Q1 2024 Summit Materials Inc Earnings Call

Unknown Executive: Hello everyone, and welcome to Summit Materials Incorporated's 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, everyone and welcome to summit materials incorporated first quarter 'twenty 'twenty four English call. Please note that this call is being recorded I'd now like to hand over to Andy Larkin.

Andy Larkin: Please go ahead.

Andy Larkin: 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 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.

Andy Larkin: Hello, and welcome to the summit materials first quarter 2024 results conference call.

Andy Larkin: Yesterday afternoon, we issued a press release detailing our financial and operating results. Today's call is accompanied by an investor presentation, and supplemental workbook, highlighting key financial and operating data.

Andy Larkin: All of these materials can be found on our Investor Relations website.

Andy Larkin: Management's commentary and responses to questions on today's call May include forward looking statements, which by their nature are uncertain and outside of summit Materials' control.

Andy Larkin: Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. 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 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.

Andy Larkin: Although these forward looking statements are based on management's current expectations and beliefs actual results may differ in a material way.

Andy Larkin: For a discussion of some of the factors that could cause actual results to differ please see the risk factors section of <unk> 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.

Andy Larkin: You can find reconciliations of the historical non-GAAP financial measures discussed in today's call in our press release.

Andy Larkin: I am pleased to be joined by Summit Materials CEO, Anne Noonan, and CFO, Scott Anderson. Anne will begin today's call with a business update. Scott will then review our financial performance before turning the call back to Anne to conclude our prepared remarks with an updated discussion on our 2024 outlook. Afterward, we will open the line for questions. At 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, I will turn the call over to Anne.

Andy Larkin: I am pleased to be joined by some of the Trc.

Andy Larkin: And CFO Scott Anderson.

Andy Larkin: And we will 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 update a discussion on our 2024 outlook. Afterwards, we will open the line for questions in respect to the other analysts and the time, we have Aladdin. Please limit yourself to one question and return to the queue. So we can accommodate as many analysts as possible.

Andy Larkin: We have available with that let me turn the call over to Ed.

Anne P. Noonan: 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 to 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.

Anne P. Noonan: 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 oracles USA, we have efficiently track.

Anne P. Noonan: Fish and towards a common set of metrics and goals enterprise wide we.

Anne P. Noonan: 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.

Anne P. Noonan: Along with safety, I want to turn to slide four to cover, at a high level, three areas of strong early progress this year. The first is around solid execution when it comes to controlling what's within our control.

Anne P. Noonan: Along with safety I want to turn to slide four to cover at a high level three areas of strong early progress this year.

Anne P. Noonan: First is around solid execution when it comes to controlling what's within our control.

Anne P. Noonan: Here, I'm specifically talking about pricing, integration execution, and ongoing operational improvement. Pricing is performing at or better than our initial forecast. Our integration activities have proceeded exactly as designed, with synergy realization ahead of schedule.

Anne P. Noonan: Here, I'm, specifically talking about pricing integration execution and ongoing operational improvements.

Anne P. Noonan: Pricing is performing at or better than our initial forecast on the Argos integration. Thanks to our day. One readiness are focused integration management office and total organizational buy in our integration activities have proceeded exactly as designed with synergy realization ahead of schedule.

Anne P. Noonan: 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 an 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 $1,010,000,000 at the upper end.

Anne P. Noonan: 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.

Anne P. Noonan: These factors have provided the foundation and confidence to increase the lower end of our 'twenty 'twenty four 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.

Anne P. Noonan: 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.

Anne P. Noonan: 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 completed three divestitures shedding subscale and noncore assets that were not additive to our elevate stomach financial goals, while concurrently engaging and long term.

Anne P. Noonan: And strategic aggregate supply partnerships they are asset light operating model.

Anne P. Noonan: These divestiture proceeds as well as our robust balance sheet.

Anne P. Noonan: <unk> us to pursue and 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 Thomas to strengthen our business.

Anne P. Noonan: 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 5 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-dominated 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.

Anne P. Noonan: Five lays out what we believe is a compelling case that summit portfolio is more durable and growth oriented than ever before.

Anne P. Noonan: 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.

Anne P. Noonan: 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 growing foothold in Phoenix.

Anne P. Noonan: 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 distributed our earnings profile from quarter to quarter.

Anne P. Noonan: As a result, 63% of Q1 revenue is now derived from all season markets versus just 35% prior to launching elevate summit.

Anne P. Noonan: Critically our efforts to reshape the portfolio over the prior four years of effectively place summit in nine of the top 10 fastest growing msas significantly increased our exposure to year round markets are better distributes our earnings profile from quarter to quarter.

Anne P. Noonan: Despite these objective and foundational improvements to Summit's business, our solid execution has not been rewarded with a sustained increase in 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 6, where we present first quarter financials and line of business performance, I'll let Scott provide the details, but we'll cover a couple of notable takeaways.

Anne P. Noonan: Despite these objective and foundational improvements to summit's business are solid execution has not been rewarded with a sustained increase for 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 a pre.

Anne P. Noonan: You see the value of high quality and consistent financial performance.

Anne P. Noonan: Turning to slide six where we present first quarter financials and line of business performance I'll, let Scott provide the details but will cover a couple of 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 at 12.

Anne P. Noonan: First, with Q1 adjusted EBITDA of $121.2 million, we now anticipate that roughly 12% of our annual EBITDA will be 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.

Anne P. Noonan: Per cent 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 thoughts first quarter, adjusted EBITDA would approximate $98 million or approximately 10% of full year EBITDA.

Anne P. Noonan: 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 acknowledgment 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 Act. Stepping back and grading ourselves against our Elevate Summit scorecard on slide 7, we are clearly ahead of schedule in 2024. Net leverage is well below our Elevate Summit target, at 2.5 times.

Anne P. Noonan: Better than anticipated results were driven predominantly by cement outperformance relative to prior expectations.

Anne P. Noonan: 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.

Anne P. Noonan: The takeaway from this page is that while organic aggregates 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 acknowledgment that pricing remains the prominent and primary lever to deliver earnings growth for our aggregates business.

Anne P. Noonan: A trend we expect to persist as we move towards our mid year pricing actions.

Anne P. Noonan: Stepping back and grading ourselves against our elevate somewhat scorecard on slide seven.

Anne P. Noonan: This provides the capacity to take accretive portfolio actions to enhance our business and shareholder return. 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 applying our disciplined and focused portfolio optimization approach to the entirety of the asset base. And finally, with the LTM EBITDA margin at 23.4%, we are benefiting from a step change in the Q1 margin profile.

Anne P. Noonan: We are clearly ahead of pace in 2024 net leverage is well below our elevate summit target at two five times. This provides the capacity to take accretive portfolio actions to enhance our business and shareholder returns as expected ROIC at nine 3% moved below our long run minimum, but we are confident that with.

Anne P. Noonan: In two years, we can restore ROIC above our 10% target.

Anne P. Noonan: 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.

Anne P. Noonan: First quarter adjusted EBITDA margins increased 560 basis points year-on-year, catalyzed by margin expansion for both materials lines of business. Pricing and operational improvement helped drive Aggregate's Cash Gross Margins expansion of 550 basis points, and Cement's segment-adjusted EBITDA margins went from break-even a year ago to over 25%, as Cement constitutes a larger portion of our Q1 business 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%.

Anne P. Noonan: First quarter adjusted EBITDA margins increased 560 basis points year on year catalyzed by margin expansion for both materials lines of business.

Anne P. Noonan: Pricing and operational improvement helped drive aggregates cash gross margins expansion of 550 basis points and cement segment. Adjusted EBITDA margins went from breakeven a year ago to over 25% and submit constitutes a larger portion of our Q1 business today.

Anne P. Noonan: And then one compares what's the legacy summit profile overall this strong momentum to start the year puts us firmly ahead of pace to comfortably achieve our full year 2020 for EBITDA margin range of between 23 and 24% when achieved that would put us on the break of entering into horizon two of our EBITDA margin.

Anne P. Noonan: When achieved, that would put us on the brink of entering into Horizon 2 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, and while there is 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.

Anne P. Noonan: <unk>, 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 through our common vision of while there is plenty of work ahead of US we are stronger today. Thanks in large part to Europe.

Anne P. Noonan: Tireless work and sacrifice to bringing our two great organizations together safely.

Anne P. Noonan: 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.

Scott Anderson: Thanks Anne. I'll pick up on slide 9, covering our total company performance in the first quarter. In Q1, net revenue increased to $773.2 million, including the partial quarter impact of the Argos USAF. In the quarter, $378.5 million of revenue was recognized from the recent acquisitions.

Speaker Change: Thanks, Ann I'll pick up on slide nine covering off our total company performance in the first quarter.

Scott Anderson: In Q1, net revenue increased to $773 2 million, including the partial quarter impact of the Argos USA assets in the quarter $378 5 million of revenue was recognized from the recent acquisitions pricing as Ann mentioned across all lines of business also contributed to our net revenue growth in Q1.

Scott Anderson: Pricing, as Anne mentioned, across all lines of business also contributed to our net revenue growth in Q1. Adjusted cash growth profit margin increased 340 basis points year-on-year, reflecting positive pricing, as well as product and geographic mix benefits, and came despite lower organic volumes in most businesses. Similarly, adjusted EBITDA margins inflected higher, up 560 basis points in Q1, driven in large part by gross margin flow-through and enhanced by better GNA leverage in the quarter.

Scott Anderson: Adjusted cash gross profit margin increased 340 basis points year on year, reflecting positive pricing as well as product and geographic mix benefits and came despite lower organic volumes in most businesses and cost inflation that remains elevated and several cost categories.

Scott Anderson: Similarly, adjusted EBITDA margins inflected higher up 560 basis points in Q1, driven in large part by gross margin flow through an enhanced by better G&A leverage in the quarter.

Scott Anderson: As a percentage of net revenue, G&A decreased 240 basis points this quarter relative to the comparable year-ago period. Adjusted diluted loss per share improved 14 cents relative to Q1'23 despite higher interest expense driven by better operating performance. Before moving on, there are three items I would like to note.

Scott Anderson: As a percentage of net revenue G&A decreased 240 basis points this quarter relative to the comparable year ago period.

Scott Anderson: Adjusted diluted loss per share improved 14 relative.

Scott Anderson: Relative to Q1, 'twenty three despite higher interest expense driven by better operating performance.

Scott Anderson: First, transaction costs associated with the Argos combination amounted to $61.3 million in the period and, as is customary, are not included in the adjusted results. Second, having completed the opening balance sheets for our combination, we have adjusted our full-year expectations for dDNA. We now expect dDNA to approximate $385 million in 2024. And third, a share count of $175 million is an appropriate figure to use moving forward. And prior to the close of the quarter, 100% of previously outstanding LP units that were not held by Summit Inc were exchanged, effectively eliminating our upsea structure and helping to streamline our corporate structure.

Scott Anderson: Before moving on there are three items I would like to note first transaction costs associated with the Argos combination amounted to $61 $3 million in the period and as is customary are not included in the adjusted results.

Scott Anderson: Having completed the opening balance sheets for our combination we have adjusted our full year expectations for deep DNA, we now expect DD&A to approximate $385 million in 2024 and.

Scott Anderson: And third a share count of $175 million is an appropriate figure to use moving forward.

Scott Anderson: And prior to the close of the quarter, 100% of previously outstanding LP units that were not held by Summit, Inc, where exchange effectively eliminating our up sea structure and helping to streamline our corporate structure.

Scott Anderson: Turning next to Line of Business Performance, aggregate volumes in the quarter were negatively impacted by adverse weather conditions across much of the country, especially in January and early into February. This, alongside generally subdued residential activity, pushed aggregate volumes 8.3% lower on an organic basis.

Scott Anderson: Turning next to line of business performance.

Scott Anderson: Aggregates volumes in the quarter were negatively impacted by adverse weather conditions across much of the country, especially in January and early into February.

Scott Anderson: This alongside generally subdued residential activity pushed aggregate volumes eight 3% lower on an organic basis.

Scott Anderson: Organic aggregates pricing, on the other hand, remains persistently strong, increasing 10.4% year-on-year, powered in part by wraparound 2023 pricing, as well as fresh price increases broadly implemented on January 1. Notably, the 7.4% sequential acceleration in average selling price from Q4 of 2023 is an important indicator that our value pricing approach is working and yielding solid in-market traction. By market, pricing growth was strongest in Kansas and Missouri, followed closely by double-digit growth in British Columbia, Houston, and the Carolinas.

Scott Anderson: Organic aggregates pricing on the other hand remains persistently strong increasing 10, 4% year on year powered in part by Rep around 2023 pricing as well as fresh price increases broadly implemented on January one.

Scott Anderson: Notably the seven 4% sequential acceleration in average selling price from Q4 of 'twenty. Three it is an important indicator that our value pricing approach is working and yielding solid end market traction.

Scott Anderson: By market pricing growth was strongest in Kansas, and Missouri, followed closely by double digit growth in British Columbia, Houston and the Carolinas.

Scott Anderson: This pricing dynamic, combined with moderating cost headwinds, mixed favorability, and operational improvements, drove adjusted cash gross profit margins up 550 basis points. Per unit profitability for our aggregates business increased $1.06 year on year, continuing a positive trend from 2023. This growth came despite a cost environment for Agrids that remains challenging, but remember, we were expecting a gradual reduction in cost headwinds over time, and that's still our expectation for 2024. Margin-wise, this is a fast start to the year and reinforces our perspective that we are looking to put percentage points on the board this year as we aim to reach 60% adjusted cash growth profit for aggregates over the long run. Turning to cement performance on slide 11.

Scott Anderson: This pricing dynamic combined with moderating cost headwinds mix favorability and operational improvements to drive adjusted cash gross profit margins up 550 basis points.

Scott Anderson: Per unit profitability for our aggregates business increased $1 six <unk> year on year, continuing a positive trend from 2023.

Scott Anderson: This growth came despite a cost environment for Edwards remains challenging, but remember we were expecting a gradual reduction in cost headwinds over time, and that's still our expectation for 2024 margin wise. This is a fast start to the year and reinforces our perspective that we are looking to put percentage points on the board.

Scott Anderson: This year as we aim to reach 60% adjusted cash gross profit margin for aggregates over the long run.

Scott Anderson: Organic volumes held up rather well, despite weather disruptions, with strong volume performance, most notably out of our mid-Atlantic platform. For pricing, you are seeing play out what we discussed on our February call. Specifically, river market pricing effective January 1st, especially inland geographies, is powering organic pricing gains. Reported growth, while up a low single-digit percent, does reflect a different pricing cadence in the legacy Argos markets that Anne will cover off in a moment.

Scott Anderson: Turning to submit performance on slide 11, organic volumes held up rather well despite weather disruptions with strong volume performance, most notably all of our mid Atlantic platform.

Scott Anderson: The pricing you're seeing play out what we discussed on our February call, specifically river market pricing effective January one, especially inland geographies is powering organic pricing gains reported growth while up low single digit does reflect a different pricing cadence in the legacy <unk> markets that Anne will cover off.

Speaker Change: In a moment.

Scott Anderson: The material gains in our business are best seen at the margin line, with cement segment adjusted EBITDA margins registering 25.7% in the period. Historically, our business would be very pleased with any non-negative cement segment EBITDA margins in the first quarter. This meaningful step up reflects not only the pricing gains but our new footprint and operational improvements. Foundationally, with our expanded footprint into the southeast, we extend our season. Once winter kicks in and locks close on the Mississippi River, that effectively shuts down the season in those areas.

Scott Anderson: The material gains in our business is best seen at the margin line with cement segment adjusted EBITDA margins registering 25, 7% in the period historically, our business would be very pleased with any nonnegative cement segment EBITDA margins in the first quarter.

Scott Anderson: This meaningful step up reflects not only the pricing gains, but our new footprint and operational improvements foundational Lee with our expanded footprint into the southeast we extend our season once winter kicks in and locks close on the Mississippi River that effectively shut down the season in those markets.

Scott Anderson: Without those constraints in Texas, the Mid-Atlantic, and the Southeast, it frankly makes for a more profitable Q1. The other factor influencing profitability was operational improvements across our network. Yes, we are still early in our integration journey, but plant performance has already exceeded our expectations, due in large part to effective winter turnaround. I'm proud to report that all plants that have come out of their annual turnaround have done so on time or faster than scheduled and are operating at higher rates since emerging from their planned downtime. And importantly, all turnarounds were done without a single safety incident.

Scott Anderson: Without those constraints in Texas, the mid Atlantic and southeast It frankly makes for a more profitable Q1.

Scott Anderson: The other factor influencing profitability were the operational improvements across our network. Yes. We are still early in our integration journey, but plant performance has already exceeded our expectations due in large part to effective winter turnarounds.

Scott Anderson: Proud to report that all plants that have come out of their annual turnaround have done so on time or faster than scheduled and are operating at higher rates since emerging from their planned downtime.

Scott Anderson: And importantly, all turned around were done without a single safety incident.

Scott Anderson: On the investment front, our CapEx spend is already paying dividends. For example, investments in raw meal at the Newberry facility in Florida are enhancing reliability, increasing throughput, and helping to drive higher operational equipment effectiveness, or OEE, a primary value driver of our synergy. Moreover, we are seeing exceptionally strong cohesion between our plants, our people, and the technical experts within our cement team. This seamless integration of talent is critical to knowledge sharing, troubleshooting, and facilitating performance improvements throughout our Summit network.

Scott Anderson: On the investment front, our Capex spend is already paying dividends for example.

Scott Anderson: Investments in the raw mill Newberry facility in Florida are enhancing reliability, increasing throughput and helping to drive higher operational equipment effectiveness or OA, a primary value driver of our synergies. Moreover, we are seeing exceptionally strong cohesion between our plants, our people and the technical.

Scott Anderson: Experts within our cement teams.

Scott Anderson: This seamless integration of talent is critical to knowledge sharing troubleshooting and facilitating performance improvements throughout our cement network moving forward all the core ingredients for continued margin expansion are in place positive pricing momentum and energy cost basket that remains favorable and the operational and commercial synergies that we believe are firmly within our.

Scott Anderson: Moving forward, all the core ingredients for continued margin expansion are in place, including positive pricing momentum, an energy cost basket that remains favorable, and the operational and commercial synergies that we believe are firmly within our control. Closing with our downstream businesses on slide 12. ReadyMix volumes remain negatively impacted by residential and light non-residential trends that show signs of improving but are still down overall.

Scott Anderson: Control closing with our downstream businesses on slide 12, ready mix volumes remained negatively impacted by residential and light nonresidential trends that show signs of improving but are still down overall reported growth primarily reflects acquisitions in Phoenix and the integration of Argos ready mix in our east and west segments.

Scott Anderson: The reported growth primarily reflects acquisitions in Phoenix and the integration of Argos ReadyMix in our east and west segments. On the back of infrastructure growth, organic asphalt volumes grew 9.4%, with strong performance in our two heaviest asphalt markets, North Texas and the Intermountain West. ReadyMix and Asphalt Pricing grew 12.5% and 7%, respectively, in the period, and collectively, adjusted cash gross profit margins were stable year-on-year, despite dilutive impacts from the acquired portfolio and softness in private end markets.

Scott Anderson: On the back of infrastructure growth organic asphalt volumes grew nine 4% with strong performance in our two heaviest asphalt markets, North, Texas and the inner mountain West.

Scott Anderson: Mix and asphalt pricing grew 12, 5% and 7% respectively in the period and collectively adjusted cash gross profit margins were stable year on year, despite dilutive impacts from the acquired portfolio and softness and private end markets.

Scott Anderson: As ReadyMix integration activity is well underway in key markets like Houston and Florida, we expect to have momentum to sustainably grow downstream margins over time. Unlike others, we are unapologetic yet selective about where we participate in downstream business. And when we can have leading positions in growth markets, we have proven we can deliver top-tier downstream profitability. With that, I will turn it back to Anne to close our prepared remarks. Thanks, Scott.

Scott Anderson: As ready mix integration activity is well underway in key markets like Houston, and Florida, we expect to have momentum to sustainably grow downstream margins overtime.

Scott Anderson: Unlike others, we are unapologetic, yet selective about where we participate and downstream businesses and when we can have leading positions in growth markets. We have proven we can deliver top tier downstream profitability.

Anne: With that let me turn it back to Ann to close our prepared remarks.

Anne P. Noonan: Thanks, Scott. Slide 14 succinctly summarizes how we see things today, and you'll notice our view is largely consistent with how we saw things in February. Specifically, we still see demand conditions accommodating margin growth. What I mean by that is, our 2024 margin outlook is not overly reliant on volume. Why that's especially prudent this year is because private end markets remain quite variable. Take residential, for example.

Anne: Thanks, Scott Slide 14, succinctly summarize how we see things today and you'll notice our view is largely consistent with how we saw things in February.

Anne P. Noonan: Specifically, we still see demand conditions accommodating margin growth what I mean by that is our 2024 margin outlook is not overly reliant on volumes.

Anne P. Noonan: While that's especially prudent this year because private end markets remain quite variable.

Anne P. Noonan: Already this year, we've witnessed healthy, seasonally adjusted trends in January and February, followed by plateauing and retrenching in March. Similarly, since non-residential is highly project and time-independent, we will be appropriately measured regarding the trajectory of non-residential at this point in the year. We're finding that commercial work seems to be sensitive to the higher-for-longer interest rate environment. As a result, the commercial project pipeline and backlogs remain promising, but the stark timelines for some of these projects could get pushed out this year.

Anne P. Noonan: Take residential for example, already this year, we've witnessed healthy seasonally adjusted trends in January and February followed by plateauing or retrenching in March. Similarly, since nonresidential is highly project and timing dependent we will be appropriately measured regarding the trajectory of nonresidential at this point in the year.

Anne P. Noonan: Finding that commercial work seems to be sensitive to the higher for longer interest rate environment. As a result, the commercial project pipeline and backlogs remain promising.

Anne P. Noonan: Stark timelines for some of these projects could get pushed out this year public by contrast is the one end market, where we have considerable conviction on both the direction and magnitude of that end market volume outlook. We are encouraged by trends in our markets, including the recent win of the multiyear $2 8 billion I 70 project that <unk>.

Anne P. Noonan: Public, by contrast, is the one end market where we have considerable conviction on both the direction and magnitude of that end market's volume outlook. We are encouraged by trends in our markets, including the recent win of the multiyear $2.8 billion I-70 project that expands the interstate from St. Louis to Kansas City.

Anne P. Noonan: <unk> the Interstate from St. Louis Kansas City.

Anne P. Noonan: This project will be accretive to pricing and benefit both our aggregates and cement businesses in 2024 and beyond. The primary point is that strong backlogs are underpinning mid-single-digit or better public market volume growth in 2024. In total, and on balance, our vantage point on demand is consistent with where it was three months ago.

Anne P. Noonan: This project will be accretive to pricing and benefit both our aggregates and cement businesses in 2024 and beyond.

Anne P. Noonan: Primary point is strong backlogs are underpinning mid single digits or better public market volume growth in 2024 in total and on balance our vantage point on demand is consistent with where it was three months ago public tailwind, mostly are more than offset by variability and private end markets. The swing factor on volumes.

Anne P. Noonan: Public tailwinds are mostly or more than offset by variability in private end markets. The swing factor on volumes will be private demand recovery, and at this point, we are cautiously optimistic that interest rate relief in the back half will spur greater activity. But for now, we aren't prepared to lean into that scenario.

Anne P. Noonan: We'll be on private demand recovery and at this point, we are cautiously optimistic that interest rate relief in the back half will spur greater activity, but for now we are prepared to lean into that scenario.

Anne P. Noonan: Switching gears to pricing, as we approach the mid-year pricing window, we do so with a strong track record of commercial execution and by reflecting the value our construction materials bring to their respective marketplaces. For aggregates, while our plans vary by locality and by product type, mid-year price increases will be across our markets and can be expected to range between low single-digits to 7% at the high end. As we effectively shift towards a dynamic, more frequent pricing model on aggregates, our sales teams are able to better leverage tools and processes to incorporate real-time cost information, demand conditions, and more adequately reflect the increased value that our reserves have in our market. And while we simplify the external discussion surrounding pricing, the reality is that we are constantly looking for instances to value price.

Anne P. Noonan: Switching gears to pricing as we approach the mid year pricing window, we do so with a strong track record of commercial execution and reflecting the value of our construction materials bring to their respective marketplaces on aggregates, while our plants very by locality and by product type midyear price increases will be across our markets and could be expected to range between.

Anne P. Noonan: Low single digit to 7% at the high end as we effectively shift towards the dynamic more frequent pricing model on aggregates. Our sales teams are able to better leverage tools and processes to incorporate real time cost information demand conditions are more adequately reflect the increased value that our reserves have in our markets.

Anne P. Noonan: And while we simplified the external discussion surrounding pricing. The reality is we are constantly looking for instances to value price.

Anne P. Noonan: In fact, we recently recognized conditions in certain East Coast markets that were suitable for an April price increase, and we swiftly moved on that intelligence and realized relatively strong market receptivity. These anecdotal trends give us increased confidence that the pricing environment remains healthy, and we look forward to solid traction for our mid-year pricing. On cement, we are maintaining our outlook that organic pricing should be up mid-single-digit in 2024. As always, you should expect us to take a market-by-market approach to pricing, as the demand environment and competitive sets will differ by region.

Anne P. Noonan: In fact, we recently recognized conditions in certain east coast markets that were suitable for an April price increase.

Anne P. Noonan: <unk> moved on that intelligence and we're realizing relatively strong market receptivity.

Anne P. Noonan: Anecdotal trends give us increased confidence that the pricing environment remains healthy and we look forward to solid traction for our mid year pricing actions.

Anne P. Noonan: <unk>, we are maintaining our outlook that organic pricing should be up mid single digit in 2024 as always you should expect us to take a market by market approach to pricing as the demand environment and competitive sets will differ by region for example, and as you'll recall, we priced our river market at $15 per ton in January.

Anne P. Noonan: For example, and as you'll recall, we priced our river market at $15 per ton in January, while the Mid-Atlantic and Southeast markets were more restrained around January 1st prices. More recently, we issued pricing letters across most Mid-Atlantic and Southeast markets that went into effect April 1st.

Anne P. Noonan: The mid Atlantic and southeast markets, where more restrained around January 1st pricing more recently, we issued pricing letters across most mid Atlantic and southeast markets that go into effect April one.

Anne P. Noonan: And consistent with our River, we anticipate realization to vary from marginal to 70% in certain markets. Contract timing, mix, and market dynamics will always influence the average sales price that we realize in any one quarter. Furthermore, we have select price increases expected to take place on June 1st. This tiered and surgical approach to pricing reflects, in our opinion, the positive yet rational nature of cement markets. As import costs have come down, there have been minor impacts on some of our markets.

Anne P. Noonan: Assistant with our river, we anticipate realization to vary from marginal to 70% in certain markets.

Anne P. Noonan: Fact timing mix and market dynamics will always influence the average sales price that we realize in any one quarter. Furthermore, we have select price increase is expected to take place on June one.

Anne P. Noonan: Tiered and surgical approach to pricing reflects in our opinion the positive yet rational nature of cement markets as input costs have come down there have been minor impacts some of our markets that said, we are definitely navigating these dynamics operating and largely supply constrained environment I believe that the cement pricing story.

Anne P. Noonan: That said, we are adeptly navigating these dynamics, operating in a largely supply-constrained environment, and believe that the cement pricing story will remain positive in both the near and long term. And remember, our market-based pricing decisions will coincide with our ongoing commercial synergy initiatives that include, among other things, working with customers to reset underpriced contracts to more market-competitive rates. In both aggregates and cement, we will take the opportunity to see how forthcoming price realization plays out prior to incorporating these further pricing actions into our formal 2024 guidance.

Anne P. Noonan: Main positive in both the near and long term and remember our market based pricing decisions will coincide with our ongoing commercial synergy initiatives that include among other things working with customers to reset underpriced contracts to more market competitive rates.

Anne P. Noonan: In both aggregates and cement, we will take the opportunity to see how forthcoming price realization plays out prior to incorporating these further pricing actions into our formal 2024 guidance for.

Anne P. Noonan: Regardless of what the fraction looks like, we know that pricing will be the most positive lever available to us to offset sticky cost inflation and create sustainable, profitable growth for our business. In combination with our commercial efforts, we expect our 2024 margins will benefit from operational improvements already underway across our network. Synergies in ReadyMix and Cement, as Scott discussed, are flowing through quicker than originally modeled and represent just the tip of the iceberg on our integration plan.

Anne P. Noonan: Regardless of what traction looks like we know that pricing will be the most positive lever available to us to offset sticky cost inflation and create sustainable profitable growth for our business in combination with our commercial efforts. We expect our 2020 for margins will benefit from operational improvements already underway across our network synergy.

Anne P. Noonan: In ready mix and cement as Scott discussed are flowing through quicker than originally modeled and represent just the tip of the iceberg on our integration plan.

Anne P. Noonan: Now, having been at the wheel for more than three months, we are in a position to confidently call up our synergies target to at least $40 million in 2024. This increase reflects three factors. First, a knock on wood, we have not uncovered any material negative surprises, a testament to our rigorous diligence process, as well as the transparency and strong partnership with the Argos team.

Anne P. Noonan: Now having been at the wheel for more than three months, we are in a position to confidently call up our synergy target to at least $40 million. In 2024. This increase reflects three factors first and knock on wood, we have not uncovered any material negative surprises a testament to our rigorous diligence process as well as the transparency and strong partnership with the <unk>.

Anne P. Noonan: Second, the increase reflects a quicker implementation and adoption of the Synergy Playbook. And third, we have greater confidence and visibility into synergies revealed once we took ownership of the business earlier this year, namely, greater aggregates pull through opportunities and commercial synergies. Our self-help margin levers extend beyond the Argos combination.

Anne P. Noonan: His team secondly increase reflects a quicker implementation and adoption of the synergy playbook and third we have greater confidence and visibility to synergies revealed once we took ownership of the business earlier this year, namely greater aggregates pull through opportunities and commercial synergies are self help margin levers extend beyond the Argos combination.

Anne P. Noonan: In fact, operational excellence within our aggregates line of business is a key value creation imperative on our path towards our 60% adjusted cash gross profit North Star target. This year, our OPEX team is pursuing aggressive productivity targets, recruiting talent, and building towards a best-in-class operations organization, conducting more onsite continuous improvement events than ever before. Together, we expect these actions will lift our 2024 aggregates margins by percentage points and set us on our course towards greater per unit revenue, as well as overall profitability for our aggregates line of business. In summary, our 2024 outlook has improved versus our February perspective. Demand, while variable, is coming in as expected.

Anne P. Noonan: In fact operational excellence within our aggregates business is a key value creation imperative on our path towards our 60% adjusted cash gross profit North star targets. This year, our opex team is pursuing aggressive productivity targets recruiting talent and building towards a best in class operations organization.

Anne P. Noonan: And conducting more onsite continuous improvement events than ever before together. We expect these actions will lift our 2020 for aggregates margins by percentage points and set us on a course towards greater per unit as well as overall profitability for our aggregates line of business.

Anne P. Noonan: In summary, our 'twenty 'twenty four outlook has improved versus our February perspective demand, while variable is coming in as expected.

Anne P. Noonan: Price remains the primary driver of organic top and bottom line growth, and we are uniquely positioned to deliver margin enhancement this year through meaningful synergy realization and ongoing operational improvements across the enterprise. These three factors fuel our increased adjusted EBITDA guide to $990 million at the midpoint and a reiteration that we anticipate an adjusted EBITDA margin between 23% and 24% this year. In closing, the four near-term priorities on slide 15 will chart Summit's course this year.

Anne P. Noonan: This remains the primary driver of organic top and bottom line growth and we are uniquely positioned to deliver margin enhancement this year through meaningful synergy realization and through ongoing operational improvements across the enterprise.

Anne P. Noonan: These three factors fuel our increased adjusted EBITDA guidance to $990 million at the midpoint and a reiteration that we anticipate adjusted EBITDA margin between 23% and 24% this year and closing the four near term priorities on slide 15, we'll charge Summit's course this year.

Anne P. Noonan: Safely integrate and deliver on our synergy commitments, accelerate profitable growth from aggregates both organically and inorganically, and effectively manage the balance sheet and cash flow to strengthen the portfolio and deliver superior returns to our shareholders. Thus far, we are adhering closely to these priorities and have a very strong first quarter to show for it, with greater success ahead in 2024. With that, I'll ask the operator to provide the required Q&A instructions, and then Scott and I would be happy to take your questions.

Anne P. Noonan: Safely integrate and deliver on our synergy commitments accelerate profitable growth from aggregates, both organically and inorganically and effectively manage the balance sheet and cash flow to strengthen the portfolio and deliver superior returns for our shareholders. Thus.

Anne P. Noonan: Thus far we are adhering closely to these priorities and have a very strong first quarter to show for it with greater success ahead in 2024 with that I'll ask the operator to provide the required Q&A instructions and that Scott and I would be happy to take your questions.

Operator: Hello everyone, we are now opening the floor for a question and answer session. If you'd like to ask a question, please press star and number one on your telephone keypad. Our first question comes from Stanley Elliott from Speichel. Your line is now open.

Speaker Change: Hello, everyone. We are now opening the floor for question and answer session. If you'd like to ask a question. Please press star and number one on your telephone keypad.

Operator: Our first question comes from Stanley Elliott from Stifel. Your line is now open.

Stanley Stoker Elliott: Good morning, everybody. Congratulations on the nice start to the year. Thanks, Stanley. I'm curious if you guys could talk a little bit more about the demand outlook for the balance of the year, how you think all of this will come together, and at one point, you had some commentary around, kind of, interest rates and that maybe being a bit of a boost. I thought I heard that in the back half of the year. Just, you know, any sort of color on the demand piece would be helpful, and then also, I guess, kind of how that leads into, you know, building out into next year. Thanks.

Stanley Stoker Elliott: Good morning, everybody congratulations on the nice start to the year.

Stanley Stoker Elliott: Expanded in Q2.

Stanley Stoker Elliott: Curious if you guys could talk a little bit more about the demand outlook.

Stanley Stoker Elliott: The balance of the year, how you think all of this will come together and at one point you had some commentary around kind of around interest rates and that maybe being a bit of a boost I thought I heard that in the back half of the year.

Stanley Stoker Elliott: Just.

Stanley Stoker Elliott: Any sort of color on the demand piece I think would be would be helpful. And then also I guess kind of how that lead them to.

Stanley Stoker Elliott: Building out into into next year. Thanks.

Anne P. Noonan: Thanks for the question, Stanley. So yeah, let's kind of talk about demand across the board. I'll kind of hit our end markets is probably the best way to do that. Overall, I will say there was a comment that our volumes that are baked into the guide are rather garish. And I'll explain why.

Speaker Change: Thanks for the question Stanley. So yeah, let's kind of talk about demand across the board I'll kind of hit our end markets is probably the best way to do that overall I will say, though is that.

Anne P. Noonan: Comment is that our volumes that are baked into the guide or rather guarded.

Anne P. Noonan: So as we go into residential, think about our residential volumes in the guide as being flat to down. And the reason for that is, as we went into Q1 and residential, we had a lot of weather, particularly in Texas and Florida, which are heavy residential markets for us. And so there could be some recovery in that, but we're not baking that into our guide right now.

Anne P. Noonan: And I'll explain why so as we go into residential think about our residential volumes in the guide as being flat to down and the reason for that is as we went into Q1 in residential we had a lot of weather, particularly in Texas, and Florida, which are heavy residential markets for us and so there could be some recovery in that but we're not baking that into our guide right now.

Anne P. Noonan: Now if I step back then and look at kind of the national forecast on single family permits and starts.

Anne P. Noonan: <unk> forecast would say its going up across on a national basis across the board, but as we've talked before Stanley. It is really market by market as we look at our residential segment and if I look at Houston consistent what we said last quarter Houston continues to normalize.

Anne P. Noonan: If I step back then and look at kind of the national forecast on single family permits and starts, the forecast would say it's going up across the board on a national basis. But as we've talked before, Stanley, it is really market by market as we look at our residential segment. And if I look at Houston, consistent with what we said last quarter, Houston continues to normalize, fortified by larger builders that can absorb interest rate shocks, great macro indicators, and, you know, inventories that are around 3.8 months. So supply is still very low there. Salt Lake City is slower to come back, as we predicted last quarter.

Anne P. Noonan: Fortified by larger builders that can absorb interest rate shocks right macro indicators and inventories that are around three eight months. So supply is still very low there salt Lake city is slower to come back as we predicted last quarter.

Anne P. Noonan: I would say there, though, inventories are only at 2.3 months, but we're seeing some leading indicators that are strong where our large builders are at building developments. We also see our asphalt backlogs as being three times of what they were a year ago going into residential. So there's pent-up demand in Salt Lake City. But I do think interest rates, to your point, need to come down a bit for that to really pop completely. So we're rather guarded in volume recovery there.

Anne P. Noonan: I would say there, though inventories are only up to three months, but we're seeing some leading indicators that are strong where our large builders are out building developments. We also see our asphalt backlogs as being three times, what they were a year ago going into residential so there's pent up demand in Salt Lake City, but I do think interest rates to your point need.

Anne P. Noonan: It's come down a bit for that to pop completely so we're rather guarded and volume recovery. There and then our other big market that I would say is Phoenix with the Diamondback acquisition, we've been really putting on a lot more residential projects, which were very positive about and again inventories are quite low there are permits.

Anne P. Noonan: And then our other big market that I would say is Phoenix. With the Diamondback acquisition, we've been really putting on a lot more residential projects, which we're very positive about. And again, inventories are quite low there.

Anne P. Noonan: Above the national average there, but were born multifamily, there, which will take a little longer to come in overall I'm residential, though very bullish on it if interest rates softened at all you will see a pop in our volumes Theres absolutely no dose, but in the guidance we have kept it rather guarded at this point, let's talk about nonresidential.

Anne P. Noonan: Our permits are running above the national average there, but we're more in the multifamily there, which will take a little longer to come in. Overall, I'm very bullish on residential, though. If interest rates soften at all, you will see a pop in our volumes. There's absolutely no doubt.

Anne P. Noonan: But in the guidance, we have kept it rather guarded at this point. Let's talk about non-residential. So there, I would say, think about flat to down.

Anne P. Noonan: So there I would say think about flat to down.

Anne P. Noonan: And the things I would point out to you there, we're very encouraged in 24 by the number of heavy non-residential projects, particularly the publicly funded ones. So the energy verticals, your semiconductors, and a big pickup in data centers. So we're holding a lot on those projects. We have a very rich and nicely diverse pipeline in that area. The area that we're looking at more carefully, though, is more privately funded commercial. And I point you to two areas specifically in our footprint.

Anne P. Noonan: And the things I would point to you that we're very encouraged in 'twenty four but the number of heavy nonresidential projects, particularly the publicly funded one so the energy verticals, you're semiconductors and a big pickup in data centers. So were holding a lot on those projects, we have a very rich at nicely diverse pipeline in that area the area that.

Anne P. Noonan: We're looking at more carefully though is more of a privately funded commercial and I'd point you to two areas specifically in our footprint. So salt Lake City is one of our you know what I'd say is big box private commercial markets. There, we're seeing some projects pushed to the second half.

Anne P. Noonan: So Salt Lake City is one of our, you know, what I say is the big box private commercial markets. There, we're seeing some projects push to the second, in Midland or in Mainland, in British Columbia, we've had two large projects pushed into 2025. And that's purely a function of interest rates being higher for longer. Overall, though, we're very bullish on this segment. As we've said before, we're uniquely positioned with our materials-led portfolio, which is both aggregates and cement-intensive. And we're in the right geographies with plenty of land and space to support these projects. Public, the story is the same as I told you before.

Anne P. Noonan: <unk> Midland or a mainland in British Columbia, We had two large projects pushed into 2025, and that's purely a function of interest rates higher for longer.

Anne P. Noonan: Overall, though we're very bullish on this segment as we've said before we're uniquely positioned with our materials led portfolio, which are both aggregates and cement intensive and we're in the right geographies with plant Atlanta space to support these projects public. The story is the same as I told you before there we've got really high growth the IHA a dollars are.

Anne P. Noonan: There We've got really high growth. The IIJA dollars are flowing with over $28 billion into our top eight states since fiscal 2022. We're above the national average on contract highway and paving projects, running at 21%, which is 11 percentage points above the national average in our top eight states. Our states are really, really strong from a DOT perspective, 16% up year over year, which is 12% above the national average. And more importantly, our backlogs are strong. So we're saying, you know, in Texas and in our Colorado region, we're seeing really strong performance. And so we'd say mid single digit plus, and I'd say that's kind of conservative.

Anne P. Noonan: Flowing with over 28 billion into our top eight states since fiscal 2022, we're above the national average on contract highway and paving wards running at 21%, which is 11 percentage points above the national average and our top eight states or states are really really strong from a DLT perspective, 16% up year over.

Anne P. Noonan: A year, which is 12% above the national average and more importantly, our backlogs are strong so there, we're saying in Texas and in our.

Anne P. Noonan: Colorado region, we're seeing really strong performance and so we'd say mid single digits digit plus and I'd say, that's kind of conservative. So overall, if I step back from what we talked about you're absolutely correct and for.

Anne P. Noonan: So overall, if I step back from what we talked about, you're absolutely correct. Interest rates would boost us. We're pushed to the back half of our volumes, but we're not relying on that or stepping into that right now. I think next year we will be woefully underbuilt in this country. Those private end markets have to pop at some point, so I would remain cautiously optimistic that next year we'll have a very strong year in those end markets. Thanks, Dan.

Anne P. Noonan: Interest rates would boost us were pushed to the back half of our volumes, but we're not relying on that are stepping into that right. Now I think next year. We are woefully under built in this country. Those private end markets have to pop at some point. So I would remain cautiously optimistic that next year, we'd have a very strong year in those end markets.

Anne P. Noonan: Thanks so much and best of luck!

Dan: Perfect and thanks, so much and best of luck.

Dan: Thanks Stanley.

Trey Grooms: The question comes from Trey Grooms from Stephens. Your line is now open.

Anne P. Noonan: Question comes from Trey Grooms from Stephens. Your line is now open.

Trey Grooms: Hey, good morning everybody, and congratulations on the great results in the margins for the quarter. So my first question, Sure. My question is, well, I have several, but I'm just going to hit on pricing and cement. You know, you had the January increases in your legacy markets. And, you know, you clearly got some traction there. And you mentioned that you're out with some increases announced for April, I think Mid Atlantic and Southeast, if I heard it right.

Trey Grooms: Hey, good morning, everybody and congrats on the great.

Trey Grooms: And the margins in the quarter.

Trey Grooms: So my first.

Trey Grooms: Could you maybe give us any color on how those are coming along here, you know, a month or so into them, and, you know, just maybe how the reception's been there?

Trey Grooms: Sure.

Trey Grooms: My question is.

Trey Grooms: Well I have several but I'm just going to hit on the pricing in cement.

Trey Grooms: You you had the January increases in your legacy markets and you've clearly got some subtraction there.

Trey Grooms: And you mentioned that you are out with some increases announced for April I think mid Atlantic and southeast if if I heard it right could you maybe give us any color on I know, it's a little early but any color on how those are coming along here a month or so into them and just maybe how the reception has been there.

Anne P. Noonan: Great. So, you know, cement pricing, clearly, as you're correct, Trey, we went with very strong pricing on our Legacy Summit business. As is traditional with us, in the January price increase, we went out with $15 a ton. And we had, you know, as typical, mixed receptivity on the lower part of our river and the upper part.

Trey Grooms: Great. So cement pricing clearly as you're correct Trey we blend with very strong pricing on our legacy summit business as is traditional with us and the January price increase we went out with $15 a ton and we had you know as typical mixed receptivity on the lower part of our river in the upper <unk>.

Anne P. Noonan: So in the lower part of the river, which is more important expose small part of our revenue, but there it was marginal price realization on the upper part in our more northern markets. We had very strong over 70% realization now if you really drill into our pricing and what you saw actually realized in our Q1 from our legacy summit business.

Anne P. Noonan: So, in the lower part of the river, which is more exposed to imports, a small part of our revenue, but there was marginal price realization. On the upper part, in our more northern markets, we had very strong over 70% realization. Now, if you really drill into our pricing, and what you saw actually realized in our Q1 from our Legacy Summit business, it was actually flat sequentially. And the reason that's not atypical for us is because it's our lowest volume, because all our plants are down.

Anne P. Noonan: It was actually flat sequentially and the reason that's not atypical for us because it's our lowest volume because all our plants are down and so its a lower volume quarter on top of that you had a mix effect because our northern markets had our higher pricing and of course less volume you hardly have any volume coming from that and then the other factor I'd point to the reason.

Anne P. Noonan: And there's, so it's a lower volume quarter. On top of that, you had a mixed effect because our northern markets had our higher pricing, and of course, less volume; you hardly have any volume coming from that. And then the other factor I'd point to, the reason you're not seeing that big January price increase from the Legacy Summit in Q1, is because our larger contract customers come in to play more in Q2 and Q3.

Anne P. Noonan: Youre not seeing that big January price increase from the legacy see somewhat in Q1 is because our larger contract customers come into play more in Q2 and Q3. So we're very confident that pricing is going to roll through and we've had strong execution on the legacy summit into Q2 and Q3. There were also some selective price increases on the legacy Argo side, but as we talked last quarter.

Anne P. Noonan: So, we're very confident that pricing is going to roll through, and we've had strong execution on the Legacy Summit into Q2 and Q3. There were also some selective price increases on the Legacy Argo side, but as we talked last quarter, they were less than we would have gone out with. That being said, the team has really stepped back, to your point, Trey, they've looked at April price increases, and they've gone out at about $4 to $6 a ton.

Anne P. Noonan: They were less than we would have gone out with that being said the team have really step back to your point trade they've looked at April price increases they've gone out at about four to $6 a tonne I'm very surgical in selective customer market by market and we're seeing some nice realization on that so we're we're very optimistic at this point in time on that pricing.

Anne P. Noonan: Very surgical and selective customer, market by market, and we're seeing some nice realizations on that. So, we're very optimistic at this point in time on that pricing sticking as we go throughout the year. That's not built fully into our guide at this point.

Anne P. Noonan: Taking as we go throughout the year, that's not built fully into our guide at this point. We also have June 1st of July 1st price increases that were at as we go through the rest of the year I would say if I step back on cement pricing overall I would describe it as a little bit of a messy year, because we're trying to get our arms around customer market and really.

Anne P. Noonan: We also have June 1st and July 1st price increases that we're at as we go through the rest of the year. I will say, if I step back on cement pricing overall, I describe it as a little bit of a messy year because we're trying to get our arms around the customer market and really increase the prices. Moving forward, what you can expect from our cement price increase is that you will see our value pricing, our commercial excellence, people, process, and tools applied over those 6 million tons, which will have a very positive effect on pricing in cement moving forward.

Anne P. Noonan: The pricing moving forward, what you can expect on our cement price increasing is that you will see our value pricing, our commercial excellence people process and tools applied over those 6 million tonnes, which will have a very positive effect on pricing in cement moving forward in 2024 as I said in my prepared comments, we're saying no.

Anne P. Noonan: In 2024, as I said in my prepared comments, we're saying, look, factory in mid-single digits, but understand we have not factored into that the April and mid-year price increases that we're out there really executing very well on. We're very confident in our ability to do that because, if we look at the markets overall, they're still largely supply constrained, and customers recognize the value that we bring in these cement investments that we make. Overall, positive on cement pricing as we move throughout the year, and think about the mid-single digit as a floor-to-pricing trade.

Anne P. Noonan: Factoring in the mid single digits, but understand we have not factored into that.

Anne P. Noonan: April and mid year price increases that were out there really executing very well on that we're very confident in our ability to do that because if we look at the markets overall, they're still largely supply constrained and customers recognize the value that we bring in the cement investments that we're bringing to the market. So overall positive on cement pricing as we move throughout the year.

Anne P. Noonan: And think about the mid single digits as a floor to pricing Trey.

Trey Grooms: Yep, got it. And just for a little bit of clarity on that comment a minute ago about the June and July increases that you said are out there in some select markets, are those more kind of legacy markets, or are those more your kind of newer markets gained with Argos?

Speaker Change: Yep got it and just for a little bit of clarity on that comment a minute ago on the June and July increases that you said are out there in some select markets are those more kind of legacy markets or are those more your kind of newer markets gained with Argos.

Anne P. Noonan: Yeah, so good question, Trey. So it's the legacy that's mainly what we're talking about here at the June market. So some of these larger contracts you've heard us talk about that were underpriced relative to the market are rolling off contracts; we're actively working on those as we go through, you know, the first 12 to 18 months of our ownership. Basically, if they are go-sack assets, as is traditional with the summit business, we will be opportunistic and go for mid-year price increases.

Trey Grooms: Yeah. So good question Trey so it's the legacy are mainly what we're talking about there on the June market. So some of these larger contracts you've heard us talk about that were underpriced relative to market are rolling off contract. So we're actively working on those as we go through the first 12 to 18 months of our ownership basically if they are.

Anne P. Noonan: Assets as is traditionally with the summit business, we will be opportunistic and going for a mid year price increases and you know all.

Anne P. Noonan: And, you know, all the indications we have right now are that the second half would be where demand picks up in cement. And that's where we would be very opportunistic and go on across the entire legacy summit and legacy articles business for July price increases.

Anne P. Noonan: Indications, we have right now is that second half would be where demand would pick up in demand and that's where we would be very opportunistic and going on across the entire legacy summit and legacy oracles business for July price increases.

Trey Grooms: Got it. That's all great color. Thanks, Anne. Thanks, Trey.

Trey Grooms: Got it that's all great color. Thanks Ann.

Trey Grooms: Thanks Ray.

Trey Grooms: Yeah.

Anthony James Pettinari: Your question comes from Anthony Pettinari from Citi. Your line is now open.

Trey Grooms: Question comes from Anthony Pettinari from Citi. Your line is now open.

Anthony James Pettinari: Okay.

Anthony James Pettinari: Hi, good morning.

Anthony James Pettinari: Hey, just following up on Trey's question on cement pricing, you also talked about some markets where imports have had an impact, and you talked about, you know, the southern part of the river. I was just wondering if there's any more kind of color you can give there in terms of, you know, the acquired Argos markets and, you know, to what extent imports have had an impact in the south.

Anthony James Pettinari: Lenny just Oh, Hey, just following up on <unk> question on cement pricing. You also you talked about some markets where imports have had an impact and you talked about southern part of the river just wondering if theres any more kind of color you can give there.

Anthony James Pettinari: In terms of the acquired Argos markets and you know to what extent imports had an impact on the quarter.

Anne P. Noonan: Sure, so overall, we said this last year and going into this year that import pricing in general is down. The other factor that I would say is that our footprint overall, both Summit and Legacy Argos, is quite lowly exposed to imports. Where our exposure exists, Anthony, is in Louisiana, so the Gulf, it's in Houston, and to a much lesser extent in Florida.

Speaker Change: Sure. So overall, we said this last year and going into this year that import pricing in general is down the other.

Anne P. Noonan: With that I would say is that our footprint overall, both summit and legacy Argos is quite lowly import expose where our exposure exists Anthony is in Louisiana. So the Gulf, it's in Houston and to a much lesser extent in Florida. So we're not heavily import exposed as a business, which is the beauty of it.

Anne P. Noonan: So we're not heavily exposed to imports as a business, which is the beauty of this combination. Where we are, our team has done a superb job of navigating those conditions, employing value pricing, really delivering and focusing on the quality of the product that we bring. And frankly, you know, customers there, the larger customers, value the fact that when supply-demand dynamics get tight, Summit is the domestic producer in those markets, and we will continue to have high-quality products.

Anne P. Noonan: This combination.

Anne P. Noonan: Where we are our team has done a superb job of navigating those conditions.

Anne P. Noonan: Employee value pricing really delivering on focusing on our quality of the product that we bring and frankly customers. They are the larger customers value. The fact that when supply demand dynamics get tight summit is the domestic producer in those markets and we will continue to have high quality products. So we've not seen a V.

Anne P. Noonan: So, we've not seen a very large impact, but you see it in the range that we give you on cement pricing, particularly, I spoke about it in the Legacy Summit business, for marginal price realization in Louisiana. But to put that in perspective, on the Legacy Summit business, that's about 5% of our revenue. The vast majority of our business is in the Northern Marks. So not a major impact.

Anne P. Noonan: Very large impact, but you see it in the range that we gave you on cement pricing, particularly I spoke about it in the legacy summit business for marginal price realization in Louisiana, but to put that in perspective on the legacy summit business. That's about 5% about revenue the vast majority of our business is in the northern markets.

Anne P. Noonan: So not a major impact for us.

Anthony James Pettinari: Oh, okay. Okay, that's very helpful. And as you look at kind of freight rates and shipping times, any thoughts in terms of whether that import pressure is increasing or lessening or kind of consistent with what you thought, just kind of going forward?

Speaker Change: Oh, okay. Okay, that's very helpful.

Anne P. Noonan: As you look at kind of freight rates and shipping times I mean, any any view in terms of whether that import pressure is.

Anthony James Pettinari: Increasing or lessening or kind of consistent with what you saw.

Anthony James Pettinari: Just kind of going forward.

Anne P. Noonan: Yeah, I think it's pretty much consistent. It's behaving exactly as we thought, and frankly, we're definitely not seeing it increasing. And as I point out in my comments to Trey, in the second half, we see volumes being much tighter on cement, and especially if interest rates pop, you know, that import impact will be much less. So there might be some, you know, as we come into the year, some people had some import volumes, they brought in some of the producers, and that's kind of being used, I think about as that being, you know, basically run down here And in the first half, but I don't see it as being a major impact on our, particularly Summit's 2024 results.

Speaker Change: Yeah, I think it's pretty much consistent it's behaving exactly as we thought frankly, we're definitely not seeing it increasing.

Anne P. Noonan: And as I pointed out in my comments to trade in the second half, we see really volumes being much tighter on cement and especially if interest rates pop.

Anne P. Noonan: That import impact will be much less so there might be some you know as we come into the year. We said some people had some import volumes. They brought in some of the producers and that's kind of been used to think about it that being you know.

Anne P. Noonan: Basically run down here in Q1 and in the first half, but I don't see it as being a major impact on our strictly unsub its 2024 results.

Anthony James Pettinari: Okay, that's very helpful. I'll turn it over.

Speaker Change: Okay. That's very helpful I'll turn it over.

Garik Simha Shmois: Our next question comes from Garik Shmois from Blue Capital Markets. Your line is now open.

Anne P. Noonan: Our next question comes from Garik <unk> from <unk>.

Garik Simha Shmois: Capital markets. Your line is now open.

Garik Simha Shmois: Oh hi, thanks for having me on. I just wanted to ask, just stepping back, how you're thinking about the full-year guidance? You took up the low-end after a very strong 1Q. You have a couple things in the works here with better synergies.

Garik Simha Shmois: Oh, hi, Thanks for having me on just harder.

Garik Simha Shmois: Just stepping back how are you thinking about the full year guidance.

Garik Simha Shmois: Took up the low end after very strong once you you have a couple of things in the works here with better synergies.

Garik Simha Shmois: Maybe there are some some additional pricing that's not baked in your guidance.

Garik Simha Shmois: You know, maybe there's some additional pricing that's not baked in your guidance. And then, you know, historically, 1Q has been about 10% of your full-year EBITDA. Not perfect, but that's been the historical run rate. So just curious as to, you know, how you're thinking about the guide this year? You know, perhaps why you didn't take the upper end of the range higher? And is there anything holding you back from potentially having a more bullish outlook than you offered up today?

Garik Simha Shmois: And then historically <unk> has been about 10% of your full year EBITDA I'm not perfect, but that's been the historical run rates. So just curious as to how you're thinking about the guide this year, perhaps why you didn't take the upper end of the range higher.

Garik Simha Shmois: And is there anything holding you back from from pension actually.

Garik Simha Shmois: Having a more bullish outlook. Then you then you offered up today.

Anne P. Noonan: Hey, thanks for the question, Garik. So let's kind of get grounded on the numbers a little bit. First, I think that'd be helpful.

Speaker Change: Hey, Thanks for the question, Eric So, let's kind of get grounded on the numbers a little bit first I think that'd be helpful.

Speaker Change: So we last when we reported last we put our first quarter guidance at about 98 million of EBITDA, we see the beta on that it is at about say $22 million of EBITDA. We added to your point 10 million of synergies in there and as you look at that number.

Speaker Change: We've been very active on the portfolio optimization, and so take a negative $10 million.

Anne P. Noonan: So when we reported last, we put our first quarter guidance at about 98 million EBITDA. We see the beat on that at about, say, 22 million EBITDA. We added to your point 10 million of synergies in there. And, you know, as you look at that number, we've been very active on the portfolio optimization end. So take a negative 10 million net of EBITDA for divestitures and acquisitions. That leaves us with about $12 million we didn't bake into the guide. Well, why might you call that conservative?

Speaker Change: Nash on EBITDA of divestitures and acquisitions, so that leaves us with about $12 million, we didn't bake into the guide well like you might call that conservative it's really very consistent with what we've always done our planning stance has always been for the first quarter, our lowest quarter in the year not to get out ahead of our skis. This team has.

Anne P. Noonan: It's really very consistent with what we've always done. Our planning stance has always been for the first quarter, our lowest quarter in the year, not to get out ahead of our skis. This team has consistently under-promised and over-delivered, and we're not going to go away from that stance. So call it conservatism.

Anne P. Noonan: Consistently under promised and over delivered and we're not going to go away from that stance. So call. It conservatism you know what.

Anne P. Noonan: You know, what we factor in that conservatism is around this is a big year of integration. While it's going phenomenally well, and I'm extremely proud of our team and how they're executing, things happen during integrations. I don't see anything.

Anne P. Noonan: We factor in that conservatism is around you know this is a big year of integration of wireless going phenomenally, well and I'm extremely proud of our team and how they're executing things happened on integrations I don't see anything I have not seen any negative surprises, but theres always that potential. The other thing I'd say is you know costs, we expect them to basically moderate off but we're not seeing that yet.

Anne P. Noonan: I have not seen any negative surprises, but there's always that potential. The other thing I'd say is, you know, costs. We expect them to basically moderate off, but we're not seeing that yet. And we've pointed out some variability in end markets that we haven't leaned into, even though we feel we're cautiously optimistic they'll be good. So that'll give you some context around how we put the guide together. Let me kind of then move to where we really see 2024 from our perspective, how our team is acting against 2024. I see this guide as not only achievable but beatable.

Anne P. Noonan: And we've pointed out some variability in end markets that we haven't leaned into even though we feel we're cautiously optimistic that will be good. So that'll give you some context around how we put the guide together, let me kind of then moved to where we really see 2024 from our perspective of how our team is acting against 2024 I see this guide as not only achievable.

Anne P. Noonan: But beatable.

Anne P. Noonan: I also would point to the fact that like I said last quarter think about scaling up into the right and what drives that to your point Garik as we have not put in our mid year price increases and we are very constructive pricing environment in both cement and aggregates, but that's a definite upside and then the other point we talked about is this variability on private.

Anne P. Noonan: I also would point to the fact that, like I said last quarter, think about skewing up and to the right. And what drives that to your point, Garrett, is we have not put in our mid-year price increases, and we have very constructive pricing environments in both cement and aggregate. So that's a definite.

Anne P. Noonan: And then the other point we talked about is this volatility in private end markets in particular. We feel we're cautiously optimistic that interest rates will soften and that would give us, we have a very low volume guide here, and so any pop and volume at all is going to push us up and to the right. The bottom line is that we view ourselves as a billion plus EBITDA business, and we have a lot of confidence in delivering tremendous growth in both profit and margin to our shareholders in 2024.

Anne P. Noonan: End markets in particular, we feel we're cautiously optimistic that interest rates will soften and that would give us we have a very low volume guide in here and so any pop in volume at all it's going to push us up into the right bottom line is we view ourselves as a 1 billion plus EBITDA business and we have a lot of confidence in delivery tremendous growth on both.

Anne P. Noonan: Profit and margin expansion to our shareholders in 2024.

Garik Simha Shmois: That makes sense. Thanks for all that. I'll pass it on. Thanks, Garik. Our next question comes from Adam.

Speaker Change: That makes sense, thanks for all that I'll pass it on.

Speaker Change: Thanks, Gary.

Adam Robert Thalhimer: Our next question comes from Adam Thalhimer from Thompson. Your line is open.

Speaker Change: Our next question comes from Ed had been telling me Oh Hymer from Thompson. Your line is now open.

Adam Robert Thalhimer: Hey, good morning, guys great quarter.

Speaker Change: And Garik just asked the only question that matter and so I Gotta go down the list here.

Adam Robert Thalhimer: What's your G&A outlook for the rest of the year.

Scott Anderson: Scott, you want to take that one? Sure, sure, Adam.

Adam Robert Thalhimer: It wouldn't take that was eastern cross Guy sure Adam I know, we had a good start on G&A.

Scott Anderson: You know we had a good start on G&A. We're, you know, that was part of our synergy plan to really take out some costs on the G&A side. You will see it build some in the rest of the quarters of the year. We are building out capabilities on the operational excellence side, and so there's some cost there. So you are going to see that come up some. But overall, you know, that 8%, and we're working on that pathway to 7% of revenue. So we'll continue to take advantage of the scale that we're getting as part of this transaction. But certainly, off to a good start. We're seeing the effects early on here of some of the decisions.

Scott Anderson: That was part of our synergy plans are really take out some costs on the G&A side, you will see it build some in the rest of the quarters of the year. We are building out capabilities on the on the operational excellence side.

Scott Anderson: And so there's some cost there. So you are going to see that would come up some.

Scott Anderson: But overall, you know that 8% and we're working on that pathway to 7% of revenue.

Scott Anderson: So we will continue to take advantage of the scale that we're getting on part of this transaction.

Scott Anderson: But <unk>.

Scott Anderson: Certainly off to a good start we are seeing the effects early on here of some of the decisions we make.

Speaker Change: Okay sounds good thanks.

Kathryn Ingram Thompson: Our next question comes from Kathryn Thompson from Thompson Research Group. Your line is now open.

Scott Anderson: Our next question comes from Kathryn Thompson from Thompson Research Group. Your line is now open.

Kathryn Ingram Thompson: Hi, thank you for taking my question today. This is a bigger picture question about the summit business. And really, it's around managing costs over the near and long term. So in other words, not just necessarily in 2024.

Kathryn Ingram Thompson: Hi, Thank you for taking my question today. This is a just a bigger picture question on the cement business.

Kathryn Ingram Thompson: It's around managing cost over the near and long term and that's not the worst not just necessarily 2024.

Kathryn Ingram Thompson: A couple of different factors you have news of our current administration.

Anne P. Noonan: A couple different factors; you have news of the current administration, further, regulating and shutting down coal-fired plants, which is going to impact access to fly ash in the eastern part of the U.S. Alongside that, just the parabolic demand for utility needs to meet growing A.I. demands. This all impacts the cost structure overall for cement production. How does Summit Approach Managing These Costs? Including initiatives that you already have underway and those that you may undertake going forward. Thank you.

Kathryn Ingram Thompson: Further frankly.

Kathryn Ingram Thompson: Frank in writing in and shutting down coal fire plants, which is going to impact access to fly ash in the eastern part of the U S. Alongside that just the a parabolic demand for utility needs with unique growing AI demands.

Anne P. Noonan: It's all impacts.

Anne P. Noonan: Impacts to.

Anne P. Noonan: Cost structure overall for cement production.

Speaker Change: Uh huh.

Anne P. Noonan: The summit.

Anne P. Noonan: Approach managing these cost including initiatives that you already have underway and those that she may undertake going forward. Thank you.

Anne P. Noonan: Thanks for the question, Kathryn. So you know what I'd say at a high level, and thanks for kind of asking a broader question here from that perspective. As you know, we have been very forward looking on ESG, and we view all of our actions on ESG as being very value-accretive. And a lot of the programs that we're putting in place and why we're very confident about getting bigger in cement is because we are leaders in this area. We are leaders in PLC, we are leaders in alternative fuels, and we are totally committed to our carbon emissions reduction. What I would say to you is the US is a very different environment for regulation than Europe.

Speaker Change: Thanks for the question Catherine So you know what I'd say at a high level and thanks for asking a broader question here from that perspective.

Anne P. Noonan: So the US tends to be much more, Predictable works alongside industry to get to our carbon reduction targets, and we feel we're extremely well planned for that. Specific to your question on fly ash, we have been, I will give you an example, in our West region, we have very actively been replacing fly ash with a natural pozzolana, and we have a number of our innovation efforts around replacing fly ash over time.

Anne P. Noonan: As you know we have been very forward facing on ESG and we view all of our actions on E. S. Geos as being very value accretive and a lot of the programs that we're putting in place and why we were very constant getting bigger in cement is because we are leaders in this area. We're leaders in plc, we're leaders in alternative fuels we're totally.

Anne P. Noonan: Committed to our carbon emissions reduction what I would say to you is the U S is a very different environment. I'm regulation, then is Europe. So the U S tends to be much more.

Anne P. Noonan: Predictable works alongside industry to get to our carbon reduction targets and we feel we're extremely well planned for that specific to your question on fly Ash. We have been I will give you. An example in our west region, we have very active leap in replacing fly ash with eight natural puzzle and we have a number of our innovation efforts around replace.

Anne P. Noonan: <unk>.

Anne P. Noonan: Fly ash overtime, and so we feel we're very well planned and supported on that and we have a number of initiatives in that regard that will not increase our costs over time.

Anne P. Noonan: And so we feel we're very well planned and supported on that. And we have a number of initiatives in that regard that will not increase our costs over time. We are actively doing it today in our West region. So I'd point that to you. Now, can that increase over time? Potentially, yes.

Anne P. Noonan: We are actively doing it today in our west region. So I'd point back to you know Ken letting things over time potentially yes, but I also believe that cement is a very valuable and product and given that you have to invest in cement plants, our customers realize that and I would have no doubt that we could pass that cost alone and continue to expand our March.

Kathryn Ingram Thompson: But I also believe that cement is a very valuable end product, and given that you have to invest in cement plants, our customers realize that. And I would have no doubt that we could pass that cost along and continue to expand our margins in cement. If I understood your question, which I may not have on utilities and AI, I think it's more a demand picture for us, not a cost picture. From a data center perspective, these are very cement intensive, and we believe that our footprint and our materials that strategy will allow us to continue to grow in that area. And we see that as actually providing more volume and more pricing leverage in the future.

Kathryn Ingram Thompson: Cement.

Kathryn Ingram Thompson: If I understood your question, which I may not have on utilities and they I think it's more demand picture for us not a cost picture from a data center perspective. These are very spent intensive and we believe that our footprint in our materials that strategy will allow us to continue to grow in that area and we see that it's actually providing more volume and more pricing.

Kathryn Ingram Thompson: In the future.

Anne P. Noonan: Thanks very much. I hope that was great. Thanks again.

Speaker Change: Thanks, very much hopefully that'd be great question Catherine.

Kathryn Ingram Thompson: Yes.

Philip H. Ng: Our next question comes from Phil Ng from Jefferies. Your line is now open.

Anne P. Noonan: Our next question comes from Phil <unk> from Jefferies. Your line is now open.

Philip H. Ng: Congratulations on a really strong quarter, particularly on the margin side of things, both cement and aggregates, but my question is about aggregates. Strong margins in a seasonally slower quarter and yet some wet weather. So, you know, a big part of that was the improvement or actually relatively flattish type costs per ton. Scott, perhaps, what were the key drivers there? And how do you kind of think about maintaining a pretty contained cost front through the year? And can you kind of build off of the margins you kind of delivered in one shot on the aggregate side? You know, once again, pretty impressive.

Philip H. Ng: Congrats on a really strong quarter, particularly.

Philip H. Ng: Particularly on the margin side of things, both cement and aggregates, but my question is on aggregates.

Philip H. Ng: Strong margins in a seasonally slower quarter and yet somewhat weather. So you got a big part of that was the improvement or actually relatively flattish type costs per ton Scott, perhaps what were the key drivers there and how do you kind of think about.

Philip H. Ng: Painting, a pretty contained cost front through the year and.

Philip H. Ng: And can you kind of build off of the margins as you kind of delivered in <unk> on the aggregate side once again, a pretty impressive here.

Philip H. Ng: Yeah.

Scott Anderson: Yeah, Phil. Glad you picked up on the cost. That is a focus for us. And right out of the gate this year, we said operational excellence. You know, we've been going site by site doing these continuous improvement projects. We dropped $15 million from the bottom line last year.

Scott Anderson: Yeah Phil.

Scott Anderson: Glad you picked up on the cost that is a focus for us and right out of the gate. This year, we said operational excellence, we've been going through side by side doing these continuous improvement projects, we dropped $15 million to the bottom line last year.

Scott Anderson: We're going to double down our efforts. This year, we're building out those capabilities. We're very focused what we called an S. T. Vec sub total variable cost, which is our unit cost per ton of aggregates produced.

Scott Anderson: So youre going to see throughout the year, we're going to be very focused on just the efficiencies and it's side by side when you've got 230 quarries theres a lot of sites to cover but we're making good progress there, we're putting more resources to it.

Scott Anderson: We're going to double down on our efforts this year. We're building out those capabilities. We're very focused on what we call an STVC, subtotal variable cost, which is our unit cost per ton of aggregates produced. So you're going to see throughout the year that we're going to be very focused on just the efficiencies. And it's site by site. When you've got 230 quarries, there are a lot of sites to cover.

Scott Anderson: So youre going to see continued project progress on the cost side and that's how we're countering that inflation.

Scott Anderson: Then you picked up on the margins certainly prices coming through but with price and the cost relationship here, we're really going to see that margin this year expansion.

Scott Anderson: But we're making good progress there. We're putting more resources into it. So you're going to see continued project progress on the cost side. And that's how we're countering that inflation. And then you picked up on the margins.

Scott Anderson: So that's what we're excited about as you saw.

Scott Anderson: 51% cash gross profit margin store L T M.

Scott Anderson: Back in the fifties, we ended last year at 49 nine.

Scott Anderson: So we're moving in that direction towards that 60% North star.

Scott Anderson: And we're going after it.

Scott Anderson: Certainly price is coming through. But with price and the cost relationship here, we're really going to see that margin this year. It is an expansion. So that's what we're excited about. As you saw, 51% cash gross profit margin is our LTM. We're back in the 50s. You know, we ended last year at 49.9. So we're moving in that direction toward that 60% North Star. And we're going after it

Scott Anderson: Scott any more color on that on the cost per ton guidance for this year for eggs and how that kind of plays out this year quarter by quarter.

Scott Anderson: Scott, any more color on the cost per ton guidance for this year for ags and how that kind of plays out this year, quarter by quarter?

Scott Anderson: Yeah.

Philip H. Ng: Well, I'll tell you this, Phil. We're going to try to hold our costs flat. So we're going to try to offset that inflation. That's our goal. And so you'll see us working towards that endeavor throughout the year.

Scott Anderson: Well I'll tell you I'll tell you. This Phil we are we're going to try to hold our cost flat.

Philip H. Ng: So we're going to try to offset that inflation, that's our goal and so you'll see us working towards that endeavor throughout the year.

Scott Anderson: Now I will tell you, costs are not moderating as fast, and you guys haven't asked me about the cost inflation outlook, but it's more of the same. We keep saying it's going to moderate, but it's been very gradual in that moderation. We came off of a 9.5% inflation cost factor last year, and we're not coming down fast. We still are convinced it will moderate, but it's definitely probably going to be more of the back half. So we do have some energy tailwinds, but other than that, we're still facing some inflationary pressures.

Philip H. Ng: Now I will tell you the cost costs are not moderating as fast and.

Scott Anderson: You guys haven't asked me about the cost inflation outlook, but you know it's more of the same we keep saying, it's going to moderate and but it's been very gradual on that moderation. We came off of a nine 5% inflation cost factor last year.

Scott Anderson: And we're not we're not coming down fast.

Scott Anderson: We still are convicted it will moderate.

Scott Anderson: But it's definitely probably going to be more in the back half.

Scott Anderson: So we're we do have some energy tailwind, but other than that we're still facing some inflationary pressures.

Speaker Change: Okay I appreciate the call.

Brent Thielman: Our next question comes from Brent Thielman from D.A. Davidson. Your line is now open. Hey, thanks. Appreciate it. Just wanted to level set.

Brent Thielman: Our next question comes from Brent Thielman from D.A. Davidson.

Scott Anderson: Our next question comes from Brent Thielman from D. A Davidson your line is now open.

Brent Thielman: Your line is now open. Hey, thanks. I appreciate it. Just want to say

Brent Thielman: Hey, Thanks I appreciate it.

Brent Thielman: Just wanted to level set back on aggregates.

Brent Thielman: Is it the current view.

Brent Thielman: Could still see a little pressure on volume I guess organic into the second quarter just as some of these.

Brent Thielman: On our private sector headwinds linger for longer and then maybe you get some flattening out.

Brent Thielman: In the second half I guess relative to last year I'm, just trying to think about what sort of embedded for the aggregates demand outlook kind of sequencing.

Anne P. Noonan: Yeah, I think Brent, you're right on there. So you know, if I look at our full year on aggregates right now, we kind of think about us as down in the guide low single digits, we could see a way to flat. But what's in the guide is basically that, and that's, you know, we had a very rough Q1 with respect to weather in some of our aggregates intensive businesses in April was a bit wet.

Brent Thielman: Yeah, I think you're right on there so if I look at our full year on aggregates right now.

Anne P. Noonan: We're kind of think about us is down in the guide low single digits, we could see a way to flat.

Anne P. Noonan: But what's in the guide is basically that and that's you know we had a very rough Q.

Anne P. Noonan: With respect to weather and some of our aggregates intense businesses in April was a bit worse. So I would say Q2, because we could still see some pressure on the volumes second half, though you'll see some recovery on aggregates no doubt our team has that built in and that's driven really by our biggest part of our year is in Q2 or Q3, Q3s are absolutely biggest quarter of the year.

Anne P. Noonan: So I would say Q2, because we could still see some pressure on the volumes. In the second half, though, you'll see some recovery on aggregates, no doubt; our team has that built in. And that's driven really by our biggest part of our year is in Q2 and Q3. You know, Q3 is our absolutely biggest quarter of the year. And we're more of an all-season business moving forward, so definitely some second half improvement. And that's, you know, we haven't a lot built in there, though I will reinforce that to you, you know, in my comments to Stanley earlier, we do have some upside on volume that could potentially happen for two reasons.

Anne P. Noonan: And we're more than all season business moving forward. So definitely some second half improvement and that's you know we haven't a lot built in there, though I will reinforce that to you in my comments to Stanley earlier, we do have some upside on volume that could potentially happen for two reasons. One if we catch up on some of this Q1 weather.

Anne P. Noonan: That would help but secondly, if we get any kind of relief.

Anne P. Noonan: One, if we catch up on some of this Q1 weather, that would help. But secondly, if we get any kind of relief on volume uptick in the private end markets, with any kind of interest rate softening at all, we would see some volume pickup. But what's baked into our guide is pretty conservative, right?

Anne P. Noonan: On volume uptick in the private end markets with any kind of interest rates softening at all we would see some volume pick up but what's baked into our guide is pretty conservative right now.

Speaker Change: Yeah makes sense, Okay I appreciate it thank you.

Speaker Change: Thanks Brent.

David Macgregor: Our next question comes from David MacGregor from Longbow Research. Your line is now open.

Anne P. Noonan: Our next question comes from David Macgregor from Longbow Research. Your line is now open.

David Macgregor: Yes, good morning everyone, and thanks for taking the question. Anne, I wanted to go back to your comments around commercial opportunities and commercial synergies, and I realize that's something you couldn't really get your arms around until you closed the transaction and were able to sort of pull everybody together. Can you talk a little further about kind of your learnings there and why you're feeling more confident? If there's any way to size that opportunity, just on a tentative...

David Macgregor: Yes.

David Macgregor: Hey, everyone and thanks for taking the question and I wanted to go back to your comments around commercial opportunities commercial synergies and I realize that's something you couldn't really get your arms around until you close the transaction and were able to sort of pull everybody together.

David Macgregor: Can you talk a little further about kind of your learnings there and why you are feeling more confident if there's any way to size that opportunity just on Canada.

David Macgregor: That would be helpful and obviously, it's going to be big for 2025, but how significant could it be to 2024 in terms of its contribution and maybe what you've got in the guide.

Anne: Yeah. So David you know one of the things when we brought the the the synergies up to $40 million. The primary reason for that was you know our plants came up really fast and really well and OE was running above by about 5%. In addition to that the ready mixed synergies are coming in but to your point, we all Scott really confident.

David Macgregor: Because we saw it specifically some eggs pull through synergies.

David Macgregor: That we hadn't anticipated in the original number and specifically in Houston just to give you anecdotal points here Houston used a 40% upholstery is now 69%. So that's significant something we haven't identified the other commercial synergies I'd point, you to and Theres a multitude of these in our pipeline, but I'd point to cement the pricing that we have.

David Macgregor: <unk> talked about there we didn't have our arms around that at the beginning and if you recall on Investor day, we brought that number up that synergy number up and the reason for that was we said look we got all these underpriced. We've got three buckets one of contracts that were done as part of divestitures that are below market. We had larger customers that have more leverage on the Argos as a standalone unit.

David Macgregor: But those two buckets alone were below market by about $10 a ton and so think about those at about 15% of our volumes. So we says hey, those so that synergies are going to be $20 million to $25 million about half of those are about $10 million to $12 million is coming from increased commercial synergies. So that's a big chunk of it and as I referenced in.

David Macgregor: My comment to Trey about these April June July increases, we're going after those write down were pretty confident of our ability to deliver on the pricing. There's a load of other commercial synergies. You know if you were to think about procurement, we're getting a lot of those as well. The teams are identifying this pipeline everyday so I get more and more encouraged.

David Macgregor: And Scott, maybe you want to talk a little bit about the cadence of the synergies that $40 million in 2004 to give David a little bit more yes, David when you think about that pace of the $40 million.

Speaker Change: And mentioned, we're getting really good traction, but while we're getting good traction on the synergies I will I will say more more weighted towards that back half the second half of the year. It's just going to take some time for these synergies to really.

David Macgregor: Drive through to the results.

Anne: So I wouldn't expect half of them in June we will give up in the second quarter results. We will give you an update on the synergies, but I would expect less than half in the first year and then building as we move out through the year. Yeah. We're seeing also the combined footprint David.

David Macgregor: This exposure of adding our AG business with cement and ready mix, we're seeing some real customer interest and where we play now in the portfolio that we have a little give more color on that as we proceed throughout the year.

Speaker Change: Great good color, thanks, and congrats on all the progress.

Anne: Thanks, David.

David Macgregor: Our next question comes from Jerry Revich from Goldman Sachs. Your line is now open.

Speaker Change: Yes, hi, good morning, everyone and congratulations on the strong quarter.

Speaker Change: I wanted to ask on the <unk>.

David Macgregor: Dose cement business really phenomenal margins in the quarter of 35% EBITDA.

David Macgregor: Your Standalone business last year was 38% and 35% and the seasonally weakest quarters really jumped out at me I'm wondering could you just talk about how you expect the sequential margin cadence to play out and Santos Argos.

David Macgregor: From here just the par.

David Macgregor: Part of the business.

David Macgregor: Were there any moving pieces that surprised you in the outstanding first quarter margin performance for the acquired business.

Anne: Yeah, Jerry let me start when you talk about the margins. We are focused on the EBITDA margins, we've got a north star target on the cement a 45%. So we feel like we're just getting started on that journey.

David Macgregor: When we added the Argos assets. It did dilutive they were closer to that 35%, where we were up there like you had mentioned more than 38 to 39 are well on our way to about 40%.

David Macgregor: So you know out of the gate, it's really about these operating and get these plans to operating performance.

David Macgregor: We're investing in them, we're working on on the cost side of the business. If we can take cost out of these plants.

Anne: <unk> already talked about the pricing and the momentum we have there so that will continue and cement margins, we think theres a lot of opportunity as we will build in our processes into these new Argos plants.

David Macgregor: And on our way to about 45%.

David Macgregor: Super.

Speaker Change: Can I ask a follow up from an accounting standpoint, with the higher synergy numbers and the better performance out of the gate. It sounds like some of the balance sheet numbers related to the acquisition moved out moved around it sounds like depreciation moved up goodwill move down I'm wondering can you just expand on that because thats a good indicator for how the performance is tracking.

Anne: Yeah, I will tell you on the purchase accounting side, Jerry we just.

David Macgregor: Very standard you know you go through in an acquisition like this you got to revalue everything so once they did their appraisals, we got all the outside appraisals and the values put in it did move from where their book values were.

David Macgregor: It did move up these plants were more valuable than what they had them on the books and so anytime you reset that value you reset your depreciation figure. So that's that's driving the increase in depreciation in the DNA that you saw from the $3 30 to $3 80.

David Macgregor: And it's just a.

Anne: It's pretty standard and then the goodwill at $700 million pretty pretty expected was the base of synergies we have we feel pretty good about that as well.

Speaker Change: Super Thank you.

David Macgregor: ,......

David Macgregor: I'd now like to hand back over to Ken as we don't have any questions right now thank you.

David Macgregor: and maybe what you've got in the guide.

Anne P. Noonan: Yeah, so David, one of the things when we brought the synergies up to 40 million, the primary reason for that was, you know, our plants came up really fast and really well, and OEE was running over by about 5%.

Speaker Change: Great. Thank you. We appreciate everyone's time and attention on todays call are impressive results and our upgraded 2024 outlook underscore that summit materials is operating at a very high level with strong coordination and strategic focus across our businesses I would reiterate the conditions exist for a strong margin and EBITDA growth this year.

Anne P. Noonan: In addition to that, the ReadyMix synergies are coming in. But to your point, we also got really confident because we saw specifically some Ags pull through synergy, that we hadn't anticipated in the original number, and specifically in Houston, just to give you an anecdotal point here, Houston used to have 40% upholstery, it's now 69%, so that's significant, something we hadn't identified. The other commercial synergies I'd point you to, and there's a multitude of these in our pipeline, but I'd point to cement, you know, the pricing that we've talked about there, we didn't have our arms around that at the beginning, and if you recall on investor day, we brought that number up, that synergy number up, and the reason for that was, we said, look, we've got all these underpriced, we've got three buckets, one of contracts that were done as part of the best years that are below market, we had larger customers that had more leverage on Argos as a standalone unit, those two buckets alone were below market by about $10 a ton, and so think about those at about, you know, 15% of our volume, so we said, hey, those cement synergies are going to be $20 to $25 million, about half of those, so the $10 to $12 million is coming from increased commercial synergies, so that's a big chunk of it, and as I referenced in my comment to Trey about these April, June, July increases, we're going after those right now, and we're pretty confident in our ability to deliver on the pricing.

Anne P. Noonan: There's a load of other commercial synergies, you know, if you were to think about procurement, we're getting a lot of those as well, the teams are identifying this pipeline every day, so I get more and more encouraged, and, you know, Scott, maybe you want to talk a little bit about the cadence of the synergies, you know, that $40 million and $24 to get David a little bit more.

Scott Anderson: Yeah, David, when you think about that pace of the 40 million, Anne mentioned we're getting really good traction. But while we're getting good traction on the synergies, I would say more weighted towards that back half, the second half of the year. It's just going to take some time for these synergies to really drive through to the results. So you know, I wouldn't expect half of them in June. We will give you the second quarter results, and we will give you an update on the synergies, but I would expect less than half in the first year, and then it will build as we move out through the year.

Scott Anderson: Year, commercial excellence and value pricing being the primary growth driver, our cost moderation and material cost savings be as synergies and operational improvements was also contribute positively to our 2024 growth plans and when you consider our capacity to add eggs oriented targets to our portfolio, we have plenty of optimism around 2002.

David Macgregor: Yeah, we're also seeing the combined footprint, David, you know, this exposure of adding our ags business with cement and ReadyMix. We're seeing some real customer interest in where we play now and the portfolio that we have, and we'll get more color on that as we proceed throughout the year.

David Macgregor: Great, good colors. Thanks and congrats on all the progress.

Jerry Revich: Our next question comes from Jerry Revich from Goldman Sachs. Your line is now open.

Jerry Revich: Yes, hi, good morning, everyone, and congratulations on the strong quarter. I want to ask about the Argos cement business, really phenomenal margins in the quarter of 35%. You know, your standalone business last year was 38%, and you know, 35% in the seasonally weakest quarter really jumped out at me. I'm wondering, could you just talk about how you expect the sequential margin cadence to play out in cement Argos from here, just the cement part of the business? And, you know, were there any moving pieces that surprised you in the outstanding first quarter margin performance for the acquired cement business?

Scott Anderson: Yeah, Jerry, let me start. When you talk about the margins, we are focused on the EBITDA margins; we've got a North Star target for cement of 45%. So we feel like we're just getting started on that journey. When we added the Argos assets, it did dilute us; they were closer to that 35%, where we were up there, like you had mentioned, more than 38 to 39, well on our way to that 40%.

Scott Anderson: And so, you know, out of the gate, it's really about these operating performance. We're investing in them, we're working on the cost side of the business, if we can take costs out of these plants. Anne's already talked about the pricing and the momentum we have there. So that'll continue. And for cement margins, we think there's a lot of opportunity as we will build our processes into these new Argos plants and on our way to that 45%.

Jerry Revich: Super, and Scott, can I ask a follow-up from an accounting standpoint with the higher synergy numbers and the better performance out of the gate? It sounds like some of the balance sheet numbers related to that acquisition moved out, moved around, sounds like depreciation moved up, and goodwill moved down. I'm wondering, can you just expand on that because that's a good indicator for how the performance is tracking?

Scott Anderson: Yeah, I will tell you on the purchase accounting side, Jerry, it's very standard, you know, you go through in an acquisition like this, you got to revalue everything. So once they did their appraisals, we got all the outside appraisals, and the values put in, it didn't move from where their book values were, you know, it didn't move up; these plants were more valuable than what they had on the books.

Scott Anderson: And so anytime you reset that value, you reset your depreciation figures. So that's driving the increase in depreciation in the DDNA that you saw from the 330 to 380, and it's just a it's pretty standard, and then the goodwill at 700 million is pretty much expected with the basis synergies we have. We feel pretty good about that as well.

Jerry Revich: 24, we are positioned and confident we can deliver superior value creation for all summit stakeholders and we hope you share our optimism for the year ahead. Thank you for your continued support of summit materials and we hope you have a great day.

Anne P. Noonan: I'd now like to hand it back over to Anne, as we don't have any questions for now. Thank you.

Anne P. Noonan: Great, thank you. We appreciate everyone's time and attention on today's call. Our impressive results in our upgraded 2024 outlook underscore that Summit Materials is operating at a very high level, with strong coordination and strategic focus across our businesses. I would reiterate that conditions exist for strong margin and EBITDA growth this year, commercial excellence and value pricing being the primary growth driver, but cost moderation and material cost savings via synergies and operational improvements will also contribute positively to our 2024 growth plans.

Anne P. Noonan: And when you consider our capacity to add ags-oriented targets to our portfolio, we have plenty of optimism around 2024. We are positioned and confident we can deliver superior value creation for all Summit stakeholders, and we hope you share our optimism for the year ahead. Thank you for your continued support of Summit Materials, and we hope you have a great day.

Operator: Thank you so much for attending today's conference call. We hope you have a wonderful day. Stay safe.

Speaker Change: Thank you so much right that during today's conference call. We hope you have a wonderful day.

Operator: Yes.