Q2 2024 Summit Materials Inc Earnings Call

August 6, 2024

Thank you for standing by my name is Danica and I will be your conference operator today at this time I would like to welcome everyone to the summit materials second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Danica: Thank you for standing by. My name is Danica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Summit Materials second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: Thank you for standing by.

Danica: My name is Danica, and I will be your conference operator today.

Operator: At this time, I would like to welcome everyone to the Summit Materials second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.

Danica: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Andy Larkin, VP of Investor Relations. Please go ahead.

After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question Press Star one again, thank you.

Andy Larkin: I would now like to turn the call over to Andy Larkin, VP of Investor Relations. Please go ahead.

I would now like to turn the call over to Andy Larkin V P.

Andy Larkin: Investor Relations. Please go ahead.

Andy Larkin: Hello and welcome to the Summit Materials second quarter 2024 results conference call. Yesterday, we issued a press release detailing our financial and operating results. Today's call is accompanied by an investor presentation and a supplemental workbook highlighting key financial and operating data. All of these materials can be found on our Investor Relations website. Management's commentary and responses questions on today's call may include forward-looking statements, which, by their nature, are uncertain and outside of Summit Materials control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ in a material way. For a discussion of some of the factors that could cause actual results to differ, please view the risk factor 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.

Hello, and welcome to summit materials second quarter 2024 results conference call.

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

Speaker Change: All of these materials can be found on our Investor Relations website.

Speaker Change: 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.

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

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

Speaker Change: For a 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 or subsequent filings with the SEC.

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

Speaker Change: Can find reconciliations of the historical non-GAAP financial measures discussed in today's call in our press release.

Speaker Change: Today I'm pleased to be joined by summit Materials', CEO, Ed Noonan CFO Scott Anderson.

Andy Larkin: Today, I am pleased to be joined by Summit Materials CEO and Newman and TFO, Scott Anderson. And we'll begin our discussion by touching on key takeaways from the quarter and then outline our go-forward view on the business. Scott will follow with a detailed review of our financial performance. Afterwards, we're open to the line for questions. Out of respect for the analysts and the time we have allotted, please let me ask you one question and then return to the queue. So we can accommodate as many analysts as possible in the time we have available.

Andy Larkin: Today, I'm pleased to be joined by Summit Materials CEO Anne Noonan and CFO Scott Anderson, and we'll begin our discussion by touching on key takeaways from the quarter and then outline our go forward view on the business. Scott will follow with a detailed review of our financial performance. Afterward, we are open to the line for questions. Out of respect for the 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.

Speaker Change: And we will begin our discussion by touching on our key takeaways from the quarter and then outline our go forward view on the business.

Scott will follow with a detailed review of our financial performance.

Speaker Change: Afterwards, we will open the line for questions out of respect for the 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 at the time, we have available with that let me turn the call over to Ann.

Anne Noonan: With that, let me turn the call over to Anne.

Anne Noonan: Thank you, Andy, and thank you to everyone joining us on today's call. Summit Materials and our 7,500 employees successfully navigated dynamic market conditions to accelerate our strategic agenda and deliver strong financial performance in the second quarter. Among and central to our progress has been a cohesive focus on safety. For 2024, we are tracking ahead of target on nearly all of our safety metrics. And while our goal of 100% zero harm remains aspirational, we believe our combined organization is capable of and is tracking towards setting the safety standard in our industry.

Anne Noonan: Thank you, Andy, and thank you to everyone joining us on today's call. Summit Materials and our 7,500 employees successfully navigated dynamic market conditions to accelerate our strategic agenda and deliver strong financial performance in the second quarter. Among and central to our progress has been a cohesive focus on safety. For 2024, we are tracking ahead of targets on nearly all of our safety metrics. And while our goal of 100% zero harm remains aspirational, we believe our combined organization is capable of and is tracking towards setting the safety standard in our industry.

Ann: Thank you Andy and thank you to everyone joining us on today's call somewhat materials, and our 7500 employees successfully navigated dynamic market conditions to accelerate our strategic agenda and deliver strong financial performance in the second quarter, among and central to our progress has been a cohesive focus on safety for 2020.

We are tracking ahead of targets on nearly all of our safety metrics and while our goal of 100% zero harm remains aspirational. We believe our combined organization is capable of and is tracking towards setting the safety standards in our industry.

Anne Noonan: Before touching on our 2024 outlook, I want to briefly cover the key takeaways from our second quarter on slide four. From a strategic perspective, we are advancing all areas within our control. I'd highlight three in particular. First is the promulgation of commercial and operational excellence principles across our network, including the Argos USA assets, value pricing, upskilling our sales team, and the implementation of core operating principles are foundational to improving the quality of business, and critically, these initiatives can forge ahead regardless of the environment. Second are the integration-related activities that are generating synergies today and providing the runway for sustained synergy creation and value capture moving forward.

Ann: Before touching on our 2024 outlook I want to briefly cover the key takeaways from our second quarter on slide four from a strategic perspective, we are advancing all areas within our control I'd highlight three in particular first is the promulgation of commercial and operational excellence principles across our network, including the Argos USA asked.

Anne Noonan: First, is the promulgation of commercial and operational excellence principles across our network, including the Argos USA assets. Value pricing, upskilling our sales team, and the implementation of core operating principles are foundational to improving the quality of business. And critically, these initiatives can forge ahead regardless of the environment.

Ann: That's value pricing Upskilling, our sales team and the implementation of core operating principles are foundational to improving the quality of business are critically these initiatives can forge ahead, regardless of the environment.

Anne Noonan: Second are the integration-related activities that are generating synergies today and providing the runway for sustained synergy creation and value capture moving forward. And third, our ongoing efforts on both the buy and sell side to strengthen our footprint in furtherance of our Elevate Summit financial target. In the second quarter, we completed a bolt-on aggregates acquisition in our recently entered Florida market and shed a non-core asset in our South Region.

Ann: Are the integration related activities that are generating synergies today, and providing the runway for sustained synergy creation and value capture moving forward.

Anne Noonan: And third is our ongoing efforts on both the buy and sell side to strengthen our footprint in furtherance of our Elevate Summit financial target. In the second quarter, we completed a bolt-on aggregates acquisition in our recently entered Florida market, and shared a non-core asset in our South region. In all three of these strategic areas, we took action and ownership of our controllables, and as a result, delivered solid financial results again in this quarter. In addition to substantially growing adjusted EBITDA dollars, we estimate that on a pro-forma basis we were able to expand adjusted EBITDA margins in the second quarter and on a year-to-date basis by more than 200 basis points.

Ann: Third is our ongoing efforts on both the buy and sell side to strengthen our footprint in furtherance of our elevate summit financial targets in.

Ann: In the second quarter, we completed a bolt on aggregates acquisition and our recently entered Florida market and she had a noncore asset and our south region in all three of these strategic areas, we took action and ownership of our controllable and as a result delivered solid financial results again this quarter in.

Anne Noonan: In all three of these strategic areas, we took action and ownership of our controllables, and as a result, delivered solid financial results again this quarter. In addition to substantially growing Adjusted EBITDA dollars, we estimate that, on a pro-forma basis, we were able to expand Adjusted EBITDA margins in the second quarter and on a year-to-date basis by more than 200 basis points. Continued margin progress towards our North Star aggregates and cement targets were the primary catalysts for this year-to-date growth, demonstrating the power of our materials-dominated portfolio.

Ann: In addition to substantially growing adjusted EBITDA dollars, we estimate that on a pro forma basis, we were able to expand adjusted EBITDA margins in the second quarter and on a year to date basis by more than 200 basis points.

Anne Noonan: Continued margin progress towards our north star aggregates and cement targets, where the primary catalyst for this year-to-date growth, demonstrating the power of our materials dominant portfolio. We are driving sustainable growth by leveraging our national scale and hand-stereographic reach and leading positions in high growth markets. This renewed materials oriented portfolio combined with attractive and favorable geographic exposures are creating more economic resilient summit materials, one built for today's environment and tomorrow's opportunities. On integration, our Argo USA game plan is on track, having delivered 17.5 million in synergies through mid-year, well on our way towards our 40 million full-year target.

Ann: Continued margin progress towards our North star aggregates and cement targets were the primary catalyst for this year to date growth demonstrating the power of our materials dominant portfolio.

Anne Noonan: We are driving sustainable growth by leveraging our national scale, enhanced geographic reach, and leading positions in high-growth markets. This renewed materials-oriented portfolio, combined with attractive and favorable geographic exposures, is creating more economically resilient summit materials, one built for today's environment and tomorrow's opportunities.

Ann: We are driving sustainable growth by leveraging our national scale, and enhanced geographic reach and leading positions in high growth markets.

Ann: This renewed materials oriented portfolio combined with attractive unfavorable geographic exposures are creating more economically resilient to summit materials, one built for today's environment and tomorrow's opportunities.

Anne Noonan: On integration, our Argos USA game plan is on track, having delivered $17.5 million in synergies through mid-year, well on our way to our $40 million full-year target. Clearly, our momentum is building, we are scoring points on the board, and we are increasingly confident that we are taking all the right steps to improve the quality of the assets, improve our commercial positions, and, by extension, improve the profitability and growth profile of the Argos USA business.

Ann: On integration, our Argos USA game plan is on track I think delivered $17 5 million in synergies through mid year, well on our way towards our $40 million full year target clearly our momentum is building we are putting points on the board and we are increasingly confident that we are taking all the rights steps to improve the quality of the assets.

Anne Noonan: Clearly, our momentum is building. We are putting points on the board, and we are increasing the confidence that we are taking all the right steps to improve the quality of the assets, improve our commercial positions, and, by extension, improve the profitability and growth profile of the Argo USA business.

Ann: Improve our commercial positions and by extension improve the profitability and growth profile of the Argos USA business.

Anne Noonan: These strategic and financial advancements, together with a focused team and a fortified balance sheet, enable us to confidently reaffirm our full-year 2024 adjusted EBITDA guidance range of 970 million at the low end and 1 billion 10 million at the high end. Concurrently, 2024 adjusted EBITDA margins should land at the upper end or above our 23 to 24% expectations this year.

Ann: These strategic and financial advancements together with a focused team and a fortified balance sheet enables us to confidently reaffirm our full year 'twenty 'twenty four adjusted EBITDA guidance range of $970 million at the low end and $1 billion $10 million at the high end concurrently 'twenty 'twenty four adjusted EBITDA margins should land.

Anne Noonan: These strategic and financial advancements, together with a focused team and a fortified balance sheet, enable us to confidently reaffirm our full year 2024 Adjusted EBITDA guidance range of $970 million at the low end and $1 billion, $10 million at the high end. Concurrently, 2024 Adjusted EBITDA margins should land at the upper end or above our 23 to 24% expectations this year. Slide 5 provides our updated perspective on 2024, and what you'll see is that many of our outlook components are virtually intact from where they were at the end of the first quarter.

Ann: At the upper end or above our 23% to 24% expectations. This year.

Anne Noonan: Slide 5 provides our updated perspective on 2024. And what you'll see is that many of our outer components are virtually intact from where they were exiting the first quarter. I'm pricing with our mid-year expectations incorporated. We are calling for double-digit aggregates and mid-single digit organic pricing growth in cement for 2024. Our detailed Argo USA synergies in a moment, but we are reiterating our goal of at least 40 million dollars this year. And from a portfolio perspective, we anticipate building an even more resilient portfolio as we pursue ag-oriented bolt-ons and targeted geographies while continuing to optimize our existing asset base.

Ann: Slide five provides our updated perspective on 2024 and what you'll see is that many of our other components are virtually intact from where they were exiting the first quarter.

Anne Noonan: On pricing, with our mid-year expectations incorporated, we are calling for double-digit aggregates and mid-single-digit organic pricing growth in cement for 2024. I'll detail Argos USA Synergies in a moment, but we are reiterating our goal of at least $40 million this year. And from a portfolio perspective, we anticipate building an even more resilient portfolio as we pursue ags-oriented bolt-ons in targeted geographies while continuing to optimize our existing asset base. Now, what has been adjusted in our guide is an updated perspective on volumes due to two factors. Scott will cover the specific Q2 weather impacts in Houston, but more broadly, wet conditions, severe weather events, and constrained barge traffic along the Mississippi River have disrupted our ability to produce, sell, and service key markets.

Ann: On pricing with our midyear expectations incorporated we're calling for double digit aggregates and mid single digit organic pricing growth in cement for 2024.

Ann: I'll detail Argos USA synergies in a moment, but we are reiterating our goal of at least $40 million this year.

And from a portfolio perspective, we anticipate building an even more resilient portfolio as we pursue eggs oriented bolt ons in targeted geographies, while continuing to optimize our existing asset base now.

Anne Noonan: Now what has adjusted in our guide is an updated perspective on volumes due to two factors. Scott will cover the specific Q2 weather impacts and Houston. But more broadly, wet conditions, severe weather events, and constrained barged traffic along the Mississippi River has disrupted our ability to produce cell and service key markets. Fortunately, when conditions cooperate, we are seeing activity pick-up substantially. That is to say, we are cautiously optimistic that some or most of the lost volumes in markets like Houston can be recovered if we get a solid stretch of working days. In addition to weather, we are now reflecting an updated view on demand in geographies that are skewed towards commercial activity.

Scott Anderson: Now what has adjusted in our guide is enough data perspective on volumes due to two factors Scott.

Scott Anderson: Scott will cover the specific Q2 weather impacts in Houston, but more broadly wet conditions severe weather events and constrained barge traffic along the Mississippi River has disrupted our ability to produce sell and service key markets. Fortunately when conditions cooperate we're seeing activity pick up substantially that is to say we are.

Anne Noonan: Fortunately, when conditions cooperate, we are seeing activity pick up substantially. That is to say, we are cautiously optimistic that some or most of the lost volumes in markets like Houston can be recovered if we get a solid stretch of working days. In addition to weather, we are now reflecting an updated view on demand in geographies that are skewed towards commercial activity. As you recall, we had left open the possibility that with second half rate relief would come a second half recovery in private and market demand.

Scott Anderson: Just the optimistic that some or most of the lost volumes in markets like Houston can be recovered if we get a solid stretch of working days.

Scott Anderson: In addition to weather we are now reflecting an updated view on demand in geographies that are skewed towards commercial activity. If you recall, we had left open the possibility that with second half rate relief with kind of a second half recovery in private end market demand. While we think that situation is still on the table. We now think it's more likely a 2025.

Anne Noonan: If you recall, we had left open the possibility that, with second half rate relief, would come a second half recovery in private and market demand. While we think that situation is still on the table, we now think it's more likely a 2025 scenario given a higher-for-longer interest rate environment and a notable lack of urgency to activate commercial jobs in some of our key markets like Salt Lake City and Phoenix. That said, we are encouraged by our customer conversations that indicate activity should pick up when financing conditions improve. Simply put, demand and select markets is being pushed out.

Anne Noonan: While we think that situation is still on the table, we now think it's more likely a 2025 scenario, given a higher for longer interest rate environment and a notable lack of urgency to activate commercial jobs in some of our key markets like Salt Lake City and Phoenix. That said, we are encouraged by our customer conversations that indicate activity should pick up when financing conditions improve. Simply put, demand in select markets is being pushed out.

Scott Anderson: Given a higher for longer interest rate environment, and a notable lack of urgency to activate commercial jobs and some of our key markets like Salt Lake City and Phoenix that said, we are encouraged by our customer conversations that indicate activity should pick up when financing conditions improve simply pellet demand in select markets is being pushed out.

Anne Noonan: Outside these markets, we are seeing volumes perform in line or better than anticipated. Take Georgia and the Carolinas, where we've been able to capitalize on large scale manufacturing and green energy projects, as well as residential resiliency to drive both volume and pricing growth this year.

Scott Anderson: Outside these markets, we are seeing volumes perform in line or better than anticipated take Georgia, and the Carolinas, where we've been able to capitalize on large scale manufacturing and green energy projects as well as residential resiliency to drive both volume and pricing growth this year.

Anne Noonan: Outside these markets, we are seeing volumes perform in line or better than anticipated. Take Georgia and the Carolinas, where we've been able to capitalize on large-scale manufacturing and green energy projects, as well as residential resiliency, to drive both volume and pricing growth this year. Our long-term view hasn't changed at all.

Anne Noonan: We are bullish on all 3M markets and feel we are playing in the right high-growth geographies with advantaged assets. But in the near term, and consistent with our typical managerial posture, we are taking a realistic yet prudent approach to expectation setting, which has proven especially astute in this environment. For example, our updated outlook now incorporates low-single-to-mid-single-digit organic volume declines on aggregates and cement for

Anne Noonan: Our long-term view hasn't changed at all. We are bullish on all three in markets and feel we are playing in the right, high-growth geographies with advantaged assets.

Our long term view hasn't changed at all we are bullish on all three end markets I feel we are playing in the right high growth geographies with advantaged assets, but in the near term and consistent with our typical managerial posture. We are taking a realistic yet prudent approach to expectation setting, which is proven especially astute in this environment our updated that.

Anne Noonan: But in the near-term and consistent with our typical managerial posture, we are taking a realistic yet prudent approach to expectation setting, which has proven especially astute in this environment. Our updated outlook now incorporates low-single to mid-single digit organic volume declines on aggregates and cement for 2024. Offsetting this revision is inclusion of our mid-year pricing expectations and an adjustment to our GNA expectations to $330 million for 2024. For pacing, the mid-point of today's guidance implies nearly $575 million a year to go adjusted EBITDA, where we would expect approximately 60% occurring in Q3 and 40% in Q4 using round numbers.

Look now incorporates low single to mid single digit organic volume declines on aggregates and cement for 'twenty 'twenty four.

Anne Noonan: Offsetting this revision is the inclusion of our mid-year pricing expectations and an adjustment to our G&A expectations to $330 million for 2024. For pacing, the midpoint of today's guidance implies nearly $575 million in year-to-go adjusted EBITDA, where we would expect approximately 60% to occur in Q3 and 40% in Q4 using round numbers. In summary, we are able to confidently maintain our outlook due to three factors. First, we built a 2024 profile that's guarded and not reliant on volume. 2.

Scott Anderson: Offsetting this revision is inclusion of our mid year pricing expectations, and then the adjustment to our G&A expectations to $330 million for 'twenty 'twenty four for pacing. The mid point of today's guidance implies nearly $575 million in order to grow adjusted EBITDA or we would expect approximately 60% recurring.

Scott Anderson: And in Q3 and 40% in Q4 using round numbers in summary, we are able to confidently maintain our outlook due to three factors. One we built a 'twenty 'twenty four profile, that's guarded and not reliant on volumes.

Anne Noonan: In summary, we are able to confidently maintain our outlook due to three factors. One, we built a 2024 profile that's guarded and not reliant on volumes. Two, we've included the traction from our mid-year pricing actions. And three, we are actioning discretionary spend contingencies this year. Net net, our outlook is intact. We are demonstrating high-quality execution on our controllables, and we look forward to another year of strong growth and returns for our shareholders.

Anne Noonan: We've included the traction from our mid-year pricing actions, and 3. We are addressing discretionary spend contingencies this year. Net-net, our outlook is intact.

Scott Anderson: We've included the traction from our mid year pricing actions and three we are actioning discretionary spend contingencies this year net.

Scott Anderson: Net net our outlook is intact, we are demonstrating high quality execution on our controllable and we look forward to another year of strong growth and returns for our shareholders.

Anne Noonan: We are demonstrating high-quality execution on our controllables, and we look forward to another year of strong growth and returns for our shareholders. Turning now to slide 6, where we outline one of our unique growth levers, our Argos USA synergies. As you'll see, we achieved $17.5 million in first half synergies. This is tracking almost exactly in line with how we mapped our progress earlier this year. Additionally, the composition of these synergies aligns neatly with how we expected things to unfold.

Anne Noonan: Turning now to slide six, where we outline one of our unique growth levers: our Argos USA synergies. As you'll see, we achieved $17.5 million in first-half synergies. This is tracking almost exactly in line with how we mapped our progress earlier this year. Additionally, the composition of these synergies aligns neatly with how we expected things to unfold. We moved quickly and efficiently to consolidate procurement tools and redundancies across the organization, thereby realizing sizable scale savings early in our integration game plan. For cement, our three primary operational metrics, overall equipment effectiveness, or OEE, alternative fuel replacement, and Portland limestone cement conversion, are all tracking in line or ahead of targets this year.

Scott Anderson: Turning now to slide six where we outlined one of our unique growth levers are Argos USA synergies as you'll see we achieved $17 $5 million in first half synergies. This is tracking almost exactly in line with how we mapped our progress earlier this year.

Scott Anderson: Additionally, the composition of these synergies aligns neatly with how we expected things to unfold, we moved quickly and efficiently to consolidate procurement tools and redundancies across the organization, thereby realizing sizable scale savings early in our integration game plan for cement, our three primary operational metrics overall equipment effectiveness.

Anne Noonan: We moved quickly and efficiently to consolidate procurement tools and redundancies across the organization, thereby realizing sizable scale savings early in our integration game plan. For cement, our three primary operational metrics, overall equipment effectiveness or OEE, alternative fuel replacement, and Portland limestone cement conversion, are all tracking in line or ahead of targets this year. These, combined with successful winter turnarounds and capital improvement, have provided the main thrust for synergy generation so far this year.

Scott Anderson: A desk or OA alternative fuel replacement on Portland limestone snack conversion are all tracking in line or ahead of targets. This year. These.

Anne Noonan: These, combined with successful winter turn rounds and capital improvement, provided the main thrust for synergy generation so far this year. Redding mixed synergies driven by delivery, excellence, and footprint consolidation, as well as unlocking growth through greater aggregates pulled through in Houston and the Carolinas, were positive contributors to our first half progress as well. On a whole, we are delivering on our commitments, with both operational as well as commercial initiatives fully in flight and providing the expected momentum for ongoing synergy capture. Looking ahead, we have clear line of sight with at least $40 million in synergies, although we expect the composition of synergies to evolve over time.

Scott Anderson: These combined with successful winter turnarounds capital improvement provided the main thrusts for synergy generation. So far this year ready mix synergies driven by delivery excellence and footprint consolidation as well as unlocking growth through greater aggregates pull through in Houston in the Carolinas were positive contributors to our first half progress as well on the <unk>.

Anne Noonan: ReadyMix Synergies, driven by delivery, excellence, and footprint consolidation, as well as unlocking growth through greater aggregates pulled through in Houston and the Carolinas, were positive contributors to our first half progress as well. As a whole, we are delivering on our commitments with both operational as well as commercial initiatives fully in flight and providing the expected momentum for ongoing synergy capture. Looking ahead, we have a clear line of sight to at least $40 million in synergies, although we expect the composition of synergies to evolve over time.

Scott Anderson: We are delivering on our commitments with both operational as well as commercial initiatives fully in flight and providing the expected momentum for ongoing synergy capture looking ahead, we have clear line of sight to at least $40 million in synergies, although we expect the composition of synergies to evolve over time, we anticipate that the cement synergy bucket.

Anne Noonan: We anticipate that the cement synergy bucket will grow as capital improvement projects take hold, commercial initiatives unfold, and our One Summit model is more fully implemented. The headline message we leave you with regarding synergies is that we are delivering on all value streams, and we have even greater confidence today that we are comfortably achieve our synergy target this year and at least $130 million over our integration timeline.

Anne Noonan: We anticipate that the cement synergy bucket will grow as capital improvement projects take hold, commercial initiatives unfold, and our One Summit model is more fully implemented. The headline message we leave you with regarding synergies is that we are delivering on all value streams, and we have even greater confidence today that we will comfortably achieve our synergy target this year and at least $130 million over our integration timeline.

Scott Anderson: Grow as capital improvement projects take hold commercial initiatives unfold and our one summit model is more fully implemented the headline message. We'd leave you with regarding synergies is that we are delivering on all value streams and we have even greater confidence today that we are comfortably achieve our synergy target this year and at least 130.

Scott Anderson: Million over our integration timeline.

Anne Noonan: In addition to this synergy creation, the cash generation opportunity was core to our Argos USA investment thesis. On slide seven, we contextualized how we see that cash flow opportunity progressing as we move through integration. On the left, you see Summit Materials cumulative five-year cash flow conversion defined as free cash flow as a percentage of adjusted EBITDA. From 2019 to 2023, roughly 32 cents on every EBITDA dollar was converted to free cash flow. Our new enterprise can and will do much better than that. Over time, we expect to convert greater than 40% of adjusted EBITDA into free cash flow.

Anne Noonan: In addition to this synergy creation, the cash generation opportunity was core to our Argos USA investment thesis. On slide 7, we contextualize how we see that cash flow opportunity progressing as we move through integration. On the left, you can see Summit Materials' cumulative five-year cash flow conversion, defined as free cash flow as a percentage of adjusted EBITDA. From 2019 to 2023, roughly $0.32 of every EBITDA dollar was converted to free cash flow. Our new enterprise can and will do much better than that. Over time, we expect to convert greater than 40% of adjusted EBITDA into free cash flow. That will be driven by three facts.

Scott Anderson: In addition to the synergy creation the cash generation opportunity was core to our Argos USA investment thesis on slide seven we contextualize, how do we see that cash flow opportunity progressing as we move through integration on the left you see summit materials' cumulative five year cash flow conversion defined as free cash flow as a percentage.

Scott Anderson: Adjusted EBITDA.

Scott Anderson: From 2019 to 2023, roughly 32 cents on every EBITDA dollar was converted to free cash flow, our new enterprise can and will do much better than that over time, we expect to convert greater than 40% of adjusted EBITDA into free cash flow that will be driven by three factors first is fueling greater cash from operations by <unk>.

Anne Noonan: That will be driven by three factors. First is fueling greater cash from operations by having a more powerful portfolio. Due to its higher fixed cost nature, our cement facilities will turn out greater cash flow. For context, our legacy Summit Cement assets consistently converted adjusted EBITDA into cash at a rate that was at least 10 points higher than the rest of the Summit portfolio. As we work through the integration and exhibit our cement leadership, we will emerge as a cash generated machine. Moreover, leveraging our company's greater scale and scope will help drive working capital management improvement, and by extension, greater operating cash flow.

Anne Noonan: The first step is fueling greater cash from operations by having a more powerful portfolio. Due to its higher fixed cost nature, our cement facilities will churn out greater cash flow. For context, our legacy Summit cement assets consistently converted adjusted EBITDA into cash at a rate that was at least 10 points higher than the rest of the Summit portfolio. As we work through the integration and demonstrate our cement leadership, we will emerge as a cash-generative machine.

Scott Anderson: A more powerful portfolio due to its higher fixed cost nature of our cement facilities will churn out greater cash flow for context, our legacy summit cement assets consistently converted adjusted EBITDA into cash at a rate that was at least 10 points higher than the rest of the portfolio.

Speaker Change: As we work through the integration and exhibit our cement leadership, we will emerge as a cash generative machine. Moreover, leveraging our company's greater scale and scope will help drive working capital management improvement and by extension Greater operating cash flow second is the reduction of capital intensity over time, you've heard Scott say and I'd reiterate.

Anne Noonan: Moreover, leveraging our company's greater scale and scope will help drive working capital management improvement and, by extension, greater operating cash flow. Second, is the reduction of capital intensity over time. You've heard Scott say, and I'd reiterate, that we believe the long-term target of CapEx as a percentage of net revenue will moderate to approximately 8% over time. Reduced maintenance capex on cement assets and better return opportunities overall will enhance our cash profile.

Anne Noonan: Second, is the reduction of capital intensity over time. You've heard Scott say, and I'd reiterate that we believe the long term target of CapEx as a percentage of net revenue will moderate to approximately 8% over time. Reduced maintenance CapEx on cement assets and better return opportunities overall will enhance our cash profile. When achieved, this lever alone would release more than 100 million of free cash flow annually. And the last notable component is a continued scrutiny on our assets to determine if they are more valuable than someone else's hand. Taken together and over time, these three factors drive a powerful flywheel.

Scott Anderson: We believe the long term target of Capex as a percentage of net revenue will moderate to approximately 8% over time.

Speaker Change: <unk> maintenance capex on cement assets and better return opportunities overall will enhance our cash profile when achieved this lever alone would release more than 100 million of free cash flow annually.

Anne Noonan: When achieved, this level alone would release more than $100 million of free cash flow annually. And the last notable component is continued scrutiny of our assets to determine if they are more valuable in someone else's hands. Taken together and over time, these three factors drive a powerful flywheel.

Speaker Change: The last notable component is a continued scrutiny on our assets to determine if they are more valuable in someone else's hand.

Speaker Change: Taken together and over time. These three factors drive a powerful flywheel. The business is positioned to drive even greater EBITDA growth translate that growth into substantial cash flow and deployed that cash to high return opportunities, including our top priority dialing up organic and inorganic aggregates growth.

Anne Noonan: The business is positioned to drive even greater EBITDA growth, translate that growth into substantial cash flow, and deploy that cash to high return opportunities, including our top priority, dialing up organic and inorganic aggregate growth.

Anne Noonan: The business is positioned to drive even greater EBITDA growth, translate that growth into substantial cash flow, and deploy that cash to high-return opportunities, including our top priority, dialing up organic and inorganic aggregates growth. Let me close out on slide eight with our quarterly Elevate Summit Scorecard. This schedule is the clearest demonstration of how our strategic execution is translating into our financial performance. On net leverage, we remain a half-turn below our three-times target, providing sufficient optionality to strengthen the portfolio via price-disciplined and ags-led bolt-on opportunities.

Anne Noonan: Let me close out on slide eight with our quarterly Elevate Summit scorecard. This schedule is the clearest demonstration on how our strategic execution is translating into our financial performance. On net leverage, we remain a half turn below our three times target, providing sufficient optionality to strengthen the portfolio. The price, discipline, and ag's led both on opportunities. As anticipated, Roic at 8.9% incorporates the Argos USA assets, but over time, as we enhance our margin profile and execute against our tried and true portfolio optimization playbook, we fully expect to restore our Roic to greater than 10% within two years.

Speaker Change: Let me close out on slide eight with our quarterly elevate summit scorecard. This schedule as the players demonstration on how our strategic execution is translating into our financial performance on net leverage we remain a half turn below our three times target, providing sufficient optionality to strengthen the portfolio via price disciplined and AG led.

Speaker Change: Bolt on opportunities as anticipated ROIC at eight 9% incorporates the Argos USA assets, but overtime as we enhance our margin profile and execute against our tried and through portfolio optimization playbook, we fully expect to restore our ROIC to greater than 10% within two years.

Anne Noonan: As anticipated, ROIC at 8.9% incorporates the Argos USA assets. But over time, as we enhance our margin profile and execute against our tried-and-true portfolio optimization playbook, we fully expect to restore our ROIC to greater than 10% within two years. And finally, with the last 12 months' reported EBITDA at 23.8%, our profitability profile is trending to meet our 2024 margin expectations, and we are taking solid steps towards our 30% Elevate Summit target.

Anne Noonan: And finally, with last 12 months reported EBITDA at 23.8%, our profitability profile is trending to meet our 2024 margin expectations, and we are taking solid steps towards our 30% elevate summit target.

Speaker Change: Finally, with last 12 months reported EBITDA of 23, 8% our profitability profile is trending to meet our 2020 for margin expectations and we are taking solid steps towards our 30% elevate summit target all of the credit for our achievements. So far this year and those still ahead of US is due to the tireless efforts of our.

Anne Noonan: All of the credit for our achievements so far this year and those still ahead of us is due to the tireless efforts of our dedicated employees. We are privileged to have a combined workforce that is engaged and enthusiastic. They have moved quickly and safely to integrate our companies, align our cultures, and make substantial progress toward achieving all of our stakeholder commitments. I want to say thank you to all some of the employees for your hard work.

Speaker Change: It employees, we are privileged to have a combined work force that is engaged and enthusiastic they have moved quickly and safely to integrate our companies align our cultures and make substantial progress towards achieving all of our stakeholder commitments I want to say thank you to all summit employees for your hard work you have a lot to be proud of I'll now hand, it to Scott.

Anne Noonan: You have a lot to be proud of.

Scott Anderson: I'll now hand it to Scott to conclude our prepared remarks. Thanks, Anne. Let's pick up on slide 10 for a snapshot of our second quarter financial performance. On the surface and at a headline level, you can see our second quarter was characterized by strong pricing growth across lines of business for the aggregates and cement, up strongly in the period as commercial excellence remains a primary growth enabler for our business. This was offset to varying degrees by lower volumes that all unpacked for you in a moment.

Scott Anderson: To conclude our prepared remarks.

Scott Anderson: Thanks, Dan let's pick up on slide 10 for a snapshot of our second quarter financial performance on the surface and at a headline level you can see our second quarter was characterized by strong pricing growth across lines of business for aggregates and cement up strongly in the period as commercial excellence remains a primary growth enabler for our business.

This was offset to varying degrees by lower volumes that I'll unpack for you in a moment Fortunately as Ann mentioned, our 2024 profile is not volume dependent and as such we remain confident in achieving our financial goals. This year.

Scott Anderson: Fortunately, as Anne mentioned, our 2021 profile is not volume dependent, and as such, we remain confident in achieving our financial goals this year. Slide 11 isolates the primary weather impact that caused volume softness in the second quarter for us. The brunt of the impact was felt in our Houston business, which comprises roughly 10% of the total companies. Even here, the frequency and severity of weather events negatively impacted our ability to produce, sell, and complete jobs in the field. Percipitation days were a 30% year-on-year, and precipitation tolls increased nearly 40% versus last year. Flooding mainly affected our quarries in Northeast Houston, and electrical outages forced us to shut down several ready-mix plants for an extended period.

Ann: Slide 11 isolates the primary weather impact that caused volume softness in the second quarter for us the brunt of the impact was felt in our Houston business, which comprises roughly 10% of the total company's email.

Ann: The frequency and severity of weather events negatively impacted our ability to produce so uncomplete jobs in the field.

Ann: Precipitation days were up 30% year on year and precipitation totals increased nearly 40% versus last year.

Flooding, mainly affected our core is in the northeast Houston, and electrical outages forced us to shut down several ready mix plants for an extended period.

Scott Anderson: Operations were further hampered by damaged infrastructure, limiting access to our sites and wet feed materials slowing down throughput. Thankfully, our Houston operations swiftly responded to safeguard our assets, including, most importantly, our people. As a result, we had zero safety incidents during these weather events. Still, we did incur volume headwinds across aggregates, ready-mix, and cement.

Ann: Operations were further hampered by damage infrastructure limiting access to our sites and wet feed materials slowing down throughput thankfully.

Ann: Thankfully, our Houston operations swiftly responded to safeguard our assets, including most importantly, our people as a result, we have zero safety incidents during these weather events.

Ann: We did incur volume headwinds across aggregates ready mix and cement and overall, we estimate that Houston alone accounted for approximately $6 5 million in lost or delayed EBITDA in the second quarter two thanks.

Scott Anderson: And overall, we estimate that Houston alone accounted for approximately 6.5 million lost or delayed EBITDA on the second quarter. Two things to note. First, this estimate does not include the impact of Hurricane Barrel that struck southeastern Texas in July. Second, pricing execution on aggregates and ready-mix was not affected by Q2 weather in Houston or any other market.

Ann: This estimate does not include the impact of hurricane barrel that struck southeastern Texas in July 2nd.

Speaker Change: <unk> execution on aggregates and ready mix was not affected by Q2 weather in Houston or any other market.

Scott Anderson: Turning now to key metrics on slide 12. Both, adjusted cash growth profit and adjusted EBITDA dollars grew substantially in the quarter due to the inclusion of the RGO's USA assets. For the same reasons, and as expected, quarterly reported margins did pull back year on year in the second quarter to account for the RGO's dilution. Importantly, if you zoom out, you'll note that both adjusted cash growth profit margin and adjusted EBITDA margins expanded year over year through the first six months of the year. And on a pro forma, like-for-like basis, adjusted EBITDA margins expanded both in Q2 and year to date by more than 200 basis points.

Speaker Change: Turning now to key metrics on slide 12, both adjusted cash gross profit and adjusted EBITDA dollars grew substantially in the quarter due to the inclusion of the Argos USA assets.

Speaker Change: For the same reasons and as expected quarterly reported margins did pull back year on year in the second quarter to account for the Argos dilution importantly.

Speaker Change: Importantly, if you zoom out you will note that both adjusted cash gross profit margin and adjusted EBITDA margins expanded year over year through the first six months of the year.

Speaker Change: And on a pro forma like for like basis, adjusted EBITDA margins expanded both in Q2 and year to date by more than 200 basis points.

Scott Anderson: This speaks to the power of a less seasonal portfolio, our ability to improve the assets as we integrate, and a favorable price cost environment. On cost, outside weather-affected markets, we are seeing relief in some supply chain-related areas like repair and maintenance and subcontracting. And at the end of the day, we feel good about our prior estimate calling for mid-single-digit cost inflation this year. Adjusted diluted earnings per year was down 5 cents in Q2 and is up 2 cents year to date, reflecting strong operating performance and higher interest expense. Moving to line of business performance, aggregates volumes in the quarter were negatively impacted.

Speaker Change: This speaks to the power of it less seasonal portfolio, our ability to improve the assets as we integrate and a favorable price cost environment.

Speaker Change: On cost outside weather affected markets, we are seeing relief in some supply chain related areas like repair and maintenance and some contracting and at the end of the day, we feel good about our prior estimate calling for mid single digit cost inflation. This year.

Speaker Change: Adjusted diluted earnings per share was down five cents in Q2 and is up 10% year to date, reflecting strong operating performance and higher interest expense.

Speaker Change: Moving to the line of business.

Speaker Change: Aggregates volumes in the quarter were negatively impacted in part by weather conditions, We just discussed as well as relatively subdued private end market demand that Dan mentioned earlier.

Scott Anderson: Import by weather conditions we just discussed, as well as relatively subdued private and market demand that Anne mentioned earlier. By our estimates, Houston weather negatively impacted volumes by 280 basis points in the quarter. Elsewhere, growth in Georgia and the Carolinas was more than offset by lower volumes in British Columbia, Kansas, and Missouri. Local digit growth in Houston, Virginia, and the Carolinas. Houston weather adversely affected Ag's adjusted cash growth profit margin by roughly 20 basis points, but we were still up 50 basis points year on year, the 4th consecutive quarter of year-over-year margin expansion. Unit profitability accelerated $1.80 per ton sequentially or 15% year on year. Is strong price cost favorability persisted.

Dan: By our estimates Houston weather negatively impacted volumes by 280 basis points in the quarter.

Speaker Change: <unk> growth in Georgia, and the Carolinas was more than offset by lower volumes in British Columbia, Kansas and Missouri.

Speaker Change: Aggregates pricing, however remained strong increasing 11, 8% in Q2 and sequentially increased two 5% due in part to mixed benefits.

Year over year and by market, Kansas, and Missouri letter pricing gains followed closely by double digit growth in Huston, Virginia and the Carolinas.

Speaker Change: Houston weather adversely affected adjusted cash gross profit margin by roughly 20 basis points, but we were still up 50 basis points year on year, the fourth consecutive quarter of year over year margin expansion.

Speaker Change: Unit profitability accelerated $1 80 per ton sequentially or 15% year on year, a strong price cost favorability persistence.

Scott Anderson: On the cost side, our operational excellence initiatives are dropping real dollars to the bottom line, with 8 million already achieved this year and plenty more in scope for 2024. This is helping the power adjusted cash growth profit margin expansion, which is up 280 basis points year to date and 320 basis points on an LTM basis.

Speaker Change: On the cost side, our operational excellence initiatives, our drop in real dollars to the bottom line with $8 million already achieved this year and plenty more in scope for 2024.

Speaker Change: This is helping to power adjusted cash gross profit margin expansion, which is up 280 basis points year to date and 320 basis points on an LTM basis.

Scott Anderson: In all, and despite temporary volume softness, we are on pace for our strongest annual aggregates margin expansion since 2017. For submit performance on slide 14, second quarter organic volumes were negatively impacted by weather, large constraints, and slightly softening demand that prompted reduced import volume in southern and river markets. In fact, nearly 40% of the organic decline is attributable to lower import volumes, and weather in Minnesota and Iowa, two of our largest river markets, experienced record rainfall in the second quarter, with rain days up 48% and 45%. Respectively versus Q2 2023. Notably, outside the legacy summit footprint, Argos USA markets in the Mid Atlantic and the Southeast experienced second quarter volume growth for the back half as volume comparison these and jobs like a large EV project in South Carolina, a steel project in Memphis, another start to game steam.

Speaker Change: And despite temporary volume softness we are on pace for our strongest annual aggregate margin expansion since 2017.

Speaker Change: Or submit performance on slide 14 second quarter organic volumes were negatively impacted by weather barge constraints and slightly softening demand that prompted reduced import volume in southern peripheral markets. In fact, nearly 40% of the organic decline is attributable to lower import volumes and weather in Minnesota.

Speaker Change: In Iowa, two of our largest river markets experienced record rainfall in the second quarter with rain days up 48% from 45%, respectively versus Q2, 2023, notably outside the legacy summit footprint Argos USA markets in the mid Atlantic and the southeast experienced second quarter volume growth.

Speaker Change: For the back half is volume comparisons ease in jobs like a large <unk> project in South Carolina Steel project in Memphis, and other start to gain steam we see an improvement year on year growth trends materialize.

Scott Anderson: We see an improvement year-on-year growth trends materialized, and all we anticipate selling roughly nine million tons of cement this year, an amount nearly equivalent to the pro forma 2023 amount. Strong traction occurred for our inland markets, feeling greater year-on-year pricing growth in Q2. And remember, despite some quarter-to-quarter noise, we are still calling for mid-single-digit organic pricing growth this year. Our commercial excellence approach is taking hold, and we are currently engaged in constructive customer conversations across Argos margins. Here, we are looking to move towards a more cohesive market supported and value of creatives go to market approach.

Speaker Change: All we anticipate selling roughly 9 million tons of cement this year, an amount nearly equivalent to the pro forma 2023 of them.

Speaker Change: Strong traction occurred for our inland markets fueling greater year on year pricing growth in Q2, and remember despite some quarter to quarter noise, we're still calling for mid single digit organic pricing growth this year.

Speaker Change: Our commercial excellence approach is taking hold and we are currently engaged in constructive customer conversations across our gross margins here, we're looking to move towards a more cohesive market supported and value accretive go to market approach.

Scott Anderson: Reported cement segment adjusted EBIT on margins took a step back in the quarter as the dilutive impacts from the Argos USA assets surfaced as anticipated. But on a year-to-date basis, cement segment adjusted EBIT on margins are up 410 basis points. We are benefited from pricing, favorable natural gas cost, reduced seasonality, and the early realization of cement synergies. Meanwhile, we are actually in all the foundational elements that will enhance profitability going forward.

Speaker Change: Reported <unk> segment adjusted EBITDA margins took a step back in the quarter as the dilutive impacts from the Argos USAA asset surfaced as anticipated.

Speaker Change: But on a year to date basis cement segment adjusted EBITDA margins were up 410 basis points.

Speaker Change: We are benefited from pricing favorable natural gas costs reduced seasonality and the early realization of cement synergies. Meanwhile, we are actually all the foundational elements that will enhance profitability going forward. Thanks.

Scott Anderson: Take the Martinsburg, West Virginia, Platte for example. We're during the planned outage this quarter, we successfully completed the 17 million dollar kiln bag house project that will improve plant production levels, reduce plant cost, improve our mission profile, and as a result, position Summit to better meet the growing demand in the Mid Atlantic region. Similar projects are underway at each Summit plant as we more fully implement the One Summit's operating model. Lastly, on our downstream businesses on slide 12, organic ready mix volumes remain under pressure from both weather and the higher-for-longer environment. As you would expect, weather in Houston, one of our largest ready mix markets, negatively impacted volumes and adjusted cash growth profit in the period.

Speaker Change: Take the Martinsburg West Virginia plant for example.

Speaker Change: During the planned outage this quarter, we successfully completed the 17 million dollar challenge Backhouse project that will improve plant production levels reduced plant cost improve our emissions profile and as a result positions summit to better meet the growing demand in the mid Atlantic region.

Speaker Change: Similar projects are underway at each cement plant as we more fully implement the ones from its operating model.

Speaker Change: Lastly, on our downstream businesses on slide 12, organic ready mix volumes remain under pressure from both weather and the higher for longer environment. As you would expect weather in Houston, one of our largest ready mixed markets negatively impacted volumes and adjusted cash gross profit in the period.

Scott Anderson: Our asphalt business, which is training towards being a smaller portion of the EBIT all mixed, faces unfavorable project timing this quarter, which was a primary driver of year-on-year volume declines in Q2, not specifically reported but asked what margins did remain healthy despite lower volumes. Therefore, the primary driver of lower product margins was the inclusion of lower margin Argos USA ready mix assets in Houston, Atlanta, the Carolinas, and Florida. Here, it's worth repeating that our approach to the downstream is highly selected and where we choose to operate. We need to be number one or number two in the markets we compete. If we can achieve that, for the assets will not help us achieve our elevate summit financial goals.

Speaker Change: Our asphalt business, which is trending towards being a smaller portion of the EBITDA mix based on favorable project timing this quarter, which was the primary driver of year on year volume declines in Q2.

Speaker Change: Specifically reported but asphalt margins did remain healthy despite lower volumes.

Speaker Change: Therefore, the primary driver of lower product margins was the inclusion of lower margin Argos USA ready mix assets in Houston, Atlanta, The Carolinas and Florida here, it's worth repeating that our approach to the downstream is highly selective and where we choose to operate we need to be number one or number two in the markets we compete.

Speaker Change: If we can achieve that or the assets will not help us achieve our elevate some financial goals. We have demonstrated a strong track record of proactively take steps to optimize and strengthen our materials led portfolio.

Scott Anderson: We have demonstrated a strong track record to proactively take steps to optimize and strengthen our materials led portfolio.

Scott Anderson: I'll wrap up quickly by drawing everyone back to our near torn priorities on slide 16. We are transforming into one high performance enterprise through integration. We are accelerating aggregate growth with year-to-date margins up over 280 basis points. We are on our way to delivering on our synergy commitments, and we are focused on strengthening the portfolio and balance sheet for superior growth and value creation.

Speaker Change: I'll wrap up quickly by drawing everyone back to our near term priorities on slide 16.

Speaker Change: We are transforming into one high performance enterprise suite integration.

Speaker Change: Our accelerating aggregates growth with year to date margins up over 280 basis points we.

Speaker Change: We are on our way to delivering on our synergy commitments and we are focused on strengthening the portfolio on balance sheet for superior growth and value creation.

Operator: With that, I'll ask the operator to provide the required instructions and open the line so that Anna and I can field your questions.

Danica: With that, I'll ask the operator to provide the required instructions and open the lines so that Anne and I can answer your questions.

Speaker Change: With that I'll ask the operator to provide the required instructions and open the lines so that in and I can field your questions.

Operator: Thank you. At this time, I would like to remind everyone that in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster.

Speaker Change: Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Speaker Change: We'll pause for just a moment to compile the Q&A roster.

Trey Grooms: Your first question comes from the line of trade grooms with Steven. Please go ahead. Hey, can you hear me? Yeah, we can, right? Good morning. Oh, sorry about that. Hey, thanks. It's a failure. Sorry about that.

Speaker Change: Your first question comes from the line of Trey Grooms with Stephens. Please go ahead.

Speaker Change: Okay.

Trey Grooms: Can you hear me.

Yeah, we can sorry, good morning, sorry about that thanks.

Trey Grooms: Headset failure, sorry about that.

Trey Grooms: Well, first off, my question is not related to this energy slide six.

Speaker Change: Well first off.

My question is not related to the synergies slide six did a great job of detailing that but I did want to give you guys.

Trey Grooms: Did a great job of detailing that, but I did want to give you guys a hats off on the execution there. Very impressive.

Speaker Change: Hats off on the execution there very impressive so congrats on that.

Trey Grooms: So congrats on that. On, maybe on my question, though, thanks for the color on the impacts from Houston weather in two Q. But, like you mentioned, you know, a hurricane hit Houston and other markets in early July. And now we have a tropical storm moving through the Southeast. One of your competitors was talking about a kind of a tough start to three Q a moment ago. So any color you might could give us on how you know, three Q is starting off and presumably, you know, whatever you've seen thus far. is taken into consideration in that updated guide.

Speaker Change: On.

Speaker Change: Moving onto my question, though thanks for the color on the impacts from Houston weather in <unk>, but.

Speaker Change: But like you mentioned.

Speaker Change: A hurricane hit Houston and other markets in early July and now we have a a.

Tropical storm moving through the South East one of your competitors was talking.

Speaker Change: Talking about a kind of a tough start to <unk> a moment ago. So any color you could give us on how <unk> was starting off and.

Speaker Change: Presumably.

Speaker Change: Whatever you've seen thus far is taken into consideration in the updated guide I'm guessing.

Scott Anderson: I'm guessing. Yeah, thanks for the question, Trey. Absolutely, Q3 started off to rough start with Houston with barrel and no doubt this storm that's going through. Right now, honestly, our focus is 100% on keeping our people safe and our assets safe.

Speaker Change: Yeah. Thanks for the question Trey I'm, absolutely Q3 started off to a rough start in Houston with barrel.

Speaker Change: And no.

Speaker Change: The storm that's going through right now honestly, our focus is 100% on keeping our people safe and our asset base and we will update as we learn more the one thing I will point out though is that you know.

Scott Anderson: We will update as we learn more. The one thing I will point out, though, is that in Q3, we can make up some time on these. These are all season states where these are heading. And we saw this in Houston too. As soon as we got a few good days, we were back with strong backlogs. So the backlogs are there. It's not if it's when the business comes back. So right now, our guide assumes that we will, we obviously did not have huge impacts from volume loss. We'll assume we'll catch up on most of those days.

Speaker Change: In Q3.

Speaker Change: We can make up some time on these these are all season states, where these are heading and we saw this in Houston to as soon as we got a few good days, we went back with strong backlog. So the backlogs are there.

Speaker Change: Not if it's when the business comes back so right now our guide assumes that we will you know we obviously did not have huge impacts from volume loss will assume will catch up on most of those days and you know one thing storm spring tray of millwork and so some of it falls into 2025, it'll just make a better 2025 with better.

Scott Anderson: And you know, one thing, storm spring tray or more work. And so if some of it falls into 2025, it'll just make a better 2025 with better pricing. I will point out, though, a lot of our confidence comes in our guide from what we can control. It's our, we've done very well on pricing. The team's executed extremely well. The synergies to your point are well ahead. And we continue to operate on a control levels are well in play in the guide that you see today.

Speaker Change: Pricing I will point out, though a lot of our confidence comes in our guide from what we can control its our we've done very well on pricing the teams executed extremely well the synergies to your points are well ahead, and we continue to operate on our portfolio optimization and our operational excellence. The controllable are well in play in the guide that you see today.

Speaker Change: Great. Thanks, a lot I'll pass it on good luck. Thanks Trey.

Trey Grooms: Great. Thanks a lot.

Trey Grooms: I'll pass it on. Good luck.

Trey Grooms: Thanks, Tray.

Garik Shmois: Our next question comes from the line of Garrick Shmois with Loop Capital.

Garik <unk>: Our next question comes from the line of Garik <unk> with loop capital. Please go ahead.

Garik Shmois: Please go ahead. Oh, hi, thanks.

Garik <unk>: Oh, hi, thanks.

Garik Shmois: I'm wondering if you could help us think of how aggregates margins could look in half of this year, you know, recognizing the second quarter did have headwinds associated with the volumes and, you know, assuming, you know, some of that, you know, maybe comes back, maybe doesn't, but you do have strong pricing momentum just in any way to help contextualize how aggregates margins could end up expanding in the second half of the year. Yeah. I think, Garrick, thanks for the question. You know, from the beginning, we saw Scott talked about his commentary, you know, the Ag's margins having reached by 280 basis points here today.

Garik <unk>: If you could.

Garik <unk>: Help us think of how our aggregate margins critical second half of this year, recognizing a lot of <unk>.

Speaker Change: Second quarter did have headwinds associated with the volume.

Speaker Change: Sumit.

Speaker Change: Some of that maybe comes back maybe it doesn't but you do have your strong pricing momentum just any way to help contextualize, how average margins could end up expanding in the second half of the year.

Sumit: Yeah, I think Eric Thanks for the question you know from the beginning we saw Scott talked about in his commentary you know the AG margins have increased by 280 basis points year to date, and we said at the beginning of the year and our guide we'd add percentage points to our AG margins. We will continue to do so so you can expect that play out as the year.

Scott Anderson: And we said at the beginning of the year in our guide, we've had percentage points to our Ag's margins. We would continue to do so, so you can expect that play out as the year goes through. You know, our North Star Ag's margins, as we've called out on a training 12-month basis, our 60% cash adjusted gross profit margin. And that's a North Star objective. We hit 51.4 versus 49% this quarter, so we're very encouraged by not only the price cost, you know, price net of cost from our commercial excellence, but also the op excellence work, which is having an impact and will continue to accelerate throughout the year.

Speaker Change: It goes through our <unk>.

Speaker Change: Star AG margins as we've called out on a trailing 12 month basis, our 60% cash adjusted gross profit margin and that's our North Star objective, we had $51 four versus 49%. This quarter. So we're very encouraged by not only the price cost.

Marshall Mohr: Price net of cost from our commercial excellence, but also the Opex <unk> work, which is having an impact and will continue to accelerate throughout the year, we've landed about $8 million to the bottom line from Opex. This year will continue to accelerate that as we go through Marshall Mohr and his team are doing they didnt do an exceptional job on the cost front. So I would be very disappointed if we do.

Scott Anderson: We've landed about 8 million to the bottom line from Op X this year. We'll continue to accelerate that out as we go through. Marshall Moore and his team have been doing an exceptional job on the cost front. So I would be very disappointed if we didn't continue that point to our Ag's margin expansion as we go throughout the year.

Scott Anderson: <unk> continued to add points to our margin expansion as we go throughout the year, Scott anything you might add.

Scott Anderson: Scott, anything you might add? No, I think that captures it well. Four quarters in a row with the Ag margin expansion, so we're building the track record here that we're going to continue on. Okay, sounds good.

Scott Anderson: No I think that captures it well four quarters in a row, but AG.

Scott Anderson: AG margin expansion. So we're building a track record here that we're going to continue.

Speaker Change: Okay. It sounds good Buffalo.

Anthony Pettinari: Thank you. Our next question comes from Anthony Pettinari with Citi's.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Our next question comes from Anthony Pettinari with Citi. Please go ahead.

Asher Sohnen: Please go ahead. Hi, this is Asher Sohnen on for Anthony's. Thanks for taking my question. I just, you know, in terms of the mid years, kind of contemplated in your updated aggregate price guide. Can you just talk about maybe the timing or magnitude of those? I'm like, what kind of carry forward that could that maybe set you up for in 2025?

Ashley <unk>: Hi, This is Ashley <unk> on for Anthony Thanks for taking my question I was just in terms of the mid years kind of contemplated in your updated aggregates price got it can you just talk about maybe the timing or magnitude of those.

Speaker Change: Kind of carryforward that could that maybe you set you up for in 2025.

Speaker Change: Thanks for the question asked there. So overall, we're very confident as we said in our prepared remarks and delivering over 10% on AG on a full year basis for 2024 that was a bit of a mixed bag. If you look at how we did pricing. This year. So if I talk about our Central region. For example, you know Kansas, Missouri, we can.

Asher Sohnen: Thanks for the question, Asher. So overall, we're very confident, as we said in our preparation. We've heard remarks in delivering over 10% on ads on a full-year basis for 2024. That was a bit of a mixed bag. If you look at how we did pricing this year. So if I talk about our central region, for example, you know, Kansas, Missouri, we come out very strong in January. There was double-digit price increases that have carried forward. So if I look at the mid years for them, we talked about our mid years being two to seven percent across the entire network of acts operations.

Speaker Change: Very strong in January there with double digit price increases that are carrying forward. So if I look at the mid years for them, we talked about our mid year as being 2% to 7% across the entire network of ag's operations. They would've been on the low end of that but we'll finish the year very strong probably close to mid teens.

Asher Sohnen: They would have been on the low end of that, but when finished a year very strong, probably close to the mid teens. In, as we got into mid year, we started getting more traction on our East region. For example, and on Georgia increasing those prices. So overall, we're confident in the 10% as we exit over 10% as we exit the year and see continued constructive pricing environment as we go into 2025. Thanks. That's right.

Speaker Change: And as we got into mid year, we started getting more traction on our east region for example, and on Georgia, increasing those prices. So overall, we're confident in the 10% as we exited over 10% as we exit the year and see continued constructive pricing environment as we go into 2025.

Speaker Change: Thanks, that's very helpful I'll turn it over.

Katherine Thompson: I'll turn it over. Our next question comes from Katherine Thompson with Thompson Research.

Speaker Change: Our next question comes from Kathryn Thompson with Thompson Research. Please go ahead.

Katherine Thompson: Please go ahead.

Katherine Thompson: Hi, thank you for taking my question today. There's one to focus on your cement segment and on pricing. And you noted that inland, the really the Mississippi River drove pricing momentum. If you could shift to what you're seeing for cement pricing and other markets, including South Texas, a couple of tier question. What are you seeing with pricing? And how has it, what changes at any, have you seen with import terminals in terms of bringing product in? And with the rain delays and everything, you know, that Houston market being impacted, how is that impacting just the overall cement dynamics in that market?

Hi, Thank you for taking my question today.

Kathryn Thompson: Wanted to focus on your cement segment and on pricing.

Kathryn Thompson: And you noted that it inland so really the Mississippi River drove pricing momentum and if you could shift to what youre seeing for cement pricing.

Speaker Change: In other markets, including South Texas.

Speaker Change: Couple of tier question, what are you seeing with pricing and how has what changes if any have you seen with input terminals in terms of bringing product in and with the rain delays and everything are you know that Houston market being impacted how is that in.

Speaker Change: <unk> just the overall.

Speaker Change: Some of that dynamics in that market. Thank you.

Katherine Thompson: Thank you. Thanks for the question, Catherine. So overall, to your point, I would say cement pricing for us, as we anticipated, would be is noisy this year. So, to your point on our inlet markets or river markets, definitely drove that 7.3% organic pricing growth, with the northern markets having very strong price realization for the traditional legacy summit markets. Now, if you go then into your question on Houston, so reminder that Houston for us is mainly an import market for cement as part of the Argos USA deal. And there it's a small part of our business, but because of the weather, pricing has been pushed out into the years, or pricing will be delayed in Houston again. It's a small part of our business.

Speaker Change: Thanks for the question Catherine So overall to your point I would say cement pricing for us as we anticipated would be is noisy. This year. So to your point on our inland markets of our river markets definitely drove that seven 3% organic pricing growth with the northern markets, having very strong price realization for the traditional legacy.

Speaker Change: Summit markets now if you go then into your question on Houston. So reminder, that Houston for US is mainly an import market first men's as part of the Argos USA Dale and there. It's a small part of our business, but because of the weather pricing has been pushed out into the year. So our pricing will be delayed in Houston again, it's a small part of our business.

Katherine Thompson: But that, because of the weather, will be the case. Now the third bucket I'd point you to is our, you know, legacy Argos assets there. It's more customer customer market by markets pricing adjustments to try and get them back where they need to be from a value pricing perspective, and we continue to gain momentum.

Speaker Change: But that because of the weather will be the case now that third bucket I'd point you to is our legacy our gross assets there, it's more customer customer market by market pricing adjustments to try and get them back where they need to be from a value pricing perspective, and we continue to gain momentum. So overall on the year.

Katherine Thompson: So overall on the year, where I would guide everyone is on a full year basis, look at our price ending at that like the mid 150's for the whole enterprise and continuing to have that mid single digit growth on a full year basis year over year.

Speaker Change: Where I would guide everyone is on a full year basis look at our price ending at that like the mid <unk> for the whole enterprise and continuing to have that mid single digit growth on a full year basis year over year.

Katherine Thompson: Great, thanks very much.

Speaker Change: Great. Thanks very much.

Philip Ng: Our next question comes from Philip Ng with Jeffries. Please go ahead. Hey guys, congrats on the really strong quarter in a choppy environment. I guess a question for Scott. Your back half guidance, I think if I heard you correctly, four years both for Agrits and Smith, download a mid-single digit, so it actually sounds like things pick up pretty nicely in the back half. So what I was trying to get a better handle is how to think about volume declines or increases, I guess, perhaps three key versus fourth quarter.

Philip <unk>: Our next question comes from Philip <unk> with Jefferies. Please go ahead.

Unknown Analyst: Hey guys, congrats on a really strong quarter in a choppy environment. I guess a question for Scott, your back half guidance, I think if I heard you correctly, full year both for aggrets and cement down low to mid-single digits. So it actually sounds like things pick up pretty nicely in the back half.

Philip <unk>: Hey, guys. Congrats on a really strong quarter in a choppy environment I guess a question for Scott you.

Philip <unk>: Your back half guidance I think if I heard you correctly full year, both for aggregates and cement down low to mid single digits actually it sounds like things pick up pretty nicely in the back half.

Unknown Analyst: So what I was trying to get a better handle on volume declines or increases, I guess, perhaps, three key versus the fourth quarter. And have you baked in this latest storm that's hitting the southeast just because your competitor is assuming a much more cautious outlook on demand? So I just want to make sure it's properly calibrated, and then have you incorporated any, perhaps, elevated costs that you saw in 2Q from some of the wet weather? Is that kind of spilling over into 3Q?

Speaker Change: Well I was trying to get a better handle is how to think about volume declines or increases I guess, perhaps streaky versus fourth quarter.

Philip Ng: And you baked in this latest storm that's hitting the South East just because your competitors are assuming a much more cautious outlook on the man, so you just want to make sure it's properly calibrated and then have you incorporated any perhaps elevated costs that you saw on two key from some of the wet weather, is that kind of spilling over the three key. Yeah, Philip, let me start with just on the volume profile when you think about the back half. We do have some pent up demand with weather, and we have really strong backlogs and is already touched on that.

Speaker Change: And have you baked in this latest storm.

Speaker Change: That's hitting the southeast just because your competitors assuming a much more cautious outlook on the math I just want to make sure. It's properly calibrate. It and then have you incorporate any perhaps elevated cost that you saw in <unk> from some of the wet weather is that kind of spilling over to <unk>.

Speaker Change: Yes, Philip let me start with just on the volume profile when you think about the back half.

Speaker Change: We do have some pent up demand with weather.

Speaker Change: And we have really strong backlogs and as I already touched on that so when we when we look at the back half, we do see a little bit of an uptick in <unk> in Q3, we've got that forecasted in some of that may push into Q4, but we'd really not not heavily relying on volumes.

Philip Ng: So when we, when we look at the back half, we do see a little bit of an uptick in axe and Q3. We've got that forecasted, and some of that may push into Q4, but we're really not, not heavily relying on volumes. But definitely a slight step up. And if you look over our comparable from the prior year in Q3, it was down 7.3% last year. So the comp gets a little bit easier on the prior year. So we definitely do believe it's achievable.

But definitely a slight step up and if you look over our comparable from the prior year.

Speaker Change: Q3, it was down seven 3% last year, so the comp gets a little bit easier on the prior year. So we definitely do believe its achievable, we got to get out of this weather pattern.

Philip Ng: We've got to get out of this weather pattern. But Philip, we definitely see eggs coming on now, cement on the other side, and talked about, you know, our Southeast and our Mid Atlantic markets are actually we do have good demand conditions there. So likewise, there we see that that path. We don't need much growth there to get to that low single digits on the growth side.

Speaker Change: Philip we definitely see AG coming on now cement on the other side and talked about our southeast and mid Atlantic markets are actually we do have good demand conditions. There. So likewise, there we see that that path, we don't need much growth there.

Speaker Change: To get to that low single digits.

Speaker Change: On the growth side.

Philip Ng: What about the cost? Anything you would cost the moderate and in 2Q first, I'm sorry, 3Q versus 2Q with some of the volume head ones you saw in 2Q. Yeah. So, Philip, on the cost, you know, let me, let me categorize it like this. Really, we got three buckets on cost. And the first one is outright favorable. And that's our energy cost, diesel fuel. We're hedged in a really good position. It's worked well for us this year. We've already dropped about 5 million savings to the bottom line. We will continue to do that through the back half, as we're 55% hedged through the back half.

Speaker Change: What about the cost anything use cost.

Speaker Change: Cost to moderate in <unk> and <unk>.

Speaker Change: Q4, I'm, sorry, Q3, Q versus <unk> with some of the volume headwinds you saw.

Speaker Change: Yeah, So Philip on the cost.

Speaker Change: Let me categorize like this really we got three buckets on cost.

Philip <unk>: The first one is as outright favorable and that's our energy cost diesel fuel we're hedged in a really good position. It's worked well for us. This year, we've already dropped about $5 million savings to the bottom line. We will continue to do that through the back half as were 55% hedged through the back half. So we have savings on the energy side as well as natural gas little flu.

Philip Ng: So we have savings on the energy side as well as natural gas that will flow through to the kilns that will have savings as well on. We're 25% on hedge on natural gas. So energy is going to be favorable. I would say that the second bucket you're moderating, cost. This is your RNM and subcontractor cost that we're seeing moderate through the year. So that front half was heavier, heavier weighted on inflation. You'll see that ease off this back half. And then the third bucket or your sticky cost. And that's labor. For us, labor is still tight.

Philip <unk>: Through to the kilns, though we will have savings as well on a more 25% on a hedged on natural gas. So energy is going to be favorable I would say that's the second bucket you're moderating costs. This is your R&M and subcontractor.

Philip <unk>: Costs that we're seeing moderate through the year, so that front half was heavier heavier weighted on inflation you will see that ease off this back half and then the third bucket are you sticky cost and that's labor for US labor is still tight I know youre hearing a lot in the market about labor, but it's still tight for us that's probably our most sticky bucket but.

Philip Ng: I know you're hearing a lot in the market about labor, but it's still tight for us. That's probably our most sticky bucket. But we do see that coming off as we go through the latter part of the year. So we're still, we're still good with our range of that mid-single digits on the cost side. More front weighted, less than the back half.

Philip <unk>: But we do see that coming off as we go through the latter part of the year. So we're still we're still good with a range of that mid single digits on the cost side more front weighted less in the back back half.

Philip Ng: And the only thing I'd add to that fill is that we are adjusting our discretionary spend according to our volume. So our team, I've been incredibly impressed by the execution they've had as volumes have been challenging; that they quickly adapt to adjusting discretionary spend as we called out and are prepared comments as well.

Philip <unk>: The only thing I'd add to that Phil is that we are adjusting our discretionary spend according to our volume. So our team I've been incredibly impressed by the execution they've had as volumes have been challenging that they quickly get down to adjusting discretionary spend as we called out in our prepared comments as well.

Philip Ng: Super, really impressive execution, guys. Thank you.

Speaker Change: Super really impressive execution guys. Thank you.

Philip <unk>: Yeah.

Brent Thielman: All right, our next question comes from Brent Thielman with DA Davidson. Please go ahead. Hey, thanks, Anne Scott. Just the revision and GNA expectations for this year. Does that potentially mean any sort of deferral and certain costs that it ultimately need to be realized beyond this year?

Speaker Change: Alright. Our next question comes from Brent Thielman with D. A Davidson. Please go ahead.

Brent Thielman: Hey, Thanks, and Scott just the revision in G&A expectations for this year does that potentially mean any sort of deferral and certain cost that ultimately we need to be realized beyond this year or does this sort of diverse structural reset or run rate, we can think about it.

Brent Thielman: Is this sort of a structural reset or run rate we can think about as we go into 2025? Yeah, I'll just start on Scott if you want to add anything to it. No, there's no deferrals. Number one, this is purely as we came into the integration, Brent. We took a very, you know, do no harm approach, as you should in an integration. And we didn't cut SG&A heavily at the beginning. We wanted to understand what we had from a people talent perspective, and you know what markets we were truly serving and what we needed to serve those markets. And so we were able to quickly adapt and look at what our SGNA run rate was.

Speaker Change: We go into 2025.

Speaker Change: Yeah, I'll just start on Scott if you want to add anything to it no. If there's no deferrals number one this is purely as we came into the integration Brett We took a very you know do no harm approach as you showed in an integration and we didn't cut SG&A heavily at the beginning we wanted to understand what we had from our people talent perspective then.

Speaker Change: What markets, we were truly serving and what we needed to serve those markets and so we were able to quickly adapt and look at what our SG&A run rate was so as we got into this second half. We said, okay. We know at that point, where we're at a run rate and we can continue to bring our SG&A down in and many of our discretionary spend bucket. So it's really the way out.

Brent Thielman: So, as we got into this second half, we said, okay, we're now at that point where we're at a run rate and we can continue to bring our SGNA down and many of our discretionary spend buckets. So it's really the way I would couch it for you is more just the synergies coming in a little faster on the scale site. That's the way I would couch it for you, and we're getting down to that run rate that we have targeted on SGNA overall that should come with the company our size. Yeah, the only thing I would add, Brent, you know, just on percentages that Anne's talking about, you know, we were a touch over 8%.

Speaker Change: With couch it for you it's more just the synergies coming in a little faster on the scale side, that's the way I would couch. It for you and we're getting down to that run rate that we have targeted on SG&A overall that should come with a company our size.

Speaker Change: Yes, the only thing I would add Brian just on percentage of sedans talking about we were a touch over 8% now this quarter seven 8%. So we're trending down we're going to we're going to attack those scale synergies.

Brent Thielman: Now we're, you know, this quarter 7.8%. So we're trending down. We're going to, we're going to attack those scale synergies.

Brian: Excellent. Thank you.

Brent Thielman: Excellent.

Timna Tanners: Thank you. Our next question comes from Tim Nutaners with Wolf Research.

Brian: Our next question comes from Timna Tanners with Wolfe Research. Please go ahead.

Timna Tanners: Please go ahead. Yeah, hey, good day. I wanted to follow up on the cement pricing question. We are kind of hearing that cement volumes broadly looking a little softer this year, and yet cement price is holding up really nicely. So just wanted a little bit more color on what you're seeing in the terms of the pricing power and cement more broadly. So, you know, if all the players are being more disciplined and I didn't hear the answer on the question earlier on imports. So if you wouldn't mind talking about any import threat, or do you think imports come down with any weakness in domestic demand?

Timna Tanners: Yeah, Hey, good day and wanted to follow up on the cement pricing question. We are kind of hearing that cement volumes broadly looking a little softer this year and yet cement prices holding up really nicely. So just find out a little bit more color on what you're seeing in the terms of the pricing power in cement more broadly I think you know if all the players are being more disciplined.

Speaker Change: Planned and I didn't hear the answer on that question earlier on imports. So if you wouldn't mind talking about any import threat or do you think imports come down with any weakness in domestic demand. Thanks.

Timna Tanners: Thanks.

Speaker Change: Thanks, Tim for the question. So let me talk a little bit about pricing power first of all so as we said just to reiterate we're very confident in our mid single digits as we go throughout the year and all of our conversations have been constructive with our customers to pass this price through the supply chain and get everything back to where it should be going into 'twenty.

Timna Tanners: Thanks, Tim Nutaners, for the question. So let me talk a little bit about pricing power first of all. So, as we said, just to reiterate, we're very confident on our mid single digits as we go throughout the year, and all our conversations have been constructive. With our customers to pass this price through the supply chain and get everything back to where it should be going into 2025, and we believe long-term supply-demand dynamics will support pricing cards event. But just to give you a few steps around that, if you look back over the last, we talk a lot about acts pricing power, but I think cement is under realized sometimes, Tim Nutaners, because we look over the last 75 years.

Speaker Change: 25, and we believe long term supply demand dynamics will support pricing parents event, but just to give you a few stats around that if you look back over the last we talked a lot about AG pricing power, but I think cement is under realize sometimes timna because we look over the last 75 years.

Timna Tanners: Acts pricing has increased over 70% of the time by mid single digit by 6% on average, and the other 30% of the time only went down 2%. So you take this structural and historic support. There really is support for cement at mid single-digit pricing moving forward on top of that. I believe that the 6th of cality has been overstated on cement when you consider the supply demand dynamics, it being a net importer in the US. There's really a good case for persistent cement pricing power moving forward, and you're seeing that in the numbers that we're presenting here today.

Speaker Change: <unk> pricing has increased over 70% of the time by mid single digit by 6% on average and the other 30% of the time. It only went down 2%. So you take the structural and historic support there really is support for cement at mid single digit pricing moving forward on top of that I believe that the cyclicality has been overstated.

Speaker Change: The announcement when you consider the supply demand dynamics and being a net importer in the U S. There was really good.

Speaker Change: A good case for persistent cement pricing power moving forward and Youre seeing that in the numbers that we're presenting here today and that was part of our thesis is we hadn't invested in articles to your question on imports. We are not heavily import exposed obviously, we're seeing it in Houston with the weather and the ag's imports were seeing more it's really more whether there timna is the way I would.

Timna Tanners: And that was part of our thesis as we invested in Argos to your question on imports. We are not heavily import exposed. Obviously, we're seeing it in Houston with the weather and the acts imports we're seeing more. It's really more whether they're timid, as the way I would call it out at this point that's pushing pricing back. We are not heavily import exposed everywhere, so we're not seeing a great impact of imports on our business. Thank you. All right.

Speaker Change: Call. It out at this point, that's pushing pricing back we are not heavily import exposed everywhere else. So we're not seeing a great impact of imports on our business.

Speaker Change: Okay. Thank you.

Speaker Change: Okay.

Speaker Change: Alright. Our next question comes from Jerry Revich with Goldman Sachs. Please go ahead.

Jerry Revich: Our next question comes from Jerry Revich with Goldman Sachs. Please go ahead. Yes. Hi. Good morning, everyone. And nice quarter.

Jerry Revich: Yes, hi, good morning, everyone and nice quarter.

Jerry Revich: I want to ask on Argos. So historically, they've had some longer-term contractual agreements. Can you just update us on what impact those agreements had on pricing in the quarter? I'm assuming it was a headwind. And what's the timing of when those agreements for a lot of, if they are indeed still in place? Well, they're a bit of a mixed bag. And it's going to be noisy, Jerry, on some hand pricing. Some have rolled off, and we've gotten the pricing up to market pricing. Others were in discussions as we go throughout. And I think we call that 12 to 18 months is the bulk of those contracts that will come up for reprising.

Jerry Revich: I wanted to ask on Argos, So historically they've had some longer term contractual agreements can you just update us on what impact those agreements had on pricing in the quarter I'm, assuming it was a headwind.

Speaker Change: And what's the timing of when those agreements roll off if they are indeed still in place.

Speaker Change: Well, there there a bit of a mixed bag.

Speaker Change: It's going to be noisy Jerry on cement pricing some have rolled off and we've gotten the pricing up to market pricing others. We're in discussions as we go throughout and I think we called out 12 to 18 months as the bulk of those contracts that will come up for repricing them. That's all contained in our mid single digit price increase for the year in that mid hundred Fifty's.

Jerry Revich: That's all contained in our mid single digit price increased the year, and that mid 150s that I spoke to that was get by the end of the year. Now, some of it, there'll be more in 2025. And I honestly believe the supply demand dynamics are going to be more constructive in 2025 that'll drive that price again higher. So you should expect mid single digit plus pricing as we go forward.

Speaker Change: That I spoke to that will get by the end of the year now some that there'll be more than 2025, and I honestly believe the supply demand dynamics are going to be more constructive in 2025 that'll drive that pricing even higher. So you should expect mid single digit plus pricing as we go forward.

Speaker Change: Well.

Jerry Revich: Well, the reason for the question here is as good as the results have been; you're actually still under earning relative to market-based pricing. Just based on what you inherited. So I'm wondering if we just, you know, market market today and we didn't have these contracts. Would we be talking about pricing that was another, you know, on our goes, $5 higher, $10 higher? Can you just help us give an appreciation of how much we're under earning because constructions. Well, we talked about when we first came out that there was about, you know, 10 to 15 dollars a ton under pricing.

Speaker Change: Just final question your yes kudos to.

Speaker Change: As a result of bid you're actually still under earning relative to market based pricing just based on what you inherited so I'm wondering if we just mark to market today and we didn't have these contracts would we be talking about pricing that was another.

Argo's $5 higher $10 higher.

Speaker Change: Just help us give an appreciation of how much.

Speaker Change: Under earning because yeah, that's correct.

Speaker Change: Well, we talked about when we first came out that there was above him you know.

Jerry Revich: 10 to $15 a ton under pricing. So that's why we increased if you recall Jerry the commercial synergies and our 130 million bucket, we brought that up to like I believe $10 million to $20 million as the target to go after at that point. So we're still going after that target. So that's kind of the price you should think of over the next you know 12 to say 'twenty four.

Jerry Revich: So that's why we increased, if you recall, Jerry, the commercial synergies in our 130 million bucket. We brought that up to like, I believe 10 to 20 million as the target to go after at that point. So we're still going after that target. So that's kind of the price you should think of over the next 12 to say 24 months that will catch up on that and continue to drive from there.

Jerry Revich: Months of little catch up on that and continue to drive from there.

Jerry Revich: Thanks. Thanks, Jerry.

Jerry Revich: Thanks, Dan.

Jerry Revich: Thanks Jerry.

Keith Hughes: Our next question comes from Keith Hughes with Truest Securities. Please go ahead. Thanks. Thank you.

Our next question comes from Keith Hughes with tourists Securities. Please go ahead.

Keith Hughes: Thank you give us any detail on the future sent or do the pacing of the future synergies would be consistent or will it be kind of a bucket spaces as you work on projects.

Keith Hughes: Give us any detail on the future center, the pacing of the future center, will it be consistent or will it be coming, coming bucket spaces work on projects? How would you like to address that one? Yeah, sure. Keith, when you look at synergies, you know, we've already kind of talked about the progress we've made this year. But when you look at the grand total 130 million, you know, what we committed to was 40 million this year, but we actually committed to 80 million over two years. So we have another 40 million plan for next year at the point in time.

Speaker Change: But would you like to address that one.

Speaker Change: Yeah sure Keith when I when you look at synergies, we've already kind of talked about the progress we've made this year.

Speaker Change: But when you look at the Grand total of $130 million.

Speaker Change: We committed to was 40 million this year, but we just we actually committed to $80 million over two years. So we have another 40 minute 40 million planned for next year at this point in time and really what's happening is we got our scale synergies out of the gate those will lessen over time on the skill side as we shift more to the cement.

Keith Hughes: And really what's happening is we got our scale synergies out of the gate; those are less than over time on the scale side as we shift more to the cement. As you recall, the cement is really the line share of the synergies here. And what you're going to see is that OEE is the primary mover, and what you'll see there is our plans that we're putting in place right now around preventive maintenance and just the critical access to critical spares. And then you're going to see the capital improvement projects start compounding. So you're going to see those really start growing in the months to come.

Speaker Change: As you recall the cement is really the lion's share of the synergies here and what Youre going to see is that OE is the primary mover and what you'll see there is our plans that we're putting in place right now around preventive maintenance and just the critical access to critical spares and then youre going to see the capital improvement projects start.

Speaker Change: Compounding so youre going to see those really start growing in the months to come and that's what I see next year as being a big a big mover.

Keith Hughes: And that's what I see next year is being a big, a big move. for, I guess, 40 million next year, is that clear? So that's, yes, so we do 80 million within two years, and over a hundred percent.

Hey, guys 40 million next year is that correct.

Speaker Change: So that's yes.

Speaker Change: That said, we do $80 million within two years and over 100.

Keith Hughes: I guess, of course, particularly given what you're talking about on the PP&E, it seems like that would be lumpy. Is that there, particularly in the off season, that's a better time to do that? Is that the right way to look at it, or will it be more consistent? I mean, there's no doubt; there's going to be some lumpiness to it. Over time, though, you'll see these projects drop in dollars to the bottom line, and we'll get to the extra 40 million next year. But yeah, you're right. I mean, we've got to plan the CAPEX projects during the shutdowns, so there's some timing elements that we've got to work around.

Speaker Change: I guess my question, particularly given what you're talking about.

Speaker Change: It seems like that would be lumpy is that is that fair and particularly in the off season.

Speaker Change: Better time to do that is that the right way to look at it or it will be more consistent.

Speaker Change: Hi.

Speaker Change: I mean, theres no doubt theres going to be some some lumpiness to it.

Speaker Change: Over over time, though you'll see these projects dropped dropping dollars to the bottom line and we will get to the the extra 40 million next year.

But yeah Youre right I mean, we've got a plan the capex projects during the shutdowns.

Speaker Change: So there is some timing elements that we got to work around.

Keith Hughes: But definitely, on the longer term, you'll see the 80 million over the two years. Yeah, the green America is what you're talking about in lumpiness, just to be specific, keys. That's where we'd be putting the capital in. We have to do that when we're shut down because our plants are running flat out. So that will drive the lumpiness, but you'll be at a good run race of 40 million per year coming out of this year, and then 80 million within the first two, because the scale synergies continue on, and we continue with the commercial excellence, and then you get into the green America as the last big lump into the cement synergies.

Speaker Change: But definitely on the longer term youll see youll see the $80 million over the two years yeah. The Green in America is what Youre talking about Lumpiness just to be specific Keith that's where we'd be putting the capital and we have to do that when we're shut down because our plants are running flat out. So that's that will drive the lumpiness, but you'll get a good run rate of $40 million per year coming out of this year and then.

Speaker Change: $80 million within the first two because the scale synergies continue on and we continue with the commercial excellence and then you get into the Green Americas, the last big lump into the cement synergies.

Speaker Change: Okay. Thank you.

Keith Hughes: Okay, thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

David McGregor: All right, our final question for today comes from David McGregor with Longbow Research. Please go ahead. Hey, good afternoon.

Speaker Change: Alright, and our final question for today comes from David Macgregor with Longbow Research. Please go ahead.

Speaker Change: Hey, Good afternoon. This is Joe Nolan on for David.

Jonah: This is Jonah, and I'm for David. I was just hoping within your aggregate volume outlook, can you just update us on what's embedded within that, or residential, non-resident infrastructure? Yes, so aggregates we call down, you know, low-to-mid single digit down on the year. And if I just talk to the end market, I would actually put it, you know, residential. We're looking, you know, flat to down overall. And think about it; the way we're looking at our residential markets, they're a little more hesitant. And what I mean by that, the longer, higher-for-longer interest rates, the fact there's a lock-in effect, there's a presidential election, and jobs reports are keeping people hesitant from going out and buying houses.

Joe Nolan: I was just hoping within your aggregates volume outlook can you just update us on what's embedded within that for residential nonresident infrastructure.

Speaker Change: Okay.

Speaker Change: Yeah, So aggregates, we called down you know.

Speaker Change: Low to mid single digit down on the year.

Speaker Change: And if I just talk to the end markets.

I would actually put it you know residential we're looking flat to down overall and think about it the way we're looking at a residential markets, they're a little more hesitant and what I mean by that the longer higher for longer interest rates. The fact, theres a lock in effect, there's a presidential election and jobs reports are keeping people hesitant from going out and buying has.

Jonah: That being said, we have pent-up demand in all three of our very strong end markets of Houston, Phoenix, and Salt Lake City. Houston, we have very strong backlogs right now; Phoenix has come back slowly. Salt Lake might be more 25 recovery than a 24, so we're not counting a lot of eggs in for there, but it's worth waiting on, because that's one of our highest margin, you know, residential markets. So that will come back; it's not a matter of if, it's a matter of when. And then, you know, on public markets, we're assuming continued strength in our public markets.

Speaker Change: With that being said, we have pent up demand in all three of our end very strong end markets of Houston, Phoenix, and Salt Lake City and.

Speaker Change: Houston, we have very strong backlogs right now Phoenix has come back slowly salt lake might be more twenty-five recovery than the 24. So we're not counting a lot of eggs in for there, but its worth waiting on because that's one of our highest margin.

Speaker Change: Residential market, so that will come back it's not a matter of if it's a matter of win and then you know on public markets. We're assuming continued strength in our public markets are north Texas markets are up double digits. We've got some timing issues on some of our other public markets, but think about it as continued strong growth in public overall, our state <unk>.

Jonah: Our North Texas markets are up double digits. We've got some timing issues on some of our other public markets, but think about it as continued strong growth in public overall. Our state DOTs are up three percent already. They'll probably be more than that by the time they finish their estimates. Our contract highway and paving wards are up 6.3 percent, which is over seven points above the national average. And we're seeing in our backlogs, specific tags. If you look at our backlogs right now, Joel, we are up 10 million tons per year, over 70 percent. Our backlogs are up at 40 percent. Of those, go into public markets.

Joel: <unk> are up 3% already they'll probably be up more than that by the time. They finished their estimates are contract highway paving awards are up six 3% with just over seven points above the national average and we're seeing it in our backlogs specific tags. If you look at our backlogs right now Joel we are up 10 million tons per year over 70% our backlogs are up.

Speaker Change: At 40% of those go into public markets, So real strength in public and as I said in my prepared comments the nonresidential, there's where you've got a mixed bag. So you've got positives on your manufacturing your energy verticals and data centers, which we're seeing some nice growth there, but then against that is the commercial weakness that I called out in Salt Lake City, Phoenix and <unk>.

Jonah: So real strength in public.

Jonah: And as I said in my prepared comments, the non-residential is where you've got a mixed bag. So you've got positives on your manufacturing, your energy verticals, and data centers, which we're seeing some nice growth there. But then against that, it's the commercial weakness that I called out in Salt Lake City, Phoenix, and British Columbia. So that's really what's driving those that eggs volume recommendation over. Paul, that's helpful detail. Thanks.

Speaker Change: Colombia, So that's really what's driving those that eggs volume recommendation overall.

Speaker Change: That's helpful detail. Thanks.

Speaker Change: Okay.

Jonah: All right, I'm going to turn it back over to Anne Noonan, Summit CEO, for closing remarks. Thank you for joining today's call, and I'd leave you with three final messages. First, our team in our business has demonstrated high quality execution in a dynamic backdrop, continuing a strong record of meeting or beating the expectations we've set externally. Two, we are supremely confident that the levers within our control can and will drive strong margin and EBITDA growth this year. And three, our capital allocation approach and strategic goals continually strengthen our materials-led portfolio, which is a chief priority and one that we know will promote superior long-term shareholder value.

Alright, I mean ill turn it back over to Anne Noonan CEO for closing remarks.

Anne Noonan: Thank you for joining today's call and I'd leave you with three final messages first our team and our business has demonstrated high quality execution and a dynamic backdrop, continuing a strong record of meeting or beating the expectations. We've set externally too we are supremely confident that the levers within our control 10 and will drive.

Anne Noonan: Strong margin and EBITDA growth this year and three our capital allocation approach and strategic goal to continuously strengthen our materials led portfolio as a chief priority and one that we know will promote superior long term shareholder value. We thank you for your time today. We appreciate your continued support of summit materials and we hope you all have a great day.

Anne Noonan: We thank you for your time today. We appreciate your continued support of Summit Materials, and we hope you all have a great day.

Anne Noonan: Okay.

Anne Noonan: [music].

Anne Noonan: Yeah.

Anne Noonan: [music].

Anne Noonan: Okay.

Anne Noonan: Yeah.

Anne Noonan: [music].

Anne Noonan: Okay.

Anne Noonan: Yeah.

Anne Noonan: Thank you.

Anne Noonan: Yeah.

Anne Noonan: Okay.

Anne Noonan: [music].

Anne Noonan: Yeah.

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Anne Noonan: [music].

Anne Noonan: Okay.

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