Summit materials, inc. reports third quarter 2022 results
Denver--(business wire)--summit materials, inc. (nyse: sum) (“summit,” “summit materials,” "summit inc." or the “company”), a leading vertically integrated construction materials company, today announced results for the third quarter ended october 1, 2022 (“third quarter”). all comparisons are versus the quarter ended october 2, 2021 unless noted otherwise. three months ended ($ in thousands) october 1, 2022 october 2, 2021 % chg vs. py net revenue $ 686,009 $ 662,259 3.6 % operating income 127,062 125,017 1.6 % net income 87,651 75,378 16.3 % basic eps $ 0.73 $ 0.63 15.9 % adjusted cash gross profit 217,811 230,304 (5.4 )% adjusted ebitda 184,888 190,284 (2.8 )% "today, we are pleased to report that summit materials delivered record organic pricing growth across aggregates, cement, and ready-mix while achieving the lowest net leverage in company history and the highest roic since we launched elevate summit," commented anne noonan, summit materials president and ceo. "these solid financial results in the face of market crosscurrents is thanks to continued execution of our elevate strategy and the commitment of our team to meet the opportunities of a dynamic marketplace. we are positioned to achieve strong pricing growth in 2022 driven, in large part, by double digit growth across all lines of business in the third quarter and catalyzed by accelerating aggregates and cement pricing. we continue to view the pricing environment as favorable and we expect to see substantial exit velocity heading into 2023. "on portfolio optimization, recent transactions are evidence that summit, equipped with the strongest balance sheet in company history, is well positioned to play offense as we intentionally shift towards a more materials-led portfolio. finally, our 2022 adjusted ebitda guidance has been adjusted to reflect 2022 performance to date, the additional divestiture we made in the third quarter, and the projected fourth quarter impacts from hurricane ian and low mississippi river levels. the mid-point of the revised guide now represents mid-single-digit adjusted ebitda growth on a pro forma basis, which we feel represents very strong performance especially in light of a challenging macroeconomic backdrop." brian harris, cfo of summit materials, added, "our strong balance sheet and liquidity position affords us the unique opportunity to concurrently pursue multiple capital allocation priorities. we continue to make capital investments to sustain and drive organic growth while, at the same time, opportunistically buying back our own common stock when shares represent compelling value. and, more recently, we have taken steps to strengthen the portfolio via value creative m&a. with the acquisition of sci materials in october, we enter into the high-growth florida market, expand the summit footprint, and become more materials-led by adding an aggregates-based business to the portfolio. these moves are proof that we have a focused and intentional capital allocation approach and that we will use our financial flexibility and firepower to pursue the highest return opportunities for our shareholders." in the three months ended october 1, 2022, summit materials sold one business in the east segment, resulting in cash proceeds of $32.0 million and a total gain on disposition of $4.1 million. to date, as part of its elevate summit strategy, the company has received $502.1 million in proceeds from a total of eleven divestitures. on october 14, 2022, summit completed the acquisition of sci materials, an aggregates-based business in the high-growth florida market. sci materials is being integrated with summit’s georgia stone products business and will contribute to its east segment. 2022 guidance for the full year 2022, summit is revising its adjusted ebitda guidance to reflect performance over the first nine months of 2022, the divestiture of an asphalt and paving business in the east segment, as well as impacts from hurricane ian and low mississippi river levels that will impact the company's fourth quarter. the company now expects adjusted ebitda of approximately $490 million to $510 million, a revision from $500 million to $530 million previously. the company now expects 2022 capital expenditures of approximately $240 million to $260 million, a revision from $270 million to $290 million previously. third quarter 2022 | total company results net revenue increased $23.8 million, or 3.6% in the third quarter to $686.0 million, due to increases in average sales prices across all lines of business that more than offset the impact of divestitures. operating income increased $2.0 million, or 1.6% in the third quarter to $127.1 million, as net revenue gains combined with lower general & administrative expenses and decreases in depletion, amortization and accretion expenses more than offset increases in cost of revenue. summit's operating margin percentage for the three months ended october 1, 2022 decreased to 18.5% from 18.9%, from the comparable period a year ago. net income attributable to summit inc. increased to $86.5 million, or $0.73 per basic share, compared to $74.2 million, or $0.63 per basic share in the comparable prior year period. summit reported adjusted diluted net income of $84.2 million, or $0.71 per adjusted diluted share as compared to $81.5 million, or $0.68 per adjusted diluted share in the prior year period. adjusted ebitda decreased $5.4 million, or 2.8% to $184.9 million reflecting the impact of divestitures and inflationary cost of revenue conditions that more than offset net revenue growth and lower general and administrative expenses relative to the prior year. excluding the impacts of acquisitions and divestitures, adjusted ebitda would have grown in the third quarter. third quarter 2022 | results by line of business aggregates business: aggregates net revenues increased by $3.2 million to $163.5 million in the third quarter. aggregates adjusted cash gross profit margin decreased to 53.3% in the third quarter as compared to 60.3% in the third quarter 2021. aggregates sales volume decreased 9.0% in the third quarter due primarily to divestitures in the east segment. organic aggregates sales volumes declined 3.5% driven by a combination of unfavorable weather conditions and supply chain related disruptions. average selling prices for aggregates increased 10.2% in the third quarter with solid growth across both reporting segments. cement business: cement segment net revenues increased 29.6% to $119.9 million in the third quarter. cement segment adjusted cash gross profit margin decreased to 42.5% in the third quarter, compared to 47.4% in the prior year period as strong pricing gains were more than offset by higher variable costs and a greater proportion of sales from imports. sales volume of cement increased 12.4% reflecting a healthy demand environment. average selling prices increased 12.8% in the third quarter driven by compounding pricing actions taken in 2022 and a focus on value pricing. products business: products net revenues were $311.1 million in the third quarter, compared to $314.0 million in the prior year period. products adjusted cash gross profit margin decreased to 19.5% in the third quarter, versus 21.0% in the prior year period. organic average sales price for ready-mix concrete increased 18.8% driven by pricing growth across all markets, with strong, double-digit growth in the intermountain west and south texas. organic sales volumes of ready-mix concrete decreased 1.3% due to cement supply constraints. organic average selling prices for asphalt increased 17.8%, driven by strong pricing gains in texas and the intermountain west market. organic asphalt sales volume decreased 0.9% including lower sales volumes in north texas and virginia markets. third quarter 2022 | results by reporting segment west segment: the west segment operating income increased 8.4% to $73.1 million and adjusted ebitda increased 6.5% to $98.3 million in the third quarter due primarily to pricing gains that more than offset lower volumes and inflationary cost conditions. aggregates revenue in the third quarter increased 11.6% as 14.5% pricing growth was partially offset by 2.5% volume declines. double digit price growth was experienced by all markets while volume growth in the intermountain west was more than offset by lower sales volume in texas and british columbia. ready-mix concrete revenue in the third quarter increased 18.6% driven by 19.4% pricing growth and only partially offset by lower volumes, particularly in south texas. lower aggregates and ready-mix volumes in texas were due, in part, to unfavorable weather conditions and supply chain constraints. asphalt revenue increased 18.0% in the third quarter as sales prices increased 16.7% and volumes increased 1.1% in the period. east segment: the east segment operating income decreased 36.7% to $28.5 million and adjusted ebitda decreased 36.1% to $44.1 million in the third quarter reflecting the impact of divestitures as well as increased cost of revenue that exceeded pricing growth. the impact from divestitures on adjusted ebitda was approximately $16.3 million in the period. aggregates revenue decreased 9.2% versus the prior year period. organic aggregates volumes decreased 4.7% with wet conditions and supply chain related disruptions more than offsetting growth in kansas and virginia. aggregates organic pricing increased 8.2% led by the strongest growth in virginia and the carolinas. ready-mix concrete revenue decreased 44.0% due primarily to divestitures. organic sales volumes were down 4.9% relative to the year ago period due to unfavorable weather conditions and supply chain disruptions. ready-mix concrete organic average selling price increased 15.0% in the period. due to divestitures, asphalt revenue decreased 61.4%. asphalt organic volumes decreased 18.5% while organic average selling prices for asphalt increased 29.2% to reflect increased costs. cement segment: the cement segment operating income increased 18.1% to $35.5 million in the third quarter. adjusted ebitda increased $6.2 million as revenue growth combined with greater contribution from green america recycling more than offset inflationary conditions. in the third quarter, the cement segment reported a volume increase of 12.4% and average selling price growth of 12.8%. liquidity and capital resources as of october 1, 2022, the company had $471.7 million in cash and $1.5 billion in debt outstanding. the company's $345 million revolving credit facility has $324.9 million available after outstanding letters of credit. for the quarter ended october 1, 2022, cash flow provided by operations was $132.2 million and cash paid for capital expenditures was $189.0 million. during the three months ended october 1, 2022, summit materials repaid $23.3 million of its term loan under provisions related to the divestitures of businesses. in the three months ending october 1, 2022, summit materials repurchased approximately 1.9 million shares of class a common stock for approximately $53.5 million. as of october 1, 2022, approximately $149.0 million remained available for share repurchase under the share repurchase program. webcast and conference call information summit materials will conduct a conference call on thursday, november 3, 2022, at 11:00 a.m. eastern time (9:00 a.m. mountain time) to review the company’s third quarter 2022 financial results, discuss recent events and conduct a question-and-answer session. 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. a webcast of the third quarter results conference call and accompanying presentation materials will be available in the investors section of summit’s website at investors.summit-materials.com or at the following link: https://events.q4inc.com/attendee/550652656. to participate in the live teleconference for third quarter 2022 financial results: 1-888-330-3416 international live: 1-646-960-0820 conference id: 1542153 to listen to a replay of the teleconference, which will be available through november 8, 2022: domestic replay: 1-800-770-2030 international replay: 1-647-362-9199 conference id: 1542153 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 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 (loss), adjusted diluted net income, adjusted diluted eps, adjusted ebitda, adjusted ebitda margin, adjusted cash gross profit, adjusted cash gross profit margin, free cash flow, net leverage and net debt 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 (loss), adjusted diluted net income, adjusted diluted eps, adjusted ebitda, further adjusted ebitda, adjusted ebitda margin, adjusted cash gross profit, adjusted cash gross profit margin, free cash flow, net leverage and net debt 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, further adjusted ebitda, adjusted ebitda margin, adjusted cash gross profit, adjusted cash gross profit margin, adjusted net income (loss), adjusted diluted net income, adjusted diluted eps, free cash flow, net leverage and net debt 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 press release 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 january 1, 2022, as filed with the sec, and any factors discussed in the section entitled “risk factors” in any of our subsequently filed sec filings. the impact of the covid-19 pandemic, and responses to it, including vaccine mandates, or any similar crisis, on our business; 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; our reliance on private investment in infrastructure, which may be adversely affected by periods of economic stagnation and recession; environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use; costs associated with pending and future litigation; rising prices for, or more limited availability of, commodities, labor and other production and delivery inputs as a result of inflation, supply chain challenges or otherwise; 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; unexpected factors affecting self-insurance claims and reserve estimates; our substantial current level of indebtedness, including our exposure to variable interest rate risk; our dependence on senior management and other key personnel, and our ability to retain and attract qualified personnel; supply constraints or significant price fluctuations in the electricity and petroleum-based resources that we use, including diesel and liquid asphalt; climate change and climate change legislation or regulations; unexpected operational difficulties; interruptions in our information technology systems and infrastructure; including cybersecurity and data leakage risks; and potential labor disputes, strikes, other forms of work stoppage or other union activities. 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 press release. 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 unaudited consolidated statements of operations ($ in thousands, except share and per share amounts) three months ended nine months ended october 1, october 2, october 1, october 2, 2022 2021 2022 2021 revenue: product $ 587,138 $ 561,938 $ 1,485,746 $ 1,443,972 service 98,871 100,321 224,676 235,298 net revenue 686,009 662,259 1,710,422 1,679,270 delivery and subcontract revenue 66,738 54,981 149,826 133,731 total revenue 752,747 717,240 1,860,248 1,813,001 cost of revenue (excluding items shown separately below): product 392,187 356,214 1,042,888 980,045 service 76,011 75,741 179,807 187,570 net cost of revenue 468,198 431,955 1,222,695 1,167,615 delivery and subcontract cost 66,738 54,981 149,826 133,731 total cost of revenue 534,936 486,936 1,372,521 1,301,346 general and administrative expenses 39,959 47,364 139,534 146,454 depreciation, depletion, amortization and accretion 52,133 59,082 150,483 173,651 gain on sale of property, plant and equipment (1,343 ) (1,159 ) (6,293 ) (4,331 ) operating income 127,062 125,017 204,003 195,881 interest expense 21,980 24,134 62,728 72,536 loss on debt financings — 6,016 — 6,016 tax receivable agreement expense — — 954 — (gain) loss on sale of businesses (4,115 ) 113 (174,373 ) (15,319 ) other income, net (3,283 ) (1,137 ) (4,956 ) (10,721 ) income from operations before taxes 112,480 95,891 319,650 143,369 income tax expense 24,829 20,513 74,033 33,478 net income 87,651 75,378 245,617 109,891 net income attributable to summit holdings (1) 1,162 1,174 3,307 1,545 net income attributable to summit inc. $ 86,489 $ 74,204 $ 242,310 $ 108,346 earnings per share of class a common stock: basic $ 0.73 $ 0.63 $ 2.05 $ 0.92 diluted $ 0.73 $ 0.62 $ 2.03 $ 0.92 weighted average shares of class a common stock: basic 117,917,058 118,473,530 118,365,801 117,258,431 diluted 118,404,098 119,291,646 119,098,936 118,360,615 ________________________________________________________ (1) represents portion of business owned by pre-ipo investors rather than by summit. summit materials, inc. and subsidiaries consolidated balance sheets ($ in thousands, except share and per share amounts) october 1, january 1, 2022 2022 (unaudited) (audited) assets current assets: cash and cash equivalents $ 471,666 $ 380,961 accounts receivable, net 363,956 287,226 costs and estimated earnings in excess of billings 33,568 7,600 inventories 202,783 180,760 other current assets 20,132 11,827 current assets held for sale 1,205 1,236 total current assets 1,093,310 869,610 property, plant and equipment, less accumulated depreciation, depletion and amortization (october 1, 2022 - $1,241,028 and january 1, 2022 - $1,266,513) 1,768,394 1,842,908 goodwill 1,131,764 1,163,750 intangible assets, less accumulated amortization (october 1, 2022 - $14,642 and january 1, 2022 - $15,269) 67,253 69,396 deferred tax assets, less valuation allowance (october 1, 2022 - $1,113 and january 1, 2022 - $1,675) 151,099 204,566 operating lease right-of-use assets 31,057 30,150 other assets 42,078 58,745 total assets $ 4,284,955 $ 4,239,125 liabilities and stockholders’ equity current liabilities: current portion of debt $ 6,354 $ 6,354 current portion of acquisition-related liabilities 12,215 13,110 accounts payable 166,592 128,232 accrued expenses 123,985 147,476 current operating lease liabilities 6,481 6,497 billings in excess of costs and estimated earnings 7,143 7,401 total current liabilities 322,770 309,070 long-term debt 1,492,429 1,591,019 acquisition-related liabilities 23,953 33,369 tax receivable agreement liability 327,501 326,548 noncurrent operating lease liabilities 29,945 28,880 other noncurrent liabilities 117,133 127,027 total liabilities 2,313,731 2,415,913 stockholders’ equity: class a common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 116,386,969 and 118,705,108 shares issued and outstanding as of october 1, 2022 and january 1, 2022, respectively 1,165 1,188 class b common stock, par value $0.01 per share; 250,000,000 shares authorized, 99 shares issued and outstanding as of october 1, 2022 and january 1, 2022 — — additional paid-in capital 1,340,602 1,326,340 accumulated earnings 620,320 478,956 accumulated other comprehensive (loss) income (3,470 ) 7,083 stockholders’ equity 1,958,617 1,813,567 noncontrolling interest in summit holdings 12,607 9,645 total stockholders’ equity 1,971,224 1,823,212 total liabilities and stockholders’ equity $ 4,284,955 $ 4,239,125 summit materials, inc. and subsidiaries unaudited consolidated statements of cash flows ($ in thousands) nine months ended october 1, october 2, 2022 2021 cash flows from operating activities: net income $ 245,617 $ 109,891 adjustments to reconcile net income to net cash provided by operating activities: depreciation, depletion, amortization and accretion 160,162 177,841 share-based compensation expense 15,058 14,875 net gain on asset and business disposals (180,240 ) (19,295 ) non-cash loss on debt financings — 2,116 change in deferred tax asset, net 58,318 19,814 other (396 ) (586 ) decrease (increase) in operating assets, net of acquisitions and dispositions: accounts receivable, net (96,724 ) (78,108 ) inventories (53,762 ) (12,002 ) costs and estimated earnings in excess of billings (32,042 ) (26,969 ) other current assets (6,961 ) (2,556 ) other assets 3,432 6,459 (decrease) increase in operating liabilities, net of acquisitions and dispositions: accounts payable 44,510 33,756 accrued expenses (21,780 ) (15,598 ) billings in excess of costs and estimated earnings 646 (2,907 ) tax receivable agreement liability 954 9,191 other liabilities (4,601 ) (8,549 ) net cash provided by operating activities 132,191 207,373 cash flows from investing activities: acquisitions, net of cash acquired (1,933 ) (7,263 ) purchases of property, plant and equipment (189,008 ) (170,070 ) proceeds from the sale of property, plant and equipment 8,298 8,827 proceeds from sale of businesses 373,790 103,649 other (2,214 ) (459 ) net cash provided by (used in) investing activities 188,933 (65,316 ) cash flows from financing activities: payments on debt (113,769 ) (323,802 ) payments on acquisition-related liabilities (12,964 ) (9,755 ) distributions from partnership (399 ) — repurchases of common stock (100,980 ) — proceeds from stock option exercises 199 32,416 other (774 ) (951 ) net cash used in financing activities (228,687 ) (302,092 ) impact of foreign currency on cash (1,732 ) (63 ) net increase (decrease) in cash 90,705 (160,098 ) cash and cash equivalents—beginning of period 380,961 418,181 cash and cash equivalents—end of period $ 471,666 $ 258,083 summit materials, inc. and subsidiaries unaudited revenue data by segment and line of business ($ in thousands) three months ended nine months ended october 1, october 2, october 1, october 2, 2022 2021 2022 2021 segment net revenue: west $ 394,648 $ 338,575 $ 983,160 $ 886,936 east 171,446 231,184 467,471 573,343 cement 119,915 92,500 259,791 218,991 net revenue $ 686,009 $ 662,259 $ 1,710,422 $ 1,679,270 line of business - net revenue: materials aggregates $ 163,524 $ 160,317 $ 448,397 $ 431,201 cement (1) 112,489 87,645 241,858 207,953 products 311,125 313,976 795,491 804,818 total materials and products 587,138 561,938 1,485,746 1,443,972 services 98,871 100,321 224,676 235,298 net revenue $ 686,009 $ 662,259 $ 1,710,422 $ 1,679,270 line of business - net cost of revenue: materials aggregates $ 76,369 $ 63,622 $ 229,767 $ 199,653 cement 61,519 43,768 146,327 122,800 products 250,591 248,042 659,342 657,005 total materials and products 388,479 355,432 1,035,436 979,458 services 79,719 76,523 187,259 188,157 net cost of revenue $ 468,198 $ 431,955 $ 1,222,695 $ 1,167,615 line of business - adjusted cash gross profit (2): materials aggregates $ 87,155 $ 96,695 $ 218,630 $ 231,548 cement (3) 50,970 43,877 95,531 85,153 products 60,534 65,934 136,149 147,813 total materials and products 198,659 206,506 450,310 464,514 services 19,152 23,798 37,417 47,141 adjusted cash gross profit $ 217,811 $ 230,304 $ 487,727 $ 511,655 adjusted cash gross profit margin (2) materials aggregates 53.3 % 60.3 % 48.8 % 53.7 % cement (3) 42.5 % 47.4 % 36.8 % 38.9 % products 19.5 % 21.0 % 17.1 % 18.4 % services 19.4 % 23.7 % 16.7 % 20.0 % total adjusted cash gross profit margin 31.8 % 34.8 % 28.5 % 30.5 % ________________________________________________________ (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 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 october 1, 2022 october 2, 2021 october 1, 2022 october 2, 2021 aggregates (tons) 16,267 17,884 46,489 48,484 cement (tons) 841 748 1,887 1,796 ready-mix concrete (cubic yards) 1,326 1,509 3,960 4,381 asphalt (tons) 1,459 1,880 3,041 3,911 three months ended nine months ended pricing october 1, 2022 october 2, 2021 october 1, 2022 october 2, 2021 aggregates (per ton) $ 12.48 $ 11.32 $ 11.89 $ 11.16 cement (per ton) 136.83 121.26 132.22 119.76 ready-mix concrete (per cubic yards) 142.66 121.40 133.87 119.95 asphalt (per ton) 73.26 61.42 71.74 60.63 three months ended nine months ended percentage change in percentage change in year over year comparison volume pricing volume pricing aggregates (per ton) (9.0 )% 10.2 % (4.1 )% 6.5 % cement (per ton) 12.4 % 12.8 % 5.1 % 10.4 % ready-mix concrete (per cubic yards) (12.1 )% 17.5 % (9.6 )% 11.6 % asphalt (per ton) (22.4 )% 19.3 % (22.2 )% 18.3 % three months ended nine months ended percentage change in percentage change in year over year comparison (excluding acquisitions & divestitures) volume pricing volume pricing aggregates (per ton) (3.5 )% 11.2 % (0.9 )% 7.4 % cement (per ton) 12.4 % 12.8 % 5.1 % 10.4 % ready-mix concrete (per cubic yards) (1.3 )% 18.8 % (1.6 )% 13.0 % asphalt (per ton) (0.9 )% 17.8 % (0.6 )% 16.3 % 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 october 1, 2022 gross revenue intercompany net volumes pricing by product elimination/delivery revenue aggregates 16,267 $ 12.48 $ 202,982 $ (39,458 ) $ 163,524 cement 841 136.83 115,022 (2,533 ) 112,489 materials $ 318,004 $ (41,991 ) $ 276,013 ready-mix concrete 1,326 142.66 189,151 (70 ) 189,081 asphalt 1,459 73.26 106,897 (92 ) 106,805 other products 94,964 (79,725 ) 15,239 products $ 391,012 $ (79,887 ) $ 311,125 nine months ended october 1, 2022 gross revenue intercompany net volumes pricing by product elimination/delivery revenue aggregates 46,489 $ 11.89 $ 552,943 $ (104,546 ) $ 448,397 cement 1,887 132.22 249,517 (7,659 ) 241,858 materials $ 802,460 $ (112,205 ) $ 690,255 ready-mix concrete 3,960 133.87 530,178 (177 ) 530,001 asphalt 3,041 71.74 218,136 (279 ) 217,857 other products 273,112 (225,479 ) 47,633 products $ 1,021,426 $ (225,935 ) $ 795,491 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 to adjusted ebitda by segment for the three and nine months ended october 1, 2022 and october 2, 2021. reconciliation of net income (loss) to adjusted ebitda three months ended october 1, 2022 by segment west east cement corporate consolidated ($ in thousands) net income (loss) $ 76,350 $ 30,225 $ 40,748 $ (59,672 ) $ 87,651 interest (income) expense (4,475 ) (2,602 ) (5,110 ) 34,167 21,980 income tax expense 1,384 — — 23,445 24,829 depreciation, depletion and amortization 24,676 15,063 10,879 821 51,439 ebitda $ 97,935 $ 42,686 $ 46,517 $ (1,239 ) $ 185,899 accretion 232 382 80 — 694 loss (gain) on sale of businesses — 1,005 — (5,120 ) (4,115 ) non-cash compensation — — — 4,902 4,902 other 114 46 — (2,652 ) (2,492 ) adjusted ebitda $ 98,281 $ 44,119 $ 46,597 $ (4,109 ) $ 184,888 adjusted ebitda margin (1) 24.9 % 25.7 % 38.9 % 27.0 % reconciliation of net income (loss) to adjusted ebitda three months ended october 2, 2021 by segment west east cement corporate consolidated ($ in thousands) net income (loss) $ 69,457 $ 47,924 $ 34,310 $ (76,313 ) $ 75,378 interest (income) expense (2,933 ) (2,237 ) (4,359 ) 33,663 24,134 income tax expense 976 119 — 19,418 20,513 depreciation, depletion and amortization 24,577 22,412 10,324 1,068 58,381 ebitda $ 92,077 $ 68,218 $ 40,275 $ (22,164 ) $ 178,406 accretion 219 397 85 — 701 loss on debt financings — — — 6,016 6,016 (gain) loss on sale of businesses (135 ) 248 — — 113 non-cash compensation — — — 4,685 4,685 other 142 221 — — 363 adjusted ebitda $ 92,303 $ 69,084 $ 40,360 $ (11,463 ) $ 190,284 adjusted ebitda margin (1) 27.3 % 29.9 % 43.6 % 28.7 % reconciliation of net income (loss) to adjusted ebitda nine months ended october 1, 2022 by segment west east cement corporate consolidated ($ in thousands) net income (loss) $ 153,857 $ 101,680 $ 70,958 $ (80,878 ) $ 245,617 interest (income) expense (12,480 ) (8,767 ) (14,932 ) 98,907 62,728 income tax expense (benefit) 2,547 (106 ) — 71,592 74,033 depreciation, depletion and amortization 70,803 47,470 27,760 2,340 148,373 ebitda $ 214,727 $ 140,277 $ 83,786 $ 91,961 $ 530,751 accretion 692 1,185 233 — 2,110 tax receivable agreement benefit — — — 954 954 gain on sale of businesses — (42,652 ) — (131,721 ) (174,373 ) non-cash compensation — — — 15,058 15,058 other 198 139 — (2,652 ) (2,315 ) adjusted ebitda $ 215,617 $ 98,949 $ 84,019 $ (26,400 ) $ 372,185 adjusted ebitda margin (1) 21.9 % 21.2 % 32.3 % 21.8 % reconciliation of net income (loss) to adjusted ebitda nine months ended october 2, 2021 by segment west east cement corporate consolidated ($ in thousands) net income (loss) $ 142,340 $ 91,928 $ 65,935 $ (190,312 ) $ 109,891 interest (income) expense (7,825 ) (6,133 ) (12,439 ) 98,933 72,536 income tax expense 2,360 209 — 30,909 33,478 depreciation, depletion and amortization 74,634 65,032 28,535 3,273 171,474 ebitda $ 211,509 $ 151,036 $ 82,031 $ (57,197 ) $ 387,379 accretion 653 1,274 250 — 2,177 loss on debt financings — — — 6,016 6,016 gain on sale of businesses (408 ) (14,911 ) — — (15,319 ) non-cash compensation — — — 14,875 14,875 other (32 ) 714 — — 682 adjusted ebitda $ 211,722 $ 138,113 $ 82,281 $ (36,306 ) $ 395,810 adjusted ebitda margin (1) 23.9 % 24.1 % 37.6 % 23.6 % ________________________________________________ (1) adjusted ebitda margin is defined as adjusted ebitda as a percentage of net revenue. the table below reconciles our net income attributable to summit materials, inc. to adjusted diluted net income per share for the three and nine months ended october 1, 2022 and october 2, 2021. 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 october 1, 2022 october 2, 2021 october 1, 2022 october 2, 2021 reconciliation of net income per share to adjusted diluted eps net income per equity unit net income per equity unit net income per equity unit net income per equity unit net income attributable to summit materials, inc. $ 86,489 $ 0.73 $ 74,204 $ 0.62 $ 242,310 $ 2.03 $ 108,346 $ 0.91 adjustments: net income attributable to noncontrolling interest 1,162 0.01 1,174 0.01 3,307 0.03 1,545 0.01 (gain) loss on sale of businesses, net of tax (3,406 ) (0.03 ) 113 — (130,975 ) (1.10 ) (11,541 ) (0.10 ) loss on debt financings — — 6,016 0.05 — — 6,016 0.06 adjusted diluted net income before tax related adjustments 84,245 0.71 81,507 0.68 114,642 0.96 104,366 0.88 tax receivable agreement expense — — — — 954 0.01 — — adjusted diluted net income $ 84,245 $ 0.71 $ 81,507 $ 0.68 $ 115,596 $ 0.97 $ 104,366 $ 0.88 weighted-average shares: basic class a common stock 117,774,592 118,272,955 118,216,997 117,040,207 lp units outstanding 1,312,797 1,594,272 1,313,603 2,031,090 total equity units 119,087,389 119,867,227 119,530,600 119,071,297 the following table reconciles operating income to adjusted cash gross profit and adjusted cash gross profit margin for the three and nine months ended october 1, 2022 and october 2, 2021. three months ended nine months ended october 1, october 2, october 1, october 2, reconciliation of operating income to adjusted cash gross profit 2022 2021 2022 2021 ($ in thousands) operating income $ 127,062 $ 125,017 $ 204,003 $ 195,881 general and administrative expenses 39,959 47,364 139,534 146,454 depreciation, depletion, amortization and accretion 52,133 59,082 150,483 173,651 gain on sale of property, plant and equipment (1,343 ) (1,159 ) (6,293 ) (4,331 ) adjusted cash gross profit (exclusive of items shown separately) $ 217,811 $ 230,304 $ 487,727 $ 511,655 adjusted cash gross profit margin (exclusive of items shown separately) (1) 31.8 % 34.8 % 28.5 % 30.5 % _______________________________________________________ (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 provided by operating activities to free cash flow for the three and nine months ended october 1, 2022 and october 2, 2021. three months ended nine months ended october 1, october 2, october 1, october 2, ($ in thousands) 2022 2021 2022 2021 net income $ 87,651 $ 75,378 $ 245,617 $ 109,891 non-cash items 66,334 81,700 52,902 194,765 net income adjusted for non-cash items 153,985 157,078 298,519 304,656 change in working capital accounts (38,048 ) (24,356 ) (166,328 ) (97,283 ) net cash provided by operating activities 115,937 132,722 132,191 207,373 capital expenditures, net of asset sales (56,557 ) (35,326 ) (180,710 ) (161,243 ) free cash flow $ 59,380 $ 97,396 $ (48,519 ) $ 46,130
