Sources: Summit Materials Inc., Denver; CP staff
Summit Materials recently closed on Buildex Inc., Ottawa, Kan.-based proprietor of the Haydite brand of expanded shale lightweight aggregate. One of four businesses added during second quarter transactions totaling $75 million, Buildex spans two plants and 750,000 cubic yards’ capacity, and is strategic to sister cement, ready mixed, aggregate and asphalt operations in Great Plains and Intermountain states. Companion June-July deals brought Summit quarry and asphalt production assets in Olathe, Kan., plus Virginia and Texas aggregates producers Buckingham Slate and XIT.
“Our vertically integrated, multi-local strategy continues to gain momentum in regional markets, positioning Summit as an emerging leader in the North American heavy materials industry that remains on pace to achieve record full-year Adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] in 2018,” CEO Tom Hill tells investors in a report on second quarter and year-to-date activities.
Unfavorable spring weather effects and higher than projected operating costs, however, compel Summit to lower 2018 Adjusted EBITDA guidance by 7 percent—from a range of $495 million–$515 million to $460 million–$480 million. “The pace of cost inflation in raw materials, freight, labor and fuel exceeded our expectations in the first half of 2018,” Hill affirms. “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.”