DENVER--(BUSINESS WIRE)--Summit Materials, Inc. (NYSE: SUM, “Summit” or the “Company”), a leading vertically integrated construction materials company, today announced results for the third quarter 2017.
For the three months ended September 30, 2017, the Company reported diluted net income per share of $0.72 on net income of $79.1 million, compared to diluted earnings per share of $0.60 on net income of $44.8 million in the prior year period. On an adjusted diluted basis, excluding tax-related adjustments, the Company reported adjusted diluted net income per share of $0.73 per share on net income of $82.0 million, compared to adjusted diluted earnings per share of $0.71 on adjusted net income of $73.5 million in the prior year period. In the third quarter, the Company recorded a significant benefit related to the valuation of its deferred tax assets that was substantially offset by a corresponding Tax Receivable Agreement (“TRA”) expense. Both of these items are excluded from adjusted net income. Operating income increased by 28.8% to $113.9 million in the third quarter 2017, versus $88.4 million in the prior year period.
“We delivered double-digit year-over-year growth in net revenue, operating income and net income during the third quarter, driven by a combination of increased organic sales volumes in our materials businesses, together with contributions from recently completed acquisitions,” stated Tom Hill, CEO of Summit Materials. “Adjusted EBITDA increased 18.1% year-over-year to $172.7 million, supported by organic growth in our Cement Segment and East Segment. Organic growth contributed nearly 30% of the year-over-year improvement in third quarter Adjusted EBITDA, as we continue to leverage efficiencies afforded by our vertically integrated, decentralized model.”
“Demand fundamentals remain strong in our core regional markets,” continued Hill. “Organic sales volumes of cement and aggregates increased 10.0% and 2.6%, respectively, in the third quarter 2017, when compared to the prior year period. Organic sales volumes of cement in our core northern Mississippi River markets increased significantly on a year-over-year basis in the third quarter, while organic aggregates sales volumes in both the East and West Segments increased versus the prior year period.”
“Our two cement plants located along the Mississippi River corridor are operating at capacity, given continued growth in cement demand throughout the region,” continued Hill. “On a year-to-date basis, cement prices have grown organically by 3.6%, consistent with expectations. Looking to 2018, we anticipate additional growth in cement prices along the Mississippi River corridor.”
“Organic prices on aggregates declined less than 1% in the third quarter, due mainly to sales mix related factors isolated to the West Segment,” continued Hill. “Excluding mix, we estimate organic aggregates prices increased nearly 3% in the third quarter, versus the prior year period.”
“We continue to deliver exceptional margin capture in our materials lines of business,” continued Hill. “During the third quarter, adjusted cash gross profit margin on aggregates increased 130 basis points to a record 73.0% while adjusted cash gross profit margin on cement increased 160 basis points to 50.6%. Temporary disruptions related to Harvey, a category 4 hurricane, impacted operations in Houston, our single largest ready-mix market by volume, resulting in lower overall margin capture in our products line of business in the third quarter.”
“Since our last update in August 2017, we closed on four additional materials-based acquisitions,” noted Hill. “Our acquisitions of Georgia Stone/McLanahan provide us with an entry point into the growing Georgia market, while the acquisition of Alan Ritchey Materials provides us an entry point into the Dallas market. Columbia Silica and Stockman are attractive bolt-on acquisitions that expand our existing footprint in South Carolina and Missouri, respectively. As before, we remain disciplined acquirors, transacting on quality aggregates reserves with high synergy potential. For the full-year 2017, we are maintaining our annualized acquired EBITDA target range of $50 million to $70 million.”
“From a regional perspective, we remain bullish on Texas, where we have existing positions in Houston, Midland/Odessa, Austin, North Dallas, together with Utah, Nevada, North/South Carolina, Virginia and Georgia. Over time, we believe each of these regions stand to benefit from a combination of increased state-level infrastructure investment, stable demand for new single-family homes and the subsequent build-out of low-rise commercial amenities,” noted Hill.
“For the full-year 2017, we expect Adjusted EBITDA to be in a range of $425 million to $435 million, down from the previous range of $440 million to $455 million,” stated Hill. “In the aftermath of Hurricanes Harvey and Irma, sales volumes in our Texas and southeastern U.S. markets temporarily declined below historical levels in September and, to a lesser degree, in October, the combined impact of which has led us to reduce our full-year Adjusted EBITDA guidance.”
“We ended the third quarter with significant available liquidity on our balance sheet with which to support a combination of organic and acquisition-related growth,” stated Brian Harris, CFO of Summit Materials. “As of September 30, 2017, we had $506 million in cash and availability under our revolving credit facility, up from $224 million in the prior year period.”
“Net leverage was 3.7x exiting the third quarter 2017, versus 4.3x in the prior year period,” continued Harris. “Looking ahead, we expect net leverage to be at approximately 3.5x by year-end 2017.”
“We are pleased with our year-to-date performance,” continued Hill. “Although historic volumes of rainfall resulting from the current hurricane season have impacted our full-year outlook, underlying demand conditions remain strong in our private and public end-markets, positioning us for continued profitable growth as we look ahead to 2018.”
Third Quarter 2017 | Financial Performance
Net revenue increased by 19.6% to $574.4 million in the third quarter 2017, versus $480.2 in the prior year period. The improvement in net revenue was primarily attributable to acquisition-related contributions, increased organic sales volumes of cement, aggregates and asphalt, together with increased organic selling prices on cement, ready-mix concrete and asphalt. Operating income increased by 28.8% to $113.9 million in the third quarter 2017, when compared to the prior year period. Adjusted EBITDA increased 18.1% year-over-year to $172.7 million, versus $146.2 million in the prior year period.
In connection with a normal periodic review of its deferred tax assets, the Company released $513.2 million of the valuation allowance against its deferred tax assets that is largely responsible for a $483.6 million income tax benefit realized in the third quarter 2017. Further, given an increase in the probability that deferred tax assets subject to the TRA would be realized, the Company recorded $489.2 million of TRA expense in the third quarter of 2017. The Company has accrued its full liability related to the TRA, which totaled $548.9 million as of September 30, 2017. This accrued liability is not classified as debt for the purposes of the Company’s net leverage calculation.
West Segment: Operating income increased 22.4% to $57.5 million in the third quarter 2017, when compared to the prior year period. Adjusted EBITDA increased by 20.3% to $76.6 million in the third quarter 2017, when compared to the prior year period. Adjusted EBITDA margin was 26.1% in the third quarter 2017, versus 27.0% in the prior year period. Year-over-year organic improvements in sales volumes of aggregates, ready-mix concrete and asphalt, together with acquisition-related EBITDA contributions, were partially offset by lower organic declines in average selling prices on aggregates.
East Segment: Operating income increased by 5.2% to $36.9 million in the third quarter 2017, when compared to the prior year period. Adjusted EBITDA increased by 9.4% to $56.4 million in the third quarter 2017, when compared to the prior year period. Adjusted EBITDA margin declined to 31.5% in the third quarter 2017, versus 33.3% in the prior year period. Year-over-year organic improvements in average selling prices on aggregates and ready-mix concrete and asphalt, improved organic sales volumes of aggregates and asphalt, together with acquisition-related EBITDA contributions, were offset by a sales volume decline in ready-mix concrete, due in part to weather-related factors.
Cement Segment: Operating income increased 7.1% to $35.1 million in the third quarter 2017, when compared to the prior year period. Adjusted EBITDA increased by 16.4% to $46.9 million in the third quarter 2017, when compared to the prior year period. Adjusted EBITDA margin increased to 46.3% in the third quarter 2017, versus 45.0% in the prior year period. A year-over-year increase in average selling prices, organic sales volumes, improved production efficiencies and cost reductions all contributed to improved results.
Third Quarter 2017 | Results by Line of Business
Aggregates Business: Aggregates net revenues increased by 15.7% to $90.6 million in the third quarter 2017, when compared to the prior year period. Aggregates adjusted cash gross profit margin increased to 73.0% in the third quarter 2017, versus 71.7% in the prior year period. Organic aggregates sales volumes increased 2.6% in the third quarter 2017, due mainly to increased demand in north Texas, Utah, Vancouver and additional markets in the southeast. Organic aggregates average selling prices declined 0.8% in the third quarter, mainly in the West Segment, where hurricane-related weather impacted business conditions.
Cement Business: Cement segment net revenues increased 13.1% to $101.3 million in the third quarter 2017, when compared to the prior year period. Cement adjusted cash gross profit margin was 50.6% in the third quarter 2017, versus 49.0% in the prior year period. Organic sales volumes and average selling prices on cement increased 10.0% and 3.2%, respectively, when compared to the prior year period. Strong regional demand in the Company’s northern markets drove organic volume growth in the third quarter, while continued organic growth in sales prices was attributable to previously announced annual price increase effective January 1, 2017.
Products Business: Net revenues increased 23.5% to $280.0 million in the third quarter 2017, when compared to the prior year period. Products adjusted cash gross profit margin declined to 26.1% in the third quarter 2017, versus 28.4% in the prior year period. Organic sales volumes of ready-mix concrete declined 3.1%, versus the prior year period, due to Hurricane-related disruptions in the Houston market. Organic sales volumes of asphalt increased 11.9%, versus the prior year period, given strength in the north Texas, Austin and Utah markets.
Acquisition Program Update
As of October 2017, the Company has completed fourteen acquisitions on a year-to-date basis, including four transactions that have closed since August 2017. Total investment spend across the fourteen acquisitions completed year-to-date 2017 was approximately $402 million, including approximately $94 million for the four acquisitions completed since August 2017.
Alan Ritchey Materials (Southern Oklahoma-Northeast Texas). Alan Ritchey Materials is an aggregates bolt-on acquisition to Summit’s existing business in the northeast Texas market. This acquisition complements Summit’s existing footprint in the region and provides increased exposure to the fast-growing north Dallas market, Alan Ritchey’s primary shipping destination. Summit closed on its acquisition of Alan Ritchey in August 2017.
Georgia Stone Products/McLanahan (Northeast Georgia). Georgia Stone Products is an aggregates bolt-on acquisition comprising two quarries in northeast Georgia. This transaction represents an expansion westwards into Georgia from Summit’s existing position in the Carolinas. Summit closed on this acquisition over August/September 2017.
Columbia Silica (Columbia, South Carolina). Columbia Silica is an aggregates bolt-on acquisition in central South Carolina. This acquisition is a strong complementary fit with the recent Glasscock acquisition also in South Carolina (acquired May 2017) and brings additional scale to Summit’s growing footprint in the region. Summit closed on its acquisition of Columbia Silica in September 2017.
Stockman Quarry (Central Missouri). Stockman is an aggregates bolt-on acquisition to our existing position in central Missouri. This transaction brings new market expansion to Summit’s existing Missouri business. Summit closed on its acquisition of Stockman in October 2017.
Liquidity and Capital Resources
At September 30, 2017, the Company had cash on hand of $287.1 million and borrowing capacity under its revolving credit facility of $218.9 million. The borrowing capacity on the revolving credit facility is fully available to the Company within the terms and covenant requirements of its credit agreement. As of September 30, 2017, the Company had $1.8 billion in debt outstanding.
Financial Guidance and Outlook
Due mainly to the combined effects of Hurricane Harvey, which impacted the Houston market beginning in late August 2017, and Hurricane Irma, which impacted regions of Virginia and South Carolina beginning in early September 2017, the Company is lowering its full-year 2017 Adjusted EBITDA guidance from a range of $440 million to $455 million to a range of $425 million to $435 million. The downwardly revised Adjusted EBITDA outlook includes the partial-year impact of the four acquisitions completed since August 2017. No additional potential acquisitions are included within the Company’s full-year 2017 Adjusted EBITDA guidance.
The Company is raising its full-year 2017 capital spending guidance from a range of $140 million to $160 million, to a range of $180 million to $190 million. The upwardly revised capital spending guidance includes incremental investments related to discretionary organic growth investments, land/reserve acquisitions, together with acquisition-related maintenance expenditures.
Webcast and Conference Call Information
Summit Materials will conduct a conference call today at 11:00 a.m. Eastern time (9:00 a.m. Mountain time) to review the Company’s third quarter 2017 financial results. A webcast of the conference call and accompanying presentation materials will be available in the Investors section of Summit’s website at investors.summit-materials.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.
To participate in the live teleconference:
| Domestic Live: | 1-877-407-0784 | ||||
| International Live: | 1-201-689-8560 | ||||
| Conference ID: | 86972581 |
To listen to a replay of the teleconference, which will be available through November 30, 2017:
| Domestic Replay: | 1-844-512-2921 | ||
| International Replay: | 1-412-317-6671 | ||
| Conference ID: | 13670383 | ||
About Summit Materials
Summit Materials is a leading vertically integrated materials-based company that supplies aggregates, cement, ready-mix concrete and asphalt in the United States and British Columbia, Canada. Summit is a geographically diverse, materials-based business of scale that offers customers a single-source provider of construction materials and related downstream products in the public infrastructure, residential and nonresidential, and end markets. Summit has a strong track record of successful acquisitions since its founding and continues to pursue growth opportunities in new and existing markets. For more information about Summit Materials, please visit www.summit-materials.com.
Non-GAAP Financial Measures
The Securities and Exchange Commission (“SEC”) regulates the use of “non-GAAP financial measures,” such as Adjusted Net Income, Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow and Net Leverage which are derived on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We have provided these measures because, among other things, 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 Adjusted Net Income, Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Cash Gross Profit may vary from the use of such terms by others and should not be considered as alternatives to or more important than net income (loss), operating income (loss), revenue or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or to cash flows as measures of liquidity.
Adjusted EBITDA, Adjusted EBITDA margin 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 U.S. GAAP. Some of the limitations of Adjusted EBITDA are that these measures do not reflect: (i) our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, our working capital needs; (iii) interest expense or cash requirements necessary to service interest and principal payments on our debt; and (iv) income tax payments we are required to make. Because of these limitations, we rely primarily on our U.S. GAAP results and use Adjusted EBITDA, Adjusted EBITDA margin and other non-GAAP measures on a supplemental basis.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Gross Profit, Adjusted Net Income, Adjusted EPS and Free Cash Flow reflect additional ways of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to U.S. 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. We strongly encourage investors to review our consolidated financial statements in their entirety and not rely on any single financial measure. Reconciliations of the non-GAAP measures used in this press release are included in the attached tables. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.
Cautionary Statement Regarding Forward-Looking Statements
This report includes “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. All statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. 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 effect 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 realized. 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 Summit Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”), any factors discussed in the section entitled “Risk Factors” of this report and the following:
- our dependence on the construction industry and the strength of the local economies in which we operate;
- the cyclical nature of our business;
- risks related to weather and seasonality;
- risks associated with our capital-intensive business;
- competition within our local markets;
- our ability to execute on our acquisition strategy, successfully integrate acquisitions with our existing operations and retain key employees of acquired businesses;
- our dependence on securing and permitting aggregate reserves in strategically located areas;
- declines in public infrastructure construction and delays or reductions in governmental funding, including the funding by transportation authorities and other state agencies;
- environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use;
- conditions in the credit markets;
- our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us;
- material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications;
- cancellation of a significant number of contracts or our disqualification from bidding for new contracts;
- special hazards related to our operations that may cause personal injury or property damage not covered by insurance;
- our substantial current level of indebtedness;
- our dependence on senior management and other key personnel; and
- interruptions in our information technology systems and infrastructure.
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.
Any forward-looking statement that we make herein speaks only as of the date of this report. 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 required by law.
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | |||||||||||||||||
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Unaudited Consolidated Statements of Operations |
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($ in thousands, except share and per share amounts) |
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| Three months ended | Nine months ended | ||||||||||||||||
| September 30, | October 1, | September 30, | October 1, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Revenue: | |||||||||||||||||
| Product | $ | 465,556 | $ | 386,236 | $ | 1,088,299 | $ | 907,679 | |||||||||
| Service | 108,831 | 93,974 | 223,500 | 193,206 | |||||||||||||
| Net revenue | 574,387 | 480,210 | 1,311,799 | 1,100,885 | |||||||||||||
| Delivery and subcontract revenue | 59,794 | 49,227 | 130,752 | 102,205 | |||||||||||||
| Total revenue | 634,181 | 529,437 | 1,442,551 | 1,203,090 | |||||||||||||
| Cost of revenue (excluding items shown separately below): | |||||||||||||||||
| Product | 277,301 | 224,868 | 677,861 | 559,293 | |||||||||||||
| Service | 72,450 | 61,725 | 154,408 | 136,250 | |||||||||||||
| Net cost of revenue | 349,751 | 286,593 | 832,269 | 695,543 | |||||||||||||
| Delivery and subcontract cost | 59,794 | 49,227 | 130,752 | 102,205 | |||||||||||||
| Total cost of revenue | 409,545 | 335,820 | 963,021 | 797,748 | |||||||||||||
| General and administrative expenses | 59,175 | 64,096 | 175,729 | 184,956 | |||||||||||||
| Depreciation, depletion, amortization and accretion | 48,969 | 39,427 | 133,756 | 109,195 | |||||||||||||
| Transaction costs | 2,581 | 1,684 | 6,474 | 5,290 | |||||||||||||
| Operating income | 113,911 | 88,410 | 163,571 | 105,901 | |||||||||||||
| Interest expense | 28,921 | 25,273 | 79,876 | 72,467 | |||||||||||||
|
Loss on debt financings |
— | — | 190 | — | |||||||||||||
| Tax receivable agreement expense | 489,215 | — | 490,740 | — | |||||||||||||
| Other (income) expense, net | (2,716 | ) | 722 | (3,963 | ) | 1,270 | |||||||||||
| (Loss) income from operations before taxes | (401,509 | ) | 62,415 | (403,272 | ) | 32,164 | |||||||||||
| Income tax (benefit) expense | (483,584 | ) | 1,309 | (482,327 | ) | (7,913 | ) | ||||||||||
| Net income | 82,075 | 61,106 | 79,055 | 40,077 | |||||||||||||
| Net income (loss) attributable to noncontrolling interest in subsidiaries | 59 | 92 | (27 | ) | 57 | ||||||||||||
| Net income attributable to Summit Holdings (1) | 2,964 | 16,194 | 2,474 | 2,947 | |||||||||||||
| Net income attributable to Summit Inc. | $ | 79,052 | $ | 44,820 | $ | 76,608 | $ | 37,073 | |||||||||
| Income per share of Class A common stock: | |||||||||||||||||
| Basic | $ | 0.73 | $ | 0.60 | $ | 0.72 | $ | 0.59 | |||||||||
| Diluted | $ | 0.72 | $ | 0.60 | $ | 0.71 | $ | 0.40 | |||||||||
| Weighted average shares of Class A common stock: | |||||||||||||||||
| Basic | 108,024,055 | 74,433,487 | 106,698,076 | 62,686,433 | |||||||||||||
| Diluted | 109,303,412 | 74,579,797 | 107,327,624 | 101,479,150 | |||||||||||||
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_________________________ |
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| (1) | Represents portion of business owned by pre-IPO investors rather than by Summit. | |
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | |||||||||||
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Consolidated Balance Sheets |
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($ in thousands, except share and per share amounts) |
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| September 30, | December 31, | ||||||||||
| 2017 | 2016 | ||||||||||
| (unaudited) | (audited) | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 287,082 | $ | 143,392 | |||||||
| Accounts receivable, net | 295,491 | 162,377 | |||||||||
| Costs and estimated earnings in excess of billings | 39,316 | 7,450 | |||||||||
| Inventories | 181,784 | 157,679 | |||||||||
| Other current assets | 11,669 | 12,800 | |||||||||
| Total current assets | 815,342 | 483,698 | |||||||||
| Property, plant and equipment, less accumulated depreciation, depletion and amortization (September 30, 2017 - $592,086 and December 31, 2016 - $484,554) | 1,620,123 | 1,446,452 | |||||||||
| Goodwill | 1,012,771 | 782,212 | |||||||||
| Intangible assets, less accumulated amortization (September 30, 2017 - $6,376 and December 31, 2016 - $7,854) | 16,995 | 17,989 | |||||||||
|
Deferred tax assets, less valuation allowance (September 30, 2017 - $2,677 and December 31, 2016 - $502,839) |
477,493 | 4,326 | |||||||||
| Other assets | 50,068 | 46,789 | |||||||||
| Total assets | $ | 3,992,792 | $ | 2,781,466 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of debt | $ | 6,500 | $ | 6,500 | |||||||
| Current portion of acquisition-related liabilities | 25,153 | 24,162 | |||||||||
| Accounts payable | 134,925 | 81,565 | |||||||||
| Accrued expenses | 130,502 | 111,605 | |||||||||
| Billings in excess of costs and estimated earnings | 18,043 | 15,456 | |||||||||
| Total current liabilities | 315,123 | 239,288 | |||||||||
| Long-term debt | 1,807,064 | 1,514,456 | |||||||||
| Acquisition-related liabilities | 36,326 | 32,664 | |||||||||
| Tax receivable agreement liability | 548,885 | 58,145 | |||||||||
| Other noncurrent liabilities | 68,030 | 76,874 | |||||||||
| Total liabilities | 2,775,428 | 1,921,427 | |||||||||
| Stockholders’ equity: | |||||||||||
| Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 108,465,688 and 96,033,222 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 1,085 | 961 | |||||||||
| Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 100 shares issued and outstanding as of September 30, 2017 and December 31, 2016 | — | — | |||||||||
| Additional paid-in capital | 1,098,151 | 824,304 | |||||||||
| Accumulated earnings | 95,636 | 19,028 | |||||||||
| Accumulated other comprehensive income (loss) | 6,688 | (2,249 | ) | ||||||||
| Stockholders’ equity | 1,201,560 | 842,044 | |||||||||
| Noncontrolling interest in consolidated subsidiaries | 1,351 | 1,378 | |||||||||
| Noncontrolling interest in Summit Holdings | 14,453 | 16,617 | |||||||||
| Total stockholders’ equity | 1,217,364 | 860,039 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,992,792 | $ | 2,781,466 | |||||||
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||||
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Unaudited Consolidated Statements of Cash Flows |
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($ in thousands) |
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| Nine months ended | ||||||||||
| September 30, | October 1, | |||||||||
| 2017 | 2016 | |||||||||
| Cash flow from operating activities: | ||||||||||
| Net income | $ | 79,055 | $ | 40,077 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation, depletion, amortization and accretion | 140,634 | 118,026 | ||||||||
| Share-based compensation expense | 14,148 | 46,123 | ||||||||
| Deferred income tax benefit (expense) | 4,768 | (8,994 | ) | |||||||
| Net gain on asset disposals | (6,063 | ) | (5,844 | ) | ||||||
| Non-cash loss on debt financings | 85 | — | ||||||||
| Other | (855 | ) | (971 | ) | ||||||
| (Increase) decrease in operating assets, net of acquisitions: | ||||||||||
| Accounts receivable, net | (98,961 | ) | (81,234 | ) | ||||||
| Inventories | (12,835 | ) | (17,072 | ) | ||||||
| Costs and estimated earnings in excess of billings | (31,606 | ) | (34,349 | ) | ||||||
| Other current assets | 6,043 | (2,876 | ) | |||||||
| Deferred tax assets, net | (488,852 | ) | - | |||||||
| Other assets | (3,141 | ) | (217 | ) | ||||||
| Increase (decrease) in operating liabilities, net of acquisitions: | ||||||||||
| Accounts payable | 38,357 | 23,812 | ||||||||
| Accrued expenses | 3,854 | 8,948 | ||||||||
| Billings in excess of costs and estimated earnings | 2,386 | 2,138 | ||||||||
| Tax receivable agreement liability | 490,740 | - | ||||||||
| Other liabilities |
(5,324 |
) | (3,044 | ) | ||||||
| Net cash provided by operating activities |
132,433 |
84,523 | ||||||||
| Cash flow from investing activities: | ||||||||||
| Acquisitions, net of cash acquired |
(371,479 |
) | (331,463 | ) | ||||||
| Purchases of property, plant and equipment | (147,478 | ) | (121,945 | ) | ||||||
| Proceeds from the sale of property, plant and equipment | 13,290 | 16,222 | ||||||||
| Other | 182 | 1,500 | ||||||||
| Net cash used for investing activities |
(505,485 |
) | (435,686 | ) | ||||||
| Cash flow from financing activities: | ||||||||||
| Proceeds from equity offerings | 237,600 | — | ||||||||
| Capital issuance costs | (627 | ) | (136 | ) | ||||||
| Proceeds from debt issuances | 302,000 | 354,000 | ||||||||
| Debt issuance costs | (5,317 | ) | (5,675 | ) | ||||||
| Payments on debt | (12,887 | ) | (114,254 | ) | ||||||
| Payments on acquisition-related liabilities | (22,616 | ) | (28,920 | ) | ||||||
| Distributions from partnership | (109 | ) | (9,049 | ) | ||||||
| Other | 17,964 | 105 | ||||||||
| Net cash provided by financing activities | 516,008 | 196,071 | ||||||||
| Impact of foreign currency on cash | 734 | 330 | ||||||||
| Net increase (decrease) in cash | 143,690 | (154,762 | ) | |||||||
| Cash and cash equivalents—beginning of period | 143,392 | 186,405 | ||||||||
| Cash and cash equivalents—end of period | $ | 287,082 | $ | 31,643 | ||||||
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||||||||||||||
|
Unaudited Revenue Data by Segment and Line of Business |
||||||||||||||||||||
|
($ in thousands) |
||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | October 1, | September 30, | October 1, | |||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Segment Net Revenue: | ||||||||||||||||||||
| West | $ | 293,851 | $ | 235,667 | $ | 675,674 | $ | 558,488 | ||||||||||||
| East | 179,262 | 154,980 | 406,787 | 339,229 | ||||||||||||||||
| Cement | 101,274 | 89,563 | 229,338 | 203,168 | ||||||||||||||||
| Net Revenue | $ | 574,387 | $ | 480,210 | $ | 1,311,799 | $ | 1,100,885 | ||||||||||||
| Line of Business - Net Revenue: | ||||||||||||||||||||
| Materials | ||||||||||||||||||||
| Aggregates | $ | 90,594 | $ | 78,274 | $ | 236,437 | $ | 201,217 | ||||||||||||
| Cement (1) | 94,915 | 81,154 | 213,243 | 179,658 | ||||||||||||||||
| Products | 280,047 | 226,808 | 638,619 | 526,804 | ||||||||||||||||
| Total Materials and Products | 465,556 | 386,236 | 1,088,299 | 907,679 | ||||||||||||||||
| Services | 108,831 | 93,974 | 223,500 | 193,206 | ||||||||||||||||
| Net Revenue | $ | 574,387 | $ | 480,210 | $ | 1,311,799 | $ | 1,100,885 | ||||||||||||
| Line of Business - Net Cost of Revenue: | ||||||||||||||||||||
| Materials | ||||||||||||||||||||
| Aggregates | $ | 24,478 | $ | 22,166 | $ | 86,000 | $ | 77,444 | ||||||||||||
| Cement | 43,715 | 37,273 | 107,399 | 89,831 | ||||||||||||||||
| Products | 206,911 | 162,410 | 479,274 | 385,544 | ||||||||||||||||
| Total Materials and Products | 275,104 | 221,849 | 672,673 | 552,819 | ||||||||||||||||
| Services | 74,647 | 64,744 | 159,596 | 142,724 | ||||||||||||||||
| Net Cost of Revenue | $ | 349,751 | $ | 286,593 | $ | 832,269 | $ | 695,543 | ||||||||||||
| Line of Business - Adjusted Cash Gross Profit (2): | ||||||||||||||||||||
| Materials | ||||||||||||||||||||
| Aggregates | $ | 66,116 | $ | 56,108 | $ | 150,437 | $ | 123,773 | ||||||||||||
| Cement (3) | 51,200 | 43,881 | 105,844 | 89,827 | ||||||||||||||||
| Products | 73,136 | 64,398 | 159,345 | 141,260 | ||||||||||||||||
| Total Materials and Products | 190,452 | 164,387 | 415,626 | 354,860 | ||||||||||||||||
| Services | 34,184 | 29,230 | 63,904 | 50,482 | ||||||||||||||||
| Adjusted Cash Gross Profit | $ | 224,636 | $ | 193,617 | $ | 479,530 | $ | 405,342 | ||||||||||||
| Adjusted Cash Gross Profit Margin (2) | ||||||||||||||||||||
| Materials | ||||||||||||||||||||
| Aggregates | 73.0 | % | 71.7 | % | 63.6 | % |
61.5 |
% |
||||||||||||
| Cement (3) | 50.6 | % | 49.0 | % | 46.2 | % |
44.2 |
% |
||||||||||||
| Products | 26.1 | % | 28.4 | % | 25.0 | % |
26.8 |
% |
||||||||||||
| Services | 31.4 | % | 31.1 | % | 28.6 | % |
26.1 |
% |
||||||||||||
| Total Adjusted Cash Gross Profit Margin | 39.1 | % | 40.3 | % | 36.6 | % |
36.8 |
% |
||||||||||||
|
_________________________ |
||
| (1) | Net revenue for the cement line of business excludes revenue associated with hazardous and non-hazardous waste, which is processed into fuel and used in the cement plants and is included in services net revenue. Additionally, net revenue from cement swaps and other cement-related products are included in products net revenue. | |
| (2) |
Previously, we presented gross profit as a non-GAAP metric. We have renamed that metric adjusted cash gross profit to be more descriptive of the calculation. Adjusted cash gross profit is calculated as net revenue by line of business less net cost of revenue by line of business. Adjusted cash gross profit margin is defined as adjusted cash gross profit divided by net revenue. |
|
| (3) | The cement adjusted cash gross profit includes the earnings from the waste processing operations, cement swaps and other products. Cement line of business adjusted cash gross profit margin is defined as cement adjusted cash gross profit divided by cement segment net revenue. | |
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||||||||||||
|
Unaudited Volume and Price Statistics |
||||||||||||||||||
|
(Units in thousands) |
||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||
| Total Volume | September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | ||||||||||||||
| Aggregates (tons) | 11,998 | 10,658 | 31,247 | 27,302 | ||||||||||||||
| Cement (tons) | 850 | 757 | 1,925 | 1,699 | ||||||||||||||
| Ready-mix concrete (cubic yards) | 1,320 | 1,083 | 3,463 | 2,798 | ||||||||||||||
| Asphalt (tons) | 2,124 | 1,735 | 4,004 | 3,269 | ||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||
| Pricing | September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | ||||||||||||||
| Aggregates (per ton) | $ | 10.23 | $ | 10.19 | $ | 10.04 | $ | 9.91 | ||||||||||
| Cement (per ton) | 113.15 | 109.35 | 112.45 | 108.26 | ||||||||||||||
| Ready-mix concrete (per cubic yards) | 106.09 | 103.36 | 104.63 | 103.48 | ||||||||||||||
| Asphalt (per ton) | 54.37 | 53.91 | 54.55 | 55.63 | ||||||||||||||
| Year over Year Comparison | Volume | Pricing | Volume | Pricing | ||||||||||||||
| Aggregates (per ton) | 12.6 | % | 0.4 | % | 14.4 | % | 1.3 | % | ||||||||||
| Cement (per ton) | 12.3 | % | 3.5 | % | 13.3 | % | 3.9 | % | ||||||||||
| Ready-mix concrete (per cubic yards) | 21.9 | % | 2.6 | % | 23.8 | % | 1.1 | % | ||||||||||
| Asphalt (per ton) | 22.4 | % | 0.9 | % | 22.5 | % |
(1.9 |
)% |
||||||||||
| Year over Year Comparison (Excluding acquisitions) | Volume | Pricing | Volume | Pricing | ||||||||||||||
| Aggregates (per ton) | 2.6 | % |
(0.8 |
)% |
3.4 | % |
(0.2 |
)% |
||||||||||
| Cement (per ton) | 10.0 | % | 3.2 | % | 10.2 | % | 3.6 | % | ||||||||||
| Ready-mix concrete (per cubic yards) |
(3.1 |
)% |
0.2 | % |
(1.2 |
)% |
0.0 | % | ||||||||||
| Asphalt (per ton) | 11.9 | % | 0.8 | % | 12.1 | % |
(1.8 |
)% |
||||||||||
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||||||||||
|
Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of Business |
||||||||||||||||
|
($ and Units in thousands, except pricing information) |
||||||||||||||||
| Three months ended September 30, 2017 | ||||||||||||||||
| Gross Revenue | Intercompany | Net | ||||||||||||||
| Volumes | Pricing | by Product | Elimination/Delivery | Revenue | ||||||||||||
| Aggregates | 11,998 | $ | 10.23 | $ | 122,796 | $ | (32,202 | ) | $ | 90,594 | ||||||
| Cement | 850 | 113.15 | 96,223 | (1,308 | ) | 94,915 | ||||||||||
| Materials | $ | 219,019 | $ | (33,510 | ) | $ | 185,509 | |||||||||
| Ready-mix concrete | 1,320 | 106.09 | 140,049 | (115 | ) | 139,934 | ||||||||||
| Asphalt | 2,124 | 54.37 | 115,470 | (161 | ) | 115,309 | ||||||||||
| Other Products | 109,976 | (85,172 | ) | 24,804 | ||||||||||||
| Products | $ | 365,495 | $ | (85,448 | ) | $ | 280,047 | |||||||||
| Nine months ended September 30, 2017 | ||||||||||||||||
| Gross Revenue | Intercompany | Net | ||||||||||||||
| Volumes | Pricing | by Product | Elimination/Delivery | Revenue | ||||||||||||
| Aggregates | 31,247 | $ | 10.04 | $ | 313,686 | $ | (77,249 | ) | $ | 236,437 | ||||||
| Cement | 1,925 | 112.45 | 216,512 | (3,269 | ) | 213,243 | ||||||||||
| Materials | $ | 530,198 | $ | (80,518 | ) | $ | 449,680 | |||||||||
| Ready-mix concrete | 3,463 | 104.63 | 362,349 | (525 | ) | 361,824 | ||||||||||
| Asphalt | 4,004 | 54.55 | 218,403 | (346 | ) | 218,057 | ||||||||||
| Other Products | 262,958 | (204,220 | ) | 58,738 | ||||||||||||
| Products | $ | 843,710 | $ | (205,091 | ) | $ | 638,619 | |||||||||
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited
Reconciliations of Non-GAAP Financial Measures
($ in thousands,
except share and per share amounts)
The tables below reconcile our net income (loss) to Adjusted EBITDA by segment for the three and nine months ended September 30, 2017 and October 1, 2016 and the twelve months ended September 30, 2017 and October 1, 2016.
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | Three months ended September 30, 2017 | ||||||||||||||||||||
| by Segment | West | East | Cement | Corporate | Consolidated | ||||||||||||||||
| (in thousands) | |||||||||||||||||||||
| Net income (loss) | $ | 54,839 | $ | 37,617 | $ | 36,056 | $ | (46,437 | ) | $ | 82,075 | ||||||||||
| Interest expense (income) | 1,839 | 889 | (1,011 | ) | 27,204 | 28,921 | |||||||||||||||
| Income tax expense (benefit) | 889 | — | — | (484,473 | ) | (483,584 | ) | ||||||||||||||
| Depreciation, depletion and amortization | 18,697 | 17,416 | 11,751 | 619 | 48,483 | ||||||||||||||||
| EBITDA | $ | 76,264 | $ | 55,922 | $ | 46,796 | $ | (503,087 | ) | $ | (324,105 | ) | |||||||||
| Accretion | 210 | 212 | 64 | — | 486 | ||||||||||||||||
| Loss on debt financings | — | — | — | — | — | ||||||||||||||||
| Tax receivable agreement expense | — | — | — | 489,215 | 489,215 | ||||||||||||||||
| Transaction costs | 14 | — | — | 2,567 | 2,581 | ||||||||||||||||
| Non-cash compensation | — | — | — | 4,724 | 4,724 | ||||||||||||||||
| Other | 149 | 263 | — | (612 | ) | (200 | ) | ||||||||||||||
| Adjusted EBITDA | $ | 76,637 | $ | 56,397 | $ | 46,860 | $ | (7,193 | ) | $ | 172,701 | ||||||||||
| Adjusted EBITDA Margin (1) | 26.1 | % | 31.5 | % | 46.3 | % | 30.1 | % | |||||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | Three months ended October 1, 2016 | ||||||||||||||||||||
| by Segment | West | East | Cement | Corporate | Consolidated | ||||||||||||||||
| (in thousands) | |||||||||||||||||||||
| Net income (loss) | $ | 42,249 | $ | 34,657 | $ | 32,823 | $ | (48,623 | ) | $ | 61,106 | ||||||||||
| Interest expense (income) | 2,556 | 1,929 | (178 | ) | 20,966 | 25,273 | |||||||||||||||
| Income tax expense | 97 | — | — | 1,212 | 1,309 | ||||||||||||||||
| Depreciation, depletion and amortization | 16,301 | 14,572 | 7,610 | 572 | 39,055 | ||||||||||||||||
| EBITDA | $ | 61,203 | $ | 51,158 | $ | 40,255 | $ | (25,873 | ) | $ | 126,743 | ||||||||||
| Accretion | 191 | 172 | 9 | — | 372 | ||||||||||||||||
| IPO/ Legacy equity modification costs | — | — | — | 12,506 | 12,506 | ||||||||||||||||
| Transaction costs | 75 | 20 | — | 1,589 | 1,684 | ||||||||||||||||
| Non-cash compensation | — | — | — | 3,801 | 3,801 | ||||||||||||||||
| Other | 2,214 | 208 | — | (1,337 | ) | 1,085 | |||||||||||||||
| Adjusted EBITDA | $ | 63,683 | $ | 51,558 | $ | 40,264 | $ | (9,314 | ) | $ | 146,191 | ||||||||||
| Adjusted EBITDA Margin (1) | 27.0 | % | 33.3 | % | 45.0 | % | 30.4 | % | |||||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | Nine months ended September 30, 2017 | ||||||||||||||||||||
| by Segment | West | East | Cement | Corporate | Consolidated | ||||||||||||||||
| (in thousands) | |||||||||||||||||||||
| Net income (loss) | $ | 93,342 | $ | 46,124 | $ | 65,785 | $ | (126,196 | ) | $ | 79,055 | ||||||||||
| Interest expense (income) | 5,586 | 2,503 | (2,345 | ) | 74,132 | 79,876 | |||||||||||||||
| Income tax expense (benefit) | 1,424 | (21 | ) | — | (483,730 | ) | (482,327 | ) | |||||||||||||
| Depreciation, depletion and amortization | 51,389 | 49,343 | 29,702 | 1,940 | 132,374 | ||||||||||||||||
| EBITDA | $ | 151,741 | $ | 97,949 | $ | 93,142 | $ | (533,854 | ) | $ | (191,022 | ) | |||||||||
| Accretion | 600 | 596 | 186 | — | 1,382 | ||||||||||||||||
| Loss on debt financings | — | — | — | 190 | 190 | ||||||||||||||||
| Tax receivable agreement expense | — | — | — | 490,740 | 490,740 | ||||||||||||||||
| Transaction costs | 23 | — | — | 6,451 | 6,474 | ||||||||||||||||
| Non-cash compensation | — | — | — | 14,148 | 14,148 | ||||||||||||||||
| Other | 492 | 966 | — | (1,804 | ) | (346 | ) | ||||||||||||||
| Adjusted EBITDA | $ | 152,856 | $ | 99,511 | $ | 93,328 | $ | (24,129 | ) | $ | 321,566 | ||||||||||
| Adjusted EBITDA Margin (1) | 22.6 | % | 24.5 | % | 40.7 | % | 24.5 | % | |||||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | Nine months ended October 1, 2016 | ||||||||||||||||||||
| by Segment | West | East | Cement | Corporate | Consolidated | ||||||||||||||||
| (in thousands) | |||||||||||||||||||||
| Net income (loss) | $ | 67,705 | $ | 46,369 | $ | 53,395 | $ | (127,392 | ) | $ | 40,077 | ||||||||||
| Interest expense | 7,087 | 5,827 | 3,322 | 56,231 | 72,467 | ||||||||||||||||
| Income tax expense (benefit) | 175 | — | — | (8,088 | ) | (7,913 | ) | ||||||||||||||
| Depreciation, depletion and amortization | 48,044 | 36,984 | 21,116 | 1,849 | 107,993 | ||||||||||||||||
| EBITDA | $ | 123,011 | $ | 89,180 | $ | 77,833 | $ | (77,400 | ) | $ | 212,624 | ||||||||||
| Accretion | 670 | 501 | 31 | — | 1,202 | ||||||||||||||||
| IPO/ Legacy equity modification costs | — | — | — | 37,257 | 37,257 | ||||||||||||||||
| Transaction costs | 440 | 25 | — | 4,825 | 5,290 | ||||||||||||||||
| Non-cash compensation | — | — | — | 8,866 | 8,866 | ||||||||||||||||
| Other | 3,426 | 699 | 964 | (996 | ) | 4,093 | |||||||||||||||
| Adjusted EBITDA | $ | 127,547 | $ | 90,405 | $ | 78,828 | $ | (27,448 | ) | $ | 269,332 | ||||||||||
| Adjusted EBITDA Margin (1) | 22.8 | % | 26.7 | % | 38.8 | % | 24.5 | % | |||||||||||||
| Twelve months ended (2) | ||||||||||
| Reconciliation of Net Income to Adjusted EBITDA | September 30, 2017 | October 1, 2016 | ||||||||
| (in thousands) | ||||||||||
| Net income | $ | 85,104 | $ | 87,493 | ||||||
| Interest expense | 104,945 | 94,865 | ||||||||
| Income tax benefit | (479,713 | ) | (13,708 | ) | ||||||
| Depreciation, depletion and amortization | 172,117 | 140,625 | ||||||||
| EBITDA | $ | (117,547 | ) | $ | 309,275 | |||||
| Accretion | 1,744 | 1,475 | ||||||||
| IPO/ Legacy equity modification costs | — | 37,257 | ||||||||
| Loss on debt financings | 190 | 7,318 | ||||||||
| Tax receivable agreement expense | 505,678 | — | ||||||||
| Transaction costs | 7,981 | 6,765 | ||||||||
| Management fees and expenses | (1,379 | ) | — | |||||||
| Non-cash compensation | 17,965 | 10,176 | ||||||||
| (Gain) loss on disposal and impairment of assets | 3,805 | (16,561 | ) | |||||||
| Other | 5,144 | 3,956 | ||||||||
| Adjusted EBITDA | $ | 423,581 | $ | 359,661 | ||||||
| Adjusted EBITDA Margin (1) | 24.9 | % | 24.6 | % | ||||||
|
_________________________ |
||
| (1) | Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of net revenue. | |
| (2) | Information for the twelve months ended September 30, 2017 is calculated as the nine months ended September 30, 2017 plus the year ended December 31, 2016 less the nine months ended October 1, 2016. Information for the twelve months ended October 1, 2016 is calculated as the nine months ended October 1, 2016 plus the year ended January 2, 2016 less the nine months ended September 26, 2015. This presentation is not in accordance with U.S. GAAP. We believe this information is useful to investors as we use it to evaluate our financial performance for ongoing planning purposes, including a continuous assessment of our financial performance in comparison to budgets and internal projections. In addition, we use such trailing twelve month financial data to test compliance with covenants under our senior secured credit facilities. | |
The table below reconciles our net income per share attributable to Summit Materials, Inc. to adjusted diluted net income per share for the three and nine months ended September 30, 2017 and October 1, 2016. The per share amount of the net income attributable to Summit Materials, Inc. presented in the table is calculated using the total equity interests for the purpose of reconciling to adjusted diluted net income per share.
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||
| September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | ||||||||||||||||||||||||||
|
Reconciliation of Net Income Per Share to |
Net |
Per |
Net |
Per |
Net |
Per |
Net |
Per |
|||||||||||||||||||||
| Net income attributable to Summit Materials, Inc. | $ | 79,052 | $ | 0.70 | $ | 44,820 | $ | 0.44 | $ | 76,608 | $ | 0.69 | $ | 37,073 | $ | 0.37 | |||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | 2,964 | 0.03 | 16,194 | 0.16 | 2,474 | 0.02 | 2,947 | 0.03 | |||||||||||||||||||||
| IPO/ Legacy equity modification costs | — | — | 12,506 | 0.11 | — | — | 37,257 | 0.37 | |||||||||||||||||||||
| Loss on debt financings | — | — | — | — | 190 | — | — | — | |||||||||||||||||||||
| Adjusted diluted net income before tax related adjustments | 82,016 | 0.73 | 73,520 | 0.71 | 79,272 | 0.71 | 77,277 | 0.76 | |||||||||||||||||||||
| Tax receivable agreement expense | 489,215 | 4.37 | — | — | 490,740 | 4.41 | — | — | |||||||||||||||||||||
| Valuation allowance release | (513,191 | ) | (4.58 | ) | — | — | (513,191 | ) | (4.61 | ) | — | — | |||||||||||||||||
| Adjusted diluted net income | $ | 58,040 | $ | 0.52 | $ | 73,520 | $ | 0.71 | $ | 56,821 | $ | 0.51 | $ | 77,277 | $ | 0.76 | |||||||||||||
| Weighted-average shares: | |||||||||||||||||||||||||||||
| Class A common stock | 108,024,055 | 74,433,487 | 106,698,076 | 62,686,433 | |||||||||||||||||||||||||
| LP Units outstanding | 4,039,020 | 26,731,747 | 4,560,976 | 38,470,523 | |||||||||||||||||||||||||
| Total equity interest | 112,063,075 | 101,165,234 | 111,259,052 | 101,156,956 | |||||||||||||||||||||||||
The following table reconciles operating income to adjusted cash gross profit and adjusted cash gross profit margin for the three and nine months ended September 30, 2017 and October 1, 2016.
| Three months ended | Nine months ended | ||||||||||||||||
| September 30, | October 1, | September 30, | October 1, | ||||||||||||||
| Reconciliation of Operating Income to Adjusted Cash Gross Profit | 2017 | 2016 | 2017 | 2016 | |||||||||||||
| ($ in thousands) | |||||||||||||||||
| Operating income | $ | 113,911 | $ | 88,410 | $ | 163,571 | $ | 105,901 | |||||||||
| General and administrative expenses | 59,175 | 64,096 | 175,729 | 184,956 | |||||||||||||
| Depreciation, depletion, amortization and accretion | 48,969 | 39,427 | 133,756 | 109,195 | |||||||||||||
| Transaction costs | 2,581 | 1,684 | 6,474 | 5,290 | |||||||||||||
| Adjusted Cash Gross Profit (exclusive of items shown separately) | $ | 224,636 | $ | 193,617 | $ | 479,530 | $ | 405,342 | |||||||||
| Adjusted Cash Gross Profit Margin (exclusive of items shown separately) (1) | 39.1 | % | 40.3 | % | 36.6 | % | 36.8 | % | |||||||||
|
_________________________ |
||
| (1) | Adjusted cash gross profit margin is defined as adjusted cash gross profit as a percentage of net revenue. | |
The following table reconciles net cash used for operating activities to free cash flow for the three and nine months ended September 30, 2017 and October 1, 2016.
| Three months ended | Nine months ended | |||||||||||||||||
| September 30, | October 1, | September 30, | October 1, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Net income | $ | 82,075 | $ | 61,106 | $ | 79,055 | $ | 40,077 | ||||||||||
| Non-cash items | 55,395 | 55,899 | 152,717 | 148,340 | ||||||||||||||
| Net income adjusted for non-cash items | 137,470 | 117,005 | 231,772 | 188,417 | ||||||||||||||
| Change in working capital accounts |
(16,186 |
) | (5,982 | ) |
(99,339 |
) | (103,894 | ) | ||||||||||
| Net cash provided by operating activities |
121,284 |
111,023 |
132,433 |
84,523 | ||||||||||||||
| Capital expenditures, net of asset sales | (33,511 | ) | (23,496 | ) | (134,188 | ) | (105,723 | ) | ||||||||||
| Free cash flow | $ |
87,773 |
$ | 87,527 | $ |
(1,755 |
) | $ | (21,200 | ) | ||||||||
