Summit's (SUM) Stock Rises on Q4 Earnings & Revenue Beat
Summit Materials, Inc. SUM reported fourth-quarter 2023 results, wherein earnings and revenues topped the Zacks Consensus Estimate. On a year-over-year basis, the top line grew but the bottom line inched down.
The company’s top line benefited from increased average sales prices across all lines of business. Its focus on Argos integration, which is expected to strengthen its materials-led business, is encouraging. However, an increase in general and administrative expenses, and transaction and integration costs during the quarter dented the bottom line to a great extent.
Nonetheless, with an improved footprint and increased scale, the company is well-positioned to deliver solid results through 2024.
Following the results, shares of SUM gained 6.6% after the trading hours on Feb 14.
Inside the Headlines
Summit reported adjusted earnings of 31 cents per share, which surpassed the Zacks Consensus Estimate of 27 cents by 14.8%. In the year-ago quarter, the company reported adjusted earnings of 32 cents per share.
Summit Materials, Inc. Price, Consensus and EPS Surprise
Summit Materials, Inc. price-consensus-eps-surprise-chart | Summit Materials, Inc. Quote
Net revenues of $613.1 million topped the consensus mark of $566 million by 8.3% and grew 19.8% year over year.
Performance by Line of Business
Total Materials and Products
Aggregates: The quarterly net revenues of this business increased to $157.6 million, up 16.2% year over year. The adjusted cash gross profit margin expanded 90 basis points (bps) year over year to 48.7%.
Cement: This business’ net revenues declined to $88 million during the quarter from $90.7 million reported in the year-ago quarter. The adjusted cash gross profit margin expanded 100 bps to 48.1% from 47.1% reported a year ago. The uptrend was attributable to strong pricing along with Green America Recycling performance and reduced mix of import volumes relative to the prior year period.
Products: The quarterly net revenues increased to $282.4 million, up 27.5% from $221.5 million reported in the year-ago period. The adjusted cash gross profit margin was 16.5% in the quarter, down from 17.1% reported in the year-ago quarter.
Services
In the fourth quarter of 2023, net revenues for this line of business increased to $85.1 million from $63.9 million reported a year ago. The adjusted cash gross profit margin was 21.2% in the quarter, up 130 bps from 19.9% reported in the year-ago quarter.
Segmental Discussion
West Segment: This segment reported fourth-quarter net revenues of $377.4 million, which increased 30.6% year over year. The operating income increased 25.1% to $47.8 million year over year. Also, the adjusted EBITDA of $76.1 million increased 17.2% year over year.
East Segment: The net revenues of this segment were $140.4 million, up 12.5% from $124.8 million reported in the year-ago quarter. The segment’s operating income increased 17.5% to $17.9 million year over year. Furthermore, adjusted EBITDA increased 12.6% to $34.1 million year over year.
Cement Segment: The quarterly net revenues were $95.3 million, down from $97.9 million reported in the year-ago quarter. The operating income declined 5.8% to $31.6 million year over year. Also, adjusted EBITDA of $40.8 million decreased 1.9% year over year.
2023 Highlights
In 2023, net revenues were $2.44 billion, up 9.9% from $2.22 billion reported in the prior year. Adjusted earnings per share were $1.58, up 24.4% from $1.27 reported in 2022.
Adjusted EBITDA for the full year increased 17.6% to $578 million from $491.5 million reported a year ago.
Liquidity and Cash Flow
As of Dec 30, 2023, Summit had cash and cash equivalents of $374.2 million compared with $520.5 million at 2022-end. Long-term debt was $2.28 billion, up from $1.49 billion as of 2022-end.
For 2023, net cash provided by operating activities was $438.9 million, up from $284.1 million reported in the year-ago period.
2024 Guidance
For the full year, Summit expects adjusted EBITDA in the range of $950 million-$1.01 billion.
Capital expenditures are expected to be between $430 million to $470 million, approximately.
Zacks Rank & Recent Construction Releases
Summit currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Martin Marietta Materials, Inc. MLM reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover, as demand still exceeds supply, particularly in its key markets.
Watsco, Inc. WSO reported dismal fourth-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, the top line grew while the bottom line dwindled.
The quarter’s results reflect a seasonal sales trend, wherein HVAC equipment witnessed flat sales while sales in other HVAC products declined, year over year. Also, sales volume for commercial refrigeration products was down. Furthermore, high costs and expenses impacted the bottom line of the company. Nonetheless, the company’s focus on improving its operating efficiency, conforming inventory levels to current conditions and generating cash flow are encouraging through 2024.
Masco Corporation MAS reported better-than-expected results for fourth-quarter 2023. Both the top and bottom lines surpassed the Zacks Consensus Estimate and increased from the prior year. Strong pricing actions and operational efficiency helped deliver solid results.
Despite facing challenges in end markets and experiencing lower volume, Masco achieved 2% growth in adjusted earnings per share (EPS) in 2023. Looking forward to 2024, Masco anticipates that sales will remain relatively unchanged throughout the year, reflecting a market that is expected to be flat to slightly declining in the low single digits.
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