Profits rising for Summit Materials
By Andrew Macklin
November 4, 2015 – Summit Materials, Inc. is reporting positive third quarter results as a result of volume and price increases across all lines of its business.
In relation to the third quarter of 2014, operating income improved 74.6 per cent to $83.4 million, while gross profit increased 46.0% to $159.5 million.
Tom Hill, CEO of Summit, stated, “The significant improvement in our results reflects our sustained efforts to capitalize on steadily rising demand trends across our markets, the contributions from our highly strategic acquisitions and continued progress on our internal initiatives. We were especially pleased to record a 55.2 per cent increase in our Further Adjusted EBITDA representing another quarter of incremental margins in excess of 50 per cent. This is a strong accomplishment and largely tied to the successful completion and ongoing integration of our Davenport Assets acquisition, which remains on track.”
Third Quarter 2015 Operating Results
In the third quarter 2015, net revenue increased 22.4 per cent to $426.3 million, compared to $348.1 million in the prior year quarter. The increase in net revenue was primarily attributable to an increase in volumes and price across all lines of business, led by the West and Central regions. Net revenue grew organically by $4.7 million, or 1.3 per cent, compared to the prior year quarter.
The West Region increased $20.5 million, or 52.3 per cent, primarily driven by a higher mix of revenue from aggregates, organic volume and price growth across all lines of business and the impact of acquisitions, mainly in the Houston and Midland/Odessa, Texas and British Columbia, Canada markets.
The Central Region grew $22.9 million, or 74.4 per cent, largely attributable to the favorable impact of acquisition activity, including the addition of the Davenport Assets in cement, along with volume and price growth in aggregates and ready-mixed concrete.
The East Region improved $1.5 million, or 12.8 per cent, mainly as a result of higher price in aggregates, leading to a larger mix of net revenue derived from materials, and cost controls.
Gross profit increased 46.0 per cent to $159.5 million, compared to $109.3 million in the prior year quarter. As a percentage of net revenue, gross margin improved to 37.4 per cent, compared to 31.4 per cent in the prior year quarter, primarily attributable to improved profitability in materials and products, in addition to a higher mix of revenue from materials and products as a result of organic improvements and acquisition activity.