Summit Materials, Inc.

hello we are now ready to begin the summit materials first quarter 2023 conference call i'll now hand the call over to andy larkin vice president of investor relations andy you may begin hello and welcome to the summit materials first quarter 2023 results conference call yesterday afternoon we issued a press release detailing our financial and operating results today's call is accompanied by an investor presentation

and a supplemental workbook, highlighting key financial and operating data. All of these materials can be found on our investor relations website. Management's commentary and response to questions on today's call may include forward-looking statements, which by their nature are uncertain and outside of Summit Materials' control. Although these forward-looking statements are based on Management's current expectations and beliefs, actual results may differ in a material way. For discussion of some of the factors that could cause actual results to differ, please see the risk factors section of Summit Materials' latest annual report on Form 10-K, which is filed with the SEC. You can find reconciliations of the circle non-GAAP financial measures discussed in today's call in our press release. Today, I am joined by Summit CEO, Ann Noonan, and our new Chief Financial Officer, Scott Anderson. Ann will provide a brief business update, Scott will review our financial performance, and then we'll conclude our prepared remarks with our view on the path forward. After that, we will open the line for questions. Please limit your ask to one question and then return to the queue so we can accommodate as many analysts as possible. in the time we have available. I'll now turn the call over to Anne.

Thanks, Andy, and hello to everyone joining today's call. Before I start, I wanted to publicly thank Brian Harris for his graciousness and generosity during this leadership transition. I also want to welcome Scott to these quarterly calls. As he settles into the CFO role, he is making an immediate and positive impact on our business, and we look forward to more fully introducing him to the investor community in the weeks and months that follow. Now, as you saw in our press release yesterday, Our record first quarter results clearly indicate that we have a head start to 2023 as we enter our prime construction season. This progress was not limited to just our financial results, but extended to our safety performance as well. Through March, our forward-looking metrics are flashing green, and most of our lagging metrics are trending in the right direction. Recordable incidents are down year on year, and we are leveraging new technologies to make continuous safety improvement. and we are tracking ahead of our 2023 goals. Our success, as always, will depend on our safety leadership across our footprint, and more importantly, the buy-in from all Summit employees. As we aspire towards a zero-harm culture, I'm confident our great people will spearhead those efforts and deliver ongoing successes on the safety front. Moving to slide four for a first-quarter financial review, where I'll highlight a few items, but ask Scott to cover our results in more detail. First and foremost, adjusted EBITDA of $41.2 million is a nearly 80% increase year-on-year and corresponds with a 420 basis point improvement to our adjusted EBITDA margins. Strong mid-teams are better pricing growth across all lines of business was the primary catalyst that drove record first quarter net revenue and our outstanding profit performance in the quarter. In fact, 20.6% organic aggregates pricing growth is the largest year-over-year quarterly growth rate in our history. Our team has flawlessly executed on our January 1st pricing actions in all markets. This, in combination with increased contribution from our operational centers of excellence, is fueling our margin recovery. Our fast start to the year, along with improved outlooks for demand and pricing, has prompted us to raise our adjusted EBITDA outlook for the full year. I'll go into more detail for you momentarily, but in short, and consistent with our playbook, we are controlling our controllables and well-positioned to deliver strong financial results amidst ongoing uncertainties in the marketplace. One major way that we're controlling what we can is on slide five, where we provided LIMPS into one of our unique self-help margin opportunities, our Aggregate Center of Excellence. If you recall, our North Star cash gross margin target for our ags business is 60% on a trailing 12-month basis. We closed last year at 48.5% and are intently focused on closing that gap in 2023. Here, our Center of Excellence, led by our East Region President, Bart Boyd, is holding multiple onsite continuous improvement events monthly. These events aim to diagnose sources of operational inefficiencies, design and implement customized corrective actions, and measure progress against clear objectives. This summit capability is rather new, yet we are already making significant progress. For one, we are identifying common themes across our quarries. These include modernizing long-term mine planning, focusing on yield optimization, conducting maintenance blitzes, de-bottlenecking plants, and better utilizing automation. By identifying common operational pain points across our footprint, we can lift and shift proven solutions to deliver tangible results more quickly. For the quarries that have recently undertaken these CI events, overall equipment effectiveness is up on average 7%, and tons per hour is up more than 9% versus baseline levels. And this has translated into approximately $3 million in productivity savings, helping to offset input cost inflation. Let's be clear, we are still in the early innings on our operational excellence journey, but we are organized and incentivized around this strategic imperative and very encouraged by the progress to date. And this progress is enterprise-wide and in every line of business. In cement, for example, we are in the process of installing a new innovative waste fuel technology in our Davenport facility. This FuelFlex system will be the first pre-commercial installation in the world and the first of its kind technology within the United States. Construction is currently underway and the equipment will be commissioned in early 2024. When complete, FuelFlex will allow Davenport to reduce its fossil fuel consumption by at least 50% and move Summit that much closer to achieving its carbon reduction commitment. At the same time, by replacing coal and pet coke with alternative fuels, we will drive significant cost savings for our business and increase our overall competitiveness in the marketplace. Projects like these are underway across our footprint and they are feeding our collective confidence that the unique self-help margin opportunities that we talk about are materializing. Our teams are working hard to gain ground operationally deliver substantive cost savings, and take strides towards our Elevate Summit EBITDA margin target of 30%. Before passing to Scott, let's look at our Elevate Summit scorecard on slide six. Leverage remains well ahead of the Elevate Summit targets, providing ample firepower to pursue portfolio-optimizing transactions. ROIC at 9.6% is up 50 basis points sequentially and up 120 basis points from year-ago levels, as our materials-led strategy coupled with a sharp focus on improving asset efficiency, has put the Elevate Summit ROIC target of at least 10% within reach. And finally, our first quarter boosted our trailing 12-month adjusted EBITDA margin to 22.8%, up 70 basis points sequentially and 30 basis points year on year. With each of these metrics either ahead of target or moving in the right direction, it supports the view that our strategy is working. we have transitioned towards a more materials-led portfolio with 71% of our trailing 12-month adjusted EBITDA generated by our upstream businesses. And where we choose to have a downstream presence, we have advantaged assets, leading market positions, and attractive profitability profiles. From continued and diligent execution of our four strategic pillars, market leadership, asset light, sustainability, and innovation, We are on a pathway towards a more economically durable and profitable organization. With that, let me hand it to Scott to review our financial performance. Scott.