Rodny Nacier – Investor Relations Tom Hill – President and Chief Executive Officer; Director Brian Harris – Executive Vice President and Chief Financial Officer.

Todd Vencil – Sterne Agee Trey Grooms – Stephens Kathryn Thompson – Thompson Research Group Nishu Sood – Deutsche Bank Ted Grace – Susquehanna Bob Wetenhall – RBC Capital Markets Adam Thalhimer – BB&T Capital Markets Stephen Kim – Barclays.

Greetings and welcome to the Summit Materials Third Quarter 2015 Earnings Conference Call. At this time, all participants are in listen-only-mode. A question-and-answer session will follow-up with formal presentation. [Operator Instruction] As a reminder, this conference is being recorded. It is now my pleasure to introduce our host Rodny Nacier of ICR.

Please go ahead, sir..

Good morning. We’d like to thank you for thanking for joining us today for Summit Materials third quarter 2015 earnings conference call. Today’s conference call is hosted by Tom Hill, Chief Executive Officer; and Brian Harris, Chief Financial Officer.

This morning we issued a press release detailing our third quarter financial results which can be found in the Investor Section of our website at summit-materials.com. We also published a supplemental worksheet highlighting key financial and operating historical data in the Investor Section of our website.

During this call, we will review our third quarter presentation, which is available by assessing the live webcast in the Investor’s Section of our website.

Turning to Slide 2, I would like to remind you that management’s remarks and answers 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 materially. For a discussion of some risk factors that could cause actual results to differ, please see the Risk Factors section of Summit’s perspective dated August 7, 2015, filed with the SEC.

In addition, we will refer you to certain non-GAAP measures on this call. You can find reconciliations of non-GAAP measures for historical period, the most directly comparable GAAP measures in the press release. With that I will turn the call over to Tom..

Thank you, Rodney, and welcome to our third quarter 2015 earnings conference call. Turning to Slide 3, I will begin with a review of our operating highlights and a brief review of our business. Brian will then give you some more details on our operating and financial results. After our review, we will open the lines for questions.

Now turning to Slide 4, we had very good momentum across our business during the third quarter and continue to make significant progress towards accomplishing our 2015 goals. We also took significant steps to expand our business and further enhance our leading market positions.

During the third quarter, we increased our volumes and prices across all of our lines of business, including aggregates organic pricing up 5%. Our further adjusted EBITDA increased by 55% to a $120 million, with improvement in all three of our regions, driven by those acquisitions and organic improvement.

Our gross margin improved by 590 basis points to a higher mix of materials and core profit improvement across aggregates, cements, ready mix and asphalt. On the acquisition front, we doubled the size of our cement operations and have already made progress on the integration of the highly strategic Davenport acquisition.

We also completed the acquisition of LeGrand Johnson Construction, an aggregate-based business in Utah, which further strengthened our vertically integrated position in this dynamic market. We improved our capital structure by completing a secondary follow-on offering, which expanded our public flow and institutional shareholder base.

In addition, we strengthened our balance sheet, while also preserving our financial flexibility to execute our growth strategy and generate value for stockholders. We are very pleased with our Q3 results as we continue to execute our strategy and deliver on our goals.

Turning to our operations on Slide 5, during the third quarter, we increased net revenues across all of our lines of business. We grew net revenue by 22% to $426 million compared to the prior year quarter. Acquisitions accounted for the majority of our growth with help from underlying improvement and demand.

In the West, our volume and price trends are positive and we are working through very healthy backlogs. In our central and east region, organic revenues decreased due to wet weather, exiting certain lower-margin businesses, and softer highway markets. However, the Davenport acquisition provided a significant contribution to our central revenues.

In the east, aggregate pricing improved despite these lower volumes. On Slide 6, we had quite gains across all of our lines of business. Underlying demand was stronger in each of our businesses and acquisitions contributed additional growth primarily in cement.

In aggregates, our organic price gains we've had the benefits of our pricing initiatives and the positive pricing environment in our markets. Cement volumes increased 77%, helped by Davenport, while price improved 13% reflecting improving utilization rates and favorable market dynamics across our networks.

The inclusion of the Davenport operations also provided some favorable mix impacts on price. But due to the immediate integration and market overlap with our existing Hannibal cement plant, it is impractical to separate the results.

Moving to Slide 7, we were especially pleased to record a 55% increase in our further adjusted EBITDA, representing another quarter of incremental margins in excess of 50%. Higher prices and accretive transactions, coupled with internal cost initiatives, helped us expand our margin by 590 basis points to 28%.

Our strategy is built around continued margin enhancements and during the quarter, we captured additional margin at each phase of our vertically integrated business. A higher proportion of higher margin materials and product revenue helped, as well. We believe we have lots of runway to improve our margins.

Having owned these businesses an average of only two years or three years, we have many opportunities for improvement, which is an important part of our margin story going forward. Turning to our growth story on Slide 8. Our acquisition strategy placed us in a unique position among top U.S. construction materials companies.

We are executing on our acquisition gain plan and are well ahead of our 2015 plan. A significant portion of this accomplishment is attributable to the Davenport acquisition we completed in July. As I discussed earlier, the integration of our expanded cement network is progressing well and delivering accretive results.

We expect further benefits in due course from additional logistical efficiencies, tighter inventory controls and better capacity utilization.

During the third quarter, we also acquired the LeGrand Johnson Construction Company, a vertically integrated construction materials company based in Utah, serving that state along with western Wyoming and southern Idaho. It’s an aggregates-based business with a long history, strong customer relationships and an excellent reputation.

Our performance teams are working with local management to implement price optimization and other best practices to enhance the accretive benefits of LeGrand. Turning to Slide 9, opportunities like LeGrand are really the bread and butter of our growth strategy and a core focus of our development efforts.

LeGrand also highlights why we are committed to our vertically integrated model, and why it worked so well for Summit. We have a larger pipeline of acquisition opportunities since most of our markets are typically dominated by these vertically integrated companies.

To be clear, we are a material-focused business with select exposure to strategic and defensible downstream positions. To that point, our participation in ready-mixed asphalt and paving construction, allows us to benefit from increased predictability and visibility in our markets.

And most importantly, we can better control our pricing at the various stages of the vertical. Again, we are an aggregates-based and cement-based business and we are in the downstream where we have a strong materials position in well-structured markets.

It’s in these markets where we operate that we can transfer the benefits of that strong materials position into the downstream. We have a strong history of sourcing and completing strategic acquisitions and we expect to continue complementing our organic efforts with accretive transactions.

Our pipeline of potential deals, remain strong and we remain optimistic about our ability to grow and add value through acquisitions.

Now moving to Slide 10, our core organic price and volume growth is key to our long-term success and we believe we are well-positioned in attractive markets to benefit from what we expect to be a steadily improving construction environment.

The significant majority of our markets had negligible exposure to the energy sector and are largely comprised of operations in healthy, diversified economics, with stable to positive outlooks that tend to be more resilient through the economic cycle.

The status of additional federal funding for our nation’s transportation needs remains in limbo, with congressional consensus for a well-funded long-term highway build still unlikely.

That said, we are extremely pleased with the increasing ingenuity and determination of state governments throughout the country to fund their needed infrastructure investment. As a result, many states, including a few of ours, such as Texas, Iowa, Utah and Idaho are allocating additional resources to invest in our infrastructure.

In combination, with steady improvement in private non-residential and residential activity, we are encouraged by the long-term tailwind for construction activity. Now, let's look more closely at some of our key states. The upper Mississippi region, including Iowa, Minnesota and Wisconsin, is now an important market for our cement business.

Notably, this region is geographically isolated, and relatively insulated from either domestic or international cement imports. As a result, the outlook for pricing in this region is quite favorable.

This regional economy is also doing better than the national average, and in addition, has some of the percentage of concrete roads, which is a very positive environment for our cement business. Additionally, earlier this year, Iowa passed a $0.10 per gallon or 45% increase in the state’s gas tax.

It provides additional funding for Iowa’s highway program, moving forward. In short, our cement business is well-positioned to be successful in these attractive upper Mississippi markets. In Utah, we had strong vertical integrated positions, enabling us to take advantage of one of the more vibrant economies in the U.S.

The non-residential and multi-family markets have recovered nicely, but the single-family housing market is only roughly 45% of the prior peak. However at the moment, we’re starting to see improved bidding activity for new residential sub-divisions, which is encouraging.

On the public side, in July of this year, Utah converted to a percentage-based sales tax on gas of 12%, which increased the state tax per gallon by approximately 20% to 60%. The tax is capped at $0.40 a gallon, and has a floor of $0.29. This compares to the previous flat tax of $0.245, which hadn’t changed since 1997.

In Missouri, we have a great aggregates position in very well-structured markets with strong margins. It is a stable, low-single digit growth market, despite having still being a half of the prior peak. That said, like in Utah, we’re seeing some early signs of pent-up activity. Kansas and Kentucky are relatively stable markets.

In these states, we're vertically integrated, with significant highway paving-geared businesses. Both of these states' highway programs have been under pressure, due to some political battles, but we are confident these will be worked out in due course.

For instance, both candidates in today's gubernatorial election in Kentucky have supported increased highway spending. And in Texas, our markets that were affected by severe weather during the first half of 2015, have experienced a rebound in activity during the second half of 2015.

Furthermore, we expect the tailwinds that increased construction activity, and favorable legislation such as propositions 1 and 7 to drive additional volume growth. Prop 1 added up to $1.7 billion to the Texas transportation budget.

Prop 7, which is actually being voted on today, would add an additional $2 billion to $3 billion per year to current Texas transportation funding levels beginning in September of 2017. We expect it will be successful, given as this is a reallocation of existing taxes.

These two funding measures are very positive developments for our Texas operations and collectively stand to increase the state’s transpiration funding by 30% to 40% by 2017, compared to a year-ago. In our private construction activity in Texas none of our revenue is directly exposed to oil.

But we do have some indirect exposure in a few markets, such as Houston and Midland Odessa, which collectively represent approximately 15% of our business. In our important Houston market, we have not seen a drop in demand and recent forecast predict activity to be stable in 2016, before returning to growth in 2017.

Overall, this is an exciting time for our business. Our strong market positions which support a positive pricing outlook, our continued focus on internal operating improvements and our unique acquisition pipeline, create significant and sustainable operating leverage going forward. With that, I’d like to turn the call over to Brian.

He will take us through our financial performance and balance sheet metrics..

Thank you, Tom. Turning to Slide 11, we are pleased with the strong momentum in our financial performance to end the quarter with a strong balance sheet to meet our growth objectives.

Beginning with the discussion on revenue by lines of business, overall we had another quarter of positive price and volume improvement across all lines of business on an organic and reported basis. Acquisitions are a major driver of our volume growth as expected but the underlying improvements in our existing operations is encouraging, as well.

In our materials businesses, which includes aggregates and cement, net revenue for materials increased 61%, to $130 million, compared to the prior-year quarter. In our aggregates operations, 22% volume growth was led by our West segment, helped by the effective acquisitions mainly in the greater Houston, Texas, and Vancouver, Canada markets.

Our Central segment growth purely reflected demand improvement and our East segment reflected softness in Kentucky. Aggregates prices moved higher in each of our regional segments to end the quarter up 5% year-over-year on an organic basis.

This was largely attributable to successful price increases implemented over the past 18 months cycling into current project activity across most of our markets. Our average prices increased year-over-year in our newly acquired operations, as well.

But the mix impact of the acquisition activity in lower-priced markets largely masks this progress in our overall price improvement. Specifically, prices at our acquired Mainland operations in Vancouver are up year-over-year but have lower absolute prices compared to the company average due to their product mix.

In our combined cement operations including our Davenport and Hannibal plants, we were pleased to realize another quarter of solid momentum, with volume up 77% as a result of the Davenport acquisition and with average cement prices up 13%.

In our products businesses, which includes ready-mix concrete and asphalt, net revenue increased 17% to $208 million, compared to the prior year quarter. Our ready-mix volumes were largely driven by acquisitions in the west.

Average ready-mix price increased 5% on an organic and reported basis, largely benefitting from the efficient pass through of higher industry cement prices, which is very encouraging as well for our own cement operations.

In asphalt, organic and reported volumes continued moving higher, entirely driven by the west region, following weather-related challenges during the first half. Asphalt average price growth of 1% was mainly attributable to favorable region and product mix.

In the top left, our total gross profits increased 46% to $160 million, compared to the prior year quarter and as a percentage of net revenue gross margins expanded to 37.4% compared to 31.4% in the same period last year.

Our expanded cement network along with our aggregates-based acquisitions completed since 2014 were meaningful contributors to this improvement resulting in a 970 basis point increase in the mix of our gross profit from higher margin materials.

We also achieved core profit improvements within each of our lines of business and benefited from lower energy costs. Moving onto our broader financial results on Slide 12.

In the third quarter 2015, we increased our further adjusted EBITDA 55% to $120 million, compared to $78 million in the same period last year, generating incremental margins in excess of 50%.

As a percentage of net revenue, our margin improved by approximately 590 basis points to 28%, largely as a result of our ability to increase prices organically, across all product lines, the accretive contribution from our acquisitions and our active cost management.

General and administrative costs for the third quarter were $43 million, representing 10% of net revenue and essentially stable compared to the year ago quarter and in line with our near to medium term expectations.

We reduced our interest expense for the quarter to $21 million, compared to $22 million in the year ago period, largely reflecting our refinancing of higher cost debt, since April, which I will detail momentarily. Our adjusted net income per share attributable to Summit Materials Inc.

was $0.72 per share of Class A common stock for the third quarter of 2015 and excludes certain one-time items, associated with our loss on debt financings. On a GAAP basis, we reported net income per share of $0.39, attributable to Summit Materials Inc.

For your modeling purposes, I’d like to emphasize that we calculate earnings per share on a net income attributable to Summit Materials Inc., which represents the number of shares of Class A common stock available to public shareholders.

For our reporting purposes, the weighted average number of diluted shares of Class A common stock was approximately $38 million in the third quarter. The calculation of our EPS, based on Class As for all quarters in 2015, are further detailed in the supplemental worksheet posted on our Investors site.

We continue to expect our corporate taxes to remain relatively immaterial going forward, as a result of the utilization of NOLs in the short-term and the benefits of our tax receivable agreement in the longer term. Moving onto our balance sheet and liquidity on Slide 13.

During the quarter, we had a few capital market transactions, which we detailed in today’s third quarter earnings press release, mainly in connection with our Davenport acquisition. In July, we issued 350 million of 6 1/8% senior notes due 2023, which met strong investor interest and was upsized twice to accommodate a larger group of investors.

In our credit facilities, we successfully amended our term loan to expand the facility to $650 million and extend the maturity by three years to 2022, while lowering our borrowing rate by 1/4 of a percentage point to 300 quarter percent.

In August, we successfully completed and oversubscribed follow-on offering raising net proceeds of $556 million through the issuance of 22.4 million shares of Class A common stock.

The proceeds were mainly used to purchase $18.7 million LP Units for some of our pre IPO owners along with 3.8 million of shares issued for primary proceeds to fund a portion of our Davenport transaction.

As a result our total share count including shares of Class A common stock and assuming conversion of outstanding LP Units increased by $3.8 million to $99.3 million at the end of the third quarter. With Class A is representing 49% of our total equity held by the public compared to 28% prior to the offering.

We are pleased with this increased liquidity in our float to the public. As a reminder, our Class B stock has no economic value but generally reflects our sponsors’ voting interests.

We subsequently used to combine net proceeds from the issuance of the senior notes due 2023, the refinancing of the term loan and the proceeds from the August equity offering to pay the $450 million cash purchase price for the Davenport assets, with the remainder used to refinance our existing senior secured term loan facility redeemed $183 million of 10.5% notes and to pay related fees and expenses.

Incorporating all of our transaction activity along with $38 million of free cash flow generated during the quarter at September 26, we had total outstanding net debt of $1.3 billion, our total liquidity was $170 million including $151 million of availability on our revolving credit facility.

We were pleased to complete the financing of the Davenport assets in a timely manner and sourced an attractive terms to end the quarter with a prudently levered balance sheet.

As in the past we intent to remain disciplined with our capital allocation and we continue to target a net debt to EBITDA leverage ratio of approximately four times at the end of 2015.

As we look forward we are focused on preserving our financial flexibility for opportunistic capital deployment and we continue to expect to delever overtime as our EBITDA grows. In regards to our outlook for the full year 2015 on Slide 14.

We are encouraged by our business momentum so far in 2015 and as we look to the balance of 2015, we are narrowing our full year further adjusted EBITDA guidance which we now expect to be in the range of $275 million to $285 million which comprises our organic improvement, the contribution from our Davenport acquisition and up to $10 million of EBITDA from other 2015 acquisitions such as LeGrand.

This compares to our prior range of $265 million to $290 million. We would like to remind you that our stated full year 2015 guidance only captures contributions from the successive period of acquisitions as of the date completed of each respective acquisition.

As we look at our comparative base of activity as we head into 2016 on a pro forma basis, which assumes all of our acquisitions were completed on January 1 of 2015. Then our stated full year 2015 guidance implies a pro forma EBITDA range of $300 million to $310 million representing significant progress during 2015.

For the full year 2015, we continue to expect our organic pricing and volume to improve across all of our lines of business in addition to the incremental volumes from our acquisitions since 2014.

We continue to expect to incur capital expenditures excluding asset sales between $80 million and $90 million for the full year 2015 with the increase reflecting our expanded operating platform coupled with our continued long-term expectation for CapEx to approximate 6% to 7% of net revenue.

We expect to generate positive free cash flow for the full-year 2015, largely weighted towards the second half of the year. And with that, I’d like to turn the call back to Tom for some closing remarks..

Thank you, Brian. We have developed a diverse and scalable vertically integrated business in very attractive markets. We are in a great position to continue delivering on our margin and growth objectives.

Our improving margin outlook is based on the positive pricing environment and organic internal operational initiatives that take advantage of our scale without disrupting our decentralized management system. Our exciting growth story is based on three primary drivers. First, the positive pricing environment in all of our product lines.

Second, steadily improving underlying demand. And finally, a unique relationship-driven acquisition strategy focused on low risk value-added bolt-ons, while at the same time always looking for new platforms that meet our strict criteria. We are now happy to take some of your questions. Operator, can you please open the lines up to Q&A..

Certainly, at this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Todd Vencil from Sterne Agee. Please proceed with your question..

All right, thanks. Good morning guys..

Hi, Todd..

Tom, you just mentioned a couple of the underlying drivers of the business and you walked around two things that you I want to ask you about that is good first with positive pricing momentum.

And you had mentioned especially in the upper Mississippi area geographically isolated which makes it good for pricing can you talk about any pricing increases for cement that you may have in place before the springtime..

Sure Todd. I mean, Continental has announced that $12 term price increase effective April 1. That is similar to the Buzzi increase announced, that is for the same amount at the same time. They tend to vary a little bit by geographic area but in general those are the two price increases, from us and from Buzzi.

LafargeHolcim has announced a $15 price increase, effective January 1. And I – so far I haven’t heard anything else about those announcements..

Perfect, thanks. Are there any announcements, I mean, I know it’s a little more – little more they tend to be a little more spread around and granular.

But what are you thinking about, on the aggregate side, for price increases in the springtime?.

I would hope that we continue the same level as we’ve had this year. It is so specific to local markets. We have had some fall price increases in Texas, but in general, most of our local markets go up in the springtime. And we see the same type of pricing that we’ve experienced this year..

Got it, perfect. And you mentioned steadily improving underlying demand. Is there any way – I know it's early. But people are a little focused today on what next year can potentially look like.

Is there any way to characterize next year, in terms of demand growth or volume growth? Maybe even just from [indiscernible] to this year standpoint? Do you see things accelerating? Are they holding steady? Or is there some deceleration going on? What do you see there?.

We really haven’t seen any deceleration on the individual markets, probably a bit more optimistic in British Columbia and Vancouver, on our Mainland Sand and Gravel business. We are seeing good momentum in Utah, which is probably accelerating at this point.

And I would say that we’re now looking at the Houston market is probably stable next year where I was a little concerned about some deceleration there next year. We are seeing some softness in Kansas and Kentucky on the highway side. That will probably continue into next year.

But on the other hand in those – Kansas, Missouri, Kentucky markets the residential market appears to be improving and gaining a bit of momentum. So that’s – overall, we see sort of the continuation of what we expected this year. And its – we are very optimistic about continued growth into 2016..

Great and then final one from me. We’ve been hearing from private companies or the public companies, the home builders are talking about these bottlenecks that are sort of developed in – on the labor side, particularly on the contractor side, probably at some of your customers.

Is that something that that you guys are seeing?.

We have not – we certainly haven’t experienced it ourselves. Year and half ago, we were seeing some bottlenecks in Texas, both with the decline of the oil price that has relaxed those bottlenecks in Odessa, Midland and in Houston. But we read a lot of the – probably the same things that you do.

But we have not had any feedback from our customers as far as bottlenecks on the labor side..

Great, that’s very helpful. Thank you so much..

Thanks Todd..

Thank you. We ask you that you please limit yourselves to one question, one follow-up in the interest of time. Our next question is coming from Trey Grooms from Stephens. Please proceed with your question..

Good morning..

Hi Steve..

I just want to make sure I understand your outlook for Houston, Tom. And the – so your thinking is going to be something around stable right now. I think some of the residential permits suggest that we could see that down next year, I don’t know maybe 10% or so.

So is it’s your take that you would see some of these other end markets offset that and if so kind of what's driving that I guess in Houston specifically..

Yes, a month ago I would have said that was what we would have shared. There is a UBS home building conference in – with a bunch of local economists and they are sort of conclusion was they’re having said they are going to be level in 2016 versus 2015. That is also what we’re hearing from our customers is that we see stability in that market in 2016.

So that over the last 30 days in my mind is probably improved the outlook for Houston from slightly down to stable..

Great, that’s encouraging. And then I guess….

And Trey – sorry. Our demand continues very strong there. We have seen no slowdown whatsoever in Houston..

That is good to hear. And then could you talk a little bit about I mean this is going to be kind of overall, as you look at the end market, the buckets that you are – the different buckets you are in.

First off, remind us what is your, I guess, pro forma – or the end market mix that you guys have now, after all of the acquisitions you've done? What the res/non-res infrastructure mix picture looks like? And then also, just if you could comment on any trends that you are seeing, specifically in non-res, as we look forward?.

Yes, thanks, Trey. As far as the unused….

What was upon what is the…..

It's around about one-third, one-third, one-third between the….

Yes, it’s roughly one-third, one-third, one-third..

The infrastructure res and non-res it’s about one-third, one-third, one-third..

Yes, so we see, we see continued strength in the non-res sector both in our backlogs and in projects that we’re bidding we have not seen any deceleration on the non-res side.

Our res again continuous to be about its good consistent growth there I do see some potential pick up on the res side in Utah that’s a market that has been very strong non-res over the last couple of years and multi-family has been very strong there, single-family has lagged.

But we’re seeing good residential lot development and we’d be optimistic about acceleration there. You know highways is a mixed bag we certainly saw some slowdown in the second half of this year in Kansas and Kentucky there is some political issues, there we do think they had of chance of being resolved next year.

But I would say we will probably look at stable to slightly down highway markets in Kansas and Kentucky. On the other hand, Texas is very strong on the highway side. And we are doing quite well there. So I would look at highways overall, although it’s a mixed bag, we are very large in highways in Texas. So overall, I’d say our highway market improving.

Does that answer that for you, Trey..

Thank you. Our next question is coming from Kathryn Thompson from Thompson Research Group. Please proceed with your question..

Hi, thank you for taking my questions today. First would focus on your cement segment.

Could you go through what you're capacity utilization is throughout your cement plant network? And how should we think about modeling cement volumes, going forward, including the acquired distribution centers? And then finally, with that, if you could give a little bit more color how we should think about what a reasonable incremental margins for the cement segment, as we think about 2016 and beyond?.

Okay. Thanks Kathryn. On our cement side, our Hannibal plant has a capacity of 1.25 million short tons or going to be a little shy of 1.1 this year. The Davenport’s plant is 1.1 million short tons and we are going to be roughly a capacity there.

We are going to sell a several hundred thousand tons of distributed tons in the expanded network terminals that we acquired with Davenport. We do have the capacity in our Baton Rouge terminal to import cement in due course once domestic demand exceeds supply.

So and Brian you can jump in but I would model our manufactured and then our distributed tons obviously the distributed tons are at a lower-margin but we have lots of run rate on the distributed tons with our network of terminals..

Yes, Kathryn. So overall we would model 40% to 44% gross margins on cement..

Okay, perfect.

And from a – stepping back, in your opinion, from an industry standpoint, how far away you think we are, from a national volume standpoint, from being sold out with cement? And where you are forced to import product, in order to meet demand?.

I would say, late 2016 early 2017, Kathryn is when that would be prudent to begin import. Now that imports going on today in certain areas whether it’s from Canada or there are some imports in Florida and Houston. But I would check around the river system we will be where demand exceeds supply, sometime in late 2016 or early 2017..

Great, thank you so much for taking my questions..

Thanks, Kathryn..

Thank you. Our next question today is coming from Nishu Sood from Deutsche Bank. Please proceed with your question..

Thanks. Following-up on Kathryn's question. At the Company level, the incremental margins this quarter were very nice and strong, north of 50%. So just wanted to think about the puts and takes for how sustainable that level may be.

For example, how much of the incremental margins were driven by internal actions, synergies, cost outs, from your acquisitions? You were discussing a little bit of the lower – the drag there might be from the terminals, from the redistribution.

So how sustainable, if you think about that puts and takes, is the current level of incremental margins?.

Nishu, this is Brian here. So when you look across the board, we actually saw pretty decent margin improvement in most of the product line, but particularly in the ags and cement, so big portion of that improvement came from the realignment of the mix in the business.

As we said, we’re up almost to 61% of our profit is coming now from cement and ags, so from the materials segments. So with that mix change, and stable margins on the other products, we think that’s a more sustainable now than it would have been prior to the acquisition of Davenport. So we have a nicer mix from a margin standpoint, going forward.

I think that’s two quarters now, where we had incremental margins of 50%, so yes, reasonably sustainable..

Great. Appreciate the color. And then Tom, in your prepared commentary, you didn't sound too optimistic about the federal or the national highway bill. There has been some optimism, because of the short-term extension, and the seeming focus now on getting something done.

So I was just wondering if you could elaborate a little bit on your thoughts and I know it's always hard to handicap.

But your thoughts on the process, and where you see it going?.

Yes, I guess, like I said, I am still not optimistic for a well-funded long-term bill. I think the best case scenario here is that we get a bill out of the house, with almost no increase in funding or very, very small increase in funding. And then you have a Senate bill, which has – I would call it an okay increase in spending.

So you get to conference, and I think what will happen in conference is and what I would hope we get is two years of modest increases in spending and then a reopener. So this is just a little bit more sophisticated way to kick the can down the road a little bit.

Instead of short-term extensions, you will have a six-year bill, with not great funding in it. And you'll have a re-opener, in two or three years, where they’ll look for new revenues. And the new revenues really need to come out of an overall tax reform package.

And I think that's where we can get to the $60 billion a year for highways, versus the low $40s now. But I do think that maybe a couple of a years off. Now look, getting a six-year bill will be a positive – a positive action from Congress which is unusual.

And I also think there are some really good policy initiatives in there, especially on the speed of delivery for projects. So overall we are getting that six-year bill even though there’s – a have to be a reopener for additional revenues, will be a positive.

But I think that’s the best case scenario now and I’m not sure I would bet a lot of money on that but that’s the best case scenario..

Okay, great. Thanks..

Sure thanks, Nishu..

Thank you. Our next question today is coming from Ted Grace from Susquehanna. Please proceed with your question..

Good morning, guys..

Hey, Ted..

Hi..

Brian, I was wondering if you could bridge us a little more granularly on the gross profit improvement within materials? Revenue up $49 million or so, and gross profits up a little better than $34 million. So very strong incremental.

Is there any chance you could just bridge us, the impact of organic pricing in aggregates and cement, M&A contributions? Cost factors, whether it is energy and labor, maybe the head wind, and synergies as a tailwind? Just so we can get a better sense of the breakdown? And then if you could also address, potentially, the gross margin for the cement business separately, versus the aggregate business within materials?.

Yes, okay bunch of question there Ted. I will start with the last one first. The cement margins, as I mentioned before, in the 40% to 44% range.

When you look at the improved cost on diesel and we flagged this earlier but we’ve, as you know we’ve been buying our diesel forward a month at a time and so we saw continued benefit from that during the quarter. And year-to-date, we've now saved about $10 million on a like-for-like basis, for the cost of diesel.

There’s no doubt that a big portion as you saw from our slide deck there a big portion of our margin improvement has come from price on the material side and from cost reduction. And then obviously we have the acquisition of Davenport as higher average margins in there as well.

So it’s a combination of things that are driving the margin improvements, but price input costs and the acquisitions are the main aspects of it..

Okay, great. That is very helpful. The second thing I was hoping to ask is, just looking at the East segment specifically, growth was down a little bit sequentially. Seasonally, that just struck us as atypical.

Are we off base with that? Were there transient factors that – I think Tom made mention, Kentucky was down on the highway side, and there could have been some mix impact, I don't not know if that was less paving. But could you maybe just help us understand what happened there? Because I think revenue is down 8% sequentially, but profits were up 40%.

So that is a great outcome, but I was wondering how we got there..

Yes, so again it was a combination of things. On the margin side of it, we have been exiting some of the lower-margin grading business in our Kentucky operation. So that has helped to boost the overall margins. We did have some weather related delays. It was quite wet in the East and a little tougher market for us in Kansas this quarter.

So that was really going drove the combination of things there in the East..

Okay. That's great. Best of luck this quarter, guys. Congratulations..

Thanks..

Thank you. And next question is coming from Bob Wetenhall from RBC Capital Markets. Please proceed with your questions..

Good morning.

Just wanted to get an update on the acquisition pipeline and how are you thinking about 2016?.

Yes, Bob. This is very strong, right now. It’s strong as I can remember it. And we have some decent sized deals in the pipeline. All of them are pretty – what I would say at the preliminary stage however and then we have our normal number of smaller bolt-on acquisitions that we’re progressing. So, I’d be growing into 2016 and I would be very optimistic.

And as I said – think I've said this to you before, Bob, I have never been able to correlate deal flow with cycles or anything else that’s more family related, but it’s very strong right now and our acquisition team is extremely busy..

Got it. Good luck with that. Wanted to ask you, Brian pointed out that there is a big shift in mix towards materials, in aggregates and cement, and it's now over 60% of the profit pie. Is this like a structural thing, where you guys are migrating more upstream? Or a twist in the business model? How should we think about this in 2016? Good luck, guys..

Okay, thanks, Bob. And we’re very happy with our product mix right now. As we said since we started the business, we really do believe in the vertically integrated model. The model is based on a strong materials position in well-structured markets where we can carry those benefits down the vertical. We will continue along the same path..

Cool.

Thank you, Bob..

Thank you, our next question today is coming from Adam Thalhimer from BB&T Capital Markets. Please proceed with your question..

Hi, good morning guys, nice quarter..

Thanks you Adam..

Thank you..

What is the lag between when a state raises their gas tax and when you might see some incremental business from that? And then are there any other early-stage developments in other states coming up with additional highway funding?.

Yes, the life is usually six months to a year. But it can vary by how well organized the DOT is in that particular state. A lot of states are extremely professional and have projects ready to go. Texas will be an example of what, I think, is a highly professional DOT.

That is very efficient and they have gotten, for instance the projects out from Prop 1. We have been bidding on those for the last few months. So it really varies by state, the Utah, DOT is one of the other ones that’s very efficient and very professional. So it really does depend on state. But six months to a year is probably a decent indicator.

As far as states go, Kentucky has always had a pretty good highway program. The departing governor has not been a big proponent of highways, and in fact, built up a pretty big cash reserve in his highway fund. And as a result there’s been a bit of decline in the highway market there.

And there’s – both candidates in today's gubernatorial election are pro-highways. I would say the Democrat more than the Republican. But we are not a partisan organization, and we root for whoever wants to support highways. In Kansas, we’ve had a governor, who has cut taxes pretty highly, and then had to go back in and start cutting spending.

So as a result, they’ve have cut back highway spending there. There is a huge movement there to get that money back, and to re-energize the highway program. So those are the ones that I would say that impact our business..

Okay. Great.

And then Brian, is the interest expense in Q3 a good run rate, going forward?.

Yes, it’s a pretty good – it’s a pretty good indication. $21 million..

Okay. Thanks so much..

Thanks, Adam..

Thank you. Our next question today is coming from Stephen Kim from Barclays. Please proceed with your question..

Thanks very much guys. Tom, I guess, I wanted to, just first, start asking about the Northeast Utah/Wyoming market. I guess you are shipping into Idaho, as well there. Can you just – I know obviously, you have done two deals there recently.

Just curious whether you think, at this point, your footprint is sufficiently built out now to service that market well? And maybe if there is anything in particular about that market that you can help share with us – you can share with us, to help us understand what makes it particularly attractive?.

LeGrand has a – who operates in Northeast Utah, and it is a contiguous area to our existing foot print. LeGrand has been around for, you know 60 years or so and it is very solid market. There’s some – there’s agriculture, there’s a manufacturing, there’s some tech there. It’s a very diversified economy.

I do not believe that there is much locked on the acquisition front in Utah, it’s a very consolidated market now. So, yes, there may be some smaller bits and pieces, but the market is pretty well consolidated and on the front range and in Northeast Utah, which is one of the things that makes it attractive, actually.

So you get into Idaho, there is a couple of potential acquisitions up there. But I think it’s just – look, it’s a very well diversified economy – area and what I think Utah is one of the best economies in the U.S. low unemployment, high employment growth. It’s a great place to do business pro-business government.

It’s, I think a very dynamic economy and one which, I think has a good few years ahead of growth..

Okay, great, thanks a lot. Tom, also, you’ve obviously been around, seen a bunch of cycles. And I was curious, particularly as it pertains to the residential end market. We know the concrete in particular, and aggregate, tends to kind of go early in the construction process of any home, or a community.

At the same time, sometimes, when builders get a little nervous about where the market is going, or the cycle is going, they will maybe tend to try to build out some of their communities, so they – to shorten the – in the projected life of that community.

And therefore, I was curious, in your experience, do you see that your business, and demand for your products, particularly on the ready mix side, is a leading indicator, or more of a lagging indicator, of the sentiment and the direction of the residential market?.

I’d say it’s pretty – on the concrete side, it’s pretty concurrent. I mean, it’s – although it’s – you pour a slab in Houston for instance, you pour a slab and a house goes up pretty quickly, so you know it’s pretty concurrent with start.

It lags permits by anywhere from – in some places this is a little as 30 to 60 days, in some areas it’s more or like six months.

But I think where you see the difference is and the leading indicator would be if you’re doing residential, if you're doing streets and curbs in residential and we are starting to see some of that for instance in Utah where we have been disappointed in the single family recovery was non-res and multifamily had being growing gang busters.

Single family has been fairly slow. But we’re not – excluding some of that residential development where we’re bidding the streets and the gutters and the sidewalk and so forth. And that’s definitely a leading indicator. And we’re seeing that in a couple of our markets where single family residential has large rest of the recovery..

Right, like in the Midwest, you were saying..

Yes..

Got it. Okay, great. Thanks a lot. I appreciate it..

Okay, Stephen. Thank you..

Thank you. We’ve reached the end of our question-and-answer session. I’d like to turn the floor back over to Mr. Hill for any further closing comments..

Thank you, operator, and thanks everyone for joining us today. And we look forward to speaking to you again in the near future. Everybody have a good day..

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today..