2q17 results overview investor presentation...2017/08/01 · 2q17 results overview investor...

2Q17 Results OverviewInvestor Presentation August 2, 2017

1

Legal Disclaimer

Forward-Looking Statements

This presentation 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 the macroeconomic outlook for our markets, potential acquisition

activity, 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 filed with the SEC on February 28, 2017. Such factors may be updated from

time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

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.

Non-GAAP Financial Measures

Included in this presentation are certain non-GAAP financial measures, such as Adjusted EBITDA, Further Adjusted EBITDA, Adjusted Net Income (Loss),

Adjusted Earnings Per Share, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Net Debt, Net Leverage and Free Cash Flow designed to

complement the financial information presented in accordance with U.S. GAAP because management believes such measures are useful to investors. These non-

GAAP financial measures should be considered only as supplemental to, and not superior to, financial measures provided in accordance with GAAP. Please refer

to the appendix of this presentation for a reconciliation of the historical non-GAAP financial measures included in this presentation to the most directly comparable

financial measures prepared in accordance with GAAP.

Reconciliations of the non-GAAP measures used in this presentation are included or described in the tables attached to the appendix. 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.

2

Conference Call Agenda

Introduction

Noel Ryan, IR

Business Update

Tom Hill, CEO

Financial Update

Brian Harris, CFO

Conclusion & Outlook

Tom Hill, CEO

Q&A

3

Business Update

Tom Hill, CEO

4

Executive Summary2Q17 Results | 2017 Outlook

Second Quarter 2017 | Results

(1) Adjusted Cash Gross Profit Margin defined as Adjusted Cash Gross Profit divided by Net Revenue

(2) Adjusted EBITDA margin defined as Adjusted EBITDA divided by Net Revenue

(3) Companies acquired since May 2017 include Ready Mix of Somerset, Great Southern Ready-Mix, Northwest Ready Mix and Glasscock Company

– Net Revenue +15.9% Y/Y; Operating Income +75.6% Y/Y; Net Income +142.2% Y/Y

Full-Year 2017 | Outlook

– Anticipate net leverage of 3.0x to 3.5x by year-end 2017, subject to pace of acquisitions

– Increasing FY17 acquired EBITDA guidance by $10 million to be in a range of $50 to $70 million

– Increasing FY17 Adj. EBITDA guidance by $10 million to a range of $440 to $455 million

– Adj. Cash Gross Profit +17.5% Y/Y Adj. Cash Gross Profit Margin +50 bps y/y to 39.3%(1)

– Adj. EBITDA +17.9% y/y to $135.2 million; Adj. EBITDA Margin +50 bps y/y to 28.3%(2)

– Organically generated Adj. EBITDA contributed 33% of the y/y overall Adj. EBITDA growth in 2Q17

– Completed four acquisitions for combined invested capital of $130 million(3)

– Strong organic volume growth across all LOB; organic aggregates ASP down y/y due to sales mix

– Reiterate FY17 Gross CAPEX guidance to be in a range of $140 to $160 million

– More than 20 potential transactions currently under review as of Aug. 2, 2017

5

Key Financial Metrics Y/Y Growth In Net Revenue, Operating and Net Income

Net Revenue ($MM)

Operating Income ($MM)

& Margin (%)(1)

Reported Net Income Attributable to Summit, Inc. ($MM)

$412.6 $478.4

$1,406.5 $1,605.0

2Q16 2Q17 LTM 2Q16 LTM 2Q17

Basic Earnings Per Share

(1) Operating Margin defined as Operating Income divided by Net Revenue

11.4%

17.2%

$13.4

$50.0

2Q16 2Q17

$0.21

$0.47

2Q16 2Q17

$46.9

$82.4

2Q16 2Q17

+274%

y/y+124%

y/y

6

Key Financial Metrics (Non-GAAP)Strong Cash Generation, Margin Expansion, Income Growth

Adjusted Cash Gross Profit ($MM)

& Margin (%)(1,2)

Adjusted Diluted Earnings Per Share(1,4)

Adjusted EBITDA ($MM)

& Margin (%)

(1) See appendix for reconciliation of these non-GAAP metrics to the most comparable GAAP metrics

(2) Adjusted Cash Gross Profit Margin defined as Adjusted Cash Gross Profit divided by Net Revenue

(3) Adjusted EBITDA margin defined as Adjusted EBITDA divided by Net Revenue

(4) Adjusted diluted share count includes all outstanding Class A common stock and LP Units

(1,3)

39.3%

$160.1 $188.2

$502.3 $597.4

2Q16 2Q17 LTM 2Q16 LTM 2Q17

38.8%

35.7%37.2%

$114.7 $135.2

$333.9 $397.1

2Q16 2Q17 LTM 2Q16 LTM 2Q17

27.8% 28.3%

23.7%24.7%

Adjusted Diluted Net Income ($MM)(1)

$46.2

$53.6

2Q16 2Q17

$0.45

$0.48

2Q16 2Q17

+16%

y/y +7%

y/y

7

Price and Volume AnalysisBroad-Based Y/Y Recovery In Organic Sales Volumes

Average Selling Price, Excluding Acquisitions

(y/y % change)

Average Selling Price, Including Acquisitions

(y/y % change)

Sales Volume, Excluding Acquisitions

(y/y % change)

Sales Volume, Including Acquisitions

(y/y % change)

Aggregates Cement

Aggregates Cement Ready-Mix

ConcreteAsphalt Aggregates Cement

Ready-Mix

Concrete Asphalt

2Q16 2Q17

Aggregates Cement

6.7%

-1.7%

3.0%

9.5%10.7%

-0.5%

2.9%

-9.7%

-5.4%

-19.2%

6.1% 7.1%9.2%

3.6%

10.9%

114.7%

9.4%1.1%

16.6%

8.3%

29.8%

15.3%

8

Cement Segment Remains A Key Growth EngineAdvantaged Northern Tier Market Footprint

85%

14%

Minnesota, Missouri, Iowa Other States

~80% of SUM’s Cement Volume Sold In MN, MO, IA

Northern Tier Market Concentration

Cement Segment Adjusted EBITDA & Margin

($MM)(2)

Positive Cement Demand Outlook In MN, MO, IA

Projected Growth In Cement Demand (Y/Y % Change)(1)

Apparent Cement End Use Analysis In MN, MO, IA

Demand (Tons) By Residential, Non-Residential & Public(1)

18%

34%

48%

Residential Demand Non-Residential Demand Public Demand

(1) Source: Portland Cement Association, July 2017

(2) See reconciliation of Adjusted EBITDA to Net Income in the appendix

52.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2017 E 2018 E 2019 E 2020 E 2021 E

Minnesota Missouri Iowa

$37.6

$43.8

2Q16 2Q17

47.2%

9

Anticipate Cement Imports To Increase As U.S. Approaches Full Capacity Utilization

Cement Imports Have Supplied An Average of 18% of U.S. Cement Demand Over The Last 20 Years(1)

(Cement Imports as % of U.S. Cement Demand)

0%

5%

10%

15%

20%

25%

30%

35%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Long-Term Average = 18%

(1) Source: Portland Cement Association; Company estimates

10

Adjusted Cash Gross Margin ScorecardLTM 2Q17 Margins Increased Across all Lines of Business

Aggregates Business

Adjusted Cash Gross Profit Margin (%)(1,2)

Cement Segment


Products Business


Services Business


63.3%

68.3%

60.5%

62.9%

2Q16 2Q17 LTM 2Q16 LTM 2Q17

52.2%57.4%

43.7% 46.0%

2Q16 2Q17 LTM 2Q16 LTM 2Q17

26.9%

25.6% 25.6%25.8%

2Q16 2Q17 LTM 2Q16 LTM 2Q17

26.5%

27.7%

26.3%

29.5%

2Q16 2Q17 LTM 2Q16 LTM 2Q17

(1) See reconciliations of Adjusted Cash Gross Profit Margin in the appendix

(2) Adjusted Cash Gross Profit Margin is defined as Adjusted Cash Gross Profit divided by Net Revenue. In this presentation of the data, Adjusted Cash Gross Profit is

calculated by line of business, less net cost of revenue by line of business

11

Texas Market POVStrong Public Markets, Accelerating Private Markets

Market Commentary Private Cycle Outlook

Public Market Outlook

(“Very Positive” as of August 2017)

Houston. Recovery in organic aggregates volumes, solid ASP

growth; expect a 2H:17 acceleration in residential

Austin. Strong organic aggregates volume growth; solid public

activity w/ acceleration in 2H:17; Central TX residential strong

NE TX, Midland-Odessa. Strong organic aggregates volume and

pricing; acute housing shortages in Permian Basin driving demand

TXDOT UTP plan anticipates $70 billion of highway spending

over the next 10 years

Proposition 1 and Proposition 7 increase state-level funding

from $10 billion in FY17 to nearly $13 billion in FY20.

$4 billion Grand Parkway 180 mile loop in Houston

$1.3 billion rebuilding of Loop 610/I-69

$1.2 billion Lower Bois d’Arc Creek Reservoir

Early

Cycle

Late

Cycle

Texas (25% of 2016 Revenue)

Early-Cycle Private Market

++

(1) Source: Midland Development Group

Private Market Outlook

(“Positive” as of August 2017)+

Houston. According to the Houston Association of Realtors (HAR),

home sales have increased 7.4% y/y thru May 2017.

Austin. In May 2017, single-family home sales volume increased

9.7% y/y in Austin.

Midland-Odessa. Number of new single-family building permits

issued through April 2017 is the highest total ever(1)

12

Houston MSA - Single-Family Housing Permit Growth

(Y/Y % Change – LTM May 2017 vs. LTM May 2016)(1)

Houston MSA - New Home Sales (Actual/Projected)(1)

Houston Residential Market Entering New Cycle

Anticipate Accelerating Demand in 2H:17

(1) JBREC Research (July 2017); used with permission

26,000

26,500

27,000

27,500

28,000

28,500

29,000

29,500

30,000

2014 2015 2016 2017 E 2018 E 2019 E

-6%

5%

LTM May 2016 LTM May 2017

13

Kansas Market POVStable Private Markets, Potential Upside in Public Markets



(“Neutral” as of August 2017)

Organic aggregates volume has been stable, while organic ASP

has grown in the low single-digits

Primary opportunity in Kansas remains “catch-up” spending on

underfunded state infrastructure programs

Recent reversal of KS Governor’s tax breaks could provide a

catalyst for the FY18 state budget (which begins July 1, 2017)

Increased State Funding. In June 2017, KS legislators voted to

raise $1.2 billion in revenue by raising personal income taxes

Key Upcoming Public Projects. Three large multi-year paving

projects on Route 400 provide strong backlog into 2017-2019

Early

Cycle

Late

Cycle

Kansas (14% of 2016 Revenue)


=Private Market Outlook

(“Positive” as of August 2017)+

Residential is seeing modest growth due to reduced regional home

inventories and improved demand

Multi-family is seeing improved demand vs. single family

Commercial activity remains strong, particularly in Wichita

14

Utah Market POVImproving Public Market, Strongest Private Market in U.S.



(“Positive” as of August 2017)

Positive demographic trends continue to fuel an expansionary

phase in Utah

Continued growth in organic aggregates volume and average

selling prices

Ready-mix demand and pricing is very strong, given shortage of

single family housing in and around Salt Lake City

$1 billion in highway general obligation bond to accelerate

funding for projects approved by Utah Transportation Commission

$650 million Utah State Correctional Facility in Salt Lake City –

multi-year opportunity reaching completion in 2020

$2.2 billion Salt Lake City airport expansion is underway and

anticipated to be completed by 2020.

Early

Cycle

Late

Cycle

Utah (12% of 2016 Revenue)


+Private Market Outlook

(“Very Positive” as of August 2017)++

Insufficient supply of homes given continued net migration into Utah

One of the lowest unemployment rates in the U.S.

Year over year residential starts in May increased +15% vs. 2016.

15

Salt Lake City Residential Demand AcceleratingSingle Family Housing Shortage A Multi-Year Issue

Salt Lake City Is Facing An Acute Housing Shortage

Estimated Months of Housing Supply Stands At 2.1 Months vs. the 10 Year Average of 4.8 Months(1)

Salt Lake City MSA - New Home Sales (Actual/Projected)(1)

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

May

-14

Jun-

14

Jul-1

4

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb

-15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-1

5

Aug

-15

Sep

-15

Oct

-15

Nov

-15

Dec

-15

Jan-

16

Feb

-16

Mar

-16

Apr

-16

May

-16

Jun-

16

Jul-1

6

Aug

-16

Sep

-16

Oct

-16

Nov

-16

Dec

-16

Jan-

17

Feb

-17

Mar

-17

Apr

-17

May

-17

Jun-

17

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2014 2015 2016 2017 E 2018 E 2019 E

(1) JBREC Research (July 2017); used with permission

16

Invested $130 million Across Four AcquisitionsTransactions Completed Since May 2017(1)

Geographic Markets

Asset Base

Line(s) of

Business(2)

End Markets(2)

Rationale

Materials

Products

100%

Private

Public

100%

Services

100%

(1) As of August 2, 2017

(2) Sourced from internal management research and estimates

100%

Great Southern Ready Mix

(Closed July 2017)

Glasscock Company

(Closed May 2017)

Houston, TX

Ready-Mix Concrete assets

Complementary expansion into

commercial Houston markets with

high quality ready-mix concrete

assets

100%

Central SC

Aggregates, Ready-Mix Concrete

and Distribution/Trucking assets

Complementary market expansion

into central SC South Carolina with

high quality aggregates, ready-mix

concrete and services assets

80%

20%

Ready Mix of Somerset

(Closed July 2017)

Central KY

Ready-Mix Concrete assets

Product line expansion; increased

exposure to private-side markets;

vertical integration with existing KY

assets

100%

90%

10%

100%

Northwest Ready Mix

(Closed July 2017)

40%

10%

50%

Northwest CO

Aggregates and Ready-Mix concrete

assets

Geographic expansion, adds

aggregates reserves in NW

Colorado

100%

25%

75%

17

Financial Update

Brian Harris, CFO

18

Net Revenue Bridge Generated Organic and Acquisition-Related Growth

Organic vs. Acquisition - Net Revenue by Reporting Segment

West Region, East Region and Cement Segment All Grew Organically Y/Y ($MM)

$412.6

$478.4

$10.5

$30.4 $1.6

$18.6

$3.8 $0.8

2Q16 West - Organic West - Acq East - Organic East - Acq Cement - Organic Cement - Acq 2Q17

19

Consistent Margin Expansion Since IPOAdjusted EBITDA Margin of 28.3% in 2Q17

Adjusted EBITDA Margin +450 bps Since 2Q15(1,2)

(Y/Y % Change)

(1) Adjusted EBITDA margin defined as Adjusted EBITDA divided by net revenue

(2) See reconciliation of Adjusted EBITDA to Net Income in the Appendix

23.8%

27.8%

28.3%

2Q15 2Q16 2Q17

20

Robust Incremental Margins Adjusted Cash Gross Profit Incremental Margins by LOB

Seeing Sustained Strength In Cement and Aggregates Incremental Margins (1)

(1) Incremental Adjusted Cash Gross Profit Margin defined as LTM y/y change in Adjusted Cash Gross Profit divided by the LTM y/y change in Net Revenue

53.1%

147.2%

47.9%

62.8%59.2%

100.4%

84.4%

75.9%

2Q16 2Q17 LTM 2Q16 LTM 2Q17

Cement Aggregates

21

Sustained Growth In Cash FlowsLTM Operating Cash Flow and FCF Grew Materially Y/Y

(1) Summit Materials defines Free Cash Flow, a non-GAAP measure, as net cash flow from operations less net capital expenditures

(2) See reconciliation of Free Cash Flow to Cash Flows From Operating Activities in the appendix

LTM Operating Cash Flow +85% Y/Y ($MM)

Net CAPEX

$136.6 million

Net CAPEX

$75.8

Net CAPEX

$62.8

LTM Free Cash Flow Increased More Than 300% Y/Y ($MM)(1,2)

$98.2

$151.9

$282.5

FY15

LTM 2Q16

LTM 2Q17

$22.4 $31.2

$127.4

FY15 LTM 2Q16 LTM 2Q17

+308%

y/y LTM

2Q17

22

Disciplined Management of Net LeverageEstimate Net Leverage of ~3.0x to 3.5x By Year-End 2017

Net Leverage Declined on a y/y Basis, Even After Investing $260 million Across 11 Acquisitions During TTM(1)

(1) Calculation uses “Further Adjusted EBITDA”, which includes full LTM benefit of all acquisitions in a given year

(2) Summit had full revolver availability of $218.9 million as of 7/1/17

Available Liquidity With Which To Pursue Further Growth Opportunities ($MM)(2)

4.0 x

4.4 x

3.9 x

4.5 x 4.5 x4.3 x

3.9 x3.7 x 3.7 x

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Cash Revolver Capacity

$157.4 $156.1

$395.9

$301.8

$203.6 $223.6

$352.8 $371.6

$572.0

23

2017 Financial GuidanceImproved Full-Year Outlook

Increasing Full-Year 2017 Adjusted EBITDA Guidance For Second Time This Year ($MM)(1)

Includes Partial Year Adj. Benefit from Great Southern, Glasscock and Ready-Mix Concrete Companies

Reiterate Full-Year 2017 Gross Capital Expenditure Guidance ($MM)(1)

(1) Full-year 2017 Adjusted EBITDA guidance excludes any contributions from any acquisitions that have not been announced and may be completed during 2017

$425 million to $445 million$430 million to $445 million

$410 million to $425 million



Current FY17 Guidance $140 million to $160 million

Old FY17 Guidance

New FY17 Guidance



24

Conclusion

Tom Hill, CEO

25

Well Positioned For A Strong 2H:17Organic Volume Growth, Margin Expansion

Summary & Conclusion

– Seeing continued recovery in organic volume growth, stable materials pricing

– Bullish on Texas, Utah and the Southeastern U.S. – early cycle markets with strong fundamentals

– Active acquisition pipeline – more than 20 transactions currently under review as of August 2, 2017

– Significant liquidity available to pursue a combination of organic and acquisition fueled growth

– Increased full-year 2017 Adjusted EBITDA guidance for the second time this year – positive outlook

– ~1/3 of y/y Adjusted EBITDA growth in 2Q17 was organic – acquiring and improving businesses

– Forecast a further reduction in net leverage by year-end, subject to pace of acquisitions

26

APPENDIX

EXHIBIT 1

Capital Structure Overview

27

(1) Revolver Capacity post-usage for (undrawn) Letters of Credit is $218.9 million as of 7/1/17

($ in Millions) 2Q16 3Q16 4Q16 1Q17 2Q17 Int. Rates Maturity

Cash $8.2 $14.2 $142.7 $156.1 $353.1 1.18% n/a

Debt:

Revolver1

$14.0 -- -- -- -- 4.58% Mar-2020

Senior Secured Term Loans $643.5 $641.9 $640.3 $638.6 $637.0 3.98% Jul-2022

Capital Leases and Other $41.4 $41.3 $39.3 $40.9 $38.4 3.50% Various

Senior Secured Debt $698.9 $683.1 $679.6 $679.6 $675.4 3.95%

Acq.-related Liab. $40.8 $43.6 $46.8 $43.8 $47.8 11.00% Various

5.125% Senior Notes -- -- -- -- $300.0 5.125% Jun-2025

8.5% Senior Notes $250.0 $250.0 $250.0 $250.0 $250.0 8.50% Apr-2022

6.125% Senior Notes $650.0 $650.0 $650.0 $650.0 $650.0 6.125% Jul-2023

Senior Unsecured Debt $940.8 $943.6 $946.8 $943.8 $1,247.8 6.55%

Total Debt $1,639.7 $1,626.8 $1,626.4 $1,623.4 $1,923.2 5.63%

Net Debt $1,631.6 $1,612.6 $1,483.7 $1,467.3 $1,570.1

LTM Further Adj. EBITDA $360.0 $379.1 $382.4 $398.0 $421.8

Net Senior Secured Leverage 1.9x 1.8x 1.4x 1.3x 0.8x

Total Net Leverage 4.5x 4.3x 3.9x 3.7x 3.7x

EXHIBIT 2

Reconciliation of Op. Income to Adj. Cash Gross Profit

28(1) Adjusted Cash Gross Profit Margin defined as Adjusted Cash Gross Profit divided by Net Revenue

Reconciliation of Operating Income to Adjusted Cash Gross Profit

($ in thousands)

Operating Income $ 82,444 $ 46,948 $ 49,660 $ 17,491

General and administrative expenses 58,086 75,490 116,554 120,860

Depreciation, depletion, amortization and accretion 45,039 37,408 84,787 69,768

Transaction costs 2,620 290 3,893 3,606

Adjusted Cash Gross Profit (exclusive of items shown separately) $ 188,189 $ 160,136 $ 254,894 $ 211,725

Adjusted Cash Gross Profit Margin (exclusive of items shown separately) (1) 39.3 % 38.8 % 34.6 % 34.1 %

Six months endedThree months ended

2017 201620172016

July 2,July 1,July 2,July 1,

29

EXHIBIT 3

Reconciliation of Gross Revenue to Net Revenue by LOB

Volumes

Aggregates 11,286 $ 9.97 $ 112,520 $ (28,299) $ 84,221

Cement 714 112.09 79,985 (1,092) 78,893

Materials $ 192,505 $ (29,391) $ 163,114

Ready-mix concrete 1,237 104.23 128,942 (229) 128,713

Asphalt 1,517 54.94 83,371 (124) 83,247

Other Products 95,419 (72,767) 22,652

Products $ 307,732 $ (73,120) $ 234,612

Three months ended July 1, 2017

Gross Revenue Intercompany Net

Pricing by Product Elimination/Delivery Revenue

Volumes

Aggregates 19,249 $ 9.92 $ 190,890 $ (45,047) $ 145,843

Cement 1,075 111.89 120,289 (1,961) 118,328

Materials $ 311,179 $ (47,008) $ 264,171

Ready-mix concrete 2,143 103.73 222,300 (410) 221,890

Asphalt 1,880 54.76 102,933 (185) 102,748

Other Products 152,982 (119,048) 33,934

Products $ 478,215 $ (119,643) $ 358,572

Six months ended July 1, 2017

Gross Revenue Intercompany Net

Pricing by Product Elimination/Delivery Revenue

EXHIBIT 4

Reconciliation of Net Income to Further Adjusted EBITDA

30

(1) Last twelve month (“LTM”) information corresponding to fiscal years (i.e., the periods ended December 31, 2016, January 2, 2016, December 27, 2014 and December 28, 2013) reflects our audited historical results for such fiscal years presented in accordance with U.S. GAAP. Information presented for other LTM periods (i.e., July 1, 2017, April 1, 2017, October 1, 2016, July 2, 2016 and April 2, 2016) reflect unaudited trailing four quarter financial information calculated by starting with the results from the most recent audited fiscal year included in such LTM period and then (x) adding quarterly information for subsequent fiscal quarters and (y) subtracting quarterly information for the corresponding prior year period. For example, LTM July 1, 2017 has been calculated by starting with data for the fiscal year ended December 31, 2016 and then adding data for the six months ended July 1, 2017 and subtracting the data for the six months ended July 2, 2016. This presentation is not in accordance with U.S. GAAP. However, 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. We also use such LTM financial data to test compliance with covenants under our senior secured credit facilities. This presentation has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Please see our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for the relevant periods for the historical amounts used to calculate the LTM information presented.

(2) EBITDA for certain completed acquisitions is pro forma for all acquisitions completed as of the date listed(3) Further Adjusted EBITDA is calculated using trailing four quarter financial data to test compliance with covenants under our senior secured credit facilities(4) Adjusted EBITDA margin defined as Adjusted EBITDA as a percentage of net revenue

($ in millions) July 1, July 2, June 27, July 1, July 2, July 1, April 1, December 31, October 1, July 2, April 2, January 2, December 27, December 28,

2017 2016 2015 2017 2016 2017 2017 2016 2016 2016 2016 2016 2014 2013

Net income (loss) 52$ 22$ -$ (3)$ (21)$ 64$ 34$ 46$ 87$ 60$ 39$ 1$ (6)$ (104)$

Interest expense 26 26 17 51 47 101 101 98 95 90 82 85 87 56

Income tax expense (benefit) 3 (1) (5) 1 (9) 5 1 (5) (14) (18) (22) (18) (7) (3)

Depreciation, depletion, amortization, and accretion expense 45 37 27 85 70 164 157 149 142 136 126 120 88 73

IPO/ Legacy equity modification costs - 25 - - 25 13 37 37 37 25 - 28 - -

Loss on debt financings - - 31 - - - - - 7 40 71 72 - 3

Goodwill impairment - - - - - - - - - - - - - 68

Tax receivable agreement expense 2 - - 2 - 17 15 15 - - - - - -

Acquisition transaction expenses 3 - 6 4 4 7 5 7 7 5 11 10 9 4

Management fees and expenses - - - - - (1) (1) (1) - - - 1 5 3

Non-cash compensation 5 3 2 9 5 17 15 13 10 8 7 5 2 2

Other (1) 3 - - 2 10 13 12 (11) (12) (17) (16) 11 28

Adjusted EBITDA 135$ 115$ 78$ 149$ 123$ 397$ 377$ 371$ 360$ 334$ 297$ 288$ 189$ 130$

EBITDA for certain completed acquisitions (2) 25 21 11 19 26 43 20 23 (2)

Further Adjusted EBITDA (3) 422$ 398$ 382$ 379$ 360$ 340$ 308$ 212$ 128$

Net Revenue 478$ 413$ 329$ 737$ 621$ 1,605$ 1,539$ 1,488$ 1,460$ 1,406$ 1,323$ 1,290$ 1,071$ 824$

Adjusted EBITDA Margin (4) 28.3% 27.8% 23.8% 20.2% 19.8% 24.7% 24.5% 25.0% 24.6% 23.7% 22.5% 22.3% 17.7% 15.8%

Six months ended Last Twelve Months Ended (1)Three months ended

EXHIBIT 5

Non-GAAP Reconciliation of Long-Term Debt to Net Debt

31

Reconciliation of Long-term Debt to Net Debt IPO

($ in millions) Q4'14 3/11/15 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17

Long-term debt, including current portion 1,041$ 773$ 1,040$ 817$ 1,214$ 1,297$ 1,545$ 1,558$ 1,542$ 1,540$ 1,539$ 1,837$

Acquisition related liabilities 61 59 59 54 51 49 41 41 44 47 44 48

Capital leases and other 31 35 35 50 47 44 44 41 41 39 41 38

Less: Cash and cash equivalents (13) (5) (315) (13) (5) (185) (91) (8) (14) (143) (156) (353)

Net debt 1,120$ 862$ 819$ 908$ 1,307$ 1,205$ 1,539$ 1,632$ 1,613$ 1,483$ 1,468$ 1,570$

Net cash used in operating activities $ 282,512 $ 151,927 $ 44,894

Capital expenditures, net of asset sales (155,065) (120,727) (56,861)

Free cash flow $ 127,447 $ 31,200 $ (11,967)

July 1, July 2,

2017 2016

Twelve months ended

June 27,

2015

EXHIBIT 6

Non-GAAP Reconciliation of Net Income to Adj. EBITDA

32

Reconciliation of Net Income (Loss) to Adjusted EBITDA

by Segment

(in thousands)

Net income (loss) $ 40,529 $ 20,600 $ 34,442 $ (43,483) $ 52,088

Interest expense (income) 1,843 929 (684) 23,898 25,986

Income tax expense (benefit) 533 (21) — 2,923 3,435

Depreciation, depletion and amortization 17,224 16,740 9,961 662 44,587

EBITDA $ 60,129 $ 38,248 $ 43,719 $ (16,000) $ 126,096

Accretion 195 193 64 — 452

Loss on debt financings — — — — —

Tax receivable agreement expense — — — 1,525 1,525

Transaction costs (28) — — 2,648 2,620

Non-cash compensation — — — 4,676 4,676

Other 224 325 — (683) (134)

Adjusted EBITDA $ 60,520 $ 38,766 $ 43,783 $ (7,834) $ 135,235

Adjusted EBITDA Margin (1) 24.2% 26.9% 52.0% 28.3%


West East Cement Corporate Consolidated

Reconciliation of Net Income (Loss) to Adjusted EBITDA

by Segment

(in thousands)

Net income (loss) $ 30,018 $ 21,150 $ 28,034 $ (57,697) $ 21,505

Interest expense 2,545 2,008 326 20,738 25,617

Income tax expense (benefit) 139 — — (1,195) (1,056)

Depreciation, depletion and amortization 15,994 12,140 8,261 643 37,038

EBITDA $ 48,696 $ 35,298 $ 36,621 $ (37,511) $ 83,104

Accretion 192 170 8 — 370

IPO/ Legacy equity modification costs — — — 24,751 24,751

Transaction costs 216 5 — 69 290

Non-cash compensation — — — 3,029 3,029

Other 1,481 201 964 542 3,188

Adjusted EBITDA $ 50,585 $ 35,674 $ 37,593 $ (9,120) $ 114,732

Adjusted EBITDA Margin (1) 24.2% 28.8% 47.2% 27.8%


West East Cement Corporate Consolidated

(1) Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of net revenue

EXHIBIT 7

Non-GAAP Reconciliation of Net Income to Adj. Net Income

33

Reconciliation of Net Income (Loss) Per Share to Adjusted Diluted EPS

(In thousands, except share and per share amounts)

Net income (loss) attributable to Summit Materials, Inc. $ 50,000 $ 0.45 $ 13,371 $ 0.13 $ (2,444) $ (0.02) $ (7,747) $ (0.08)

Adjustments:

Net income (loss) attributable to noncontrolling interest 2,076 0.02 8,090 0.08 (490) — (13,247) (0.13)

IPO/ Legacy equity modification costs — — 24,751 0.24 — — 24,751 0.24

Tax receivable agreement expense 1,525 0.01 — — 1,525 0.01 — —

Loss on debt financings — — — — 190 — — —

Adjusted diluted net income (loss) $ 53,601 $ 0.48 $ 46,212 $ 0.45 $ (1,219) $ (0.01) $ 3,757 $ 0.04

Weighted-average shares:

Class A common stock 106,898,512 62,743,149 106,035,087 56,812,906

LP Units outstanding 4,574,104 38,418,331 4,821,955 44,339,911

Total equity interest 111,472,616 101,161,480 110,857,042 101,152,817

Six months ended

July 1, 2017 July 2, 2016

Three months ended

July 1, 2017 July 2, 2016

Per ShareNet Income Per Share Net IncomeNet Income Per Share Net Income Per Share

EXHIBIT 8

Non-GAAP Reconciliation of Adj. Cash Gross Profit by LOB

34

(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) Adjusted cash gross profit 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 defined as cement adjusted

cash gross profit divided by cement segment net revenue.

($ in thousands) July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016

Segment Net Revenue:

West 249,849$ 208,974$ 381,823$ 322,821$ 795,575$ 739,287$

East 144,290 124,045 227,525 184,249 513,890 406,302

Cement 84,229 79,617 128,064 113,605 295,546 260,904

Net Revenue 478,368$ 412,636$ 737,412$ 620,675$ 1,605,011$ 1,406,493$

Line of Business - Net Revenue:

Materials

Aggregates 84,221$ 73,035$ 145,843$ 122,943$ 287,509$ 242,509$

Cement (1) 78,893 69,968 118,328 98,504 270,173 227,527

Products 234,612 198,338 358,572 299,996 766,626 685,060

Total Materials and Products 397,726 341,341 622,743 521,443 1,324,308 1,155,096

Services 80,642 71,295 114,669 99,232 280,703 251,397

Net Revenue 478,368$ 412,636$ 737,412$ 620,675$ 1,605,011$ 1,406,493$

Line of Business - Net Cost of Revenue:

Materials

Aggregates 26,740$ 26,787$ 61,522$ 55,278$ 106,724$ 95,897$

Cement 30,511 28,375 63,684 52,558 134,290 113,408

Products 174,622 144,951 272,363 223,134 568,668 509,670

Total Materials and Products 231,873 200,113 397,569 330,970 809,682 718,975

Services 58,306 52,387 84,949 77,980 197,889 185,249

Net Cost of Revenue 290,179$ 252,500$ 482,518$ 408,950$ 1,007,571$ 904,224$

Line of Business - Adjusted Cash Gross Profit (2):

Materials

Aggregates 57,481$ 46,248$ 84,321$ 67,665$ 180,785$ 146,612$

Cement (3) 48,382 41,593 54,644 45,946 135,883 114,119

Products 59,990 53,387 86,209 76,862 197,958 175,390

Services 22,336 18,908 29,720 21,252 82,814 66,148

Adjusted Cash Gross Profit 188,189$ 160,136$ 254,894$ 211,725$ 597,440$ 502,269$

Adjusted Cash Gross Profit Margin (2)

Materials

Aggregates 68.3% 63.3% 57.8% 55.0% 62.9% 60.5%

Cement (3) 57.4% 52.2% 42.7% 40.4% 46.0% 43.7%

Products 25.6% 26.9% 24.0% 25.6% 25.8% 25.6%

Services 27.7% 26.5% 25.9% 21.4% 29.5% 26.3%

Total Adjusted Cash Gross Profit Margin 39.3% 38.8% 34.6% 34.1% 37.2% 35.7%

Three months ended Twelve months endedSix months ended

EXHIBIT 9

Non-GAAP Reconciliation of Incremental Margins

35

July 1, July 2, June 27, Y/Y Change Y/Y Change July 1, July 2, June 27, Y/Y Change Y/Y Change

($ in thousands) 2017 2016 2015 QTD 2Q17 QTD 2Q16 2017 2016 2015 LTM 2Q17 LTM 2Q16

Adjusted Cash Gross Profit (1)

Aggregates 57,481$ 46,248$ 38,051$ 11,233$ 8,197$ 180,785$ 146,612$ 107,901$ 34,173$ 38,711$

Cement 48,382 41,593 17,591 6,789 24,002 135,883 114,119 43,303 21,764 70,816

Net Revenue

Aggregates 84,221 73,035 59,188 11,186 13,847 287,509 242,509 196,627 45,000 45,882

Cement Segment 84,229 79,617 34,408 4,612 45,209 295,546 260,904 113,184 34,642 147,720

Incremental Margins

Aggregates 100.4% 59.2% 75.9% 84.4%

Cement 147.2% 53.1% 62.8% 47.9%

Three Months Ended Variance Last Twelve Months Variance

(1) Adjusted cash gross profit calculated as net revenue by line of business less net cost of revenue by line of business.

2q17 results overview investor presentation...2017/08/01 · 2q17 results overview investor...

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