SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 2, 2016
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file numbers:
001-36873 (Summit Materials, Inc.)
333-187556 (Summit Materials, LLC)
SUMMIT MATERIALS, INC.
SUMMIT MATERIALS, LLC
(Exact name of registrants as specified in their charters)
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Delaware (Summit Materials, Inc.) |
47-1984212 |
Delaware (Summit Materials, LLC) |
26-4138486 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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1550 Wynkoop Street, 3 rd Floor Denver, Colorado |
80202 |
(Address of principal executive offices) |
(Zip Code) |
Registrants’ telephone number, including area code: (303) 893-0012
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Summit Materials, Inc. |
Yes ☒ |
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No ◻ |
Summit Materials, LLC |
Yes ☒ |
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No ◻ |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Summit Materials, Inc. |
Yes ☒ |
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No ◻ |
Summit Materials, LLC |
Yes ☒ |
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No ◻ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Summit Materials, Inc.
Large accelerated filer ◻ |
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Accelerated filer |
☐ |
Non-accelerated filer ☒ |
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(Do not check if a smaller reporting company) |
Smaller reporting company |
☐ |
Summit Materials, LLC
Large accelerated filer ◻ |
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Accelerated filer |
☐ |
Non-accelerated filer ☒ |
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(Do not check if a smaller reporting company) |
Smaller reporting company |
☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Summit Materials, Inc. |
Yes ◻ |
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No ☒ |
Summit Materials, LLC |
Yes ◻ |
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No ☒ |
As of May 3, 2016, the number of shares of Summit Materials, Inc.’s outstanding Class A and Class B common stock, par value $0.01 per share for each class, was 62,622,655 and 69,007,297, respectively.
As of April 27, 2016, 100% of Summit Materials, LLC’s outstanding limited liability company interests were held by Summit Materials Intermediate Holdings, LLC, its sole member and an indirect subsidiary of Summit Materials, Inc.
EXPLANATORY NOTE
This quarterly report on Form 10-Q (this “report”) is a combined quarterly report being filed separately by two registrants: Summit Materials, Inc. and Summit Materials, LLC. Each registrant hereto is filing on its own behalf all of the information contained in this report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information. We believe that combining the quarterly reports on Form 10-Q of Summit Materials, Inc. and Summit Materials, LLC into this single report eliminates duplicative and potentially confusing disclosure and provides a more streamlined presentation since a substantial amount of the disclosure applies to both registrants.
Unless stated otherwise or the context requires otherwise, references to “Summit Inc.” mean Summit Materials, Inc., a Delaware corporation, and references to “Summit LLC” mean Summit Materials, LLC, a Delaware limited liability company. The references to Summit Inc. and Summit LLC are used in cases where it is important to distinguish between them. We use the terms “we,” “our,” “us” or “the Company” to refer to Summit Inc. and Summit LLC together with their respective subsidiaries, unless otherwise noted or the context otherwise requires.
Summit Inc. was formed on September 23, 2014 to be a holding company. As of April 2, 2016, its sole material asset was a 49.7% economic interest in Summit Materials Holdings L.P. (“Summit Holdings”). Summit Inc. has 100% of the voting rights of Summit Holdings, which is the indirect parent of Summit LLC. Summit LLC is a co-issuer of our outstanding 8 1 / 2 % senior notes due 2022 (“2022 Notes”) and our 6 1/ 8 % senior notes due 2023 (“2023 Notes” and collectively with the 2022 Notes, the "Senior Notes"). Summit Inc.’s only revenue for the three months ended April 2, 2016 was that generated by Summit LLC. Summit Inc. controls all of the business and affairs of Summit Holdings and, in turn, Summit LLC, as a result of its reorganization into a holding corporation structure consummated in connection with the initial public offering of its Class A common stock on March 11, 2015 (“IPO”).
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report includes “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. All statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, it is very difficult to predict the effect of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be realized. Important factors could affect our results and could cause results to differ materially from those expressed in our forward-looking statements, including but not limited to the factors discussed in the section entitled “Risk Factors” in Summit Inc.’s Annual Report on Form 10-K for the fiscal year ended January 2, 2016 (the “Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”), any factors discussed in the section entitled “Risk Factors” of this report, and the following:
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our dependence on the construction industry and the strength of the local economies in which we operate; |
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the cyclical nature of our business; |
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risks related to weather and seasonality; |
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risks associated with our capital-intensive business; |
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competition within our local markets; |
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our ability to execute on our acquisition strategy, successfully integrate acquisitions with our existing operations and retain key employees of acquired businesses; |
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our dependence on securing and permitting aggregate reserves in strategically located areas; |
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declines in public infrastructure construction and reductions in governmental funding, including the funding by transportation authorities and other state agencies; |
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environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use; |
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conditions in the credit markets; |
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our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us; |
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material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications; |
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cancellation of a significant number of contracts or our disqualification from bidding for new contracts; |
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special hazards related to our operations that may cause personal injury or property damage not covered by insurance; |
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our substantial current level of indebtedness; |
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our dependence on senior management and other key personnel; and |
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interruptions in our information technology systems and infrastructure. |
All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.
Any forward-looking statement that we make herein speaks only as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.
CERTAIN DEFINITIONS
As used in this report, unless otherwise noted or the context otherwise requires:
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"Finance Corp." refers to Summit Materials Finance Corp., an indirect wholly-owned subsidiary of Summit LLC and the co-issuer of the Senior Notes; |
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the “Issuers” refers to Summit LLC and Finance Corp. as co-issuers of the Senior Notes but not to any of their subsidiaries; |
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“Continental Cement” refers to Continental Cement Company, L.L.C.; |
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“Harper Contracting” refers collectively to substantially all the assets of Harper Contracting, Inc., Harper Sand and Gravel, Inc., Harper Excavating, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc.; |
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“Lafarge” refers to Lafarge North America Inc.; |
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“Mainland” refers to Mainland Sand & Gravel ULC, which is the surviving entity from the acquisition of Rock Head Holdings Ltd., B.I.M Holdings Ltd., Carlson Ventures Ltd., Mainland Sand and Gravel Ltd. and Jamieson Quarries Ltd.; |
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“Lewis & Lewis” refers to Lewis & Lewis, Inc.; |
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“Davenport Assets” refers to a cement plant and quarry in Davenport, Iowa and seven cement distribution terminals along the Mississippi River; |
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“LeGrand” refers to LeGrand Johnson Construction Co.; |
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“Pelican” refers to Pelican Asphalt Company, LLC; |
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“AMC" refers to American Materials Company; |
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“Boxley” refers to Boxley Materials Company; |
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“ Sierra ” refers to Sierra Ready Mix, LLC; |
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“Blackstone” refers to investment funds associated with or designated by The Blackstone Group L.P. and its affiliates; |
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“Silverhawk” refers to certain investment funds affiliated with Silverhawk Summit, L.P.; |
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“Sponsors” refers to Blackstone and Silverhawk; and |
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“EBITDA” refers to net loss before interest expense, income tax expense (benefit), depreciation, depletion and amortization expense. |
SUMMIT MATERIALS, INC.
SUMMIT MATERIALS, LLC
FORM 10-Q
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Page No. |
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Consolidated Balance Sheets as of April 2, 2016 (unaudited) and January 2, 2016 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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SUMMIT MATERIALS, INC. AND SUBSIDIARIES
(In thousands, except share and per share amounts)
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April 2, |
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January 2, |
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2016 |
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2016 |
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(unaudited) |
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(audited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Costs and estimated earnings in excess of billings |
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Inventories |
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Other current assets |
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Total current assets |
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Property, plant and equipment, less accumulated depreciation, depletion and amortization (April 2, 2016 - $395,192 and January 2, 2016 - $366,505) |
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Goodwill |
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Intangible assets, less accumulated amortization (April 2, 2016 - $5,871 and January 2, 2016 - $5,237) |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Current portion of debt |
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$ |
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$ |
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Current portion of acquisition-related liabilities |
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Accounts payable |
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Accrued expenses |
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Billings in excess of costs and estimated earnings |
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Total current liabilities |
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Long-term debt |
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Acquisition-related liabilities |
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Other noncurrent liabilities |
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Total liabilities |
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Commitments and contingencies (see note 11) |
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Stockholders’ equity: |
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Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 49,746,982 and 49,745,944 shares issued and outstanding as of April 2, 2016 and January 2, 2016, respectively |
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Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 69,007,297 shares issued and outstanding as of April 2, 2016 and January 2, 2016 |
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Additional paid-in capital |
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Accumulated (deficit) earnings |
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Accumulated other comprehensive loss |
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Stockholders’ equity |
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Noncontrolling interest in consolidated subsidiaries |
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Noncontrolling interest in Summit Materials, Inc. |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See notes to unaudited consolidated financial statements.
1
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(In thousands, except share and per share amounts)
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Three months ended |
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April 2, |
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March 28, |
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2016 |
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2015 |
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Revenue: |
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Product |
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$ |
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$ |
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Service |
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Net revenue |
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Delivery and subcontract revenue |
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Total revenue |
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Cost of revenue (excluding items shown separately below): |
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Product |
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Service |
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Net cost of revenue |
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Delivery and subcontract cost |
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Total cost of revenue |
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General and administrative expenses |
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Depreciation, depletion, amortization and accretion |
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Transaction costs |
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Operating loss |
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Other (income) expense, net |
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Loss on debt financings |
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— |
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Interest expense |
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Loss from operations before taxes |
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Income tax benefit |
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Net loss |
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Net loss attributable to noncontrolling interest in subsidiaries |
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Net loss attributable to Summit Holdings |
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Net loss attributable to Summit Materials, Inc. |
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$ |
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$ |
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Net loss per share of Class A common stock: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted average shares of Class A common stock: |
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Basic |
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Diluted |
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See notes to unaudited consolidated financial statements.
2
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Comprehensive Loss
(In thousands)
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Three months ended |
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April 2, |
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March 28, |
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2016 |
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2015 |
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Net loss |
$ |
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$ |
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Other comprehensive loss: |
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Foreign currency translation adjustment |
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Loss on cash flow hedges |
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— |
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Other comprehensive income (loss) |
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Comprehensive loss |
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Less comprehensive loss attributable to the noncontrolling interest in consolidated subsidiaries |
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Less comprehensive loss attributable to Summit Holdings |
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Comprehensive loss attributable to Summit Materials, Inc. |
$ |
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$ |
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See notes to unaudited consolidated financial statements.
3
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
(In thousands)
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Three months ended |
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April 2, |
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March 28, |
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2016 |
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2015 |
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Cash flow from operating activities: |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation, depletion, amortization and accretion |
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Share-based compensation expense |
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Deferred income tax benefit |
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— |
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Net gain on asset disposals |
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Net gain on debt financings |
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— |
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Other |
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Decrease (increase) in operating assets, net of acquisitions: |
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Accounts receivable, net |
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Inventories |
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Costs and estimated earnings in excess of billings |
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Other current assets |
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Other assets |
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(Decrease) increase in operating liabilities, net of acquisitions: |
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Accounts payable |
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Accrued expenses |
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Billings in excess of costs and estimated earnings |
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Other liabilities |
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Net cash used in operating activities |
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Cash flow from investing activities: |
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Acquisitions, net of cash acquired |
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— |
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Purchases of property, plant and equipment |
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Proceeds from the sale of property, plant and equipment |
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Other |
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— |
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Net cash used for investing activities |
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Cash flow from financing activities: |
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Proceeds from equity offerings |
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— |
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Capital issuance costs |
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— |
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Proceeds from debt issuances |
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Debt issuance costs |
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Payments on debt |
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Purchase of noncontrolling interests |
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— |
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Payments on acquisition-related liabilities |
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Net cash provided by financing activities |
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Impact of foreign currency on cash |
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Net (decrease) increase in cash |
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Cash and cash equivalents—beginning of period |
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Cash and cash equivalents—end of period |
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$ |
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$ |
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See notes to unaudited consolidated financial statements.
4
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interest
(In thousands, except share amounts)
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Summit Materials, Inc. |
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Total |
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Accumulated |
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Stockholders’ |
|
||
|
|
Redeemable |
|
|
|
|
Noncontrolling |
|
|
|
|
Other |
|
Class A |
|
Class B |
|
Additional |
|
Noncontrolling |
|
Equity/ |
|
||||||||||||||
|
|
Noncontrolling |
|
Partners’ |
|
Interest in |
|
Accumulated |
|
Comprehensive |
|
Common Stock |
|
Common Stock |
|
Paid-in |
|
Interest in |
|
Partners’ |
|
||||||||||||||||
|
|
Interest |
|
Interest |
|
Subsidiaries |
|
Earnings |
|
Loss |
|
Shares |
|
Dollars |
|
Shares |
|
Dollars |
|
Capital |
|
Summit Inc. |
|
Interest |
|
||||||||||||
Balance — January 2, 2016 |
|
$ |
— |
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Net loss |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Issuance of Class A Shares |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Other comprehensive income |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Share-based compensation |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Balance — April 2, 2016 |
|
$ |
— |
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — December 27, 2014 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
$ |
— |
|
|
— |
|
$ |
— |
|
|
— |
|
$ |
— |
|
$ |
— |
|
|
— |
|
$ |
|
|
Accretion/ redemption value adjustment |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Other comprehensive income |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Share-based compensation |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Balance — March 11, 2015 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
$ |
— |
|
|
— |
|
$ |
— |
|
|
— |
|
$ |
— |
|
$ |
— |
|
|
— |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recording of noncontrolling interest upon reorganization |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
Net loss |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Issuance of Class A Shares |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Issuance of Class B Shares |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
— |
|
Other comprehensive income |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Share repurchase |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Purchase of redeemable noncontrolling interest |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Share-based compensation |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Balance — March 28, 2015 |
|
$ |
— |
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
See notes to unaudited consolidated financial statements.
5
SUMMIT MATERIALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share amounts)
1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Summit Materials, Inc. (“Summit Inc.” and, together with its subsidiaries, the “Company”) is a vertically-integrated construction materials company. The Company is engaged in the production and sale of aggregates, cement, ready-mixed concrete, asphalt paving mix and concrete products and owns and operates quarries, sand and gravel pits, two cement plants, cement distribution terminals, ready-mixed concrete plants, asphalt plants and landfill sites. It is also engaged in paving and related services. The Company has three operating segments, which are also its reporting segments: West; East; and Cement.
Substantially all of the Company’s products and services are produced, consumed and performed outdoors, primarily in the spring, summer and fall. Seasonal changes and other weather-related conditions can affect the production and sales volumes of its products and delivery of services. Therefore, the financial results for any interim period are typically not indicative of the results expected for the full year. Furthermore, the Company’s sales and earnings are sensitive to national, regional and local economic conditions and to cyclical changes in construction spending, among other factors.
On September 23, 2014, Summit Inc. was formed as a Delaware corporation to be a holding company. Its sole material asset is a controlling equity interest in Summit Materials Holdings L.P. (“Summit Holdings”). Pursuant to a reorganization into a holding company structure (the “Reorganization”) consummated in connection with Summit Inc.’s March 2015 initial public offering, Summit Inc. became a holding corporation operating and controlling all of the business and affairs of Summit Holdings and its subsidiaries and, through Summit Holdings, conducts its business. Together with Summit Inc., certain investment funds affiliated with Blackstone Capital Partners V L.P. and Silverhawk Summit, L.P. (collectively, the “Sponsors”) are the primary owners of Summit Holdings.
Equity Offerings —Summit Inc. commenced operations on March 11, 2015 upon the pricing of the initial public offering of its Class A common stock (“IPO”). Summit Inc. raised $433.0 million, net of underwriting discounts, through the issuance of 25,555,555 shares of Class A common stock at a public offering price of $18.00 per share. Summit Inc. used the offering proceeds to purchase a number of newly-issued Class A Units (“LP Units”) from Summit Holdings equal to the number of shares of Class A common stock issued to the public. Summit Inc. caused Summit Holdings to use these proceeds: (i) to redeem $288.2 million in aggregate principal amount of outstanding 10 1 / 2 % senior notes due January 31, 2020 (“2020 Notes”); (ii) to purchase 71,428,571 Class B Units of Continental Cement Company, L.L.C. (“Continental Cement”); (iii) to pay a one-time termination fee of $13.8 million primarily to affiliates of the Sponsors in connection with the termination of a transaction and management fee agreement; and (iv) for general corporate purposes. The $288.2 million redemption of 2020 Notes was completed in the second quarter of 2015 at a redemption price equal to par plus an applicable premium of $38.2 million plus $5.2 million of accrued and unpaid interest.
On August 11, 2015, Summit Inc. raised $555.8 million, net of underwriting discounts, through the issuance of 22,425,000 shares of Class A common stock at a public offering price of $25.75 per share ("follow-on offering"). Summit Inc. used these proceeds to purchase 3,750,000 newly-issued LP Units from Summit Holdings and 18,675,000 LP Units from certain of our pre-IPO owners, at a purchase price per LP Unit equal to the public offering price per share of Class A common stock, less underwriting discounts and commissions. Summit Holdings used the proceeds from the 3,750,000 newly-issued LP Units to pay the deferred purchase price of $80.0 million related to the July 17, 2015 acquisition of a cement plant and a quarry in Davenport, Iowa, and seven cement terminals along the Mississippi River (the “Davenport Assets”) and for general corporate purposes.
Basis of Presentation —These unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and
6
footnote disclosures typically included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto as of and for the year ended January 2, 2016. The Company continues to follow the accounting policies set forth in those consolidated financial statements.
Management believes that these consolidated interim financial statements include all adjustments, normal and recurring in nature, that are necessary to present fairly the financial position of the Company as of April 2, 2016 and the results of operations and cash flows for the three months ended April 2, 2016 and March 28, 2015. All significant intercompany balances and transactions have been eliminated.
The Company’s fiscal year is based on a 52-53 week year with each quarter composed of 13 weeks ending on a Saturday. The 53-week year occurs approximately once every seven years and occurred in 2015. The additional week in the 53-week year was included in the fourth quarter of 2015.
Principles of Consolidation —The consolidated financial statements include the accounts of Summit Inc. and its majority owned subsidiaries. As a result of the Reorganization, Summit Holdings became a variable interest entity. Summit Inc. is the primary beneficiary of Summit Holdings as a result of its 100% voting power and control over Summit Holdings and its obligation to absorb losses and its right to receive benefits of Summit Holdings and thus consolidates Summit Holdings in its consolidated financial statements with a corresponding noncontrolling interest elimination of 50.3% between January 2, 2016 and April 2, 2016 and 72.2% between March 11, 2015 and March 28, 2015. Collectively, Summit Inc.’s August 2015 follow-on offering and its December 2015 stock dividend decreased the noncontrolling interest’s economic interest from 72.2% to 50.3%.
Noncontrolling interests in consolidated subsidiaries represent a 20% ownership in Ohio Valley Asphalt, LLC and, prior to the IPO and concurrent purchase of the noncontrolling interests of Continental Cement, a 30% redeemable ownership in Continental Cement. All intercompany balances and transactions have been eliminated. The Company attributes consolidated stockholders’ equity and net income separately to the controlling and noncontrolling interests. The Company accounts for investments in entities for which it has an ownership of 20% to 50% using the equity method of accounting.
Use of Estimates —Preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenue and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangibles and other long-lived assets, pension and other postretirement obligations and asset retirement obligations. Estimates also include revenue earned on contracts and costs to complete contracts. Most of the Company’s paving and related services are performed under fixed unit-price contracts with state and local governmental entities. Management regularly evaluates its estimates and assumptions based on historical experience and other factors, including the current economic environment. Management adjusts such estimates and assumptions when circumstances dictate. As future events and their effects cannot be determined with precision, actual results can differ significantly from estimates made. Changes in estimates, including those resulting from continuing changes in the economic environment, are reflected in the Company’s consolidated financial statements when the change in estimate occurs.
Business and Credit Concentrations— The Company’s operations are conducted primarily across 22 U.S. states and in British Columbia, Canada, with the most significant revenue generated in Texas, Kansas, Utah, Missouri and Kentucky. The Company’s accounts receivable consist primarily of amounts due from customers within these areas. Therefore, collection of these accounts is dependent on the economic conditions in the aforementioned states, as well as specific situations affecting individual customers. Credit granted within the Company’s trade areas has been granted to many customers, and management does not believe that a significant concentration of credit exists with respect to any individual customer or group of customers. No single customer accounted for more than 10% of the Company’s total revenue in the three months ended April 2, 2016.
Earnings per Share— The Company computes basic earnings per share attributable to stockholders by dividing income attributable to Summit Inc. by the weighted-average shares of Class A common stock outstanding.
7
Diluted earnings per share reflects the potential dilution beyond shares for basic earnings per share that could occur if securities or other contracts to issue common stock were exercised, converted into common stock, or resulted in the issuance of common stock that would have shared in the Company’s earnings. Since the Class B common stock has no economic value, those shares are not included in the weighted-average common share amount for basic or diluted earnings per share. In addition, as the shares of Class A common stock are issued by Summit Inc., the earnings and equity interests of noncontrolling interests are not included in basic or diluted earnings per share.
Fair Value Measurements— Certain acquisitions made by the Company require the payment of contingent amounts of purchase consideration. These payments are contingent on specified operating results being achieved in periods subsequent to the acquisition and will only be made if earn-out thresholds are achieved. Contingent consideration obligations are measured at fair value each reporting period. Any adjustments to fair value are recognized in earnings in the period identified.
The Company has entered into interest rate derivatives on $200.0 million of its term loan borrowings to add stability to interest expense and to manage its exposure to interest rate movements. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and will be subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The fair value of contingent consideration and derivatives as of April 2, 2016 and January 2, 2016 was:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Current portion of acquisition-related liabilities and Accrued expenses: |
|
|
|
|
|
|
|
|
Contingent consideration |
|
$ |
|
|
$ |
|
|
|
Cash flow hedges |
|
|
|
|
|
|
|
|
Acquisition-related liabilities and Other noncurrent liabilities |
|
|
|
|
|
|
|
|
Contingent consideration |
|
$ |
|
|
$ |
|
|
|
Cash flow hedges |
|
|
|
|
|
|
|
|
The fair value of contingent consideration was based on unobservable, or Level 3, inputs, including projected probability-weighted cash payments and an 11.0% discount rate, which reflects a market discount rate. Changes in fair value may occur as a result of a change in actual or projected cash payments, the probability weightings applied by the Company to projected payments or a change in the discount rate. Significant increases or decreases in any of these inputs in isolation could result in a lower, or higher, fair value measurement. The fair value of the cash flow hedges are based on observable, or Level 2, inputs such as interest rates, bond yields and prices in inactive markets. There were no material valuation adjustments in the three months ended April 2, 2016 or March 28, 2015.
Financial Instruments —The Company’s financial instruments include debt and certain acquisition-related liabilities (deferred consideration and noncompete obligations). The carrying value and fair value of these financial instruments as of April 2, 2016 and January 2, 2016 was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, 2016 |
|
January 2, 2016 |
|
||||||||
|
|
Fair Value |
|
Carrying Value |
|
Fair Value |
|
Carrying Value |
|
||||
Level 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of deferred consideration and noncompete obligations(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term portion of deferred consideration and noncompete obligations(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
$6.5 million included in current portion of debt as of April 2, 2016 and January 2, 2016. Capitalized loan costs of $16.2 million and $11.7 million are excluded, respectively. |
8
|
(2) |
|
Included in current portion of acquisition-related liabilities on the balance sheet. |
|
(3) |
|
Included in acquisition-related liabilities on the balance sheet. |
The fair value of debt was determined based on observable, or Level 2, inputs, such as interest rates, bond yields and quoted prices in inactive markets. The fair values of the deferred consideration and noncompete obligations were determined based on unobservable, or Level 3, inputs, including the cash payment terms in the purchase agreements and a discount rate reflecting the Company’s credit risk.
Redeemable Noncontrolling Interest — On March 17, 2015, upon the consummation of the IPO and the transactions contemplated by a contribution and purchase agreement entered into with the holders of all of the outstanding Class B Units of Continental Cement, Continental Cement became a wholly-owned indirect subsidiary of Summit Inc. The noncontrolling interests of Continental Cement were acquired for aggregate consideration of $64.1 million, consisting of $35.0 million of cash, 1,029,183 shares of Summit Inc.’s Class A common stock and $15.0 million aggregate principal amount of non-interest bearing notes payable in six annual installments of $2.5 million, beginning on March 17, 2016.
New Accounting Standards — In March 2016, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard with targeted amendments to the accounting for employee share-based payments. Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting , requires that the income tax effect of share-based awards be recognized in the income statement and allows entities to elect an accounting method to recognize forfeitures as they occur or to estimate forfeitures, as is currently required. The ASU is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 and interim periods within those years. However, the Company early adopted this ASU as of the beginning of fiscal year 2016 and made an election to recognize forfeitures as they occur. The ASU adoption was applied using a modified retrospective method by means of a $1.7 million cumulative-effect adjustment to equity as of the beginning of the fiscal year.
In February 2016, the FASB issued new accounting guidance to the standard of lease accounting, ASU No. 2016-02, Leases , which will result in lessees recognizing most leases on-balance sheet. Lessees are required to disclose more quantitative and qualitative information about their leases than current U.S. GAAP requires. They are also required to apply the new guidance at the beginning of the earliest period presented in the financial statements when they first apply the new standard. The new standard must be adopted by December 15, 2018. Early adoption is permitted. Management is currently assessing the effect that the adoption of this ASU will have on the consolidated financial statements.
In May 2014, the FASB issued a new accounting standard to improve and converge the financial reporting requirements for revenue from contracts with customers. ASU No. 2014-09, Revenue from Contracts with Customers , prescribes a five-step model for revenue recognition that will replace most existing revenue recognition guidance in U.S. GAAP. The ASU will supersede nearly all existing revenue recognition guidance under U.S. GAAP and provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB postponed the effective date of the new revenue standard by one year to the first quarter of 2018. Early adoption is permitted, but no earlier than 2017. Management is currently assessing the effect that the adoption of this standard will have on the consolidated financial statements.
Reclassifications — Certain amounts in the prior year have been reclassified to conform to the current period’s presentation.
2. REORGANIZATION
Prior to the IPO and Reorganization, the capital structure of Summit Holdings consisted of six different classes of limited partnership interests (Class A-1, Class A-2, Class B-1, Class C, Class D-1 and Class D-2), each of which
9
was subject to unique distribution rights. There were no outstanding Class A-2 interests. In connection with the IPO and the Reorganization, the limited partnership agreement of Summit Holdings was amended and restated to, among other things, modify its capital structure by creating the LP Units, referred to as the “Reclassification.” Immediately following the Reclassification, 69,007,297 LP Units were outstanding. In addition, in substitution for part of the economic benefit of the Class C and Class D interests that was not reflected in the conversion of such interests to LP Units, warrants were issued to holders of Class C interests to purchase an aggregate of 160,333 shares of Class A common stock, and options were issued to holders of Class D interests to purchase an aggregate of 4,358,842 shares of Class A common stock (“leverage restoration options”). The exercise price of the warrants and leverage restoration options is the IPO price of $18.00 per share. In conjunction with the Reclassification of the equity-based awards, the Company recognized a $14.5 million modification charge in general and administrative costs in the three months ended March 28, 2015.
The leverage restoration options were granted under the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). The leverage restoration options that correlate to time-vesting interests vest over four years, beginning on the Reclassification date and the leverage restoration options that correlate to performance-vesting interests vest only when both the relevant return multiple is achieved and a four year time-vesting condition is satisfied. The time-based vesting condition for both the time-vesting and performance-vesting interests will be satisfied with respect to 25% of the performance-vesting options on each of the first four anniversaries of the Reclassification date, subject to the employee’s continued employment through the applicable vesting date.
The Company also granted 240,000 options to purchase shares of Class A common stock under the Omnibus Incentive Plan to certain employees some of whom had not previously been granted equity-based interests. These stock options have an exercise price of $18.00 per share, the IPO price, and are subject to a time-based vesting condition that will be satisfied with respect to 25% of the award on each of the first four anniversaries of the grant date, subject to the employee’s continued employment through the applicable vesting date.
3. INTANGIBLE ASSETS
The Company’s intangible assets are primarily composed of goodwill, lease agreements and reserve rights. The assets related to lease agreements reflect the submarket royalty rates paid under agreements, primarily, for extracting aggregates. The values were determined as of the respective acquisition dates by a comparison of market-royalty rates. The reserve rights relate to aggregate reserves to which the Company has the rights of ownership, but do not own the reserves. The intangible assets are amortized on a straight-line basis over the lives of the leases.
Changes in the carrying amount of goodwill, by reportable segment, from January 2, 2016 to April 2, 2016 are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West |
|
East |
|
Cement |
|
Total |
|
||||
Balance, January 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Acquisitions(1) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
Foreign currency translation adjustments |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
Balance, April 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated impairment losses as of April 2, 2016 and January 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
$ |
|
|
|
(1) |
|
Includes goodwill from the East segment’s acquisitions of Boxley Materials Company (“Boxley”) and American Materials Company (“AMC”) in the three months ended April 2, 2016. Boxley is a vertically-integrated materials-based company serving Roanoke, Virginia and surrounding areas. AMC is an aggregates and ready-mixed concrete business serving the Carolinas. The purchase price allocation for the 2015 and 2016 acquisitions, primarily related to the valuation of property, plant and equipment, has not yet been finalized due to the recent timing of the acquisitions. Included in the West segment’s goodwill are certain working capital adjustments related to 2015 acquisitions. |
10
The following table shows intangible assets by type and in total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, 2016 |
|
January 2, 2016 |
||||||||||||||
|
|
Gross |
|
|
|
|
Net |
|
Gross |
|
|
|
|
Net |
||||
|
|
Carrying |
|
Accumulated |
|
Carrying |
|
Carrying |
|
Accumulated |
|
Carrying |
||||||
|
|
Amount |
|
Amortization |
|
Amount |
|
Amount |
|
Amortization |
|
Amount |
||||||
Leases |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Reserve rights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Amortization expense in the three months ended April 2, 2016 and March 28, 2015 was $0.4 million in each period. The estimated amortization expense for the intangible assets for each of the five years subsequent to April 2, 2016 is as follows:
|
|
|
|
|
2016 (nine months) |
|
$ |
|
|
2017 |
|
|
|
|
2018 |
|
|
|
|
2019 |
|
|
|
|
2020 |
|
|
|
|
2021 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
4. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following as of April 2, 2016 and January 2, 2016:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Trade accounts receivable |
|
$ |
|
|
$ |
|
|
|
Retention receivables |
|
|
|
|
|
|
|
|
Receivables from related parties |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
|
|
|
Less: Allowance for doubtful accounts |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
$ |
|
|
$ |
|
|
|
Retention receivables are amounts earned by the Company but held by customers until paving and related service contracts and projects are near completion or fully completed. Amounts are generally expected to be billed and collected within one year.
11
5. INVENTORIES
Inventories consisted of the following as of April 2, 2016 and January 2, 2016:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Aggregate stockpiles |
|
$ |
|
|
$ |
|
|
|
Finished goods |
|
|
|
|
|
|
|
|
Work in process |
|
|
|
|
|
|
|
|
Raw materials |
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
|
6. ACCRUED EXPENSES
Accrued expenses consisted of the following as of April 2, 2016 and January 2, 2016:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Interest |
|
$ |
|
|
$ |
|
|
|
Payroll and benefits |
|
|
|
|
|
|
|
|
Capital lease obligations |
|
|
|
|
|
|
|
|
Insurance |
|
|
|
|
|
|
|
|
Non-income taxes |
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
Other(1) |
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
|
|
(1) |
|
Consists primarily of subcontractor and working capital settlement accruals. |
7. DEBT
Debt consisted of the following as of April 2, 2016 and January 2, 2016:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Term Loan, due 2022: |
|
|
|
|
|
|
|
|
$645.1 million term loan, net of $2.9 million discount at April 2, 2016 and $646.8 million term loan, net of $3.1 million discount at January 2, 2016 |
|
$ |
|
|
$ |
|
|
|
8 1 ⁄ 2 % Senior Notes, due 2022 |
|
|
|
|
|
— |
|
|
6 1 ⁄ 8 % Senior Notes, due 2023: |
|
|
|
|
|
|
|
|
$650 million senior notes, net of $1.8 million discount at April 2, 2016 and January 2, 2016 |
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
|
|
|
|
|
|
Long-term debt |
|
$ |
|
|
$ |
|
|
|
12
The contractual payments of long-term debt, including current maturities, for the five years subsequent to April 2, 2016, are as follows:
|
|
|
|
|
2016 (nine months) |
|
$ |
|
|
2017 |
|
|
|
|
2018 |
|
|
|
|
2019 |
|
|
|
|
2020 |
|
|
|
|
2021 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
|
|
|
Less: Original issue net discount |
|
|
|
|
Less: Capitalized loan costs |
|
|
|
|
Total debt |
|
$ |
|
|
Senior Notes — On March 8, 2016, the Issuers issued $250.0 million of 8.500% senior notes due April 15, 2022 (the “2022 Notes”). The 2022 Notes were issued at 100.0% of their par value with proceeds of $246.3 million, net of related fees and expenses. The proceeds from the sale of the 2022 Notes were used to fund the acquisition of Boxley, replenish cash used for the acquisition of AMC and the expenses incurred in connection with these acquisitions. The 2022 Notes were issued under an indenture dated March 8, 2016 (as amended and supplemented, the “2016 Indenture”). The 2016 Indenture contains covenants limiting, among other things, Summit LLC and its restricted subsidiaries’ ability to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merger, sell or otherwise dispose of all or substantially all of the company’s assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The 2016 Indenture also contains customary events of default. Interest on the 2022 Notes is payable semi-annually on April 15 and October 15 of each year commencing on October 15, 2016.
In 2015, the Issuers issued $650.0 million of 6.125% senior notes due July 2023 (the "2023 Notes”). The net proceeds from the 2023 Notes, with proceeds from the refinancing of the term loan described below, were used to pay the $370.0 million initial purchase price for the Davenport Assets, to redeem $183.0 million plus $153.8 million in aggregate principal amount of the then outstanding 2020 Notes and pay related fees and expenses. Of the aggregate $650.0 million of 2023 Notes in 2015, $350.0 million were issued at par and $300.0 million were issued at 99.375% of par. The 2023 Notes were issued under an indenture dated July 8, 2015 (as amended and supplemented, the “2015 Indenture”), the terms of which are generally consistent with the 2016 Indenture. Interest on the 2023 Notes is payable semi-annually in arrears on January 15 and July 15 of each year commencing on January 15, 2016.
In April, August and November 2015, using proceeds from the IPO, the refinancing of the term loan described below and the proceeds from the 2023 Notes, $288.2 million, $183.0 million and $153.8 million, respectively, aggregate principal amount of the outstanding 2020 Notes were redeemed at a price equal to par plus an applicable premium and the indenture under which the 2020 Notes were issued was satisfied and discharged. As a result of the redemptions, net charges of $56.5 million were recognized in the year ended January 2, 2016. The fees included $66.6 million for the applicable prepayment premium and $11.9 million for the write-off of deferred financing fees, partially offset by $22.0 million of net benefit from the write-off the original issuance net premium in the year ended January 2, 2016. There were no related charges recognized for the three months ended March 28, 2015, as the first redemption was in April 2015.
As of April 2, 2016 and January 2, 2016, the Company was in compliance with all covenants under the indentures that were applicable as of each date.
Senior Secured Credit Facilities — Summit LLC has credit facilities that provide for term loans in an aggregate amount of $650.0 million and revolving credit commitments in an aggregate amount of $235.0 million (the “Senior Secured Credit Facilities”). Under the Senior Secured Credit Facilities, required principal repayments of 0.25% of term debt are due on the last business day of each March, June, September and December. The unpaid principal balance is due in full on the maturity date, which is July 17, 2022. On July 17, 2015, Summit LLC refinanced its term loan under the Senior Secured Credit Facilities (the “Refinancing”). The Refinancing, among other things: (i) reduced the applicable margins used to calculate interest rates for term loans under the Senior Secured Credit Facilities to 3.25% for LIBOR rate loans and 2.25% for base rate loans, subject to a LIBOR floor
13
of 1.00% (and one 25 basis point step down upon Summit LLC achieving a certain first lien net leverage ratio); (ii) increased term loans borrowed under the term loan facility from $422.0 million to an aggregate $650.0 million; and (iii) created additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated First Lien Net Leverage Ratio (as defined in the credit agreement governing the Senior Secured Credit Facilities, the “Credit Agreement”).
On March 11, 2015, Summit LLC entered into Amendment No. 3 to the Credit Agreement, which became effective on March 17, 2015 upon the consummation of the IPO. The amendment: (i) increased the size of the revolving credit facility from $150.0 million to $235.0 million; (ii) extended the maturity date of the revolving credit facility to March 11, 2020; (iii) amended certain covenants; and (iv) permits periodic tax distributions as contemplated in a tax receivable agreement, dated March 11, 2015. As a result of this amendment, $0.8 million of financing fees were recognized in the three months ended March 28, 2015.
The revolving credit facility bears interest per annum equal to, at Summit LLC’s option, either (i) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A. and (c) LIBOR plus 1.00%, plus an applicable margin of 2.25% for base rate loans or (ii) a LIBOR rate determined by reference to Reuters prior to the interest period relevant to such borrowing adjusted for certain additional costs plus an applicable margin of 3.25% for LIBOR rate loans.
There were no outstanding borrowings under the revolving credit facility as of April 2, 2016, leaving remaining borrowing capacity of $210.6 million, which is net of $24.4 million of outstanding letters of credit. The outstanding letters of credit are renewed annually and support required bonding on construction projects and the Company’s insurance liabilities.
Summit LLC’s Consolidated First Lien Net Leverage Ratio, as such term is defined in the Senior Secured Credit Facilities, should be no greater than 4.75:1.0 as of each quarter-end. As of April 2, 2016 and January 2, 2016, Summit LLC was in compliance with all covenants.
Summit LLC’s wholly-owned domestic subsidiary companies, subject to certain exclusions and exceptions, are named as subsidiary guarantors of the Senior Notes and the Senior Secured Credit Facilities. In addition, Summit LLC has pledged substantially all of its assets as collateral, subject to certain exclusions and exceptions, for the Senior Secured Credit Facilities.
Interest expense related to debt totaled $18.3 million and $22.0 million in the three months ended April 2, 2016 and March 28, 2015, respectively.
The following table presents the activity for the deferred financing fees for the three months ended April 2, 2016 and March 28, 2015:
|
|
|
|
|
|
|
Deferred financing fees |
|
|
Balance—January 2, 2016 |
|
$ |
|
|
Loan origination fees |
|
|
|
|
Amortization |
|
|
|
|
Balance—April 2, 2016 |
|
$ |
|
|
|
|
|
|
|
Balance—December 27, 2014 |
|
$ |
|
|
Loan origination fees |
|
|
|
|
Amortization |
|
|
|
|
Write off of deferred financing fees |
|
|
|
|
Balance—March 28, 2015 |
|
$ |
|
|
Other —On January 15, 2015, the Company’s wholly-owned subsidiary in British Columbia, Canada entered into an agreement with HSBC for a (i) $6.0 million Canadian dollar (“CAD”) revolving credit commitment to be used for operating activities that bears interest per annum equal to the bank’s prime rate plus 0.20%, (ii) $0.5 million CAD revolving credit commitment to be used for capital equipment that bears interest per annum at the bank’s
14
prime rate plus 0.90% and (iii) $0.4 million CAD revolving credit commitment to provide guarantees on behalf of that subsidiary. There were no amounts outstanding under this agreement as of April 2, 2016 or January 2, 2016.
8. ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in each component of accumulated other comprehensive loss consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Foreign currency |
|
|
|
|
other |
||
|
|
Change in |
|
translation |
|
Cash flow hedge |
|
comprehensive |
||||
|
|
retirement plans |
|
adjustments |
|
adjustments |
|
loss |
||||
Balance — January 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
|
|
— |
|
|
|
Loss on cash flow hedges |
|
|
— |
|
|
— |
|
|
|
|
|
|
Balance — April 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
9. INCOME TAXES
Summit Inc.’s tax provision includes its proportional share of Summit Holdings’ tax attributes. Summit Holdings’ subsidiaries are primarily limited liability companies, but do include certain entities organized as C corporations and a Canadian subsidiary. The tax attributes related to the limited liability companies are passed on to Summit Holdings and then to its partners, including Summit Inc. The tax attributes associated with the C corporation and Canadian subsidiaries are fully reflected in the Company’s accounts.
The effective income tax rate for the C corporations differ from the statutory federal rate primarily due to (1) tax depletion expense in excess of the expense recorded under U.S. GAAP, (2) state income taxes and the effect of graduated tax rates and (3) various other items such as limitations on meals and entertainment and other costs. The effective income tax rate for the Canadian subsidiary is not significantly different from its historical effective tax rate.
As of April 2, 2016, and January 2, 2016, Summit Inc. and its subsidiaries had not recognized any liabilities for uncertain tax positions. The Company records interest and penalties as a component of the income tax provision. No material interest or penalties were recognized in income tax expense during the three months ended April 2, 2016, or March 28, 2015.
10. NET LOSS PER SHARE
Basic loss per share is computed by dividing net loss by the weighted average common shares outstanding and diluted net loss is computed by dividing net loss, adjusted for changes in the amount allocated to Summit Inc. as a result of the assumed conversion of LP Units, by the weighted-average common shares outstanding assuming dilution.
The following table shows the calculation of basic loss per share:
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
||||
|
|
April 2, |
|
March 28, |
|
||
|
|
2016 |
|
2015 |
|
||
Net loss attributable to Summit Inc. |
|
$ |
|
|
$ |
|
|
Weighted average shares of Class A shares outstanding |
|
|
|
|
|
|
|
Basic loss per share |
|
$ |
|
|
$ |
|
|
Excluded from the above calculation for the three months ended April 2, 2016 and March 28, 2015 were 50,261,471 and 69,007,297 LP Units, respectively, and 336,657 time-vesting restricted stock units and 130,691
15
market-based restricted stock units were excluded from the above calculation for the three months ended April 2, 2016 as they had no effect on loss per share. Also excluded from the calculation were 2,767,458 and 2,280,314 time-vesting stock options in the three months ended April 2, 2016 and March 28, 2015, respectively, as they were antidilutive. In addition, 160,333 warrants were excluded from the above calculation in the three months ended April 2, 2016 and March 28, 2015 as they were antidilutive.
11. COMMITMENTS AND CONTINGENCIES
The Company is party to certain legal actions arising from the ordinary course of business activities. Accruals are recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be predicted with certainty, management expects that the ultimate resolution of all pending or threatened claims and litigation will not have a material effect on the Company’s consolidated results of operations, financial position or liquidity. The Company records legal fees as incurred.
Litigation and Claims —The Company is obligated under an indemnification agreement entered into with the sellers of Harper Contracting, Inc., Harper Sand and Gravel, Inc., Harper Excavating, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc. for the sellers’ ownership interests in a joint venture agreement. The Company has the rights to any benefits under the joint venture as well as the assumption of any obligations, but does not own equity interests in the joint venture. The joint venture has incurred significant losses on a highway project in Utah, which have resulted in requests for funding from the joint venture partners and ultimately from the Company. Through April 2, 2016, the Company has funded $8.8 million, $4.0 million in 2012 and $4.8 million in 2011. In 2012 and 2011, the Company recognized losses on the indemnification agreement of $8.0 million and $1.9 million, respectively. As of April 2, 2016 and January 2, 2016, an accrual of $4.3 million was recorded in other noncurrent liabilities as management’s best estimate of future funding obligations.
Environmental Remediation and Site Restoration —The Company’s operations are subject to and affected by federal, state, provincial and local laws and regulations relating to the environment, health and safety and other regulatory matters. These operations require environmental operating permits, which are subject to modification, renewal and revocation. The Company regularly monitors and reviews its operations, procedures and policies for compliance with these laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of the Company’s business, as it is with other companies engaged in similar businesses and there can be no assurance that environmental liabilities or noncompliance will not have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.
The Company has site restoration obligations arising from regulatory and contractual requirements to perform reclamation activities at the time certain quarries and landfills are closed. As of April 2, 2016 and January 2, 2016, $19.1 million and $18.7 million, respectively, were included in other noncurrent liabilities on the consolidated balance sheets and $2.1 million and $2.0 million were included in accrued expenses for future reclamation costs. The total undiscounted anticipated costs for site reclamation as of April 2, 2016 and January 2, 2016 were $63.2 million and $56.7 million, respectively.
Other —During the ordinary course of business, there may be revisions to project costs and conditions that can give rise to change orders. Revisions can also result in claims that the Company may make against the customer or a subcontractor to recover project variances that have not been satisfactorily addressed through change orders with the customer. As of April 2, 2016, there were no unapproved change orders or claims and, as of January 2, 2016, unapproved change orders and claims included in accounts receivable totaled $1.2 million.
The Company is obligated under various firm purchase commitments for certain raw materials and services that are in the ordinary course of business. Management does not expect any significant changes in the market value of these goods and services during the commitment period that would have a material adverse effect on the financial condition, results of operations, and cash flows of the Company. The terms of the purchase commitments generally approximate one year.
16
12. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Cash payments: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
|
|
$ |
|
|
|
Income taxes |
|
|
|
|
|
|
|
|
Non cash financing activities: |
|
|
|
|
|
|
|
|
Purchase of noncontrolling interest in Continental Cement |
|
$ |
— |
|
$ |
|
|
|
13. SEGMENT INFORMATION
The Company has three operating segments: West; East; and Cement, which are its reportable segments. These segments are consistent with the Company’s management reporting structure. In the fourth quarter of 2015, the Company reorganized the operations and management reporting structure of the Cement and East segment operations, resulting in a change to its reportable business segments. The Company now conducts the cement business separate from the regional segments. As a result, the cement business is a reportable business segment. In addition, we have combined the materials-based businesses centered in Kansas and Missouri with the Kentucky-based operations, creating an expanded East segment and eliminating what was the Central region. These changes did not affect the West segment. Amounts in prior periods have been revised to reflect the current reporting structure.
The operating results of each segment are regularly reviewed and evaluated by the Chief Executive Officer, the Company’s Chief Operating Decision Maker (“CODM”). The CODM primarily evaluates the performance of its segments and allocates resources to them based on a segment profit metric that we call Adjusted EBITDA, which is computed as earnings from continuing operations before interest, taxes, depreciation, depletion, amortization, accretion, share-based compensation, and transaction costs, as well as various other non-recurring, non-cash amounts.
The West and East segments have several acquired subsidiaries that are engaged in various activities including quarry mining, aggregate production and contracting. The Cement segment is engaged in the production of Portland cement. Assets employed by segment include assets directly identified with those operations. Corporate assets consist primarily of cash, property, plant and equipment for corporate operations and other assets not directly identifiable with a reportable business segment. The accounting policies applicable to each segment are consistent with those used in the consolidated financial statements.
The following tables display selected financial data for the Company’s reportable business segments as of April 2, 2016 and January 2, 2016, and for the three months ended April 2, 2016 and March 28, 2015:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Revenue: |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
$ |
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Corporate and other |
|
|
|
|
|
|
|
|
Total reportable segments and corporate |
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
Accretion |
|
|
|
|
|
|
|
|
Initial public offering costs |
|
|
— |
|
|
|
|
|
Loss on debt financings |
|
|
— |
|
|
|
|
|
Acquisition transaction expenses |
|
|
|
|
|
|
|
|
Management fees and expenses |
|
|
— |
|
|
|
|
|
Non-cash compensation |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Loss from continuing operations before taxes |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Cash paid for capital expenditures: |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Total reportable segments |
|
|
|
|
|
|
|
|
Corporate and other |
|
|
|
|
|
|
|
|
Total capital expenditures |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Depreciation, depletion, amortization and accretion: |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Total reportable segments |
|
|
|
|
|
|
|
|
Corporate and other |
|
|
|
|
|
|
|
|
Total depreciation, depletion, amortization and accretion |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Total assets: |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Total reportable segments |
|
|
|
|
|
|
|
|
Corporate and other |
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Revenue by product:* |
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
|
|
$ |
|
|
|
Cement |
|
|
|
|
|
|
|
|
Ready-mixed concrete |
|
|
|
|
|
|
|
|
Asphalt |
|
|
|
|
|
|
|
|
Paving and related services |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
$ |
|
|
|
* Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.
14. RELATED PARTY TRANSACTIONS
Under the terms of a transaction and management fee agreement between Summit Holdings and Blackstone Management Partners L.L.C. (“BMP”), whose affiliates include controlling stockholders of the Company, BMP provided monitoring, advisory and consulting services to the Company through March 17, 2015. Under the terms of the agreement, BMP was permitted to assign, and had assigned, a portion of the fees to which it was entitled to Silverhawk Summit, L.P. and to certain other equity investors.
The management fee was calculated based on the greater of $300,000 or 2.0% of the Company’s annual consolidated profit, as defined in the agreement, and is included in general and administrative expenses. The Company incurred management fees totaling $1.0 million during the period between December 28, 2014 and March 17, 2015.
In connection with the IPO, the transaction and management fee agreement with BMP was terminated on March 17, 2015 for a final payment of $13.8 million; $13.4 million was paid to affiliates of BMP and the remaining $0.4 million was paid to affiliates of Silverhawk Summit, L.P. and to certain other equity investors.
In addition to the transaction and management fees paid to BMP, the Company reimbursed BMP for direct expenses incurred, which were not material in the three months ended April 2, 2016 and March 28, 2015.
Blackstone Advisory Partners L.P., an affiliate of BMP, served as an initial purchaser of $18.8 million of the 2022 Notes issued in March 2016 and $22.5 million and $26.3 million of the 2023 Notes issued in November 2015 and July 2015, respectively, and received compensation in connection therewith. In addition, Blackstone Advisory Partners L.P. served as an underwriter of 1,681,875 shares of Class A common stock issued in connection with the August 2015 follow-on offering and received compensation in connection therewith.
On July 17, 2015, the Company purchased the Davenport Assets from Lafarge North America Inc. for a purchase price of $450.0 million in cash and a cement distribution terminal in Bettendorf, Iowa. At closing, $370.0 million of the purchase price was paid, and the remaining $80.0 million was paid on August 13, 2015. Summit Holdings entered into a commitment letter dated April 16, 2015, with Blackstone Capital Partners V L.P. (“BCP”) for equity financing up to $90.0 million in the form of a preferred equity interest (the “Equity Commitment Financing”), which would have been used to pay the $80.0 million deferred purchase price if other financing was not attained by December 31, 2015. For the Equity Commitment Financing, the Company paid a $1.8 million commitment fee to BCP for the year ended January 2, 2016.
19
15. SUBSEQUENT EVENTS
In April 2016, the Company acquired Sierra Ready Mix, LLC, an aggregates and ready-mixed concrete business serving the Las Vegas, Nevada market. The acquisition includes one sand and gravel pit and two ready-mixed concrete plants.
* * *
20
SUMMIT MATERIALS, LLC
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited consolidated financial statements and notes thereto for Summit Materials, LLC and subsidiaries are included as Exhibit 99.1 to this Quarterly Report on Form 10-Q and are incorporated by reference herein.
21
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. Historical results may not be indicative of future performance. Forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in the section entitled “Risk Factors” in the Annual Report and any factors discussed in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” of this report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated interim financial statements and the related notes and other information included in this report.
Overview
We are one of the fastest growing construction materials companies in the United States. Our materials include aggregates, which we supply across the country, with a focus on Texas, Kansas, Utah, Missouri and Kentucky, and cement, which we supply primarily in Missouri, Iowa and along the Mississippi River. Within our markets, we offer customers a single-source provider for construction materials and related downstream products through our vertical integration. In addition to supplying aggregates to customers, we use our materials internally to produce ready-mixed concrete and asphalt paving mix, which may be sold externally or used in our paving and related services businesses. Our vertical integration creates opportunities to increase aggregates volumes, optimize margin at each stage of production and provide customers with efficiency gains, convenience and reliability, which we believe gives us a competitive advantage.
We have completed 41 acquisitions, which are organized into 12 operating companies that make up our three distinct operating segments—West, East and Cement—spanning 19 U.S. states and British Columbia, Canada and 38 metropolitan statistical areas. Our highly experienced management team, led by our President and Chief Executive Officer, Tom Hill, a 35-year industry veteran, has successfully enhanced the operations of acquired companies by focusing on scale advantages, cost efficiencies and pricing discipline to improve profitability and cash flow.
As of April 2, 2016, we had 2.6 billion tons of proven and probable aggregates reserves serving our aggregates and cement businesses and operated over 300 sites and plants, to which we believe we have adequate road, barge and/or railroad access. From time to time, in connection with certain acquisitions, we engage a third party engineering firm to perform an aggregates reserves audit, but we do not perform annual reserve audits.
22
We operate in 22 U.S. states and British Columbia, Canada and currently have assets in 19 U.S. states and in British Columbia, Canada. The map below illustrates our geographic footprint:
Business Trends and Conditions
The U.S. construction materials industry is composed of four primary sectors: aggregates; cement; ready-mixed concrete; and asphalt paving mix. Each of these materials is widely used in most forms of construction activity. Participants in these sectors typically range from small, privately-held companies focused on a single material, product or market to multinational corporations that offer a wide array of construction materials and services. Competition is constrained in part by the distance materials can be transported efficiently, resulting in predominantly local or regional operations. Due to the lack of product differentiation, competition for all of our products is predominantly based on price and, to a lesser extent, quality of products and service. As a result, the prices we charge our customers are not likely to be materially different from the prices charged by other producers in the same markets. Accordingly, our profitability is generally dependent on the level of demand for our products and our ability to control operating costs.
Our revenue is derived from multiple end-use markets including private residential and nonresidential construction, as well as public infrastructure construction. Residential and nonresidential construction consists of new construction and repair and remodel markets. The construction sectors in the local economies in which we operate have begun to show signs of recovery. However, we could still be affected by any economic stagnation or decline, which could vary by local region and market, could affect our results of operations. Our sales and earnings are sensitive to national, regional and local economic conditions and particularly to cyclical changes in construction spending, especially in the private sector. From a macroeconomic view, we see positive indicators for the construction sector, including upward trends in housing starts, construction employment and highway obligations. All of these factors should result in increased construction activity in the private sector. However, we do not expect this recovery to be consistent across the United States. Certain of our markets are showing greater, more rapid signs of recovery. Increased construction activity in the private sector could lead to increased public infrastructure spending in the relatively near future. Public infrastructure includes spending by federal, state and local governments for roads, highways, bridges, airports and other
23
infrastructure projects. Public infrastructure projects have historically been a relatively stable portion of state and federal budgets.
Transportation infrastructure projects, driven by both federal and state funding programs, represent a significant share of the U.S. construction materials market. Federal funds are allocated to the states, which are required to match a portion of the federal funds they receive. Federal highway spending uses funds predominantly from the Federal Highway Trust Fund, which derives its revenue from taxes on diesel fuel, gasoline and other user fees. The dependability of federal funding allows the state departments of transportation to plan for their long term highway construction and maintenance needs. The FAST Act was signed into law on December 4, 2015 and authorizes $305 billion of funding between 2016 and 2020. Over its five year term, it provides funding for surface transportation infrastructure, including roads, bridges, transit systems, and the rail transportation network . With the nation’s infrastructure aging, we expect U.S. infrastructure spending to grow over the long term, and we believe we are well positioned to capitalize on any such increase.
In addition to federal funding, highway construction and maintenance funding is also available through state, county and local agencies. Each of our five largest states by revenue (Texas, Kansas, Utah, Missouri and Kentucky, which represented approximately 33%, 16%, 11%, 10% and 8%, respectively, of our total revenue in 2015) each have funds whose revenue sources have certain constitutional protections that limit spending to transportation projects:
|
· |
|
Texas Department of Transportation’s budget from 2014 to 2016 is $25.3 billion. |
|
· |
|
Kansas has a 10-year $8.2 billion highway bill that was passed in May 2010. |
|
· |
|
Utah’s transportation investment fund has $3.0 billion committed through 2018. |
|
· |
|
Missouri has an estimated $0.7 billion in annual construction funding committed to essential road and bridge programs through 2017. |
|
· |
|
Kentucky’s biennial highway construction plan has funding of $3.6 billion from July 2014 to June 2016. |
Within many of our markets, state and local governments have taken actions to maintain or grow highway funding. For example:
|
· |
|
On November 3, 2015, voters in Texas passed an additional proposition that dedicates up to $2.5 billion of the state’s sales and use tax revenue to the state’s highway fund beginning in 2018, and 35% of any excess revenue over $5 billion generated from the motor vehicles sales tax beginning in 2020. |
|
· |
|
On November 4, 2014, voters in Texas passed a proposition that is estimated to provide up to $1.7 billion of incremental funding annually to the Texas Department of Transportation. The funds must be used for construction, maintenance, rehabilitation and acquiring right-of-way for public roads. |
|
· |
|
Increases in heavy truck registration fees, dedicated sales tax revenue and bond issuances have enabled Kansas to maintain stability in public infrastructure spending. |
|
· |
|
We believe that public infrastructure spending in Kentucky, which comprises the majority of our revenue in the state, will remain consistent in the upcoming years. |
|
· |
|
We expect primarily maintenance-related public demand in Utah and Missouri, both of which have recently completed large spending programs. |
Use and consumption of our products fluctuate due to seasonality. Nearly all of the products used by us, and by our customers, in the private construction and public infrastructure industries are used outdoors. Our highway operations and production and distribution facilities are also located outdoors. Therefore, seasonal changes and other weather-related conditions, in particular extended rainy and cold weather in the spring and fall and major weather events, such as hurricanes, tornadoes, tropical storms and heavy snows, can adversely affect our business and operations through a decline in both the use of our products and demand for our services. In addition, construction materials production and shipment levels follow activity in the construction industry, which typically occurs in the spring, summer and fall.
24
Warmer and drier weather during the second and third quarters of our fiscal year typically result in higher activity and revenue levels during those quarters.
We are subject to commodity price risk with respect to price changes in liquid asphalt and energy, including fossil fuels and electricity for aggregates, cement, ready-mixed concrete and asphalt paving mix production, natural gas for hot mix asphalt production and diesel fuel for distribution vehicles and production related mobile equipment. Liquid asphalt escalator provisions in most of our private and commercial contracts limit our exposure to price fluctuations in this commodity. We often obtain similar escalators on public infrastructure contracts. In addition, we enter into various firm purchase commitments, with terms generally less than one year, for certain raw materials. Through effective use of our purchase commitments and a year on year decline in prices, our costs associated with liquid asphalt and energy have decreased $2.4 million in the three months ended April 2, 2016 as compared to the three months ended March 28, 2015, taking into consideration organic and acquisition-related volume increases.
Our reporting unit based in Austin, Texas, where the economy has been expanding, has seen new market entrants, some of whom are aggressively seeking market share. We will continue to monitor the effect of this activity to assess whether an event occurs that indicates the carrying amount of the Austin-based reporting unit may be impaired requiring a goodwill impairment analysis. We did not recognize a goodwill impairment charge on the reporting unit’s $17.7 million of goodwill as of April 2, 2016. The estimated fair value of the reporting unit was 8.9% greater than its carrying value as of the date of the 2015 impairment test. The key assumptions in the impairment analysis were cash flows assuming no to moderate growth from 2015 and an 11.0% discount rate .
Our acquisition strategy has historically required us to raise capital through equity issuances or debt financings. As of April 2, 2016 and January 2, 2016, our long-term borrowings, including the current portion and less original issue discount, totaled $1,545.1 million and $1,296.8 million, respectively, and we incurred $21.6 million and $24.1 million of interest expense for the three months ended April 2, 2016 and March 28, 2015, respectively. Although the amounts borrowed and related interest expense are material to us, we have been in compliance with our debt covenants and, when we have made additional issuances of senior notes to fund acquisitions, we have complied with the incurrence tests in the indentures governing our senior notes. In addition, our cash flows provided by operating activities was $98.2 million in the year ended January 2, 2016, which is net of interest payments, all of which have been paid when due, along with principal payments. Our senior secured revolving credit facility, which provides us with up to $210.6 million of borrowing capacity, net of $24.4 million of outstanding letters of credit, has been adequate to fund our seasonal working capital needs and certain acquisitions . We had no outstanding borrowings on the revolving credit facility as of April 2, 2016 and January 2, 2016 .
Backlog
Our products are generally delivered upon receipt of orders or requests from customers, or shortly thereafter. Accordingly, the backlog associated with product sales is converted into revenue within a relatively short period of time. Inventory for products is generally maintained in sufficient quantities to meet rapid delivery requirements of customers. Therefore, a period over period increase or decrease of backlog does not necessarily result in an improvement or a deterioration of our business. Our backlog includes only those products and projects for which we have obtained a purchase order or a signed contract with the customer and does not include products purchased and sold or services awarded and provided within the period. Subject to applicable contract terms, substantially all contracts in our backlog may be cancelled or modified by our customers. Historically, we have not been materially adversely affected by contract cancellations or modifications.
As a vertically-integrated business, approximately 20% of our aggregates sales volume was further processed and sold into either ready-mixed concrete or asphalt paving mix and approximately 55% of the asphalt paving mix we
25
sold was installed by our own paving crews during the three months ended April 2, 2016. The following table sets forth our backlog as of the indicated dates:
|
|
|
|
|
|
|
|
|
|
April 2, |
|
March 28, |
|
||
(in thousands) |
|
2016 |
|
2015 |
|
||
Aggregate (in tons) |
|
|
|
|
|
|
|
Asphalt (in tons) |
|
|
|
|
|
|
|
Ready-mixed concrete (in cubic yards) |
|
|
|
|
|
|
|
Construction services(1) |
|
$ |
|
|
$ |
|
|
|
(1) |
|
The dollar value of the construction services backlog includes the value of the aggregate and asphalt tons and ready-mixed concrete cubic yards in backlog that are expected to be sourced internally. |
Financial Highlights
The principal factors in evaluating our financial condition and operating results for the three months ended April 2, 2016 as compared to the three months ended March 28, 2015, are:
|
· |
|
Net revenue increased $32.9 million as a result of pricing and volume increases across our product lines, which includes volume contributions from our acquisitions. |
|
· |
|
Our operating loss decreased $29.5 million. The 2015 results included $28.3 million of costs associated with Summit Inc.’s IPO. |
|
· |
|
In March 2016, we issued $250.0 million in aggregate principal amount of 8.500% Senior Notes due 2022. The proceeds were used to help finance the acquisitions of Boxley (vertically integrated) and AMC, construction materials companies based in Roanoke, Virginia and the Carolinas, respectively . |
Acquisitions
In addition to our organic growth, we continued to grow our business through acquisitions, completing the following transactions in 2016 and 2015:
|
· |
|
On April 29, 2016, we acquired Sierra Ready Mix, LLC, a vertically integrated aggregates and ready mix concrete business located in Las Vegas, Nevada. |
|
· |
|
On March 18, 2016, we acquired Boxley, a vertically integrated materials-based company in Roanoke, Virginia. |
|
· |
|
On February 5, 2016, we acquired AMC, a construction materials company servicing North and South Carolina. |
|
· |
|
On December 11, 2015, we acquired Pelican, an asphalt terminal business in Texas. |
|
· |
|
On August 21, 2015, we acquired LeGrand, a vertically integrated materials-based company based in Utah and servicing the northern and central Utah, western Wyoming and southern Idaho markets. |
|
· |
|
On July 17, 2015, we completed the acquisition of the Davenport Assets. Our combined business has over two million short tons of cement capacity across our two plants in Hannibal, Missouri and Davenport, Iowa and eight cement distribution terminals along the Mississippi River from Minneapolis, Minnesota to New Orleans, Louisiana. |
|
· |
|
On June 1, 2015, we acquired all of the issued and outstanding shares of Lewis & Lewis, a vertically integrated, materials-based business in Wyoming. |
26
Results of Operations
The following discussion of our results of operations is focused on the key financial measures we use to evaluate the performance of our business from both a consolidated and operating segment perspective. Operating income and margins are discussed in terms of changes in volume, pricing and mix of revenue source (i.e., type of product sales or service revenue). We focus on operating margin, which we define as operating income as a percentage of net revenue, as a key metric when assessing the performance of the business, as we believe that analyzing changes in costs in relation to changes in revenue provides more meaningful insight into the results of operations than examining costs in isolation.
Operating income (loss) reflects our profit (loss) from continuing operations after taking into consideration cost of revenue, general and administrative expenses, depreciation, depletion, amortization and accretion and transaction costs. Cost of revenue generally increases ratably with revenue, as labor, transportation costs and subcontractor costs are recorded in cost of revenue. General and administrative costs as a percentage of revenue vary throughout the year due to the seasonality of our business. As a result of our revenue growth occurring primarily through acquisitions, general and administrative costs and depreciation, depletion, amortization and accretion have historically grown ratably with revenue. However, as volumes increase, we expect these costs, as a percentage of revenue, to decrease. Our transaction costs fluctuate with the number and size of acquisitions completed each year.
The table below includes revenue and operating loss by segment for the three months ended April 2, 2016 and March 28, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
||||||||||
|
|
April 2, 2016 |
|
March 28, 2015 |
|
||||||||
|
|
|
|
Operating |
|
|
|
Operating |
|
||||
(in thousands) |
|
Revenue |
|
loss |
|
Revenue |
|
loss |
|
||||
West |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
East |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(1) |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
(1) |
|
Corporate results primarily consist of compensation and office expenses for employees included in the Company's headquarters. Approximately $28.3 million of costs associated with the IPO are included in the operating loss for the three months ended March 28, 2015. |
Non-GAAP Performance Measures
We evaluate our operating performance using metrics that we refer to as “Adjusted EBITDA” and “gross margin” which are not defined by U.S. GAAP and should not be considered as an alternative to earnings measures defined by U.S. GAAP. We define Adjusted EBITDA as EBITDA, as adjusted to exclude accretion, loss on debt financings, IPO costs, loss from discontinued operations and certain non-cash and non-operating items. We define gross profit as operating income (loss) before general and administrative costs, depreciation, depletion, amortization and accretion and transaction costs and gross margin as gross profit as a percentage of net revenue.
We present Adjusted EBITDA and gross margin for the convenience of investment professionals who use such metrics in their analyses. The investment community often uses Adjusted EBITDA to assess the operating performance of a company’s business and to provide a more consistent comparison of performance from period to period. We use Adjusted EBITDA and gross margin, among other metrics, to assess the operating performance of our individual segments and the consolidated company. Adjusted EBITDA and gross margin are used for certain items to provide a more consistent comparison of performance from period to period.
Non-GAAP financial measures are not standardized; therefore, it may not be possible to compare such financial measures with other companies’ non-GAAP financial measures having the same or similar names. We strongly encourage investors to review our consolidated financial statements in their entirety and not rely on any single financial measure.
27
The tables below reconcile our net loss to EBITDA and Adjusted EBITDA and present Adjusted EBITDA by segment for the periods indicated:
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
||||
|
|
April 2, |
|
March 28, |
|
||
Reconciliation of Net Loss to Adjusted EBITDA |
|
2016 |
|
2015 |
|
||
(in thousands) |
|
|
|
|
|
|
|
Net loss(1) |
|
$ |
|
|
$ |
|
|
Interest expense(1) |
|
|
|
|
|
|
|
Income tax benefit |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
EBITDA |
|
$ |
|
|
$ |
|
|
Accretion |
|
|
|
|
|
|
|
IPO costs |
|
|
— |
|
|
|
|
Loss on debt financings |
|
|
— |
|
|
|
|
Transaction costs |
|
|
|
|
|
|
|
Management fees and expenses |
|
|
— |
|
|
|
|
Non-cash compensation |
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
$ |
|
|
$ |
|
|
Adjusted EBITDA by Segment |
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
East |
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
|
(1) |
|
The reconciliation of net loss to Adjusted EBITDA is based on the financial results of Summit Inc. Summit Inc.'s net loss in the three months ended April 2, 2016 was $291 thousand greater than Summit LLC's due to interest expense associated with a deferred consideration obligation that is an obligation of Summit Holdings and is thus excluded from Summit LLC's interest expense. |
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|
Three months ended |
|
||||
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|
April 2, |
|
March 28, |
|
||
Reconciliation of Operating Loss to Gross Profit |
|
2016 |
|
2015 |
|
||
(in thousands) |
|
|
|
|
|
|
|
Operating loss |
|
$ |
|
|
$ |
|
|
General and administrative expenses |
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
|
|
|
|
|
Transaction costs |
|
|
|
|
|
|
|
Gross Profit |
|
$ |
|
|
$ |
|
|
Gross Margin(1) |
|
|
|
% |
|
|
% |
|
(1) |
|
Gross margin, which we define as gross profit as a percentage of net revenue, improved 440 basis points in the three months ended April 2, 2016 primarily as a result of a shift in product mix and increased volumes. Our recent acquisitions have been primarily materials and products businesses, including the July 2015 acquisition of a cement plant in Davenport, Iowa. As a result, and as shown in the table below, gross revenue from cement was 13.4% of total revenue in the three months ended April 2, 2016 compared to 6.1% in the three months ended March 28, 2015. Gross revenue from paving and related services, which generally has lower operating margins than the materials and products operations, was 15.6% of total gross revenue in the three months ended April 2, 2016 compared to 22.6% in the three months ended March 28, 2015. Our business includes a significant amount of fixed costs and, as a result, volume growth across our lines of business resulted in an improvement in gross margin. |
28
Consolidated Results of Operations
The table below sets forth our consolidated results of operations for the three months ended April 2, 2016 and March 28, 2015.
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Three months ended |
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||||
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April 2, |
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March 28, |
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||
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2016 |
|
2015 |
|
||
(in thousands) |
|
|
|
|
|
|
|
Net revenue |
|
$ |
|
|
$ |
|
|
Delivery and subcontract revenue |
|
|
|
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|
|
|
Total revenue |
|
|
|
|
|
|
|
Cost of revenue (excluding items shown separately below): |
|
|
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|
|
|
General and administrative expenses |
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
|
|
|
|
|
Transaction costs |
|
|
|
|
|
|
|
Operating loss |
|
|
|
|
|
|
|
Other (income) loss, net |
|
|
|
|
|
|
|
Loss on debt financings |
|
|
— |
|
|
|
|
Interest expense (1) |
|
|
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|
|
|
|
Loss from operations before taxes |
|
|
|
|
|
|
|
Income tax benefit |
|
|
|
|
|
|
|
Net loss (1) |
|
$ |
|
|
$ |
|
|
|
(1) |
|
The statement of operations above is based on the financial results of Summit Inc. Summit Inc.'s net loss in the three months ended April 2, 2016 was $291 thousand greater than Summit LLC's due to interest expense associated with a certain deferred consideration obligation that is an obligation of Summit Holdings and is thus excluded from Summit LLC's interest expense. |
Three months ended April 2, 2016 compared to the three months ended March 28, 2015
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Three months ended |
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April 2, |
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March 28, |
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||
($ in thousands) |
|
2016 |
|
2015 |
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Variance |
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|
||||
Net Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|
Operating loss |
|
|
|
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|
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% |
|
Operating margin |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|
Net revenue increased $32.9 million in the three months ended April 2, 2016, of which $29.5 million was from increased sales of materials, $1.7 million was from increased sales of products, and $1.7 million was from increased service revenue. We had volume growth in our aggregates, cement and ready-mixed concrete lines of business, driven by the 2015 and 2016 acquisitions and organic growth. Excluding the cement segment, $4.2 million of the net revenue growth was organic and $8.5 million was contributed by acquisitions. Approximately $20.2 million of the revenue growth was attributable to our cement operations. The Davenport Assets acquired in July 2015 were immediately integrated with our existing cement operations such that it is impracticable to bifurcate the $20.2 million increase in cement revenue between organic and acquisition growth .
29
As a vertically-integrated company, we include intercompany sales from materials to products and from products to services when assessing the operating results of our business. We refer to revenue inclusive of intercompany sales as gross revenue. These intercompany transactions are eliminated in the consolidated financial statements. Gross revenue by line of business was as follows:
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Three months ended |
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||||
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April 2, |
|
March 28, |
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|
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|
||
(in thousands) |
|
2016 |
|
2015 |
|
Variance |
|
|||
Revenue by product:* |
|
|
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
|
|
$ |
|
|
$ |
|
|
Cement |
|
|
|
|
|
|
|
|
|
|
Ready-mixed concrete |
|
|
|
|
|
|
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|
|
Asphalt |
|
|
|
|
|
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|
|
Paving and related services |
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|
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|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
* Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.
Gross revenue for paving and related services decreased $8.2 million in the three months ended April 2, 2016, primarily in the Austin, Texas market. In Austin, Texas where the economy has been expanding, a new aggressive entrant has entered the market and has attracted a number of our employees, which have collectively resulted in a decrease in our paving and related services revenue. Detail of our volumes and average selling prices by product in the three months ended April 2, 2016 and March 28, 2015 were as follows :
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Three months ended |
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||||||||
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April 2, 2016 |
|
March 28, 2015 |
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||||||
|
|
Volume(1) |
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Volume(1) |
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|
Percentage Change in |
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|
||||
|
|
(in thousands) |
|
Pricing(2) |
|
(in thousands) |
|
Pricing(2) |
|
Volume |
|
Pricing |
|
|
||
Aggregates |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
% |
|
% |
|
Cement |
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
% |
|
Ready-mixed concrete |
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
% |
|
Asphalt |
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
% |
|
|
(1) |
|
Volumes are shown in tons for aggregates, cement and asphalt and in cubic yards for ready-mixed concrete. |
|
(2) |
|
Pricing is shown on a per ton basis for aggregates, cement and asphalt and on a per cubic yard basis for ready-mixed concrete. |
Aggregates volumes were positively affected by favorable weather, particularly in the East segment, and 2015 and 2016 acquisitions. Aggregates pricing improved across our markets and would have been greater, absent the effect from the U.S./Canadian exchange rate. The U.S. dollar was stronger as compared to the Canadian dollar in the three months ended April 2, 2016 compared to the three months ended March 28, 2015. Absent the effect of foreign currency fluctuations, aggregates pricing would have increased 9.8% in the three months ended April 2, 2016.
Our cement volumes increased as a result of the July 2015 acquisition of the Davenport Assets and prices increased as a result of an improved market. Ready-mixed concrete volumes were positively affected by better weather in the East segment and in Utah, as compared to 2015 and pricing was positively affected by the higher cement input costs. Asphalt volumes decreased from the three months ended March 28, 2015 primarily in Austin related to a new aggressive entrant in that paving market. The increased asphalt pricing was largely due to a shift in product mix. Prior to eliminations, the net effect of these volume and pricing changes on gross revenue in the three months ended April 2, 2016 was approximately $31.2 million and $4.0 million, respectively .
30
Operating loss decreased $29.5 million in the three months ended April 2, 2016, and Adjusted EBITDA improved $9.8 million. For the three months ended April 2, 2016 operating margin improved from (33.7)% to (14.2)%, which was attributable to the following:
|
|
|
|
Operating margin—2015 |
|
|
% |
IPO costs(1) |
|
|
% |
Other |
|
|
% |
Operating margin—2016 |
|
|
% |
|
(1) |
|
In conjunction with our March 2015 IPO, we recognized a $14.5 million charge on the modification of our share-based awards and a $13.8 million charge on the termination of a management fee agreement with our Sponsors. The management fee agreement was terminated on March 17, 2015. |
|
(2) |
|
The remaining improvement in operating margin primarily resulted from improved pricing across our lines of business, volume growth and a continued shift in total product mix toward materials and products . |
Segment results of operations
West Segment
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Three months ended |
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||||
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April 2, |
|
March 28, |
|
|
|
|
|
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|
||
($ in thousands) |
|
2016 |
|
2015 |
|
|
Variance |
|
|
||||
Net Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|
Operating loss |
|
|
|
|
|
|
|
|
|
|
|
% |
|
Operating margin |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|
Net revenue in the West segment decreased approximately 2.7% in the three months ended April 2, 2016, due primarily to a decline in volumes at our Austin, Texas operations, partially offset by $3.2 million of acquisition growth. Our Austin, Texas operations have been affected by a new aggressive competitor in the market. Gross revenue by product/service was as follows :
|
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|
|
|
Three months ended |
|
|
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|
||||
|
|
April 2, |
|
March 28, |
|
|
|
|
||
(in thousands) |
|
2016 |
|
2015 |
|
Variance |
|
|||
Revenue by product:* |
|
|
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
|
|
$ |
|
|
$ |
|
|
Ready-mixed concrete |
|
|
|
|
|
|
|
|
|
|
Asphalt |
|
|
|
|
|
|
|
|
|
|
Paving and related services |
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
* Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.
Gross revenue for paving and related services decreased by $7.7 million in the three months ended April 2, 2016 primarily due to decreased revenue in Austin, Texas. The West segment’s percent changes in sales volumes and pricing in the three months ended April 2, 2016 from the three months ended March 28, 2015 were as follows :
|
|
|
|
|
|
|
|
|
Percentage Change in |
|
|
||
|
|
Volume |
|
Pricing |
|
|
Aggregates |
|
|
% |
|
% |
|
Ready-mixed concrete |
|
|
% |
|
% |
|
Asphalt |
|
|
% |
|
% |
|
31
Aggregates volumes decreased, primarily in British Columbia, Canada, as a large commercial project in 2015 has been completed. Aggregate prices increased due primarily to product mix and an improving pricing environment across our markets and partially offset by the effect of foreign currency rates. Absent the currency effects, aggregate pricing would have increased 12.3%. The increase in ready-mixed concrete volumes primarily occurred in the Utah market and prices increased as a result of higher cement input prices. Asphalt volumes decreased, primarily in Austin, Texas, due to a new aggressive competitor entering that paving market. The increased asphalt pricing was largely due to a shift in product mix. Prior to eliminations of intercompany transactions, the net effect of volume and pricing changes on gross revenue in the three months ended April 2, 2016 was approximately $(1.2) million and $2.6 million, respectively .
The West segment’s operating loss increased $2.6 million in the three months ended April 2, 2016, and Adjusted EBITDA improved $1.2 million. The Adjusted EBITDA improvement was primarily driven by the inclusion of a full quarter of results from the 2015 acquisitions of Lewis & Lewis and LeGrand, partially offset by a decline in organic volumes. Operating margin fell in the three months ended April 2, 2016 from (0.2)% to (2.5)%, which was attributable to the following:
|
|
|
|
Operating margin — 2015 |
|
|
% |
Gross margin(1) |
|
|
% |
Depreciation, depletion, amortization and accretion(2) |
|
|
% |
Other |
|
|
% |
Operating margin — 2016 |
|
|
% |
|
(1) |
|
The gross margin improvement in the West segment was primarily due to a shift in product mix. The materials and products acquired with our 2015 acquisitions have boosted aggregate and ready mix revenue in the first quarter of 2016. As a result and as shown in the table above, gross revenue from aggregates and ready-mixed concrete was 27.2% and 50.4%, respectively, of total revenue in the three months ended April 2, 2016, compared to 24.8% and 43.8%, respectively, in the three months ended March 28, 2015. Gross revenue from paving and related services, which generally has lower operating margins than the materials and products operations, was 19.3% of total gross revenue in the three months ended April 2, 2016 compared to 24.7% in the three months ended March 28, 2015. |
|
(2) |
|
Depreciation, depletion, amortization and accretion, as a percentage of revenue, increased from 10.3% to 14.1% in the first quarter of 2016 reflective of the incremental depreciation, depletion and accretion associated with the 2015 acquisitions of Lewis & Lewis and LeGrand . |
East Segment
|
|
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|
Three months ended |
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|
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|
||||
|
|
April 2, |
|
March 28, |
|
|
|
|
|
|
|
||
($ in thousands) |
|
2016 |
|
2015 |
|
|
Variance |
|
|
||||
Net Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|
Operating loss |
|
|
|
|
|
|
|
|
|
|
|
% |
|
Operating margin |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|
32
The East segment’s net revenue increased 35.7% in the three months ended April 2, 2016 due to both acquisitions and organic growth. Incremental net revenue from acquisitions totaled $5.2 million and organic net revenue increased $10.6 million. Gross revenue by product/service was as follows:
|
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|
|
Three months ended |
|
|
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
|
|
||
(in thousands) |
|
2016 |
|
2015 |
|
Variance |
|
|||
Revenue by product:* |
|
|
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
|
|
$ |
|
|
$ |
|
|
Ready-mixed concrete |
|
|
|
|
|
|
|
|
|
|
Asphalt |
|
|
|
|
|
|
|
|
|
|
Paving and related services |
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
* Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.
The $0.5 million decrease in paving and related services primarily was a result of our exit of grading operations in Kentucky in 2015. The East segment’s percent changes in sales volumes and pricing in the three months ended April 2, 2016 from the three months ended March 28, 2015 were as follows:
|
|
|
|
|
|
|
|
|
Percentage Change in |
|
|
||
|
|
Volume |
|
Pricing |
|
|
Aggregates |
|
|
% |
|
% |
|
Ready-mixed concrete |
|
|
% |
|
% |
|
Asphalt |
|
|
% |
|
% |
|
Aggregate volumes in the three months ended April 2, 2016 increased 47.4% as a result of good weather driving in growth of all of the segment’s markets and the AMC and Boxley acquisitions on February 5, 2016 and March 18, 2016, respectively. Aggregates pricing increased as a result of an improved market and shift in product mix. Ready-mixed concrete volumes improved in Kansas and Missouri and the increase in asphalt volumes was driven by the Kansas markets on relatively low volumes. Prior to eliminations of intercompany transactions, the net effect of volume and pricing changes on gross revenue in the three months ended April 2, 2016 was approximately $14.3 million and $0.6 million, respectively .
The East segment’s operating loss decreased $5.9 million in the three months ended April 2, 2016, and Adjusted EBITDA increased $6.7 million. Operating margin for the three months ended April 2, 2016 improved from (30.4)% to (12.6)%, which was attributable to the following :
|
|
|
|
Operating margin — 2015 |
|
|
% |
Gross margin(1) |
|
|
% |
General and administrative costs(2) |
|
|
% |
Depreciation, depletion, amortization and accretion(3) |
|
|
% |
Operating margin — 2016 |
|
|
% |
|
(1) |
|
The operating margin improvement in the East segment was partially due to a shift in product mix, increased organic volumes and price improvements across the segment’s markets. As shown in the table above, gross revenue from aggregates and ready-mixed concrete was 44.5% and 25.3%, respectively, of total revenue in the three months ended April 2, 2016, compared to 39.3% and 26.9%, respectively, in the three months ended March 28, 2015. Gross revenue from paving and related services, which generally has lower operating margins than the materials and products, was 16.7% of total revenue in the three months ended April 2, 2016, compared to 23.5% in the three months ended March 28, 2015 . Our business includes a significant amount of fixed costs and, as a result, volume growth across the East segment’s lines of business resulted in an improvement in gross margin. |
|
(2) |
|
General and administrative costs as a percentage of net revenue decreased from 25.0% to 20.0% in the first quarter of 2016 as the East segment’s revenue growth was primarily organic resulting in general and administrative costs growing at a slower rate than revenue. |
33
|
(3) |
|
Depreciation, depletion, amortization and accretion, as a percentage of revenue, decreased from 22.8% to 17.3% in the first quarter of 2016 as the East segment’s growth was primarily organic. |
Cement Segment
|
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Three months ended |
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|
||||
|
|
April 2, |
|
March 28, |
|
|
|
|
|
|
|
||
($ in thousands) |
|
2016 |
|
2015 |
|
Variance |
|
|
|||||
Net Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|
Operating loss |
|
|
|
|
|
|
|
|
|
|
|
% |
|
Operating margin |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|
Net revenue in the Cement segment increased $20.2 million in three months ended April 2, 2016 primarily as a result of the acquisition of the Davenport Assets in July 2015. The Davenport Assets were immediately integrated with our existing cement operations such that it is impracticable to bifurcate the $20.2 million increase in cement revenue between organic and acquisition growth. However, a significant portion of the 146.7% increase in Cement revenue is estimated to be a result of the acquisition of the Davenport Assets in July 2015. Gross revenue by product/service was as follows :
|
|
|
|
|
|
|
|
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|
|
Three months ended |
|
|
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
|
|
||
(in thousands) |
|
2016 |
|
2015 |
|
Variance |
|
|||
Revenue by product:* |
|
|
|
|
|
|
|
|
|
|
Cement |
|
$ |
|
|
$ |
|
|
$ |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
* Revenue by product includes intercompany and intracompany sales transferred at market value. Revenue from waste processing is included in Other.
The Cement segment’s percent changes in sales volumes and pricing in the three months ended April 2, 2016 from the three months ended March 28, 2015 were as follows:
|
|
|
|
|
|
|
|
|
Percentage Change in |
|
|
||
|
|
Volume |
|
Pricing |
|
|
Cement |
|
|
% |
|
% |
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For the three months ended April 2, 2016, cement volumes and pricing increased primarily as a result of the acquisition of the Davenport Assets. With the acquisition of the Davenport Assets, we expanded our markets from Minnesota to Louisiana, which included higher-priced markets than St. Louis and Hannibal, Missouri. The net effect of volume and pricing changes on gross revenue in the three months ended April 2, 2016 was approximately $18.1 million and $0.8 million, respectively.
The Cement segment’s operating loss decreased $2.7 million in the three months ended April 2, 2016 and Adjusted EBITDA improved $4.4 million. Operating margin for the three months ended April 2, 2016 increased from (51.4)% to (12.4)%, primarily attributable to pricing improvements and increased production .
Liquidity and Capital Resources
Our primary sources of liquidity include cash on-hand, cash provided by operations and amounts available for borrowing under our credit facilities and capital-raising activities in the debt and capital markets. As of April 2, 2016, we had $92.2 million in cash and cash equivalents and $214.1 million of working capital compared to cash and working capital of $186.4 million and $258.0 million, respectively, at January 2, 2016. Working capital is calculated as current assets less current liabilities. There were no restricted cash balances as of April 2, 2016 or January 2, 2016. Our remaining borrowing capacity on our senior secured revolving credit facility was $210.6 million as of April 2, 2016, which is net of $24.4 million of outstanding letters of credit, and is fully available to us within the terms and covenant requirements of our credit agreement.
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Given the seasonality of our business, we typically experience significant fluctuations in working capital needs and balances throughout the year. Our working capital requirements generally increase during the first half of the year as we build up inventory and focus on repair and maintenance and other set-up costs for the upcoming season. Working capital levels then decrease as the construction season winds down and we enter the winter months, which is when we see significant inflows of cash from the collection of receivables. For example, net cash used for operating activities in the three months ended March 28, 2015 was $61.3 million, compared to full year 2015 net cash provided by operating activities of $98.2 million. Net cash used for operating activities in the three months ended April 2, 2016 was $42.0 million.
We believe we have access to sufficient financial resources from our liquidity sources to fund our business and operations, including contractual obligations, capital expenditures and debt service obligations, for at least the next twelve months. Our growth strategy contemplates future acquisitions for which we believe we have sufficient access to capital.
As market conditions warrant, we and our equity holders, including our Sponsors, their respective affiliates and members of our management, may from time to time seek to purchase our outstanding debt securities or loans, including Senior Notes and borrowings under our Senior Secured Credit Facilities, in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any purchases made by us may be funded by the use of cash on our balance sheet or the incurrence of new secured or unsecured debt. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may be with respect to a substantial amount of a particular class or series of debt, with the attendant reduction in the trading liquidity of such class or series.
Indebtedness
Please refer to the notes to the consolidated interim financial statements for detailed information about our long-term debt, scheduled maturities of long-term debt and affirmative and negative covenants, including the maximum allowable consolidated first lien net leverage ratio. As of April 2, 2016, we were in compliance with all debt covenants.
At April 2, 2016 and January 2, 2016, $1,545.1 million and $1,296.8 million, respectively, of total debt, without giving effect to original issuance discount, were outstanding under our respective debt agreements. Summit LLC has senior secured credit facilities that provide for term loans in an aggregate amount of $650.0 million and revolving credit commitments in an aggregate amount of $235.0 million (the “Senior Secured Credit Facilities”). Summit LLC’s domestic wholly-owned subsidiary companies are named as guarantors of the Senior Notes and the Senior Secured Credit Facilities. Certain other partially-owned subsidiaries, and the wholly-owned Canadian subsidiary, Mainland, do not guarantee the Senior Notes or Senior Secured Credit Facilities. Summit LLC has pledged substantially all of its assets as collateral for the Senior Secured Credit Facilities.
On March 8, 2016, the Issuers issued $250.0 million in aggregate principal amount of 8.500% senior notes due April 15, 2022. The 2022 notes were issued at par and i nterest on the 2022 Notes is payable semi-annually on April 15 and October 15 of each year commencing on October 15, 2016. The net proceeds of the 2022 Notes were used to fund the Boxley acquisition, replenish cash used for the AMC acquisition and the expenses incurred therewith.
In 2015, the Issuers issued $650.0 million aggregate principal amount of 2023 Notes due July, 2023 under an indenture dated as of July 8, 2015 –$350.0 million on July 8, 2015 and $300.0 million on November 19, 2015. The July issuance of the 2023 notes was issued at par and the November add-on was issued at a discount. Interest on the 2023 notes is payable semi-annually on January 15 and July 15 of each year commencing on January 15, 2016.
In 2015, $625.0 million aggregate principal amount of outstanding 10 ½% senior notes due January 31, 2020 ("2020 Notes") were redeemed – $288.2 million in April 2015 using proceeds from the IPO, $183.0 million in August 2015 and $153.8 million in December 2015.
On July 17, 2015, we refinanced our term loan under the Senior Secured Credit Facilities (the “Refinancing”). The Refinancing, among other things: (i) reduced the applicable margins used to calculate interest rates for term loans under our senior secured credit facilities to 3.25% for LIBOR rate loans and 2.25% for base rate loans, subject to a LIBOR floor of 1.00% (and one 25 basis point step down upon Summit LLC achieving a certain first lien net leverage
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ratio); (ii) increased term loans borrowed under our term loan facility from $422.0 million to $650.0 million; and (iii) created additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated First Lien Net Leverage Ratio (as defined in the amended and restated credit agreement that governs the senior secured credit facilities).
We used the net proceeds from the 2023 Notes and the Refinancing to finance the initial $370.0 million cash to purchase the Davenport Assets, to refinance our existing senior secured term loan facility, to redeem $183.0 million aggregate principal amount of our outstanding 2020 Notes and to pay related fees and expenses.
Cash Flows
The following table summarizes our net cash used for or provided by operating, investing and financing activities and our capital expenditures in the three months ended April 2, 2016 and March 28, 2015:
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Operating activities
During the three months ended April 2, 2016, cash used in operating activities was $42.0 million primarily as a result of:
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Net loss of $42.5 million, adjusted for $37.3 million of non-cash expenses, including $36.8 million of depreciation, depletion, amortization and accretion. |
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Additional investment in inventory of $25.6 million consistent with the seasonality of our business for which our inventory levels typically increase in the first quarter in preparation for the upcoming season . |
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The timing of payments associated with accounts payable and accrued expenses withdrew $18.5 million of cash in conjunction with the build-up of inventory levels and incurrence of repairs and maintenance costs to ready the business for increased sales volumes in the summer and fall. Almost all of our products are consumed and services provided outdoors. In addition, we made $27.5 million of interest payments in the three months ended April 2, 2016 . |
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$20.3 million of accounts receivable collections (billed and unbilled) as a result of the seasonality of our business. The majority of our sales occur in the spring, summer and fall and we typically incur an increase in accounts receivable (net billed and unbilled) during the second and third quarters of each year. This amount is typically converted to cash in the fourth and first quarters . |
During the three months ended March 28, 2015, cash used in operating activities was $61.3 million primarily as a result of:
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Net loss of $79.8 million, adjusted for $42.2 million of non-cash expenses, including $27.4 million of depreciation, depletion, amortization and accretion and $15.2 million of share-based compensation expense. |
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$21.4 million utilized to increase inventory consistent with the seasonality of our business for which our inventory levels typically decrease in the fourth quarter in preparation for the winter slowdown and are then increased during the first half of the year in preparation for the increased sales volumes in the spring and summer. |
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The timing of payments associated with accounts payable and accrued expenses utilized $30.5 million of cash in conjunction with the build-up of inventory levels and incurrence of repairs and maintenance costs to ready the business for increased sales volumes in the summer and fall. In addition, we made $39.2 million of interest payments in the three months ended March 28, 2015 . |
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Offsetting these cash outlays were $30.3 million of net collections on accounts receivable in conjunction with the seasonality of our business . |
Investing activities
During the three months ended April 2, 2016, cash used for investing activities was $282.2 million, of which $249.1 million related to the acquisitions of AMC and Boxley and $39.1 million was invested in capital expenditures, which was partially offset by $6.0 million of proceeds from asset sales .
During the three months ended March 28, 2015, cash used for investing activities was $15.2 million, of which $17.7 million was invested in capital expenditures, offset by $2.7 million of proceeds from asset sales.
Financing activities
During the three months ended April 2, 2016, cash provided by financing activities was $229.6 million, which was primarily composed of $246.3 million of proceeds from the 2022 Notes, net of fees. Summit made $12.0 million of payments on acquisition related liabilities, and $5.0 million in debt issuance costs.
During the three months ended March 28, 2015, cash provided by financing activities was $378.5 million, which was primarily composed of $460.0 million of proceeds from the IPO. Summit Inc. sold 25.6 million shares of Common Stock in the first quarter of 2015, receiving $424.0 million of proceeds net of underwriter and other issuance costs. Summit Inc. utilized $35.0 million of the proceeds for the purchase of the noncontrolling interest of Continental Cement. The remaining proceeds were contributed to Summit LLC. We also made $4.0 million of payments on acquisition related liabilities and paid $4.1 million for the amendment to the revolving credit facility, which was accounted for as a modification.
Cash paid for capital expenditures
We expended approximately $39.1 million in capital expenditures in the three months ended April 2, 2016 compared to $17.7 million in the three months ended March 28, 2015. The first quarter 2016 capital expenditures were primarily composed of plant upgrades and rolling stock.
We estimate that we will invest between $150.0 million and $170.0 million in capital expenditures in 2016, which we have funded or expect to fund through cash on hand, cash from operations, outside financing arrangements and available borrowings under our revolving credit facility. In 2016, we expect to invest in Texas, including approximately $23.7 million on new aggregate and ready-mix plants near Houston, $7.3 million on an aggregate plant upgrade near Austin and the completion of a new asphalt plant in San Antonio. We also plan to invest approximately $7.5 million on upgrades to our aggregate plants in Kentucky and South Carolina.
Commitments and contingencies
We are party to certain legal actions arising from the ordinary course of business activities. Accruals are recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be predicted with certainty, management expects that the ultimate resolution of all pending or threatened claims and litigation will not have a material effect on our consolidated results of operations, financial position or liquidity. We record legal fees as incurred.
Litigation and Claims —We are obligated under an indemnification agreement entered into with the sellers of Harper Contracting for the sellers’ ownership interests in a joint venture agreement. We have the rights to any benefits under the joint venture as well as the assumption of any obligations, but do not own equity interests in the joint venture. The joint venture has incurred significant losses on a highway project in Utah, which have resulted in requests for funding from the joint venture partners and ultimately from us. Through April 2, 2016, we have funded $8.8 million,
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$4.0 million in 2012 and $4.8 million in 2011. In 2012 and 2011, we recognized losses on the indemnification agreement of $8.0 million and $1.9 million, respectively. As of April 2, 2016 and January 2, 2016, an accrual of $4.3 million was recorded in other noncurrent liabilities as management’s best estimate of future funding obligations.
Environmental Remediation —Our operations are subject to and affected by federal, state, provincial and local laws and regulations relating to the environment, health and safety and other regulatory matters. These operations require environmental operating permits, which are subject to modification, renewal and revocation. We regularly monitor and review its operations, procedures and policies for compliance with these laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of our business, as it is with other companies engaged in similar businesses and there can be no assurance that environmental liabilities and noncompliance will not have a material adverse effect on our consolidated financial condition, results of operations or liquidity.
Other —During the ordinary course of business, there may be revisions to project costs and conditions that can give rise to change orders. Revisions can also result in claims we might make against the customer or a subcontractor to recover project variances that have not been satisfactorily addressed through change orders with the customer. As of April 2, 2016, there were no unapproved change orders or claims and, as of January 2, 2016, unapproved change orders and claims i n accounts receivable totaled $1.2 million.
We are obligated under various firm purchase commitments for certain raw materials and services that are in the ordinary course of business. Management does not expect any significant changes in the market value of these goods and services during the commitment period that would have a material adverse effect on the financial condition, results of operations, and cash flows of the Company. The terms of the purchase commitments generally approximate one year.
Off-Balance sheet arrangements
As of April 2, 2016, we had no material off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks arising from transactions that are entered into in the normal course of business. Our operations are highly dependent upon the interest rate-sensitive construction industry as well as the general economic environment. These marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs. For a discussion of quantitative and qualitative disclosures about market risk, please refer to the Annual Report. Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Summit Inc.
Summit Inc. maintains disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in Summit Inc.’s reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Summit Inc.’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Summit Inc.’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Summit Inc.’s disclosure controls and procedures as of April 2, 2016. Based upon that evaluation, Summit Inc.’s Chief Executive Officer and Chief Financial Officer concluded that, as of April 2, 2016, Summit Inc.’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
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Summit LLC
Summit LLC maintains disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in Summit LLC’s reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Summit LLC’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Summit LLC’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Summit LLC’s disclosure controls and procedures as of April 2, 2016. Based upon that evaluation, Summit LLC’s Chief Executive Officer and Chief Financial Officer concluded that, as of April 2, 2016, Summit LLC’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
Summit Inc.
There was no change in Summit Inc.’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during its last fiscal quarter that has materially affected, or is reasonably likely to materially affect, Summit Inc.’s internal control over financial reporting.
Summit LLC
There was no change in Summit LLC’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during its last fiscal quarter that has materially affected, or is reasonably likely to materially affect, Summit LLC’s internal control over financial reporting.
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We are party to certain legal actions arising from the ordinary course of business activities. Accruals are recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be predicted with certainty, management expects that the ultimate resolution of all current pending or threatened claims and litigation will not have a material effect on our results of operations, financial position or liquidity.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in the section entitled “Risk Factors” in the Annual Report, which could materially affect the Company’s business, financial condition, operating results or liquidity or future results. The risks described in the Annual Report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect its results of operations, financial condition or liquidity. There have been no material changes to the risk factors disclosed in the Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
The information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this report.
Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) of the Exchange Act, the Company hereby incorporates by reference herein Exhibit 99.2 of this report, which includes disclosures publicly filed and/or provided to The Blackstone Group L.P., an affiliate of certain investment funds that indirectly equity interests of the Company, by Hilton Worldwide Holdings Inc., which may be considered the Company’s affiliate.
We are not presently aware that we and our subsidiaries have knowingly engaged in any transaction or dealing reportable under Section 13(r) of the Exchange Act during the three months ended April 2, 2016.
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3.1 |
Amended and Restated Certificate of Incorporation of Summit Materials, Inc. (incorporated by reference to Exhibit 3.1 to Summit Materials, Inc.’s Current Report on Form 8-K filed on March 17, 2015). |
3.2 |
Amended and Restated Bylaws of Summit Materials, Inc. (incorporated by reference to Exhibit 3.2 to Summit Materials, Inc.’s Current Report on Form 8-K filed on March 17, 2015). |
3.3 |
Certificate of Formation of Summit Materials, LLC, as amended (incorporated by reference from Exhibit 3.1 to Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)). |
3.4 |
Amended and Restated Limited Liability Company Agreement of Summit Materials, LLC (incorporated by reference from Exhibit 3.2 to Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)). |
4.1 |
Indenture dated as of March 8, 2016, by and among Summit Materials, LLC, Summit Materials Finance Corp., the subsidiary guarantors named on the signature pages thereto and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 filed with the Registrants’ Current Report on Form 8-K filed on March 8, 2016 (File No. 001-36873)). |
4.2 |
Form of 8.5000% Senior Note due 2022 (included in Exhibit 4.1). |
4.3 |
Registration Rights Agreement, dated March 8, 2016, by and among Summit Materials, LLC, Summit Materials Finance Corp., the subsidiary guarantors named on the signature pages thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of the initial purchasers (incorporated by reference to Exhibit 4.3 filed with the Registrants’ Current Report on Form 8-K filed on March 8, 2016 (File No. 001-36873)). |
4.4* |
First Supplemental Indenture, dated as of April 5, 2016, between American Materials Company, LLC, Boxley Materials Company and Wilmington Trust, National Association, as trustee. |
4.5* |
Fifth Supplemental Indenture, dated as of April 5, 2016, between American Materials Company, LLC, Boxley Materials Company and Wilmington Trust, National Association, as trustee. |
10.1*+ |
Form of Restricted Stock Unit Award Notice and Agreement for Directors. |
10.2*+ |
Form of Restricted Stock Unit Award Notice and Agreement for Executive Officers. |
10.3*+ |
Form of Nonqualified Stock Option Award Notice and Agreement for Executive Officers. |
10.4*+ |
Form of Performance Unit Award Notice and Agreement for Executive Officers. |
31.1* |
Summit Materials, Inc.’s Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2* |
Summit Materials, Inc.’s Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.3* |
Summit Materials, LLC’s Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.4* |
Summit Materials, LLC’s Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1** |
Summit Materials, Inc.’s Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2** |
Summit Materials, Inc.’s Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.3** |
Summit Materials, LLC’s Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.4** |
Summit Materials, LLC’s Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
95.1* |
Mine Safety Disclosures |
99.1* |
Summit Materials, LLC’s Unaudited Consolidated Financial Statements and Notes to Unaudited Consolidated Financial Statements. |
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99.2* |
Section 13(r) Disclosure. |
101.INS* |
XBRL Instance Document |
101.SCH* |
XBRL Taxonomy Extension Schema Document |
101.CAL* |
XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* |
XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith
** Furnished herewith
+ Indicates management contract or compensatory plan or arrangement
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.
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SUMMIT MATERIALS, INC. |
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SUMMIT MATERIALS, LLC |
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Date: May 4, 2016 |
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/s/ Thomas W. Hill |
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Thomas W. Hill |
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Chief Executive Officer |
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(Principal Executive Officer) |
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Date: May 4, 2016 |
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/s/ Brian J. Harris |
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Brian J. Harris |
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Chief Financial Officer |
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FIRST SUPPLEMENTAL INDENTURE
First Supplemental Indenture (this “ Supplemental Indenture ”), dated as of April 5, 2016, among American Materials Company, LLC, a North Carolina limited liability company, and Boxley Materials Company, a Virginia corporation (each, a “ Guaranteeing Subsidiary ”), each a subsidiary of Summit Materials, LLC, a Delaware limited liability company (the “ Issuer ”), and Wilmington Trust, National Association, a national banking association, as trustee (the “ Trustee ”), Transfer Agent, Registrar and Paying Agent.
W I T N E S S E T H
WHEREAS, the Issuer, Summit Materials Finance Corp., a Delaware corporation (together with the Issuer, the “ Issuers ”), and the Guarantors have heretofore executed and delivered to the Trustee an Indenture (the “ Indenture ”), dated as of March 8, 2016, providing for the issuance of $250,000,000 aggregate principal amount of 8.500% Senior Notes due 2022 (the “ Initial Notes ”);
WHEREAS, the Indenture provides that under certain circumstances a Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which such Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers’ Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (each, a “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
(1) Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2) Agreement to Guarantee . Each Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture, and acknowledge and agree to (i) join and become a party to the Indenture as indicated by its signature below; (ii) be bound by the Indenture, as of the date hereof, as if made by, and with respect to, each signatory hereto; and (iii) perform all obligations and duties required of a Guarantor pursuant to the Indenture. Each Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Indenture, including, but not limited to, Article 10 thereof.
(3) Execution and Delivery . Each Guaranteeing Subsidiary agrees that its Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.
(4) No Recourse Against Others . No past, present or future director, officer, employee, incorporator, member, partner or stockholder of the Issuers or any Guaranteeing Subsidiary shall have any liability for any obligations of the Issuers or the Guarantors (including any Guaranteeing Subsidiary) under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives
and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
(5) Governing Law . THIS SUPPLEMENTAL INDENTURE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS SUPPLEMENTAL INDENTURE, WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(6) Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
(7) Effect of Headings . The Section headings herein are for convenience only and shall not affect the construction hereof.
(8) The Trustee . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by each Guaranteeing Subsidiary.
(9) Benefits Acknowledged . Each Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. Each Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to its Guarantee are knowingly made in contemplation of such benefits.
(10) Successors . All agreements of each Guaranteeing Subsidiary in this Supplemental Indenture shall bind its Successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
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/s/ Christopher Gaskill |
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Name: Christopher Gaskill |
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Title: Assistant Secretary |
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boxley materials company |
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By: |
/s/ Christopher Gaskill |
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Name: Christopher Gaskill |
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Title: Assistant Secretary |
[Signature Page to First Supplemental Indenture]
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WILMINGTON TRUST, NATIONAL ASSOCIATION, |
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as Trustee |
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/s/ Joseph O’Donnell |
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Name: Joseph O’Donnell |
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Title: Vice President |
[Signature Page to First Supplemental Indenture]
FIFTH Supplemental Indenture
Fifth Supplemental Indenture (this “ Supplemental Indenture ”), dated as of April 5, 2016, among American Materials Company, LLC, a North Carolina limited liability company, and Boxley Materials Company, a Virginia corporation (each, a “ Guaranteeing Subsidiary ”), each a subsidiary of Summit Materials, LLC, a Delaware limited liability company (the “ Issuer ”), and Wilmington Trust, National Association, a national banking association, as trustee (the “ Trustee ”), Transfer Agent, Registrar and Paying Agent.
W I T N E S S E T H
WHEREAS, the Issuer, Summit Materials Finance Corp., a Delaware corporation (together with the Issuer, the “ Issuers ”), and the Guarantors have heretofore executed and delivered to the Trustee an Indenture (the “ Indenture ”), dated as of July 8, 2015, providing for the issuance of 6.125% Senior Notes due 2023 (the “ Notes ”), as supplemented by that First Supplemental Indenture, dated as of July 17, 2015, as further supplemented by that Second Supplemental Indenture, dated as of October 7, 2015, as further supplemented by that Third Supplemental Indenture, dated as of November 19, 2015, and as further supplemented by that Fourth Supplemental Indenture, dated as of February 3, 2016;
WHEREAS, the Indenture provides that under certain circumstances a Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which such Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers’ Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (each, a “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
(1) Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2) Agreement to Guarantee . Each Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture, and acknowledge and agree to (i) join and become a party to the Indenture as indicated by its signature below; (ii) be bound by the Indenture, as of the date hereof, as if made by, and with respect to, each signatory hereto; and (iii) perform all obligations and duties required of a Guarantor pursuant to the Indenture. Each Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Indenture, including, but not limited to, Article 10 thereof.
(3) Execution and Delivery . Each Guaranteeing Subsidiary agrees that its Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.
(4) No Recourse Against Others . No past, present or future director, officer, employee, incorporator, member, partner or stockholder of the Issuers or any Guaranteeing Subsidiary shall have any liability for any obligations of the Issuers or the Guarantors (including any Guaranteeing Subsidiary)
under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
(5) Governing Law . THIS SUPPLEMENTAL INDENTURE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS SUPPLEMENTAL INDENTURE, WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(6) Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
(7) Effect of Headings . The Section headings herein are for convenience only and shall not affect the construction hereof.
(8) The Trustee . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by each Guaranteeing Subsidiary.
(9) Benefits Acknowledged . Each Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. Each Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to its Guarantee are knowingly made in contemplation of such benefits.
(10) Successors . All agreements of each Guaranteeing Subsidiary in this Supplemental Indenture shall bind its Successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
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american materials company, llc |
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By: |
/s/ Christopher Gaskill |
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Name: Christopher Gaskill |
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Title: Assistant Secretary |
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boxley materials company |
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By: |
/s/ Christopher Gaskill |
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Name: Christopher Gaskill |
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Title: Assistant Secretary |
[Signature Page to Fifth Supplemental Indenture]
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WILMINGTON TRUST, NATIONAL ASSOCIATION, as |
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Trustee |
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By: |
/s/ Joseph O’Donnell |
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Name: Joseph O’Donnell |
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Title: Vice President |
[Signature Page to Fifth Supplemental Indenture]
[Directors]
RESTRICTED STOCK UNIT AWARD NOTICE
UNDER THE
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
Summit Materials, Inc. (the “ Com pan y”), pursuant to its 2015 Omnibus Incentive Plan (the “ P l an”), hereby grants to the Participant set forth below the number of Restricted Stock Units set forth below. The Restricted Stock Units are subject to all of the terms and conditions as set forth herein, in the Restricted Stock Unit Agreement attached hereto and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.
Participant : Participant_Name
Date of G rant: Date_of_Grant
Vesting Start D ate: Vesting_Start_Date
Number of Shares of Common Stock Subject to Restricted Stock U nits: Number_of_Shares
Vesting S chedule:
1. Vesting . So long as the Participant’s service as a member of the Board of Directors of the Company ( “Service”) has not been terminated, the Restricted Stock Units shall become vested on the first anniversary of the Vesting Start Date. Subject to Section 2 and Section 3 of this Award Notice, any Restricted Stock Units that are unvested on the date of a termination of Service with the Company and its affiliates shall be immediately forfeited by the Participant.
2. Termination of Service.
(a) Upon the Participant’s death, if the Participant’s Service is terminated by the Company and each of its Subsidiaries without Cause or during the Participant’s Disability, 100% of the Restricted Stock Units shall become vested.
(b) Upon the Participant’s termination of Service as a result of a Retirement or a termination of Service as a result of such Participant declining to stand for reelection to the Board, in each case which occurs as of or after the regular annual meeting of shareholders for the calendar year which includes the Date of Grant, a pro rata portion of the number of Restricted Stock Units which would otherwise vest on the applicable vesting date shall vest, based on the number of full or partial calendar months elapsed since the Date of Grant (including the calendar months in which the Date of Grant and the termination of Service occur). Such vested Restricted Stock Units shall be settled at such time as the Restricted Stock Units would have been settled
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had vesting occurred pursuant to Section 1 of the Award Notice. For this purpose, “Retirement” shall mean a Director’s resignation from Service on the Board under circumstances to which Section 2(a) does not apply, prior to the expiration of his or her term and on or after the date he or she attains age seventy.
3. Change in Control . The Restricted Stock Units shall become vested immediately prior to a Change in Control if the Restricted Stock Units would not otherwise be continued, converted, assumed, or replaced by the Company or a successor entity thereto in connection with such Change in Control.
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THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS RESTRICTED STOCK UNIT AWARD NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT, AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTED STOCK UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS RESTRICTED STOCK UNIT AWARD NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT, AND THE PLAN.
SUMMIT MATERIALS, INC. |
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PARTICIPANT 1 |
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1 To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute Participant’s signature hereof.
RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
Pursuant to the Restricted Stock Unit Award Notice (the “ Award Notice ”) delivered to Participant (as defined in the Award Notice), and subject to the terms of this Restricted Stock Unit Agreement and the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the “ Plan”), Summit Materials, Inc. (the “ Com pan y”) and Participant agree as follows.
1. Definitions . Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. The following terms shall have the following meanings for purposes of this Agreement:
(a) “ Agreem e nt” shall mean this Restricted Stock Unit Agreement including (unless the context otherwise requires) the Award Notice.
(b) “ Date of G rant” shall mean the “Date of Grant” listed in the Award Notice.
(c) “ Shares” shall mean the number of shares of Common Stock listed in the Award Notice as “Number of Shares of Common Stock Subject to Restricted Stock Units”.
2. Grant of Restricted Stock Units . Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to Participant the number of Restricted Stock Units provided in the Award Notice (with each Restricted Stock Unit representing an unfunded, unsecured right to receive one share of Common Stock). The Company may make one or more additional grants of Restricted Stock Units to Participant under this Agreement by providing Participant with a new Award Notice, which may also include any terms and conditions differing from this Agreement to the extent provided therein. The Company reserves all rights with respect to the granting of additional Restricted Stock Units hereunder and makes no implied promise to grant additional Restricted Stock Units.
3. Vesting . Subject to the conditions contained herein and in the Plan, the Restricted Stock Units shall vest and the restrictions on such Restricted Stock Units shall lapse as provided in the Award Notice.
4. Settlement of Restricted Stock Units . The provisions of Section 9(d) of the Plan are incorporated herein by reference and made a part hereof.
5. Treatment of Restricted Stock Units Upon Termination .
(a) Upon any Termination occurring prior to a Vesting Date (as defined in the Award Notice), except as set forth in the Award Notice all unvested Restricted Stock Units shall be forfeited immediately upon such Termination and revert back to the Company without any consideration paid in respect thereof. In addition, upon any Termination for Cause, all vested Restricted Stock Units which have not been settled in accordance with Section 4 hereof shall be forfeited immediately upon such Termination and revert back to the Company without any
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consideration paid in respect thereof. As a pre-condition to a Participant’s right to any vesting as a result of a Termination, or following a Termination, the Participant shall deliver a release of claims in favor of the Company and its affiliates in a form satisfactory to the Committee or its designee.
(b) Whether (and the circumstances under which) Service has been terminated and the determination of the date of Termination for the purposes of this Agreement shall be determined by the Committee.
6. Restrictions on Transfer . The Participant may not assign, alienate, pledge, attach, sell, or otherwise transfer or encumber the Restricted Stock Units or the Participant’s right under the Restricted Stock Units to receive Shares, except other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer, or encumbrance shall be void and unenforceable against the Company or an Affiliate; pro vided, that the designation of a beneficiary (if permitted by the Committee) shall not constitute an assignment, alienation, pledge, attachment, sale, transfer, or encumbrance.
7. Rights as Stockholder . Participant or a permitted transferee of the Restricted Stock Units shall have no rights as a stockholder with respect to any share of Common Stock underlying a Restricted Stock Unit unless and until Participant shall have become the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which Participant shall become the holder of record or the beneficial owner thereof.
8. Tax Withholding .
(a) The Participant acknowledges and agrees that to consistent with applicable law and the Participant’s status as an independent consultant for U.S. Federal income tax purposes, the Company does not intend to withhold any amounts as federal income tax withholdings under any other state or federal laws, and the Participant hereby agrees to make adequate provision for any sums required to satisfy all applicable federal, state, local and foreign tax withholding obligations of the Company which may arise in connection with the Restricted Stock Units.
(b) Notwithstanding the foregoing, the Company shall have the right and is hereby authorized to withhold, from any Common Stock or from any compensation (including from any cash retainer payments or any other amounts payable to the Participant) the amount (in cash, Common Stock, or other property) of any required withholding taxes in respect of the Restricted Stock Units, and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such withholding and taxes; provided, however, that no amounts shall be withheld in excess of the Company’s statutory minimum withholding liability.
9. Repayment of Proceeds; Clawback Policy . The Restricted Stock Units and all proceeds of the Restricted Stock Units shall be subject to the Company’s clawback policy, as in effect from time to time.
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10. No Right to Continued Service . Neither the Plan nor this Agreement nor the Participant’s receipt of the Restricted Stock Units hereunder shall impose any obligation on the Company or any Affiliate to continue the engagement of the Participant, including the Participant’s service as a member of the Board. Further, the Company or any Affiliate (as applicable) may at any time terminate the engagement of such Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.
11. Notice . Every notice or other communication relating to this Agreement between the Company and Participant shall be in writing, and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided ; provi ded, that, unless and until some other address be so designated, all notices or communications by Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Chief Human Resources Officer or another officer designated by the Company, and all notices or communications by the Company to Participant may be given to Participant personally or may be mailed to Participant at Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between Participant and any third-party plan administrator shall be mailed, delivered, transmitted, or sent in accordance with the procedures established by such third-party plan administrator and communicated to Participant from time to time.
12. Binding Effect . This Agreement shall be binding upon the heirs, executors, administrators, and successors of the parties hereto.
13. Waiver . The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
14. Governing Law; Venue; Language . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. Any suit, action, or proceeding with respect to this Agreement, or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware, and each of the Participant and the Company each hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware, (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum, and (c) any right to a jury trial.
15. Award Subject to Plan . By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Restricted Stock Units granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of this Agreement will govern and prevail.
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16. Severability . Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.
17. Successors in Interest . Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding, and conclusive upon the Participant’s heirs, executors, administrators, and successors.
18. Data Privacy Consent . The Participant hereby explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Restricted Stock Unit grant materials by and among, as applicable, the Participant’s employer or contracting party (the “ E m ployer”) and the Company for the exclusive purpose of implementing, administering, and managing the Participant’s participation in the Plan. The Participant understands that the Company may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, and telephone number, work location and phone number, date of birth, social insurance number, or other identification number, salary, nationality, job title, hire date, any shares of stock or directorships held in the Company, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested, or outstanding in the Participant’s favor, for the purpose of implementing, administering, and managing the Plan ( “Personal D ata”). The Participant understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, now or in the future, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of the Personal Data by contacting the Participant’s local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Personal Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s status or service and career with the Company will not be adversely affected; the only consequence of the Participant’s refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Restricted Stock Units or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of
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Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
19. Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation . By accepting this Agreement and the grant of the Restricted Stock Units evidenced hereby, the Participant expressly acknowledges that: (a) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (b) the grant of the Restricted Stock Units is a one-time benefit that does not create any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units; (c) all determinations with respect to future restricted stock unit grants, if any, including the grant date and the number of Shares granted, will be at the sole discretion of the Company; (d) the Participant’s participation in the Plan is voluntary; (e) the value of the Restricted Stock Units is an extraordinary item of compensation that is outside the scope of the Participant’s employment or services contract, if any, and nothing can or must automatically be inferred from such employment or services contract or its consequences; (f) Restricted Stock Units are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis and, for the avoidance of doubt, the Restricted Stock Units shall not constitute an “acquired right” under the applicable law of any jurisdiction; (g) the value of Shares received upon settlement of the Restricted Stock Units may increase or decrease in value; and (h) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant understands, acknowledges and agrees that the Participant will have no rights to compensation or damages related to Restricted Stock Unit proceeds in consequence of the termination of the Participant’s engagement or service as a member of the Board for any reason whatsoever and whether or not in breach of contract.
20. Award Administrator . The Company may from time to time designate a third party (an “ A ward Admin istrator”) to assist the Company in the implementation, administration, and management of the Plan and any Restricted Stock Units granted thereunder, including by sending Award Notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of this Agreement by Participants.
21. Book Entry Delivery of Shares . Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
22. Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
23. Acceptance and Agreement by the Participant; Forfeiture upon Failure to Accept . By accepting the Restricted Stock Units (including through electronic means), the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Agreement, and the Company’s policies, as in effect from time to time, relating to the Plan. The
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Participant’s rights under the Restricted Stock Units will lapse 45 days from the Date of Grant, and the Restricted Stock Units will be forfeited on such date if the Participant shall not have accepted this Agreement by such date. For the avoidance of doubt, the Participant’s failure to accept this Agreement shall not affect the Participant’s continuing obligations under any other agreement between the Company and the Participant. By accepting the Restricted Stock Units Participant expressly agrees that Participant has reviewed and agrees to abide by the Company’s Securities Trading Policy, available at [HYPERLINK], as such may be revised or updated from time to time.
24. No Advice Regarding Grant . The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal, and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
25. Appendices for Non-U.S. Participants . Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for Non-U.S. Participants attached hereto as Appendix A . If the Participant relocates from the United States to another country, the Terms and Conditions for Non-U.S. Participants and the applicable Country-Specific Terms and Conditions will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in Country-Specific Terms and Conditions, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
26. Imposition of Other Requirements . The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
27. Section 409A . This Agreement is intended to comply with the provisions of Section 409A of the Code and the regulations promulgated thereunder. Without limiting the foregoing, the Committee shall have the right to amend the terms and conditions of this Agreement in any respect as may be necessary or appropriate to comply with Section 409A of the Code or any regulations promulgated thereunder, including, without limitation, by delaying the issuance of the Shares contemplated hereunder.
Appendix A - 1
APPENDIX A
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Restricted Stock Unit Agreement.
1. Responsibility for Taxes . This provision supplements Section 8 of the Restricted Stock Unit Agreement:
(a) The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant ( “Tax -Related Items ”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting or settlement of the Restricted Stock Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any other distributions; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b) Prior to any relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by:
(i) withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired at settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) without further consent; or
Appendix A - 2
(iii) withholding in Shares to be issued upon settlement of the Restricted Stock Units;
p rovided, h owever, that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, the obligation for Tax-Related Items may be satisfied by one or a combination of methods
(i) and (ii) above.
(c) Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the portion of the Restricted Stock Units that is settled, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.
(d) Finally, the Participant agrees to pay to the Company or the Employer, any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
2. Nature of Grant . This provision supplements Section 20 of the Restricted Stock Unit Agreement:
In accepting the grant of the Restricted Stock Units, the Participant acknowledges, understands and agrees that:
(a) the Restricted Stock Unit grant and the Participant’s participation in the Plan shall not create a right to employment or engagement, or be interpreted as forming an employment or services contract with the Company or any Affiliate;
(b) the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation;
(c) for purposes of the Restricted Stock Units, the date of Termination shall be the date the Participant is no longer actively providing services to the Company or its Affiliates (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment or services agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the Restricted Stock Units under the Plan, if any, will terminate and the Participant’s right
Appendix A - 3
to have settled any vested Restricted Stock Units, if any, will be measured as of such date and will not be extended by any notice period ( e.g. , the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment or services agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the Restricted Stock Unit grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(d) unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(e) neither the Company nor any Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Restricted Stock Units or of any amounts due to the Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement.
3. Insider Trading Restrictions/Market Abuse Laws . The Participant acknowledges that, depending on his or her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell Shares or rights to Shares ( e.g. , Restricted Stock Units) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
[ Final ]
RESTRICTED STOCK UNIT AWARD NOTICE
UNDER THE
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
Summit Materials, Inc. (the “ Company ”), pursuant to its 2015 Omnibus Incentive Plan (the “ Plan ”), hereby grants to the Participant set forth below the number of Restricted Stock Units set forth below. The Restricted Stock Units are subject to all of the terms and conditions as set forth herein, in the Restricted Stock Unit Agreement attached hereto and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.
Participant : Participant_Name
Date of Grant : Date_of_Grant
Vesting Start Date : Vesting_Start_Date
Number of Shares of Common Stock Subject to Restricted Stock Units : Number_of_Shares
Vesting Schedule :
1. Vesting . So long as the Participant’s employment with the Company and its Affiliates has not been terminated, one-third of the Restricted Stock Units shall become vested on each of the first three anniversaries of the Vesting Start Date, provided that if the number of Restricted Stock Units is not evenly divisible by three, then no fractional units shall vest and the installments shall be as equal as possible with the smaller installments vesting first. Subject to Section 2 and Section 3 of this Award Notice, any Restricted Stock Units that are unvested on the date of a termination of Employment with the Company and its affiliates shall be immediately forfeited by the Participant.
2. Termination of Employment .
(a) If the Participant’s Employment is terminated by the Company or any Subsidiary without Cause or by the Participant as a result of a Constructive Termination, a pro rata portion of the number of Restricted Stock Units which would otherwise vest on the next applicable vesting date shall become vested, based on the number of days elapsed since the prior vesting date (or the Date of Grant if there has been no prior vesting date) over 365 or 366, as applicable.
(b) If the Participant’s Employment is terminated by the Participant and such termination constitutes a Retirement, the Restricted Stock Units shall continue to vest, notwithstanding such termination of Employment, in accordance with the schedule set forth in
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the Award Notice so long as no Restrictive Covenant Violation occurs, as determined by the Committee, or its designee, in its sole discretion, prior to the applicable vesting date. As a pre-condition to a Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to any applicable vesting date that no Restrictive Covenant Violation has occurred.
(c) Upon the Participant’s death, or if the Participant’s Employment is terminated by the Company and each of its Subsidiaries during the Participant’s Disability, 100% of the Restricted Stock Units shall become vested.
3. Change in Control .
(a) The Restricted Stock Units shall become vested immediately prior to a Change in Control if the Restricted Stock Units would not otherwise be continued, converted, assumed, or replaced by the Company or a successor entity thereto in connection with such Change in Control.
(b) If the Participant’s employment with the Company and its Affiliates (or a successor) is terminated by the Company (or a successor) without Cause or by the Participant as a result of a Constructive Termination during the two-year period following a Change in Control, 100% of the Restricted Stock Units shall become vested.
4. Definitions . The term “ Constructive Termination ” shall have the meaning set forth in any employment agreement entered into by and between the Participant and the Company or an Affiliate, or if no such agreement exists, any of the following, without the Participant’s prior written consent: (A) a material reduction in the Participant’s base salary or, to the extent applicable, target bonus (other than in connection with an across the board reduction in compensation of similarly situated employees, of, on an individual-by-individual basis, less than 10%); (B) a material diminution of the Participant’s authority, duties or responsibilities; (C) a relocation of the Participant’s primary place of business by more than fifty (50) miles from its then-current location; (D) any material breach by the Company of any written agreement relating to the Participant’s compensation (including any equity awards); provided that any such event shall constitute a Constructive Termination only if the Participant gives written notice to the Company within 10 days of the later of its occurrence of Executive’s knowledge thereof and the Company fails to cure such event within 30 days after receipt from the Participant of written notice of such event; provided , further , that a “Constructive Termination” shall cease to exist for an event on the 60 th day after the lapse of any such cure period.
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THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS RESTRICTED STOCK UNIT AWARD NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT, AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTED STOCK UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS RESTRICTED STOCK UNIT AWARD NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT, AND THE PLAN.
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1 To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute Participant’s signature hereof.
RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
SUMMIT MATERIALS, Inc.
2015 OMNIBUS INCENTIVE PLAN
Pursuant to the Restricted Stock Unit Award Notice (the “ Award Notice ”) delivered to Participant (as defined in the Award Notice), and subject to the terms of this Restricted Stock Unit Agreement and the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the “ Plan ”), Summit Materials, Inc. (the “ Company ”) and Participant agree as follows.
1. Definitions . Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. The following terms shall have the following meanings for purposes of this Agreement:
(a) “ Agreement ” shall mean this Restricted Stock Unit Agreement including (unless the context otherwise requires) the Award Notice.
(b) “ Date of Grant ” shall mean the “Date of Grant” listed in the Award Notice.
(c) “ Restrictive Covenant Violation ” shall mean Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by Participant.
(d) “ Retirement ” shall mean the Participant’s termination of employment with the Company and its Affiliates, other than for Cause or while grounds for Cause exist, and other than due to the Participant’s death or during the Participant’s Disability, following the date on which (i) the Participant attained the age of 62 years old, and (ii) the number of completed years of the Participant’s employment with the Company and/or its Affiliates is at least 5.
(e) “ Shares ” shall mean the number of shares of Common Stock listed in the Award Notice as “Number of Shares of Common Stock Subject to Restricted Stock Units”.
2. Grant of Restricted Stock Units . Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to Participant the number of Restricted Stock Units provided in the Award Notice (with each Restricted Stock Unit representing an unfunded, unsecured right to receive one share of Common Stock). The Company may make one or more additional grants of Restricted Stock Units to Participant under this Agreement by providing Participant with a new Award Notice, which may also include any terms and conditions differing from this Agreement to the extent provided therein. The Company reserves all rights with respect to the granting of additional Restricted Stock Units hereunder and makes no implied promise to grant additional Restricted Stock Units.
3. Vesting . Subject to the conditions contained herein and in the Plan, the Restricted Stock Units shall vest and the restrictions on such Restricted Stock Units shall lapse as provided in the Award Notice.
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4. Settlement of Restricted Stock Units . The provisions of Section 9(d) of the Plan are incorporated herein by reference and made a part hereof.
5. Treatment of Restricted Stock Units Upon Termination .
(a) Upon any Termination occurring prior to a Vesting Date (as defined in the Award Notice), except as set forth in the Award Notice all unvested Restricted Stock Units shall be forfeited immediately upon such Termination and revert back to the Company without any consideration paid in respect thereof. In addition, upon any Termination for Cause, all vested Restricted Stock Units which have not been settled in accordance with Section 4 hereof shall be forfeited immediately upon such Termination and revert back to the Company without any consideration paid in respect thereof. As a pre-condition to a Participant’s right to any vesting as a result of a Termination, or following a Termination, the Participant shall deliver a release of claims in favor of the Company and its affiliates in a form satisfactory to the Committee or its designee.
(b) The Participant’s rights with respect to the Restricted Stock Units shall not be affected by any change in the nature of the Participant’s employment so long as the Participant continues to be an employee of the Company or any of its Subsidiaries. Whether (and the circumstances under which) employment has been terminated and the determination of the date of Termination for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule 16a-1(f) under the Exchange Act, its designee, whose good faith determination shall be final, binding, and conclusive; provided , that such designee may not make any such determination with respect to the designee’s own employment for purposes of the Restricted Stock Units).
6. Restrictions on Transfer . The Participant may not assign, alienate, pledge, attach, sell, or otherwise transfer or encumber the Restricted Stock Units or the Participant’s right under the Restricted Stock Units to receive Shares, except other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer, or encumbrance shall be void and unenforceable against the Company or an Affiliate; provided , that the designation of a beneficiary (if permitted by the Committee) shall not constitute an assignment, alienation, pledge, attachment, sale, transfer, or encumbrance.
7. Rights as Stockholder . Participant or a permitted transferee of the Restricted Stock Units shall have no rights as a stockholder with respect to any share of Common Stock underlying a Restricted Stock Unit unless and until Participant shall have become the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which Participant shall become the holder of record or the beneficial owner thereof.
8. Tax Withholding . The provisions of Section 15(d) of the Plan are incorporated herein by reference and made a part hereof.
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9. Restrictive Covenants . Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees to the provisions of Appendix A to this Agreement (the “ Restrictive Covenants ”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between Participant and the Company or any of its Affiliates.
10. Repayment of Proceeds; Clawback Policy . I f a Restrictive Covenant Violation occurs or the Company discovers after a Termination that grounds existed for Cause at the time thereof, then Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to Participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) Participant received upon the sale or other disposition of, or distributions in respect of, the Restricted Stock Units and any Shares issued in respect thereof. Any reference in this Agreement to grounds existing for a Termination with Cause shall be determined without regard to any notice period, cure period, or other procedural delay or event required prior to finding of or Termination with Cause. The Restricted Stock Units and all proceeds of the Restricted Stock Units shall be subject to the Company’s clawback policy, as in effect from time to time, to the extent Participant is a director or “officer” as defined under Rule 16a-1(f) of the Exchange Act.
11. No Right to Continued Employment . Neither the Plan nor this Agreement nor the Participant’s receipt of the Restricted Stock Units hereunder shall impose any obligation on the Company or any Affiliate to continue the employment or engagement of the Participant. Further, the Company or any Affiliate (as applicable) may at any time terminate the employment or engagement of such Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.
12. Notice . Every notice or other communication relating to this Agreement between the Company and Participant shall be in writing, and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided , that, unless and until some other address be so designated, all notices or communications by Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Chief Human Resources Officer or another officer designated by the Company, and all notices or communications by the Company to Participant may be given to Participant personally or may be mailed to Participant at Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between Participant and any third-party plan administrator shall be mailed, delivered, transmitted, or sent in accordance with the procedures established by such third-party plan administrator and communicated to Participant from time to time.
13. Binding Effect . This Agreement shall be binding upon the heirs, executors, administrators, and successors of the parties hereto.
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14. Waiver . The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
15. Governing Law; Venue; Language . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. Any suit, action, or proceeding with respect to this Agreement, or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware, and each of the Participant and the Company each hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware, (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum, and (c) any right to a jury trial.
16. Award Subject to Plan . By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Restricted Stock Units granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of this Agreement will govern and prevail.
17. Severability . Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.
18. Successors in Interest . Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding, and conclusive upon the Participant’s heirs, executors, administrators, and successors.
19. Data Privacy Consent . The Participant hereby explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Restricted Stock Unit grant materials by and among, as applicable, the Participant’s employer or contracting party (the “ Employer ”) and the Company for the exclusive purpose of implementing, administering, and managing the Participant’s participation in the Plan. The Participant understands that the Company may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, and telephone number, work location and phone number, date of birth, social insurance number, or other identification number, salary, nationality, job title, hire date, any shares of stock or directorships held in the Company, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested, or outstanding in the Participant’s favor, for the purpose of implementing, administering, and managing the Plan (“ Personal Data ”). The Participant understands that Personal Data may be transferred to any
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third parties assisting in the implementation, administration and management of the Plan, now or in the future, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of the Personal Data by contacting the Participant’s local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Personal Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service and career with the Employer will not be adversely affected; the only consequence of the Participant’s refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Restricted Stock Units or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
20. Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation . By accepting this Agreement and the grant of the Restricted Stock Units evidenced hereby, the Participant expressly acknowledges that: (a) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (b) the grant of the Restricted Stock Units is a one-time benefit that does not create any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units; (c) all determinations with respect to future restricted stock unit grants, if any, including the grant date and the number of Shares granted, will be at the sole discretion of the Company; (d) the Participant’s participation in the Plan is voluntary; (e) the value of the Restricted Stock Units is an extraordinary item of compensation that is outside the scope of the Participant’s employment contract, if any, and nothing can or must automatically be inferred from such employment contract or its consequences; (f) Restricted Stock Units are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis and, for the avoidance of doubt, the Restricted Stock Units shall not constitute an “acquired right” under the applicable law of any jurisdiction; (g) the value of Shares received upon settlement of the Restricted Stock Units may increase or decrease in value; and (h) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant understands, acknowledges and agrees that the Participant will have no rights to compensation or damages related to Restricted Stock Unit proceeds in consequence of the
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termination of the Participant’s employment for any reason whatsoever and whether or not in breach of contract.
21. Award Administrator . The Company may from time to time designate a third party (an “ Award Administrator ”) to assist the Company in the implementation, administration, and management of the Plan and any Restricted Stock Units granted thereunder, including by sending Award Notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of this Agreement by Participants.
22. Book Entry Delivery of Shares . Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
23. Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
24. Acceptance and Agreement by the Participant; Forfeiture upon Failure to Accept . By accepting the Restricted Stock Units (including through electronic means), the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Agreement, and the Company’s policies, as in effect from time to time, relating to the Plan. The Participant’s rights under the Restricted Stock Units will lapse 45 days from the Date of Grant, and the Restricted Stock Units will be forfeited on such date if the Participant shall not have accepted this Agreement by such date. For the avoidance of doubt, the Participant’s failure to accept this Agreement shall not affect the Participant’s continuing obligations under any other agreement between the Company and the Participant. By accepting the Restricted Stock Units Participant expressly agrees that Participant has reviewed and agrees to abide by the Company’s Securities Trading Policy, available at [HYPERLINK], as such may be revised or updated from time to time.
25. No Advice Regarding Grant . The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal, and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
26. Appendices for Non-U.S. Participants . Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for Non-U.S. Participants attached hereto as Appendix B . If the Participant relocates from the United States to another country, the Terms and Conditions for Non-U.S. Participants and the applicable Country-Specific Terms and Conditions will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in Country-Specific Terms and Conditions, the special terms and conditions for such country will apply to the Participant, to the
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extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
27. Imposition of Other Requirements . The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
28. Section 409A . This Agreement is intended to comply with the provisions of Section 409A of the Code and the regulations promulgated thereunder. Without limiting the foregoing, the Committee shall have the right to amend the terms and conditions of this Agreement in any respect as may be necessary or appropriate to comply with Section 409A of the Code or any regulations promulgated thereunder, including, without limitation, by delaying the issuance of the Shares contemplated hereunder.
Appendix A - 1
Appendix A
Restrictive Covenants
1. Confidentiality; Non-Compete; Non-Solicit; Non-Disparagement .
(a) For the purposes of this Appendix A , any reference to the “Company” shall mean the Company and its Subsidiaries and Affiliates, collectively. In view of the fact that Participant’s work for the Company brings Participant into close contact with many confidential affairs of the Company not readily available to the public, and plans for further developments, Participant agrees:
(i) Participant will not at any time (whether during or after Participant’s Employment with the Company): (x) retain or use for the benefit, purposes, or account of Participant or any other person; or (y) disclose, divulge, reveal, communicate, share, transfer, or provide access to any person outside the Company (other than its professional advisers who are bound by confidentiality obligations), any non-public, proprietary, or confidential information – including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs, and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, and government and regulatory activities and approvals – concerning the past, current, or future business, activities, and operations of the Company and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“ Confidential Information ”) without the prior written authorization of the Board, except as specifically necessary during the term of Participant’s Employment in order to perform the duties of his or her position and in the best interests of the Company.
(ii) “Confidential Information” shall not include any information that is: (x) generally known to the industry or the public other than as a result of Participant’s breach of this covenant or any breach of other confidentiality obligations by third parties; (y) made legitimately available to Participant by a third party without breach of any confidentiality obligation; or (z) required by law to be disclosed; provided , that Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii) Except as required by law, Participant will not disclose to anyone, other than Participant’s immediate family and legal or financial advisors, the existence or contents of this Agreement; provided , that Participant may disclose to any prospective future employer the provisions of Section (b) of this Appendix A provided they agree to maintain the confidentiality of such terms.
(iv) Upon termination of Participant’s Employment with the Company for any reason, Participant shall: (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including, without limitation, any
Appendix A - 2
patent, invention, copyright, trade secret, trademark, trade name, logo, domain name, or other source indicator) owned or used by the Company, its Subsidiaries, or Affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters, and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop, or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company, except that Participant may retain only those portions of any personal notes, notebooks, and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which Participant is or becomes aware.
(b) Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees as follows:
(i) Participant will not, within twelve (12) months following the termination of Participant’s Employment with the Company (the “ Post-Termination Period ”) or during Participant’s Employment (collectively with the Post-Termination Period, the “ Restricted Period ”):
(A) engage in any business involved, either directly or indirectly, in: (x) the acquisition of companies primarily engaged in the U.S. and Canadian aggregates and related downstream product sectors (including, but not limited to, asphalt, paving, cement, concrete, and concrete products) (any such company, a “ Business ”) or (y) the operation of any Business, in each case in any Restricted Area (any such business as described in subclauses (x) or (y), a “ Competitive Business ”); provided , that for the purposes of this Appendix A, “ Restricted Area ” shall mean any geographic area where each and any Service Recipient of the Participant during the Participant’s Employment conducts or conducted Business; provided , further , that if the Service Recipient with respect to a Participant is the Operating Partnership, Summit Materials, LLC, or any of their respective successors thereto at any time during the Participant’s Employment, the Restricted Area shall be the United States and Canada;
(B) enter the employ of, or render any services to, any person (or any division or controlled or controlling affiliate of any person) who or which engages in a Competitive Business;
(C) acquire a financial interest in, or otherwise become actively involved with, any Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee, or consultant; or
(D) interfere with, or attempt to interfere with, business relationships (whether formed before, on, or after the date of this Agreement) between the Company and customers, clients, suppliers, partners, members, investors, or acquisition targets.
Appendix A - 3
(ii) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, directly or indirectly:
(A) solicit or encourage any employee of the Company to leave the Employment of the Company; or
(B) hire any such employee who was employed by the Company as of the date of Participant’s termination of Employment with the Company or who left the Employment of the Company coincident with, or within one (1) year prior to or after, the termination of Participant’s Employment with the Company.
(iii) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, directly or indirectly solicit or assist in soliciting in competition with the Company, the business of any client or prospective client:
(A) with whom Participant had personal contact or dealings on behalf of the Company during the one (1) year period preceding Participant’s termination of Employment;
(B) with whom employees reporting to Participant have had personal contact or dealings on behalf of the Company during the one (1) year immediately preceding Participant’s termination of Employment; or
(C) for whom Participant had direct or indirect responsibility during the one (1) year immediately preceding Participant’s termination of Employment.
Notwithstanding anything to the contrary in this Agreement, Participant may, directly or indirectly own, solely as an investment, securities of any person which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (x) is not a controlling person of, or a member of a group which controls, such person and (y) does not, directly or indirectly, own 5% or more of any class of securities of such person.
(c) During the Restricted Period, Participant will not, directly or indirectly, solicit or encourage to cease to work with the Company any consultant then under contract with the Company.
(d) Participant will not, other than as required by law or by order of a court or other competent authority, make or publish, or cause any other person to make or publish, any statement that is disparaging or that reflects negatively upon the Company, or that is or reasonably would be expected to be damaging to the reputation of the Company.
(e) It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Appendix A to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against
Appendix A - 4
Participant, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.
(f) The period of time during which the provisions of this Appendix A shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
2. Specific Performance; Survival .
(a) Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Appendix A would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to suspend making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction, or any other equitable remedy which may then be available.
(b) The provisions of this Appendix A shall survive the termination of Participant’s Employment for any reason.
Appendix B - 1
APPENDIX B
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Restricted Stock Unit Agreement.
1. Responsibility for Taxes . This provision supplements Section 8 of the Restricted Stock Unit Agreement:
(a) The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“ Tax-Related Items ”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting or settlement of the Restricted Stock Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any other distributions; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b) Prior to any relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by:
(i) withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired at settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) without further consent; or
Appendix B - 2
(iii) withholding in Shares to be issued upon settlement of the Restricted Stock Units;
provided , however , that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, the obligation for Tax-Related Items may be satisfied by one or a combination of methods (i) and (ii) above.
(c) Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the portion of the Restricted Stock Units that is settled, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.
(d) Finally, the Participant agrees to pay to the Company or the Employer, any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
2. Nature of Grant . This provision supplements Section 20 of the Restricted Stock Unit Agreement:
In accepting the grant of the Restricted Stock Units, the Participant acknowledges, understands and agrees that:
(a) the Restricted Stock Unit grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any Affiliate;
(b) the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation;
(c) for purposes of the Restricted Stock Units, the date of Termination shall be the date the Participant is no longer actively providing services to the Company or its Affiliates (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the Restricted Stock Units under the Plan, if any, will terminate and the Participant’s right to have
Appendix B - 3
settled any vested Restricted Stock Units, if any, will be measured as of such date and will not be extended by any notice period ( e.g. , the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the Restricted Stock Unit grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(d) unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(e) neither the Company nor any Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Restricted Stock Units or of any amounts due to the Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement.
3. Insider Trading Restrictions/Market Abuse Laws . The Participant acknowledges that, depending on his or her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell Shares or rights to Shares ( e.g. , Restricted Stock Units) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
[Final]
NONQUALIFIED STOCK OPTION AWARD NOTICE
UNDER THE
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
Summit Materials, Inc. (the “ Company ”), pursuant to its 2015 Omnibus Incentive Plan (the “ Plan ”), hereby grants to the Participant set forth below an Option with respect to the number of Shares set forth below. The Option shall be subject to all of the terms and conditions as set forth herein, in the Nonqualified Stock Option Agreement attached hereto, and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.
Participant : Participant_Name
Date of Grant : Date_of_Grant
Vesting Start Date : Vesting_Start_Date
Exercise Price : Exercise_Price
Number of Shares Subject to Option : Number_of_Shares
Vesting Schedule :
1. Vesting . So long as the Participant’s employment with the Company and its Affiliates has not been terminated, one-third of the Options shall become vested on each of the first three anniversaries of the Vesting Start Date, provided that if the number of Options is not evenly divisible by three, then no fractional units shall vest and the installments shall be as equal as possible with the smaller installments vesting first. Subject to Section 2 and Section 3 of this Award Notice, any Options that are unvested on the date of a termination of Employment with the Company and its affiliates shall be immediately forfeited by the Participant.
2. Termination of Employment .
(a) If the Participant’s Employment is terminated by the Company or any Subsidiary without Cause or by the Participant as a result of a Constructive Termination, a pro rata portion of the number of Options which would otherwise vest on the next applicable vesting date shall become vested and fully exercisable, based on the number of days elapsed since the prior vesting date (or the Date of Grant if there has been no prior vesting date) over 365 or 366, as applicable.
(b) If the Participant’s Employment is terminated by the Participant and such termination constitutes a Retirement, the Options shall continue to vest and become exercisable, notwithstanding such termination of Employment, in accordance with the schedule set forth in the Award Notice so long as no Restrictive Covenant Violation occurs, as determined by the Committee, or its designee, in its sole discretion, prior to the applicable vesting date. As a pre-condition to a Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to any applicable vesting date that no Restrictive Covenant Violation has occurred.
(c) Upon the Participant’s death, or if the Participant’s Employment is terminated by the Company and each of its Subsidiaries during the Participant’s Disability, 100% of the Options shall become vested and exercisable.
3. Change in Control .
(a) The Options shall become vested and exercisable immediately prior to a Change in Control if the Options would not otherwise be continued, converted, assumed, or replaced by the Company or a successor entity thereto in connection with such Change in Control.
(b) If the Participant’s employment with the Company and its Affiliates (or a successor) is terminated by the Company (or a successor) without Cause or by the Participant as a result of a Constructive Termination during the two-year period following a Change in Control, 100% of the Options shall become vested and exercisable.
4. Definitions . The term “ Constructive Termination ” shall have the meaning set forth in any employment agreement entered into by and between the Participant and the Company or an Affiliate, or if no such agreement exists, any of the following, without the Participant’s prior written consent: (A) a material reduction in the Participant’s annual base salary or, to the extent applicable, target bonus opportunity (other than in connection with an across the board reduction in compensation of similarly situated employees, of, on an individual-by-individual basis, less than 10%); (B) a material diminution of the Participant’s authority, duties or responsibilities; (C) a relocation of the Participant’s primary place of business by more than fifty (50) miles from its then-current location; (D) any material breach by the Company of any written agreement relating to the Participant’s compensation (including any equity awards); provided that any such event shall constitute a Constructive Termination only if the Participant gives written notice to the Company within 10 days of the later of its occurrence of Executive’s knowledge thereof and the Company fails to cure such event within 30 days after receipt from the Participant of written notice of such event; provided , further , that a “Constructive Termination” shall cease to exist for an event on the 60 th day after the lapse of any such cure period.
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NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE
SUMMIT MATERIALS, Inc.
2015 OMNIBUS INCENTIVE PLAN
Pursuant to the Nonqualified Stock Option Award Notice (the “ Award Notice ”) delivered to Participant (as defined in the Award Notice), and subject to the terms of this Nonqualified Stock Option Agreement and the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the “ Plan ”), Summit Materials, Inc. (the “ Company ”) and Participant agree as follows.
1. Definitions . Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. The following terms shall have the following meanings for purposes of this Agreement:
(a) “ Agreement ” shall mean this Nonqualified Stock Option Agreement including (unless the context otherwise requires) the Award Notice.
(b) “ Date of Grant ” shall mean the “Date of Grant” listed in the Award Notice.
(c) “ Exercise Price ” shall mean the “Exercise Price” listed in the Award Notice.
(d) “ Participant ” shall mean the “Participant” listed in the Award Notice.
(e) “ Restrictive Covenant Violation ” shall mean the Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by the Participant.
(f) “ Retirement ” shall mean the Participant’s termination of employment with the Company and its Affiliates, other than for Cause or while grounds for Cause exist, and other than due to the Participant’s death or during the Participant’s Disability, following the date on which (i) the Participant attained the age of 62 years old, and (ii) the number of completed years of the Participant’s employment with the Company and/or its Affiliates is at least 5.
(g) “ Shares ” shall mean the number of shares of Common Stock listed in the Award Notice as “Number of Shares Subject to Option”.
2. Grant of Options.
(a) Effective as of the Date of Grant, for good and valuable consideration, the Company hereby irrevocably grants to the Participant the right and option (the “ Option ”) to purchase all or any part of the Shares, subject to, and in accordance with, the terms, conditions and restrictions set forth in the Plan and this Agreement.
(b) The Option is not intended to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code.
(c) This Agreement shall be construed in accordance and consistent with, and subject to, the terms of the Plan (the provisions of which are incorporated hereby by reference); and, except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. In the event of any conflict between one or more of this Agreement, the Award Notice and the Plan, the Plan shall govern this Agreement and the Award Notice, and the Agreement (to the extent not in conflict with the Plan) shall govern the Award Notice.
3. Exercise Price . The price at which the Participant shall be entitled to purchase the Shares upon the exercise of the Option shall be the Exercise Price per share, subject to adjustment as provided in Section 12.
4. Exercisability of Option . The Option shall become vested and exercisable in accordance with the schedule set forth on the Award Notice.
5. Duration of Option . The Option shall be exercisable to the extent and in the manner provided herein for a period of 10 years from the Date of Grant (the “ Option Period ”); provided , however , that the Option may be earlier terminated as provided in Section 7 hereof.
6. Manner of Exercise and Payment.
(a) Subject to the terms and conditions of this Agreement and the Plan, the Option may be exercised by delivery of written or electronic notice to the Company in the manner prescribed in Section 7(d) of the Plan and as otherwise set forth by the Committee from time to time. Such notice shall set forth the number of Shares in respect of which the Option is being exercised and shall be signed by the person or persons exercising the Option. In the event the Company has designated an Award Administrator (as defined below), the Option may also be exercised by giving notice (including through electronic means) in accordance with the procedures established from time to time by the Award Administrator. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part, provided that partial exercise shall be for whole shares of Common Stock only.
(b) Upon exercise of the Option pursuant to Section 6(a), unless otherwise determined by the Committee, the Company shall withhold a number of Shares otherwise deliverable to the Participant to pay (i) the full purchase price for the Shares in respect of which the Option is being exercised (the “ Aggregate Exercise Price ”) and (ii) the minimum applicable withholding taxes, liabilities, and obligations (“ Withholding Taxes ”) associated with such exercise.
(c) Upon receipt of the notice of exercise and any payment or other documentation as may be necessary pursuant to Sections 6(a) and 6(b) relating to the Shares in respect of which the Option is being exercised, the Company shall, subject to the Plan and this Agreement, take such action as may be necessary to effect the transfer to the Participant of the number of Shares as to which such exercise was effective (less any Shares withheld pursuant to Section 6(b)).
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(d) The Participant shall not be deemed to be the holder of, or to have any of the rights and privileges of a stockholder of the Company (including the right to vote or receive dividends) in respect of, Shares purchased upon exercise of the Option until (i) the Option shall have been exercised pursuant to the terms of this Agreement and the Participant shall have paid the Aggregate Exercise Price associated with such exercise and any applicable Withholding Taxes and (ii) the Company shall have issued the Shares in connection with such exercise.
(a) Subject to the terms of Section 7(c) and the Award Notice, in the event that the Participant’s employment with the Company and its Subsidiaries is terminated for any reason, any unvested portion of the Option shall be forfeited and all of the Participant’s rights hereunder with respect to such unvested portion of the Option shall terminate as of the effective date of termination (the “ Termination Date ”) (unless otherwise provided for by the Committee in accordance with the Plan). As a pre-condition to a Participant’s right to any vesting as a result of a Termination Date, or following a Termination Date, the Participant shall deliver a release of claims in favor of the Company and its affiliates in a form satisfactory to the Committee or its designee.
(b) Notwithstanding any portion of this Agreement to the contrary, if the Participant’s employment is terminated by the Company or any Subsidiary with Cause or by the Participant when grounds existed for Cause at the time thereof, the vested and unvested portions of the Option shall terminate as of the Termination Date.
(c) In the event of (i) the Participant’s employment with the Company and its Subsidiaries is terminated by the Company due to death or Disability, each outstanding vested Option shall remain exercisable for one year after the Termination Date (but in no event beyond the Option Period), (ii) the Participant’s employment is terminated due to a Retirement, each outstanding vested Option (whether such Option becomes vested before, on, or after the Termination Date) shall remain exercisable for five years after the later of (x) the Termination Date and (y) the date such Option becomes vested and exercisable (but in no event beyond the Option Period), and (iii) the Participant’s employment with the Company and its Subsidiaries is terminated for any other reason (subject to Section 7(b)), each outstanding vested Option shall remain exercisable for 90 days thereafter (but in no event beyond the Option Period); provided that, in each case, the Option Period shall expire immediately upon the occurrence of a Restrictive Covenant Violation.
(d) The Participant’s rights with respect to the Option shall not be affected by any change in the nature of the Participant’s employment so long as the Participant continues to be an employee of the Company or any of its Subsidiaries. Whether (and the circumstances under which) employment has been terminated and the determination of the Termination Date for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, its designee, whose good faith determination shall be final, binding and conclusive; provided , that such designee may not make any such determination with respect to the designee’s own employment for purposes of the Option).
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8. Restrictions on Transfer . The Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Option or the Participant’s right under the Option to receive Shares, except other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or an Affiliate; provided that the designation of a beneficiary (if permitted by the Committee) shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
9. Restrictive Covenants . Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees to the provisions of Appendix A to this Agreement (the “ Restrictive Covenants ”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.
10. Repayment of Proceeds; Clawback Policy . If a Restrictive Covenant Violation occurs or the Company discovers after a termination of employment that grounds existed for Cause at the time thereof, then Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within 10 business days of the Company’s request to Participant therefor, an amount equal to the excess, if any, of (a) the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) Participant received upon the sale or other disposition of, or distributions in respect of, the Options and any Shares acquired in respect thereof over (b) the aggregate Cost (if any) of such Shares. For purposes of this Agreement, “ Cost ” means, in respect of any Share, the amount paid by Participant for the Share (excluding, for the avoidance of doubt, any Withholding Taxes), as proportionately adjusted for corporate transactions and other recapitalizations and less the amount of any dividends or distributions made with respect to the Share; provided that Cost may not be less than zero. Any reference in this Agreement to grounds existing for a termination of employment with Cause shall be determined without regard to any notice period, cure period, or other procedural delay or event required prior to finding of or termination with, Cause. The Option and all proceeds of the Option shall be subject to the Company’s Clawback Policy, as in effect from time to time, to the extent Participant is a director or “officer” as defined under Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended.
11. No Right to Continued Employment . Neither the Plan nor this Agreement nor the Participant’s receipt of the Option hereunder shall
6
impose any obligation on the Company or any Affiliate to continue the employment or engagement of the Participant. Further, the Company or any Affiliate (as applicable) may at any time terminate the employment or engagement of such Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.
12. Adjustments . The terms of this Agreement, including, without limitation, (a) the number of Shares subject to the Option and (b) the Exercise Price specified herein, shall be subject to adjustment in accordance with Section 12 of the Plan.
13. Award Subject to Plan . By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Option granted hereunder is subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Agreement will govern and prevail.
14. Severability . Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.
15. Governing Law; Venue; Language . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. Any suit, action, or proceeding with respect to this Agreement, or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware, and each of the Participant and the Company each hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware, (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum, and (c) any right to a jury trial.
16. Successors in Interest . Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Participant’s heirs, executors, administrators and successors.
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17. Data Privacy Consent . The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Option grant materials by and among, as applicable, the Participant’s employer or contracting party (the “ Employer ”) and the Company for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that the Company may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, work location and phone number, date of birth, social insurance number or other identification number, salary, nationality, job title, hire date, any shares of stock or directorships held in the Company, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“ Personal Data ”). The Participant understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, now or in the future, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of the Personal Data by contacting the Participant’s local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Personal Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service and career with the Employer will not be adversely affected; the only consequence of the Participant’s refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Options or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s
8
refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
18. Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation . By accepting this Agreement and the grant of the Option evidenced hereby, the Participant expressly acknowledges that: (a) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (b) the grant of the Option is a one-time benefit that does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (c) all determinations with respect to future option grants, if any, including the date of grant, the number of Shares granted, the exercise price and the exercise date or dates, will be at the sole discretion of the Company; (d) the Participant’s participation in the Plan is voluntary; (e) the value of the Option is an extraordinary item of compensation that is outside the scope of the Participant’s employment contract, if any, and nothing can or must automatically be inferred from such employment contract or its consequences; (f) Options are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis and, for the avoidance of doubt, the Option shall not constitute an “acquired right” under the applicable law of any jurisdiction; (g) if the underlying Shares do not increase in value, the Option will have no value; (h) if the Participant exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the exercise price; and (i) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant understands, acknowledges and agrees that the Participant will have no rights to compensation or damages related to option proceeds in consequence of the termination of the Participant’s employment for any reason whatsoever and whether or not in breach of contract.
19. Award Administrator . The Company may from time to time designate a third party (an “ Award Administrator ”) to assist the Company in the implementation, administration and management of the Plan and any Options granted thereunder, including by sending Award Notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of Agreement by Participants and Option exercises by Participants.
20. Book Entry Delivery of Shares . Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
21. Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
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22. Acceptance and Agreement by the Participant; Forfeiture upon Failure to Accept . By accepting this Option (including through electronic means), the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Agreement, and the Company’s policies, as in effect from time to time, relating to the Plan. The Participant's rights under the Option will lapse 45 days from the Date of Grant, and the Option will be forfeited on such date if the Participant shall not have accepted this Agreement by such date. For the avoidance of doubt, the Participant's failure to accept this Agreement shall not affect the Participant’s continuing obligations under any other agreement between the Company and the Participant. By accepting this Option Participant expressly agrees that Participant has reviewed and agrees to abide by the Company’s Securities Trading Policy, available at [HYPERLINK], as such may be revised or updated from time to time.
23. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant's participation in the Plan, or the Participant's acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
24. Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant's participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
25. Waiver. The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
[ Signatures follow ]
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SUMMIT MATERIALS, INC. |
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By: |
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Name: Thomas W. Hill |
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Title: Chief Executive Officer |
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Participant Signature |
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[ Signature Page – Nonqualified Stock Option Agreement ]
Appendix A
Restrictive Covenants
1. Confidentiality; Non-Compete; Non-Solicit; Non-Disparagement .
(a) For the purposes of this Appendix A, any reference to the “Company” shall mean the Company and its Subsidiaries and Affiliates, collectively. In view of the fact that Participant’s work for the Company brings Participant into close contact with many confidential affairs of the Company not readily available to the public, and plans for further developments, Participant agrees:
(i) Participant will not at any time (whether during or after Participant’s Employment with the Company): (x) retain or use for the benefit, purposes or account of Participant or any other person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any person outside the Company (other than its professional advisers who are bound by confidentiality obligations), any non-public, proprietary or confidential information – including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals – concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“ Confidential Information ”) without the prior written authorization of the Board, except as specifically necessary during the term of Participant’s Employment in order to perform the duties of his or her position and in the best interests of the Company.
(ii) “Confidential Information” shall not include any information that is: (a) generally known to the industry or the public other than as a result of Participant’s breach of this covenant or any breach of other confidentiality obligations by third parties; (b) made legitimately available to Participant by a third party without breach of any confidentiality obligation; or (c) required by law to be disclosed; provided that Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii) Except as required by law, Participant will not disclose to anyone, other than Participant’s immediate family and legal or financial advisors, the existence or contents of this Agreement; provided that Participant may disclose to any prospective future employer the provisions of Section (b) of this Appendix provided they agree to maintain the confidentiality of such terms.
(iv) Upon termination of Participant’s Employment with the Company for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any
Appendix A - 2
patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company, its Affiliates and Subsidiaries, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which Participant is or becomes aware.
(b) Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:
(i) Participant will not, within twelve months following the termination of Participant’s Employment with the Company (the “ Post-Termination Period ”) or during Participant’s Employment (collectively with the Post-Termination Period, the “ Restricted Period ”):
(A) engage in any business involved, either directly or indirectly, in (x) the acquisition of companies primarily engaged in the U.S. and Canadian aggregates and related downstream product sectors (including, but not limited to, asphalt, paving, cement, concrete and concrete products) (any such company, a “ Business ”) or (y) the operation of any Business, in each case in any Restricted Area (any such business as described in subclauses (x) or (y), a “ Competitive Business ”). For the purposes of this Appendix A, “Restricted Area” shall mean any geographic area where each and any Service Recipient of the Participant during the Participant’s Employment conducts or conducted Business, provided, that if the Service Recipient with respect to a Participant is the Operating Partnership, Summit Materials, LLC, or any of their respective successors thereto at any time during the Participant’s Employment, the Restricted Area shall be the United States and Canada.
(B) enter the employ of, or render any services to, any person (or any division or controlled or controlling affiliate of any person) who or which engages in a Competitive Business;
(C) acquire a financial interest in, or otherwise become actively involved with, any Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(D) interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the date of this Agreement) between the Company or any of its Affiliates and customers, clients, suppliers, partners, members, investors or acquisition targets.
Appendix A - 3
(ii) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, directly or indirectly:
(A) solicit or encourage any employee of the Company or its Affiliates to leave the Employment of the Company or its Affiliates; or
(B) hire any such employee who was employed by the Company or its Affiliates as of the date of Participant’s termination of Employment with the Company or who left the Employment of the Company or its Affiliates coincident with, or within one year prior to or after, the termination of Participant’s Employment with the Company.
(iii) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, directly or indirectly solicit or assist in soliciting in competition with the Company, the business of any client or prospective client:
(A) with whom Participant had personal contact or dealings on behalf of the Company during the one-year period preceding Participant’s termination of Employment;
(B) with whom employees reporting to Participant have had personal contact or dealings on behalf of the Company during the one year immediately preceding Participant’s termination of Employment; or
(C) for whom Participant had direct or indirect responsibility during the one year immediately preceding Participant’s termination of Employment.
Notwithstanding anything to the contrary in this Agreement, Participant may, directly or indirectly own, solely as an investment, securities of any person which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (i) is not a controlling person of, or a member of a group which controls, such person and (ii) does not, directly or indirectly, own 5% or more of any class of securities of such person.
(c) During the Restricted Period, Participant will not, directly or indirectly, solicit or encourage to cease to work with the Company or its Affiliates any consultant then under contract with the Company or its Affiliates.
(d) Participant will not, other than as required by law or by order of a court or other competent authority, make or publish, or cause any other person to make or publish, any statement that is disparaging or that reflects negatively upon the Company or its Affiliates, or that is or reasonably would be expected to be damaging to the reputation of the Company or its Affiliates.
(e) It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Appendix A to be reasonable, if a final judicial determination is made by a court of competent jurisdiction, that the time or territory or
Appendix A - 4
any other restriction contained in this Agreement is an unenforceable restriction against Participant, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restric tion contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.
(f) The period of time during which the provisions of this Appendix A shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
2. Specific Performance; Survival .
(a) Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Appendix A would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to suspend making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.
(b) The provisions of this Appendix A shall survive the termination of Participant’s Employment for any reason.
APPENDIX B
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Nonqualified Stock Option Agreement.
1. Responsibility for Taxes . This provision supplements Section 6 of the Nonqualified Stock Option Agreement:
(a) The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Employer the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“ Tax-Related Items ”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends and/or any other distributions; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b) Prior to any relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by:
(i) withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) without further consent; or
(iii) withholding in Shares to be issued upon exercise of the Option;
Appendix B - 2
provided, however, that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, the obligation for Tax-Related Items may be satisfied by one or a combination of methods (i) and (ii) above.
(c) Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the portion of the Option that is exercised, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items
(d) The Participant agrees to pay to the Company or the Employer, any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e) Notwithstanding anything to the contrary in the Plan or in Section 16(b) of the Nonqualified Stock Option Agreement, if the Company is required by applicable law to use a particular definition of fair market value for purposes of calculating the taxable income for the Participant, the Company shall have the discretion to calculate the Shares to be withheld to cover any Withholding Taxes by using either the price used to calculate the taxable income under applicable law or by using the closing price per Share on the New York Stock Exchange (or other principal exchange on which the Shares then trade) on the trading day immediately prior to the date of delivery of the Shares.
2. Nature of Grant . This provision supplements Section 18 of the Nonqualified Stock Option Agreement:
In accepting the grant of the Option, the Participant acknowledges, understands and agrees that:
(a) the Option grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any Affiliate;
(b) the Option and the Shares subject to the Option, and the income and value of same, are not intended to replace any pension rights or compensation;
Appendix B - 3
(c) unless otherwise agreed with the Company, the Option and the Shares subject to the Option, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of an Affiliate;
(d) for purposes of the Option, the Termination Date shall be the date the Participant is no longer actively providing services to the Company or its Affiliates (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the Option under the Plan, if any, will terminate and the Participant’s right to exercise any vested Option, if any, will be measured as of such date and will not be extended by any notice period ( e.g. , the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the Option grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(e) unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Agreement do not create any entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(f) neither the Company nor any Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Option or of any amounts due to the Participant pursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercise.
3. Insider Trading Restrictions/Market Abuse Laws . The Participant acknowledges that, depending on his or her country, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell Shares or rights to Shares ( e.g. , Options) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
4. Termination of Employment . This provision supplements Section 7 of the Nonqualified Stock Option Agreement:
Notwithstanding anything in this Section 7, if the Company receives a legal opinion that there has been a legal judgment and/or legal development in the Participant’s jurisdiction that likely would result in the favorable treatment that applies to the Option when the Participant terminates employment as a result of the Participant’s Retirement being deemed unlawful and/or
Appendix B - 4
discriminatory, the provisions of this Section 7 regarding the treatment of the Option when the Participant terminates employment as a result of the Participant’s Retirement shall not be applicable to the Participant and the remaining provisions of this Section 7 shall govern.
[ Final ]
PERFORMANCE UNIT AWARD NOTICE
UNDER THE
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
Summit Materials, Inc. (the “ Company ”), pursuant to its 2015 Omnibus Incentive Plan (the “ Plan ”), hereby grants to the Participant set forth below the number of Restricted Stock Units set forth below (the “ Performance Units ”). The Performance Units are subject to all of the terms and conditions as set forth herein, in the Performance Unit Agreement attached hereto and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.
Participant : Participant_Name
Date of Grant : Date_of_Grant
Performance Period : [January 1, 2016 through December 31, 2018]
Target Number of Performance Share Units : Number_of_Shares (subject to adjustment in accordance with the terms set forth in the Agreement and the Plan)
Vesting Schedule :
1. Determination of Vested Performance Units .
(a) The Performance Units shall become vested based on the Total Shareholder Return of the Company relative to the Total Shareholder Returns of each Peer Group Member. The Committee shall determine (i) the Total Shareholder Return for the Company for the Performance Period, (ii) the Total Shareholder Return for each Peer Group Member for the Performance Period, and (iii) the Percentile Rank for the Company. The Company’s rank as a percentile will be calculated excluding the Company from the peer group. All determinations with respect to Total Shareholder Return Position shall be made by the Committee in its sole discretion, and the applicable performance targets shall not be achieved and the Performance Units shall not vest until the Committee certifies that such performance targets have been met (such date, the “ Determination Date ”).
(b) The total number of Performance Units that become vested shall be equal to (x) the target number of Performance Units granted under this Agreement, multiplied by (y) the Achievement Percentage, and rounded down to the nearest whole Performance Unit.
2. Definitions . For the purposes of this Award Notice:
(a) The “ Achievement Percentage ” shall mean the “Achievement Percentage” specified with respect to the percentile of Relative Total Shareholder Return specified below, or
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a percentage determined using linear interpolation if actual performance falls between threshold and target, or between target and maximum levels.
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Level of
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200% |
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Notwithstanding anything to the contrary herein, if the Total Shareholder Return for the Company is negative over the Performance Period, then the Achievement Percentage in respect of any the Total Shareholder Return Position shall not exceed 100%.
(a) “ Beginning Price ” is the average per share closing price of a share or share equivalent on the applicable stock exchange for the period of 20 trading days immediately preceding the first day of the Performance Period.
(b) “ Ending Price ” is the average per share closing price of a share or share equivalent on the applicable stock exchange for the period of 20 trading days immediately preceding and including the last day of the Performance Period.
(c) “ Peer Group Members ” means the S&P Building and Construction Select Industry Index, as composed on the date that is 30 trading days prior to the commencement of the Performance Period.
(d) “ Total Shareholder Return ” of either the Company or a Peer Group Member is the result of dividing (1) the sum of the cumulative value of an entity’s dividends for the Performance Period, plus the entity’s Ending Price minus the Beginning Price, by (2) the Beginning Price. For the purposes of determining the cumulative value of the Company’s or a Peer Group Member’s dividends during the Performance Period, it will be assumed that all dividends declared and paid during the Performance Period were reinvested in the Company, or such Peer Group Member, as applicable, on the ex-dividend date, using the closing price on such date. The aggregate shares, or fractional shares thereof, that will be assumed to be purchased as part of the reinvestment calculation will be multiplied by the Ending Price to determine the cumulative value of the Company’s, or such Peer Group Member’s, dividends for the Performance Period. Any Peer Group Member (i) which merges with or is acquired by another company shall not be a Peer Group Member for purposes of calculating Relative Total Shareholder Return, and (ii) which is in reorganization under Chapter 11 of the Bankruptcy Code on the last date of the Performance Period, such Peer Group Member shall be deemed to have a Total Shareholder Return of -100%.
(e) “ Relative Total Shareholder Return Position ” shall be the performance percentile of the Total Shareholder Return of the Company, as compared to the Total Shareholder Return for each Peer Group Member. The percentile shall be determined by ranking the Company and each Peer Group Member according to its respective Total Shareholder Return
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for the Performance Period, from minimum to maximum, with the lowest Total Shareholder Return being assigned a rank of one. The Company’s percentile rank shall be calculated by dividing the Company’s rank by the total number of Peer Group Members (including the Company).
3. Change in Control .
(a) If, in connection with a Change in Control, the Performance Units are not be continued, converted, assumed, or replaced by the Company or a successor entity thereto in connection with such Change in Control, then a number of Performance Units equal to the target number of Performance Units shall become vested immediately prior to such Change in Control.
(b) If the Participant’s employment with the Company and its Affiliates (or a successor) is terminated by the Company without Cause or by the Participant as a result of a Constructive Termination during the two-year period following a Change in Control, then a pro rata portion of the target number of Performance Units shall become vested as of the date of such termination of employment.
4. Other Definitions .
(a) The term “ Constructive Termination ” shall have the meaning set forth in any employment agreement entered into by and between the Participant and the Company or an Affiliate, or if no such agreement exists, any of the following, without the Participant’s prior written consent: (A) a material reduction in the Participant’s base salary or, to the extent applicable, target bonus (other than in connection with an across the board reduction in compensation of similarly situated employees, of, on an individual-by-individual basis, less than 10%); (B) a material diminution of the Participant’s authority, duties or responsibilities; (C) a relocation of the Participant’s primary place of business by more than fifty (50) miles from its then-current location; (D) any material breach by the Company of any written agreement relating to the Participant’s compensation (including any equity awards); provided that that any such event shall constitute a Constructive Termination only if the Participant gives written notice to the Company within 10 days of the later of its occurrence of Executive’s knowledge thereof and the Company fails to cure such event within 30 days after receipt from the Participant of written notice of such event; provided , further , that a “Constructive Termination” shall cease to exist for an event on the 60 th day after the lapse of any such cure period.
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THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS PERFORMANCE UNIT AWARD NOTICE, THE PERFORMANCE UNIT AGREEMENT, AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF PERFORMANCE UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS PERFORMANCE UNIT AWARD NOTICE, THE PERFORMANCE UNIT AGREEMENT, AND THE PLAN.
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1 To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute Participant’s signature hereof.
PERFORMANCE UNIT AGREEMENT
UNDER THE
SUMMIT MATERIALS, Inc.
2015 OMNIBUS INCENTIVE PLAN
Pursuant to the Performance Unit Award Notice (the “ Award Notice ”) delivered to Participant (as defined in the Award Notice), and subject to the terms of this Performance Unit Agreement and the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the “ Plan ”), Summit Materials, Inc. (the “ Company ”) and Participant agree as follows.
1. Definitions . Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. The following terms shall have the following meanings for purposes of this Agreement:
(a) “ Agreement ” shall mean this Performance Unit Agreement including (unless the context otherwise requires) the Award Notice.
(b) “ Date of Grant ” shall mean the “Date of Grant” listed in the Award Notice.
(c) “ Restrictive Covenant Violation ” shall mean Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by Participant.
(d) “ Retirement ” shall mean the Participant’s termination of employment with the Company and its Affiliates, other than for Cause or while grounds for Cause exist, and other than due to the Participant’s death or during the Participant’s Disability, following the date on which (i) the Participant attained the age of 62 years old, and (ii) the number of completed years of the Participant’s employment with the Company and/or its Affiliates is at least 5.
(e) “ Shares ” shall mean the number of shares of Common Stock listed in the Award Notice as “Number of Shares of Common Stock Subject to Performance Units”.
2. Grant of Performance Units . Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to Participant the number of Performance Units provided in the Award Notice (with each Performance Unit representing an unfunded, unsecured right to receive one share of Common Stock). The Company may make one or more additional grants of Performance Units to Participant under this Agreement by providing Participant with a new Award Notice, which may also include any terms and conditions differing from this Agreement to the extent provided therein. The Company reserves all rights with respect to the granting of additional Performance Units hereunder and makes no implied promise to grant additional Performance Units.
3. Vesting . Subject to the conditions contained herein and in the Plan, the Performance Units shall vest and the restrictions on such Performance Units shall lapse as provided in the Award Notice.
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4. Settlement of Performance Units . The provisions of Section 9(d) of the Plan are incorporated herein by reference and made a part hereof.
5. Treatment of Performance Units Upon Termination .
(a) Upon any Termination occurring prior to a Determination Date (as defined in the Award Notice), except as set forth in the Award Notice or the Performance Unit Agreement, all unvested Performance Units shall be forfeited immediately upon such Termination and revert back to the Company without any consideration paid in respect thereof. In addition, upon any Termination for Cause, all vested Performance Units which have not been settled in accordance with Section 4 hereof shall be forfeited immediately upon such Termination and revert back to the Company without any consideration paid in respect thereof. As a pre-condition to a Participant’s right to any vesting as a result of any Termination Date, or following any Termination Date, the Participant shall deliver a release of claims in favor of the Company and its affiliates in a form satisfactory to the Committee or its designee.
(b) In the event the Participant’s employment with the Company and its Subsidiaries is terminated by the Company or any Subsidiary due to or during Participant’s Disability or due to the Participant’s death, as a result of Participant’s Retirement, by the Company without Cause, or by the Participant as a result of a Constructive Termination, a pro-rated number of the Performance Units granted hereunder shall remain outstanding and eligible to vest based on (and to the extent) the Committee’s determines that the applicable performance conditions have been satisfied on the Determination Date, so long as no Restrictive Covenant Violation occurs, as determined by the Committee, or its designee, in its sole discretion, prior to the applicable vesting date, with such pro-rated number of Performance Shares which remain outstanding calculated based on the number of days in the Performance Period prior to the Termination Date relative to the number of the days in the full Performance Period. As a pre-condition to a Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to each applicable vesting date that no Restrictive Covenant Violation has occurred.
(c) The Participant’s rights with respect to the Performance Units shall not be affected by any change in the nature of the Participant’s employment so long as the Participant continues to be an employee of the Company or any of its Subsidiaries. Whether (and the circumstances under which) employment has been terminated and the determination of the date of Termination for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule 16a-1(f) under the Exchange Act, its designee, whose good faith determination shall be final, binding, and conclusive; provided , that such designee may not make any such determination with respect to the designee’s own employment for purposes of the Performance Units).
6. Restrictions on Transfer . The Participant may not assign, alienate, pledge, attach, sell, or otherwise transfer or encumber the Performance Units or the Participant’s right under the Performance Units to receive Shares, except other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer, or encumbrance shall be void and unenforceable against the Company or an Affiliate;
7
provided , that the designation of a beneficiary (if permitted by the Committee) shall not constitute an assignment, alienation, pledge, attachment, sale, transfer, or encumbrance.
7. Rights as Stockholder . Participant or a permitted transferee of the Performance Units shall have no rights as a stockholder with respect to any share of Common Stock underlying a Performance Unit unless and until Participant shall have become the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which Participant shall become the holder of record or the beneficial owner thereof.
8. Tax Withholding . The provisions of Section 15(d) of the Plan are incorporated herein by reference and made a part hereof.
9. Restrictive Covenants . Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees to the provisions of Appendix A to this Agreement (the “ Restrictive Covenants ”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between Participant and the Company or any of its Affiliates.
10. Repayment of Proceeds; Clawback Policy . I f a Restrictive Covenant Violation occurs or the Company discovers after a Termination that grounds existed for Cause at the time thereof, then Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to Participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) Participant received upon the sale or other disposition of, or distributions in respect of, the Performance Units and any Shares issued in respect thereof. Any reference in this Agreement to grounds existing for a Termination with Cause shall be determined without regard to any notice period, cure period, or other procedural delay or event required prior to finding of or Termination with Cause. The Performance Units and all proceeds of the Performance Units shall be subject to the Company’s clawback policy, as in effect from time to time, to the extent Participant is a director or “officer” as defined under Rule 16a-1(f) of the Exchange Act.
11. No Right to Continued Employment . Neither the Plan nor this Agreement nor the Participant’s receipt of the Performance Units hereunder shall impose any obligation on the Company or any Affiliate to continue the employment or engagement of the Participant. Further, the Company or any Affiliate (as applicable) may at any time terminate the employment or engagement of such Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.
12. Notice . Every notice or other communication relating to this Agreement between the Company and Participant shall be in writing, and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided , that, unless and until some
8
other address be so designated, all notices or communications by Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Chief Human Resources Officer or another officer designated by the Company, and all notices or communications by the Company to Participant may be given to Participant personally or may be mailed to Participant at Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between Participant and any third-party plan administrator shall be mailed, delivered, transmitted, or sent in accordance with the procedures established by such third-party plan administrator and communicated to Participant from time to time.
13. Binding Effect . This Agreement shall be binding upon the heirs, executors, administrators, and successors of the parties hereto.
14. Waiver . The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
15. Governing Law; Venue; Language . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. Any suit, action, or proceeding with respect to this Agreement, or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware, and each of the Participant and the Company each hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware, (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum, and (c) any right to a jury trial.
16. Award Subject to Plan . By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Performance Units granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of this Agreement will govern and prevail.
17. Severability . Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.
18. Successors in Interest . Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding, and conclusive upon the Participant’s heirs, executors, administrators, and successors.
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19. Data Privacy Consent . The Participant hereby explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Performance Unit grant materials by and among, as applicable, the Participant’s employer or contracting party (the “ Employer ”) and the Company for the exclusive purpose of implementing, administering, and managing the Participant’s participation in the Plan. The Participant understands that the Company may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, and telephone number, work location and phone number, date of birth, social insurance number, or other identification number, salary, nationality, job title, hire date, any shares of stock or directorships held in the Company, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested, or outstanding in the Participant’s favor, for the purpose of implementing, administering, and managing the Plan (“ Personal Data ”). The Participant understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, now or in the future, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of the Personal Data by contacting the Participant’s local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Personal Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service and career with the Employer will not be adversely affected; the only consequence of the Participant’s refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Performance Units or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
20. Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation . By accepting this Agreement and the grant of the Performance Units evidenced hereby, the Participant expressly acknowledges that: (a) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (b) the grant of the Performance Units is a one-time benefit that does not create any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units; (c) all determinations with respect to future restricted stock unit grants, if any, including the grant date and the number of Shares granted, will be at the sole discretion of the Company; (d) the Participant’s
10
participation in the Plan is voluntary; (e) the value of the Performance Units is an extraordinary item of compensation that is outside the scope of the Participant’s employment contract, if any, and nothing can or must automatically be inferred from such employment contract or its consequences; (f) Performance Units are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis and, for the avoidance of doubt, the Performance Units shall not constitute an “acquired right” under the applicable law of any jurisdiction; (g) the value of Shares received upon settlement of the Performance Units may increase or decrease in value; and (h) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant understands, acknowledges and agrees that the Participant will have no rights to compensation or damages related to Performance Unit proceeds in consequence of the termination of the Participant’s employment for any reason whatsoever and whether or not in breach of contract.
21. Award Administrator . The Company may from time to time designate a third party (an “ Award Administrator ”) to assist the Company in the implementation, administration, and management of the Plan and any Performance Units granted thereunder, including by sending Award Notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of this Agreement by Participants.
22. Book Entry Delivery of Shares . Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
23. Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
24. Acceptance and Agreement by the Participant; Forfeiture upon Failure to Accept . By accepting the Performance Units (including through electronic means), the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Agreement, and the Company’s policies, as in effect from time to time, relating to the Plan. The Participant’s rights under the Performance Units will lapse 45 days from the Date of Grant, and the Performance Units will be forfeited on such date if the Participant shall not have accepted this Agreement by such date. For the avoidance of doubt, the Participant’s failure to accept this Agreement shall not affect the Participant’s continuing obligations under any other agreement between the Company and the Participant. By accepting the Performance Units Participant expressly agrees that Participant has reviewed and agrees to abide by the Company’s Securities Trading Policy, available at [HYPERLINK], as such may be revised or updated from time to time.
25. No Advice Regarding Grant . The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The
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Participant is hereby advised to consult with his or her own personal tax, legal, and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
26. Appendices for Non-U.S. Participants . Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for Non-U.S. Participants attached hereto as Appendix B . If the Participant relocates from the United States to another country, the Terms and Conditions for Non-U.S. Participants and the applicable Country-Specific Terms and Conditions will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in Country-Specific Terms and Conditions, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
27. Imposition of Other Requirements . The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Performance Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
28. Section 409A . This Agreement is intended to comply with the provisions of Section 409A of the Code and the regulations promulgated thereunder. Without limiting the foregoing, the Committee shall have the right to amend the terms and conditions of this Agreement in any respect as may be necessary or appropriate to comply with Section 409A of the Code or any regulations promulgated thereunder, including, without limitation, by delaying the issuance of the Shares contemplated hereunder.
Appendix A - 1
Appendix A
Restrictive Covenants
1. Confidentiality; Non-Compete; Non-Solicit; Non-Disparagement .
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(a) |
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For the purposes of this Appendix A , any reference to the “Company” shall mean the Company and its Subsidiaries and Affiliates, collectively. In view of the fact that Participant’s work for the Company brings Participant into close contact with many confidential affairs of the Company not readily available to the public, and plans for further developments, Participant agrees: |
(i) Participant will not at any time (whether during or after Participant’s Employment with the Company): (x) retain or use for the benefit, purposes, or account of Participant or any other person; or (y) disclose, divulge, reveal, communicate, share, transfer, or provide access to any person outside the Company (other than its professional advisers who are bound by confidentiality obligations), any non-public, proprietary, or confidential information – including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs, and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, and government and regulatory activities and approvals – concerning the past, current, or future business, activities, and operations of the Company and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“ Confidential Information ”) without the prior written authorization of the Board, except as specifically necessary during the term of Participant’s Employment in order to perform the duties of his or her position and in the best interests of the Company.
(ii) “Confidential Information” shall not include any information that is: (x) generally known to the industry or the public other than as a result of Participant’s breach of this covenant or any breach of other confidentiality obligations by third parties; (y) made legitimately available to Participant by a third party without breach of any confidentiality obligation; or (z) required by law to be disclosed; provided , that Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii) Except as required by law, Participant will not disclose to anyone, other than Participant’s immediate family and legal or financial advisors, the existence or contents of this Agreement; provided , that Participant may disclose to any prospective future employer the provisions of Section (b) of this Appendix A provided they agree to maintain the confidentiality of such terms.
(iv) Upon termination of Participant’s Employment with the Company for any reason, Participant shall: (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including, without limitation, any
Appendix A - 2
patent, invention, copyright, trade secret, trademark, trade name, logo, domain name, or other source indicator) owned or used by the Company, its Subsidiaries, or Affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters, and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop, or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company, except that Participant may retain only those portions of any personal notes, notebooks, and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which Participant is or becomes aware.
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(b) |
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Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees as follows: |
(i) Participant will not, within twelve (12) months following the termination of Participant’s Employment with the Company (the “ Post-Termination Period ”) or during Participant’s Employment (collectively with the Post-Termination Period, the “ Restricted Period ”):
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(A) |
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engage in any business involved, either directly or indirectly, in: (x) the acquisition of companies primarily engaged in the U.S. and Canadian aggregates and related downstream product sectors (including, but not limited to, asphalt, paving, cement, concrete, and concrete products) (any such company, a “ Business ”) or (y) the operation of any Business, in each case in any Restricted Area (any such business as described in subclauses (x) or (y), a “ Competitive Business ”); provided , that for the purposes of this Appendix A, “ Restricted Area ” shall mean any geographic area where each and any Service Recipient of the Participant during the Participant’s Employment conducts or conducted Business; provided , further , that if the Service Recipient with respect to a Participant is the Operating Partnership, Summit Materials, LLC, or any of their respective successors thereto at any time during the Participant’s Employment, the Restricted Area shall be the United States and Canada; |
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(B) |
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enter the employ of, or render any services to, any person (or any division or controlled or controlling affiliate of any person) who or which engages in a Competitive Business; |
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(C) |
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acquire a financial interest in, or otherwise become actively involved with, any Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee, or consultant; or |
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(D) |
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interfere with, or attempt to interfere with, business relationships (whether formed before, on, or after the date of this Agreement) between the Company and customers, clients, suppliers, partners, members, investors, or acquisition targets. |
Appendix A - 3
(ii) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, directly or indirectly:
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(A) |
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solicit or encourage any employee of the Company to leave the Employment of the Company; or |
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(B) |
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hire any such employee who was employed by the Company as of the date of Participant’s termination of Employment with the Company or who left the Employment of the Company coincident with, or within one (1) year prior to or after, the termination of Participant’s Employment with the Company. |
(iii) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, directly or indirectly solicit or assist in soliciting in competition with the Company, the business of any client or prospective client:
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(A) |
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with whom Participant had personal contact or dealings on behalf of the Company during the one (1) year period preceding Participant’s termination of Employment; |
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(B) |
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with whom employees reporting to Participant have had personal contact or dealings on behalf of the Company during the one (1) year immediately preceding Participant’s termination of Employment; or |
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(C) |
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for whom Participant had direct or indirect responsibility during the one (1) year immediately preceding Participant’s termination of Employment. |
Notwithstanding anything to the contrary in this Agreement, Participant may, directly or indirectly own, solely as an investment, securities of any person which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (x) is not a controlling person of, or a member of a group which controls, such person and (y) does not, directly or indirectly, own 5% or more of any class of securities of such person.
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(c) |
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During the Restricted Period, Participant will not, directly or indirectly, solicit or encourage to cease to work with the Company any consultant then under contract with the Company. |
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(d) |
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Participant will not, other than as required by law or by order of a court or other competent authority, make or publish, or cause any other person to make or publish, any statement that is disparaging or that reflects negatively upon the Company, or that is or reasonably would be expected to be damaging to the reputation of the Company. |
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(e) |
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It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Appendix A to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against |
Appendix A - 4
Participant, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.
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(f) |
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The period of time during which the provisions of this Appendix A shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief. |
2. Specific Performance; Survival .
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(a) |
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Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Appendix A would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to suspend making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction, or any other equitable remedy which may then be available. |
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(b) |
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The provisions of this Appendix A shall survive the termination of Participant’s Employment for any reason. |
Appendix B - 1
APPENDIX B
SUMMIT MATERIALS, INC.
2015 OMNIBUS INCENTIVE PLAN
PERFORMANCE UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Performance Unit Agreement.
1. Responsibility for Taxes . This provision supplements Section 8 of the Performance Unit Agreement:
(a) The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“ Tax-Related Items ”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance Units, including, but not limited to, the grant, vesting or settlement of the Performance Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any other distributions; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Performance Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b) Prior to any relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by:
(i) withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired at settlement of the Performance Units either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) without further consent; or
Appendix B - 2
(iii) withholding in Shares to be issued upon settlement of the Performance Units;
provided , however , that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, the obligation for Tax-Related Items may be satisfied by one or a combination of methods (i) and (ii) above.
(c) Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the portion of the Performance Units that is settled, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.
(d) Finally, the Participant agrees to pay to the Company or the Employer, any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
2. Nature of Grant . This provision supplements Section 20 of the Performance Unit Agreement:
In accepting the grant of the Performance Units, the Participant acknowledges, understands and agrees that:
(a) the Performance Unit grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any Affiliate;
(b) the Performance Units and the Shares subject to the Performance Units are not intended to replace any pension rights or compensation;
(c) for purposes of the Performance Units, the date of Termination shall be the date the Participant is no longer actively providing services to the Company or its Affiliates (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the Performance Units under the Plan, if any, will terminate and the Participant’s right to have settled any vested Performance Units, if any, will be measured as of such date and will not be extended by any
Appendix B - 3
notice period ( e.g. , the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the Performance Unit grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(d) unless otherwise provided in the Plan or by the Company in its discretion, the Performance Units and the benefits evidenced by this Agreement do not create any entitlement to have the Performance Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(e) neither the Company nor any Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Performance Units or of any amounts due to the Participant pursuant to the settlement of the Performance Units or the subsequent sale of any Shares acquired upon settlement.
3. Insider Trading Restrictions/Market Abuse Laws . The Participant acknowledges that, depending on his or her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell Shares or rights to Shares ( e.g. , Performance Units) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
CERTIFICATION
I, Thomas W. Hill, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Summit Materials, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) [Reserved];
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 4, 2016
|
|
/s/ Thomas W. Hill |
|
Thomas W. Hill |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
|
CERTIFICATION
I, Brian J. Harris, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Summit Materials, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) [Reserved];
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 4, 2016
|
|
/s/ Brian J. Harris |
|
Brian J. Harris |
|
Chief Financial Officer |
|
(Principal Financial Officer) |
|
CERTIFICATION
I, Thomas W. Hill, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Summit Materials, LLC (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 4, 2016
|
|
/s/ Thomas W. Hill |
|
Thomas W. Hill |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
|
CERTIFICATION
I, Brian J. Harris, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Summit Materials, LLC (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 4, 2016
|
|
/s/ Brian J. Harris |
|
Brian J. Harris |
|
Chief Financial Officer |
|
(Principal Financial Officer) |
|
Certification
Pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Summit Materials, Inc. (the “Company”) on Form 10-Q for the quarterly period ended April 2, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas W. Hill, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 4, 2016
|
|
/s/ Thomas W. Hill |
|
Thomas W. Hill |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
|
Certification
Pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Summit Materials, Inc. (the “Company”) on Form 10-Q for the quarterly period ended April 2, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian J. Harris, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 4, 2016
|
|
/s/ Brian J. Harris |
|
Brian J. Harris |
|
Chief Financial Officer |
|
(Principal Financial Officer) |
|
Certification
Pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Summit Materials, LLC (the “Company”) on Form 10-Q for the quarterly period ended April 2, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas W. Hill, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 4, 2016
|
|
/s/ Thomas W. Hill |
|
Thomas W. Hill |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
|
Certification
Pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Summit Materials, LLC (the “Company”) on Form 10-Q for the quarterly period ended April 2, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian J. Harris, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 4, 2016
|
|
/s/ Brian J. Harris |
|
Brian J. Harris |
|
Chief Financial Officer |
|
(Principal Financial Officer) |
|
Mine Safety Disclosures
The operation of Summit Materials, Inc.’s and its subsidiaries’ (collectively, the “Company’s”) aggregates quarries and mines are subject to regulation by the federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects the Company’s quarries and mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Whenever MSHA issues a citation or order, it also generally proposes a civil penalty, or fine, related to the alleged violation. Citations or orders may be contested and appealed, and as part of that process, are often reduced in severity and amount, and are sometimes dismissed.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Company is required to present information regarding certain mining safety and health citations which MSHA has issued with respect to its aggregates mining operations in its periodic reports filed with the Securities and Exchange Commission (“SEC”). In evaluating this information, consideration should be given to factors such as: (i) the number of citations and orders will vary depending on the size of the quarry or mine and types of operations (underground or surface), (ii) the number of citations issued will vary from inspector to inspector and location to location, and (iii) citations and orders can be contested and appealed, and in that process, may be reduced in severity and amount, and are sometimes dismissed.
The Company presents the following items regarding certain mining safety and health matters for the quarter ended April 2, 2016, as applicable:
|
· |
|
Total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under Section 104 of the Mine Act for which the Company has received a citation from MSHA (hereinafter, “Section 104 S&S Citations”). If MSHA determines that a violation of a mandatory health or safety standard is likely to result in a reasonably serious injury or illness under the unique circumstance contributed to by the violation, MSHA will classify the violation as a “significant and substantial” violation (commonly referred to as a “S&S” violation). MSHA inspectors will classify each citation or order written as a “S&S” violation or not. |
|
· |
|
Total number of orders issued under Section 104(b) of the Mine Act (hereinafter, “Section 104(b) Orders”). These orders are issued for situations in which MSHA determines a previous violation covered by a Section 104(a) citation has not been totally abated within the prescribed time period, so a further order is needed to require the mine operator to immediately withdraw all persons (except authorized persons) from the affected area of a quarry or mine. |
|
· |
|
Total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under Section 104(d) of the Mine Act (hereinafter, “Section 104(d) Citations and Orders”). These violations are similar to those described above, but the standard is that the violation could significantly and substantially contribute to the cause and effect of a safety or health hazard, but the conditions do not cause imminent danger, and the MSHA inspector finds that the violation is caused by an unwarranted failure of the operator to comply with the health and safety standards. |
|
· |
|
Total number of flagrant violations under Section 110(b)(2) of the Mine Act (hereinafter, “Section 110(b)(2) Violations”). These violations are penalty violations issued if MSHA determines that violations are “flagrant”, for which civil penalties may be assessed. A “flagrant” violation means a reckless or repeated failure to make reasonable efforts to eliminate a known violation of a mandatory health or safety standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury. |
|
· |
|
Total number of imminent danger orders issued under Section 107(a) of the Mine Act (hereinafter, “Section 107(a) Orders”). These orders are issued for situations in which MSHA determines an imminent danger exists in the quarry or mine and results in orders of immediate withdrawal of all persons (except certain authorized |
persons) from the area of the quarry or mine affected by its condition until the imminent danger and the underlying conditions causing the imminent danger no longer exist.
|
· |
|
Total dollar value of proposed assessments from MSHA under the Mine Act. These are the amounts of proposed assessments issued by MSHA with each citation or order for the time period covered by the reports. Penalties are assessed by MSHA according to a formula that considers a number of factors, including the mine operator’s history, size, negligence, gravity of the violation, good faith in trying to correct the violation promptly, and the effect of the penalty on the operator’s ability to continue in business. |
|
· |
|
Total number of mining-related fatalities. Mines subject to the Mine Act are required to report all fatalities occurring at their facilities unless the fatality is determined to be “non-chargeable” to the mining industry. The final rules of the SEC require disclosure of mining-related fatalities at mines subject to the Mine Act. Only fatalities determined by MSHA not to be mining-related may be excluded. |
|
· |
|
Receipt of written notice from MSHA of a pattern (or a potential to have such a pattern) of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of other mine health or safety hazards under Section 104(e) of the Mine Act. If MSHA determines that a mine has a “pattern” of these types of violations, or the potential to have such a pattern, MSHA is required to notify the mine operator of the existence of such a thing. |
|
· |
|
Legal actions before the Federal Mine Safety and Health Review Commission (the “Commission”) pending as of the last day of period. |
|
· |
|
Legal actions before the Commission initiated during period. |
|
· |
|
Legal actions before the Commission resolved during period. |
The Commission is an independent adjudicative agency that provides administrative trial and appellate review of legal disputes arising under the Mine Act. The cases may involve, among other questions, challenges by operators to citations, orders and penalties they have received from MSHA, or complaints of discrimination by miners under Section 105 of the Mine Act. There were no legal actions pending before the Commission for any of the Company’s quarries or mines, as of or during the quarter ended April 2, 2016.
Appendix 1 follows.
Appendix 1
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Company |
|
Name or Operation |
|
MSHA ID |
|
State |
|
Number of
|
|
Total
|
|
Section 104(b)
|
|
Section 104(d)
|
|
Section 110(b)(2)
|
|
Section 107(a)
|
|
Total
|
|
Total
|
|
Received
|
|
Received
|
|
Number of
|
|
Number of
|
|
Total
|
|
Number of
|
|
||
Alleyton Resources |
|
4L Ranch |
|
|
|
TX |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
$ |
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
$ |
- |
|
- |
|
Alleyton Resources |
|
Altair Plant |
|
|
|
TX |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Alleyton Resources |
|
Monahan |
|
|
|
TX |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Alleyton Resources |
|
Potter Plant |
|
|
|
TX |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Alleyton Resources |
|
Vox Plant |
|
|
|
TX |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
American Materials |
|
Bailey Mine |
|
|
|
NC |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
American Materials |
|
Dupree Mine |
|
|
|
NC |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
American Materials |
|
IVANHOE PIT |
|
|
|
NC |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
American Materials |
|
Pinner Mine |
|
|
|
NC |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
American Materials |
|
Wade Mine |
|
|
|
NC |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Austin Materials |
|
Hays Quarry |
|
|
|
TX |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Austin Materials |
|
Ramming Pit |
|
|
|
TX |
|
|
|
|
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Boxley Materials |
|
Blue Ridge Plant |
|
|
|
VA |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Boxley Materials |
|
Fieldale Plant |
|
|
|
VA |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Boxley Materials |
|
Lawyers Rd Plt |
|
|
|
VA |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Boxley Materials |
|
Mt Athos Plant |
|
|
|
VA |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Boxley Materials |
|
Piney River Plant |
|
|
|
VA |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Boxley Materials |
|
Rich Patch Quarry |
|
|
|
VA |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Boxley Materials |
|
PSC1 - EXTEC 5000S Screen |
|
|
|
VA |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Con-Agg of MO |
|
Boon Quarries East |
|
|
|
MO |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Con-Agg of MO |
|
Boon Quarries West |
|
|
|
MO |
|
|
|
|
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Con-Agg of MO |
|
Boone Quarries-North Telsmith Plant |
|
|
|
MO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Con-Agg of MO |
|
Con-Agg LLC dba Boone Quarries |
|
|
|
MO |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Con-Agg of MO |
|
Huntsville Quarry |
|
|
|
MO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
|
|
|
|
|
|
|
- |
|
Con-Agg of MO |
|
Plant # 65 |
|
|
|
MO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Con-Agg of MO |
|
plant # 80 |
|
|
|
MO |
|
|
|
|
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
|
|
|
|
|
|
|
- |
|
Con-Agg of MO |
|
Plant # 81 |
|
|
|
MO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Con-Agg of MO |
|
Plant #83 |
|
|
|
MO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Concrete Supply |
|
Oakland Sand River Plant |
|
|
|
KS |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Concrete Supply |
|
Silver Lake Plant |
|
|
|
KS |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Continental Cement Company |
|
Davenport Plant |
|
|
|
IA |
|
|
|
|
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
|
|
|
|
|
|
|
- |
|
Continental Cement Company |
|
Hannibal Plant |
|
|
|
MO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Continental Cement Company |
|
Hannibal Underground |
|
|
|
MO |
|
|
|
|
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
|
|
|
|
|
|
|
- |
|
Continental Cement Company |
|
Owensville Plant |
|
|
|
MO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Cornejo & Sons |
|
Durbin Quarry |
|
|
|
KS |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Cornejo & Sons |
|
Grove |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Cornejo & Sons |
|
Kingsbury |
|
|
|
KS |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Cornejo & Sons |
|
Oxford Sand and Gravel |
|
|
|
KS |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Cornejo & Sons |
|
Wichita Sand and Gravel |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
85.9 |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
Herington Airport |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
Plant # 80002 |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
|
|
|
|
|
|
|
- |
|
Hamm, Inc |
|
Plant # 80003 |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
Plant # 80010 |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
Plant # 80011 |
|
|
|
KS |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
Plant # 80013 |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
Plant #80006 |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
Plant #80012 |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hamm, Inc |
|
Plant #81038 |
|
|
|
KS |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Allen Co. Stone |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Barren Co Stone |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Bassett Stone Company |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Bourbon Limestone Company |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Casey Stone Company |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Cave Run Stone |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Ewing Stone |
|
|
|
VA |
|
|
|
|
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Glass Sand and Gravel |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Hart County Stone Company |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Jellico Stone Company |
|
|
|
TN |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Lake Cumberland Stone |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Lynches River Quarry |
|
|
|
SC |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Monroe Co. Stone |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Natural Bridge Stone |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Pulaski Stone Company |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Somerset Stone Company |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Tipton Ridge Quarry |
|
|
|
KY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Hinkle Contracting Company |
|
Black Creek Sand Mine |
|
|
|
SC |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Black Canyon 2100 |
|
|
|
ID |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Crusher 2 |
|
|
|
CO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Crusher 3 |
|
|
|
CO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Crusher1 |
|
|
|
CO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Elam Construction Inc |
|
|
|
CO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Highland Pit |
|
|
|
UT |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
KC-Portable 2 (WY) |
|
|
|
WY |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
KC-Portable 3 (WY) |
|
|
|
WY |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Mona Pit |
|
|
|
UT |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Parleys Stone |
|
|
|
UT |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Portable 1 |
|
|
|
UT |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Powerscreen 2100-2 |
|
|
|
ID |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Rental Plant 1 |
|
|
|
CO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Roadrunner Screen |
|
|
|
ID |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Stockton Pit |
|
|
|
UT |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Valley Pit |
|
|
|
UT |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Washplant 1 |
|
|
|
CO |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Washplant 2` |
|
|
|
CO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Washplant 3 |
|
|
|
CO |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Washplant 4 |
|
|
|
CO |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
West Valley |
|
|
|
UT |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Portable Crusher, Unit F |
|
|
|
UT |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Kolberg Portable Belt & Grizzly |
|
|
|
ID |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
PORTABLE CRUSHER A UNIT |
|
|
|
UT |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Portable Crusher K |
|
|
|
UT |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Lewis & Lewis, Inc Pit #2 |
|
|
|
WY |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
PORTABLE CRUSHER UNIT B |
|
|
|
UT |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Kilgore Companies |
|
Portable Crusher G |
|
|
|
UT |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
RK Hall Construction |
|
Kirby Crusher #15 |
|
|
|
AR |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
RK Hall Construction |
|
Sawyer Plant |
|
|
|
OK |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Troy Vines |
|
Vines Portable Plant |
|
|
|
TX |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
Troy Vines |
|
Vines Sand and Gravel |
|
|
|
TX |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
- |
|
No |
|
No |
|
- |
|
- |
|
|
- |
|
- |
|
SUMMIT MATERIALS, LLC AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
||
|
|
2016 |
|
2016 |
|
||
|
|
(unaudited) |
|
(audited) |
|
||
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
Accounts receivable, net |
|
|
|
|
|
|
|
Costs and estimated earnings in excess of billings |
|
|
|
|
|
|
|
Inventories |
|
|
|
|
|
|
|
Other current assets |
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
|
Property, plant and equipment, less accumulated depreciation, depletion and amortization (April 2, 2016 - $395,192 and January 2, 2016 - $366,505) |
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
|
|
Intangible assets, less accumulated amortization (April 2, 2016 - $5,871 and January 2, 2016 - $5,237) |
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
$ |
|
|
Liabilities and Member’s Interest |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Current portion of debt |
|
$ |
|
|
$ |
|
|
Current portion of acquisition-related liabilities |
|
|
|
|
|
|
|
Accounts payable |
|
|
|
|
|
|
|
Accrued expenses |
|
|
|
|
|
|
|
Billings in excess of costs and estimated earnings |
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
Acquisition-related liabilities |
|
|
|
|
|
|
|
Other noncurrent liabilities |
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
Commitments and contingencies (see note 10) |
|
|
|
|
|
|
|
Member’s equity |
|
|
|
|
|
|
|
Accumulated deficit |
|
|
|
|
|
|
|
Accumulated other comprehensive loss |
|
|
|
|
|
|
|
Member’s interest |
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
|
|
|
|
|
Total member’s interest |
|
|
|
|
|
|
|
Total liabilities and member’s interest |
|
$ |
|
|
$ |
|
|
See notes to unaudited consolidated financial statements.
1
SUMMIT MATERIALS, LLC AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Revenue: |
|
|
|
|
|
|
|
|
Product |
|
$ |
|
|
$ |
|
|
|
Service |
|
|
|
|
|
|
|
|
Net revenue |
|
|
|
|
|
|
|
|
Delivery and subcontract revenue |
|
|
|
|
|
|
|
|
Total revenue |
|
|
|
|
|
|
|
|
Cost of revenue (excluding items shown separately below): |
|
|
|
|
|
|
|
|
Product |
|
|
|
|
|
|
|
|
Service |
|
|
|
|
|
|
|
|
Net cost of revenue |
|
|
|
|
|
|
|
|
Delivery and subcontract cost |
|
|
|
|
|
|
|
|
Total cost of revenue |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
|
|
|
|
|
|
Transaction costs |
|
|
|
|
|
|
|
|
Operating loss |
|
|
|
|
|
|
|
|
Other (income) loss, net |
|
|
|
|
|
|
|
|
Loss on debt financings |
|
|
— |
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
Loss from operations before taxes |
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
Net loss attributable to member of Summit Materials, LLC |
|
$ |
|
|
$ |
|
|
|
See notes to unaudited consolidated financial statements.
2
SUMMIT MATERIALS, LLC AND SUBSIDIARIES
Unaudited Consolidated Statements of Comprehensive Loss
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Net loss |
|
$ |
|
|
$ |
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
Loss on cash flow hedges |
|
|
|
|
|
— |
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
Less comprehensive loss attributable to the noncontrolling interest |
|
|
|
|
|
|
|
|
Comprehensive loss attributable to member of Summit Materials, LLC |
|
$ |
|
|
$ |
|
|
|
See notes to unaudited consolidated financial statements.
3
SUMMIT MATERIALS, LLC AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Cash flow from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
|
|
$ |
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
Net gain on asset disposals |
|
|
|
|
|
|
|
|
Net loss on debt financings |
|
|
— |
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Decrease (increase) in operating assets, net of acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
|
|
|
|
|
|
Inventories |
|
|
|
|
|
|
|
|
Costs and estimated earnings in excess of billings |
|
|
|
|
|
|
|
|
Other current assets |
|
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
|
(Decrease) increase in operating liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
Accrued expenses |
|
|
|
|
|
|
|
|
Billings in excess of costs and estimated earnings |
|
|
|
|
|
|
|
|
Other liabilities |
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
|
|
|
|
|
|
Cash flow from investing activities: |
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired |
|
|
|
|
|
— |
|
|
Purchases of property, plant and equipment |
|
|
|
|
|
|
|
|
Proceeds from the sale of property, plant and equipment |
|
|
|
|
|
|
|
|
Other |
|
|
— |
|
|
|
|
|
Net cash used for investing activities |
|
|
|
|
|
|
|
|
Cash flow from financing activities: |
|
|
|
|
|
|
|
|
Capital contributions by member |
|
|
— |
|
|
|
|
|
Capital issuance costs |
|
|
— |
|
|
|
|
|
Proceeds from debt issuances |
|
|
|
|
|
|
|
|
Debt issuance costs |
|
|
|
|
|
|
|
|
Payments on debt |
|
|
|
|
|
|
|
|
Payments on acquisition-related liabilities |
|
|
|
|
|
|
|
|
Distributions |
|
|
|
|
|
— |
|
|
Net cash provided by financing activities |
|
|
|
|
|
|
|
|
Impact of foreign currency on cash |
|
|
|
|
|
|
|
|
Net (decrease) increase in cash |
|
|
|
|
|
|
|
|
Cash and cash equivalents – beginning of period |
|
|
|
|
|
|
|
|
Cash and cash equivalents – end of period |
|
$ |
|
|
$ |
|
|
|
See notes to unaudited consolidated financial statements.
4
SUMMIT MATERIALS, LLC AND SUBSIDIARIES
Unaudited Consolidated Statements of Changes in Member’s Interest and Redeemable Noncontrolling Interest
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Member’s Interest |
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other |
|
|
|
|
Total |
|
Redeemable |
|
|||
|
|
Member’s |
|
Accumulated |
|
comprehensive |
|
Noncontrolling |
|
member’s |
|
noncontrolling |
|
||||||
|
|
equity |
|
deficit |
|
loss |
|
interest |
|
interest |
|
interest |
|
||||||
Balance — January 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed capital |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
Net loss |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
Other comprehensive income |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
Distributions |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
Share-based compensation |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
Balance — April 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — December 27, 2014 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed capital |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
Accretion/ redemption value adjustment |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
Share-based compensation |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
Balance — March 28, 2015 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
See notes to unaudited consolidated financial statements.
5
SUMMIT MATERIALS, LLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands)
1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Summit Materials, LLC (“Summit LLC” and, together with its subsidiaries, the “Company”) is a vertically integrated, construction materials company. The Company is engaged in the production and sale of aggregates, cement, ready-mixed concrete, asphalt paving mix and concrete products and owns and operates quarries, sand and gravel pits, two cement plants, cement distribution terminals, ready-mixed concrete plants, asphalt plants and landfill sites. It is also engaged in paving and related services. The Company has three operating segments, which are also its reporting segments: West; East; and Cement.
Substantially all of the Company’s products and services are produced, consumed and performed outdoors, primarily in the spring, summer and fall. Seasonal changes and other weather-related conditions can affect the production and sales volumes of its products and delivery of services. Therefore, the financial results for any interim period are typically not indicative of the results expected for the full year. Furthermore, the Company’s sales and earnings are sensitive to national, regional and local economic conditions and to cyclical changes in construction spending, among other factors.
Summit LLC is a wholly owned indirect subsidiary of Summit Materials Holdings L.P. (“Summit Holdings”), whose primary owners are Summit Materials, Inc. (“Summit Inc.”) and certain investment funds affiliated with Blackstone Capital Partners V L.P. and Silverhawk Summit, L.P. (collectively, the “Sponsors”). Summit Inc. was formed as a Delaware corporation on September 23, 2014. Its sole material asset is a controlling equity interest in Summit Holdings. Pursuant to a reorganization into a holding company structure (the “Reorganization”) in connection with Summit Inc.’s March 2015 initial public offering, Summit Inc. became a holding corporation operating and controlling all of the business and affairs of Summit Holdings and its subsidiaries, including Summit LLC.
Summit Inc.'s Equity Offerings — Summit Inc. commenced operations on March 11, 2015 upon the pricing of the initial public offering of its Class A common stock (“IPO”). Summit Inc. raised $433.0 million, net of underwriting discounts, through the issuance of 25,555,555 shares of Class A common stock at a public offering price of $18.00 per share. Summit Inc. used the offering proceeds to purchase a number of newly-issued Class A Units (“LP Units”) from Summit Holdings equal to the number of shares of Class A common stock issued to the public. Summit Inc. caused Summit Holdings to use these proceeds: (i) to redeem $288.2 million in aggregate principal amount of outstanding 10 1 / 2 % senior notes due January 31, 2020 (“2020 Notes”); (ii) to purchase 71,428,571 Class B Units of Continental Cement Company, L.L.C. (“Continental Cement”); (iii) to pay a one-time termination fee of $13.8 million primarily to affiliates of the Sponsors in connection with the termination of a transaction and management fee agreement; and (iv) for general corporate purposes. The $288.2 million redemption of 2020 Notes was completed in the second quarter of 2015 at a redemption price equal to par plus an applicable premium of $38.2 million plus $5.2 million of accrued and unpaid interest.
On August 11, 2015, Summit Inc. raised $555.8 million, net of underwriting discounts, through the issuance of 22,425,000 shares of Class A common stock at a public offering price of $25.75 per share. Summit Inc. used these proceeds to purchase 3,750,000 newly-issued LP Units from Summit Holdings and 18,675,000 LP Units from certain of our pre-IPO owners, at a purchase price per LP Unit equal to the public offering price per share of Class A common stock, less underwriting discounts and commissions. Summit Holdings used the proceeds from the 3,750,000 newly-issued LP Units to pay the deferred purchase price of $80.0 million related to the July 17, 2015 acquisition of a cement plant and a quarry in Davenport, Iowa, and seven cement terminals along the Mississippi River (the “Davenport Assets”) and for general corporate purposes.
Basis of Presentation —These unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto as of and for the year ended January 2, 2016. The Company continues to follow the accounting policies set forth in those consolidated financial statements.
Management believes that these consolidated interim financial statements include all adjustments, normal and recurring in nature, that are necessary to present fairly the financial position of the Company as of April 2, 2016 and the results of operations and cash flows for the three months ended April 2, 2016 and March 28, 2015.
The Company’s fiscal year is based on a 52-53 week year with each quarter composed of 13 weeks ending on a Saturday. The 53-week year occurs approximately once every seven years and occurred in 2015. The additional week in the 53-week year was included in the fourth quarter of 2015.
6
The consolidated financial statements include the accounts of Summit LLC and its majority owned subsidiaries. All intercompany balances and transactions have been eliminated. The Company attributes consolidated member’s interest and net income separately to the controlling and noncontrolling interests. Noncontrolling interests in consolidated subsidiaries represent a 20% ownership in Ohio Valley Asphalt, LLC and, prior to the IPO and concurrent purchase of the noncontrolling interests of Continental Cement, a 30% redeemable ownership in Continental Cement. The Company accounts for investments in entities for which it has an ownership of 20% to 50% using the equity method of accounting.
Use of Estimates — Preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenue and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangibles and other long-lived assets, pension and other postretirement obligations and asset retirement obligations. Estimates also include revenue earned on contracts and costs to complete contracts. Most of the Company’s paving and related services are performed under fixed unit-price contracts with state and local governmental entities. Management regularly evaluates its estimates and assumptions based on historical experience and other factors, including the current economic environment. Management adjusts such estimates and assumptions when circumstances dictate. As future events and their effects cannot be determined with precision, actual results can differ significantly from estimates made. Changes in estimates, including those resulting from continuing changes in the economic environment, are reflected in the Company’s consolidated financial statements when the change in estimate occurs.
Business and Credit Concentrations— The Company’s operations are conducted primarily across 22 U.S. states and in British Columbia, Canada, with the most significant revenue generated in Texas, Kansas, Utah, Missouri and Kentucky. The Company’s accounts receivable consist primarily of amounts due from customers within these areas. Therefore, collection of these accounts is dependent on the economic conditions in the aforementioned states, as well as specific situations affecting individual customers. Credit granted within the Company’s trade areas has been granted to many customers, and management does not believe that a significant concentration of credit exists with respect to any individual customer or group of customers. No single customer accounted for more than 10% of the Company’s total revenue in the three months ended April 2, 2016.
Fair Value Measurements— Certain acquisitions made by the Company require the payment of contingent amounts of purchase consideration. These payments are contingent on specified operating results being achieved in periods subsequent to the acquisition and will only be made if earn-out thresholds are achieved. Contingent consideration obligations are measured at fair value each reporting period. Any adjustments to fair value are recognized in earnings in the period identified.
The Company has entered into interest rate derivatives on $200.0 million of its term loan borrowings to add stability to interest expense and to manage its exposure to interest rate movements. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and will be subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The fair value of contingent consideration and derivatives as of April 2, 2016 and January 2, 2016 was:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Current portion of acquisition-related liabilities and Accrued expenses: |
|
|
|
|
|
|
|
|
Contingent consideration |
|
$ |
|
|
$ |
|
|
|
Cash flow hedges |
|
|
|
|
|
|
|
|
Acquisition-related liabilities and Other noncurrent liabilities |
|
|
|
|
|
|
|
|
Contingent consideration |
|
$ |
|
|
$ |
|
|
|
Cash flow hedges |
|
|
|
|
|
|
|
|
The fair value of contingent consideration was based on unobservable, or Level 3, inputs, including projected probability-weighted cash payments and an 11.0% discount rate, which reflects a market discount rate. Changes in fair value may occur as a result of a change in actual or projected cash payments, the probability weightings applied by the Company to projected payments or a change in the discount rate. Significant increases or decreases in any of these inputs in isolation could result in a lower, or higher, fair value measurement. The fair value of the cash flow hedges are based on observable, or Level 2, inputs such as interest rates, bond yields and prices in inactive markets. There were no material valuation adjustments in the three months ended April 2, 2016 or March 28, 2015.
7
Financial Instruments —The Company’s financial instruments include debt and certain acquisition-related liabilities (deferred consideration and noncompete obligations). The carrying value and fair value of these financial instruments as of April 2, 2016 and January 2, 2016 was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, 2016 |
|
January 2, 2016 |
|
||||||||
|
|
Fair Value |
|
Carrying Value |
|
Fair Value |
|
Carrying Value |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of deferred consideration and noncompete obligations(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term portion of deferred consideration and noncompete obligations(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) $6.5 million included in current portion of debt as of April 2, 2016 and January 2, 2016. Capitalized loan costs of $16.2 million and $11.7 million are excluded, respectively.
(2) Included in current portion of acquisition-related liabilities on the balance sheet.
(3) Included in acquisition-related liabilities on the balance sheet.
The fair value of debt was determined based on observable, or Level 2 inputs, such as interest rates, bond yields and quoted prices in inactive markets. The fair values of the deferred consideration and noncompete obligations were determined based on unobservable, or Level 3, inputs, including the cash payment terms in the purchase agreements and a discount rate reflecting the Company’s credit risk.
Redeemable Noncontrolling Interest — On March 17, 2015, upon the consummation of the IPO and the transactions contemplated by a contribution and purchase agreement entered into with the holders of all of the outstanding Class B Units of Continental Cement, Continental Cement became a wholly-owned indirect subsidiary of Summit LLC. The noncontrolling interests of Continental Cement were acquired for aggregate consideration of $64.1 million, consisting of $35.0 million of cash, 1,029,183 shares of Summit Inc.’s Class A common stock and $15.0 million aggregate principal amount of non-interest bearing notes payable in six annual installments of $2.5 million, beginning on March 17, 2016. The notes payable is a liability of Summit Holdings and, is therefore not included in the liabilities of Summit LLC. However, Summit LLC made a $2.5 million distribution to Summit Holdings in the three months ended April 2, 2016 so that Summit Holdings could make the deferred consideration payment due in March 2016.
New Accounting Standards — In March 2016, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard with targeted amendments to the accounting for employee share-based payments. Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting , requires that the income tax effect of share-based awards be recognized in the income statement and allows entities to elect an accounting method to recognize forfeitures as they occur or to estimate forfeitures, as is currently required. The ASU is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 and interim periods within those years. However, the Company early adopted this ASU as of the beginning of fiscal year 2016 and made an election to recognize forfeitures as they occur. The ASU adoption was applied using a modified retrospective method by means of a $1.7 million cumulative-effect adjustment to equity as of the beginning of the fiscal year.
In February 2016, the FASB issued new accounting guidance to the standard of lease accounting, ASU No. 2016-02, Leases , which will result in lessees recognizing most leases on-balance sheet. Lessees are required to disclose more quantitative and qualitative information about their leases than current U.S. GAAP requires. They are also required to apply the new guidance at the beginning of the earliest period presented in the financial statements when they first apply the new standard. The new standard must be adopted by December 15, 2018. Early adoption is permitted. Management is currently assessing the effect that the adoption of this ASU will have on the consolidated financial statements.
In May 2014, the FASB issued a new accounting standard to improve and converge the financial reporting requirements for revenue from contracts with customers. ASU No. 2014-09, Revenue from Contracts with Customers , prescribes a five-step model for revenue recognition that will replace most existing revenue recognition guidance in U.S. GAAP. The ASU will supersede nearly all existing revenue recognition guidance under U.S. GAAP and provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption.
8
In July 2015, the FASB postponed the effective date of the new revenue standard by one year to the first quarter of 2018. Early adoption is permitted, but no earlier than 2017. Management is currently assessing the effect that the adoption of this standard will have on the consolidated financial statements.
Reclassifications — Certain amounts in the prior year have been reclassified to conform to the current period’s presentation.
2. REORGANIZATION
Prior to the IPO and Reorganization, the capital structure of Summit Holdings consisted of six different classes of limited partnership interests (Class A-1, Class A-2, Class B-1, Class C, Class D-1 and Class D-2), each of which was subject to unique distribution rights. There were no outstanding Class A-2 interests. In connection with the IPO and the Reorganization, the limited partnership agreement of Summit Holdings was amended and restated to, among other things, modify its capital structure by creating the LP Units, referred to as the “Reclassification.” Immediately following the Reclassification, 69,007,297 LP Units were outstanding. In addition, in substitution for part of the economic benefit of the Class C and Class D interests that was not reflected in the conversion of such interests to LP Units, warrants were issued to holders of Class C interests to purchase an aggregate of 160,333 shares of Class A common stock, and options were issued to holders of Class D interests to purchase an aggregate of 4,358,842 shares of Class A common stock (“leverage restoration options”). The exercise price of the warrants and leverage restoration options is the IPO price of $18.00 per share. In conjunction with the Reclassification of the equity-based awards, the Company recognized a $14.5 million modification charge in general and administrative costs in the three months ended March 28, 2015.
The leverage restoration options were granted under the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). The leverage restoration options that correlate to time-vesting interests vest over four years, beginning on the Reclassification date and the leverage restoration options that correlate to performance-vesting interests vest only when both the relevant return multiple is achieved and a four year time-vesting condition is satisfied. The time-based vesting condition for both the time-vesting and performance-vesting interests will be satisfied with respect to 25% of the performance-vesting options on each of the first four anniversaries of the Reclassification date, subject to the employee’s continued employment through the applicable vesting date.
The Company also granted 240,000 options to purchase shares of Class A common stock under the Omnibus Incentive Plan to certain employees some of whom had not previously been granted equity-based interests. These stock options have an exercise price of $18.00 per share, the IPO price, and are subject to a time-based vesting condition that will be satisfied with respect to 25% of the award on each of the first four anniversaries of the grant date, subject to the employee’s continued employment through the applicable vesting date.
3. INTANGIBLE ASSETS
The Company’s intangible assets are primarily composed of goodwill, lease agreements and reserve rights. The assets related to lease agreements reflect the submarket royalty rates paid under agreements, primarily, for extracting aggregates. The values were determined as of the respective acquisition dates by a comparison of market-royalty rates. The reserve rights relate to aggregate reserves to which the Company has the rights of ownership, but do not own the reserves. The intangible assets are amortized on a straight-line basis over the lives of the leases.
Changes in the carrying amount of goodwill, by reportable segment, from January 2, 2016 to April 2, 2016 are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West |
|
East |
|
Cement |
|
Total |
|
||||
Balance, January 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Acquisitions(1) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
Foreign currency translation adjustments |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
Balance, April 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated impairment losses as of April 2, 2016 and January 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
$ |
|
|
(1) Includes goodwill from the East segment’s acquisitions of Boxley Materials Company (“Boxley”) and American Materials Company (“AMC”) in the three months ended April 2, 2016. Boxley is a vertically-integrated materials-based company serving Roanoke, Virginia and surrounding areas. AMC is an aggregates and ready-mixed concrete business serving the Carolinas. The purchase price allocation for the 2015 and 2016 acquisitions, primarily related to the valuation of property, plant and equipment, has not yet been finalized due to the recent timing of the acquisitions. Included in the West segment’s goodwill are certain working capital adjustments related to 2015 acq uisitions.
9
The following table shows intangible assets by type and in total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, 2016 |
|
January 2, 2016 |
|
||||||||||||||
|
|
Gross |
|
|
|
|
Net |
|
Gross |
|
|
|
|
Net |
|
||||
|
|
Carrying |
|
Accumulated |
|
Carrying |
|
Carrying |
|
Accumulated |
|
Carrying |
|
||||||
|
|
Amount |
|
Amortization |
|
Amount |
|
Amount |
|
Amortization |
|
Amount |
|
||||||
Leases |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Reserve rights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Amortization expense in the three months ended April 2, 2016 and March 28, 2015 was $0.4 million in each period. The estimated amortization expense for the intangible assets for each of the five years subsequent to April 2, 2016 is as follows:
|
|
|
|
|
2016 (nine months) |
|
$ |
|
|
2017 |
|
|
|
|
2018 |
|
|
|
|
2019 |
|
|
|
|
2020 |
|
|
|
|
2021 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
4. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following as of April 2, 2016 and January 2, 2016:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Trade accounts receivable |
|
$ |
|
|
$ |
|
|
|
Retention receivables |
|
|
|
|
|
|
|
|
Receivables from related parties |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
|
|
|
Less: Allowance for doubtful accounts |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
$ |
|
|
$ |
|
|
|
Retention receivables are amounts earned by the Company but held by customers until paving and related service contracts and projects are near completion or fully completed. Amounts are generally expected to be billed and collected within one year.
5. INVENTORIES
Inventories consisted of the following as of April 2, 2016 and January 2, 2016:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Aggregate stockpiles |
|
$ |
|
|
$ |
|
|
|
Finished goods |
|
|
|
|
|
|
|
|
Work in process |
|
|
|
|
|
|
|
|
Raw materials |
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
|
10
6. ACCRUED EXPENSES
Accrued expenses consisted of the following as of April 2, 2016 and January 2, 2016:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Interest |
|
$ |
|
|
$ |
|
|
|
Payroll and benefits |
|
|
|
|
|
|
|
|
Capital lease obligations |
|
|
|
|
|
|
|
|
Insurance |
|
|
|
|
|
|
|
|
Non-income taxes |
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
Other(1) |
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
|
(1) Consists primarily of subcontractor and working capital settlement accruals.
7. DEBT
Debt consisted of the following as of April 2, 2016 and January 2, 2016:
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Term Loan, due 2022: |
|
|
|
|
|
|
|
|
$645.1 million term loan, net of $2.9 million discount at April 2, 2016 and $646.8 million term loan, net of $3.1 million discount at January 2, 2016 |
|
$ |
|
|
$ |
|
|
|
8 1 ⁄ 2 % Senior Notes, due 2022 |
|
|
|
|
|
— |
|
|
6 1 ⁄ 8 % Senior Notes, due 2023: |
|
|
|
|
|
|
|
|
$650 million senior notes, net of $1.8 million discount at April 2, 2016 and January 2, 2016 |
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
|
|
|
|
|
|
Long-term debt |
|
$ |
|
|
$ |
|
|
|
The contractual payments of long-term debt, including current maturities, for the five years subsequent to April 2, 2016, are as follows:
|
|
|
|
|
2016 (nine months) |
|
$ |
|
|
2017 |
|
|
|
|
2018 |
|
|
|
|
2019 |
|
|
|
|
2020 |
|
|
|
|
2021 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
|
|
|
Less: Original issue net discount |
|
|
|
|
Less: Capitalized loan costs |
|
|
|
|
Total debt |
|
$ |
|
|
11
Senior Notes — On March 8, 2016, the Issuers issued $250.0 million of 8.500% senior notes due April 15, 2022 (the “2022 Notes”). The 2022 Notes were issued at 100.0% of their par value with proceeds of $246.3 million, net of related fees and expenses. The proceeds from the sale of the 2022 Notes were used to fund the acquisition of Boxley, replenish cash used for the acquisition of AMC and the expenses incurred in connection with these acquisitions. The 2022 Notes were issued under an indenture dated March 8, 2016 (as amended and supplemented, the “2016 Indenture”). The 2016 Indenture contains covenants limiting, among other things, Summit LLC and its restricted subsidiaries’ ability to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of the company’s assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The 2016 Indenture also contains customary events of default. Interest on the 2022 Notes is payable semi-annually on April 15 and October 15 of each year commencing on October 15, 2016.
In 2015, the Issuers issued $650.0 million of 6.125% senior notes due July 2023 (the "2023 Notes”). The net proceeds from the 2023 Notes, with proceeds from the refinancing of the term loan described below, were used to pay the $370.0 million initial purchase price for the Davenport Assets, to redeem $183.0 million plus $153.8 million in aggregate principal amount of the then outstanding 2020 Notes and pay related fees and expenses. Of the aggregate $650.0 million of 2023 Notes in 2015, $350.0 million were issued at par and $300.0 million were issued at 99.375% of par. The 2023 Notes were issued under an indenture dated July 8, 2015 (as amended and supplemented, the “2015 Indenture”), the terms of which are generally consistent with the 2016 Indenture. Interest on the 2023 Notes is payable semi-annually in arrears on January 15 and July 15 of each year commencing on January 15, 2016.
In April, August and November 2015, using proceeds from the IPO, the refinancing of the term loan described below and the proceeds from the 2023 Notes, $288.2 million, $183.0 million and $153.8 million, respectively, aggregate principal amount of the outstanding 2020 Notes were redeemed at a price equal to par plus an applicable premium and the indenture under which the 2020 Notes were issued was satisfied and discharged. As a result of the redemptions, net charges of $56.5 million were recognized in the year ended January 2, 2016. The fees included $66.6 million for the applicable prepayment premium and $11.9 million for the write-off of deferred financing fees, partially offset by $22.0 million of net benefit from the write-off the original issuance net premium in the year ended January 2, 2016. There were no related charges recognized for the three months ended March 28, 2015, as the first redemption was in April 2015.
As of April 2, 2016 and January 2, 2016, the Company was in compliance with all covenants under the indentures applicable as of each date.
Senior Secured Credit Facilities — Summit LLC has credit facilities that provide for term loans in an aggregate amount of $650.0 million and revolving credit commitments in an aggregate amount of $235.0 million (the “Senior Secured Credit Facilities”). Under the Senior Secured Credit Facilities, required principal repayments of 0.25% of term debt are due on the last business day of each March, June, September and December. The unpaid principal balance is due in full on the maturity date, which is July 17, 2022.
On July 17, 2015, Summit LLC refinanced its term loan under the Senior Secured Credit Facilities (the “Refinancing”). The Refinancing, among other things: (i) reduced the applicable margins used to calculate interest rates for term loans under the Senior Secured Credit Facilities to 3.25% for LIBOR rate loans and 2.25% for base rate loans, subject to a LIBOR floor of 1.00% (and one 25 basis point step down upon Summit LLC achieving a certain first lien net leverage ratio); (ii) increased term loans borrowed under the term loan facility from $422.0 million to an aggregate $650.0 million; and (iii) created additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated First Lien Net Leverage Ratio (as defined in the credit agreement governing the Senior Secured Credit Facilities, the “Credit Agreement”).
On March 11, 2015, Summit LLC entered into Amendment No. 3 to the Credit Agreement, which became effective on March 17, 2015 upon the consummation of the IPO. The amendment: (i) increased the size of the revolving credit facility from $150.0 million to $235.0 million; (ii) extended the maturity date of the revolving credit facility to March 11, 2020; (iii) amended certain covenants; and (iv) permits periodic tax distributions as contemplated in a tax receivable agreement, dated March 11, 2015. As a result of this amendment, $0.8 million of financing fees were recognized in the three months ended March 28, 2015.
The revolving credit facility bears interest per annum equal to, at Summit LLC’s option, either (i) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A. and (c) LIBOR plus 1.00%, plus an applicable margin of 2.25% for base rate loans or (ii) a LIBOR rate determined by reference to Reuters prior to the interest period relevant to such borrowing adjusted for certain additional costs plus an applicable margin of 3.25% for LIBOR rate loans.
There were no outstanding borrowings under the revolving credit facility as of April 2, 2016, leaving remaining borrowing capacity of $210.6 million, which is net of $24.4 million of outstanding letters of credit. The outstanding letters of credit are renewed annually and support required bonding on construction projects and the Company’s insurance liabilities.
Summit LLC’s Consolidated First Lien Net Leverage Ratio, as such term is defined in the Senior Secured Credit Facilities, should be no greater than 4.75:1.0 as of each quarter-end. As of April 2, 2016 and January 2, 2016, Summit LLC was in compliance with all covenants.
12
Summit LLC’s wholly-owned domestic subsidiary companies, subject to certain exclusions and exceptions, are named as subsidiary guarantors of the Senior Notes and the Senior Secured Credit Facilities. In addition, Summit LLC has pledged substantially all of its assets as collateral, subject to certain exclusions and exceptions, for the Senior Secured Credit Facilities.
Interest expense related to debt totaled $18.3 million and $22.0 million in the three months ended April 2, 2016 and March 28, 2015, respectively.
The following table presents the activity for the deferred financing fees for the three months ended April 2, 2016 and March 28, 2015:
|
|
|
|
|
|
|
Deferred financing fees |
|
|
Balance—January 2, 2016 |
|
$ |
|
|
Loan origination fees |
|
|
|
|
Amortization |
|
|
|
|
Balance—April 2, 2016 |
|
$ |
|
|
|
|
|
|
|
Balance—December 27, 2014 |
|
$ |
|
|
Loan origination fees |
|
|
|
|
Amortization |
|
|
|
|
Write off of deferred financing fees |
|
|
|
|
Balance—March 28, 2015 |
|
$ |
|
|
Other —On January 15, 2015, the Company’s wholly-owned subsidiary in British Columbia, Canada entered into an agreement with HSBC for a (i) $6.0 million Canadian dollar (“CAD”) revolving credit commitment to be used for operating activities that bears interest per annum equal to the bank’s prime rate plus 0.20%, (ii) $0.5 million CAD revolving credit commitment to be used for capital equipment that bears interest per annum at the bank’s prime rate plus 0.90% and (iii) $0.4 million CAD revolving credit commitment to provide guarantees on behalf of that subsidiary. There were no amounts outstanding under this agreement as of April 2, 2016 or January 2, 2016.
8. ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in each component of accumulated other comprehensive loss consisted of the following:
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|
|
|
Accumulated |
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|
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|
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|
|
Foreign currency |
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|
|
other |
|
||
|
|
Change in |
|
translation |
|
Cash flow hedge |
|
comprehensive |
|
||||
|
|
retirement plans |
|
adjustments |
|
adjustments |
|
loss |
|
||||
Balance — January 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Loss on cash flow hedges |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Balance — April 2, 2016 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
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|
|
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|
|
|
|
|
|
Balance — December 27, 2014 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
$ |
|
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Balance — March 28, 2015 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
$ |
|
|
9. INCOME TAXES
Summit LLC is a limited liability company and passes its tax attributes for federal and state tax purposes to its parent company and is generally not subject to federal or state income tax. However, certain subsidiary entities file federal, state, and Canadian income tax returns due to their status as taxable entities in the respective jurisdiction. The effective income tax rate for the C Corporations differ from the statutory federal rate primarily due to (1) tax depletion expense in excess of the expense recorded under U.S. GAAP, (2) state income taxes and the effect of graduated tax rates and (3) various other items such as limitations on meals and entertainment and other costs. The effective income tax rate for the Canadian subsidiary is not significantly different from its historical effective tax rate.
13
As of April 2, 2016 and January 2, 2016, the Company has not recognized any liabilities for uncertain tax positions. The Company records interest and penalties as a component of the income tax provision. No material interest or penalties were recognized in income tax expense during the three months ended April 2, 2016 and March 28, 2015.
10. COMMITMENTS AND CONTINGENCIES
The Company is party to certain legal actions arising from the ordinary course of business activities. Accruals are recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be predicted with certainty, management expects that the ultimate resolution of all pending or threatened claims and litigation will not have a material effect on the Company’s consolidated results of operations, financial position or liquidity. The Company records legal fees as incurred.
Litigation and Claims —The Company is obligated under an indemnification agreement entered into with the sellers of Harper Contracting, Inc., Harper Sand and Gravel, Inc., Harper Excavating, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc. for the sellers’ ownership interests in a joint venture agreement. The Company has the rights to any benefits under the joint venture as well as the assumption of any obligations, but does not own equity interests in the joint venture. The joint venture has incurred significant losses on a highway project in Utah, which have resulted in requests for funding from the joint venture partners and ultimately from the Company. Through April 2, 2016, the Company has funded $8.8 million, $4.0 million in 2012 and $4.8 million in 2011. In 2012 and 2011, the Company recognized losses on the indemnification agreement of $8.0 million and $1.9 million, respectively. As of April 2, 2016 and January 2, 2016, an accrual of $4.3 million was recorded in other noncurrent liabilities as management’s best estimate of future funding obligations .
Environmental Remediation and Site Restoration —The Company’s operations are subject to and affected by federal, state, provincial and local laws and regulations relating to the environment, health and safety and other regulatory matters. These operations require environmental operating permits, which are subject to modification, renewal and revocation. The Company regularly monitors and reviews its operations, procedures and policies for compliance with these laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of the Company’s business, as it is with other companies engaged in similar businesses and there can be no assurance that environmental liabilities or noncompliance will not have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity .
The Company has site restoration obligations arising from regulatory and contractual requirements to perform reclamation activities at the time certain quarries and landfills are closed. As of April 2, 2016 and January 2, 2016, $19.1 million and $18.7 million, respectively, were included in other noncurrent liabilities on the consolidated balance sheets and $2.1 million and $2.0 million, respectively, were included in accrued expenses for future reclamation costs. The total undiscounted anticipated costs for site reclamation as of April 2, 2016 and January 2, 2016 were $63.2 million and $56.7 million, respectively.
Other — During the ordinary course of business, there may be revisions to project costs and conditions that can give rise to change orders. Revisions can also result in claims that the Company may make against the customer or a subcontractor to recover project variances that have not been satisfactorily addressed through change orders with the customer. As of April 2, 2016, there were no unapproved change orders or claims, as of January 2, 2016, unapproved change orders and claims included in accounts receivable totaled $1.2 million .
The Company is obligated under various firm purchase commitments for certain raw materials and services that are in the ordinary course of business. Management does not expect any significant changes in the market value of these goods and services during the commitment period that would have a material adverse effect on the financial condition, results of operations, and cash flows of the Company. The terms of the purchase commitments generally approximate one year .
11. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Cash payments: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
|
|
$ |
|
|
|
Income taxes |
|
|
|
|
|
|
|
|
Non cash financing activities: |
|
|
|
|
|
|
|
|
Purchase of noncontrolling interest in Continental Cement |
|
$ |
— |
|
$ |
|
|
|
14
12. SEGMENT INFORMATION
The Company has three operating segments: West; East; and Cement, which are its reportable segments. These segments are consistent with the Company’s management reporting structure. In the fourth quarter of 2015, the Company reorganized the operations and management reporting structure of the Cement and East segment operations, resulting in a change to its reportable business segments. The Company now conducts the cement business separate from the regional segments. As a result, the cement business is a reportable business segment. In addition, we have combined the materials-based businesses centered in Kansas and Missouri with the Kentucky-based operations, creating an expanded East segment and eliminating what was the Central region. These changes did not affect the West segment. Amounts in prior periods have been revised to reflect the current reporting structure.
The operating results of each segment are regularly reviewed and evaluated by the Chief Executive Officer, the Company’s Chief Operating Decision Maker (“CODM”). The CODM primarily evaluates the performance of its segments and allocates resources to them based on a segment profit metric that we call Adjusted EBITDA, which is computed as earnings from continuing operations before interest, taxes, depreciation, depletion, amortization, accretion, share-based compensation, and transaction costs, as well as various other non-recurring, non-cash amounts.
The West and East segments have several acquired subsidiaries that are engaged in various activities including quarry mining, aggregate production and contracting. The Cement segment is engaged in the production of Portland cement. Assets employed by segment include assets directly identified with those operations. Corporate assets consist primarily of cash, property, plant and equipment for corporate operations and other assets not directly identifiable with a reportable business segment. The accounting policies applicable to each segment are consistent with those used in the consolidated financial statements.
The following tables display selected financial data for the Company’s reportable business segments as of April 2, 2016 and January 2, 2016, and for the three months ended April 2, 2016 and March 28, 2015:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Revenue: |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Corporate and other |
|
|
|
|
|
|
|
|
Total reportable segments and corporate |
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
Accretion |
|
|
|
|
|
|
|
|
Initial public offering costs |
|
|
— |
|
|
|
|
|
Loss on debt financings |
|
|
— |
|
|
|
|
|
Acquisition transaction expenses |
|
|
|
|
|
|
|
|
Management fees and expenses |
|
|
— |
|
|
|
|
|
Non-cash compensation |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Loss from continuing operations before taxes |
|
$ |
|
|
$ |
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Cash paid for capital expenditures: |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Total reportable segments |
|
|
|
|
|
|
|
|
Corporate and other |
|
|
|
|
|
|
|
|
Total capital expenditures |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Depreciation, depletion, amortization and accretion: |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Total reportable segments |
|
|
|
|
|
|
|
|
Corporate and other |
|
|
|
|
|
|
|
|
Total depreciation, depletion, amortization and accretion |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, |
|
January 2, |
|
|
||
|
|
2016 |
|
2016 |
|
|
||
Total assets: |
|
|
|
|
|
|
|
|
West |
|
$ |
|
|
$ |
|
|
|
East |
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
Total reportable segments |
|
|
|
|
|
|
|
|
Corporate and other |
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
||||
|
|
April 2, |
|
March 28, |
|
|
||
|
|
2016 |
|
2015 |
|
|
||
Revenue by product:* |
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
|
|
$ |
|
|
|
Cement |
|
|
|
|
|
|
|
|
Ready-mixed concrete |
|
|
|
|
|
|
|
|
Asphalt |
|
|
|
|
|
|
|
|
Paving and related services |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
$ |
|
|
|
* Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.
13. RELATED PARTY TRANSACTIONS
Under the terms of a transaction and management fee agreement between Summit Holdings and Blackstone Management Partners L.L.C. (“BMP”), whose affiliates include controlling stockholders of the Company, BMP provided monitoring, advisory and consulting services to the Company through March 17, 2015. Under the terms of the agreement, BMP was permitted to assign, and had assigned, a portion of the fees to which it was entitled to Silverhawk Summit, L.P. and to certain other equity investors.
The management fee was calculated based on the greater of $300,000 or 2.0% of the Company’s annual consolidated profit, as defined in the agreement, and is included in general and administrative expenses. The Company incurred management fees totaling $1.0 million during the period between December 28, 2014 and March 17, 2015. During these periods, the Company paid immaterial amounts to Silverhawk Summit, L.P. and to other equity investors.
16
In connection with the IPO, the transaction and management fee agreement with BMP was terminated on March 17, 2015 for a final payment of $13.8 million; $13.4 million was paid to affiliates of BMP and the remaining $0.4 million was paid to affiliates of Silverhawk Summit, L.P. and to certain other equity investors.
In addition to the transaction and management fees paid to BMP, the Company reimbursed BMP for direct expenses incurred, which were not material in the three months ended April 2, 2016 and March 28, 2015.
Blackstone Advisory Partners L.P., an affiliate of BMP, served as an initial purchaser of $18.8 million of the 2022 Notes issued in March 2016 and $22.5 million and $26.3 million of the 2023 Notes issued in November 2015 and July 2015, respectively, and received compensation in connection therewith. In addition, Blackstone Advisory Partners L.P. served as an underwriter of 1,681,875 shares of Class A common stock issued in connection with the August 2015 follow-on offering and received compensation in connection therewith.
On July 17, 2015, the Company purchased the Davenport Assets from Lafarge North America Inc. for a purchase price of $450.0 million in cash and a cement distribution terminal in Bettendorf, Iowa. At closing, $370.0 million of the purchase price was paid, and the remaining $80.0 million was paid on August 13, 2015. Summit Holdings entered into a commitment letter dated April 16, 2015, with Blackstone Capital Partners V L.P. (“BCP”) for equity financing up to $90.0 million in the form of a preferred equity interest (the “Equity Commitment Financing”), which would have been used to pay the $80.0 million deferred purchase price if other financing was not attained by December 31, 2015. For the Equity Commitment Financing, the Company paid a $1.8 million commitment fee to BCP for the year ended January 2, 2016.
14. GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION
Summit LLC’s domestic wholly-owned subsidiary companies other than Summit Finance Corp. are named as guarantors (collectively, the “Guarantors”) of the Senior Notes. Certain other partially-owned subsidiaries and a non-U.S. entity do not guarantee the Senior Notes (collectively, the “Non-Guarantors”). The Guarantors provide a joint and several, full and unconditional guarantee of the Senior Notes.
There are no significant restrictions on Summit LLC’s ability to obtain funds from any of the Guarantor Subsidiaries in the form of dividends or loans. Additionally, there are no significant restrictions on a Guarantor Subsidiary’s ability to obtain funds from Summit LLC or its direct or indirect subsidiaries.
The following condensed consolidating balance sheets, statements of operations and cash flows are provided for the Issuers, the Wholly-owned Guarantors and the Non-Guarantors. On March 17, 2015, the noncontrolling interests of Continental Cement were purchased resulting in Continental Cement being a wholly-owned indirect subsidiary of Summit LLC. Continental Cement’s results of operations and cash flows are reflected with the Guarantors for all periods presented.
Earnings from subsidiaries are included in other income in the condensed consolidated statements of operations below. The financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the guarantor or non-guarantor subsidiaries operated as independent entities.
17
Condensed Consolidating Balance Sheets
April 2, 2016
|
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|
||||
|
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|
Non- |
|
|
|
|
|
|
|
|
|
Issuers |
|
Guarantors |
|
Guarantors |
|
Eliminations |
|
Consolidated |
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Accounts receivable, net |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Cost and estimated earnings in excess of billings |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Inventories |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Other current assets |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
Goodwill |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Intangible assets, net |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Liabilities and Member’s Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of debt |
|
$ |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
|
Current portion of acquisition-related liabilities |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Billings in excess of costs and estimated earnings |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
Acquisition-related liabilities |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
Other noncurrent liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total member's interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and member’s interest |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
18
Condensed Consolidating Balance Sheets
January 2, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
||
|
|
Issuers |
|
Guarantors |
|
Guarantors |
|
Eliminations |
|
Consolidated |
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Accounts receivable, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Cost and estimated earnings in excess of billings |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Inventories |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Other current assets |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
Goodwill |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Intangible assets, net |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Liabilities and Member’s Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of debt |
|
$ |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
|
Current portion of acquisition-related liabilities |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Billings in excess of costs and estimated earnings |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
Acquisition-related liabilities |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
Other noncurrent liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total member's interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and member’s interest |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
19
Condensed Consolidating Statements of Operations
For the three months ended April 2, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
||
|
|
Issuers |
|
Guarantors |
|
Guarantors |
|
Eliminations |
|
Consolidated |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Cost of revenue (excluding items shown separately below) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Operating (loss) income |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Other expense (income), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Loss from continuing operations before taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Net loss attributable to member of Summit Materials, LLC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Comprehensive loss attributable to member of Summit Materials, LLC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
20
Condensed Consolidating Statements of Operations
For the three months ended March 28, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
||
|
|
Issuers |
|
Guarantors |
|
Guarantors |
|
Eliminations |
|
Consolidated |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Cost of revenue (excluding items shown separately below) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Operating (loss) income |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
(Loss) income from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Net (loss) income attributable to member of Summit Materials, LLC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Comprehensive loss attributable to member of Summit Materials, LLC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
21
Condensed Consolidating Statements of Cash Flows
For the three months ended April 2, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
||
|
|
Issuers |
|
Guarantors |
|
Guarantors |
|
Eliminations |
|
Consolidated |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
$ |
|
|
Cash flow from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
Purchase of property, plant and equipment |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Proceeds from the sale of property, plant, and equipment |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
Net cash used for investing activities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Cash flow from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from investment by member |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
Net proceeds from debt issuance |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Loans received from and payments made on loans from other Summit Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Payments on long-term debt |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
Payments on acquisition-related liabilities |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
Financing costs |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Distributions from partnership |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Net cash (used for) provided by financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of cash on foreign currency |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Net decrease in cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash — Beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash — End of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
22
Condensed Consolidating Statements of Cash Flows
For the three months ended March 28, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
||
|
|
Issuers |
|
Guarantors |
|
Guarantors |
|
Eliminations |
|
Consolidated |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Cash flow from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Proceeds from the sale of property, plant, and equipment |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
Other |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
Net cash used for investing activities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
Cash flow from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from investment by member |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Capital issuance costs |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Net proceeds from debt issuance |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Loans received from and payments made on loans from other Summit Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Payments on long-term debt |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Payments on acquisition-related liabilities |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
Financing costs |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
Other |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
Net cash provided by (used for) financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of cash on foreign currency |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Net increase (decrease) in cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash — Beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash — End of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
15. SUBSEQUENT EVENTS
In April 2016, the Company acquired Sierra Ready Mix, LLC, an aggregates and ready-mixed concrete business serving the Las Vegas, Nevada market. The acquisition includes one sand and gravel pit and two ready-mixed concrete plants.
23
Section 13(r) Disclosure
The disclosure reproduced below was initially included in a Form 10-K filed with the Securities and Exchange Commission (the “SEC”) by Hilton Worldwide Holdings Inc. (“Hilton”) in accordance with Section 13(r) of the Securities Exchange Act of 1934, as amended, after Summit Materials, Inc. and Summit Materials, LLC had filed their Form 10-K for their most recently completed fiscal year. Hilton may be considered an affiliate of The Blackstone Group L.P. (“Blackstone”), and therefore an affiliate of Summit Materials, Inc. and Summit Materials, LLC. As of the date Summit Materials, Inc. and Summit Materials, LLC filed their Form 10-Q for the quarter ended April 2, 2016 with the SEC, Blackstone had not yet filed its Form 10-Q for the quarter ended March 31, 2016. Therefore, the disclosures reproduced below do not include information for the quarter ended April 2, 2016, if any, for Blackstone or its affiliates. Neither Summit Materials, Inc. nor Summit Materials, LLC independently verified or participated in the preparation of the disclosure reproduced below.
Hilton included the following disclosure in its Annual Report on Form 10-K for the year ended December 31, 2015
“The following activities are disclosed as required by Section 13(r)(1)(D)(iii) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
During the fiscal year ended December 31, 2015, an Iranian governmental delegation stayed at the Transcorp Hilton Abuja for one night. The stays were booked and paid for by the government of Nigeria. The hotel received revenues of approximately $5,320 from these dealings. Net profit to Hilton Worldwide Holdings Inc. (“Hilton”) from these dealings was approximately $495. Hilton believes that the hotel stays were exempt from the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560, pursuant to the International Emergency Economic Powers Act (“IEEPA”) and under 31 C.F.R. Section 560.210(d). The Transcorp Hilton Abuja intends to continue engaging in future similar transactions to the extent they remain permissible under applicable laws and regulations.”