Tom Hill – President, Chief Executive Officer and Director Brian Harris – Chief Financial Officer.

Michael Eisen – RBC Kathryn Thompson – Thompson Research Trey Grooms – Stephens Rohit Seth – SunTrust Adam Thalhimer – Thompson Davis Nishu Sood – Deutsche Bank Jerry Revich – Goldman Sachs Scott Schrier – Citi Brent Thielman – D.A. Davidson Stanley Elliott – Stifel PT Luther – Bank of America Merrill Lynch.

Good morning and welcome to Summit Materials’ First Quarter 2017 Results Conference Call. Leading today’s call is Summit’s CEO Tom Hill and CFO Brian Harris. We issued a press release before the market opened this morning detailing our first quarter results.

We also published an updated supplemental workbook highlighting the key financial and operating data, which can be found in the Investors section of our website at summit-materials.com. This call will be accompanied by our first quarter investor presentation, which is available on the Investors section of our website.

I would like to remind you that management’s commentary and responses 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 Materials latest annual report on Form 10-K filed with the SEC.

Additionally, you can find reconciliations of the historical non-GAAP financial measures discussed in today’s call in this morning’s press release. Today’s call will begin with remarks from Tom Hill. He will provide an update on our business and market conditions in the first quarter, followed by a financial review and outlook from Brian Harris.

At the conclusion of these remarks, we will open the line for questions. With that, I will turn over call to Tom..

Thank you, Noel and welcome to today’s call. Before we transition into a discussion of our first quarter results, allow me to share a few thoughts on the business as we kick off the construction season.

From inception our strategy at Summit has been to drive consistent growth and profitability, margins and cash flows through the cycle, driven by a combination of continuous organic improvement and targeted strategic acquisitions that compliment our decentralized, vertically integrated model.

While Summit is well-known as one of the most active acquirers in the heavy construction material space, we also have a disciplined approach towards driving organic growth and volumes and selling prices along with consistent focus on cost efficiency and operational excellence.

For the past 30 years our key decision makers have created shareholder value by finding businesses and making them better as we continue to do.

Last year we hit our targets on price growth and cost containment but fell short on organic volume growth in aggregates, given temporary weakness in our Austin, Vancouver and Houston markets, which overshadow underlying demand in the rest of our businesses.

During the first quarter, we posted organic materials volume growth in Austin and Vancouver, as both markets rebounded versus the prior year. We remain bullish on the Houston market which we expect to improve as we move through the year. On balance, for the full-year 2017, we forecast organic materials volume growth.

This increase in organic materials sales volumes coupled with continued organic price growth and cost containment position us for a significant progress as we look to the remainder of the year. As indicated on the Slide 4 and Slide 5, first quarter net revenues, gross profit and adjusted EBITDA, all increased significantly on a year-to-year basis.

Subsequent to the acquisitions of Everist and Razorback, both of which closed during the first quarter, we've closed four additional transactions since February for a combined purchase price of approximately $70 million. The equity offering we completed in January, helped to fund these transactions, while adding dry powder to the balance sheet.

Given expectations for continued organic growth in materials sales volumes and average selling prices, coupled with EBITDA contributions from recently completed acquisitions, we are raising our adjusted EBITDA guidance to a range of $430 million to $445 million for the full-year 2017.

Including the completion of the six bolt-on acquisitions on a year-to-date basis we are raising our full-year gross capital expenditure guidance by $5 million to a range of $140 million to $160 million. Turning to Slide 6, you can see that organic cement price and volume increased 6.3% and 17.6% year-over-year, respectively in the first quarter.

The growth organic cement volume was mainly attributable to good weather and solid demand along the Mississippi River corridor where we operate in. Importantly, a small portion of our annual cement shipments occur in the first quarter.

So our mid-teens organic volume growth is certainly strong, with view mid-single-digit cement volume growth as a more reasonable run rate for the full-year. Organic aggregates price and volume growth increased approximately 3% and 1% respectively in the first quarter. In the East we saw pockets of organic growth in Kansas, Kentucky and Virginia.

While in the West our Utah, North Texas, Austin and Vancouver markets all posted year-on-year organic volume growth. On the product side organic asphalt sales volumes were up 65% year-over-year, due mainly to an acceleration in public work in North Texas and Austin.

As indicated on Slide 7 gross margins within our aggregate cement and services line of business all increased on a year-to-year basis in the first quarter.

Cement margins were particularly impressive in the quarter, up 150 basis points year-over-year, due to a combination of price and volume growth while aggregate margins benefited from a recovery in organic volumes and continued low-single-digit price growth.

Our services business benefited from a combination of clear weather and solid paving activity in our Austin, North Texas and Kansas markets.

In our products businesses margins declined 200 basis points year-on-year in the first quarter, given less favorable average selling prices for ready mix concrete together with a sales mix weighted towards asphalt, which is lower margin when compared to ready mix.

With that high-level overview of our quarter results, let’s start the discussion of the demand outlook within our regional, private and public markets. As we said on prior occasions, the maturity of the private construction cycles differs on a region by region basis. Many factors play into why one local market might be earlier cycle than another.

However, we generally look to acquire and build businesses in stable growth, well-structured material markets characterized by favorable demographic trends. As illustrated on Slide 8, single-family housing starts in our top five states are currently 40% below the prior peak and below the 30-year average of about 175,000 annualized starts.

In Utah, for example, we currently have strong population inflows while at the same time, there is a housing shortage exacerbated by low rental vacancy rates. For the first time in 40 years, more families are moving into Utah than there are new single-family homes being built.

These types of conditions went towards lengthening the regional housing cycle in many of the markets where we operate.

From a demographic perspective, the unemployment rate in our top five markets has been below the national average 29 of the last 30 years, creating less variability in end market demand for construction materials than in closer markets historically more susceptible to Bloomberg’s cycles.

In the period between 2008 and 2012 during and immediately following the Great Recession, national unemployment was 200 basis points higher than in our top five markets.

We had about one quarter of net revenue coming from four markets in Texas, including Houston, Austin, Midland Odessa and North Texas, we keep a closer eye on demographic trends within the these MSAs. Texas and in particularly Houston remained a significant growth market for us.

Houston suffered from adverse weather and a late cycle residential market during 2016 as organic aggregate volumes fell 12% year-on-year. We anticipate an early cycle recovery in West Houston residential demand towards the latter half of 2017, given discussions with our major home building customers.

As illustrated Slide 9, JBREC estimates that unsold finished home inventories in Texas has declined by 25% year-on-year after the March 2017, repricing a rate of inventory absorption well ahead of the national average.

In Austin they estimate single-family housing permits are up significantly year-on-year, while in Houston signs of stabilization are clearly evident, where population growth two times the national average, employment growth remains positive and the migration of new businesses into the state continues to create demand for housing in low rise commercial businesses.

As indicated on Slide 10, approximately $225 billion will be allocated to states under the Federal Highway Program via the FAST Act between 2015 and 2020, approximately $80 billion of which is earmarked for states where we have operation including, Texas, which stands to reap approximately $18 billion in federal infrastructure funding between now and 2020.

So therefore several states have benefited the forefront of efforts to raise state level revenues, to match federal funding available to them under FAST, as indicated on Slide 11 and Slide 12.

In Texas, voters have approved Proposition 7, creating a constitutional amendment to dedicate portions of revenue from the state’s general sales and use tax, as well as from the motor vehicle sales and rental tax to the State Highway Fund for use on the construction, maintenance and rehabilitation on non-tolled public roads.

Prop 7 plans to dedicate up to $5 billion in biannual sales tax revenue to the State Highway Fund starting in the 2018 fiscal year, which begins in September 2017.

For Texas fiscal year 2018 the state anticipates a 23% year-on-year increase in highway funding amounting to an incremental $2.2 billion per year under the Statewide Transportation Improvement Program.

Between fiscal 2017 and fiscal 2020, state level funding is expected to rise from $9.7 million to $12.6 billion, driven mainly by growth in contributions from Proposition 1 and Proposition 7.

In Utah, Governor Herbert signed a bill several weeks ago that authorizes up to $1 billion in general obligation bonds to fund catch-up spending on state highway infrastructure projects.

This bill will take effect July 1, 2017 allows the Utah Transportation Commission to speed up several previously approved highway projects at a maximum spend of $1 billion over the next four years. We believe this acceleration in spending should directly benefit our business in the state where we are one of the top three players in the market.

Many additional states are also considering similar funding measures. Turn now to the discussion of our Cement Segment, which continues to perform exceptionally well on the current environment. Our Cement distribution capabilities span from New Orleans up to Minneapolis, St.

Paul, currently approximately 80% of the cement volumes we sell go into Iowa, Missouri and Minnesota all of which are markets projected to experience low–to-mid single digit volume growth in cement consumption over the coming years. As indicated on Slide 13, domestic cement demand is anticipated to exceed U.S.

production capacity levels as early as 2019 according to the Portland Cement Association. We expect increases in U.S. import levels from the current rate of 13 million tons per year, nearly half of which is supplied from Greece, Turkey and China.

During the last 25 years we've seen two three-year periods where domestic product shortages contributed to a multi-year spike in domestic cement average selling prices. As indicated on Slide 14 the first period was from 1993 to 1995 where cement prices increased by more than 20%.

The second period was from 2004 to 2006 where cement prices increased by nearly 30%. While U.S. cement prices have gradually increased since 2012, there is a scenario going forward in which we could see a multi-year spike in pricing, should history repeat itself.

We have completed six acquisitions for a combined purchase price of $180 million on a year-to-date basis easily one of the busiest starts we've had. Since our last conference call in February, we closed on four new acquisitions for a combined $70 million as indicated on Slide 15.

In total, these four acquisitions bring approximately 90 million tons of aggregate reserves, four active pits and three ready-mix concrete plants.

All four of the acquired companies represent compelling strategic bolt-on opportunities to existing platforms businesses in Texas, South Carolina, Missouri and Vancouver by providing increased exposure to both public and private markets.

Houston-based Hanna's Bend is a sand and gravel supplier with significant permitted reserves more to the East of Huston. Hannah’s Bend is a pure play aggregates company that is an ideal fit with Summit's existing base of assets in West Huston. Carolina Sand is a construction and specialty sand supplier with a solid reserve base.

This was an acquisition of a pure play aggregates company that doubles the Company’s existence and exposure to the Myrtle Beach, South Carolina market while representing a compelling add-on to the existing Virginia Carolina’s platform.

Sandidge Concrete is a ready-mix concrete business that represents an attractive bolt-on acquisition to our existing Missouri platform. Finally, Vancouver based Winvan Paving is asphalt and paving services company that vertically integrates our existing materials platform.

In summary we are excited to have Hannah’s Bend, Carolina Sand, Sandidge and Winvan join the Summit family of company and look forward to growing with them in the years to come. Looking ahead our acquisition pipeline remains robust with more than 20 additional transactions currently in various stages of diligence.

For the full-year 2017, we anticipate closing on approximately 40 million to 60 million of acquired EBITDA. We look forward to providing you with additional updates on the conference in the months ahead. With that I'll turn the call over to Brian..

Thank you Tom. And good morning to everyone. As Tom indicated Summit reported strong first quarter results driven by a recovery in organic material sales volumes, coupled with continued organic growth and average selling prices.

Looking ahead to the remainder of this year, our focus will be on translating this operational momentum into growth in free cash flows together with a further reduction in net leverage. Let’s begin Slide 17. Consolidated net revenue increased by 24.5% year-on-year to $259 million in the first quarter of 2017 with the following segment split.

In our west region net revenue increased 15.9% on a year-on-year basis to $132 million. As acquired net revenue more than offset a modest decline in organic revenue. In our East region net revenue increased 38.3% on a year-on-year basis to $83.2 million thirty, bolstered by broad based growth in both acquired and organic net revenue.

Finally, in our Cement Segment net revenue increased by 29% on a year-on-year basis to $43.8 million supported by positive organic growth in average selling prices and volume. On Slide 18, EBITDA margins continue to increase up 200 basis points to 24.5% on an LTM basis through the first quarter of 2017 versus the prior year period.

Importantly, our much of the margin growth last year was related to growth in materials average selling prices, accusation related synergies and cost controls. This year we anticipate growth in organic volumes should also contribute to margin expansion. By mid-cycle we expect to see EBITDA margins growing another 250 basis points to approximately 27%.

As indicated on Slide 19, both operating cash flow and free cash flow which we define as operating cash flow less net capital expenditures, increased materially year-on-year on an LTM basis.

LTM operating cash flow through the first quarter 2017 has more than doubled in a year-on-year basis, while LTM free cash flow increased by fourfold over the prior year period. As our business becomes increasingly cash generative, we expect to be able to fund a larger portion of the acquisitions and organic investments.

As illustrated on Slide 20, net leverage declined to 3.7 times in the first quarter than from 4.5 times in the prior year period. While cash and available liquidity increased by more than 20% from the prior year period.

We anticipate the decline in net leverage to approximately three times by year-end 2017, assuming the midpoint of our upwardly revised 2017 adjusted EBITDA guidance, which includes acquisitions closed to date.

Including both availability on our undrawn revolver and cash on hand, our totally liquidity stood at more than $370 million at the end of the first quarter. Looking ahead, we are well-positioned to fund transactions currently in the acquisition pipeline together with the capital requirements of our business.

As indicated on Slide 21, we have increased our full-year 2017 adjusted EBITDA guidance from a range of $410 million to $425 five million, to a range of $430 million to $445 million, which implies growth of 13% to 16% versus our full-year 2016 further adjusted EBITDA of $382 million. I way of remind.

Our full-year adjusted EBITDA and capital spending guidance only includes transactions that have been enhanced. As we complete additional acquisitions throughout the year, we will update our full-year guidance. However, for modeling purposes we advise analysts to refrain from including potential acquisition related EBITDA in their estimates.

As before we estimate just under 75% of full-year EBITDA will be generated in the second and third quarters of the year weighted mainly towards the third quarter. For the full-year 2017 we updated our prior forecast for gross capital expenditures by $5 million to be in the range of $140 million to $160 million.

Total gross capital expenditures in the first quarter 2017 were up $51 million, which is in line with our normal pace of spending for this time of year.

For modeling purposes, including the impact of all six completed acquisitions on a year-to-date basis SG&A is running at the quarterly range of $57 million to $59 million, while DD&A is running in a quarterly range of $43 million to $45 million. Interest expense continues to run in a range of approximately $24 million to $25 million per quarter.

As it pertains to cash taxes, we anticipate paying $2 million to $4 million in state and local cash taxes and no federal income tax for the full-year 2017, given existing net operating loss carry forwards. Therefore for consistency sake we would recommend all analysts model out cash tax rate in their forecast.

Finally, with regard to total equity units outstanding, as of April 1, 2017, we had 106.4 million Class A shares outstanding and 4.9 million LP units held by investors, resulting in total equity interest outstanding of 111.3 million. In calculating the adjusted diluted earnings per share, this is the share count that should be used.

And with that I'll turn the call over to Tom for his closing remarks..

Thanks Brian. In summary, I’m pleased with the strong momentum we have entering the construction season. Organic materials volumes and average selling prices are higher, public and private spending is healthy in our top regional markets and our acquisition pipeline is very robust with $40 million to $60 million of acquired EBITDA expected this year.

We are generating solid cash-on-cash returns on acquisitions completed over the past three years and continue to evaluate a number of attractive material faced opportunity that complement our existing footprint. Our balance sheet remains healthy capable of supporting targeted investments in early start of the cycle well-structured materials markets.

Just within the last month, both S&P Moody's upgraded Summit given improved credit metrics and an increasingly positive outlook. Optimism for the business as reflected in our new full-year guidance, which is supported by a combination of improved organic growth and acquired EBITDA.

As before our focus remains on generating consistent profitable growth that reward shareholders over the long-term. Thank you for your continued support to Summit. We look forward to seeing you on the roads in the coming weeks and months. With that I'd like to open call for questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Robert Wetenhall with RBC. Please go ahead with your question..

Good morning. This is actually Michael Eisen on for Bob this morning. I was hoping you could just start off by talking about some of the end markets you guys are seeing outside strength.

The Cement number was very impressive this morning I want to see if there are any trends that were really driving this and how we should think about that moving on throughout the year?.

Yes thanks Mike and good morning. Really we’re seeing good solid growth in all markets. Our non-res, res and in the public markets. Especially on cement I would say we're seeing it especially on the private side, we’re seeing some pick up in places like St. Louis where we haven't seen it for a long time.

So all in all we're seeing some really good tailwinds in really all of our end markets..

And then just a quick follow-up on that point in cement. We're looking at such strong performance you guys talked about mid-single-digit growth moving forward. You mentioned in your prepared remarks that there's a good tailwinds for an uptick in pricing over the next few years.

How much do you guys think there's potential for earlier pricing in 2017 and how that can drive upside to the numbers from here? Thank you..

Mike is that specifically on cement..

Yes it was..

Tom Hill:.

. :.

Very helpful. Thanks guys. And congrats on a great quarter..

Okay thanks Mike..

Thank you. Our next question comes from the line of Kathryn Thompson with Thompson Research. Please proceed with your question..

Hi. Thank you for taking my questions. First on volumes, could you just help us walk through the volume flow through into quarter and how this would compared to a typical Q1. Also if you could help clarify on the aggregate side what was the greater driver for the improvement and organic volumes.

And [indiscernible] if you could give color on market that previously have been weaker Vancouver, Houston and Kentucky and how they contributed to the quarter?.

Yes I'll take the aggregates question and then hand it over to Brian on the volumes in Q1. The biggest change was the fact that the three areas where we had significant headwinds in 2016 Vancouver, Austin and Huston, Vancouver and Austin had really turned around and [indiscernible] growing organically.

Especially Austin has had a dramatic turnaround there with our new management team. We're doing very well especially on the aggregate side. Houston, we had some bad weather in Q1, our customers re very optimistic for the balance of the year, but I’d like to see that flow through as the weather starts to clear up there.

Brian?.

Yes so the volume flow through from quarter-to-quarter Kathryn I think I put you in the direction of the datasheet that we produced last – post to our website. The volumes ramp up steadily through the quarter.

If you look at through the year, so if you look at last year and we start to have little under $7 million in ags volume in Q1 ramping up to about 9.7, and then 10.6 and 8.8 in the fourth quarter. We’d expect a similar pattern of volume flow through this year. Obviously we had the weather issues can play a part in it, in any given quarter.

But in terms of pace of volume that's about right Q3, is always our biggest. And when that flows through to EBITDA we get about 75% of our EBITDA in Q2 and Q3 and that's weighted approximately 40% to Q2 60% to Q3..

Thank you. The clarification on your guidance is the entire delta for upside to EBITDA guidance driven by the acquisition you outlined in your prepared commentary.

And then what was proof for or could you reconfirm with proof form and pattern of acquisition made in 2016 or to numbers and which are best estimate for 2017?.

Only acquisitions Kathryn it's on the increasing guidance a little over 50% of it is due to organic growth with a little less than 50% due to the additional acquisition. So we are seeing – we’re off to a very good start for the year and we're very optimistic, so that's why we bumped the guidance..

Perfect. And then finally just in terms of product availability something that we would still be seeing with our aggregate contracts is truly more consistent of potential tightening of Clean Stone supply in the field as ahead into the spring in terms of construction fees.

Are you seeing this in your markets? What do you think doing prepare for the if you are seeing it? Thank you..

Well Kathryn thus far, we have not seen that. I mean, typically, shortages in Queenstown happening in September, October as the paving season starts to really ramp up as winter approaches. But we certainly I have not heard that in our markets. We have expanded our capacity in the last 18 months in several of our markets.

So I think what we just found on the supply side for Clean Stone this year..

Okay great. Thank you very much..

Our next question comes from the line of Trey Grooms with Stephens. Please go ahead with your questions..

Hey good morning gentlemen..

Hey Trey..

Trey, welcome back..

Thank you. I guess first question I've got I want to ask about M&A. And you guys announcement of four acquisitions you get today. So does that make six year-to-date, I think. And topline sounds very good obviously there's a lot of tuck-in opportunities that you guys have out there.

And you know you've been demonstrating that nicely that you can pick those off. But also it sounds like there could be a few large deals out there potentially. How do you think about the potential for larger deals now where you sit today versus more tuck-in types.

And then also with that on the M&A front as far as materials verses more downstream or services aspects kind of what the pipeline looks like there from a mix perspective is and what your appetite would be there for both of those types?.

Yes Trey I mean we like the singles and doubles. We like the small to medium size deals, we think that's where we're really strong. And we're very, very busy now. I mean really remarkably busy on the deal side. There are a couple of big transactions out there.

We are certainly spending some time and looking at and seeing if there's a way that we can create value. So I'm not optimistic on those deals because there are auctions and we’ve never been a big fan of auctions, but we're certainly looking at them and seeing if there’s a way that we can create value.

But I would be not optimistic that we'd be able to get something down there.

And far as mix goes, I mean – you can look at the deals we just did, Hannah’s Bend is a pure aggregates deal, Carolina Sand is a pure aggregates deal, Winvan and Sandidge are downstream bolt-ons, but where you bolt-on in the downstream like that you’re strengthening your materials position by having a larger uptake.

I’d see our product mix not shifting very much it might go up or down a couple of present but we see we are very comfortable with our product mix as is..

Okay.

And then I guess you mentioned kind of sticking with M&S the $40 million to $60 million in expected EBITDA contribution you can if you think you're kind of well on your way there? How much without getting too specific I guess how much of that do you already kind of have under your belt from the six acquisitions that you've done? And I guess just trying to get an idea of that range if you're already kind of halfway there or third there just a ballpark on….

Yes Trey we’re roughly halfway there. The 7.5 multiples that we’ve said over the last couple of years that’s still about right so you can run your calculations yourself. But it’s more of the same like I said it’s very active right now. And it's not a week goes by when it seems another deal doesn’t – does that in surface..

Good to hear. Last one for me and I'll turn it over. The weakness in the ready mix business I mean obviously you pointed out softness in Houston res which you think is going to turn as we can to get further along in the year.

But can you talk about outside of Houston with your ready mix business whether other drivers impacting the volume and pricing there in 1Q? And if anything else you could add or is it just simply just extreme just weather and other factors going on specifically in that market?.

Yes I think the biggest factor in that was certainly Houston. But Houston had exceptionally good weather in Q1 of 2016 and probably had normal to slightly worse weather in Q1 2017. So that's certainly exacerbated the differential there. The rest or our ready mix markets are very healthy from Utah, to Colorado, to Kansas.

Overall we added a ready mix business to our North Texas operation this has done extremely well. So we’re optimistic. Our customers in Houston are telling us it’s going to pickup. You all read the home builders information that comes out and most of the Texas home builders are very optimistic.

The weather is starting to clear, our volumes good there at the moment. So we like to get another couple of months of good volumes before I get less worried about Houston. .

Got it. Alright thanks for the color Tom and good luck to you guys..

Thanks Trey..

Next question comes from Rohit Seth from SunTrust. Please go ahead with your questions..

Hi thanks for taking my questions. Jut on the guidance quarter obviously coming better than expected.

Is it fair to say you’re coming ahead of your internal plan?.

Normal we don’t comment on internal plans but let's just say we're very happy where we – how we started the year and very optimistic for the rest of it..

What would it take to get to the high end of the range versus the low? What are you guys looking for there?.

A lot of our forecast are low-to-mid single digits on volume. If it gets to mid single digits well get to the high end of the range..

And then on the M&A pipeline and I'm still on that discussion. You said you are mid way through the EBITDA contribution range and given your average pipeline [indiscernible] leverage I mean would you be willing to move above to $60 million..

If we have the right deal, sure..

We are very conscious of our leverage level. And so it’s about, the great part of that a nice robust pipeline is you can be even more picky..

Got you.

Does the leverage target of three times by the end of the year as to no more deals?.

No. we’ll get down towards three even with the revised guidance on the amount of acquired EBITDA..

Okay. And then in the slides you have mid cycle EBITDA target of 27%. It seems like you can probably get there a lot sooner than mid-cycle.

Is there anything you would think about there in the incrementals or the change in the mix the business anything in that nature?.

Really?.

That was really just to remind people about the range that we provided at the Investor Day back in November where we said mid cycle was at 27% and that was with organic growth and the mix that we had in the business at that time. Hasn’t change significantly from then. And I would believe that we can still on track to deliver that margin expansion..

Got you.

And then just on the actual volume big pop there is anything would you think about there and I started ready mix concrete was a little bit weak and how do you guys think about those in the rest of the year?.

The asphalt is just shorter because it's a very – it's a small number. Ready mix compared to the prior year was soft in Huston the weather differential. Brian anything else as far as….

And obviously we have that we're very strong quarter volume for cement gains, that's not necessarily typical of the run rate for the rest of the year. As Tom mentioned at the outside and they headwinds in the market that we had last year in Vancouver and Huston on aggregates are beginning to turn around as we head – I hope that they would do..

Your question was more on asphalt right Rohit?.

Yes, it's really goal for me just the big pop there – is that a pickup in FAST Act driving activity….

North East Texas is very strong, Austin was very strong coming out of a challenging year with an easier comp, so those both contributed positively..

Yes, I mean if you look at it what are only about 7%, 8% of all of our annual volume in Q1 – so take it with a grain of salt. But our backlogs are quite good, we’ve had really good recovery in Austin. And we’re optimistic for the year, but another 65% increases and particularly meaningful..

Okay.

And then last question on the incrementals for the year, we should still think whether the incremental are kind of what we saw in last year?.

Yes, I think so, the aggregates, this is on our data sheet. You can see a steady improvement in aggregates margins that they gradually increasing 59% in 2015, 62% in 2016, we have a run rate LTM of 61.4%. So we continue to see margin improvement there, as we go through the year and we start to increase that volumes in the second and third quarter..

All right, great. I will pass it on. Thanks for taking my question..

Our next question comes from line of Adam Thalhimer with Thompson Davis. Please go ahead with your question..

Good morning guys, congrats on the strong quarter..

Thanks, Adam..

If ready mix prices, do you expect them to improve if the year goes on?.

Yes. I mean, I think they will get better. I think it’s really important to look at Houston, whether we get a cement price increase there next year will also determine whether, excuse me, at mid-year. And we're optimistic if that happens in which case will get a ready mix price increase in Houston.

So that has a disproportionate effect on our overall already mix, because it such a high portion of the total. The rest of our markets, we're seeing good solid increases. But the question is whether Houston will follow..

Okay. And then you mentioned you're seeing a good flow of potential acquisitions.

What do you seen on a competitive front on those deals, have you seen private equity show up?.

Not so much private equity, we are seeing a few other larger companies out there. But most of the deals that we're looking at the small and medium size bolt-ons, it’s the same level of competition. When you get the big auctions that I mentioned while ago, that’s gets very competitive and that’s why we tend not to compete very well in those.

Our small and medium size and the way we run our business, we're definitely the buyer of choice and most of our deals continue to be negotiated not auctions..

Okay. And lastly I wanted to ask about the materials mix.

If you think about, mid cycle and the 27% adjusted EBITDA margin, do you think aggregate cement is still 50% of gross profit or could it be higher?.

See today, it’s about 60%. Thankfully the EBITDA contribution from cements combined. In those mid cycle assumptions that we provided back at the Investor Day, we haven’t assumed the significant variance to the mix from were we are today.

Obviously, if there was to be an increase in the proportion of revenue and EBITDA from materials and cement then that percentage will possibly increase..

Okay. Thanks Brian..

Thanks, Adam..

Thank you. [Operator Instructions] Our next question comes from the line of Nishu Sood with Deutsche Bank. Please go ahead with your question..

Thanks. I wanted to follow-up on the quarterly sequence of aggregate volume. Against the very tough comp last year 6% you’re able to generate some organic growth. Now at the back half of the year you have negative high single-digit.

So that implies on a continued basis some really strong year-over-year aggregates volume gains in 2Q through 4Q, I mean something on the order of double-digit. But earlier in the Q&A, Brian you were mentioning that we should expect the quarterly volume cadence to be similar to last year.

And that implies basically continuing just a bit of kind of 1% volume year-over-year. So can you please help us frame that how should we think about that kind of reconciling those two statements..

Yes, sure. Thanks for the question. What I was talking about the cadence I was thinking more about the proposition in each quarter rather than absolutely year-on-year change. What we’ve said is that organic volume growth this year we’re seeing the businesses that where headwinds last year beginning to turn around.

And I think the pace of that improvement will increase throughout the course of the year in those markets where our headwinds last year in Vancouver and Austin in particular and then Houston should turn around we think later in the year and add to that improvement.

So we do anticipate low to mid single-digit volume organic growth over the course of the year..

Got it, okay.

On the acquisition, obviously being able to fund them internally, from the liquidity if you're thinking about $40 million to $60 million of acquired EBITDA, should we anticipate some draw down of the revolver to achieve that? Or is that obviously, your strong cash flow quarter is coming out or should we anticipate that it will be through generated free cash flow?.

[Indiscernible], Brian..

Yes it would depend on the exact timing of when we complete the future acquisitions but we should probably expect to see some drawdown at some point during the course of the year. And yes, as Tom said, it’s could be a mix of cash generated through the operations and some drawdown of the revolver..

Got it, okay. Thank you..

Thanks..

Next question is comes from the line of Jerry Revich with Goldman Sachs. Please proceed with your question..

Hi, good morning everyone. Tom, I'm wondering if you could talk about the change in strategy in Austin. Can you talk about what the new management doing differently and what proportion of the loss market share from last year, do you folks think you can recover this year..

I haven’t looked at it as market share, but we got a really good, young dynamic management team in there. That in combination with just the natural shake up of the market is started to settle down, pricing is starting to get a little better. We certainly had regained some share, I can't tell you the exact amount.

But market is quite strong, our volumes have been very good year-to-date and very optimistic for the year there. Comps getting little bit tougher as the year goes on there, but all-in-all, I am quite excited though what our team has been able to accomplish over the last six months..

And Tom can you talk about in aggregates, the cadence of pricing action that you’re expected to see this year in terms of markets when you’re putting through maybe your price increases and just calibrate us on how that cadence compares to pricing actions over the course of last year? And just can we see pricing accelerate based on the number of markets you’re rolling out increases throughout mid-year?.

It's very similar to last year. Most of our price increases are in the spring. We typically don't get two price increases in a year. When it’s early days yet have a lot of the price increases are April 1. But we’re looking at a similar cadence of last year.

And we don’t really see any acceleration in pricing but we see just good solid continuation of a very positive trend..

Thank you..

Okay, Jerry. Take care..

Your next question is come from the line of Scott Schrier with Citi. Please proceed with your question..

Hey good morning. How are you Brian? I wanted to ask about the Cement network and how close are you to being sold out of manufactured cement and that 3% to 4% pricing you're talking a little earlier, but might have been a little less that we are expecting.

Can you talk about the competitive environment maybe with a couple of larger plants down the river and what are some of the puts and takes between how close you are to being sold out..

Well we’re getting very close to being sold out. We are importing some cement this year. And we would be disappointed with the price 3% to 4% there was some competitive actions in the center of the country that limited that price increase. But our volumes are certainly well above what we anticipated.

So I think the net effect will be right either at or above what we expected for the year overall.

We do see there's been some shifts in volume for various reasons we do see that market getting awfully close by the end of the year early 2018 to demand exceeding some domestic supply and we’re optimistic for that pricing situation to accelerate in the 2018..

Got it. And so as a follow-up I wanted to out revisit the question on incremental margins in aggregate maybe more specifically to the quarter.

I just want to see is there – are there any items in there we should consider whether the production cost or unit cost was affected by anything like inventory builds or other fixed costs in there from your acquisitions or are there stripping costs? What are the things there to consider for the quarter of incremental margin?.

Scott there is a big variance obviously in the incremental margin from Q1 of the prior year where we were at about a little under 86% which was abnormally high I will say.

And lot of that was due to as everybody knows it was a very strong weather quarter, we had a number of projects particular in a Texas markets with high margin, Clean Stone in the mix, in Northern Texas and in the Houston market.

So I think you get a little bit of distortion really just as a result of the constitution of the mix of product that was in the business. What I would direct you to again is the underlying margins the gross margin in Q1 of 2017 of $43.5 for aggregates compared to $42.9 in the prior year.

And as we mentioned earlier, the LTM on aggregates is steadily improving over the long-term. So there is a little distortion quarter-on-quarter on the incrementals but the long-term fundamentals of the margin expansion have very much intact..

Great. Thank you gentlemen..

Thanks..

Our next question comes from line of Brent Thielman with D.A. Davidson. Please go ahead with your question..

Good morning..

Good morning, Brent..

Picking up on some prior question. The dip in the product margins this quarter, I mean, it sounds like you had short term anomalies with Houston weather get a shift toward more asphalt but sounds like you think you get better pricing to ready mix this year.

When you put it all together going forward is the margin headwind sustain or we get back to that expansion mode..

Brent it really was a mix issue in the quarter with that margin. Obviously you saw in our products group it's a combination of ready mix and asphalt. We saw a volume swing to the asphalt and a decline on the ready mix. There is a little bit of a margin differential between those two products, asphalt being a little bit lower than the ready mix.

So the combination of those is really got drove of that slight decline in the products margin which was just down to 21.7% for the – sorry 21.2%. So it was a slight decline year-on-year. But I think as that mix evolves over the quarter of the year you’ll start to see it swing back the other way..

Okay and then just give me an update on what you're seeing in Kansas. I think its built top five for years. It seems like it's really top on that public side.

Are you getting some growth in that market despite that?.

No. The private side is okay. Actually private side is quite strong pretty much across that, but [indiscernible] continues to be lackluster. We’re hoping that the maintenance program is pretty in the second half of the year but we're not counting on it.

There's a lot of conversation going on about increasing gas tax and getting back to – that state has had a 20-year history are really good support for that Highway Program until last year and this year. So we're optimistic in the medium term but we’re still hoping for – by the way we are still hoping for overall EBITDA growth in Kansas.

But we're not seeing any recovery on the Highway side..

Tom would you sort of characterize it, is it flat for you right now?.

We actually did see positive organic growth in aggregate in Kansas..

It’s really from that the private side..

Okay, Thank you..

Our next question comes form the line of Stanley Elliott with Stifel. Please go ahead with your question..

Hi guys. Good morning and thanks for taking a question.

Quick question we start thinking about cement business as you do start to import and sell more from has some of the terminals we have in the river what does that do from a margin perspective from an incremental perspective and how do we kind of think about the puts and takes under that frame work? And also I guess – when you think – will that maybe would that would end up happening?.

Not much this year will import a bit this year and it won't really have much impact on the overall margins but as we continue to grow that business the margins on imported cement are roughly half of manufactured. That can bounce up and down depending on what the freight rates are, and what the overseas markets are like and where it's going.

I mean, overall object is to supply the manufactured cement to the northern half of the Mississippi and then imported cement to the southern half. That would be that the goal of we would have for the next few years. So as we increase our volume over the next couple years you'll see a decline in the incremental but an overall increase in EBITDA..

Perfect and then you heard mostly positive news, guess coming out of Kansas. It sounds like there's a couple of things going on the Kentucky as well. I think both of states have been kind of lackluster here as here as of late.

Did I pick that up correctly? Did Kentucky might be doing that tiny better for you?.

Yes Kentucky we're going to have a followed year in Kentucky more return to normal. Last year was really an anomaly that they spent an extra couple of months negotiating in the legislature on the biannual Highway bill. So we’ll see some improvement in Kentucky in 2017..

Perfect guys congratulations and the best of luck..

Thanks..

Our next question comes from the line of PT Luther with Bank of America Merrill Lynch. Please go ahead with your question..

Hi Tom, Brain and how are you guys?.

Great and you?.

How are you?.

I am good thanks. I was wondering if you could just share little bit of perspective on what you've seen – what you saw in April in particular just in terms of trends maybe on the demand on the volume side? And I’ll get there..

In April we’ve had good volumes with some organic growth. So we're very encouraged by the way April has gone and has the season starts to pick up steam here in May and June we’re I can say we’re quite optimistic..

Okay good. And then on the M&A side Tom you are sure [indiscernible] (0:58:38) this year with six done year-to-date. I'm wondering if there's any sort of like what your capacity for deal flow is from a man power perspective? Company likes you link to get on the year well.

But just trying to get a sense for you talk about that the robust pipeline that you have, how many deal you think you could actually consume in a year?.

I think well first off we have a world class acquisition team headed by Michael Brady. And we have really done, I think with IT platform we’re able to integrate especially these bolt-ons. I mean they get if we have two or three weeks between signing and closing those bolt-ons are literally integrated day one. So that really increases our capacity.

I don't see any reason why we couldn't do 10, or 12, or 13 deals any year. And really doesn’t matter about size I mean the $5 million deal almost takes as much work is the $400 million deal. So we really I think have a world-class acquisition team and the ability to integrate very quickly and efficiently. .

Great thanks. And then last one and then I’ll handed off. That the four deals that you mentioned and late stage diligence. I guess, size and mix wise, they pretty similar to historical and then the recent deal you done..

Yes actually both the mix, and in pricing, and so on. We don’t know whether we can close or not It’s always bit of a [indiscernible] but I’m not sure I’m supposed to take [indiscernible] is it politically correct, but it is you never know. But it’s like I say we’re optimistic..

Got it. That appreciative thanks Tom..

Okay thanks..

Thank you. This does conclude our question-and-answer session. I would like to turn our floor back to our CEO, Tom Hill for closing command..

Thanks everybody, operator. And thanks everybody again for joining us. That concludes our call. Good day..

Ladies and gentlemen this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..