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8-K - 8-K - Summit Materials, LLCd723830d8k.htm

Exhibit 99.1

 

LOGO

Summit Materials Announces First Quarter 2014 Results

Denver, Colorado (May 13, 2014) - Summit Materials, LLC today announced results for the quarter ended March 29, 2014.

Notable items for the quarter include (all comparisons are with the first quarter of 2013):

 

    Revenue increased 41.4% to $151.1 million.

 

    Aggregates, ready-mixed concrete and asphalt volumes increased 49%, 268% and 18%, respectively. Cement volumes decreased 34%.

 

    Aggregates, cement and asphalt pricing improved 2%, 16% and 8%, respectively. Ready-mixed concrete pricing decreased 12%.

 

    Operating loss decreased $6.8 million.

 

    Adjusted EBITDA increased $12.8 million.

Tom Hill, the CEO of Summit Materials, stated, “This year is off to a positive start. We were able to achieve an increase in product revenue of $35.8 million and an increase in service revenue of $8.4 million compared to the first quarter in 2013. Our operating earnings improved 16.3% and Adjusted EBITDA increased 45.3%. Our product pricing increased in many of our markets, most notably in Texas, Missouri and Kansas. As a result of continued emphasis on lower-volume, higher-margin contracts, we enjoyed improved margins in the first quarter. Compared to this point last year, our aggregate backlog is 23% higher. Our January acquisition of Alleyton Resources, an aggregates and ready-mixed concrete business in Houston, has already showed strong results and the integration is progressing well.”

Central Region Results – The Central Region’s revenue increased 32.4% due to higher aggregate, ready-mixed concrete and asphalt volumes and pricing improvements across all the product lines. Adjusted EBITDA improved $5.5 million primarily due to the revenue growth and reduced stripping costs.

West Region Results – The West Region’s revenue increased 58.0% due to higher aggregates, ready-mixed concrete and asphalt volumes and pricing improvements across the aggregate and asphalt products. The increase in volumes was driven primarily by the Alleyton and Westroc, LLC acquisitions, contributing approximately $29.9 million of revenue. Adjusted EBITDA in the West Region increased $8.5 million. This was primarily driven by improved margins in our aggregates, asphalt and ready-mixed concrete products and improved performance in Texas.

East Region Results – The East Region’s revenue decreased $2.2 million due to the sale of our concrete block operations and a decrease in aggregate volumes, partially offset by a 3.6% improvement in aggregate pricing. Consistent with the revenue decline, the region’s operating loss increased $1.2 million.

Liquidity and Capital Resources

Our primary sources of liquidity include cash on-hand, cash provided by our operations and amounts available for borrowing under our credit facilities. As of March 29, 2014, we had $34.1 million in cash and working capital of $117.3 million as compared to cash and working capital of $14.9 million and $85.4 million, respectively, at December 28, 2013. We calculate working capital as current assets less current liabilities, excluding the current portion of long term debt and outstanding borrowings on our revolving credit facility (“Revolver”). As of March 29, 2014, our remaining borrowing capacity on our Revolver was $131.7 million, net of $18.3 million of outstanding letters of credit.

Given the seasonality of our business, we typically experience significant fluctuations in working capital needs and balances throughout the year. Our working capital requirements generally increase during the first half of the year as we build up inventory and focus on repair and maintenance and other set up costs for the upcoming season. Working capital levels then generally decrease toward the end of the year, which is when we generally see significant inflows of cash from the collection of receivables.

 

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Free cash flow, a non-GAAP measure defined as net cash used for operating activities less net capital expenditures, was $68.1 million and $56.4 million in the three month periods ended March 29, 2014 and March 30, 2013, respectively. We invested $3.5 million more in capital projects and generated $3.7 million less from asset sales.

Our growth strategy contemplates future acquisitions for which we believe we have sufficient access to capital. As of March 29, 2014, we have approximately $330.6 million of funding commitments from our equity sponsors outstanding.

On January 17, 2014, we issued an additional $260.0 million of our 10.5% senior notes due January 31, 2020. Proceeds from the notes were used to acquire Alleyton Resources, pay down outstanding borrowings on our Revolver and for general corporate purposes.

About Summit Materials, LLC

We are a leading, vertically-integrated, geographically-diverse heavy-side building materials company. We supply aggregates, cement and related downstream products such as ready-mixed concrete, asphalt paving mix, concrete products and paving and related construction services for a variety of end uses in the U.S. construction industry, including private residential and non-residential construction and public infrastructure projects. Summit Materials has completed 29 acquisitions beginning with its first acquisition in 2009. Our nine operating companies make up our three distinct geographic regions that span 16 states and 23 metropolitan statistical areas.

For more information about Summit Materials, LLC refer to the Company’s website at http://www.summit-materials.com. The information contained on our website is not incorporated herein by reference.

Conference Call Information

The Company will conduct a conference call at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) on Tuesday, May 13, 2014. Interested parties may access this event at https://viavid.webcasts.com/starthere.jsp?ei=1034721.

For those investors without online web access, the conference call may be accessed at:

 

  Conference ID:    4682051   
  Domestic:    1-877-941-1428   
  International:    1-480-629-9665   

Non-GAAP Financial Measures

The rules of the Securities and Exchange Commission (the “SEC”) regulate the use in filings with the SEC of “non-GAAP financial measures,” such as Adjusted EBITDA and Pro Forma Adjusted EBITDA, that are derived on the basis of methodologies other than in accordance with GAAP. We have provided Adjusted EBITDA and Pro Forma Adjusted EBITDA because we believe that they provide investors with additional information to measure our performance, evaluate our ability to service our debt and evaluate certain flexibility under our restrictive covenants. Our senior secured credit facilities use Pro Forma Adjusted EBITDA to measure compliance with covenants such as interest coverage and debt incurrence and the indenture governing our senior notes uses Pro Forma Adjusted EBITDA in connection with our debt incurrence and restricted payment capacity. Our use of the terms Adjusted EBITDA and Pro Forma Adjusted EBITDA may vary from the use of such terms by others in our industry and should not be considered as alternatives to net loss, operating (loss) income, revenue or any other performance measures derived in accordance with GAAP as measures of operating performance or to cash flows as measures of liquidity.

Adjusted EBITDA and Pro Forma Adjusted EBITDA and other non-GAAP measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of the limitations of Adjusted EBITDA and Pro Forma Adjusted EBITDA are that these measures do not reflect: (i) changes in, or cash requirements for, our working capital needs; (ii) the significant interest expense or cash requirements necessary to service interest and principal payments on our debt; and (iii) any cash requirements for the replacement cost of assets being depreciated or amortized. Because of these limitations, we rely primarily on our GAAP results and use Adjusted EBITDA and Pro Forma Adjusted EBITDA only supplementally.

 

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Our chief operating decision maker also considers our free cash flow as a measure of operating performance. We define free cash flow as net cash provided by (used for) operating activities less purchases of property, plant and equipment.

Adjusted EBITDA, Pro Forma Adjusted EBITDA and free cash flow reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to GAAP financial measures included in the tables attached to this press release, may provide a more complete understanding of factors and trends affecting our business. However, non-GAAP financial measures should not be construed as being more important than other comparable GAAP financial measures and should be considered in conjunction with the GAAP measures. In addition, non-GAAP financial measures are not standardized; therefore, it may not be possible to compare such financial measures with other companies’ non-GAAP financial measures having the same or similar names. We strongly encourage investors to review our consolidated financial statements in their entirety and not rely on any single financial measure.

Reconciliations of net loss to Adjusted EBITDA, cash flows used for operations to free cash flow and net loss for the twelve months ended March 29, 2014 to Pro Forma Ajdusted EBITDA are included in the tables attached to this press release.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. Any and all statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, sales volumes and financial results are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results.

In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Important factors could affect our results and could cause results to differ materially from those expressed in our forward-looking statements, including but not limited to the factors discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2013, filed with the SEC as such factors may be updated from time to time in our periodic filings with the SEC.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

($ in thousands)

 

     March 29,     December 28,  
     2014     2013  
     (unaudited)     (audited)  
Assets     

Current assets:

    

Cash

   $ 34,135     $ 14,917  

Accounts receivable, net

     95,747       99,337  

Costs and estimated earnings in excess of billings

     12,372       10,767  

Inventories

     113,248       96,432  

Other current assets

     11,191       13,181  
  

 

 

   

 

 

 

Total current assets

     266,693       234,634  

Property, plant and equipment, less accumulated depreciation, depletion and amortization (March 29, 2014 - $228,481 and December 28, 2013 - $212,382)

     891,211       831,778  

Goodwill

     271,948       127,038  

Intangible assets, less accumulated amortization (March 29, 2014 - $2,341 and December 28, 2013 - $2,192)

     15,166       15,147  

Other assets

     45,900       39,197  
  

 

 

   

 

 

 

Total assets

   $ 1,490,918     $ 1,247,794  
  

 

 

   

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest     

Current liabilities:

    

Current portion of debt

   $ 4,220     $ 30,220  

Current portion of acquisition-related liabilities

     14,428       10,635  

Accounts payable

     67,100       72,104  

Accrued expenses

     61,378       57,251  

Billings in excess of costs and estimated earnings

     6,535       9,263  
  

 

 

   

 

 

 

Total current liabilities

     153,661       179,473  

Long-term debt

     939,983       658,767  

Acquisition-related liabilities

     42,034       23,756  

Other noncurrent liabilities

     74,256       77,480  
  

 

 

   

 

 

 

Total liabilities

     1,209,934       939,476  
  

 

 

   

 

 

 

Redeemable noncontrolling interest

     25,137        24,767  

Member’s interest:

    

Member’s equity

     511,812        486,896  

Accumulated deficit

     (251,635     (198,511 )

Accumulated other comprehensive loss

     (5,472     (6,045 )
  

 

 

   

 

 

 

Member’s interest

     254,705        282,340  

Noncontrolling interest

     1,142        1,211  
  

 

 

   

 

 

 

Total member’s interest

     255,847        283,551  
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

   $ 1,490,918     $ 1,247,794  
  

 

 

   

 

 

 

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

($ in thousands)

 

     Three Months Ended  
     March 29,     March 30,  
     2014     2013  

Revenue:

    

Product

   $ 103,961      $ 68,140   

Service

     47,130        38,689   
  

 

 

   

 

 

 

Total revenue

     151,091        106,829   
  

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below):

    

Product

     89,019        65,972   

Service

     39,656        30,101   
  

 

 

   

 

 

 

Total cost of revenue

     128,675        96,073   
  

 

 

   

 

 

 

General and administrative expenses

     35,488        34,003   

Depreciation, depletion, amortization and accretion

     19,356        17,131   

Transaction costs

     2,591        1,482   
  

 

 

   

 

 

 

Operating loss

     (35,019     (41,860

Other (income) expense, net

     (194     433   

Loss on debt financings

     —          3,115   

Interest expense

     18,819        13,367   
  

 

 

   

 

 

 

Loss from continuing operations before taxes

     (53,644     (58,775

Income tax benefit

     (596     (2,621
  

 

 

   

 

 

 

Loss from continuing operations

     (53,048     (56,154

Loss from discontinued operations

     20        123   
  

 

 

   

 

 

 

Net loss

     (53,068     (56,277

Net loss attributable to noncontrolling interest

     (2,515     (3,456
  

 

 

   

 

 

 

Net loss attributable to member of Summit Materials, LLC

   $ (50,553   $ (52,821
  

 

 

   

 

 

 

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

($ in thousands)

 

     Three months ended  
     March 29,     March 30,  
     2014     2013  

Cash flow from operating activities:

    

Net loss

   $ (53,068   $ (56,277

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation, depletion, amortization and accretion

     20,479        17,738   

Financing fee amortization

     310        796   

Share-based compensation expense

     566        542   

Deferred income tax benefit

     (525     (515

Net (gain) loss on asset disposals

     (48     870   

Loss on debt financings

     —          2,990   

Other

     558        687   

Decrease (increase) in operating assets, net of acquisitions:

    

Account receivable

     16,989        32,557   

Inventories

     (13,377     (10,499

Costs and estimated earnings in excess of billings

     (839     145   

Other current assets

     9        (2,110

Other assets

     3,202        626   

(Decrease) increase in operating liabilities, net of acquisitions:

    

Accounts payable

     (10,239     (16,688

Accrued expenses

     (9,620     (14,328

Billings in excess of costs and estimated earnings

     (2,728     (1,313

Other liabilities

     (2,044     (1,117
  

 

 

   

 

 

 

Net cash used for operating activities

     (50,375     (45,896
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Acquisitions, net of cash acquired

     (182,514     —     

Purchases of property, plant and equipment

     (19,941     (16,405

Proceeds from the sale of property, plant and equipment

     2,202        5,859   

Other

     7        —     
  

 

 

   

 

 

 

Net cash used for investing activities

     (200,246     (10,546
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Proceeds from investment by member

     24,350        —     

Proceeds from debt issuances

     306,750        154,181   

Payments on long-term debt

     (54,314     (51,390

Payments on acquisition-related liabilities

     (638     (1,585

Financing costs

     (6,309     (2,221
  

 

 

   

 

 

 

Net cash provided by financing activities

     269,839        98,985   
  

 

 

   

 

 

 

Net increase in cash

     19,218        42,543   

Cash – beginning of period

     14,917        27,431   
  

 

 

   

 

 

 

Cash – end of period

   $ 34,135      $ 69,974   
  

 

 

   

 

 

 

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Financial Highlights

($ in thousands)

 

     Three months ended  
     March 29,
2014
    March 30,
2013
 

Revenue by product:*

    

Aggregates

   $ 31,549      $ 20,865   

Cement

     7,206        9,440   

Ready-mixed concrete

     42,380        13,133   

Asphalt

     24,396        19,351   

Construction and paving

     55,502        46,410   

Other

     (9,942     (2,370
  

 

 

   

 

 

 

Total revenue

   $ 151,091      $ 106,829   
  

 

 

   

 

 

 

*  Revenue by product includes intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other.

      

 

     Three months ended  
     March 29,
2014
     March 30,
2013
 

Revenue:

     

Central region

   $ 47,542       $ 35,900   

West region

     94,894         60,063   

East region

     8,655         10,866   
  

 

 

    

 

 

 

Total revenue

   $ 151,091       $ 106,829   
  

 

 

    

 

 

 

 

     Volume in Q1
2014 Compared
to Q1 2013
    Pricing in Q1
2014 Compared
to Q1 2013
 

Aggregate

     49     2

Cement

     (34 %)      16

Ready-mixed concrete

     268     (12 %) 

Asphalt

     18     8

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Reconciliations of Non-GAAP Financial Measures

($ in thousands)

The tables below reconcile our net loss to Adjusted EBITDA and present Adjusted EBITDA by segment for the three months ended March 29, 2014 and March 30, 2013.

Reconciliation of Net Loss to Adjusted EBITDA

 

     Three Months Ended  
     March 29,     March 30,  
     2014     2013  

Net loss

   $ (53,068   $ (56,277

Income tax benefit

     (596     (2,621

Interest expense

     18,819        13,367   

Depreciation, depletion and amortization

     19,149        16,959   

Accretion

     207        172   

Loss from discontinued operations

     20        123   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ (15,469   $ (28,277
  

 

 

   

 

 

 

Adjusted EBITDA by Segment

 

     Three Months Ended  
     March 29,     March 30,  
     2014     2013  

Central

   $ (423   $ (5,954

West

     1,791        (6,722

East

     (9,338     (9,533

Corporate

     (7,499     (6,068
  

 

 

   

 

 

 

Adjusted EBITDA

   $ (15,469   $ (28,277
  

 

 

   

 

 

 

The following table reconciles net cash used for operating activities to free cash flow for the three months ended March 29, 2014 and March 30, 2013.

 

     Three Months Ended  
     March 29,     March 30,  
     2013     2012  

Net loss

   $ (53,068   $ (56,277

Non- cash items

     21,340        23,108   
  

 

 

   

 

 

 

Net loss adjusted for non-cash items

     (31,728     (33,169

Change in working capital accounts

     (18,647     (12,727
  

 

 

   

 

 

 

Net cash used for operating activities

     (50,375     (45,896

Capital expenditures, net of asset sales

     (17,739     (10,546
  

 

 

   

 

 

 

Free cash flow

   $ (68,114   $ (56,442
  

 

 

   

 

 

 

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Reconciliations of Non-GAAP Financial Measures

($ in thousands)

The following table presents a reconciliation of net loss to Pro Forma Adjusted EBITDA for the twelve months ended March 29, 2014.

 

     Twelve Months ended
March 29, 2014
    Twelve Months ended
December 28, 2013
 

Net loss

   $ (100,470   $ (103,679

Interest expense

     61,895        56,443   

Income tax expense

     (622     (2,647

Depreciation, depletion, amortization and accretion expense

     75,159        72,934   
  

 

 

   

 

 

 

EBITDA

   $ 35,962      $ 23,051   
  

 

 

   

 

 

 

EBITDA for certain acquisitions

     26,866        (1,596

Discontinued operations

     575        678   

Transaction expenses

     5,099        3,990   

Monitoring fees and expenses

     2,957        2,620   

Strategic fees and initiatives

     2,782        3,887   

Anticipated cost savings

     —          —     

Goodwill impairment

     68,202        68,202   

Non-cash compensation

     2,339        2,315   

Deferred financing fees written off at re-financing

     —          3,115   

Loss on disposal and impairment of fixed assets

     11,644        12,419   

Severance and relocation costs

     2,920        2,755   

Other

     4,854        7,015   
  

 

 

   

 

 

 

Pro Forma Adjusted EBITDA

   $ 164,200      $ 128,451   
  

 

 

   

 

 

 

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Credit Statistics

($ in millions)

The following is a summary of our credit statistics:

 

     March 29, 2014     December 28, 2013  

Cash & Cash Equivalents

   $ 34.1      $ 14.9   
  

 

 

   

 

 

 

Debt

    

Revolving Credit Facility ($150M Capacity)

   $ —        $ 26.0   

Senior Secured Term Loan

     418.8        419.9   

Capital Leases

     16.8        8.0   

Other Debt

     0.4        1.6   
  

 

 

   

 

 

 

Total Senior Secured Debt

   $ 436.0      $ 455.5   

10.5 % Senior Notes

     510.0        250.0   
  

 

 

   

 

 

 

Total Debt

   $ 946.0      $ 705.5   

Leverage Ratio Calculations

    

Senior Secured Net Debt

   $ 401.9      $ 440.6   

Total Net Debt

   $ 911.9      $ 690.6   

Pro Forma Adjusted EBITDA

   $ 164.2      $ 128.5   

Senior Secured Net Leverage

     2.45     3.43

Covenant Senior Secured Net Leverage Limit

     4.75     4.75

Total Net Leverage

     5.55     5.37

 

Contact:   

info@summit-materials.com

303-893-0012

 

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