Summit Materials,Inc. (NYSE:SUM) Files An 8-K Results of Operations and Financial Condition
Item2.02. Results of Operations and Financial
Condition.
Preliminary Unaudited Consolidated Financial and
Other Data for the Three Months and Year Ended
December31, 2016
On January5, 2017, Summit Materials,Inc. (the Company) announced
preliminary unaudited consolidated financial and other
information for the three months and year ended December31, 2016.
The information presented below is based upon information
available to the Company as of the date of this Current Report on
Form8-K, is not a comprehensive statement of the Companys
financial results for such periods and has not been audited or
reviewed by the Companys independent registered public accounting
firm. The Companys actual results as of and for the three months
and year ended December31, 2016 may differ materially from this
preliminary data. During the course of the preparation of the
Companys financial statements and related notes to be included in
its Annual Report on Form10-K for the year ended December31,
2016, additional adjustments to the preliminary financial
information presented below may be identified. Any such
adjustments may be material.
Based upon such preliminary financial results, the Company
expects various key metrics as of and for the three months and
year ended December31, 2016 to be between the ranges in the
following tables (unaudited):
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ThreeMonthsEnded |
|
YearEnded |
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(inmillions,exceptpershareinformation) |
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December31,2016 |
|
January2,2016 |
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December31,2016 |
|
January2,2016 |
|
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|
Revenue |
$ |
406.9 |
|
$423.9 |
$ |
401.5 |
$ |
1,610.0 |
|
$1,627.0 |
$ |
1,432.3 |
|||||
|
Net revenue |
$ |
374.1 |
|
$391.1 |
$ |
359.5 |
$ |
1,475.0 |
|
$1,492.0 |
$ |
1,290.0 |
|||||
|
Cost of revenue |
$ |
264.0 |
|
$274.0 |
$ |
270.8 |
$ |
1,062.0 |
|
$1,072.0 |
$ |
990.6 |
|||||
|
General and administrative expenses (1) |
$ |
52.0 |
|
$54.0 |
$ |
28.3 |
$ |
237.2 |
|
$239.2 |
$ |
177.8 |
|||||
|
Operating income |
$ |
48.4 |
|
$52.4 |
$ |
68.0 |
$ |
153.8 |
|
$157.8 |
$ |
134.6 |
|||||
|
Gross profit (excludes depreciation, depletion, |
$ |
142.9 |
|
$149.9 |
$ |
130.7 |
$ |
548.0 |
|
$555.0 |
$ |
441.7 |
|||||
|
Net income |
$ |
19.9 |
|
$22.9 |
$ |
47.4 |
$ |
60.0 |
|
$63.0 |
$ |
1.5 |
|||||
|
Adjusted EBITDA (2) |
$ |
95.7 |
|
$100.7 |
$ |
90.3 |
$ |
365.0 |
|
$370.0 |
$ |
287.5 |
|||||
|
Net income per share of ClassA common stock: |
|||||||||||||||||
|
Basic |
$ |
0.15 |
|
$0.19 |
$ |
0.47 |
$ |
0.73 |
|
$0.78 |
$ |
0.73 |
|||||
|
Diluted |
$ |
0.15 |
|
$0.19 |
$ |
0.47 |
$ |
0.60 |
|
$0.63 |
$ |
0.52 |
|||||
|
Adjusted (2) |
$ |
0.20 |
|
$0.23 |
$ |
0.34 |
$ |
0.97 |
|
$1.00 |
$ |
0.76 |
|
(1) |
Share-based compensation expense, which is recognized in |
|
|
(2) |
The Company evaluates its operating performance using |
|
of ClassA common stock and LP Units outstanding. |
The Company includes these non-GAAP measures in conjunction
with its results according to U.S. GAAP because management
believes they provide a more complete understanding of factors
and trends affecting the Companys business than U.S. GAAP
measures alone. Management believes these non-GAAP measures
assist the Companys board of directors, management, lenders and
investors in comparing the Companys operating performance on a
consistent basis because they remove, where applicable, the
effect of the Companys capital structure, asset base,
acquisition accounting, non-cash charges and non-operating
items from the Companys operations. In addition, management
uses Adjusted EBITDA and gross profit to evaluate the Companys
operational performance as a basis for strategic planning and
as a performance evaluation metric.
Despite the importance of these measures in analyzing the
Companys business, evaluating its operating performance and
determining covenant compliance, as well as their use by
securities analysts, lenders and others in their evaluation of
companies, the measures have limitations as analytical tools,
and you should not consider them in isolation, or as a
substitute for analysis of the Companys results as reported
under U.S. GAAP. EBITDA, Adjusted EBITDA and gross profit are
not intended to be measures of liquidity or free cash flow for
the Companys discretionary use. Some of the limitations of
EBITDA, Adjusted EBITDA and gross profit are:
they do not reflect the Companys cash expenditures or future
requirements for capital expenditures or contractual
commitments;
they do not reflect changes in, or cash requirements for, the
Companys working capital needs;
they do not reflect the interest expense, or the cash
requirements to service interest or principal payments on the
Companys debt; and
they do not reflect income tax payments the Company is required
to make.
To properly and prudently evaluate the Companys business,
readers are encouraged to review the financial statements the
Company files with the Securities and Exchange Commission (the
SEC), and not rely on any single financial measure to evaluate
the Companys business. The Company also strongly urges you to
review the reconciliation of net income (loss) to EBITDA and
Adjusted EBITDA, operating income (loss) to gross profit and
net income (loss) per share to Adjusted EPS set forth below.
The measures presented here, may differ from and may not be
comparable to similarly titled measures used by other
companies, because they are not measures of financial
performance under U.S. GAAP and are susceptible to varying
calculations.
The following table sets forth a reconciliation of net income
(loss) to EBITDA and Adjusted EBITDA for the periods indicated
(unaudited):
|
|
|
Threemonthsended |
|
Yearended |
|
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|
ReconciliationofNetLosstoAdjustedEBITDA |
|
December31, 2016 |
|
January2, 2016 |
|
December31, 2016 |
|
January2, 2016 |
|
||||||||||
|
(inthousands) |
|
Low |
|
High |
|
Actual |
|
Low |
|
High |
|
Actual |
|
||||||
|
Net income |
$ |
19,923 |
|
$ |
22,923 |
$ |
47,416 |
$ |
60,000 |
|
$ |
63,000 |
$ |
1,484 |
|||||
|
Interest expense |
24,855 |
|
25,355 |
22,398 |
97,323 |
|
97,823 |
84,629 |
|||||||||||
|
Income tax benefit |
4,313 |
|
4,813 |
(5,795 |
) |
(3,600) |
|
(3,100 |
) |
(18,263 |
) |
||||||||
|
Depreciation, depletion and amortization |
41,700 |
|
42,700 |
32,632 |
149,700 |
|
150,700 |
118,321 |
|||||||||||
|
EBITDA |
$ |
90,791 |
|
$ |
95,791 |
$ |
96,651 |
$ |
303,423 |
|
$ |
308,423 |
$ |
186,171 |
|||||
|
Accretion |
|
|
|
|
1,700 |
|
1,700 |
1,402 |
|||||||||||
|
IPO/Legacy equity modification costs |
|
|
|
|
37,257 |
|
37,257 |
28,296 |
|||||||||||
|
Loss on debt financings |
|
|
|
7,318 |
|
|
|
71,631 |
|||||||||||
|
Income from discontinued operations |
|
|
|
(1,600 |
) |
|
|
|
(2,415 |
) |
|||||||||
|
Transaction costs |
|
|
|
1,475 |
5,600 |
|
5,600 |
9,519 |
|||||||||||
|
Management fees and expenses |
(1,400) |
|
(1,400 |
) |
|
(1,400) |
|
(1,400 |
) |
1,046 |
|||||||||
|
Non-cash compensation |
3,800 |
|
3,800 |
1,310 |
12,700 |
|
12,700 |
5,448 |
|||||||||||
|
(Gain) on disposal and impairment of assets |
(16,561 |
) |
(16,561 |
) |
|||||||||||||||
|
Other |
1,709 |
|
1,709 |
1,463 |
5,720 |
|
5,720 |
2,991 |
|||||||||||
|
Adjusted EBITDA |
$ |
95,700 |
|
$ |
100,700 |
$ |
90,329 |
$ |
365,000 |
|
$ |
370,000 |
$ |
287,528 |
The following table sets forth a reconciliation of operating
income to gross profit for the periods indicated (unaudited):
|
|
|
Threemonthsended |
|
Yearended |
|
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|
ReconciliationofOperatingIncometoGrossProfit(exclusiveofitemsshownseparately) |
|
December31, 2016 |
|
January2, 2016 |
|
December31, 2016 |
|
January2, 2016 |
|
||||||||||||||
|
(inthousands) |
|
Low |
|
|
|
High |
|
Actual |
|
Low |
|
|
|
High |
|
Actual |
|
||||||
|
Operating income |
$ |
48,400 |
|
$ |
52,400 |
$ |
67,990 |
$ |
153,800 |
|
$ |
157,800 |
$ |
134,641 |
|||||||||
|
General and administrative expenses |
52,000 |
|
54,000 |
28,285 |
237,200 |
|
239,200 |
177,769 |
|||||||||||||||
|
Depreciation, depletion, amortization and accretion |
42,200 |
|
43,200 |
32,905 |
151,400 |
|
152,400 |
119,723 |
|||||||||||||||
|
Transaction costs |
|
|
|
1,475 |
5,600 |
|
5,600 |
9,519 |
|||||||||||||||
|
Gross Profit (exclusive of items shown separately) |
$ |
142,900 |
|
$ |
149,900 |
$ |
130,655 |
$ |
548,000 |
|
$ |
555,000 |
$ |
441,652 |
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|
Gross Margin (exclusive of items shown separately) (a) |
38.2 |
% |
|
38.3 |
% |
36.3 |
% |
37.2 |
% |
|
37.2 |
% |
34.2 |
% |
(a) The Company defines gross margin as gross profit as a
percentage of net revenue.
The following table sets forth a reconciliation of net income
per share to Adjusted EPS for the periods indicated
(unaudited):
|
|
|
Three months ended |
|
Year ended |
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|
December31, 2016 |
|
January2, 2016 |
|
December31, 2016 |
|
January2, 2016 |
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Per |
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|
|
|
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|
|
|
|
|
|
|
|
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|
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|
ReconciliationofNetIncomePerSharetoAdjustedEPS |
|
Net Income |
|
Per Share |
|
NetIncome |
|
Share |
|
Net Income |
|
Per Share |
|
NetIncome |
|
PerShare |
|
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|
|
|
Low |
|
|
|
High |
|
Low |
|
|
|
High |
|
|
|
|
|
Low |
|
|
|
High |
|
Low |
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|
High |
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|
Net income attributable to Summit Materials,Inc. |
$ |
13,536 |
|
$ |
16,359 |
$ |
0.14 |
|
$ |
0.17 |
$ |
23,363 |
$ |
0.23 |
$ |
49,988 |
|
$ |
52,807 |
$ |
0.50 |
|
$ |
0.53 |
$ |
27,718 |
$ |
0.28 |
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|
Adjustments: |
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|
Net income (loss) attributable to noncontrolling interest |
6,387 |
|
6,564 |
0.06 |
|
0.06 |
23,962 |
0.24 |
10,012 |
|
10,193 |
0.10 |
|
0.10 |
(24,408 |
) |
(0.25 |
) |
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|
Stock compensation on 1.75x and 3.00x MOIC Awards |
|
|
|
|
|
|
37,257 |
37,257 |
0.37 |
|
0.37 |
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|
Initial public offering costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,296 |
0.29 |
|||||||||||||||||||||||||||||
|
Loss on debt financings, net of tax |
|
|
|
|
|
|
3,671 |
0.04 |
|
|
|
|
|
|
59,696 |
||||||||||||||||||||||||||||||
|
Gain on transfer of Bettendorf assets |
|
|
|
|
|
|
(16,561 |
) |
(0.17 |
) |
|
|
|
|
|
|
(16,561 |
) |
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|
Adjusted net income (loss) and EPS |
$ |
19,923 |
|
$ |
22,923 |
$ |
0.20 |
|
$ |
0.23 |
$ |
34,435 |
$ |
0.34 |
$ |
97,257 |
|
$ |
100,257 |
$ |
0.97 |
|
$ |
1.00 |
$ |
74,741 |
$ |
0.76 |
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|
Weighted-average shares: |
|||||||||||||||||||||||||||||||||||||||||||||
|
ClassA common stock |
87,276,645 |
49,745,910 |
68,833,986 |
38,231,689 |
|||||||||||||||||||||||||||||||||||||||||
|
LP Units outstanding |
13,900,060 |
50,306,370 |
32,327,907 |
59,911,631 |
|||||||||||||||||||||||||||||||||||||||||
|
Adjusted basic shares |
101,176,705 |
100,052,280 |
101,161,893 |
98,143,320 |
The information being furnished to this Current Report on
Form8-K shall not be deemed to be filed for purposes of
Section18 of the Securities Exchange Act of 1934, as amended
(the Exchange Act), or otherwise subject to the liabilities of
that section, nor shall it be deemed incorporated by reference
into any registration statement or other document filed under
the Securities Act of 1933, as amended, or the Exchange Act,
except as expressly set forth by specific reference in such
filing. This Current Report on Form8-K does not constitute an
offer to sell or the solicitation of an offer to buy any
securities.
CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING
STATEMENTS
Information set forth in this Current Report on Form8-K
contains forward-looking statements within the meaning of the
federal securities laws and the Private Securities Litigation
Reform Act of 1995, which reflect the Companys current views
with respect to, among other things, its preliminary financial
results. These forward-looking statements are subject to a
number of risks and uncertainties, including those described
under the heading Risk Factors in the Companys Annual Report on
Form10-K for the fiscal year ended January2, 2016, as such
factors may be amended or updated from time to time by the
Companys subsequent filings with the SEC. The Company
undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new
information, future developments or otherwise, except as
required by law.
About Summit Materials, Inc. (NYSE:SUM)
Summit Materials, Inc. is a construction materials company. The Company operates through three segments: the west segment, which includes operations in Texas, the Mountain states of Utah, Colorado, Idaho and Wyoming, and in British Columbia, Canada; east segment, which serves markets across the Midwestern and Eastern United States, and Cement segment, which consists of its Hannibal, Missouri and Davenport, Iowa cement plants and approximately eight distribution terminals along the Mississippi River from Minnesota to Louisiana. It supplies aggregates, ready-mixed concrete, asphalt paving mix and paving and related services in the West segment, and aggregates, ready-mixed concrete, asphalt paving mix and paving and related services in east segment. The Company has operations in approximately 20 states in the United States and in British Columbia, Canada. The Company serves markets, including residential construction, nonresidential construction and public infrastructure construction. Summit Materials, Inc. (NYSE:SUM) Recent Trading Information
Summit Materials, Inc. (NYSE:SUM) closed its last trading session down -0.52 at 23.85 with 8,210,140 shares trading hands.