Summit Materials, Inc. (SUM) Earnings Call Transcript & Summary

Hello, we are now ready to begin the Summit Materials First Quarter 2023 Conference Call. I'll now hand the call over to Andy Larkin, Vice President of Investor Relations. Andy, you may begin.

Hello, and welcome to the Summit Materials First Quarter 2023 Results Conference Call. Yesterday afternoon, we issued a press release detailing our financial and operating results. Today's call is accompanied by an investor presentation and supplemental workbook, highlighting key financial and operating data. All of these materials can be found on our Investor Relations website. Management's commentary in response to questions on today's call may include forward-looking statements, which, by their nature, are uncertain and outside of Summit Materials control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ in a material way. For a discussion of some of the factors that could cause actual results to differ, please see the Risk Factors section of Summit Material's latest annual report on Form 10-K, which is filed with the SEC. You can find reconciliations of the historical non-GAAP financial measures discussed in today's call in our press release. Today, I'm joined by Summit CEO, Anne Noonan and our new Chief Financial Officer, Scott Anderson. Anne will provide a brief business update, Scott will review our financial performance, and then we'll conclude our prepared remarks. Please limit your ask to one question and return to the queue so we can accommodate as many analysts as possible in the time we have available. I'll now turn the call over to Anne.

Thanks, Andy, and hello to everyone joining today's call. Before I start, I wanted to publicly thank Brian Harris for his graciousness and generosity during this leadership transition. I also want to welcome Scott to these quarterly calls. As he settles into the CFO role, he is making an immediate and positive impact on our business, and we look forward to more fully introducing him to the investor community in the weeks and months that follow. Now as you saw in our press release yesterday, our record first quarter results clearly indicate that we have a head start to 2023 as we enter our prime construction season. This progress was not limited to just our financial results but extended to our safety performance as well. Through March, our forward-looking metrics are flashing green, and most of our lagging metrics are trending in the right direction. Recordable incidents are down year-on-year, and we are leveraging new technologies to make continuous safety improvement, and we are tracking ahead of our 2023 goals. Our success, as always, will depend on our safety leadership across our footprint and more importantly, the buy-in from all Summit employees. As we aspire towards a zero-harm culture, I'm confident in our great people who spearhead those efforts and deliver ongoing successes on the safety front. Moving to Slide 4 for our first quarter financial review where I'll highlight a few items but ask Scott to cover our results in more detail. First and foremost, adjusted EBITDA of $41.2 million is a nearly 80% increase year-on-year, and corresponds with a 420 basis point improvement to our adjusted EBITDA margins. Strong [ mid-teens ] are better, pricing growth across all lines of business was the primary catalyst that drove record first quarter net revenue and our outstanding profit performance in the quarter. In fact, 20.6% organic aggregates pricing growth is the largest year-over-year quarterly growth rate in our history. Our teams flawlessly executed on our January 1 pricing actions in all markets. This, in combination with increased contribution from our operational centers of excellence is fueling our margin recovery. Our fast start to the year, along with the improved outlook for demand and pricing, has prompted us to raise our adjusted EBITDA outlook for the full year. I'll go into more detail for you momentarily, but in short and consistent with our playbook, we are controlling our controllables and well positioned to deliver strong financial results amidst ongoing uncertainties in the marketplace. One major way that we're controlling what we can is on Slide 5, where we provided glimpse into one of our unique self-help margin opportunities, our aggregate center of excellence. If you recall, our North Star cash gross margin target for our ag business is 60% on a trailing 12-month basis. We closed last year at 48.5% and are intently focused on closing that gap in 2023. Here, our center of excellence led by our East region president, Bart Boyd, is holding multiple on-site continuous improvement events monthly. These events aim to diagnose sources of operational inefficiencies, design and implement customized corrective actions and measure progress against clear objectives. This Summit capability is rather new, yet we are already making significant progress. For one, we are identifying common themes across our quarries. These include modernizing long-term mine planning, focusing on yield optimization, conducting maintenance blitzes, debottlenecking plants and better utilizing automation. By identifying common operational pain points across our footprint, we can lift and shift proven solutions to deliver tangible results more quickly. For the quarries that have recently undertaken these CI events, overall equipment effectiveness is up on average 7% and tons per hour is up more than 9% versus baseline levels. And this has translated into approximately $3 million in productivity savings, helping to offset input cost inflation. Let's be clear, we are still in the early innings on our operational excellence journey, but we are organized and incentivized around this strategic imperative and very encouraged by the progress to date. And this progress is enterprise-wide and in every line of business. In cement, for example, we are in the process of installing a new innovative waste fuel technology in our Davenport facility. This fuel flex system will be the first pre-commercial installation in the world and a first-of-its-kind technology within the United States. Construction is currently underway, and the equipment will be commissioned in early 2024. When complete, fuel flex will allow Davenport to reduce its fossil fuel consumption by at least 50% and move Summit that much closer to achieving its carbon reduction commitment. At the same time, by replacing coal and pet coke with alternative fuels, we will drive significant cost savings for our business and increase our overall competitiveness in the marketplace. Projects like these are underway across our footprint, and they are feeding our collective confidence that the unique self-help margin opportunities that we talk about are materializing. Our teams are working hard to gain ground operationally, deliver substantive cost savings and take strides towards our Elevate Summit EBITDA margin target of 30%. Before passing to Scott, let's look at our Elevate Summit scorecard on Slide 6. Leverage remains well ahead of the Elevate Summit targets, providing ample firepower to pursue portfolio optimizing transactions. ROIC at 9.6% is up 50 basis points sequentially and up 120 basis points from year ago levels as our materials-led strategy coupled with a sharp focus on improving asset efficiency has put the Elevate Summit ROIC target of at least 10% within reach. And finally, our first quarter boosted our trailing 12-month adjusted EBITDA margin to 22.8%, up 70 basis points sequentially and 30 basis points year-on-year. With each of these metrics either ahead of target or moving in the right direction, it supports the view that our strategy is working. We have transitioned towards a more materials-led portfolio with 71% of our trailing 12-month adjusted EBITDA generated by our upstream businesses. And where we choose to have a downstream presence, we have advantaged assets leading market positions and attractive profitability profiles. From continued and diligent execution of our 4 strategic pillars: market leadership, asset-light, sustainability and innovation, we are on a pathway towards a more economically durable and profitable organization. With that, let me hand it to Scott to review our financial performance. Scott?

Thank you, Anne. And let me start by saying how generally excited I am to be joining everyone here today. I know Anne has promoted a strong level of shareholder engagement and transparency and my plan is to fully embrace that approach as we move forward. Let's turn now to Slide 8 to review business segment results for the quarter. In our West segment, which includes Salt Lake City, net revenue was negatively impacted by wet and cold conditions in Utah as well as softer residential demand. These factors more than offset pricing acceleration across all lines of business and very strong volume growth in asphalt. Adjusted EBITDA was comparable to the prior year period as positive price cost offset lower volumes. Out in our East segment, net revenue was up 7.7% as increased greenfield contribution, strong public activity in Kansas and favorable weather in the Southeast fueled 18.1% organic aggregates volume growth. Aggregates pricing momentum continued across each market with strong double-digit gains in the Carolinas and Missouri, followed by high single-digit growth in all other markets. Volume and pricing growth, together with a benefit from 2022 divestitures helped drive adjusted EBITDA up $10.7 million year-on-year to [ $18.9 million ] and increased adjusted EBITDA margin by 850 basis points year over year. And while Q1 is traditionally a light volume quarter, we are please by the recent progress of our East segment and anticipate it being a major contributor towards achieving our growth and margin goals. Finally, on Cement, our continental team is executing on multiple fronts, including value pricing where our January 1 pricing action saw strong traction. Further growth was sourced from Green America recycling, a key growth driver and margin enhancer for our cement business. These factors drove net revenue up more than 17% and increased adjusted EBITDA by $5 million in the quarter. Turning to Slide 9 for pricing by line of business and the headline message from us remains the same. We are executing on our pricing plan in all markets and all lines of business. Aggregates pricing in Q1 was an all-time Summit-high as 2022 carryover pricing combined with January 1 pricing actions to drive a 20.5% year-on-year increase. By market, notably, Texas registered the strongest pricing gains as the market moved on price in January of this year versus April in the prior year. Elsewhere, Utah also delivered aggregates pricing growth in excess of 20%. The time series pricing chart is especially useful in understanding our pricing cadence for this year as the pricing comps get incrementally more difficult in the back half. Nevertheless, we now expect aggregates pricing growth to approach that double-digit range for the full year. For Cement, pricing sustained its momentum, increasing nearly $19 per ton or 14.8% year-on-year in the first quarter. We continue to face and therefore, price through higher import costs, including kiln fuels. Ongoing inflation, together with sold-out supply conditions have prompted a midyear increase of $10 a ton. This pricing approach is consistent with our value pricing principles and reflects the value we bring to the market through the highest caliber product quality, customer service and supply reliability. Downstream, passing along higher cement cost, ready-mix prices increased by 15.2%, with both Houston and Salt Lake delivering mid-teens or better pricing gains relative to Q1 2022. So far, even with residential demand softening, our ready-mix pricing has persisted, supported by our go-to-market approach that emphasizes an enhanced customer experience as well as higher quality mixes for our customers. On asphalt, price grew 24.5% in Q1, the strongest growth rate in Summit's history and emblematic of strong demand backdrop we're seeing in our public end markets, especially in North Texas. Shifting to volumes on Slide 10, where first quarter organic aggregates volumes were down 3.4%, a sequential improvement from second half 2022 run rate levels as volume growth in each of our East region markets mostly offset declines in our West region. Cement volumes were slightly down in Q1, which is traditionally our lightest volume quarter of the year and reflects, in part, lower import volumes versus the prior year. Ready-mix volumes declined 19.3% organically, only a modest rate of deterioration relative to what we witnessed in Q4 of 2022. We have seen more pressure in Salt Lake City, while Houston has held up relatively well and better than national trends. Asphalt on the other hand, is beginning to feel the flow-through from increased public activity, particularly in repair and rebuild work. Organic volumes were up 38.7%, a sharp reversal from prior trends. And remember, our largest asphalt concentration is in North Texas where TxDOT funding and activity is robust and poised for continued growth. Turning now to gross margins on Slide 11. While cost remains stubbornly elevated, the compounding impacts of our previous pricing actions, along with operational improvements has set us on the path towards margin recovery and eventually sustainable expansion. As you can see, the first quarter was the second consecutive quarter of gross margin expansion, up approximately 280 basis points from the prior year as well as an improvement in sequential growth. This is proof we are executing with more agility and while market conditions remain dynamic, we have the capability to drive towards and consistently achieve that positive price/cost relationship. By line of business, aggregates gross margins bucked the overall trend, declining to 35%. Here, we are still feeling the brunt of higher variable costs, specifically higher equipment rental, labor as well as repair and maintenance costs remain the most elevated. Further impacts were from unfavorable geographic mix as lower volumes from our high-margin West segment resulted in mix headwinds in the quarter. For Cement, cash gross profit margins were positive in Q1 at 9.6%, a first quarter high watermark for our business. Gross margins were bolstered by a combination of factors, including strong pricing growth, favorable year-on-year distribution costs and a greater contribution from high-margin Green America recycling. As you know, we target sustainable Cement EBITDA margins above 40% on a trailing 12-month basis, and we'll rely on gross margin expansion to provide the primary thrust for us to achieve that North Star Cement target. First quarter product margins increased 80 basis points to 12.4%, driven by asphalt gross margins, which expanded significantly on both strong pricing growth that we mentioned earlier as well as a slight cost moderation relative to the prior year period. Ready-mix gross margins were up on a per unit basis as price net of cost was positive but when factoring in down volumes, ready-mix gross margins were down modestly in Q1. Services margins increased to 10.2%, a 570 basis point improvement from Q1 2022 and the strongest first quarter gross margin performance since 2018. Zooming out for a moment, to provide perspective on cost trends, if you recall from February, we said that one of the big swing factors that could move us towards either end of our guide was how cost trend in 2023. Recognizing that we are still early, we have not seen a material or wholesale easing of our input costs. Yes, certain buckets like diesel and liquid asphalt have come off peak levels and that the rate of inflation may have moderated but we still believe our mid- to high single-digit cost inflation estimate is reasonable and appropriate for 2023. Until we see enough evidence, we believe the higher for longer cost mentality reinforces our managerial approach to control our controllables, and more specifically execute on our commercial and operational excellence plans. I'll wrap up on Slide 12, where we reported Q1 adjusted EBITDA margin up 420 basis points year-on-year to 10.1%, driven primarily by cash gross margin growth as well as tight management of our discretionary spend. Adjusted diluted net income and adjusted diluted earnings per share improvement primarily reflects strong operating results, partially offset by higher interest expense versus the year ago period. And finally, for the purposes of calculating adjusted diluted earnings per share, please use a share count of 119.9 million, which includes 118.6 million Class A shares and 1.3 million LP units. With that, I'll now pass it back to Anne for a look ahead.

Thank you, Scott. As you can see on Slide 14, yesterday, we upgraded our 2023 adjusted EBITDA guide by increasing each end of the range by $10 million and consequently increasing the midpoint to $510 million. Now the midpoint represents roughly mid-single-digit year-on-year growth on a pro forma basis. Our forecast for nonoperating items as well as G&A have not changed relative to our previous call nor has our expectations for CapEx changed versus what we discussed in February. What has changed, therefore and where we have become incrementally more positive, is our viewpoint on operating conditions, particularly residential demand. Slide 15 details our current outlook assumptions. If you'll allow me, I'd like to take each one by one, starting first with private demand. Our new outlook calls for residential volumes to be down approximately 25% this year, versus down at least 30% in our previous guidance. This view brings us more in line with the consensus forecast from major industry groups and differs from our previous view in 2 ways: first, we're now incorporating a more resilient outlook for Houston, one of our largest residential markets. Here, permit data reveals a shallower trough to the cycle and a local economy that should support a quicker recovery and single-family rebound. In fact, some homebuilders saw record traffic in March. We're more confident that Houston will fare much better than the national trend. By contrast, Salt Lake City is still seeing deterioration in permit activity. So we factored in a comparatively harder landing and a more delayed recovery for Salt Lake City. In reality, our demand visibility in that market has been impaired by adverse weather conditions. With 45 days of precipitation and more first quarter accumulation, it's very difficult to reliably determine what is weather-related versus truly demand-driven impacts affecting Salt Lake City. The second positive factor now incorporated into our outlook is not specific to any one market, but it's trend data observed over the course of the year. From our point of view and what's been corroborated by many of our customers is that the housing market is experiencing very strong demand elasticity. Buyers sitting on the sidelines are quickly reacting to moderately lower interest rates. Based on National Association of Homebuilders data, each 25 basis points decline in 30-year mortgage rates between 6% and 7% could price in an incremental 1.3 million households into the home buying market. This, together with the lock-in effect and record low levels of housing inventory are encouraging signs that single-family construction activity could experience a more swift and more dramatic bounce back, either later this year or in 2024. Partially offsetting this optimism is a somewhat more cautious view on nonresidential due exclusively to potential ramification for tightening credit standards. While it's too early to say what this will mean for our business with any level of specificity, so far, we have not seen any impact. Our working assumption is that any impact is likely to be rather insignificant for 2023 and is more likely a 2024 or beyond event. If we were to feel it, it would likely be in light nonresidential construction, particularly in lodging, office and smaller retail build-out. Fortunately, our 2023 outlook doesn't depend on growth from light non-res verticals, and we don't believe these tighter conditions will materially impact the nonres growth verticals on the heavy nonres side. In fact, the momentum on the heavy nonres is picking up with projects in our Kansas and Missouri markets either underway or ready to break ground. Simply put, we're monitoring and assessing the risk from bank failures, but we have not changed our overall expectations for the nonresidential end market in 2023. Moving on to public demand, where we are still calling for mid-single-digit volume growth in 2023. However, we are incrementally more positive on that end market, thanks to letting activity that continues to grow and what we expect may be faster flow-through of IIJA dollars to the type of work that benefits Summit Materials. While the data is still early, nearly half of the projects funded by IIJA are being devoted to repair and reconstruction work, a Summit specialty. If this trend persists, which we think it should, it would mean faster acceleration and realization of IIJA dollars to our business. Let me wrap up our outlook discussion with the price/cost dynamic. As Scott mentioned earlier, higher costs from things like equipment rentals, labor and kiln fuels are still flowing through the P&L, which we contemplated in our revised outlook today. The reality is we must adopt a higher-for-longer cost mentality so we take all the right steps to mitigate their impact. To that end, we are moving forward with a midyear price increase in cement effective July 1, and our value pricing plan includes multiple price increases in each of our lines of business, as warranted by local market conditions and intentionally designed to maintain and extend our positive price net of cost relationship. To sum it up, and I hope what comes across is that we are incrementally more positive on the year ahead. Our bolstered confidence is supported by a fast start to the year and improved outlook for demand, strong year-to-go pricing plans and intense focus on operational excellence initiatives as well as project-specific margin-enhancing activities. In a market that we acknowledge still has plenty of uncertainties, we will emphasize execution. Our teams have a proven track record of managing through difficult times, and we are collectively driven to deliver on or beat our 2023 commitments. I'll close our remarks on Slide 16 by regrounding everyone in our Elevate strategy. Externally, we talk a lot about market dynamics and recent data points, but internally, we don't lose sight of our strategic progress, advancing each priority and strengthening each of our enabling capabilities. We are confident that strategic execution, inclusive of portfolio optimization will over time translate to higher growth and improved profitability. That, in turn, should deliver superior shareholder returns and be rewarded with a more premium market valuation. We know we are well on our way towards that future. We have a material-oriented portfolio, advantaged downstream assets, a fortified balance sheet and a high-performance organization capable of powering our progress. Lastly, before taking your questions, I want to extend my gratitude to my Summit colleagues throughout the country and in British Columbia for a strong start both financially and on our safety progress. The race is not yet won, but we certainly have a substantial head start. With that, I'll now ask the operator to open the lines for Q&A.

[Operator Instructions] Your first question is from the line of Stanley Elliott with Stifel.

Congratulations on the strong start to the year. And you mentioned kind of on the non-res side, that's something we get a lot of questions about, could you maybe talk about your business between light and heavy. And then maybe think about how this cycle is different in terms of just the visibility that you may or may not have on some of these larger projects out there.

Yes, Stanley. So if we think about our business between light and heavy, roughly, we're split 50-50. I would say the one divergence from that would be cement where we're more heavily indexed towards the heavy side. So on the heavy side, we're seeing the same trends we talked about last quarter, a lot of projects in the onshoring and manufacturing, whether it's semiconductor or electric EV battery factories, but also the energy verticals continue to be very strong for us. So we're really -- we've seen substantial tailwinds on that. And we've got a very rich pipeline of projects on the heavy nonresidential side. Light, as we mentioned in our prepared remarks, we did not put much in our guide nor is there a revised guide, and that was basically driven by interest rates, slowdown in residential and regional bank complications may occur, but we don't see that impacting us in '23, that may be something that would look for in '24. So overall, in a sum up, a very rich pipeline of projects right now, whether it varies from the Panasonic project in Kansas City to warehousing along our East region, we're seeing really a very robust set of projects that gives us a lot of confidence for nonres in the outlook you see today.

Your next question is from the line of Trey Grooms with Stephens.

So first off, higher costs still flowing through the P&L. You talked about that, and you're raising prices there, especially in, I guess, in aggregate, is the one I'm specifically talking about here. So are you contemplating midyear price actions in aggregate, sorry, if I missed that, to help with these higher costs? And how should we be thinking about aggregate's margins and the outlook there for the balance of the year?

Okay. So on -- you're right, we are adopting on the cost a higher-for-longer mentality. And we saw that in the P&L in Q1, Trey. We have been raising prices. The January price increases were very strong across the board. We went across every line of business and the execution was really flawless I would have to say, across our business. We are planning, as we talked about, in Cement, midyear price increases of $10 per ton. And then across the rest of the business, we have price increases planned from April through the end of the year, multiple price increases. So it's not just the July 1 price increase, a little bit more variance there by markets and by customer and region and geography. So when we think about -- we're more positive on price momentum, and we plan to continue with that price as we go through. Now with respect to aggregates margins, [indiscernible] Scott's comments, he talked about the fact that in Q1, they were lower. What drove that was primarily a mix effect. Salt Lake City has had, as I mentioned in my comments, 45 days of rain and record accumulation. That particular market is 60% gross margin, and we were down 40% in volume. So as you think about the impact of aggregates margins in Q1, while we were disappointed, it's very clear where it came from. But as we go through the year, now we've got this price momentum that we're looking forward to. We've got the mix now adjusting because I'm happy to report Salt Lake City is now all of 2 weeks back in production, and we've got our operational excellence. So as we go through the year, expect us to see plans to improve that ag margin and continue on our path to our 60% adjusted cash gross profit margin as our North Star over time.

Great. And congrats on the quarter and good luck for the rest of the year.

Your next question is from the line of Keith Hughes with Truist.

Just building on the last question with the West and the weather, are you set up to get back to a normal quarter there in the second quarter? Or was some of the rain and disruption beginning of April that is going to play a role in whatever you report the second quarter results.

Yes. I mean in reality, Keith, we have literally been running for 2 weeks at Salt Lake City. We've had that much rain and accumulation. So we lost some days. I will say we've got one of our highest executing teams there, and they're extremely focused on continued price momentum and operational excellence to continue the growth and we have -- what I've said in my prepared comments is true, we've kept our view on Salt Lake City for residential slight bearish because we can't really see through the weather and demand right now. As we get through a few more weeks and into Q2, we'll be able to give you more guidance in that direction.

And are your contractor customers, are they able to get back to working? Or is there still a dry out effect that's going to have to go on before you get back to a normal run rate?

There's still some flooding and dry out is going on, but everyone's starting to get back to work at Salt Lake.

Your next question is from the line of Brent Thielman with D.A. Davidson.

It seems just from the commentary, the contributions of your new greenfield investments were pretty relevant in the East this quarter. Obviously, you had markets conducive with good demand. But I guess if we assume that continues going forward, I would think these continue to drive some positive contributions for you this year. I guess I'm just wondering how all of this informed you about the capital allocation priorities right now towards these greenfield operations over M&A at the end of the day?

Yes, absolutely. So if you look at our guide for the year, greenfields, we have been investing, and we did call it out last quarter that we count on about $5 million per year EBITDA -- incremental EBITDA over the next 3 years, and we have that built into our guide. So we're pretty confident on that. And we are starting to see the impact of Jefferson and Carnesville coming out in the high margin, high growth was very accretive to our margins. Now from a capital allocation perspective, really our priorities have not changed. We're very focused organically on really expanding our margins, whether it's through capital improvement projects such as our Davenport dome, our Green America recycling expansion. So we've got a lot of very good organic growth opportunities. But then we are also extremely focused on greenfield investments, which we basically term as organic growth in our regard, so we'll continue to invest over time. And then after that, think about this as a growth story. It's M&A. We've got a very rich pipeline and I'm very happy to report that we have a very strong balance sheet, a low leverage and in a great position to buy through the cycle. So think of us as a growth story and our capital allocation as being very focused. We remain very disciplined as we've talked to our strategy over time.

Your next question comes from the line of Adam Thalhimer with Thompson Davis.

Guys, great quarter. Anne, what's your expectation for ready-mix pricing? That tends to be a business line that's a little more sensitive to the volume component.

Yes. Ready mix, our teams have done a great job. Frankly, they have all the last year for all these high cement increases, they've expanded their margins. And it's because we have our center of excellence really focused on value pricing, adding value for our customers and quality and service. Our expectations moving forward is that we get our pass-through of our cement, that we add incremental margin. Now as we look at where our markets are overall, we've said that residential will be down 25% in Q4. Q1, it was down 19%. So we see Salt Lake going down a little further. I believe that pricing will hold for a couple of reasons. One, our cement pricing maintains very high. Cement is very tight in all markets. So we're going to have to pass that along. That's going to support that. I also think our team is doing a great job with respect to value pricing. And third, I believe we're in very strong downstream markets. We've exited all of the markets that were weak for us and we have leading positions. So we remain pretty bullish on ready-mix pricing, and that was demonstrated in our Q1 performance.

Your next question is from the line of Philip Ng with Jefferies.

Strong start to the year and Scott, looking forward to working with you going forward. My question is on cement. If I look at cement prices sequentially, it was up only about $6 a ton. I don't know if there was any noise with mix or timing? Just wanted a little more color on how that price increase kind of went through? Margins were actually quite good. And I just want to get a little more color if you saw the step-up in energy that you've talked about? Or was the big contribution coming from better performance out of Green America?

Yes. So it's all [indiscernible]. So really, just let me address the pricing, first of all. So the Q4 to Q1 sequential pricing, we did a lot of imports in Q4. So that put our pricing up to about $147 per ton. And so if you just look at the ASP, it looks like we got to your point about $6 a ton, we actually got $18 a ton in our base business. So the imports, as you know, are higher priced, lower margin but from a dollar EBITDA perspective, you saw that flow through in our margins, both from the strong pricing in our base business and our strong Green America Recycling operations and operational excellence was also very strong. So the Cement business is operating very well, and we're seeing that price go through to the margins.

And you saw the step-up in energy because I know the hedges kind of roll off.

Yes. You should have -- so that in your guide, the step-up in energy is absolutely there. And we continue to go midyear because we continue to see cost escalation in our cement business. And so we've gone for a $10 per ton mid-year price increase, and those costs have not subsided at all, and that energy will persist over time.