UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM	10-Q



(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 29, 2019~~March 28, 2020



☐	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)



~~Delaware~~	~~(Summit Materials, Inc.)~~	~~47-1984212~~
~~Delaware~~	~~(Summit Materials, LLC)~~	~~26-4138486~~
~~(State~~ Delaware (Summit Materials, Inc.) Delaware (Summit Materials, LLC) (State or other jurisdiction of incorporation or organization) 1550 Wynkoop Street, 3rd Floor Denver, Colorado (Address of principal executive offices) ~~incorporation or organization)~~		~~(I.R.S. Employer~~ ~~Identification No.)~~
~~1550 Wynkoop Street~~
~~3rd Floor~~
~~Denver~~	~~Colorado~~	~~80202~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~

47-1984212

26-4138486

(I.R.S. Employer Identification No.)

80202

(Zip Code)

Registrants’ telephone number, including area code: (303) 893-0012

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock (par value $.01 per share)	SUM	New York Stock Exchange



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	☒	No	☐
Summit Materials, LLC			Yes	☒	No	☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Summit Materials, Inc.			Yes	☒	No	☐
Summit Materials, LLC			Yes	☒	No	☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Summit Materials, Inc.
Large accelerated filer	☒	Accelerated filer				☐
Non-accelerated filer	☐	Smaller reporting company				☐
		Emerging growth company				☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.						☐
Summit Materials, LLC
Large accelerated filer	☐	Accelerated filer				☐
Non-accelerated filer	☒	Smaller reporting company				☐
		Emerging growth company				☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.						☐
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	☐	No	☒
Summit Materials, LLC			Yes	☐	No	☒

As of ~~July 29, 2019,~~April 27, 2020, 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 ~~112,074,156~~114,110,597 and 99, respectively.

As of ~~July 29, 2019,~~April 27, 2020, 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 ~~June 29, 2019,~~March 28, 2020, its sole material asset was a ~~97.0%~~97.4% economic interest in Summit Materials Holdings L.P., a Delaware limited partnership (“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 6 ¹/₈% senior notes due 2023 (“2023 Notes”), our 5 ¹/₈% senior notes due 2025 (“2025 Notes”) and our 6 ¹/₂ % senior notes due 2027 (“2027 Notes” and collectively with the 2023 Notes and 2025 Notes, the “Senior Notes”). Summit Inc.’s only revenue for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 was that generated by Summit LLC and its consolidated subsidiaries. Summit Inc. controls all of the business and affairs of Summit Holdings and, in turn, Summit LLC.

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 December ~~29, 2018~~28, 2019 (the “Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”), ~~any~~the factors discussed in the section entitled “Risk Factors” of this report and the following:

the impact of the coronavirus (“COVID-19”) pandemic, or any similar crisis, on our business;

our dependence on the construction industry and the strength of the local economies in which we operate;

the cyclical nature of our business;

risks related to weather and seasonality;

risks associated with our capital-intensive business;

competition within our local markets;

our ability to execute on our acquisition strategy, successfully integrate acquisitions with our existing operations and retain key employees of acquired businesses;

our dependence on securing and permitting aggregate reserves in strategically located areas;

declines in public infrastructure construction and delays or reductions in governmental funding, including the funding by transportation authorities and other state agencies;

our reliance on private investment in infrastructure, which may be adversely affected by periods of economic stagnation and recession;

environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use;

costs associated with pending and future litigation;

rising prices for commodities, labor and other production and delivery costs as a result of inflation or otherwise;

conditions in the credit markets;

our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us;

material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications;

cancellation of a significant number of contracts or our disqualification from bidding for new contracts;

special hazards related to our operations that may cause personal injury or property damage not covered by insurance;

unexpected factors affecting self-insurance claims and reserve estimates;

our substantial current level of indebtedness;

our dependence on senior management and other key personnel;

supply constraints or significant price fluctuations in the electricity and petroleum-based resources that we use, including diesel and liquid asphalt;

climate change and climate change legislation or regulations;

unexpected operational difficulties;

interruptions in our information technology systems and infrastructure; and

potential labor disputes.

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:

“EBITDA” refers to net income (loss) before interest expense (income), income tax expense (benefit) and depreciation, depletion and amortization;

“Finance Corp.” refers to Summit Materials Finance Corp., an indirect wholly-owned subsidiary of Summit LLC and the co-issuer of the Senior Notes;

“Issuers” refers to Summit LLC and Finance Corp. as co‑issuers of the Senior Notes;

“IPO” refers to the March 2015 initial public offering of Summit Inc.;

“LP Units” refers to the Class A limited partnership units of Summit Holdings; and

“TRA” refers to tax receivable agreement between Summit Inc. and certain current and former holders of LP Units and their permitted assignees.

Corporate Structure

The following chart summarizes our organizational structure, equity ownership and our principal indebtedness as of ~~June 29, 2019.~~March 28, 2020. This chart is provided for illustrative purposes only and does not show all of our legal entities or all obligations of such entities.


(1)	SEC registrant.


(2)	The shares of Class B Common Stock are currently held by pre-IPO investors, including certain members of management or their family trusts that directly hold LP Units. A holder of Class B Common Stock is entitled, without regard to the number of shares of Class B Common Stock held by such holder, to a number of votes that is equal to the aggregate number of LP Units held by such holder.


(3)	Guarantor under the senior secured credit facilities, but not the Senior Notes.

(4)

Summit LLC and Finance Corp are the issuers of the Senior Notes and Summit LLC is the borrower under our senior secured credit facilities. Finance Corp. was formed solely for the purpose of serving as co-issuer or guarantor of certain indebtedness, including the Senior Notes. Finance Corp. does not and will not have operations of any kind and does not and will not have revenue or assets other than as may be incidental to its activities as a co-issuer or guarantor of certain indebtedness.

SUMMIT MATERIALS, INC.

SUMMIT MATERIALS, LLC

FORM 10-Q

TABLE OF CONTENTS



		Page No.
PART I—Financial Information

Item 1.	Financial Statements for Summit Materials, Inc.	1

	Consolidated Balance Sheets as of ~~June 29, 2019~~March 28, 2020 (unaudited) and December ~~29, 2018~~28, 2019	1

	Unaudited Consolidated Statements of Operations for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~	2

	Unaudited Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~	3

	Unaudited Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~	4

	Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~	5

	Notes to Unaudited Consolidated Financial Statements	6

	Financial Statements for Summit Materials, LLC	2219

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2219

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3935

Item 4.	Controls and Procedures	3935

PART II — Other Information

Item 1.	Legal Proceedings	4136

Item 1A.	Risk Factors	4136

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4137

Item 3.	Defaults Upon Senior Securities	4137

Item 4.	Mine Safety Disclosures	4137

Item 5.	Other Information	4137

Item 6.	Exhibits	4238

SIGNATURES		4339

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)


	June 29, 2019		December 29, 2018		March 28, 2020			December 28, 2019
	(unaudited)		(audited)		(unaudited)			(audited)
Assets
Current assets:
Cash and cash equivalents	$	67,658	$	128,508	$	199,114		$	311,319
Accounts receivable, net	294,604		214,518		231,215			253,256
Costs and estimated earnings in excess of billings	45,371		18,602		11,319			13,088
Inventories	208,136		213,851		231,413			204,787
Other current assets	12,618		16,061		15,195			13,831
Total current assets	628,387		591,540		688,256			796,281
Property, plant and equipment, less accumulated depreciation, depletion and amortization (June 29, 2019 - $881,606 and December 29, 2018 - $794,251)	1,788,664		1,780,132
Property, plant and equipment, less accumulated depreciation, depletion and amortization (March 28, 2020 - $1,000,745 and December 28, 2019 - $955,815)					1,768,703			1,747,449
Goodwill	1,198,177		1,192,028		1,195,557			1,199,699
Intangible assets, less accumulated amortization (June 29, 2019 - $9,054 and December 29, 2018 - $8,247)	17,653		18,460
Deferred tax assets, less valuation allowance (June 29, 2019 - $27,863 and December 29, 2018 - $19,366)	237,089		225,397
Intangible assets, less accumulated amortization (March 28, 2020 - $11,071 and December 28, 2019 - $10,366)					22,793			23,498
Deferred tax assets, less valuation allowance (March 28, 2020 - $1,675 and December 28, 2019 - $1,675)					237,922			212,333
Operating lease right-of-use assets	34,101		—		30,527			32,777
Other assets	50,785		50,084		48,510			55,519
Total assets	$	3,954,856	$	3,857,641	$	3,992,268		$	4,067,556
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of debt	$	4,765	$	6,354	$	7,942		$	7,942
Current portion of acquisition-related liabilities	35,470		34,270		30,923			32,700
Accounts payable	131,391		107,702		122,350			116,359
Accrued expenses	113,996		100,491		102,460			120,005
Current operating lease liabilities	8,470		—		8,131			8,427
Billings in excess of costs and estimated earnings	10,733		11,840		14,022			13,864
Total current liabilities	304,825		260,657		285,828			299,297
Long-term debt	1,854,189		1,807,502		1,850,289			1,851,057
Acquisition-related liabilities	40,088		49,468		13,024			19,801
Tax receivable agreement liability	309,733		309,674		327,957			326,965
Noncurrent operating lease liabilities	26,614		—		23,280			25,381
Other noncurrent liabilities	96,636		88,195		96,031			100,282
Total liabilities	2,632,085		2,515,496		2,596,409			2,622,783
Commitments and contingencies (see note 12)
Commitments and contingencies (see note 16)
Stockholders’ equity:
Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 112,073,494 and 111,658,927 shares issued and outstanding as of June 29, 2019 and December 29, 2018, respectively	1,122		1,117
Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 99 shares issued and outstanding as of June 29, 2019 and December 29, 2018	—		—
Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 114,110,597 and 113,309,385 shares issued and outstanding as of March 28, 2020 and December 28, 2019, respectively					1,142			1,134
Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 99 shares issued and outstanding as of March 28, 2020 and December 28, 2019					—			—
Additional paid-in capital	1,205,221		1,194,204		1,239,271			1,234,020
Accumulated earnings	97,377		129,739		143,826			188,805
Accumulated other comprehensive income	5,791		2,681
Accumulated other comprehensive (loss) income					(2,645		)	3,448
Stockholders’ equity	1,309,511		1,327,741		1,381,594			1,427,407
Noncontrolling interest in Summit Holdings	13,260		14,404		14,265			17,366
Total stockholders’ equity	1,322,771		1,342,145		1,395,859			1,444,773
Total liabilities and stockholders’ equity	$	3,954,856	$	3,857,641	$	3,992,268		$	4,067,556

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(In thousands, except share and per share amounts)


	Three months ended						Six months ended						Three months ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018			March 28, 2020			March 30, 2019
Revenue:
Product	$	467,637		$	459,967		$	739,278		$	716,774		$	305,307		$	271,641
Service	84,954			89,268			119,263			122,377			37,099			34,309
Net revenue	552,591			549,235			858,541			839,151			342,406			305,950
Delivery and subcontract revenue	48,300			51,655			74,989			76,160			24,784			26,689
Total revenue	600,891			600,890			933,530			915,311			367,190			332,639
Cost of revenue (excluding items shown separately below):
Product	294,857			295,147			508,583			492,580			232,504			213,726
Service	62,336			64,130			88,925			90,053			28,867			26,589
Net cost of revenue	357,193			359,277			597,508			582,633			261,371			240,315
Delivery and subcontract cost	48,300			51,655			74,989			76,160			24,784			26,689
Total cost of revenue	405,493			410,932			672,497			658,793			286,155			267,004
General and administrative expenses	60,961			61,657			128,571			131,518			70,224			67,610
Depreciation, depletion, amortization and accretion	53,625			49,731			109,013			96,689			51,778			55,388
Transaction costs	390			1,291			698			2,557			753			308
Operating income	80,422			77,279			22,751			25,754
Operating loss													(41,720		)	(57,671		)
Interest expense	29,401			28,943			59,506			57,727			27,818			30,105
Loss on debt financings	—			149			14,565			149			—			14,565
Other income, net	(3,676		)	(916		)	(6,479		)	(8,571		)
Income (loss) from operation before taxes	54,697			49,103			(44,841		)	(23,551		)
Income tax expense (benefit)	16,707			12,190			(11,330		)	(4,516		)
Net income (loss)	37,990			36,913			(33,511		)	(19,035		)
Net income (loss) attributable to Summit Holdings	1,580			1,404			(1,149		)	(815		)
Net income (loss) attributable to Summit Inc.	$	36,410		$	35,509		$	(32,362	)	$	(18,220	)
Income (loss) per share of Class A common stock:
Other loss (income), net													89			(2,803		)
Loss from operations before taxes													(69,627		)	(99,538		)
Income tax benefit													(22,901		)	(28,037		)
Net loss													(46,726		)	(71,501		)
Net loss attributable to Summit Holdings													(1,747		)	(2,729		)
Net loss attributable to Summit Inc.													$	(44,979	)	$	(68,772	)
Loss per share of Class A common stock:
Basic	$	0.32		$	0.32		$	(0.29	)	$	(0.16	)	$	(0.40	)	$	(0.62	)
Diluted	$	0.32		$	0.32		$	(0.29	)	$	(0.16	)	$	(0.40	)	$	(0.62	)
Weighted average shares of Class A common stock:
Basic	112,070,009			111,564,190			111,940,844			111,111,644			113,602,110			111,811,679
Diluted	112,182,555			112,583,321			111,940,844			111,111,644			113,602,110			111,811,679

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income

(In thousands)

Three months ended Six months ended
June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018
Net income (loss) $ 37,990
$ 36,913
$ (33,511 ) $ (19,035 )
Other comprehensive income (loss):
Foreign currency translation adjustment 2,233
(2,045 ) 4,591
(5,149 )
(Loss) income on cash flow hedges (137 ) 361
(303 ) 1,356
Less tax effect of other comprehensive (loss) income items (508 ) 1,455
(1,050 ) 935
Other comprehensive income (loss) 1,588
(229 ) 3,238
(2,858 )
Comprehensive income (loss) 39,578
36,684
(30,273 ) (21,893 )
Less comprehensive income (loss) attributable to Summit Holdings 1,576
1,353
(1,087 ) (932 )
Comprehensive income (loss) attributable to Summit Inc. $ 38,002
$ 35,331
$ (29,186 ) $ (20,961 )



	Three months ended
	March 28, 2020			March 30, 2019
Net loss	$	(46,726	)	$	(71,501	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(8,359		)	2,358
Income (loss) on cash flow hedges	—			(166		)
Less tax effect of other comprehensive income (loss) items	2,046			(542		)
Other comprehensive (loss) income	(6,313		)	1,650
Comprehensive loss	(53,039		)	(69,851		)
Less comprehensive loss attributable to Summit Holdings	(1,967		)	(2,663		)
Comprehensive loss attributable to Summit Inc.	$	(51,072	)	$	(67,188	)

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)


	Six months ended						Three months ended
	June 29, 2019			June 30, 2018			March 28, 2020			March 30, 2019
Cash flow from operating activities:
Net loss	$	(33,511	)	$	(19,035	)	$	(46,726	)	$	(71,501	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, depletion, amortization and accretion	110,982			98,562			55,278			57,039
Share-based compensation expense	10,605			14,190			4,905			5,906
Net gain on asset disposals	(3,937		)	(7,508		)	(1,933		)	(1,735		)
Non-cash loss on debt financings	2,850			—			—			2,850
Change in deferred tax asset, net	(12,550		)	(6,934		)	(24,194		)	(28,028		)
Other	(120		)	162			1,611			47
(Increase) decrease in operating assets, net of acquisitions and dispositions:
Decrease (increase) in operating assets, net of acquisitions and dispositions:
Accounts receivable, net	(79,320		)	(57,763		)	19,939			20,118
Inventories	5,208			(44,428		)	(26,979		)	(705		)
Costs and estimated earnings in excess of billings	(26,715		)	(34,525		)	1,710			1,541
Other current assets	3,585			(1,766		)	(2,519		)	(3,447		)
Other assets	4,374			780			5,543			2,576
(Decrease) increase in operating liabilities, net of acquisitions and dispositions:
Accounts payable	29,898			23,912			(2,712		)	(5,431		)
Accrued expenses	9,395			1,674			(20,776		)	(6,963		)
Billings in excess of costs and estimated earnings	(1,138		)	(2,187		)	245			(1,195		)
Tax receivable agreement liability	59			1,688			993			59
Other liabilities	(3,717		)	(540		)	(3,316		)	(1,807		)
Net cash provided by (used in) operating activities	15,948			(33,718		)
Net cash used in operating activities							(38,931		)	(30,676		)
Cash flow from investing activities:
Acquisitions, net of cash acquired	(2,842		)	(153,196		)	—			(2,842		)
Purchases of property, plant and equipment	(105,569		)	(131,657		)	(61,829		)	(62,188		)
Proceeds from the sale of property, plant and equipment	8,005			14,110			3,160			2,797
Other	(439		)	684			1,801			(178		)
Net cash used for investing activities	(100,845		)	(270,059		)	(56,868		)	(62,411		)
Cash flow from financing activities:
Proceeds from debt issuances	300,000			—			—			300,000
Debt issuance costs	(6,246		)	(550		)	—			(5,774		)
Payments on debt	(261,025		)	(10,772		)	(5,493		)	(256,333		)
Payments on acquisition-related liabilities	(9,158		)	(31,224		)	(9,515		)	(8,933		)
Distributions from partnership	—			(69		)
Proceeds from stock option exercises	784			15,615			310			766
Other	(502		)	(1,904		)	(908		)	(501		)
Net cash provided by (used in) financing activities	23,853			(28,904		)
Net cash (used in) provided by financing activities							(15,606		)	29,225
Impact of foreign currency on cash	194			(471		)	(800		)	191
Net decrease in cash	(60,850		)	(333,152		)	(112,205		)	(63,671		)
Cash and cash equivalents—beginning of period	128,508			383,556			311,319			128,508
Cash and cash equivalents—end of period	$	67,658		$	50,404		$	199,114		$	64,837

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share amounts)


	Summit Materials, Inc.																					Summit Materials, Inc.
				Accumulated																					Accumulated
				Other			Class A			Class B			Additional			Noncontrolling			Total						Other			Class A			Class B			Additional			Noncontrolling			Total
	Accumulated			Comprehensive			Common Stock			Common Stock			Paid-in			Interest in			Stockholders’			Accumulated			Comprehensive			Common Stock			Common Stock			Paid-in			Interest in			Stockholders’
	Earnings			income			Shares	Dollars		Shares	Dollars		Capital			Summit Holdings			Equity			Earnings			(loss) income			Shares	Dollars		Shares	Dollars		Capital			Summit Holdings			Equity
Balance - December 29, 2018	$	129,739		$	2,681		111,658,927	$	1,117	99	$	—	$	1,194,204		$	14,404		$	1,342,145
Balance — December 28, 2019																						$	188,805		$	3,448		113,309,385	$	1,134	99	$	—	$	1,234,020		$	17,366		$	1,444,773
Net loss	(68,772		)	—			—	—		—	—		—			(2,729		)	(71,501		)	(44,979		)	—			—	—		—	—		—			(1,747		)	(46,726		)
LP Unit exchanges	—			—			17,500	—		—	—		122			(122		)	—			—			—			196,542	2		—	—		1,132			(1,134		)	—
Other comprehensive income, net of tax	—			1,584			—	—		—	—		—			66			1,650			—			(6,093		)	—	—		—	—		—			(220		)	(6,313		)
Stock option exercises	—			—			43,142	1		—	—		766			—			767			—			—			13,335	—		—	—		310			—			310
Share-based compensation	—			—			—	—		—	—		5,906			—			5,906			—			—			—	—		—	—		4,905			—			4,905
Shares redeemed to settle taxes and other	—			—			347,962	3		—	—		(495		)	—			(492		)	—			—			591,335	6		—	—		(1,096		)	—			(1,090		)
Balance — March 30, 2019	$	60,967		$	4,265		112,067,531	$	1,121	99	$	—	$	1,200,503		$	11,619		$	1,278,475
Net income	36,410			—			—	—		—	—		—			1,580			37,990
Other comprehensive income, net of tax	—			1,526			—	—		—	—		—			62			1,588
Stock option exercises	—			—			1,019	—		—	—		17			—			17
Share-based compensation	—			—			—	—		—	—		4,699			—			4,699
Shares redeemed to settle taxes and other	—			—			4,944	1		—	—		2			(1		)	2
Balance - June 29, 2019	$	97,377		$	5,791		112,073,494	$	1,122	99	$	—	$	1,205,221		$	13,260		$	1,322,771


Balance — December 30, 2017	$	95,833		$	7,386		110,350,594	$	1,104	100	$	—	$	1,154,220		$	13,178		$	1,271,721
Net loss	(53,729		)	—			—	—		—	—		—			(2,219		)	(55,948		)
LP Unit exchanges	—						104,104	1		—	—		485			(486		)	—
Other comprehensive loss, net of tax	—			(2,563		)	—	—		—	—		—			(66		)	(2,629		)
Stock option exercises	—			—			856,915	9		—	—		15,468			—			15,477
Share-based compensation	—			—			—	—		—	—		8,507			—			8,507
Distributions from partnership	—			—			—	—		—	—		—			(9		)	(9		)
Shares redeemed to settle taxes and other	—			—			176,960	2		—	—		(1,774		)	—			(1,772		)
Balance — March 31, 2018	$	42,104		$	4,823		111,488,573	$	1,116	100	$	—	$	1,176,906		$	10,398		$	1,235,347
Net income	35,509			—			—	—		—	—		—			1,404			36,913
LP Unit exchanges	—			—			125,554	1		—	—		365			(366		)	—
Other comprehensive loss, net of tax	—			(178		)	—	—		—	—		—			(51		)	(229		)
Stock option exercises	—			—			—	—		—	—		139			—			139
Share-based compensation	—			—			—	—		—	—		5,683			—			5,683
Distributions from partnership	—			—			—	—		—	—		—			(60		)	(60		)
Shares redeemed to settle taxes and other	—			—			15,111	—		—	—		(22		)	—			(22		)
Balance — June 30, 2018	$	77,613		$	4,645		111,629,238	$	1,117	100	$	—	$	1,183,071		$	11,325		$	1,277,771
Balance - March 28, 2020																						$	143,826		$	(2,645	)	114,110,597	$	1,142	99	$	—	$	1,239,271		$	14,265		$	1,395,859



	Summit Materials, Inc.
				Accumulated
				Other		Class A			Class B			Additional			Noncontrolling			Total
	Accumulated			Comprehensive		Common Stock			Common Stock			Paid-in			Interest in			Stockholders’
	Earnings			(loss) income		Shares	Dollars		Shares	Dollars		Capital			Summit Holdings			Equity
Balance — December 29, 2018	$	129,739		$	2,681	111,658,927	$	1,117	99	$	—	$	1,194,204		$	14,404		$	1,342,145
Net loss	(68,772		)	—		—	—		—	—		—			(2,729		)	(71,501		)
LP Unit exchanges	—			—		17,500	—		—	—		122			(122		)	—
Other comprehensive loss, net of tax	—			1,584		—	—		—	—		—			66			1,650
Stock option exercises	—			—		43,142	1		—	—		766			—			767
Share-based compensation	—			—		—	—		—	—		5,906			—			5,906
Shares redeemed to settle taxes and other	—			—		347,962	3		—	—		(495		)	—			(492		)
Balance — March 30, 2019	$	60,967		$	4,265	112,067,531	$	1,121	99	$	—	$	1,200,503		$	11,619		$	1,278,475

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, except per share amounts or otherwise noted)


1.	SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Summit Materials, Inc. (“Summit Inc.” and, together with its subsidiaries, “Summit,” “we,” “us,” “our” or the “Company”) is a vertically-integrated construction materials company. The Company is engaged in the production and sale of aggregates, cement, ready-mix concrete, asphalt paving mix and concrete products and owns and operates quarries, sand and gravel pits, ~~two~~2 cement plants, cement distribution terminals, ready-mix concrete plants, asphalt plants and landfill sites. It is also engaged in paving and related services. The Company’s ~~three~~3 operating and reporting segments are the West, East and Cement segments.

Substantially all of the Company’s construction materials, 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, weather conditions and to cyclical changes in construction spending, among other factors.

Summit Inc. is a holding corporation operating and controlling all of the business and affairs of Summit Materials Holdings L.P. (“Summit Holdings”) and its subsidiaries and, through Summit Holdings, conducts its business. Summit Inc. owns the majority of the partnership interests of Summit Holdings (see Note 9, Stockholders’ Equity). Summit Materials, LLC (“Summit LLC”) an indirect wholly owned subsidiary of Summit Holdings, conducts the majority of our operations. Summit Materials Finance Corp. (“Summit Finance”), an indirect wholly owned subsidiary of Summit LLC, has jointly issued our Senior Notes as described below.

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 (“SEC”). 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 December ~~29, 2018.~~28, 2019. The Company continues to follow the accounting policies set forth in those audited 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 ~~June 29, 2019,~~March 28, 2020, the results of operations for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~ and cash flows for the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018.~~2019.

Principles of Consolidation—The consolidated financial statements include the accounts of Summit Inc. and its majority owned subsidiaries. All intercompany balances and transactions have been eliminated. As a result of the reorganization into a holding company structure (the “Reorganization”), Summit Holdings became a variable interest entity over which Summit Inc. has 100% voting power and control and for which Summit Inc. has the obligation to absorb losses and the right to receive benefits.

For a summary of the changes in Summit Inc.’s ownership of Summit Holdings, see Note 9, Stockholders’ Equity.

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, valuation of deferred tax assets, goodwill, intangibles and other long-lived assets, the tax receivable agreement ("TRA") liability, 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. 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 23 U.S. states and in British Columbia, Canada, with the most significant revenue generated in Texas, Kansas, Utah ~~Kansas~~ and Missouri. 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 ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 or ~~June~~March 30, ~~2018.~~2019.

Revenue ~~Recognition~~Recognition——We earn revenue from the sale of products, which primarily include aggregates, cement, ready-mix concrete and asphalt, but also include concrete products, and ~~plastics components, and~~ from the provision of services, which are primarily paving and related ~~services, but also include landfill operations, the receipt and disposal of waste that is converted to fuel for use in our cement plants and underground storage space rental.~~services.

~~Products~~

We earn revenue from the sale of products, which primarily include aggregates, cement, ready-mix concrete and asphalt, but also include concrete products, net of discounts or allowances, if any, and freight and delivery charges billed to customers. Freight and delivery charges associated with cement sales are recorded on a net basis together with freight costs within cost of sales. Products: Revenue for product sales is recognized when evidence of an arrangement exists and when control passes, which generally is when the product is shipped.

~~Services~~

Services: We earn revenue from the provision of services, which are primarily paving and related services, but also include landfill operations, the receipt and disposal of waste that is converted to fuel for use in our cement plants, and underground storage space rental. Revenue from the receipt of waste fuels is recognized when the waste is accepted and a corresponding liability is recognized for the costs to process the waste into fuel for the manufacturing of cement or to ship the waste offsite for disposal in accordance with applicable regulations.

~~Revenue derived from paving and related services is recognized~~which are typically calculated using monthly progress based on the percentage of completion ~~method, which approximates progress towards completion. Under the percentage~~or a customer’s engineer review of ~~completion method, we recognize paving and related services revenue as services are rendered.~~ progress.

The majority of our construction service contracts are completed within one year, but may occasionally extend beyond this time frame. ~~We estimate profit as~~The majority of our construction service contracts are for work that occurs mostly during the ~~difference between total estimated revenue~~spring, summer and ~~total estimated cost of a contract and recognize that profit over the life of the contract based on input measures.~~fall. We generally measure progress toward completion on long-term paving and related services contracts based on the proportion of costs incurred to date relative to total estimated costs at completion. We include revisions of estimated profits on contracts in earnings under the cumulative catch-up method, under which the effect of revisions in estimates is recognized immediately. If a revised estimate of contract profitability reveals an anticipated loss on the contract, we recognize the loss in the period it is identified.

The percentage of completion method of accounting involves the use of various estimating techniques to project costs at completion, and in some cases includes estimates of recoveries asserted against the customer for changes in specifications or other disputes. Contract estimates involve various assumptions and projections relative to the outcome of future events over multiple periods, including future labor productivity and availability, the nature and complexity of the work to be performed, the cost and availability of materials, the effect of delayed performance, and the availability and timing of funding from the customer. These estimates are based on our best judgment. A significant change in one or more of these estimates could affect the profitability of one or more of our contracts. We review our contract estimates regularly to assess revisions in contract values and estimated costs at completion. Inherent uncertainties in estimating costs make it at least reasonably possible that the estimates used will change within the near term and over the life of the contracts. No material adjustments to a contract were recognized in the three and six months ended June 29, 2019.

Costs and estimated earnings in excess of billings are composed principally of revenue recognized on contracts on the percentage of completion method for which billings had not been presented to customers because the amounts were not

billable under the contract terms at the balance sheet date. In accordance with the contract terms, the unbilled receivables at the balance sheet date are expected to be billed in following periods. Billings in excess of costs and estimated earnings represent billings in excess of revenue recognized. Contract assets and liabilities are netted on a contract-by-contract basis.

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. 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 earnings per share.

Tax Receivable Agreement— When Class A limited partnership units of Summit Holdings (“LP Units”) are exchanged for shares of Class A common stock of Summit Inc. or Summit Inc. purchases LP Units for cash, this results in increases in Summit Inc.’s share of the tax basis of the tangible and intangible assets, which increases the tax depreciation and amortization deductions that otherwise would not have been available to Summit Inc. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of cash taxes that we would otherwise be required to pay in the future. Prior to our initial public offering (“IPO”), we entered into a TRA with the pre-IPO owners that requires us to pay the pre-IPO owners or their permitted assignees 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax that we actually realize as a result of these exchanges. These benefits include (1) increases in the tax basis of tangible and intangible assets of Summit Holdings and certain other tax benefits related to entering into the TRA, (2) tax benefits attributable to payments under the TRA, or (3) under certain circumstances such as an early termination of the TRA, we are deemed to realize, as a result of the increases in tax basis in connection with exchanges by the pre-IPO owners described above and certain other tax benefits attributable to payments under the TRA.

We periodically evaluate the realizability of the deferred tax assets resulting from the exchange of LP Units for Class A common stock. If the deferred tax assets are determined to be realizable, we then assess whether payment of amounts under the TRA have become probable. If so, we record a TRA liability equal to 85% of such deferred tax assets, and the remaining 15% as an increase to additional paid-in capital. If a deferred tax asset subject to the TRA is determined not to be realizable and therefore subject to a valuation allowance, we do not record a TRA liability for such deferred tax assets. In subsequent periods, we assess the realizability of all of our deferred tax assets subject to the TRA. Should we determine

a deferred tax asset with a valuation allowance is realizable in a subsequent period, the related valuation allowance will be released and consideration of a corresponding TRA liability will be assessed. The realizability of deferred tax assets, including those subject to the TRA, is dependent upon the generation of future taxable income during the periods in which those deferred tax assets become deductible and consideration of prudent and feasible tax-planning strategies.

The measurement of the TRA liability is accounted for as a contingent liability. Therefore, once we determine that a payment to a pre-IPO owner has become probable and can be estimated, the estimate of payment will be accrued.

New Accounting Standards —

In ~~February 2016,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2016-02,~~2018-15, ~~Leases~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, ~~(Topic 842),~~ which ~~requires lessees to recognize most leases on~~reduces the ~~balance sheet. Lessees are required to disclose more quantitative and qualitative information about the leases than current U.S. GAAP requires.~~accounting complexity of implementing a cloud computing service arrangement. The ASU aligns the capitalization of implementation costs among hosting arrangements and ~~subsequent amendments issued in 2018 are effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.~~costs incurred to develop internal-use software. We adopted this ASU in the ~~standard effective December 30, 2018 using~~first quarter of 2020 and the ~~modified retrospective approach.~~

The modified retrospective approach provides a method for recording existing leases at adoption. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. In addition, we elected the hindsight practical expedient to determine the lease term for existing leases.

The most significant impact upon adoption was the recognition of $36.8 million of operating lease right-of-use assets and $36.8 million operating lease liabilities. The standard had no material impact on our statement of cash flows.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, allowing more financial and nonfinancial hedging strategies to be eligible for hedge accounting. The ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The adoption of this ~~new~~ ASU did not have a material impact on ~~our~~the consolidated financial ~~results.~~

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, increasing the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The adoption of this new ASU did not have a material impact on our consolidated financial results.statements.


2.	GOODWILL AND INTANGIBLES

The Company has completed numerous acquisitions since its formation, which have been financed through a combination of debt and equity funding. The operations of each acquisition have been included in the Company’s consolidated results of operations since the respective closing dates of the acquisitions. The Company measures all assets acquired and liabilities assumed at their acquisition-date fair value.

Changes in the carrying amount of goodwill, by reportable segment, from December ~~29, 2018~~28, 2019 to ~~June 29, 2019~~March 28, 2020 are summarized as follows:



	West			East		Cement		Total
Balance—December 28, 2019	$	584,617		$	410,426	$	204,656	$	1,199,699
Foreign currency translation adjustments	(4,142		)	—		—		(4,142		)
Balance—March 28, 2020	$	580,475		$	410,426	$	204,656	$	1,195,557

West East Cement
Total
Balance, December 29, 2018 $ 580,567
$ 406,805
$ 204,656
$ 1,192,028
Acquisitions (1) 1,173
2,621
—
3,794
Foreign currency translation adjustments 2,355
—
—
2,355
Balance, June 29, 2019 $ 584,095
$ 409,426
$ 204,656
$ 1,198,177


~~(1)~~	~~Reflects goodwill from 2019 acquisitions and working capital adjustments from prior year acquisitions.~~

The Company’s intangible assets are primarily composed of goodwill, mineral lease agreements and reserve rights. The assets related to mineral 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 does not own the reserves. The intangible assets are amortized on a straight-line basis over the lives of the leases. The following table shows intangible assets by type and in total:


	June 29, 2019							December 29, 2018							March 28, 2020							December 28, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Mineral leases	$	19,064	$	(5,835	)	$	13,229	$	19,064	$	(5,259	)	$	13,805	$	19,064	$	(6,690	)	$	12,374	$	19,064	$	(6,408	)	$	12,656
Reserve rights	6,234		(2,098		)	4,136		6,234		(1,940		)	4,294		6,234		(2,323		)	3,911		6,234		(2,248		)	3,986
Trade names	1,000		(908		)	92		1,000		(858		)	142		1,000		(983		)	17		1,000		(958		)	42
Other	409		(213		)	196		409		(190		)	219		7,566		(1,075		)	6,491		7,566		(752		)	6,814
Total intangible assets	$	26,707	$	(9,054	)	$	17,653	$	26,707	$	(8,247	)	$	18,460	$	33,864	$	(11,071	)	$	22,793	$	33,864	$	(10,366	)	$	23,498

Amortization expense totaled ~~$0.4~~$0.7 million and ~~$0.8~~$0.4 million for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019, ~~respectively, and $0.3 million and $0.6 million for the three and six months June 30, 2018,~~ respectively. The estimated amortization expense for the intangible assets for each of the five years subsequent to ~~June 29, 2019~~March 28, 2020 is as follows:


2019 (six months)	$	791
2020	1,510
2020 (nine months)			$	1,823
2021	1,475		2,147
2022	1,482		2,142
2023	1,349		2,009
2024	1,254		1,914
2025			1,869
Thereafter	9,792		10,889
Total	$	17,653	$	22,793


3.	REVENUE RECOGNITION

We derive our revenue predominantly by selling construction materials, products and providing paving and related services. Construction materials consist of aggregates and cement. Products consist of related downstream products, including ready-mix concrete, asphalt paving mix and concrete products. Paving and related service revenue is generated primarily from the asphalt paving services that we provide.

Revenue by product for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~ is as follows:


	Three months ended				Six months ended				Three months ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		March 28, 2020		March 30, 2019
Revenue by product*:
Aggregates	$	128,650	$	103,690	$	216,522	$	171,140	$	96,161	$	87,872
Cement	77,799		76,413		110,298		109,530		32,863		32,499
Ready-mix concrete	154,180		160,609		271,500		282,624		141,704		117,320
Asphalt	93,365		88,372		116,403		106,513		23,206		23,038
Paving and related services	95,304		107,306		129,649		141,642		33,426		34,345
Other	51,593		64,500		89,158		103,862		39,830		37,565
Total revenue	$	600,891	$	600,890	$	933,530	$	915,311	$	367,190	$	332,639

*Revenue from liquid asphalt terminals is included in asphalt revenue.

The following table outlines the significant changes in contract assets and contract liability balances from December 29, 2018 to June 29, 2019. Also included in the table is the net change in estimate as a percentage of aggregate revenue for such contracts:

Costs and estimated earnings in excess of billings Billings in excess of costs and estimated earnings
Balance - December 29, 2018 $ 18,602
$ 11,840
Changes in revenue billed, contract price or cost estimates 26,715
(1,138 )
Other 54
31
Balance - June 29, 2019 $ 45,371
$ 10,733

Accounts receivable, net consisted of the following as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018:~~28, 2019:


	June 29, 2019			December 29, 2018			March 28, 2020			December 28, 2019
Trade accounts receivable	$	232,597		$	157,601		$	195,623		$	191,672
Construction contract receivables	52,536			47,994			22,074			47,966
Retention receivables	14,573			15,010			18,141			17,808
Receivables from related parties	1,198			629			1,585			1,596
Accounts receivable	300,904			221,234			237,423			259,042
Less: Allowance for doubtful accounts	(6,300		)	(6,716		)	(6,208		)	(5,786		)
Accounts receivable, net	$	294,604		$	214,518		$	231,215		$	253,256

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 billed and collected within one year.


4.	INVENTORIES

Inventories consisted of the following as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018:~~28, 2019:


	June 29, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Aggregate stockpiles	$	146,264	$	151,300	$	152,238	$	140,461
Finished goods	29,272		34,993		44,357		33,023
Work in process	7,754		7,478		7,628		7,664
Raw materials	24,846		20,080		27,190		23,639
Total	$	208,136	$	213,851	$	231,413	$	204,787


5.	ACCRUED EXPENSES

Accrued expenses consisted of the following as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018:~~28, 2019:


	June 29, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Interest	$	25,326	$	26,223	$	15,852	$	26,892
Payroll and benefits	22,482		15,952		18,797		29,356
Finance lease obligations	17,805		15,557		20,724		16,007
Insurance	15,807		13,625		13,870		14,968
Non-income taxes	13,075		7,442		10,377		7,666
Professional fees	1,482		1,408		1,189		902
Other (1)	18,019		20,284		21,651		24,214
Total	$	113,996	$	100,491	$	102,460	$	120,005


(1)	Consists primarily of subcontractor and working capital settlement accruals.


6.	DEBT

Debt consisted of the following as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018:~~28, 2019:


	June 29, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Term Loan, due 2024:
$625.8 million and $630.6 million, net of $1.2 million and $1.3 million discount at June 29, 2019 and December 29, 2018, respectively	$	624,615	$	629,268
8¹⁄₂% Senior Notes, due 2022	—		250,000
$622.7 million and $624.3 million, net of $1.1 million discount at March 28, 2020 and December 28, 2019, respectively					$	621,608	$	623,140
6¹⁄₈% Senior Notes, due 2023:
$650.0 million, net of $1.0 million and $1.1 million discount at June 29, 2019 and December 29, 2018, respectively	649,012		648,891
$650.0 million, net of $0.8 million and $0.9 million discount at March 28, 2020 and December 28, 2019, respectively					649,194		649,133
5¹⁄₈% Senior Notes, due 2025	300,000		300,000		300,000		300,000
6¹⁄₂% Senior Notes, due 2027	300,000		—		300,000		300,000
Total	1,873,627		1,828,159		1,870,802		1,872,273
Current portion of long-term debt	4,765		6,354		7,942		7,942
Long-term debt	$	1,868,862	$	1,821,805	$	1,862,860	$	1,864,331

The contractual payments of long-term debt, including current maturities, for the five years subsequent to ~~June 29, 2019,~~March 28, 2020, are as follows:


2019 (six months)	$	1,588
2020	7,942
2020 (nine months)				$	6,354
2021	6,354			6,353
2022	6,354			6,354
2023	656,354			656,354
2024	597,252			597,253
2025				300,000
Thereafter	600,000			300,000
Total	1,875,844			1,872,668
Less: Original issue net discount	(2,217		)	(1,866		)
Less: Capitalized loan costs	(14,673		)	(12,571		)
Total debt	$	1,858,954		$	1,858,231

Senior Notes—On March 15, 2019, Summit LLC and Summit Finance (together, the “Issuers”) issued $300.0 million in aggregate principal amount of 6.500% senior notes due March 15, 2027 (the “2027 Notes”). The 2027 Notes were issued at 100.0% of their par value with proceeds of $296.3 million, net of related fees and expenses. The 2027 Notes were issued under an indenture dated March 25, 2019 (the "2019 Indenture"). The 2019 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 its assets, enter into certain

transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The 2019 Indenture also contains customary events of default. Interest on the 2027 Notes is payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2019.

In March 2019, using the proceeds from the 2027 Notes, all of the outstanding $250.0 million 8.500% senior notes due 2022 (the “2022 Notes”) were redeemed at a price equal to par plus an applicable premium and the indenture under which the 2022 Notes were issued was satisfied and discharged. As a result of the extinguishment, charges of $14.6 million were recognized in the quarter ended March 30, 2019, which included charges of $11.7 million for the applicable redemption premium and $2.9 million for the write-off of deferred financing fees.

In 2017, the Issuers issued $300.0 million of 5.125% senior notes due June 1, 2025 (the “2025 Notes”). The 2025 Notes were issued at 100.0% of their par value with proceeds of $295.4 million, net of related fees and expenses. The 2025 Notes were issued under an indenture dated June 1, 2017, the terms of which are generally consistent with the 2019 Indenture. Interest on the 2025 Notes is payable semi-annually on June 1 and December 1 of each year commencing on December 1, 2017.

In 2015, the Issuers issued $650.0 million of 6.125% senior notes due July 2023 (the “2023 Notes” and collectively with the 2025 Notes and the 2027 Notes, the “Senior Notes”). Of the aggregate $650.0 million of 2023 Notes, $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, the terms of which are generally consistent with the 2019 Indenture. Interest on the 2023 Notes is payable semi-annually in arrears on January 15 and July 15 of each year.

As of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018,~~28, 2019, the Company was in compliance with all financial covenants under the applicable indentures.

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 $345.0 million (the “Senior Secured Credit Facilities”). Under the Senior Secured Credit Facilities, required principal repayments of 0.25% of the refinanced aggregate amount of term debt are due on the last business day of each March, June, September and December commencing with the March 2018 payment. The unpaid principal balance is due in full on the maturity date, which is November 21, 2024.

On February 25, 2019, Summit LLC entered into Incremental Amendment No. 4 to the credit agreement governing the Senior Secured Credit Facilities (the “Credit Agreement”) which, among other things, increased the total amount available under the revolving credit facility to $345.0 million and extended the maturity date of the Credit Agreement with respect to the revolving credit commitments to February 25, 2024. During 2018 and 2017, Summit LLC entered into three different amendments to the Credit Agreement, which among other things, reduced the applicable margin in respect to the outstanding principal amount at the time of the respective amendments.

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 2.00% 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 3.00% for LIBOR rate loans.

There were no0 outstanding borrowings under the revolving credit facility as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018, leaving remaining~~28, 2019, with borrowing capacity of ~~$329.8~~$329.0 million remaining as of ~~June 29, 2019,~~March 28, 2020, which is net of ~~$15.2~~$16.0 million of outstanding letters of credit. The outstanding letters of credit are renewed annually and support required bonding on construction projects, large leases, workers compensation claims and the Company’s insurance liabilities.

Summit LLC’s Consolidated First Lien Net Leverage Ratio, as such term is defined in the Credit Agreement, should be no greater than 4.75:1.0 as of each quarter-end. As of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018,~~28, 2019, Summit LLC was in compliance with all financial 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.

The following table presents the activity for the deferred financing fees for the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018:~~2019:


				Deferred financing fees
Balance—December 28, 2019				$	15,436
Amortization				(833		)
Balance—March 28, 2020				$	14,603

	Deferred financing fees
Balance—December 29, 2018	$	15,475		$	15,475
Loan origination fees	6,246			5,774
Amortization	(1,832		)	(998		)
Write off of deferred financing fees	(2,851		)	(2,851		)
Balance—June 29, 2019	$	17,038


Balance - December 30, 2017	$	19,033
Loan origination fees	550
Amortization	(2,040		)
Balance - June 30, 2018	$	17,543
Balance—March 30, 2019				$	17,400

Other—On January 15, 2015, the Company’s wholly-owned subsidiary in British Columbia, Canada entered into an agreement with HSBC Bank Canada 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~~$0.3 million CAD revolving credit commitment to provide guarantees on behalf of that subsidiary. There were no0 amounts outstanding under this agreement as of ~~June 29, 2019~~March 28, 2020 or December ~~29, 2018.~~28, 2019.


7.	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.

Our income tax ~~expense (benefit)~~benefit was ~~$16.7~~$(22.9) million and ~~$(11.3) million and our income tax expense (benefit) was $12.2 million and $(4.5)~~$(28.0) million in the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019, ~~and June 30, 2018,~~ respectively. The effective tax rate for Summit Inc. differs from the federal rate primarily due to (1) unrecognized tax benefits, (2) state taxes, ~~(2)~~(3) tax depletion expense in excess of the expense recorded under U.S. GAAP, ~~(3)~~(4) the minority interest in the Summit Holdings partnership that is allocated outside of the Company ~~(4)~~and (5) various other items such as limitations on meals and entertainment, certain stock compensation and other ~~costs~~costs. In the three months ended March 28, 2020, the increase in the Company's effective tax rate, and ~~(5) unrecognized~~related income tax ~~benefits~~expense, over the prior year is in response to provisions of the Coronavirus Aid, Relief and Economic Stability Act ("CARES Act") enacted into law in late March 2020. Among other things, the CARES Act temporarily amended provisions of the Tax Cuts and Jobs Act of 2017 ("TCJA") related to limitations on the deductibility of interest expense. The Company’s income tax provision is calculated under the provisions of the proposed TCJA regulations, as ~~noted below.~~

amended by the CARES Act, which will limit our ability to deduct interest expense in calculating our taxable income. Once the final regulations are issued, the Company will adjust its calculations, if necessary.

As of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018,~~28, 2019, Summit Inc. had a valuation allowance of ~~$27.9~~$1.7 million, ~~and $19.4 million, respectively,~~ which relates to certain deferred tax assets in taxable entities where realization is not more likely than not.

~~Summit Inc. and its subsidiaries expect additional~~In the three months ended March 28, 2020, we adjusted our unrecognized tax benefits previously reported for provisions in ~~2019 that if recognized would affect~~ the ~~annual effective tax rate, and included that~~CARES Act enacted in ~~its estimate of those amounts in its annual effective tax rate.~~March 2020. We did not recognize interest or penalties related to this amount as it is offset by other attributes. NoNaN material interest or penalties were recognized in income tax expense during the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018. No uncertain tax benefits were recognized in the three and six months ended June 30, 2018.~~2019.

Tax Receivable Agreement—The Company is party to a TRA with certain current and former holders of LP Units that provides for the payment by Summit Inc. to exchanging holders of LP Units of 85% of the benefits, if any, that Summit Inc. actually realizes (or, under certain circumstances such as an early termination of the TRA, is deemed to realize) as a result of increases in the tax basis of tangible and intangible assets of Summit Holdings and certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA.

In the ~~six~~three months ended ~~June 29, 2019, 17,500~~March 28, 2020, 196,542 LP Units were acquired by Summit Inc. in exchange for an equal number of newly-issued shares of Summit Inc.’s Class A common stock. These exchanges resulted in net new deferred tax

assets of approximately ~~$0.1~~$1.2 million. As we determined that the deferred tax assets created from these exchanges are realizable and payment under the TRA is considered probable, we have recorded 85% of the increase in deferred tax assets as TRA liability and the remainder as an ~~increase in~~adjustment to additional paid in capital. As of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018,~~28, 2019, we had recorded ~~$309.7~~$328.0 million and ~~$310.3~~$327.0 million of TRA liability, ~~respectively, of which $0.6 million was classified as accrued expenses as of December 29, 2018.~~respectively.

Tax Distributions – The holders of Summit Holdings’ LP Units, including Summit Inc., incur U.S. federal, state and local income taxes on their share of any taxable income of Summit Holdings. The limited partnership agreement of Summit Holdings provides for pro rata cash distributions (“tax distributions”) to the holders of the LP Units in an amount generally calculated to provide each holder of LP Units with sufficient cash to cover its tax liability in respect of the LP Units. In general, these tax distributions are computed based on Summit Holdings’ estimated taxable income allocated to Summit Inc. multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate in New York, New York. Summit Holdings did ~~not~~0t make any tax distributions in the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 and ~~made $0.1 million in tax distributions in the six months ended June~~March 30, ~~2018.~~2019.


8.	EARNINGS PER SHARE

Basic earnings per share is computed by dividing net earnings by the weighted average common shares outstanding and diluted net earnings is computed by dividing net earnings, adjusted for changes in the earnings 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 and diluted ~~loss~~earnings per share:

Three months ended Six months ended
June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018
Net income (loss) attributable to Summit Inc. $ 36,410
$ 35,509
$ (32,362 ) $ (18,220 )
Weighted average shares of Class A stock outstanding 112,070,009
111,564,190
111,940,844
111,111,644
Basic and diluted income (loss) per share $ 0.32
$ 0.32
$ (0.29 ) $ (0.16 )

Diluted net income (loss) attributable to Summit Inc. $ 36,410
$ 35,509
$ (32,362 ) $ (18,220 )

Weighted average shares of Class A stock outstanding 112,070,009
111,564,190
111,940,844
111,111,644
Add: weighted average of LP Units —
—
—
—
Add: stock options —
794,065
—
—
Add: warrants —
36,488
—
—
Add: restricted stock units 76,539
91,347
—
—
Add: performance stock units 36,007
97,231
—
—
Weighted average dilutive shares outstanding 112,182,555
112,583,321
111,940,844
111,111,644
Diluted earnings (loss) per share $ 0.32
$ 0.32
$ (0.29 ) $ (0.16 )



	Three months ended
	March 28, 2020			March 30, 2019
Net loss attributable to Summit Inc.	$	(44,979	)	$	(68,772	)
Weighted average shares of Class A stock outstanding	113,602,110			111,811,679
Basic and diluted loss per share	$	(0.40	)	$	(0.62	)

Excluded from the above calculations were the shares noted below as they were antidilutive:


	Three months ended		Six months ended		Three months ended
	June 29, 2019	June 30, 2018	June 29, 2019	June 30, 2018	March 28, 2020	March 30, 2019
Antidilutive shares:
LP Units	3,418,018	3,517,602	3,418,018	3,583,407	3,154,228	3,418,018
Time-vesting stock options	3,168,170	—	3,168,170	3,286,163	2,109,465	3,192,674
Warrants	100,037	—	100,037	100,037	100,037	100,037
Time-vesting restricted stock units	—	—	1,493,119	841,618	1,666,365	1,589,396
Market-based restricted stock units	—	—	390,645	295,252	446,670	419,247


9.	STOCKHOLDERS’ EQUITY

During ~~2019~~2020 and ~~2018,~~2019, certain limited partners of Summit Holdings exchanged their LP Units for shares of Class A common stock of Summit Inc. The following table summarizes the changes in our ownership of Summit Holdings:


							Summit Inc. Shares (Class A)	LP Units		Total	Summit Inc. Ownership Percentage
Balance — December 28, 2019							113,309,385	3,249,657		116,559,042	97.2	%
Exchanges during period							196,542	(196,542	)	—
Stock option exercises							13,335	—		13,335
Other equity transactions							591,335	—		591,335
Balance — March 28, 2020							114,110,597	3,053,115		117,163,712	97.4	%

	Summit Inc. Shares (Class A)	LP Units		Total	Summit Inc. Ownership Percentage
Balance — December 29, 2018	111,658,927	3,435,518		115,094,445	97.0	%	111,658,927	3,435,518		115,094,445	97.0	%
Exchanges during period	17,500	(17,500	)	—			17,500	(17,500	)	—
Other equity transactions	397,067	—		397,067			391,104	—		391,104
Balance — June 29, 2019	112,073,494	3,418,018		115,491,512	97.0	%


Balance — December 30, 2017	110,350,594	3,689,620		114,040,214	96.8	%
Exchanges during period	229,658	(229,658	)	—
Other equity transactions	1,048,986	—		1,048,986
Balance — June 30, 2018	111,629,238	3,459,962		115,089,200	97.0	%
Balance — March 30, 2019							112,067,531	3,418,018		115,485,549	97.0	%

As a result of the Reorganization, Summit Inc. is Summit Holdings’ primary beneficiary and thus consolidates Summit Holdings in its consolidated financial statements with a corresponding noncontrolling interest reclassification, which was ~~3.0%~~2.6% and 2.8% as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018.~~28, 2019, respectively.

Accumulated other comprehensive income (loss) —The changes in each component of accumulated other comprehensive income (loss) consisted of the following:


												Change in retirement plans		Foreign currency translation adjustments			Cash flow hedge adjustments			Accumulated other comprehensive income (loss)
Balance — December 28, 2019												$	2,171	$	1,277		$	—		$	3,448
Foreign currency translation adjustment, net of tax												—		(6,093		)	—			(6,093		)
Balance - Balance — March 28, 2020												$	2,171	$	(4,816	)	$	—		$	(2,645	)

	Change in retirement plans		Foreign currency translation adjustments			Cash flow hedge adjustments			Accumulated other comprehensive income (loss)
Balance — December 29, 2018	$	3,573	$	(2,147	)	$	1,255		$	2,681		$	3,573	$	(2,147	)	$	1,255		$	2,681
Foreign currency translation adjustment, net of tax	—		3,330			—			3,330			—		1,704			—			1,704
Loss on cash flow hedges, net of tax	—		—			(220		)	(220		)	—		—			(120		)	(120		)
Balance — June 29, 2019	$	3,573	$	1,183		$	1,035		$	5,791


Balance — December 30, 2017	$	2,364	$	4,637		$	385		$	7,386
Foreign currency translation adjustment, net of tax	—		(3,721		)	—			(3,721		)
Income on cash flow hedges, net of tax	—		—			980			980
Balance — June 30, 2018	$	2,364	$	916		$	1,365		$	4,645
Balance — March 30, 2019												$	3,573	$	(443	)	$	1,135		$	4,265


10.	SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:


	Six months ended				Three months ended
	June 29, 2019		June 30, 2018		March 28, 2020			March 30, 2019
Cash payments:
Interest	$	36,834	$	52,206	$	36,310		$	21,126
Income taxes	1,190		3,061
Refunds for income taxes, net					(298		)	(20		)
Operating cash payments on operating leases	5,410		—		2,948			2,837
Operating cash payments on finance leases	1,516		—		794			699
Finance cash payments on finance leases	6,000		—		3,883			2,580
Non cash financing activities:
Right of use assets obtained in exchange for operating lease obligations	$	3,298	$	—	$	577		$	1,608
Right of use assets obtained in exchange for finance leases obligations	16,248		—		6,267			9,442
Exchange of LP Units to shares of Class A common stock	277		6,987		4,648			277


11.	LEASES

We lease construction and office equipment, distribution facilities and office space. Leases with an initial term of 12 months or less, including month to month leases, are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight line basis over the lease term. For lease agreements entered into or reassessed after the adoption of ~~ASC~~Topic 842, we combine lease and nonlease components. While we also own mineral leases for mining operations, those leases are outside the scope of ~~ASC~~Topic 842. Assets acquired under finance leases are included in property, plant and equipment.

Many of our leases include options to purchase the leased equipment. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease expense were as follows:

Three months ended Six months ended
June 29, 2019 June 29, 2019
Operating lease cost $ 2,694
$ 5,149
Variable lease cost 143
215
Short-term lease cost 9,591
16,172
Financing lease cost:
Amortization of right-of-use assets 2,670
5,293
Interest on lease liabilities 876
1,631
Total lease cost $ 15,974
$ 28,460

June 29, 2019
Supplemental balance sheet information related to leases:
Operating leases:
Operating lease right-of-use assets $ 34,101

Current operating lease liabilities $ 8,470
Noncurrent operating lease liabilities 26,614
Total operating lease liabilities $ 35,084
Finance leases:
Property and equipment, gross $ 79,911
Less accumulated depreciation (21,667 )
Property and equipment, net $ 58,244

Current finance lease liabilities $ 17,805
Long-term finance lease liabilities 41,123
Total finance lease liabilities $ 58,928

June 29, 2019
Lease Term Discount Rate
(years) (%)
Weighted average:
Operating leases 7.7
5.6 %
Finance lease 2.8
5.5 %

Maturities of lease liabilities were as follows:
Operating Leases Finance Leases
2019 (six months) $ 5,124
$ 10,115
2020 9,391
17,539
2021 7,434
20,235
2022 4,558
11,745
2023 3,546
1,509
2024 2,413
1,750
Thereafter 11,252
2,662
Total lease payments 43,718
65,555
Less imputed interest (8,634 ) (6,627 )
Present value of lease payments $ 35,084
$ 58,928

~~As previously disclosed, our future minimum lease payment obligations as of December 29, 2018 were as follows:~~


	Operating Leases		Three months ended
2019	$	9,479
2020	8,101
			March 28, 2020			March 30, 2019
Operating lease cost			$	2,607		$	2,455
Variable lease cost			57			72
Short-term lease cost			8,620			6,581
Financing lease cost:
Amortization of right-of-use assets			2,739			2,623
Interest on lease liabilities			771			755
Total lease cost			$	14,794		$	12,486

			March 28, 2020			December 28, 2019
Supplemental balance sheet information related to leases:
Operating leases:
Operating lease right-of-use assets			$	30,527		$	32,777

Current operating lease liabilities			$	8,131		$	8,427
Noncurrent operating lease liabilities			23,280			25,381
Total operating lease liabilities			$	31,411		$	33,808
Finance leases:
Property and equipment, gross			$	87,377		$	82,660
Less accumulated depreciation			(27,251		)	(24,907		)
Property and equipment, net			$	60,126		$	57,753

Current finance lease liabilities			$	20,724		$	16,007
Long-term finance lease liabilities			37,300			40,410
Total finance lease liabilities			$	58,024		$	56,417

Weighted average remaining lease term (years):			Weighted average remaining lease term (years):
Operating leases			8.6			8.6
Finance lease			2.5			2.6

Weighted average discount rate (%):			Weighted average discount rate (%):
Operating leases			5.5		%	5.5		%
Finance lease			5.5		%	5.5		%

Maturities of lease liabilities were as follows:			Maturities of lease liabilities were as follows:
			Operating Leases			Finance Leases
2020 (nine months)			$	7,116		$	14,513
2021	6,701		8,033			23,292
2022	4,279		4,920			16,428
2023	3,411		3,877			4,472
2024			2,232			2,277
2025			1,414			1,104
Thereafter			12,613			1,743
Total lease payments			40,205			63,829
Less imputed interest			(8,794		)	(5,805		)
Present value of lease payments			$	31,411		$	58,024


12.	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 current pending or threatened claims

and litigation will not have a material effect on the Company’s consolidated financial position, results of operations or liquidity. The Company records legal fees as incurred.

In March 2018, we were notified of an investigation by the Canadian Competition Bureau (the “CCB”) into pricing practices by certain asphalt paving contractors in British Columbia, including Winvan Paving, Ltd. (“Winvan”). We believe the investigation is focused on time periods prior to our April 2017 acquisition of Winvan and we are cooperating with the CCB. Although we currently do not believe this matter will have a material adverse effect on our business, financial condition or results of operations, we are currently not able to predict the ultimate outcome or cost of the investigation.

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 asset retirement obligations arising from regulatory and contractual requirements to perform reclamation activities at the time certain quarries and landfills are closed. As of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018, $28.6~~28, 2019, $31.5 million and ~~$26.9~~$28.8 million, respectively, were included in other noncurrent liabilities on the consolidated balance sheets and ~~$3.5~~$5.0 million and ~~$4.1~~$7.9 million, respectively, were included in accrued expenses for future reclamation costs. The total undiscounted anticipated costs for site reclamation as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 were ~~$90.2~~$96.7 million and ~~$92.5~~$97.4 million, respectively.

Other—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.


13.	FAIR VALUE

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 interest rate derivative expires in September 2019. 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 income (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 ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 was:


	June 29, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Current portion of acquisition-related liabilities and Accrued expenses:
Contingent consideration	$	2,622	$	1,394	$	525	$	1,967
Cash flow hedges	112		—
Acquisition-related liabilities and Other noncurrent liabilities:
Contingent consideration	$	1,238	$	5,175	$	1,231	$	1,302
Cash flow hedges	—		—

The fair value of contingent consideration was based on unobservable, or Level 3, inputs, including projected probability-weighted cash payments and a 10.0% 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 is based on observable, or Level 2, inputs such as interest rates, bond yields and prices in inactive markets.~~ There were no0 material valuation adjustments to contingent consideration ~~or derivatives~~ as of ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018.~~2019.

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 ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 was:


	June 29, 2019				December 29, 2018				March 28, 2020				December 28, 2019
	Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value
Level 2
Long-term debt(1)	$	1,895,932	$	1,873,627	$	1,777,722	$	1,828,159	$	1,699,541	$	1,870,802	$	1,918,720	$	1,872,273
Level 3
Current portion of deferred consideration and noncompete obligations(2)	32,848		32,848		32,876		32,876		30,398		30,398		30,733		30,733
Long term portion of deferred consideration and noncompete obligations(3)	38,850		38,850		44,293		44,293		11,793		11,793		18,499		18,499


(1)	$~~4.8~~7.9 million ~~and $6.4 million were~~was included in current portion of debt as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018, respectively.~~28, 2019.


(2)	Included in current portion of acquisition-related liabilities on the consolidated balance sheets.


(3)	Included in acquisition-related liabilities on the consolidated balance sheets.

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. The discount rate used is generally consistent with that used when the obligations were initially recorded.

Securities with a maturity of three months or less are considered cash equivalents and the fair value of these assets approximates their carrying value.


14.	SEGMENT INFORMATION

The Company has ~~three~~3 operating segments: West, East and Cement, which are its reporting segments. These segments are consistent with the Company’s management reporting structure.

The operating results of each segment are regularly reviewed and evaluated by the Chief Executive Officer, our Company’s Chief Operating Decision Maker (“CODM”). The CODM primarily evaluates the performance of the Company’s 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 each 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 ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 and for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018:~~2019:


	Three months ended				Six months ended				Three months ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		March 28, 2020		March 30, 2019
Revenue*:
West	$	300,212	$	321,713	$	482,157	$	503,426	$	196,225	$	181,945
East	216,132		197,336		329,520		292,493		133,040		113,388
Cement	84,547		81,841		121,853		119,392		37,925		37,306
Total revenue	$	600,891	$	600,890	$	933,530	$	915,311	$	367,190	$	332,639

*Intercompany sales are immaterial and the presentation above only reflects sales to external customers.


	Three months ended						Six months ended						Three months ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018			March 28, 2020			March 30, 2019
Income (loss) from operation before taxes	$	54,697		$	49,103		$	(44,841	)	$	(23,551	)
Loss from operations before taxes													$	(69,627	)	$	(99,538	)
Interest expense	29,401			28,943			59,506			57,727			27,818			30,105
Depreciation, depletion and amortization	53,035			49,402			107,842			95,945			51,201			54,807
Accretion	590			329			1,171			744			577			581
Loss on debt financings	—			149			14,565			149			—			14,565
Transaction costs	390			1,291			698			2,557			753			308
Non-cash compensation	4,699			5,683			10,605			14,190			4,905			5,906
Other	(2,346		)	441			(2,492		)	(6,907		)	787			(146		)
Total Adjusted EBITDA	$	140,466		$	135,341		$	147,054		$	140,854		$	16,414		$	6,588

Total Adjusted EBITDA by Segment:
West	$	54,820		$	61,227		$	69,118		$	77,400		$	22,468		$	14,298
East	54,412			45,395			57,654			42,192			9,573			3,242
Cement	35,441			34,660			32,854			38,327			(7,561		)	(2,587		)
Corporate and other	(4,207		)	(5,941		)	(12,572		)	(17,065		)	(8,066		)	(8,365		)
Total Adjusted EBITDA	$	140,466		$	135,341		$	147,054		$	140,854		$	16,414		$	6,588


	Six months ended				Three months ended
	June 29, 2019		June 30, 2018		March 28, 2020		March 30, 2019
Purchases of property, plant and equipment
West	$	51,517	$	76,223	$	18,896	$	30,375
East	41,801		37,303		37,081		24,428
Cement	11,467		14,412		5,399		6,893
Total reportable segments	104,785		127,938		61,376		61,696
Corporate and other	784		3,719		453		492
Total purchases of property, plant and equipment	$	105,569	$	131,657	$	61,829	$	62,188


	Three months ended				Six months ended				Three months ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		March 28, 2020		March 30, 2019
Depreciation, depletion, amortization and accretion:
West	$	22,924	$	22,589	$	46,849	$	44,740	$	21,800	$	23,925
East	19,840		17,826		40,051		35,553		21,096		20,211
Cement	9,869		8,681		20,169		15,051		7,893		10,300
Total reportable segments	52,633		49,096		107,069		95,344		50,789		54,436
Corporate and other	992		635		1,944		1,345		989		952
Total depreciation, depletion, amortization and accretion	$	53,625	$	49,731	$	109,013	$	96,689	$	51,778	$	55,388


	June 29, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Total assets:
West	$	1,437,583	$	1,370,501	$	1,368,542	$	1,379,684
East	1,307,364		1,253,640		1,307,709		1,288,835
Cement	887,751		877,586		869,026		868,528
Total reportable segments	3,632,698		3,501,727		3,545,277		3,537,047
Corporate and other	322,158		355,914		446,991		530,509
Total	$	3,954,856	$	3,857,641	$	3,992,268	$	4,067,556

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

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.

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. Within our markets, we offer customers a single-source provider for construction materials and related downstream products through our vertical integration. Our materials include aggregates, which we supply across the United States, and in British Columbia, Canada, and cement, which we supply to surrounding states along the Mississippi River from Minnesota to Louisiana. In addition to supplying aggregates to customers, we use a portion of our materials internally to produce ready-mix 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.

Since our inception in 2009, we have completed dozens of acquisitions, which are organized into 11 operating companies that make up our three distinct operating segments: West, East and Cement, which are also our reporting segments. We operate in 23 U.S. states and in British Columbia, Canada and currently have assets in 22 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-mix 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 publicly traded 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 materials and products and our ability to control operating costs.

Our revenue is derived from multiple end-use markets including public infrastructure construction and private residential and nonresidential construction. Public infrastructure includes spending by federal, state, provincial and local governments for roads, highways, bridges, airports and other infrastructure projects. Public infrastructure projects have historically been a relatively stable portion of state and federal budgets. Residential and nonresidential construction consists of new construction and repair and remodel markets. 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~~During the first quarter of 2020, from a macroeconomic view, we ~~see~~saw positive indicators for the construction sector, including positive trends in

highway obligations, housing starts and construction employment.

However, given the onset of the COVID - 19 pandemic discussed below, we are closely monitoring these indicators for the impact on our business in subsequent quarters.

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. Funding for the existing federal transportation funding program extends through 2020. With the nation’s infrastructure aging, there is increased demand by states and municipalities for long-term federal funding to support the construction of new roads, highways and bridges in addition to the ~~maintaining~~maintenance of the existing infrastructure.

In addition to federal funding, state, county and local agencies provide highway construction and maintenance funding. Our four largest states by revenue, Texas, Kansas, Utah ~~Kansas~~ and Missouri, represented approximately ~~23%~~22%, 13%, 12% and 8%10%, respectively, of our total revenue in ~~2018.~~2019. The following is a summary of key funding initiatives in those states:

According to the Texas Department of Transportation (“TXDOT”) ~~total~~, annual funding available for transportation infrastructure, including state and federal funding, is estimated to ~~be approximately $13.9~~average $16.2 billion in total for fiscal year 2020 (which commenced September 1, 2019) and fiscal year 2021 combined. Further, the 2020 Unified Transportation Program (“UTP”) approved by the Texas Transportation Commission in September 2019 provides for $77 billion through fiscal year 2029 to fund transportation projects; this is an increase from $75 billion in fiscal year 2019 (which commenced September 1, 2018), increasing to $14.3 billion by fiscal year 2020. Further, the 2019 Unified Transportation Program (“UTP”) plans for $75 billion to fund transportation projects from 2019 through 2028, which is up from the 2018 UTP of $71 billion and more than double the ~~previous UTP,~~fiscal year 2016 level, which was prior to the Proposition 1 and Proposition 7 funding initiatives. ~~In July 2019, TXDOT released a preliminary 2020 UTP presentation that proposes $76.9 billion in transportation funding through 2029.~~ The funding available in any given year is separate and distinct from lettings, or the process of providing notice, issuing proposals, receiving proposals, and awarding contracts. In ~~July 2019, the~~April 2020, TXDOT updated its fiscal year ~~2019 state and local~~2020 lettings estimate to ~~$8.7~~$8.2 billion ~~up 19.6%~~ from ~~$7.3~~$8.9 billion in fiscal year ~~2018, and provided a fiscal year 2020 estimate of $9.2 billion, a 4.9% annual increase.~~2019. Longer-term, TXDOT has indicated a target of $8 billion per year in total state and local lettings.

◦

In February 2018, the federal government approved approximately $89 billion in relief funding related to a series of natural disasters, including Hurricane Harvey, which impacted our Houston market in the second half of 2017. Furthermore, in June 2019, Congress passed an additional $19.1 billion disaster aid package and released more than $4 billion to Texas that Congress originally allocated in early 2018. At the state-level, between December 2018 and January 2019, the Texas Land Commission and the City of Houston rolled out two federally funded programs, totaling $2.27 billion, assist to homeowners affected by Hurricane Harvey. In July 2019, the Texas Governor signed four bills into law aimed at bolstering the state’s emergency preparedness and disaster relief programs, including a framework that provides more than $1.6 billion for flood control projects and repairs across the state. We believe that the federal and state-level funding stemming from these legislative actions will result in the construction of significant new water and transportation infrastructure in the Houston market.

◦

In November 2015, Texas voters approved the ballot measure known as Proposition 7, authorizing a constitutional amendment for transportation funding. The amendment dedicates a portion of the state’s general sales and use taxes and motor vehicle sales and rental taxes to the State Highway Fund for use on non-tolled projects. Beginning in September 2017 (fiscal year 2018), if general state sales and use tax revenue exceeds $28 billion in a fiscal year, the next $2.5 billion will be directed to the State Highway Fund. Additionally, beginning in September 2019 (fiscal year 2020), if state motor vehicle sales and rental tax revenue exceeds $5 billion in a fiscal year, 35% of the amount above $5 billion will be directed to the State Highway Fund. In fiscal year 2018 sales tax revenue exceeded $30.5 billion, and as such, fiscal year 2019 will be the first year that the full Proposition 7 funding, $2.5 billion, is transferred to TXDOT.

◦

In November 2014, Texas voters approved a ballot measure known as Proposition 1, which authorized a portion of the severance taxes on oil and natural gas to be redirected to the State Highway Fund each year. In September 2018, TXDOT announced that it anticipated that funding from Proposition 1 for fiscal year 2019 would be $1.37 billion, up from $734 million received in fiscal year 2018. Furthermore, in May 2019, the Texas Comptroller increased its fiscal year 2020 Proposition 1 transfer estimate to $1.7 billion and in June 2019, the Texas State Legislature extended the sunset period on Proposition 1 to 2034 from 2024.

Utah’s transportation investment fund has $2.3 billion programmed for 2017 through 2022. In early 2017, Utah’s governor signed into law a measure to allow the state to issue up to $1 billion in highway general obligation bonds to accelerate funding for several projects that the Utah Transportation Commission already approved. Furthermore, in January 2019, Utah’s Transportation Governance and Funding Task Force, appointed by the state legislature in 2017, released draft legislation that would increase fees on electric and hybrid vehicles and create a hotel room tax and local

~~option sales tax to aid in transit development. The proposal would also authorize the Utah Department of Transportation to begin a study on a road usage charge pilot program.~~

In ~~May 2010,~~April 2020, Kansas passed a new 10-year, ~~$8.2~~$10 billion ~~highway~~transportation bill. ~~In May 2018,~~The program will select new modernization and expansion projects every two years, requires previously selected projects under the prior T-Works program be let prior to July 1, 2023 and levies 16.2% of the sales tax for the benefit of the State Highway Fund ("SHF"). The new transportation bill is a result of the legislative task force that was convened in May 2018 to evaluate the ~~current transportation system’s~~ condition and funding of ~~the state’s~~Kansas’ transportation system. The task force released its formal report in January 2019, concluding that it is imperative that the State of Kansas provides consistent, stable funding in order to maintain a quality transportation system; highlighting the negative impacts of $2.1 billion in transfers out of the ~~State Highway Fund~~SHF since 2011; and recommending that the state legislature review new potential sources of additional funding, including increasing registration fees, motor fuels taxes and fees for oversize vehicles and implementing new fees specific to alternative-fuel vehicles. ~~Based~~Prior to the new transportation bill and also based on the task force’s recommendations, in March 2019, the Kansas State Legislature approved the Governor’s fiscal year 2020 budget with $1.5 billion in transportation funding, a 32% increase from ~~the $1.1 billion in~~ fiscal year 2019, with the further plan to eliminate all transfers out of the ~~State Highway Fund~~SHF by 2023, starting with a $108 million reduction in fiscal year 2020 transfers. ~~Furthermore, with~~The elimination of transfers out of the SHF is expected to help pave the way for the issuance of new transportation bonds. Additionally, in December 2019, the Governor authorized an additional $216 million in sales tax revenue to remain in the SHF in fiscal year 2020 to help restore the bridge replacement program and the Kansas Department of Transportation ~~budget,~~pledged to complete $435 million worth of transportation projects promised under the ~~highway~~T-Works program ~~was allocated $546 million, an increase of 138% or $317 million from~~by fiscal year ~~2017.~~2023.

~~Missouri’s~~In December 2019, Utah passed new legislation imposing a 4.85% sales tax on gas purchases and a 6 cents per gallon increase to the diesel tax, with an additional 4 cents per gallon diesel tax increase in 2022. The tax is estimated to generate an additional $170 million for transportation investment in 2021. Furthermore, in January 2019, Utah’s Transportation Governance and Funding Task Force, appointed by the state legislature in 2017, released draft legislation that would increase fees on electric and hybrid vehicles and create a hotel room tax and local option sales tax to aid in transit development. The proposal would also authorize the Utah Department of Transportation to begin a study on a road usage charge pilot program.

In April 2020, the Missouri Governor announced that due to the coronavirus pandemic the Department of Transportation would have its budget reduced and that some projects will likely be delayed. In January 2020, Missouri lawmakers proposed four new bills aimed at increasing the gas tax, although three of which would require statewide votes. The fourth bill, which does not require a statewide vote, includes a $450 million bond directed toward repairing road infrastructure and would increase the gas tax from 17 cents per gallon to 19 cents per gallon from January 2021 until December 2030 and then decrease it back to 18 cents per gallon thereafter. The increased gas tax is expected to

generate around $60 million per year to pay off the bond over a 10-year period. In July 2019, the Missouri Highways and Transportation Commission approved the 2020 Statewide Transportation Improvement Program (“STIP”) ~~increases~~, which increased funding to $4.6 billion for highway and bridge construction through 2024 from ~~$4.5m~~$4.5 billion in the 2019 STIP and $4.2 billion in the 2018 STIP.

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 and flooding, 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. 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. The first quarter of our fiscal year typically has lower levels of activity due to weather conditions.

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-mix 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.

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 canceled 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 aggregates sold were used internally in our ready-mix concrete and asphalt paving mixes and approximately 63% of the asphalt paving mix were laid by our paving crews during the six months ended June 29, 2019. Our backlog as of June 29, 2019, was 16.3 million tons of aggregates, 1.9 million cubic yards of ready-mix concrete, 4.4 million tons of asphalt and $541.7 million of construction services, which includes the value of the aggregate and asphalt tons and ready-mix concrete cubic yards that are expected to be sourced internally.

Financial Highlights

The principal factors in evaluating our financial condition and operating results as of and for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 as compared to the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, and certain other highlights include:

Net revenue increased ~~$3.4 million and $19.4 million in the three and six months ended June 29, 2019, respectively, primarily resulting from organic growth and contributions from our acquisitions.~~

~~Our operating income increased $3.1~~$36.5 million in the three months ended ~~June 29, 2019,~~March 28, 2020, primarily resulting from organic growth.

Our operating income increased $16.0 million in the three months ended March 28, 2020, as ~~decreases~~revenue increases exceeded the increases in cost of revenue offset increases in depreciation, depletion, amortization and accretion expenses. Our operating income decreased $3.0 million in the six months ended June 29, 2019, primarily due to higher levels of depreciation and amortization resulting from our acquisitions in 2018 and a new cement terminal in late 2018. Our general and administrative expenses for the three and six month periods ended June 29, 2019 were lower than the comparable period in 2018 primarily due to reduced stock-based compensation charges in 2019.revenue.

In March 2019, we issued $300.0 million of 6.500% senior notes due 2027 (the “2027 Notes”), resulting in net proceeds of $296.3 million, after related fees and expenses. The proceeds from the 2027 Notes were used to redeem the $250.0 million of 8.500% senior notes due 2022 (the “2022 Notes”).

In February 2019, we entered into Incremental Amendment No. 4 to the Credit Agreement (as defined below) increasing the size of our revolving credit facility to $345.0 million and extending the maturity date with respect to the revolving credit commitments to February 25, 2024.

Results of Operations

In late 2019, a novel strain of the coronavirus ("COVID-19") virus began spreading globally, and is now in every state in the United States. In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. While COVID-19 did not have a significant impact on our business in the first quarter 2020 given the timing of when the effects of the pandemic began impacting our operating markets, we believe its impact will negatively affect our operations in subsequent periods. The impact on future results, however, is uncertain. We expect the amount of work we do for the residential end markets to be impacted first. In 2019, approximately 62% of our revenue was derived from the private construction market,

of which we estimate approximately 50% is residential. We are also anticipating a decrease in demand in our cement segment and accordingly, have decreased production by approximately 5% in April. We continue to monitor our operations, operations of our customers, and the recommendations of the various national, state and local governments in the areas in which we operate. We have implemented work-from-home protocols at all of our administrative locations and have implemented additional safety measures specific to COVID-19 at all of our operating locations. The extent to which the spread of COVID-19 impacts the national and local economies in which we operate, and ultimately our business, will depend on numerous developments, which are highly uncertain and difficult to predict. These events, as they continue to develop, could result in business disruption, including reduced revenues, profitability and cash flow.

As of March 28, 2020, we had $199.1 million in cash and cash equivalents, and we have remaining borrowing capacity on our senior secured revolving credit facility was $329.0 million, providing us with liquidity that we believe to be adequate to meet our obligations during the balance of 2020.

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 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. ~~As a result of~~In periods where our revenue growth ~~occurring~~occurs primarily through acquisitions, general and administrative expenses and depreciation, depletion, amortization and accretion have historically grown ratably with revenue. However, as organic volumes increase, we expect these costs as a percentage of revenue, to decrease. General and administrative expenses as a percentage of revenue vary throughout the year due to the seasonality of our business. Our transaction costs fluctuate with the level acquisition activity each year.

The table below includes revenue and operating income (loss) by segment for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018.~~2019. Operating income (loss) by segment is computed as earnings before interest, taxes and other income/expense.


	Three months ended										Six months ended										Three months ended
	June 29, 2019					June 30, 2018					June 29, 2019					June 30, 2018					March 28, 2020					March 30, 2019
(in thousands)	Revenue		Operating income (loss)			Revenue		Operating income (loss)			Revenue		Operating income (loss)			Revenue		Operating income (loss)
($ in thousands)																					Revenue		Operating income (loss)			Revenue		Operating income (loss)
West	$	300,212	$	31,624		$	321,713	$	38,413		$	482,157	$	20,002		$	503,426	$	32,283		$	196,225	$	354		$	181,945	$	(11,622	)
East	216,132		33,662			197,336		26,939			329,520		16,406			292,493		6,051			133,040		(11,764		)	113,388		(17,256		)
Cement	84,547		25,480			81,841		25,838			121,853		12,570			119,392		22,990			37,925		(15,490		)	37,306		(12,910		)
Corporate (1)	—		(10,344		)	—		(13,911		)	—		(26,227		)	—		(35,570		)	—		(14,820		)	—		(15,883		)
Total	$	600,891	$	80,422		$	600,890	$	77,279		$	933,530	$	22,751		$	915,311	$	25,754		$	367,190	$	(41,720	)	$	332,639	$	(57,671	)


(1)	Corporate results primarily consist of compensation and office expenses for employees included in the Company's headquarters.

Consolidated Results of Operations

The table below sets forth our consolidated results of operations for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018.~~

2019.


	Three months ended						Six months ended						Three months ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018			March 28, 2020			March 30, 2019
(in thousands)							��
($ in thousands)
Net revenue	$	552,591		$	549,235		$	858,541		$	839,151		$	342,406		$	305,950
Delivery and subcontract revenue	48,300			51,655			74,989			76,160			24,784			26,689
Total revenue	600,891			600,890			933,530			915,311			367,190			332,639
Cost of revenue (excluding items shown separately below)	405,493			410,932			672,497			658,793			286,155			267,004
General and administrative expenses	60,961			61,657			128,571			131,518			70,224			67,610
Depreciation, depletion, amortization and accretion	53,625			49,731			109,013			96,689			51,778			55,388
Transaction costs	390			1,291			698			2,557			753			308
Operating income	80,422			77,279			22,751			25,754
Operating loss													(41,720		)	(57,671		)
Interest expense (1)	29,401			28,943			59,506			57,727			27,818			30,105
Loss on debt financings	—			149			14,565			149			—			14,565
Other income, net	(3,676		)	(916		)	(6,479		)	(8,571		)
Income (loss) from operation before taxes	54,697			49,103			(44,841		)	(23,551		)
Income tax expense (benefit) (1)	16,707			12,190			(11,330		)	(4,516		)
Net income (loss)	$	37,990		$	36,913		$	(33,511	)	$	(19,035	)
Other loss (income), net													89			(2,803		)
Loss from operations before taxes													(69,627		)	(99,538		)
Income tax benefit													(22,901		)	(28,037		)
Net loss													$	(46,726	)	$	(71,501	)

(1)

The statement of operations above is based on the financial results of Summit Inc. and its subsidiaries. The statement of operations of Summit LLC and its subsidiaries differs from Summit Inc. in that Summit LLC has $0.1 million ~~and $0.3 million~~ less interest expense than Summit Inc. in the three ~~and six~~ months ended ~~June 29, 2019, respectively.~~March 28, 2020. The additional interest expense for Summit Inc. is associated with a deferred consideration obligation of Summit Holdings, which is excluded from Summit LLC’s consolidated interest expense.

Three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 compared to the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019


	Three months ended										Six months ended											Three months ended
($ in thousands)	June 29, 2019			June 30, 2018			Variance				June 29, 2019			June 30, 2018			Variance					March 28, 2020			March 30, 2019			Variance
Net revenue	$	552,591		$	549,235		$	3,356	0.6	%	$	858,541		$	839,151		$	19,390		2.3	%	$	342,406		$	305,950		$	36,456	11.9	%
Operating income	80,422			77,279			3,143		4.1	%	22,751			25,754			(3,003		)	(11.7	)%
Operating loss																						(41,720		)	(57,671		)	15,951		27.7	%
Operating margin percentage	14.6		%	14.1		%					2.6		%	3.1		%						(12.2		)%	(18.8		)%
Adjusted EBITDA (1)	$	140,466		$	135,341		$	5,125	3.8	%	$	147,054		$	140,854		$	6,200		4.4	%	$	16,414		$	6,588		$	9,826	149.1	%


(1)	Adjusted EBITDA is a non-GAAP measure that we find helpful in monitoring the performance of our business. See "Non-GAAP Performance Measures" below for a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure.

Net revenue increased ~~$3.4~~$36.5 million in the three months ended June 29, 2019, resulting from both organic growth and our acquisition program. Of the increase in net revenue, $26.4 million was from increased sales of materials, offset by a $4.3 million decrease in service revenue and $18.7 million decrease in sales of products. We generated organic volume growth of 4.4% in aggregates, while our organic ready-mix concrete and asphalt volumes decreased 7.2% and 2.5%, respectively. Our cement line of business had a 2.6% increase in organic volume. We had organic price growth in across all of our lines of business during the second quarter of 2019. Additional discussion about the impact of acquisitions on each segment is presented in more detail below.

~~Net revenue increased $19.4 million in the six months ended June 29, 2019,~~March 28, 2020, primarily resulting from ~~our acquisition program as well as~~ organic growth in our aggregates and asphalt operations. Of the increase in net revenue, ~~$46.1~~$8.7 million was from increased sales of materials, ~~offset by a $3.1~~$25.0 million ~~decrease in service revenue and a $23.6 million decrease in~~from increased sales of ~~products.~~products and $2.8 million from increased service revenue. We generated organic volume growth of ~~5.3%~~9.7%, ~~2.2%~~0.7% and ~~1.6%~~14.0% in aggregates, cement and ~~asphalt,~~ready-mix, respectively, during the first ~~six~~three months of ~~2019~~2020 over the prior year period, while our organic ~~ready-mix~~asphalt volumes decreased ~~6.5%~~2.9% compared to the first ~~six~~three months of ~~2018.~~2019. We had organic price growth in our aggregate, cement, ready-mix and asphalt lines of business of ~~7.4%~~2.2%, 2.6%, 6.0% and ~~6.2%~~4.1%, respectively, during the first ~~six~~three months of 2019. Organic cement volumes increased by 2.2%, while organic cement pricing was flat during the first six months of 2019. Additional discussion about the impact of acquisitions on each segment is presented in more detail below.2020.

In the three months ended June 29, 2019, our net revenue increased $12.1 million from acquisitions, offset by $8.7 million of organic declines. Operating income increased by $3.1 million in the second quarter of 2019 as compared to the second quarter of 2018 primarily as a result of a decrease in our cost of revenue and additional decreases in our general and administrative expense and transaction costs. Our general and administrative expenses and transaction costs decreased in the second quarter of 2019 as compared to the same period a year ago, due to fewer acquisitions through the first half of the year. Our depreciation, depletion, amortization and accretion increased $3.9 million primarily due to lower levels of cement production in our Cement segment led to less depreciation being capitalized into inventory, as well as higher depreciation levels from our acquisition program.

~~In the six months ended June 29, 2019, our net revenue increased $23.6 million from acquisitions, offset by $4.2 million of organic declines.~~ Operating ~~income~~loss decreased by ~~$3.0~~$16.0 million in the first ~~six~~three months of ~~2019~~2020 as compared to the first ~~six~~three months of ~~2018~~2019, primarily as ~~a result~~we produced net revenue gains in excess of ~~a $12.3 million increase in~~our costs of revenue. In addition, depreciation, depletion, amortization and accretion expense ~~partially offset~~decreased by ~~a decrease~~$3.6 million as our capital expenditures in general and administrative expenses. Our depreciation, depletion, amortization and accretion expense is higher in 2019 partially due to acquisitions completed in the second half of 2018, as well as less depreciation being capitalized into inventory as inventory levels are decreased.prior periods have been decreasing.

Our operating margin percentage for the three months ended March 28, 2020 increased from ~~14.1%~~(18.8)% to ~~14.6% and decreased~~(12.2)%, from ~~3.1% to 2.6% in~~ the ~~three and six months ended June 29, 2019, respectively,~~comparable period a year ago, due to the items noted above. Adjusted EBITDA, as defined in "Non-GAAP Performance Measures" below, increased by ~~$5.1 million and $6.2~~$9.8 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, due to the factors noted above.

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~~product was as follows:


	Three months ended											Six months ended											Three months ended
($ in thousands)	June 29, 2019			June 30, 2018			Variance					June 29, 2019			June 30, 2018			Variance					March 28, 2020			March 30, 2019		Variance
Revenue by product*:
Aggregates	$	161,842		$	134,213		$	27,629		20.6	%	$	270,230		$	221,092		$	49,138		22.2	%	$	121,473		$	108,388	$	13,085		12.1	%
Cement	80,248			77,714			2,534			3.3	%	113,848			111,480			2,368			2.1	%	34,758			33,600		1,158			3.4	%
Ready-mix concrete	154,239			160,930			(6,691		)	(4.2	)%	271,667			283,238			(11,571		)	(4.1	)%	141,809			117,428		24,381			20.8	%
Asphalt	104,007			91,951			12,056			13.1	%	130,404			110,253			20,151			18.3	%	25,946			26,397		(451		)	(1.7	)%
Paving and related services	162,467			173,081			(10,614		)	(6.1	)%	208,094			219,481			(11,387		)	(5.2	)%	46,074			45,627		447			1.0	%
Other	(61,912		)	(36,999		)	(24,913		)	(67.3	)%	(60,713		)	(30,233		)	(30,480		)	(100.8	)%	(2,870		)	1,199		(4,069		)	(339.4	)%
Total revenue	$	600,891		$	600,890		$	1		—	%	$	933,530		$	915,311		$	18,219		2.0	%	$	367,190		$	332,639	$	34,551		10.4	%

*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.

Detail of our volumes and average selling prices by product in the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~ were as follows:


	Three months ended										Three months ended
	June 29, 2019			June 30, 2018							March 28, 2020			March 30, 2019
	Volume(1)			Volume(1)			Percentage Change in				Volume(1)			Volume(1)			Percentage Change in
	(in thousands)	Pricing(2)		(in thousands)	Pricing(2)		Volume		Pricing		(in thousands)	Pricing(2)		(in thousands)	Pricing(2)		Volume		Pricing
Aggregates	14,528	$	11.14	13,151	$	10.21	10.5	%	9.1	%	11,193	$	10.85	10,207	$	10.62	9.7	%	2.2	%
Cement	698	114.95		680	114.21		2.6	%	0.6	%	299	116.21		297	113.31		0.7	%	2.6	%
Ready-mix concrete	1,398	110.35		1,503	107.09		(7.0	)%	3.0	%	1,244	114.04		1,091	107.62		14.0	%	6.0	%
Asphalt	1,596	58.16		1,611	54.70		(0.9	)%	6.3	%	409	56.86		421	54.62		(2.9	)%	4.1	%

	Six months ended
	June 29, 2019			June 30, 2018
	Volume(1)			Volume(1)			Percentage Change in
	(in thousands)	Pricing(2)		(in thousands)	Pricing(2)		Volume		Pricing
Aggregates	24,735	$	10.93	21,966	$	10.07	12.6	%	8.5	%
Cement	995	114.46		974	114.46		2.2	%	—	%
Ready-mix concrete	2,489	109.15		2,645	107.09		(5.9	)%	1.9	%
Asphalt	2,017	57.42		1,961	54.23		2.9	%	5.9	%


(1)	Volumes are shown in tons for aggregates, cement and asphalt and in cubic yards for ready-mix concrete.


(2)	Pricing is shown on a per ton basis for aggregates, cement and asphalt and on a per cubic yard basis for ready-mix concrete.

Revenue from aggregates increased ~~$27.6 million and $49.1~~$13.1 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, due to increased volumes and improved average sales prices. Aggregate volumes ~~were positively affected by our acquisition program and~~growth was attributable to organic growth in both the West and East segments. Organic aggregate volumes increased ~~5.3%~~9.7% in the first ~~half~~three months of ~~2019~~2020 as compared to the same period a year ago, primarily due to increases in Missouri, Kansas and Texas markets. Aggregate average sales prices of ~~$10.93~~$10.85 per ton increased ~~8.5%~~2.2% in the first ~~six~~three months of ~~2019~~2020 as compared to the first ~~six~~three months of ~~2018,~~2019, supported by strong increases in Missouri.

Revenue from cement increased ~~$2.5 million and $2.4~~$1.2 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively, primarily due to a 2.2% increase in~~March 28, 2020. In the three months ended March 28, 2020, organic ~~volume, as~~cement volumes increased 0.7% and organic cement average sales prices ~~remained flat.~~increased 2.6%, as compared to the same period in the prior year.

Revenue from ready-mix concrete ~~decreased $6.7 million and $11.6~~increased $24.4 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively, due to a 6.5% decrease in organic~~March 28, 2020. In the three months ended March 28, 2020, our ready-mix volumes ~~primarily in~~increased 14.0% and our ~~Texas and Intermountain regions partially offset by a 1.8% increase in organic~~ average sales ~~prices.~~prices increased 6.0%. These volume and price increases occurred in both the West and East segments. Volumes in the Texas and Intermountain regions were impacted by ~~less~~more favorable weather conditions during the first ~~half~~three months of ~~2019~~2020 as compared to ~~2018.~~2019.

Revenue from asphalt ~~increased $12.1 million and $20.2~~decreased $0.5 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively.~~March 28, 2020. In the first ~~half~~three months of ~~2019, our~~2020, organic ~~increases in volumes and~~ pricing ~~were 1.6% and 6.2%~~increased 4.1%, ~~respectively,~~ with strong pricing gains in Kansas, Texas and the Intermountain geographies. The increase in average sales price for asphalt was more than offset, however, by a decrease in sales volume.

Other Financial Information

Loss on Debt Financings

In March 2019, we used the net proceeds from the offering of the 2027 Notes to redeem all of the outstanding 2022 Notes. In connection with that transaction, charges of $14.6 million were recognized in the ~~six~~three months ended ~~June 29,~~March 30, 2019. The fees included $11.7 million for the applicable prepayment premium and $2.9 million for the write-off of unamortized deferred financing fees.

~~Other Income, net~~

During the second quarter of 2019, we reduced the estimated liability related to an earnout provision for one of our operations in the East segment by $2.0 million. As the period of time to record this adjustment against the purchase accounting entries had passed, this adjustment was recorded as other income.

Income Tax Expense ~~(Benefit)~~

Our income tax ~~expense (benefit)~~benefit was ~~$16.7 million and $(11.3)~~$22.9 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, and our income tax ~~expense (benefit)~~benefit was ~~$12.2 million and $(4.5)~~$28.0 million in the three ~~and six~~ months ended ~~June~~March 30, ~~2018, respectively.~~2019. Our effective tax rate for Summit Inc. differs from the federal rate primarily due to (1) unrecognized tax benefits, (2) state taxes, ~~(2)~~(3) tax depletion expense in excess of the expense recorded under U.S. GAAP, ~~(3)~~(4) the minority interest in the Summit Holdings partnership that is allocated outside of the Company ~~(4)~~and (5) various other items such as limitations on meals and entertainment, certain stock compensation and other ~~costs~~costs. The increase in the Company's effective tax rate, and ~~(5) unrecognized~~related income tax ~~benefits.~~benefit, over the prior year is in response to provisions of the Coronavirus Aid, Relief and Economic Stability Act ("CARES Act") enacted into law in late March 2020. Among other things, the CARES Act amended provisions of the Tax Cuts and Jobs Act of 2017 ("TCJA") related to limitations on the deductibility of interest expense. The Company’s income tax provision is calculated under the provisions of the proposed TCJA regulations, as amended by the CARES Act, which will limit our ability to deduct interest expense in calculating our taxable income. Once the final regulations are issued, the Company will adjust its calculations, if necessary.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible, as well as consideration of tax-planning strategies we may seek to utilize net operating loss carryforwards that begin to expire in 2030.

Segment results of operations

West Segment


	Three months ended											Six months ended											Three months ended
($ in thousands)	June 29, 2019			June 30, 2018			Variance					June 29, 2019			June 30, 2018			Variance					March 28, 2020			March 30, 2019			Variance
Net revenue	$	273,306		$	293,685		$	(20,379	)	(6.9	)%	$	441,535		$	462,629		$	(21,094	)	(4.6	)%	$	184,492		$	168,229		$	16,263	9.7	%
Operating income	31,624			38,413			(6,789		)	(17.7	)%	20,002			32,283			(12,281		)	(38.0	)%
Operating income (loss)																							354			(11,622		)	11,976		(103.0	)%
Operating margin percentage	11.6		%	13.1		%						4.5		%	7.0		%						0.2		%	(6.9		)%
Adjusted EBITDA (1)	$	54,820		$	61,227		$	(6,407	)	(10.5	)%	$	69,118		$	77,400		$	(8,282	)	(10.7	)%	$	22,468		$	14,298		$	8,170	57.1	%


(1)	Adjusted EBITDA is a non-GAAP measure that we find helpful in monitoring the performance of our business. See "Non-GAAP Performance Measures" below for a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure.

Net revenue ~~decreased $20.4~~in the West segment increased $16.3 million in the three months ended June 29, 2019, primarily resulting from the sale a non-core business in the third quarter of 2018 partially offset by increases in organic aggregate volumes and average sales prices in the second quarter of 2019. Unfavorable weather in Texas and Utah impacted our ready-mix volumes, which were down 5.9% in the second quarter of 2019 compared to the same period in 2018, while average sales prices for ready-mix improved 3.4%.

~~Net revenue in the West segment decreased $21.1 million in the six months ended June 29, 2019,~~March 28, 2020, primarily due to ~~the sale of a non-core business in the third quarter of 2018, partially offset by~~ increases in net revenues from ~~aggregates.~~aggregates and ready-mix concrete. Organic aggregate volumes increased ~~4.8%~~9.2% in the first ~~half~~three months of ~~2019~~2020 as compared to the first ~~half~~three months of ~~2018,~~2019, and organic aggregates average sales prices ~~increased 4.6%.~~decreased 1.5% primarily due to product mix. Organic ready-mix concrete volumes ~~were down 5.8%~~increased 5.2% while ~~we achieved a 1.5% increase in~~our organic ready-mix concrete average sales ~~prices.~~prices increased 6.3%.

The West segment’s operating income ~~decreased $6.8 million and $12.3~~increased $12.0 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020. Adjusted EBITDA ~~declined $6.4 million and $8.3~~increased $8.2 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively.~~March 28, 2020. The ~~decreases~~increases in operating income and Adjusted EBITDA ~~primarily due to~~occurred as the ~~sale of a non-core business in the third quarter of 2018, as well as operational inefficiencies related to the loss of a piece of mining equipment in the second quarter of 2019. Further, colder~~ weather conditions in ~~our Utah~~2020 have improved over 2019, which has resulted in operational efficiencies and ~~Colorado markets had a negative effect on our operational efficiencies.~~increased sales volumes. The operating margin percentage in the West segment ~~decreased~~increased in the three ~~and six~~ months ended ~~June 29, 2019 to 11.6% from 13.1% and to 4.5% from 7.0%~~March 28, 2020 as compared to the three ~~and six~~ months ended ~~June~~March 30, ~~2018, respectively,~~2019, due to the impact of the same items noted above.

Gross revenue by product/ service was as follows:


	Three months ended											Six months ended											Three months ended
($ in thousands)	June 29, 2019			June 30, 2018			Variance					June 29, 2019			June 30, 2018			Variance					March 28, 2020			March 30, 2019			Variance
Revenue by product*:
Aggregates	$	64,737		$	56,814		$	7,923		13.9	%	$	112,726		$	99,530		$	13,196		13.3	%	$	51,601		$	47,989		$	3,612		7.5	%
Ready-mix concrete	117,098			120,362			(3,264		)	(2.7	)%	212,106			219,621			(7,515		)	(3.4	)%	106,227			95,008			11,219			11.8	%
Asphalt	70,797			65,394			5,403			8.3	%	95,098			82,273			12,825			15.6	%	23,430			24,301			(871		)	(3.6	)%
Paving and related services	100,467			110,312			(9,845		)	(8.9	)%	131,241			141,578			(10,337		)	(7.3	)%	33,267			30,774			2,493			8.1	%
Other	(52,887		)	(31,169		)	(21,718		)	(69.7	)%	(69,014		)	(39,576		)	(29,438		)	(74.4	)%	(18,300		)	(16,127		)	(2,173		)	(13.5	)%
Total revenue	$	300,212		$	321,713		$	(21,501	)	(6.7	)%	$	482,157		$	503,426		$	(21,269	)	(4.2	)%	$	196,225		$	181,945		$	14,280		7.8	%

*Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in ~~“Other” which also includes revenue from a non-core business which was sold in the third quarter of 2018.~~“Other.” Revenue from the liquid asphalt terminals is included in asphalt revenue.

The West segment’s percent changes in sales volumes and pricing in the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 from the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019 were as follows:


	Three months ended				Six months ended				Three months ended
	Percentage Change in				Percentage Change in				Percentage Change in
	Volume		Pricing		Volume		Pricing		Volume		Pricing
Aggregates	8.5	%	5.1	%	7.7	%	5.1	%	9.2	%	(1.5	)%
Ready-mix concrete	(5.9	)%	3.4	%	(5.0	)%	1.7	%	5.2	%	6.3	%
Asphalt	(3.0	)%	4.1	%	2.5	%	3.3	%	(4.9	)%	3.7	%

Gross revenue from aggregates in the West segment increased ~~$7.9 million and $13.2~~$3.6 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, due to an increase in organic ~~volumes and average selling prices.~~volumes. The increase in aggregates volumes was primarily in our Texas markets. Aggregates pricing for the three ~~and six~~ months ended ~~June 29, 2019 increased 5.1% and 5.1%~~March 28, 2020 decreased 1.5%, ~~respectively,~~ when compared to the same period in ~~2018.~~2019 due to product mix primarily in our Texas markets.

Revenue from ready-mix concrete in the West segment ~~decreased $3.3 million and $7.5~~increased $11.2 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively, as organic volumes decreased and were partially offset by increases in average sales prices.~~March 28, 2020. For the ~~six~~three months ended ~~June 29, 2019,~~March 28, 2020, organic ready-mix concrete prices increased 6.3%. For the three months ended March 28, 2020, our ready-mix concrete organic volumes ~~decreased 5.8% due to challenging~~increased 5.2% as weather conditions in ~~Texas and~~ the Intermountain ~~geographies.~~geographies in the first three months of 2020 were more favorable than in 2019.

Revenue from asphalt in the West segment ~~increased $5.4 million and $12.8~~decreased $0.9 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively.~~March 28, 2020. Our ~~second~~first quarter asphalt volumes decreased ~~3.0%, while our volumes in the first six months of 2019 were 2.5% higher than~~4.9% below the comparable period in ~~2018.~~2019. Average sales prices for asphalt increased ~~4.1% and 3.3%~~3.7% in the three ~~and six month periods ended June 2019, respectively. Additionally, our liquid asphalt terminal, damaged by Hurricane Harvey, was in service during the three and six~~ months ended ~~June 29, 2019 but not in the comparable 2018 periods.~~March 28, 2020. Revenue for paving and related services in the West segment ~~decreased~~increased by ~~$9.8 million and $10.3~~$2.5 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively.~~March 28, 2020, due to a shift towards more private sector projects in the Utah market.

Prior to eliminations of intercompany transactions, the net effect of volume and pricing changes on gross revenue in the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 was approximately ~~($2.2)~~$8.1 million and ~~$20.7~~$5.9 million, respectively.

Our Austin ~~operation~~business operates a liquid asphalt terminal in the Houston area which was damaged by Hurricane Harvey in 2017. The terminal commenced limited operations in the third quarter of 2018. In ~~2019, in~~ the ~~six~~three months ended ~~June 29,~~March 30, 2019, we received $1.9 million related to our business interruption claim, which is included in other income, net.

East Segment


	Three months ended										Six months ended										Three months ended
($ in thousands)	June 29, 2019			June 30, 2018			Variance				June 29, 2019			June 30, 2018			Variance				March 28, 2020			March 30, 2019			Variance
Net revenue	$	194,738		$	173,709		$	21,029	12.1	%	$	295,153		$	257,130		$	38,023	14.8	%	$	119,989		$	100,415		$	19,574	19.5	%
Operating income	33,662			26,939			6,723		25.0	%	16,406			6,051			10,355		171.1	%
Operating loss																					(11,764		)	(17,256		)	5,492		31.8	%
Operating margin percentage	17.3		%	15.5		%					5.6		%	2.4		%					(9.8		)%	(17.2		)%
Adjusted EBITDA (1)	$	54,412		$	45,395		$	9,017	19.9	%	$	57,654		$	42,192		$	15,462	36.6	%	$	9,573		$	3,242		$	6,331	195.3	%


(1)	Adjusted EBITDA is a non-GAAP measure that we find helpful in monitoring the performance of our business. See "Non-GAAP Performance Measures" below for a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure.

Net revenue in the East segment increased ~~$21.0 million and $38.0~~$19.6 million in the three ~~and six month periods~~months ended ~~June 29, 2019, respectively,~~March 28, 2020, as compared to the same period a year ago, primarily due to organic growth in our aggregates ~~business,~~and ready-mix concrete businesses, both in ~~organic~~ volumes and ~~organic~~ average sales prices. Operating ~~income increased $6.7 million and $10.4~~loss decreased $5.5 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, over the same period a year ago. The ~~increase~~decrease in operating ~~income~~loss for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 was due to ~~a mix of acquisition and organic growth in aggregate volumes and net revenue, offset by~~the items noted above which exceeded increases in general and administrative expenses and depreciation, deletion, amortization and ~~accretion primarily related to 2018 acquisitions.~~accretion. Adjusted EBITDA increased ~~$9.0 million and $15.5~~$6.3 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, due to the items ~~noted above~~ relating to operating ~~income.~~income noted above.

Operating margin percentage for the three ~~and six~~ months ended ~~June 29, 2019 improved~~March 28, 2020 increased to ~~17.3%~~(9.8)% from ~~15.5% and to 5.6% from 2.4%~~(17.2)%, ~~respectively,~~ from the comparable period a year ago, as average sales prices increased more than our cost of revenues.

Gross revenue by product/ service was as follows:


	Three months ended											Six months ended									Three months ended
($ in thousands)	June 29, 2019			June 30, 2018			Variance					June 29, 2019		June 30, 2018		Variance					March 28, 2020		March 30, 2019		Variance
Revenue by product*:
Aggregates	$	97,105		$	77,399		$	19,706		25.5	%	$	157,504	$	121,562	$	35,942		29.6	%	$	69,872	$	60,399	$	9,473		15.7	%
Ready-mix concrete	37,141			40,568			(3,427		)	(8.4	)%	59,561		63,617		(4,056		)	(6.4	)%	35,582		22,420		13,162			58.7	%
Asphalt	33,210			26,557			6,653			25.1	%	35,306		27,980		7,326			26.2	%	2,516		2,096		420			20.0	%
Paving and related services	62,000			62,769			(769		)	(1.2	)%	76,853		77,903		(1,050		)	(1.3	)%	12,807		14,853		(2,046		)	(13.8	)%
Other	(13,324		)	(9,957		)	(3,367		)	(33.8	)%	296		1,431		(1,135		)	(79.3	)%	12,263		13,620		(1,357		)	(10.0	)%
Total revenue	$	216,132		$	197,336		$	18,796		9.5	%	$	329,520	$	292,493	$	37,027		12.7	%	$	133,040	$	113,388	$	19,652		17.3	%

The East segment’s percent changes in sales volumes and pricing in the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 from the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019 were as follows:


	Three months ended				Six months ended				Three months ended
	Percentage Change in				Percentage Change in				Percentage Change in
	Volume		Pricing		Volume		Pricing		Volume		Pricing
Aggregates	12.1	%	11.9	%	17.0	%	10.8	%	10.0	%	5.2	%
Ready-mix concrete	(10.2	)%	1.8	%	(9.0	)%	2.8	%	53.8	%	3.5	%
Asphalt	4.3	%	12.8	%	3.8	%	14.8	%	21.2	%	5.8	%

Gross revenue from aggregates in the East segment increased ~~$19.7 million and 35.9~~$9.5 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively, primarily due to growth~~March 28, 2020, we achieved increases in ~~organic aggregates~~both volumes and ~~to a lesser extent, acquisitions in 2018.~~prices. Aggregate volumes in the first ~~six~~three months of ~~2019~~2020 increased ~~17.0%~~10.0%, primarily due to organic growth in our Missouri market where significant flood repair work continues to occur, as ~~a result of both~~well as in Kansas. Aggregates organic ~~and~~

~~acquisition volumes. Aggregates~~ pricing increased 5.2% in the ~~three and six month period~~first quarter of ~~2019 as organic average sales prices increased 10.6% and 9.5%, respectively.~~2020.

Revenue from ready-mix concrete in the East segment ~~decreased $3.4 million and $4.1~~increased $13.2 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, as compared to the same period in ~~2018.~~2019. In the three ~~and six~~ months ended ~~June 29, 2019, declines~~March 28, 2020, ready-mix concrete volumes increased 53.8% compared to prior year levels as weather conditions in ~~our organic volumes~~the first quarter of 2020 were ~~partially offset by an increase in average sales prices of 1.8% and 2.8%, respectively.~~more favorable than a year ago. The ~~declines~~increases in ready-mix concrete volumes occurred primarily in ~~Arkansas~~Missouri and Kansas.

Revenue from asphalt increased ~~$6.7 million and $7.3~~$0.4 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, when compared to the comparable period of ~~2018.~~2019. The increase was mainly attributable to ~~increased organic~~improved pricing. Asphalt pricing increased ~~14.8%~~5.8% in the three months ended March 28, 2020, as the sales mix favored higher priced markets as well as increases in liquid asphalt volumes and pricing from our terminals. ~~The $0.8 million and $1.1 million decrease in paving~~Paving and related service revenue decreased $2.0 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively, was~~March 28, 2020, primarily due to ~~decreased paving volumes.~~the completion of two large projects in 2019 in our Kansas market.

Prior to eliminations of intercompany transactions, the net effect of volume and pricing changes on gross revenue in the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 was approximately ~~$18.0~~$18.9 million and ~~$21.1~~$4.1 million, respectively.

Cement Segment


	Three months ended											Six months ended											Three months ended
($ in thousands)	June 29, 2019			June 30, 2018			Variance					June 29, 2019			June 30, 2018			Variance					March 28, 2020			March 30, 2019			Variance
Net revenue	$	84,547		$	81,841		$	2,706		3.3	%	$	121,853		$	119,392		$	2,461		2.1	%	$	37,925		$	37,306		$	619		1.7	%
Operating income	25,480			25,838			(358		)	(1.4	)%	12,570			22,990			(10,420		)	(45.3	)%
Operating loss																							(15,490		)	(12,910		)	(2,580		)	(20.0	)%
Operating margin percentage	30.1		%	31.6		%						10.3		%	19.3		%						(40.8		)%	(34.6		)%
Adjusted EBITDA (1)	$	35,441		$	34,660		$	781		2.3	%	$	32,854		$	38,327		$	(5,473	)	(14.3	)%	$	(7,561	)	$	(2,587	)	$	(4,974	)	(192.3	)%


(1)	Adjusted EBITDA is a non-GAAP measure that we find helpful in monitoring the performance of our business. See "Non-GAAP Performance Measures" below for a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure.

Net revenue in the Cement segment increased ~~$2.7~~$0.6 million ~~and $2.5 million in the three and six months ended June 29, 2019, respectively,~~ primarily due to a ~~2.2%~~0.7% increase in organic ~~volume.~~cement volume in the three months ended March 28, 2020.

The Cement segment’s operating ~~income was flat~~loss increased approximately $2.6 million during the three months ended ~~June 29, 2019, while it decreased $10.4 million in the six months ended June 29, 2019.~~March 28, 2020. Adjusted EBITDA ~~increased $0.8 million and~~ decreased ~~$5.5~~$5.0 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively.~~ March 28, 2020. Although net revenues increased in the three month period ended March 28, 2020 as compared to the same period in the prior year, operating loss increased as we incurred higher maintenance costs in 2020 as incremental maintenance activities were performed in 2020 as compared to those that occurred in 2019. These increases in costs were partially offset by lower depreciation expense compared to the prior year, related to the amount of depreciation that was capitalized into inventory.

Operating margin percentage for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 decreased to ~~30.1%~~(40.8)% from ~~31.6% and to 10.3% from 19.3%~~(34.6)%, ~~respectively,~~ from the comparable ~~periods~~period a year ago. The increase in operating loss and ~~decrease in~~ operating margin for the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 was primarily due to ~~flood levels on~~ the Mississippi River, resulting in lower levels of production due to extended plant shutdowns in 2019 which resulted in higher costs of revenue as less production costs were capitalized into inventory. Further, the lower productionsame items noted above. Production levels in the first ~~half~~three months of ~~2019~~2020 were slightly higher than in 2019. In April 2020, we had an explosion at our facility that receives waste fuels that are converted to fuel for one of our cement plants. We are still assessing the damage, and the required repairs to our facility, which will dictate the time required to complete those repairs. We expect our ability to process solid waste fuels will be limited in the second quarter of 2020. Our preliminary estimates are that our operating income and Adjusted EBITDA will be reduced by approximately $2.0 to $4.0 million in the second quarter of 2020 as ~~compared~~a result. If we are unable to ~~2018 also resulted in higher depreciation expense as less depreciation was capitalized into inventory.~~resume operations at the facility by the end of the second quarter, there will be additional impact to subsequent quarters.

Gross revenue by product was as follows:


	Three months ended								Six months ended								Three months ended
($ in thousands)	June 29, 2019		June 30, 2018		Variance				June 29, 2019		June 30, 2018		Variance				March 28, 2020		March 30, 2019		Variance
Revenue by product*:
Cement	$	80,248	$	77,714	$	2,534	3.3	%	$	113,848	$	111,480	$	2,368	2.1	%	$	34,758	$	33,600	$	1,158		3.4	%
Other	4,299		4,127		172		4.2	%	8,005		7,912		93		1.2	%	3,167		3,706		(539		)	(14.5	)%
Total revenue	$	84,547	$	81,841	$	2,706	3.3	%	$	121,853	$	119,392	$	2,461	2.1	%	$	37,925	$	37,306	$	619		1.7	%

*Revenue by product includes intercompany and intracompany sales transferred at market value. Revenue from waste processing and the elimination of intracompany transactions is included in Other.

The Cement segment’s percent changes in sales volumes and pricing in the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 from the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019 were as follows:

Three months ended Six months ended
Percentage Change in Percentage Change in
Volume Pricing Volume Pricing
Cement 2.6 % 0.6 % 2.2 % — %



	Three months ended
	Percentage Change in
	Volume		Pricing
Cement	0.7	%	2.6	%

Revenue from cement increased ~~$2.5 million and $2.4~~$1.2 million in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, as organic cement pricing in the three ~~and six~~ months ended ~~June 29, 2019 was flat, while we obtained a 2.6%~~March 28, 2020 improved, and ~~2.2% increase in~~ volumes increased 0.7%, respectively.

Liquidity and Capital Resources

Our primary sources of liquidity include cash on-hand, cash provided by operations, amounts available for borrowing under our senior secured credit facilities and capital-raising activities in the debt and capital markets. As of ~~June 29, 2019,~~March 28, 2020, we had ~~$67.7~~$199.1 million in cash and cash equivalents and ~~$323.6~~$402.4 million of working capital compared to ~~$128.5~~$311.3 million and ~~$330.9~~$497.0 million, respectively, at December ~~29, 2018.~~28, 2019. Working capital is calculated as current assets less current liabilities. There were no restricted cash balances as of ~~June 29, 2019~~March 28, 2020 or December ~~29, 2018. Our remaining borrowing capacity~~28, 2019. We had no outstanding borrowings on our senior secured revolving credit facility, ~~was $329.8~~which had borrowing capacity of $329.0 million as of ~~June 29, 2019,~~March 28, 2020, which is net of ~~$15.2~~$16.0 million of outstanding letters of credit and is fully available to us within the terms and covenant requirements of our credit agreement governing the senior secured credit facilities (the “Credit Agreement”).

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.

Our acquisition strategy has historically required us to raise capital through equity issuances or debt financings. As of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018,~~28, 2019, our long-term borrowings totaled $1.9 billion ~~and $1.8 billion, respectively,~~ for which we incurred ~~$25.6 million and $51.9~~$24.5 million of interest expense for the three ~~and six~~ months ended ~~June 29, 2019,~~March 28, 2020, and ~~$25.6 million and $51.3~~$26.3 million for the three ~~and six~~ months ended ~~June~~March 30, ~~2018. Our senior secured revolving credit facility has been adequate~~2019. We expect that normal operating cash flow will be sufficient to fund our seasonal working capital needs and certain acquisitions. We had no outstanding borrowings on the revolving credit facility as of ~~June 29, 2019.~~March 28, 2020.

WeNotwithstanding the anticipated challenges associated with COVID-19, 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.

We and our affiliates may from time to time purchase our outstanding debt through open market purchases, privately negotiated transactions or otherwise. Purchases or retirement of debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

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 ~~June 29, 2019,~~March 28, 2020, we were in compliance with all debt covenants.

At ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018,~~28, 2019, $1.9 ~~billion and $1.8~~ billion of total debt ~~respectively,~~ was 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 $345.0 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 Sand & Gravel ULC, 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 February 28, 2019, Summit LLC entered into Incremental Amendment No. 4 to the Credit Agreement which, among other things, increased the total amount available under the revolving credit facility to $345.0 million and extended the maturity date of the Credit Agreement to February 2024.

On March 15, 2019, Summit LLC and Summit Finance (together, the “Issuers”) issued the 2027 Notes, at 100.0% of their par value with proceeds of $296.3 million, net of related fees and expenses. Interest on the 2027 Notes is payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2019. In March 2019, using the proceeds from the 2027 Notes, all of the 2022 Notes were redeemed at a price equal to par plus an applicable premium and the indenture under which the 2022 Notes were issued was satisfied and discharged. As a result of the extinguishment, charges of $14.6 million were recognized in the quarter ended March 30, 2019, which included charges of $11.7 million for the applicable redemption premium and $2.9 million for the write-off of deferred financing fees.

Cash Flows

The following table summarizes our net cash used in or provided by operating, investing and financing activities and our capital expenditures in the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018:~~2019:


	Summit Inc.						Summit Inc.
(in thousands)	June 29, 2019			June 30, 2018
Net cash provided by (used in):
($ in thousands)							March 28, 2020			March 30, 2019
Net cash used in:
Operating activities	$	15,948		$	(33,718	)	$	(38,931	)	$	(30,676	)
Investing activities	(100,845		)	(270,059		)	(56,868		)	(62,411		)
Financing activities	23,853			(28,904		)	(15,606		)	29,225

Operating activities

During the ~~six~~three months ended ~~June 29, 2019,~~March 28, 2020, cash ~~provided by~~used in operating activities was ~~$15.9~~$38.9 million primarily as a result of:

Net loss of ~~$33.5~~$46.7 million, ~~offset~~increased by non-cash expenses, including ~~$111.0~~$55.3 million of depreciation, depletion, amortization and accretion expense and ~~$10.6~~$4.9 million of share-based compensation.

Billed and unbilled accounts receivable ~~increased~~decreased by ~~$106.0~~$21.6 million in the first ~~half~~three months of ~~2019~~2020 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.

The timing of payments associated with accounts payable and accrued expenses of cash, which is consistent with the seasonality of our business whereby we build-up inventory levels and incur repairs and maintenance costs to ready the business for increased sales volumes in the summer and fall. These costs are typically incurred in the first half of the year and paid by year-end. In addition, we made ~~$36.8~~$36.3 million of interest payments in the ~~six~~three months ended ~~June 29, 2019.~~March 28, 2020.

During the ~~six~~three months ended ~~June~~March 30, ~~2018,~~2019, cash used in operating activities was ~~$33.7~~$30.7 million primarily as a result of:

Net loss of ~~$19.0~~$71.5 million, ~~offset~~decreased by non-cash expenses, including ~~$98.6~~$57.0 million of depreciation, depletion, amortization and accretion expense and ~~$14.2~~$5.9 million of share-based compensation.

Additional investment in inventory of ~~$44.4~~$0.7 million consistent with the seasonality of our business for which our inventory levels typically increase in the first half of the year ~~in preparation for~~and begin to decrease during the ~~upcoming season.~~third quarter.

Billed and unbilled accounts receivable ~~increased~~decreased by ~~$92.3~~$21.7 million in the first ~~six~~three months of ~~2018~~2019 as a result of the seasonality of our ~~business as described above.~~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.

The timing of payments associated with accounts payable and accrued expenses of cash, which is consistent with the seasonality of our business ~~as described above.~~whereby we build-up inventory levels and incur repairs and maintenance costs to ready the business for increased sales volumes in the summer and fall. These costs are typically incurred in the first half of the year and paid by year-end. In addition, we made ~~$52.2~~$21.1 million of interest payments in the ~~six~~three months ended ~~June~~March 30, ~~2018.~~2019.

Investing activities

During the three months ended March 28, 2020, cash used for investing activities was $56.9 million, of which $61.8 million was invested in capital expenditures, which was partially offset by $3.2 million of proceeds from asset sales.

During the ~~six~~three months ended ~~June 29,~~March 30, 2019, cash used for investing activities was ~~$100.8~~$62.4 million, of which $2.8 million related to the one acquisition completed in the period and ~~$105.6~~$62.2 million was invested in capital expenditures, which was partially offset by ~~$8.0~~$2.8 million of proceeds from asset sales.

During the six months ended June 30, 2018, cash used for investing activities was $270.1 million, of which $153.2 million related to the seven acquisitions completed in the period and $131.7 million was invested in capital expenditures, which was partially offset by $14.1 million of proceeds from asset sales.

Financing activities

During the ~~six~~three months ended ~~June 29,~~March 28, 2020, cash used in financing activities was $15.6 million. We made payments on acquisition-related liabilities of $9.5 million and payments on debt of $5.5 million.

During the three months ended March 30, 2019, cash provided by financing activities was ~~$23.9~~$29.2 million. We received $0.8 million of proceeds from stock option exercises and $300.0 million from proceeds from debt issuance, which was offset by ~~$9.2~~$8.9 million of payments on acquisition-related liabilities and ~~$261.0 million of payments on debt.~~

During the six months ended June 30, 2018, cash used in financing activities was $28.9 million. We received $15.6 million of proceeds from stock option exercises, which was partially offset by $31.2 million of payments on acquisition related liabilities and $10.8$256.3 million of payments on debt.

Cash paid for capital expenditures

We paid cash of approximately ~~$105.6~~$61.8 million in capital expenditures in the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 compared to ~~$131.7~~$62.2 million in the ~~six~~three months ended ~~June~~March 30, ~~2018.~~2019.

We have reduced the amount of capital expenditures we expect to invest as a result of COVID -19. We currently estimate that we will invest between ~~$160.0~~$145.0 million and ~~$175.0~~$160.0 million in capital expenditures in ~~2019,~~2020, which weincludes $50 to $60 million for our greenfield projects. The timing of our greenfield expenditures is dependent upon the timing of when permits may be issued. We expect to fund our capital expenditure program through cash on hand, cash from operations, outside financing arrangements and available borrowings under our revolving credit facility. In the first quarter of 2019, we completed the construction of a new aggregates plant in Vancouver which is now fully operational. We also expect to complete two new aggregates plants in Georgia and make aggregate plant improvements in Texas, Virginia, Kansas, Kentucky and Vancouver, investing approximately $37.7 million in these projects in 2019. Further, we also plan to purchase land reserves for greenfield opportunities in Virginia and Texas for approximately $8.5 million in the third quarter. In addition, we are in the process of installing a high efficiency finish mill separator at our cement plant in Davenport, Iowa for $4.0 million, with completion expected to occur in the third quarter 2019.

Tax Receivable Agreement

When the Company purchases LP Units for cash or LP Units are exchanged for shares of Class A common stock, this results in increases in the Company’s share of the tax basis of the tangible and intangible assets of Summit Holdings. These increases in tax basis may increase, for tax purposes, depreciation and amortization deductions and therefore reduce the amount of tax that Summit Inc. would otherwise be required to pay in the future. In connection with our IPO, we entered into a TRA with the holders of the LP Units that provides for the payment by Summit Inc. to exchanging holders of LP Units of 85% of the benefits, if any, that Summit Inc. actually realizes (or, under certain circumstances such as an early termination of the TRA is deemed to realize) as a result of these increases in tax basis and certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA. The increases in tax basis as a result of an exchange of LP Units for shares of Class A common stock, as well as the amount and timing of any payments under the TRA, are difficult to accurately estimate, as they will vary depending upon a number of factors, including the timing of the exchanges, the price of our Class A common stock at the time of the exchange, the extent to which the exchanges are taxable, the amount and timing of our income and the effective tax rate.

We anticipate funding payments under the TRA from cash flows from operations, available cash and available borrowings under our Senior Secured Revolving Credit Facilities. As of ~~June 29, 2019,~~March 28, 2020, we had accrued ~~$309.7~~$328.0 million as TRA liability in our consolidated financial statements. We do not expect significant payments on our TRA liability to occur within the next twelve months.

Based upon a ~~$19.25~~$11.59 per share price of our Class A common stock, the closing price of our stock on the last trading day of the three months ended ~~June 29, 2019,~~March 28, 2020, and a contractually defined discount rate of ~~3.18%~~1.96%, we estimate that if Summit Inc. were to exercise its right to terminate the TRA, the aggregate amount required to settle the TRA would be approximately ~~$276.4~~$297.6 million. Estimating the amount and the timing of payments that may be made under the TRA is by its nature difficult and imprecise, insofar as the amounts payable depends on a variety of factors, including, but not limited to, the timing of future exchanges, our stock price at the date of the exchange and the timing of the generation of future taxable income. The increases

in tax basis as a result of an exchange, as well as the amount and timing of any payments under the TRA, will vary depending on a variety of factors.

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 financial position, results of operations or liquidity. We record legal fees as incurred.

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—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 ~~June 29, 2019,~~March 28, 2020, we had no material off-balance sheet arrangements.

New Accounting Pronouncements Not Yet Adopted

~~In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,~~ which reduces the accounting complexity of implementing a cloud computing service arrangement. The ASU aligns the capitalization of implementation costs among hosting arrangements and costs incurred to develop internal-use software. The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. We are compiling a list of our contracts and are beginning to assess the impact of adopting this ASU.

In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employer sponsored defined benefit and other postretirement benefits plans. The ASU is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the additional disclosure requirements and are beginning to assess the impact of adopting this ASU.

Non-GAAP Performance Measures

We evaluate our operating performance using metrics that we refer to as “Adjusted EBITDA,” “Adjusted Cash Gross Profit” and “Adjusted Cash Gross Profit 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, adjusted to exclude accretion, loss on debt financings, gain on sale of business, transaction costs and certain non-cash and non-operating items. We define Adjusted Cash Gross Profit as operating income before general and administrative expenses, depreciation, depletion, amortization and accretion and transaction costs and Adjusted Cash Gross Profit Margin as Adjusted Cash Gross Profit as a percentage of net revenue.

We present Adjusted EBITDA, Adjusted Cash Gross Profit and Adjusted Cash Gross Profit Margin for the convenience of investment professionals who use such metrics in their analyses. The investment community often uses these metrics to assess the operating performance of a company’s business and to provide a consistent comparison of performance from period to period. We use these metrics, among others, to assess the operating performance of our individual segments and the consolidated company.

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.

The tables below reconcile our net income (loss) to EBITDA and Adjusted EBITDA, ~~and~~ present Adjusted EBITDA by segment and reconcile operating income to Adjusted Cash Gross Profit for the periods indicated:

Reconciliation of Net Income (Loss) to Adjusted EBITDA Three months ended June 29, 2019
by Segment West East Cement Corporate Consolidated
($ in thousands)
Net income (loss) (1) $ 30,739
$ 35,175
$ 27,917
$ (55,841 ) $ 37,990
Interest expense (income) (1) 751
1,047
(2,345 ) 29,948
29,401
Income tax expense (1) 777
64
—
15,866
16,707
Depreciation, depletion and amortization 22,784
19,540
9,719
992
53,035
EBITDA $ 55,051
$ 55,826
$ 35,291
$ (9,035 ) $ 137,133
Accretion 140
300
150
—
590
Transaction costs 11
—
—
379
390
Non-cash compensation —
—
—
4,699
4,699
Other (2) (382 ) (1,714 ) —
(250 ) (2,346 )
Adjusted EBITDA (1) $ 54,820
$ 54,412
$ 35,441
$ (4,207 ) $ 140,466



Reconciliation of Net Income (Loss) to Adjusted EBITDA	Three months ended March 28, 2020
by Segment	West			East			Cement			Corporate			Consolidated
($ in thousands)
Net income (loss)	$	498		$	(11,067	)	$	(12,278	)	$	(23,879	)	$	(46,726	)
Interest (income) expense (1)	(578		)	(569		)	(3,176		)	32,141			27,818
Income tax benefit	(467		)	(129		)	—			(22,305		)	(22,901		)
Depreciation, depletion and amortization	21,684			20,720			7,808			989			51,201
EBITDA	$	21,137		$	8,955		$	(7,646	)	$	(13,054	)	$	9,392
Accretion	116			376			85			—			577
Transaction costs	—			—			—			753			753
Non-cash compensation	—			—			—			4,905			4,905
Other	1,215			242			—			(670		)	787
Adjusted EBITDA	$	22,468		$	9,573		$	(7,561	)	$	(8,066	)	$	16,414

Reconciliation of Net Income (Loss) to Adjusted EBITDA Six months ended June 29, 2019
by Segment West East Cement Corporate Consolidated
($ in thousands)
Net income (loss) (1) $ 21,187
$ 16,808
$ 17,349
$ (88,855 ) $ (33,511 )
Interest expense (income) (1) 1,494
2,055
(4,664 ) 60,621
59,506
Income tax expense (benefit) (1) 334
118
—
(11,782 ) (11,330 )
Depreciation, depletion and amortization 46,580
39,445
19,873
1,944
107,842
EBITDA $ 69,595
$ 58,426
$ 32,558
$ (38,072 ) $ 122,507
Accretion 269
606
296
—
1,171
Loss on debt financings —
—
—
14,565
14,565
Transaction costs 11
—
—
687
698
Non-cash compensation —
—
—
10,605
10,605
Other (2) (757 ) (1,378 ) —
(357 ) (2,492 )
Adjusted EBITDA (1) $ 69,118
$ 57,654
$ 32,854
$ (12,572 ) $ 147,054

Reconciliation of Net Income (Loss) to Adjusted EBITDA Three months ended June 30, 2018
by Segment West East Cement Corporate Consolidated
($ in thousands)
Net income (loss) (1) $ 36,532
$ 26,421
$ 27,458
$ (53,498 ) $ 36,913
Interest expense (income) (1) 1,554
947
(1,479 ) 27,921
28,943
Income tax expense (benefit) 431
(84 ) —
11,843
12,190
Depreciation, depletion and amortization 22,445
17,606
8,716
635
49,402
EBITDA $ 60,962
$ 44,890
$ 34,695
$ (13,099 ) $ 127,448
Accretion 144
220
(35 ) —
329
Loss on debt financings —
—
—
149
149
Transaction costs (2 ) —
—
1,293
1,291
Non-cash compensation —
—
—
5,683
5,683
Other 123
285
—
33
441
Adjusted EBITDA (1) $ 61,227
$ 45,395
$ 34,660
$ (5,941 ) $ 135,341


Reconciliation of Net Income (Loss) to Adjusted EBITDA	Six months ended June 30, 2018
Reconciliation of Net Loss to Adjusted EBITDA																Three months ended March 30, 2019
by Segment	West			East			Cement			Corporate			Consolidated			West			East			Cement			Corporate			Consolidated
($ in thousands)
Net income (loss) (1)	$	36,604		$	4,777		$	26,361		$	(86,777	)	$	(19,035	)
Interest expense (benefit) (1)	2,734			1,553			(3,085		)	56,525			57,727
Income tax expense (benefit)	49			(270		)	—			(4,295		)	(4,516		)
Net loss																$	(9,552	)	$	(18,367	)	$	(10,568	)	$	(33,014	)	$	(71,501	)
Interest expense (income) (1)																743			1,008			(2,319		)	30,673			30,105
Income tax (benefit) expense																(443		)	54			—			(27,648		)	(28,037		)
Depreciation, depletion and amortization	44,453			35,118			15,029			1,345			95,945			23,796			19,905			10,154			952			54,807
EBITDA	$	83,840		$	41,178		$	38,305		$	(33,202	)	$	130,121		$	14,544		$	2,600		$	(2,733	)	$	(29,037	)	$	(14,626	)
Accretion	287			435			22			—			744			129			306			146			—			581
Loss on debt financings	—			—			—			149			149			—			—			—			14,565			14,565
Transaction costs	(6		)	—			—			2,563			2,557			—			—			—			308			308
Non-cash compensation	—			—			—			14,190			14,190			—			—			—			5,906			5,906
Other ~~(2)~~	(6,721		)	579			—			(765		)	(6,907		)	(375		)	336			—			(107		)	(146		)
Adjusted EBITDA ~~(1)~~	$	77,400		$	42,192		$	38,327		$	(17,065	)	$	140,854		$	14,298		$	3,242		$	(2,587	)	$	(8,365	)	$	6,588

(1)

The reconciliation of net income (loss) to Adjusted EBITDA is based on the financial results of Summit Inc. and its subsidiaries, which was $0.1 ~~and $0.3~~ million less than Summit LLC and its subsidiaries in the three ~~and six~~ months ended ~~June 29, 2019, respectively,~~March 28, 2020, and $0.2 ~~million and $0.4~~ million less in the three ~~and six~~ months ended ~~June~~March 30, ~~2018, respectively,~~2019, due to interest expense associated with a deferred consideration obligation, which is an obligation of Summit Holdings and is thus excluded from Summit LLC’s consolidated interest expense.

~~(2)~~

In the three and six months ended June 29, 2019, we negotiated a $2.0 million reduction in the amount of a contingent liability from one of our acquisitions. In the six months ended June 30, 2018, we negotiated a $6.9 million reduction in the amount of a contingent liability from one of our acquisitions. As we had passed the period to revise the opening balance sheet for this acquisition, the adjustment was recorded in the respective period as other income.


Reconciliation of Working Capital	June 29, 2019			December 29, 2018			March 28, 2020			December 28, 2019
($ in thousands)
Total current assets	$	628,387		$	591,540		$	688,256		$	796,281
Less total current liabilities	(304,825		)	(260,657		)	(285,828		)	(299,297		)
Working capital	$	323,562		$	330,883		$	402,428		$	496,984


	Three months ended						Six months ended						Three months ended
Reconciliation of Operating Income to Adjusted Cash Gross Profit	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Reconciliation of Operating Loss to Adjusted Cash Gross Profit													March 28, 2020			March 30, 2019
($ in thousands)
Operating income	$	80,422		$	77,279		$	22,751		$	25,754
Operating loss													$	(41,720	)	$	(57,671	)
General and administrative expenses	60,961			61,657			128,571			131,518			70,224			67,610
Depreciation, depletion, amortization and accretion	53,625			49,731			109,013			96,689			51,778			55,388
Transaction costs	390			1,291			698			2,557			753			308
Adjusted Cash Gross Profit (exclusive of items shown separately)	$	195,398		$	189,958		$	261,033		$	256,518		$	81,035		$	65,635
Adjusted Cash Gross Profit Margin (exclusive of items shown separately) (1)	35.4		%	34.6		%	30.4		%	30.6		%	23.7		%	21.5		%


(1)	Adjusted Cash Gross Profit Margin, which we define as Adjusted Cash Gross Profit as a percentage of net revenue.

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. Consequently, 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 from which our exposure to market risk has not materially changed.

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 ~~June 29, 2019.~~March 28, 2020. Based upon that evaluation, Summit Inc.’s Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June 29, 2019,~~March 28, 2020, Summit Inc.’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

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 ~~June 29, 2019.~~March 28, 2020. Based upon that evaluation, Summit LLC’s Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June 29, 2019,~~March 28, 2020, 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.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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.

ITEM 1A. RISK FACTORS

For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (the “Annual Report”).

In ~~addition~~light of developments relating to the ~~other information set forth in this report, you should carefully consider~~coronavirus (COVID-19) pandemic occurring subsequent to the filing of our Annual Report, the Company is supplementing the risk factors discussed in the ~~section entitled “Risk Factors”~~Annual Report with the following risk factor, which should be read in conjunction with the risk factors contained in the Annual ~~Report which could materially affect the Company’s business, financial condition, operating results or liquidity or future results.~~ Report. 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~~

The current outbreak of the novel coronavirus (COVID-19) has caused severe disruptions in the U.S. and global economy and is expected to adversely impact our business, at least for the near term. While the full scale and scope of the effects of COVID-19 are unknown at this time, the overall impact on our business, operating results, cash flows and/or financial condition could be material.

In late 2019, COVID-19 began spreading globally and is now in every state in the United States. In March 2020, the World Health Organization designated COVID-19 as a pandemic, and numerous countries, including the United States, have declared national emergencies with respect to COVID-19. The global impact of the outbreak has been ~~no material changes~~rapidly evolving, and as cases of COVID-19 have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses. Such actions are creating disruption in global supply chains, and adversely impacting many industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The outbreak of COVID-19 has had an adverse impact on the market price of our Class A common Stock and the extent of its impact on our future results of operations and overall financial performance remains uncertain.

The scale and scope of the COVID-19 pandemic may heighten the potential adverse effects on our business, operating results, cash flows and/or financial condition of the risks described in the risk factors ~~disclosed~~contained in our Annual Report, including the impact of:

potentially unfavorable economic conditions for our clients and customers, particularly in the ~~Annual Report.~~ residential and non-residential sectors, and the construction industry generally;

delays or cancellation of projects and delays in collecting on certain of our accounts receivable from our customers;

increased costs associated with compliance with new government regulations or restrictions, such as quarantines or social distancing mandates, which regulations or restrictions may curtail our normal operations in one or more of the markets in which we operate;

significant disruptions at one or more of our locations, which could disrupt our operations, raise costs and reduce revenue and earnings in the affected areas;

fluctuations in equity market prices (including that of our Class A common stock), interest rates and credit spreads limiting our ability to raise or deploy capital and affecting our overall liquidity: and

A sustained longer term reduction in cash flows may be an indication some or all of our goodwill may not be realizable.

In addition, the COVID-19 pandemic may adversely impact our business and financial condition in other areas, including as a result of:

increased costs, including as a result of implementing health and safety protocols at our locations;

disruptions to our supply and distribution channels, including delivery trucks; and

reduced state and local transportation budgets, particularly if such are not augmented by federal funding or if the federal government fails to act on a highway infrastructure bill.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions, and, as a result, present material uncertainty and risk with respect to our business. The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, suppliers and partners. It is also possible that negative consequences of the pandemic may continue once the pandemic is controlled.

The adverse impact on our business, financial condition, operating results or liquidity or future results from the COVID - 19 pandemic, or any similar future crisis could be material. The inherent uncertainty surrounding COVID-19, and likewise any similar crisis, also makes it more challenging for our management to estimate the future performance of our business and develop strategies to generate growth or achieve our objectives for fiscal 2020.

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.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



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 (File No. 001-36873)).
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 (File No. 001-36873).
3.3	Certificate of Formation of Summit Materials, LLC, as amended (incorporated by reference to Exhibit 3.1 to Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.4	Second Amended and Restated Limited Liability Company Agreement of Summit Materials, LLC (incorporated by reference to Exhibit ~~3.2~~3.4 to ~~Summit Materials, LLC’s Registration Statement~~the Registrants’ Quarterly Report on Form ~~S-4,~~10-Q filed ~~March 27, 2013~~on October 30, 2019 (File No. ~~333-187556)~~001-36783)).
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.
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the interactive data file because XBRL tags are embedded within the inline XBRL document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104.1*	Cover Page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 28, 2020, formatted in Inline XBRL (and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

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 other than 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.

SIGNATURES

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.




	SUMMIT MATERIALS, INC.
	SUMMIT MATERIALS, LLC

Date: ~~August 1, 2019~~April 29, 2020	By:	/s/ Thomas W. Hill
		Thomas W. Hill
		Chief Executive Officer
		(Principal Executive Officer)

Date: ~~August 1, 2019~~April 29, 2020	By:	/s/ Brian J. Harris
		Brian J. Harris
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

4339



Reconciliation of Net Income (Loss) to Adjusted EBITDA	Three months ended June 29, 2019
by Segment	West			East			Cement			Corporate			Consolidated
($ in thousands)
Net income (loss) (1)	$	30,739		$	35,175		$	27,917		$	(55,841	)	$	37,990
Interest expense (income) (1)	751			1,047			(2,345		)	29,948			29,401
Income tax expense (1)	777			64			—			15,866			16,707
Depreciation, depletion and amortization	22,784			19,540			9,719			992			53,035
EBITDA	$	55,051		$	55,826		$	35,291		$	(9,035	)	$	137,133
Accretion	140			300			150			—			590
Transaction costs	11			—			—			379			390
Non-cash compensation	—			—			—			4,699			4,699
Other (2)	(382		)	(1,714		)	—			(250		)	(2,346		)
Adjusted EBITDA (1)	$	54,820		$	54,412		$	35,441		$	(4,207	)	$	140,466



Reconciliation of Net Income (Loss) to Adjusted EBITDA	Six months ended June 29, 2019
by Segment	West			East			Cement			Corporate			Consolidated
($ in thousands)
Net income (loss) (1)	$	21,187		$	16,808		$	17,349		$	(88,855	)	$	(33,511	)
Interest expense (income) (1)	1,494			2,055			(4,664		)	60,621			59,506
Income tax expense (benefit) (1)	334			118			—			(11,782		)	(11,330		)
Depreciation, depletion and amortization	46,580			39,445			19,873			1,944			107,842
EBITDA	$	69,595		$	58,426		$	32,558		$	(38,072	)	$	122,507
Accretion	269			606			296			—			1,171
Loss on debt financings	—			—			—			14,565			14,565
Transaction costs	11			—			—			687			698
Non-cash compensation	—			—			—			10,605			10,605
Other (2)	(757		)	(1,378		)	—			(357		)	(2,492		)
Adjusted EBITDA (1)	$	69,118		$	57,654		$	32,854		$	(12,572	)	$	147,054



Reconciliation of Net Income (Loss) to Adjusted EBITDA	Three months ended June 30, 2018
by Segment	West			East			Cement			Corporate			Consolidated
($ in thousands)
Net income (loss) (1)	$	36,532		$	26,421		$	27,458		$	(53,498	)	$	36,913
Interest expense (income) (1)	1,554			947			(1,479		)	27,921			28,943
Income tax expense (benefit)	431			(84		)	—			11,843			12,190
Depreciation, depletion and amortization	22,445			17,606			8,716			635			49,402
EBITDA	$	60,962		$	44,890		$	34,695		$	(13,099	)	$	127,448
Accretion	144			220			(35		)	—			329
Loss on debt financings	—			—			—			149			149
Transaction costs	(2		)	—			—			1,293			1,291
Non-cash compensation	—			—			—			5,683			5,683
Other	123			285			—			33			441
Adjusted EBITDA (1)	$	61,227		$	45,395		$	34,660		$	(5,941	)	$	135,341