Summit Materials increased its aggregates business revenues by 23.1% year-on-year to $103.7 million in the second quarter of 2018 and upped its overall group revenues by 14.8%.
According to a statement on marketwatch.com this week, the company's chief executive officer Tom Hill said: "While net revenue increased 14.8% on a year-over-basis in the second quarter 2018, supported by organic volume growth in our aggregates and products lines of business, adjusted EBITDA was flat on a year-over-year basis, given lower contributions from our cement segment and Houston operations, together with inflation in our variable costs. With a finite number of days remaining in the construction season, we have reduced the midpoint of our 2018 Adjusted EBITDA guidance by 7%.”
And, he added: "Organic sales volumes in our cement segment were impacted by a combination of high precipitation levels during April and May, together with competitive pressures in the markets we serve. Our Houston operations were impacted by a slower start to the construction season than had been anticipated. Looking to the second half of the year, we expect a strengthening in both our cement segment and Houston operations, given accelerating demand in our residential, low-rise commercial and public end-markets.”
According to the CEO: “The pace of cost inflation in raw materials, freight, labour and fuel exceeded our expectations in the first half of 2018. Although we anticipated some measure of cost inflation entering the year, the effective date of our announced price increases lagged behind the impact of higher costs incurred by our business. Importantly, our average selling prices on both materials and products have gained traction entering the third quarter, which we expect will offset these higher variable costs in the second half of the year.”
“Demand conditions in most of our markets are strong and are expected to remain so into 2019 and beyond. Within our private markets, we are seeing sustained growth in new single-family home construction, given low inventories and positive demographic trends, while in our public markets, state transportation funding measures in Texas, coupled with steady increases in federal subsidies, are contributing to increased lettings activity. In July 2018, aggregates shipments per day increased 5% versus the prior year period and 13% versus June 2018.”
“Since May 2018, we have completed four materials-based acquisitions for total invested capital of $75 million. Recent acquisitions have served to further establish our leadership in well-structured, materials-based markets in Texas, Kansas, Missouri and Virginia. On a year-to-date basis, we have completed eleven acquisitions for total invested capital of $228 million. Across these eleven transactions, we have added more than 300 million tons of aggregates reserves to our portfolio. The acquisition pipeline remains active as we look ahead to the remainder of the year, with multiple transactions currently in various stages of diligence.”
The four most recent acquisitions for Summit Materials are:
Olathe Assets (Kansas) ... two quarries, two asphalt plants and two construction and landfill sites. These assets expand Summit's existing operations into the southwestern Kansas City metropolitan area. Summit closed on the acquisition of the Olathe Assets in July 2018.
Buckingham Slate (Virginia) ... an aggregates acquisition that has expanded Summit’s market position and reserve base in central Virginia. Summit closed on the acquisition of Buckingham Slate in June 2018.
Buildex (Missouri) ... a lightweight aggregates business based in western Missouri that provides a complementary product offering to the company’s existing portfolio in the region. Summit closed on the acquisition of Buildex in July 2018.
XIT (Texas) ... an aggregates company that provides further vertical integration of the company’s operations in north Texas. Summit closed on its acquisition of XIT in July 2018.
