Summit Materials, Inc.

hello everyone and welcome to summit materials incorporated first quarter 2024 earnings call please note that this call is being recorded i'd now like to hand over to andy larkin please go ahead hello and welcome to the summit materials first quarter 2024 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 in 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 Matero's latest annual report on Form 10-K and quarterly report on Form 10-Q as updated from time to time in our subsequent filings with the SEC. You can find reconciliations of the historical non-GAAP financial measures discussed in today's call in our press release. I am pleased to be joined by Summit Matero CEO Ann Noon and CFO Scott Anderson, and we'll begin today's call with a business update. Scott will then review our financial performance before turning the call back to Ann to conclude our prepared remarks with an updated discussion on our 2024 outlook. Afterwards, we will open the line for questions. Out of respect to other analysts and the time we have allotted, please limit yourself to one question and then return to the queue so we can accommodate as many analysts as possible in the time we have available. With that, let me turn the call over to Ann.

Thank you, Andy, and thanks to everyone joining us on today's call. I'm incredibly proud and pleased to report that our 2024 year is off to a remarkable start with early progress across all dimensions, including safety. Safety is a core value for all Summit employees. From day one of our integration with Argos USA, we have efficiently transitioned towards a common set of metrics and goals enterprise-wide. We now have a shared language and governance system established so that we can effectively measure ourselves and work together towards our goal of a zero-harm culture while consistently delivering industry-leading safety performance. Along with safety, I want to turn to slide four to cover, at a high level, three areas of strong early progress this year. First is around solid execution when it comes to controlling what's within our control. Here, I'm specifically talking about pricing, integration execution, and ongoing operational improvements. Pricing is performing at or better than our initial forecast. On the Argos integration, Thanks to our day one readiness, a focused integration management office, and total organizational buy-in, our integration activities have proceeded exactly as designed, with synergy realization ahead of schedule. In fact, we now have line of sight to at least 40 million in synergies this year, up 10 million from our prior forecast. And lastly, on aggregates operational excellence, we are uncovering savings throughout the footprint as we continue to instill and foster and enhanced continuous improvement mindset through our network of quarries. These factors have provided the foundation and confidence to increase the lower end of our 2024 EBITDA guidance range. We now expect 2024 adjusted EBITDA to be within $970 million on the low end and $1 billion, $10 million at the upper end. From a portfolio perspective, we are organizing and optimizing around being materials-led market leaders in high growth areas. To that end, and thus far in 2024, we have completed three divestitures, shedding subscale and non-core assets that were not additive to our Elevate Summit financial goals, while concurrently engaging in long-term and strategic aggregate supply partnerships via our asset-light operating model. These divestiture proceeds, as well as our robust balance sheet, position us to pursue an aggregates-rich pipeline of bolt-on opportunities. Together, These portfolio optimization efforts are not new, but are extensions of what we've been doing since the launch of Elevate Summit to strengthen our business. Slide five lays out what we believe is a compelling case that Summit's portfolio is more durable and growth-oriented than ever before. Relative to our first quarter 2020 portfolio, we have become a much more materials-dominant enterprise, with approximately 77% of EBITDA generated from upstream business, That's up roughly 11 percentage points from four years ago. The second element I'd highlight is our reduced seasonality. Today we maintain a large position in Texas, a much stronger presence in the southeast, and a growing foothold in Phoenix. As a result, 63% of Q1 revenue is now derived from all season markets, versus just 35% prior to launching Elevate Summit. Critically, our efforts to reshape the portfolio over the prior four years have effectively placed Summit in nine of the top ten fastest-growing MSAs, significantly increased our exposure to year-round markets, and better distributes our earnings profile from quarter to quarter. Despite these objectives and foundational improvements to Summit's business, our solid execution has not been rewarded with a sustained increase to our trading multiple. Nonetheless, we remain confident in continued strong execution on our strategic and financial commitments to our stakeholders, recognizing that markets will, over time, come to appreciate the value of high quality and consistent financial performance. Turning to slide six, where we present first quarter financials and line of business performance, I'll let Scott provide the details, but we'll cover a couple notable takeaways. First, with Q1 adjusted EBITDA of 121.2 million, We now anticipate that roughly 12% of our annual EBITDA is achieved in 2024. That 12% figure is based on the midpoint of our updated guidance range and is more than double the historical baseline for Summit. If you recall, in February, we had thought first quarter adjusted EBITDA would approximate 98 million or approximately 10% of full year EBITDA. The better than anticipated results were driven predominantly by cement outperformance relative to prior expectations. a combination of faster flow-through of anticipated synergies, strong price realization, and demand holding up better than forecasted drove the first quarter above our expectations. The other takeaway from this page is that while organic aggregate shipments did decrease, our demonstrated commitment to commercial excellence and value pricing is evident in the 10.4% year-on-year organic pricing growth. It is also an acknowledgement that pricing remains the prominent and primary lever, to deliver earnings growth for our aggregates business, a trend we expect to persist as we move towards our mid-year pricing actions. Stepping back and grading ourselves against our Elevate Summit scorecard on slide seven, we are clearly ahead of pace in 2024. Net leverage is well below our Elevate Summit target at 2.5 times. This provides the capacity to take accretive portfolio actions to enhance our business and shareholder returns. As expected, ROIC at 9.3% moved below our long-run minimum, but we are confident that within two years we can restore ROIC above our 10% target. This will happen through achieving organic growth and employing our disciplined and focused portfolio optimization approach to the entirety of the asset base. And finally, with LTM EBITDA margin at 23.4%, we are benefiting from a step change in the Q1 margin profile. First quarter adjusted EBITDA margins increased 560 basis points year on year, catalyzed by margin expansion from both materials lines of business. Pricing and operational improvement helped drive aggregates cash gross margins expansion of 550 basis points, and cement segment adjusted EBITDA margins went from break-even a year ago to over 25%, as cement constitutes a larger portion of our Q1 business today, than when compared with the legacy summit profile. Overall, this strong momentum to start the year puts us firmly ahead of pace to comfortably achieve our full year 2024 EBITDA margin range of between 23 and 24%. When achieved, that would put us on the brink of entering into horizon two of our EBITDA margin commitments, a commendable accomplishment in year one of our integration. I want to conclude my opening remarks by thanking our summit teams, especially those undergoing large scale changes and integration activities. You have dedicated yourselves to our common vision of why there's plenty of work ahead of us. We are stronger today thanks in large part to your tireless work and sacrifice to bring our two great organizations together safely. Thank you and congratulations on a very strong start to our combination. With that, let me pass it to Scott to walk you through our detailed financial performance.