Summit Materials felt the impact of its Argos USA merger in the first quarter, as companywide net revenue increased 89.9 percent to $773.2 million.
According to Summit, nearly half of its revenue ($378.5) derived from recent acquisitions, which more than offset a decrease of $21.7 million in net revenue related to divestitures. Organic prices increased across all business lines, the company says.
Summit took a first-quarter operating loss of $44.9 million. The company says $61.3 million in transaction and integration costs related to the Argos USA deal drove the operating loss increase.
Summit’s adjusted EBITDA, however, increased by 194.2 percent – to $121.2 million – as a result of the Argos USA integration, a strong contribution from new cement assets, and organic pricing growth across all business lines.
“I am delighted to report that our transformative combination with Argos USA is off to a strong start as we effectively, swiftly and safely move to integrate our two businesses,” says Anne Noonan, president and CEO of Summit. “This progress, together with a better-than-anticipated first quarter, improved synergy visibility, and a positive outlook allows us to increase the lower end of our full-year 2024 guidance range.
“Today’s updated outlook reflects our view that pricing momentum is healthy and persistent across our businesses, cost headwinds are decelerating, and demand conditions, in general, are accommodating of material margin expansion in 2024,” Noonan adds. “We expect this, combined with meaningful synergies, self-help operational improvements and a more profitable portfolio will catalyze superior value creation for Summit shareholders. Moreover, with our leverage well below target we have a balance sheet that complements a promising pipeline of accretive, aggregates-oriented acquisition targets, and the organization is well positioned to continue its financial and strategic progress in the year ahead.”
Summit’s performance in aggregates
Summit’s aggregate business made several gains in the first quarter.
According to Summit, its first-quarter net revenue in aggregates increased by $1.9 million to $145.5 million. Adjusted cash gross profit margin related to aggregates was 40.5 percent in the quarter versus 35 percent in the prior-year period.
Still, Summit’s first-quarter sales volume in aggregates decreased 7.3 percent. Organic aggregate sales volumes decreased 8.3 percent, reflecting poor weather in many markets and restrained residential activity, the company says.
The company’s average selling price for aggregates increased 10.8 percent, reflecting carryover pricing from 2023 and price increases that were implemented to start the year.
Pricing growth was strongest in the East, Summit says, but both its East and West segments achieved double-digit price increases versus the prior-year period.
