SUM

Summit Materials Inc

Industrial/Transportation


Presented:07/31/2018
Price:$25.10
Cap:$2.80B
Current Price:$39.54
Cap:$6.94B

Presented

Date07/31/2018
Price$25.10
Market Cap$2.80B
Ent Value$5.02B
P/E Ratio27.28x
Book Value$11.35
Div Yield0%
Shares O/S111.49M
Ave Daily Vol1,508,423
Short IntN/A

Current

Price$39.54
Market Cap$6.94B
Summit Materials, Inc. is a construction materials company. The company operates its business through the following segments: Cement, West and East. The Cement consists of its Hannibal, Missouri and Davenport, Iowa cement plants and distribution terminals along the Mississippi river from Minnesota to Louisiana. The West segment includes operations in Texas, the Mountain states of Utah, Colorado, Idaho, Wyoming and Nevada and in British Columbia, Canada. The East segments serves markets extending across the Midwestern and Eastern United States, most notably in Kansas, Missouri, Virginia, Kentucky, North Carolina, South Carolina and Nebraska where the company supplies aggregates, ready mix concrete, asphalt paving mix and paving and related services. It company manufactures construction materials and related downstream products. The company was founded by Thomas W. Hill on September 23, 2014 and is headquartered in Denver, CO.

*Please note, SUM reported earnings on August 1, 2018, and revised target 2018 EBITDA to ~$470MM (from ~$500MM) because of higher than expected variable cost pressure in the first half of the year.

Publicly traded companies mentioned herein: Blackstone Group LP (BX), CRH plc (CRH), Martin Marietta Materials Inc (MLM), Summit Materials Inc (SUM), Vulcan Materials Company (VMC)

Highlights

The presenter is long shares of Summit Materials (SUM), which was founded by current president and CEO Thomas Hill in 2009 with the backing of Blackstone. The company is a pure play on US infrastructure spending, and despite rising costs that could weigh on margins near-term, SUM could be at the beginning of a multi-year cycle for aggregates and cement, which make up 2/3 of its EBITDA. With additional benefits from NOLs and other favorable tax dynamics, as well as the potential for accretive acquisitions to boost EBITDA, the risk/reward is favorable in the mid-$20s. Assuming a 9x - 10x EBITDA multiple can hold looking out two years to 2020, the presenter targets a mid-$40s stock price in 12 - 18 months.

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Idea Discussion

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