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SM

Summit Materials, Inc. (SUM)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 delivered strong pricing-led growth despite weather and barge constraints: net revenue rose 58.1% year over year to $1.075B, Adjusted EBITDA increased 54.5% to $296.2M, and Adjusted EBITDA margin was 27.5%; GAAP diluted EPS was $0.60 and Adjusted diluted EPS was $0.66 .
  • Management reaffirmed full-year 2024 Adjusted EBITDA guidance of $970M–$1,010M and capex of $430M–$470M; updated outlook calls for low- to mid-single-digit organic volume declines in Aggregates and Cement, offset by midyear pricing traction and discretionary spend controls; 2024 Adjusted EBITDA margin expected at the upper end or above 23%–24% .
  • Integration momentum: $17.5M synergies achieved through midyear (tracking to at least $40M in 2024 and at least $130M over the integration timeline); pro forma Adjusted EBITDA margins expanded >200 bps YTD and in Q2; Cement OEE, alternative fuels and PLC conversion all tracking at/above targets .
  • Transitory headwinds: severe weather in Houston (approx. 10% of company EBITDA) reduced Q2 EBITDA by ~$6.5M; Mississippi River disruptions affected inland cement; private non-res demand remains delayed amid “higher for longer” rates—offset by public infrastructure and large manufacturing/data center projects in the Southeast .

What Went Well and What Went Wrong

  • What Went Well

    • Pricing power across the portfolio: Aggregates ASP +11.8% YoY (sequential +2.5%); organic Cement ASP +7.3% YoY; ready-mix and asphalt pricing also up; management reiterated mid-single-digit cement pricing for 2024 and >10% aggregates pricing for 2024 .
    • Integration and synergy execution ahead of plan: “We achieved $17.5 million in first half synergies… well on our way towards our $40 million full year target” and tracking to “at least $130 million” over the integration timeline .
    • Margin quality and operational progress: “On a pro forma, like-for-like basis, adjusted EBITDA margins expanded… by more than 200 basis points” YTD; Cement OEE/alt fuels/PLC conversion at or ahead of targets; $17M baghouse at Martinsburg to improve production and costs .

  • What Went Wrong

    • Weather and logistics disruptions: Houston precipitation days +30% and totals +40% YoY; flooding and power outages forced plant shutdowns; Mississippi barge constraints hindered inland cement; estimated ~$6.5M lost/delayed Q2 EBITDA in Houston .
    • Volume softness: Organic aggregates volumes -9.4% and organic cement volumes -16.5% (inland import pullbacks; river markets record rainfall); ready-mix volumes -14.9% organically; Asphalt volumes -6.6% organically (timing) .
    • Mix/margin dilution from Argos USA: Cement and Products margins down YoY due to inclusion of lower-margin acquired assets (offset by YoY margin expansion YTD and on pro forma); consolidated operating margin also lower YoY .

Financial Results

Consolidated results (USD Millions, except per-share and %)

MetricQ2 2023Q1 2024Q2 2024
Net Revenue ($)$680.373 $773.229 $1,075.471
Operating Income (Loss) ($)$129.633 $(44.853) $172.896
Adjusted EBITDA ($)$191.745 $121.225 $296.166
GAAP Diluted EPS ($)$0.70 $(0.40) $0.60
Adjusted Diluted EPS ($)$0.71 $(0.12) $0.66
Adjusted EBITDA Margin (%)28.2% 15.7% 27.5%
Operating Margin (%)19.1% (5.8)% 16.1%
Adjusted Cash Gross Profit ($)$236.747 $181.004 $368.253
Adjusted Cash Gross Profit Margin (%)34.8% 23.4% 34.2%

Segment and Line-of-Business

MetricQ2 2023Q2 2024
Segment Net Revenue – West ($)$400.038 $423.680
Segment Net Revenue – East ($)$168.460 $326.970
Segment Net Revenue – Cement ($)$111.875 $324.821
Adjusted EBITDA – West ($)$104.517 $101.585
Adjusted EBITDA – East ($)$47.617 $70.554
Adjusted EBITDA – Cement ($)$52.872 $140.769
Adjusted EBITDA – Corporate ($)$(13.261) $(16.742)
Adjusted EBITDA – Consolidated ($)$191.745 $296.166

Volumes and Pricing KPIs

KPIQ2 2023Q2 2024YoY Change
Aggregates Volume (k tons)16,396 14,758 (10.0)%
Aggregates ASP ($/ton)$13.65 $15.26 +11.8%
Cement Volume (k tons)703 2,376 +238.0% (reported)
Cement ASP ($/ton)$149.10 $153.43 +2.9% (reported)
Ready-Mix Volume (k cu yds)1,333 2,376 +78.2%
Ready-Mix ASP ($/cu yd)$149.91 $165.51 +10.4%
Asphalt Volume (k tons)1,096 911 (16.9)%
Asphalt ASP ($/ton)$83.90 $85.25 +1.6%

Additional Operational/Financial Items

  • Estimated Houston weather EBITDA impact in Q2: ~$6.5M (lost/delayed) .
  • Liquidity: $538.7M cash; $2.8B debt; $592.7M available under revolver (as of 6/29/24) .
  • Free cash flow Q2: $45.8M; YTD FCF $(50.3)M (seasonality/capex timing) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($)FY 2024$970M–$1,010M $970M–$1,010M Maintained
Capex ($)FY 2024$430M–$470M $430M–$470M Maintained
Adjusted EBITDA Margin (%)FY 202423%–24% (plan) Upper end or above 23%–24% Raised bias
Aggregates Organic VolumesFY 2024~Flat (Q4 outlook) Low- to mid-single-digit decline Lowered
Cement Organic VolumesFY 2024Flat to down (Q4 outlook) Low- to mid-single-digit decline Lowered
G&A Expense ($)FY 2024Not quantified; trending ~8% of revenue (Q1) ~$330M Quantified / disciplined
Synergies ($)FY 2024≥$40M (raised in Q1) ≥$40M (on track) Maintained
Total Synergies Target ($)Integration Horizon≥$130M ≥$130M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23, Q1’24)Current Period (Q2’24)Trend
Pricing Power (Aggs/Cement)Aggs pricing +~15% in 2023; cement pricing cadence by market; announced midyear actions Aggs ASP +11.8% YoY; cement organic +7.3% YoY; Aggs midyear actions 2%–7% and >10% FY pricing reiterated Improving (pricing traction)
Integration & Synergies2024 synergies upped to ≥$40M; operational and commercial levers $17.5M through midyear; on track for ≥$40M in 2024 and ≥$130M total Improving (delivery cadence)
Weather/LogisticsSeasonality reduced with SE footprint; barge season noted Houston storms; river/barge constraints; ~$6.5M Q2 EBITDA impact Worsened near-term (transitory)
Demand MixPublic strong; private variable; guarded volume plan Private non-res delays (SLC, Phoenix); SE manufacturing/data centers strong; public robust Mixed (public strength vs private delays)
Cost & EnergyExpect cost moderation; diesel hedges Energy tailwinds (diesel/gas); R&M/subcontracting moderating; labor sticky Gradual improvement (ex-labor)
G&A DisciplinePath to ~7%–8% of revenue 7.8% in Q2; FY G&A guided ~$330M Improving (scale synergies)
Cement Ops/OEETurnarounds on time; OEE focus; PLC OEE/alt fuels/PLC at/above targets; Martinsburg $17M baghouse Improving (projects in place)
Tech/Process (RMX)Delivery excellence; “load-and-go” adoption in RMX RMX footprint consolidation; delivery excellence contributing Improving

Management Commentary

  • “We… delivered solid financial results again this quarter… we are increasingly confident that… we reaffirm our full year 2024 adjusted EBITDA guidance range of $970 million… to $1.010 billion… 2024 adjusted EBITDA margin should land at the upper end or above our 23% to 24% expectations” – CEO, Anne Noonan .
  • “Houston alone accounted for approximately $6.5 million in lost or delayed EBITDA in the second quarter… pricing execution on Aggregates and Ready-Mix was not affected” – CFO, Scott Anderson .
  • “We achieved $17.5 million in first half synergies… clear line of sight to at least $40 million in synergies [in 2024] and at least $130 million over our integration time line” – CEO, Anne Noonan .
  • “Aggregates pricing… increased 11.8% in Q2 and sequentially increased 2.5%… unit profitability accelerated $1.80 per ton sequentially or 15% year-on-year” – CFO, Scott Anderson .
  • “We successfully completed the $17 million kiln baghouse project [at Martinsburg] that will improve plant production levels, reduce plant costs… position Summit to better meet… Mid-Atlantic” – CFO, Scott Anderson .

Q&A Highlights

  • Weather carryover and 2H recovery: Beryl impacted early Q3, but seasoned markets and strong backlogs support catch-up; guide assumes recovery of most lost days; if some slips into 2025, pricing could be better next year .
  • Aggregates margins: Four consecutive quarters of expansion; year-to-date +280 bps; management expects to “continue to add points” in 2H with OpEx initiatives (+$8M YTD) .
  • Cement pricing/imports/contracts: Cement pricing “noisy” by market; inland strong, Houston delayed due to weather; limited import exposure; 12–18 month cadence to reprice inherited under-market contracts; estimated Argos underpricing ~$10–$15/ton .
  • Costs/hedging: Energy (diesel/nat gas) tailwinds; R&M/subcontractor costs moderating; labor remains tight; company ~55% hedged on diesel in 2H .
  • Synergy pacing: $40M in 2024, another ~$40M in 2025 (first two years ~$80M); Cement projects (OEE/capital) drive more in 2025; some lumpiness around shutdown windows .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2024 and prior two quarters was unavailable via our SPGI interface for SUM at this time due to a missing CIQ mapping. As a result, we cannot quantify numerical beats/misses versus consensus for revenue, EPS, or EBITDA at this time. We will update when SPGI mapping is available.

Key Takeaways for Investors

  • Pricing is the primary earnings driver in 2024: Aggs ASP +11.8% YoY (sequential +2.5%); cement organic pricing +7.3% YoY, with more contract repricing slated over 12–18 months; management reiterates >10% Aggs pricing for FY and mid-single-digit cement .
  • Integration is delivering: $17.5M synergies through midyear, on track for ≥$40M in 2024 and ≥$130M total; Cement OEE and targeted capital projects underpin 2025 synergy ramp .
  • Margin trajectory remains positive despite mix/weather: Pro forma margin expansion (>200 bps) and expectation to land upper end or above 23%–24% EBITDA margin; Aggs margins expanding with OpEx .
  • Near-term volume headwinds are transitory and concentrated: Weather/logistics in Houston/river markets and higher-for-longer rates delaying private projects; public infrastructure and SE manufacturing/data centers provide offset .
  • Capital allocation and liquidity support growth: $538.7M cash; ample revolver capacity; capex prioritized for high-return cement reliability and RMX modernization .
  • Watch catalysts into 2H: Pace of cement contract repricing; execution of midyear Aggs pricing; energy tailwinds; recovery of weather-delayed volumes; synergy realization cadence (especially cement projects) .

Appendix: Additional Detail

Other Q2 press releases

  • Q2 results call date announcement (7/19/24) .

Prior quarter context

  • Q1 2024: Net revenue $773.2M; Adjusted EBITDA $121.2M; raised full-year synergy target to ≥$40M; reiterated 2024 EBITDA margin 23%–24% .
  • Q4 2023: Detailed pricing momentum across lines, path to Aggs margin recovery, seasonal benefits from SE footprint, and early integration framework .