Anne Noonan: Alright. So, the 2024 guide, let’s — we had in the proxy, 10-18, and I would, as basically — and you’ve got to remember that’s a point in time, and that was mid-2023 we put that in place. I would say the things that have brought the guide down slightly, I still think it’s in the ballpark overall, is we’ve done two divestitures on the Summit side, which were about $8 billion in EBITDA. We’ve also been able to guess now since January 12th in a really fine-tuned dis-synergies, and so that number’s been refined. And then the third factor I’d encourage you to look at, Anthony, is more around, we’ve done now a bottoms-up volume and price total analysis of the legacy Argos business. And so that’s what got us to the overall number. I would say our guide overall is, we’re very confident in that guide that we’ve put out there in the mid-point, and if anything, we would skew to upside on that guide. Scott, you wanted to talk about 2023?
Scott Anderson: Yes. For Argos 2023, Anthony, you’re right. Back in September, we thought the low-$300 million was kind of the expectation, and similar to us, Argos finished really strong to come in at that $343 million number. And I don’t want to speculate because we didn’t own it till January, but I know their pricing was starting to really take traction. And just some of that fleet modernization and their OpEx journey, they got started on that we’re going to carry through. But really excited to see the momentum they have as well as our momentum coming in ’24.
Anne Noonan: Yes. I mean, the other thing I’d point you to, Anthony is, the total margin of the combined entity was 22.2% on a pro forma basis. And we are very confident in bringing that number in 2024 to a range of 23% to 24% EBITDA. And that’ll be driven by price-cost across the entire portfolio, Aggs OpEx nuance, and delivering that $30 million of cost synergies that we’ve talked about. So, we see a pretty clear path. And then portfolio optimization will only provide upside. So, this starting point that we’re talking about for 2023 gives us a nice jumping-off point to really leverage down on the three key elements that we talked about growing the business on.
Anthony Pettinari: Okay. That’s very helpful. I’ll turn it over.
Operator: Your next question comes from the line of Brent Thielman from D.A. Davidson. Your line is open.
Brent Thielman: Hey, thanks. Good morning. I think one for Scott, wasn’t quite clear to me, but the step up in CapEx this year, could you just talk about the cadence of that? You mentioned targeting some winter turnarounds. Wasn’t clear to me if it were front-end-loaded on the CapEx or the more spread out.
Scott Anderson: You bet, Brent. So, when we think of CapEx, we’ve talked about the 10% threshold kind of being our goal here of maintaining that net revenue. But when you think about the phasing of it, we don’t really provide phasing. But I can tell you, just like you called out, it will be weighted towards the front. I would say kind of a 60%-40% if you looked at the first half of the year to the back half of the year. And that 60% in the front, really, there is two reasons to drive that, Brent, really. First is, that’s when the plants shut down. The plant shutdowns are occurring. So, we’re really putting that capital into those plants to raise that OE and that operating performance early in the year. And then just the second part is really just the deployment.
We want to get that money to work for us as early as we can in the year so we can get the returns on those growth and profitability CapEx projects. So, really, that’s what you’re looking at. We will want to push early in the year as we can and get the use of that capital.
Brent Thielman: Okay. Very good. Thank you.
Operator: Your next question comes from the line of Keith Hughes from Truist. Your line is open.
Keith Hughes: Thank you. When you were going over your end market view, I think you came up with kind of a flat unit scenario for ’24. Did I hear that right? And is there differences amongst the different products of what you think unit change will look like in ’24?
Anne Noonan: Yes. So, let me kind of give you the high level across end markets, just at a high level, and then I’ll go into line of business to address your question, Keith. So, you’re correct. We kind of came across as flattish overall. So, that really is made up of residential being flattish. Non-residential, heavy being stronger, light being dormant and weak. So, we kind of say flat to down on the non-residential. And then public mid-single-digit or higher. So, how that plays out in our actual lines of business, I would think of it in terms of Aggregates and Ready-Mix being flat. We talk about Cement flat to down, and that’s because it’s heavy non-residential. And then, we talk about Asphalt volumes going to be high mid-single-digit overall.
So, we’re going to have less imports as well on Cement. So, we’ll had more domestically produced. So, lesser imports, more reliant on higher margin Cement business is how I would look at it. Now, that being said, I will say, we are taking what I would call a guarded approach to volumes, because really there is on one side, I would say there’s pent-up demand on residential and that could pop if interest rates get, as I said in my prepared comments, to 5%. So, there is definitely an opportunity for that to swing up to the right side. That’s kind of tempered against a January that we had a lot of weather. Now our teams are really good at picking up from weather, but, we did start in a bit of a hole here. And we also have pretty much a dormant non-residential, which is a significant part of our portfolio.
But I would think about volumes overall, we started from a stance of guarded and cautious because that allows our team to react in a very appropriate way. That’s why focusing on price, focusing on the Aggs, margin expansion, Op-Excellence, focusing on our synergies and portfolio optimization, controlling what we can control. And then as volume would kick in at the end, that we — you should see that as upside and the potential for to have a compounding effect of strong pricing actions.
Keith Hughes: Okay. Thank you.
Anne Noonan: Thanks, Keith.
Operator: Your next question comes from the line of David MacGregor from Longbow Research. Your line is open.
Joe Nolan: Hey, good morning. This is Joe Nolan on for David. I was just wondering, first quarter’s seen a little bit of weather and you talked about the 10% EBITDA in the first quarter. I was wondering whether that was more of a long-term view or whether that was 2024-specific and you might see that skewed a bit lower just due to the weather this year.
Scott Anderson: Yes, Joe, I’ll take that one. You’re right. January was rough, and I think everybody felt the weather impacts for January. We think we’re still going to hold to that 10%. We feel like that February things, we still got enough time to build that back. So, wouldn’t necessarily change our outlook. And you look to the history, Summit legacy was kind of a 5% to 7% in that Q1. And now with the addition of Argos, it’s more complimentary in the seasonality. So, now we’re pushing that up to 10%, but I think we still hold to that 10% and plan on getting it back at this point, Joe.
Joe Nolan: Got it. Thank you. That’s helpful. I’ll pass it on.
Operator: Your next question comes from the line of Noah Merkousko from Stephens. Your line is open.
Noah Merkousko: Good morning. Thanks for taking my questions and congrats on the strong results.
Anne Noonan: Thanks, Noah.
Noah Merkousko: So, first — yes, just one quick one here. The Asphalt volumes were really strong in the quarter, up 27.5%. I guess, is that a one-time big project, or is something like that some really strong growth rate, something we can see continue as we look through ’24? I’d imagine infrastructure plays a big role in driving volumes there.
Anne Noonan: Yes. I mean, Q4, you’re absolutely right, Noah. It was high, but it was really weather. We had very favorable weather. So, our guys, every crew we had were out in the road. That’s all I can tell you. And we had a ton of backlogs, which we still do in Asphalt. So, on a full year basis on an organic growth, you’ll see that our Asphalt was up like 10%, but very heavy in Q4 just because we got particularly favorable weather.
Scott Anderson: Once in a while, we got to call out the good weather.
Anne Noonan: Yes.
Scott Anderson: Even though January had turned.
Noah Merkousko: Got it. And I think that, correct me if I’m wrong, but the answer to Keith’s question, kind of thinking about Asphalt volumes up in the mid-to-high single-digit range?
Anne Noonan: Yes. You can look at it that — now we have a very tough comp on the first half, I would say, of Asphalt because it had a very significant increase where we saw a big slug of pipeline in 2023 come in from — we always said we would be the beneficiary of repair and rebuild being the first of the infrastructure dollars to come in. And we started to see that in ’23. And so what you can expect, Noah, is as we go into 2’4, really healthy Asphalt backlogs. But we also have really healthy Aggregates backlogs that are all tied to that public funding.
Noah Merkousko: Got it. That all makes sense. Thanks for the time and good luck with the rest of the year.
Anne Noonan: Thanks, Noah.
Operator: Your next question comes from the line of Kathryn Thompson from Thompson Research Group. Your line is open.
Kathryn Thompson: Hi, thank you for taking my questions today. It’s not that the heavy lifting is behind you with getting Argos over the finish line, but that’s over the finish line and you’re focused on integration with Argos within Summit. But touching on commentary about just that continuous pruning of non-core assets, two parts on that. One, what are your priorities? And then two, kind of along tied with that, how has that changed with Argos? And is the pace and the type or geographic mix, some of the relatively greater drivers for pruning your portfolio?
Andy Larkin: Thanks for the question, Kathryn. So, yes, we are — as you know, we’ve always talked about portfolio optimization as a process, not a project for Summit. And we will continue to be that way. And every priority we have is driven around reaching our Elevate Summit’s financial metrics that we’ve set. So, we’ve said we want ROIC above 10% and we’re pushing the portfolio to over 30% EBITDA margin. So, every asset is scrutinized at Summit and that includes legacy Argos assets. And if we don’t see a clear path to those kind of metrics, we will find a better owner. And we’ve demonstrated that yet again here in the fourth quarter. I will say it doesn’t change our overall strategy. Our overall strategy was to become more materials-led.
Obviously, the Argos acquisition allowed us to increase that to over 80%. We’ve really got that materials part moving for us at a good time and growth for all of our end markets. Our geographies have been further fortified by this combination. And that’s getting less seasonality into our business and having that exposure to high-growth MSAs in the Southeast. And our pruning also is around, we have said we’re going to grow new platforms. So, think about the acquisition we did this quarter was very important. It was adding 30-year reserve in Arizona in a high-growth corridor, where we said we were going to build out that Aggs platform. And some of the pruning were in geographies, frankly, where we’re not focused and they’re non-strategic and non-core.
So, we still keep this ongoing list of tier 1, 2, and 3 that are on our divestiture list that have to meet the financial targets and they also align very strategically with our materials-led strategy.
Kathryn Thompson: And just to follow up on that, if to — since you’re able to share, what are the — some — those top three criteria you just referenced? The top three in Kansas?
Anne Noonan: The criteria is materials-led.
