Summit Materials Inc (SUM)

SUM new 52=week high

SUM new 52 week high

Sharp pull back but holding many gains still. Might add more here.

SUM chart

Agreed. This should further expand the Economy has the infrastructure improves and expands.

Summit has become a core holding--until the infrastructure spending is done over the next few years

Summit Materials Q2 2021 Earnings Preview

Aug. 03, 2021 By: Kaushik Sampat, SA News Editor

Summit Materials (NYSE:SUM) is scheduled to announce Q2 earnings results on Wednesday, August 4th, after market close.

The consensus EPS Estimate is $0.50 (flat Y/Y) and the consensus Revenue Estimate is $610.27M (+6.1% Y/Y).

Over the last 2 years, SUM has beaten EPS estimates 63% of the time and has beaten revenue estimates 88% of the time.

Over the last 3 months, EPS estimates have seen 3 upward revisions and 9 downward. Revenue estimates have seen 3 upward revisions and 4 downward.

SUM Chart

Summit Materials EPS beats by $0.14, beats on revenue

May 10, 2021

Summit Materials, Inc. (SUM)By: Jignesh Mehta, SA News Editor

Summit Materials (NYSE:SUM):

Q1 Non-GAAP EPS of -$0.33 beats by $0.14; GAAP EPS of -$0.20 beats by $0.28.

Revenue of $427.84M (+16.5% Y/Y) beats by $73.45M.

Such a boring stock up 100% over the past year.

Smiling here.

AGREED

SUM Chart... building higher bases. With an infrastructure bill, we should see $35

Holding strong here. Infrastructure is going to be be big here.

SUM is in breakout mode now, ben.

Agree with your outlook my friend.

SUM will do well next year. There will be an infrastructure bill and investors that have been riding on wave in technology stocks will start rotating to value stocks like SUM and taking profits in the high fliers.

JMO

I’m holding through next year as I see this performing well once you infrastructure Bill passes.

Summit Materials stumbles 12% post Q3 earnings

Oct. 28, 2020 By: Akanksha Bakshi, SA News Editor

Summit Materials (SUM -12.7%) reported Q3 revenue decline of 3.1% Y/Y to $709.62M, reflecting lower east segment and cement revenue relative to a year ago.

Organic sales volume of cement decreased 11.3% Y/Y in Q3 and organic average selling prices increased 0.5%.

Revenue by segments: West $351.51M (+6% Y/Y); East $208.86M (-11.3% Y/Y); and Cement $84.87M (-14.3% Y/Y).

Company’s operating margin percentage for the quarter decreased to 15.6% from 19.7%.

Q3 Adj. cash gross profit was $240.62M (-3.1% Y/Y) and margin was 37.3% down 10 bps.

Adj. EBITDA decreased 8.1%Y/Y to $177.7M; and margin declined by 150 bps to 27.5%.

Company had cash on hand of $288.8M and borrowing capacity under its $345M revolving credit facility of $329M, as of September 26, 2020.

Company expanded its previously announced FY20 capex guidance to $175M-$185M, including $50M-$60M for greenfield projects.

SUM Company Overview:

Summit Materials, Inc. (SUM) is a Denver-based construction materials company, providing its end users with 54.0 million tons of aggregates, 2.4 million tons of cement, 5.5 million cubic yards of ready-mix concrete, and 5.6 million tons of asphalt paving mix in its fiscal year (FY) ending December 28, 2019. These materials and products are produced across its more than 400 sites and plants in 22 states and British Columbia, which hold ~3.9 billion tons of proven and probable aggregate reserves. Summit was formed in 2009 and went public in 2015, raising net proceeds of $433.0 million at $18 per share. Its stock currently trades just above $19.00 with an approximate market cap of $2.25 billion.

Industry

Owing to transportation costs and physical constraints inherent in its products, the construction materials industry, for the most part, is highly fragmented and localized. There are ~1,465 companies operating ~3,710 aggregates quarries, ~5,500 ready-mix concrete plants, and ~3,500 asphalt paving mix plants in the U.S. The one exception is the small number of cement factories: ~91, of which Summit operates two. As such, with relatively undifferentiated products, companies compete primarily on price.

Business Approach:

With those industry parameters, it makes sense that Summit grows through acquisition – which it has, purchasing over 70 businesses since 2009. In addition to macroeconomic factors, the company considers its post-acquisition position in the local market as a litmus test for a potential takeout target. If the business under evaluation will immediately place Summit in the top three in the local market or improve an already established top three position, it is a candidate for purchase. Management believes a top three ranking provides economies of scale and synergies, which support competitive pricing, profitability, and organic growth. In addition to acquisitions, Summit develops greenfield and brownfield sites in its existing markets. These strategies have allowed the company to grow its top line from $400 million in 2009 to $2.2 billion in 2019, becoming a top 10 supplier of aggregates and a top 15 cement producer.

Source: Company Presentation

Reporting Segments

Summit conducts its business through three operating segments: West, East, and Cement.

The West segment serves markets in nine states – including Texas and Arkansas – and British Columbia. It controls ~1.1 billion tons of proven and probable aggregate reserves as well as $610.6 million of hard assets (property, plant & equipment), accounting for FY19 revenue of $1.12 billion, or 51% of its total; and 40% of the company’s operating income.

The East segment includes operations in nine states covering the midwest and eastern sections of the country, which contain ~2.3 billion tons of proven and probable aggregates reserves and hard assets of $729.0 million. This unit was responsible for FY19 revenue of $809.1 million, or 36% of total; and 37% of its overall operating income.

Cement has an operating footprint in seven states along the Mississippi River, with two large cement plants and nine distribution centers. Its locations along the Mississippi are at a strategic advantage, allowing them to transport ~63% of their cement by barge. This segment holds 0.5 billion tons of proven and probable aggregates reserves and $600.8 million of hard assets, while generating FY19 revenue of $290.7 million, or 13% of total; and 23% of its total operating income.

From an end-user perspective, public infrastructure represented 38% of FY19 revenue with private construction (both commercial and residential) accounting for the balance.

Source: Company Presentation

From a state-by-state perspective, Texas (22%), Kansas (13%), Utah (12%), and Missouri (10%) markets accounted for 57% of the company’s FY19 top line.

Recent Stock Performance

As such, Summit’s operational performance is dependent on its pricing power for its materials and products versus the input, freight, labor, and fuel costs, which are functions not only of the overall economy but also of the economies and public infrastructure projects in its biggest markets – and sometimes weather, politics, and pandemics.

Shares of SUM traded as high as $24.50 (intraday) in mid-February 2020 after the company posted a strong 4Q19 with the economy expected to hum along and hopes of an infrastructure bill passing to replace the Fast Act sometime before its expiration (September 30, 2020). Then coronavirus panic cratered its stock to $7.51 (intraday) in March as the market assumed that its construction end markets would shutter causing both a lack of demand and consequent pricing pressures on its products.

2Q20 Results:

However, that has yet to materialize. After posting an in-line 1Q20 with a revenue beat of 10.4% that featured organic average selling price growth of at least 2% in all four of its materials and product categories, Summit produced another excellent quarter in 2Q20. The company announced non-GAAP EPS of $0.50 on revenue of $575.2 million versus $0.31 on revenue of $552.6 million in 2Q19, representing 61% and 4% improvements while beating Street estimates by $0.26 a share and $28.1 million (5%), respectively. Adj. EBITDA in 2Q20 increased 14% to $160.2 million while organic average selling prices and organic sales volumes increased for three of its four materials and product categories. Gross margins rose across the board versus the prior-year period.

Source: Company Presentation

Summit was helped by good weather in Utah and Kansas and hurt by an April 2020 explosion at one of its two cement plants, which was responsible for most of the sales volume drop for that product. It was also aided by the fact that construction was considered an essential function during the COVID-19 outbreak, leaving its business activity relatively unaffected to date.

Source: Company Presentation

Summit elected not to provide any guidance for Adj. EBITDA going forward, only stating that capex would remain in a $145 million to $160 million range for FY20, of which greenfield projects would account for $50 million to $60 million of the spend. Predominantly all the non-greenfield spend occurred in July 2020 with the $92 million acquisition of Multisources Sand & Gravel, making Summit the leading aggregates supplier in the Houston market.
Balance Sheet & Analyst Commentary:

Despite all the uncertainty surrounding the U.S. economy, seasonally impacted Summit emerged from 2Q20 in the best financial shape of any 2Q in the company’s history, with its leverage ratio improving significantly to 3.5x versus 4.7x in 2019 while boasting ~$580 million of available liquidity, of which $253.4 million was cash. Available liquidity dropped to ~$490 million and leverage increased to 4.3x with the acquisition of Multisources.

The company then completed a successful refinancing of its $650 million 6.125% Senior Notes due 2023 with $700 million 5.25% Senior Notes due 2029 in August 2020. In addition to saving Summit more than $3 million in annual interest payments, the transactions pushed out its earliest major debt due date to November 2024, when ~$621 million of senior secured term loans come due. Overall, the company holds slightly over $2 billion in debt.

Owing to its growth-by-acquisition strategy, Summit does not pay a dividend or repurchase shares.

The Street is coming around on Summit, providing four upgrades since July 2020. Overall, there are nine buys and two outperforms versus three hold and one sell rating. Their median twelve-month price target is just north of $22 a share.

Concurrent to the company’s 2Q20 earnings release, it was announced that Founder, President and CEO Thomas Hill would be stepping down from his roles effective September 1, 2020, replaced by Anne Noonan. She wasted no time putting her personal capital to work, investing $1 million into shares of SUM at $15.24 on September 4th, 2020.
Verdict:

Curiously, shares of SUM initially traded lower after its 2Q20 earnings release on July 21st, from over $18 to below $15. With the residential housing market likely to see a spike from the mass exodus from Northern cities currently transpiring throughout the country and public infrastructure tailwinds in two of its major markets with Kansas passing a ten-year, $10 billion transportation bill and Utah authorizing a sales tax on gasoline and diesel that should generate $170 million annually for transportation infrastructure, the immediate future doesn’t look ominous. Passage of a federal infrastructure bill seems unlikely with the election less than 50 days away, but at some point, the entire construction materials group will get a bump when a compromise is reached.

The company won’t provide any financial outlook until its 3Q20 earnings report, but the new CEO may have tipped her hand on what she anticipates, and the market has followed her lead, rallying Summit’s stock more than 20% from her purchase price. There is still plenty of time to follow the insider in our opinion especially using a simple covered call strategy which is how I have been deploying 'dry powder' into the market throughout 2020.

Watch for more analyst coverage on SUM right after the election

SUM chart approaching a breakout

Couldn’t agree more. Honestly if they can print money to support stimulus why not for building the countries balance sheet (infrastructure)

At this point, I cannot see any way for this country to continue to ignore the need for infrastructure investment at a time when economic stimulus will be needed. Better to spend money by awarding contracts that get things done rather than giving away money during this pandemic.

JMO

Do you think an infrastructure bill will occur with either win in the election?

Agree--a long term view of two years will reward the investor with a 40% plus average annual return. Good in anyone's book

I’m a buyer or anything under $15. Mark my words next two years and this could be $30.

SUM Chart--4 Month

I feel they should invest as much in infrastructure as possible. It has to be done so this stock will benefit IMO.

I cannot see any way for the Government to NOT pass an infrastructure bill next year unless thee Fed's solution is to continue to give away money. When a real stimulus that includes real jobs is needed, the infrastructure will get investment.

And SUM will benefit

It would seem to me that this will happen by either candidate in 2021. What is your take?

SUM Chart

Time for an infrastructure bill to be passed.

I agree with the consensus here

Summit Materials (NYSE:SUM) Price Target and Consensus Rating

MarketBeat calculates consensus analyst ratings for stocks using the most recent rating from each Wall Street analyst that has rated a stock within the last twelve months. Each analyst's rating is normalized to a standardized rating score of 1 (sell), 2 (hold), 3 (buy) or 4 (strong buy). Analyst consensus ratings scores are calculated using the mean average of the number of normalized sell, hold, buy and strong buy ratings from Wall Street analysts. Each stock's consensus analyst rating is derived from its calculated consensus ratings score (0-1.5 = Sell, 1.5-2.5 = Hold, 2.5-3.5 = Buy, >3.5 = Strong Buy).

MarketBeat's consensus price targets are a mean average of the most recent available price targets set by each analyst that has set a price target for the stock in the last twelve months. MarketBeat's consensus ratings and consensus price targets may differ from those calculated by other firms due to differences in methodology and available data.

16 Wall Street analysts have issued ratings and price targets for Summit Materials in the last 12 months. Their average twelve-month price target is $18.96, suggesting that the stock has a possible upside of 19.35%. The high price target for SUM is $28.00 and the low price target for SUM is $12.50. There are currently 1 sell rating, 5 hold ratings and 10 buy ratings for the stock, resulting in a consensus rating of "Buy."

Great price points to add. Will recover fast on economic rebound and infrastructure bill through next year IMO.

SUM chart

They have to start on infrastructure soon or it’s going to get a lot worse.

An infrastructure bill should get passed by end of year, although the Democrats are pushing for the states to be bailed out. That cost may override an infrastructure spending bill.

jmo

I agree. When do you think this will happen?

SUM chart

SUM will benefit fromt he passage of a well funded infrastructure bill.

The White House held a high-level meeting Tuesday led by National Economic Council Director Larry Kudlow to chart potential paths forward, CNBC reports.

BofA downgraded Summit today. Shares currently have little Margin of Safety:

Valuation Analysis

SC..House passes amended road-funding, DOT reform bill
COLUMBIA — The House has passed and amended a Senate bill that would mean $4 billion for work on South Carolina's crumbling roads and bridges as well as a new system of governance for the state's highway agency....
http://www.greenvilleonline.com/story/news/politics/2016/05/24/house-gives-key-approval-road-funding-dot-reform-bill/84871172/

$SUM $22.24 “Implementing CXO-Cockpit..a game changer..#IT #infrastructure

Summit Materials Chooses CXO-Cockpit to Fully Leverage Their EPM Intelligence with Agile Performance Reporting

Leading aggregates based construction materials company creates a single point of entry for management reporting, by directly connecting to Enterprise Performance Management (EPM) systems.

DENVER, CO (PRWEB) MAY 26, 2016

CXO-Cockpit, global provider of integrated Strategic Performance Reporting solutions for leading Enterprise Performance Management (EPM) systems, is proud to announce our newest member of the CXO-Cockpit Customer Community.
Summit Materials, Inc., a leading vertically integrated construction materials company, has chosen CXO-Cockpit as their single point of entry for their management reporting, directly connecting to their Oracle Essbase and Oracle Hyperion Financial Management (HFM) Enterprise Performance Management (EPM) data to ensure speed with control: faster decision-making coupled with full end-to-end “single point of truth” governance of reporting processes.
“Implementing CXO-Cockpit at Summit Materials is a game changer for us in our ability to access information at all levels of our organization, from our individual operating companies to our senior executive team. CXO-Cockpit has given us the platform to leverage our IT infrastructure and systems, to have key information available at our finger tips, in an incredibly user friendly way.” Says Tony Keenan, Senior VP of Finance at Summit Materials Inc. “From the initial proof-of-concept through to execution, in less than two months we developed a great partnership and collaboration with all levels of the CXO-Cockpit organization. We are excited at the future possibilities and opportunities that CXO-Cockpit will bring us. Together we will continue to develop new reporting formats and leverage the capabilities of the CXO-Cockpit strategic reporting platform to its fullest.”
“We are proud to support Summit in achieving its ‘finance transformation’ goals,” says Hugo Ehrnreich, Group CEO of CXO-Cockpit. “Leveraging CXO-Cockpit’s concept of ‘agile reporting’ to help unleash the full power of its Oracle Hyperion investment and talented finance team.”
“It is a great pleasure to welcome Summit to the CXO Community in this exciting next stage of our US growth,” adds Wouter Born, CTO & CEO CXO-Cockpit USA Inc

http://www.prweb.com/releases/2016/05/prweb13442643.htm

$SUM $22.51...Key Statistics..http://finance.yahoo.com/q/ks?s=SUM+Key+Statistics

Profile Get Profile for:

Summit Materials, Inc..http://finance.yahoo.com/q/pr?s=SUM+Profile