Suncrete (RMIX) Q3 2026 earnings review
Suncrete doubles concrete sales, but project delays cut its outlook
Suncrete's spring buying spree more than doubled its concrete deliveries, but project delays forced a deep cut to its full-year plan. The Sunbelt ready-mix concrete producer grew revenue 163% to $141 million, while sales from businesses it owned a year ago rose about 10%. Chief executive Randall Edgar said delayed commercial starts and high mortgage rates hurt demand, so by our math the lowered outlook leaves fourth-quarter profit margins falling back near 13%.
| Sales from businesses owned a year ago | +10% total revenue +163% to $141.0M |
|---|---|
| Adjusted EBITDA margin | 15.9% up from 13.9% in Q2, down from 25.6% a year ago |
| Gross margin | 28.1% down from 29.1% in Q2 and 37.0% a year ago |
| Full-year Adjusted EBITDA outlook | Cut 23% middle of the range: $62.0M vs $80.5M prior |
⚖️ Verdict: 🔴 Bearish
The story got worse because the second-half profit step-up that management promised all year will not happen in 2026. Cutting the full-year Adjusted EBITDA forecast by nearly a quarter shows that integrating five acquired businesses and passing through material costs is taking longer than planned. One bright spot: third-quarter operating margins improved from the rain-hit second quarter as North Texas plants made early progress.
The question now is whether lower margins reflect temporary commercial project delays or lasting cost trouble at newly acquired plants. If delayed pours merely shifted into early 2027, volumes and margins will rebound next spring; if cement costs and overhead stay high, earnings will lag even on higher volume. Management's initial 2027 outlook on the fourth-quarter call will tell.
🐂 Bull Case
Five Recent Acquisitions More Than Doubled Concrete Shipments
Suncrete is buying local ready-mix concrete producers across six Sunbelt states to build a regional network. After closing five deals in the spring, the Tulsa-based group more than doubled the yards of concrete it produced and delivered compared to a year ago.
- Total revenue: $141.0 million, up 163% from a year ago and up 45% from last quarter
- Concrete volume delivered: up 125% from a year ago and up 32% from last quarter
- Revenue from acquired businesses: about $82.1 million by our math, or 58% of quarterly sales
The jump from the second quarter also shows shipments rebounding after spring rain delayed pours across Texas and Oklahoma. Adding 31 batching plants and 279 mixer trucks gave the concrete supplier the capacity to handle peak summer building.
What to watch: new acquisition announcements before year-end. Chief executive Randall Edgar said the deal pipeline is expanding, and fresh purchases will show whether the rollup keeps its pace into 2027.
Existing Markets Grew 10% and Lifted Margins From Last Quarter
When Suncrete buys a family-owned concrete operator, the new plants initially earn lower profit margins than its older sites. Chief executive Randall Edgar said "several businesses moving toward Suncrete's target margin levels" helped lift profitability from the second quarter, alongside a "significant step forward in North Texas, as we further advanced through our integration playbook to improve results".
Adjusted EBITDA — earnings before interest, taxes, depreciation and one-off deal costs — rose 66% from last quarter to $22.4 million, lifting the margin by 2.0 percentage points to 15.9%. Supplemental Adjusted EBITDA, which also removes recurring fees paid to an affiliated consultant, reached 16.5% of sales, while sales from businesses owned a year ago grew about 10%.
What to watch: whether North Texas margins keep rising inside the company's 9-to-18-month integration target window. Continued gains in that tougher market would prove the purchasing and pricing playbook works outside Oklahoma.
🐻 Bear Case
Project Delays Forced a Deep Cut to the Full-Year Profit Plan
For two quarters, management argued that normal summer weather and plant improvements would deliver a large second-half profit jump. Instead, Suncrete lowered every line of its full-year 2026 outlook. Chief executive Randall Edgar still highlighted third-quarter progress, but the cut shows the second-half recovery fell well short of the prior plan.
- Full-year Adjusted EBITDA outlook: cut 23% at the middle of the range, to $60.0–64.0 million from $68.0–93.0 million
- Second-half Adjusted EBITDA implied by the outlook: $38.3 million by our math, down from $56.8 million under the prior plan
- Fourth-quarter Adjusted EBITDA implied by the outlook: $15.9 million on $121.0 million of sales, a 13.2% margin
By our math, the revised forecast points to fourth-quarter operating margins dropping below the second quarter's rain-hit 13.9%. That means third-quarter margin gains were mostly seasonal volume rather than permanent cost savings.
What to watch: initial 2027 Adjusted EBITDA targets on the fourth-quarter report. A margin target stuck near 15% would show that newly acquired plants are taking longer than 18 months to fix.
Higher Production and Overhead Costs Keep Gross Margin Below Target
Earlier this year, executives expected price increases and bulk material buying to push gross margin — profit left after the cost of making and delivering concrete — back toward 34% to 35% in the second half. Instead, gross margin slipped to 28.1% in the third quarter, down from 29.1% in the second quarter and 37.0% a year ago.
Cost of goods sold rose 8.9 percentage points of revenue from a year ago to 71.9%, including a $1.7 million non-cash inventory charge from recent deals. Selling, general and administrative overhead also rose 2.5 percentage points of revenue to $31.1 million, running $6.4 million above the $25 million quarterly pace finance chief Tommy Whertrob indicated last quarter.
What to watch: gross margin and overhead spending in the fourth quarter. If production costs stay above 70% of sales, price increases are not keeping up with cement, aggregate and fleet expenses.
High Interest Rates and Delayed Starts Weigh on Sunbelt Construction
Suncrete supplies concrete to homebuilders, commercial developers and public road works across Oklahoma, Arkansas, Texas and Louisiana. Chief executive Randall Edgar said "some large projects are shifting start dates into 2027, while elevated interest rates continue to pressure residential construction". Those delays forced the group to cut $29 million from the middle of its full-year revenue forecast.
Homebuilding accounted for roughly 40% of sales earlier this year, leaving the producer exposed when borrowing costs slow housing starts. Edgar still expects to enter 2027 with a "healthy pipeline of large commercial projects and robust infrastructure activity across our states", but pushed-out start dates leave fourth-quarter sales falling 14% from the third quarter by our math.
What to watch: whether delayed commercial pours actually break ground in the first half of 2027. Further schedule slips would show developers are cancelling projects rather than just waiting on permits or weather.
Operating Cash Flow Lags the Full-Year Conversion Target
In August, management reiterated a target of turning 60% to 70% of Adjusted EBITDA into operating cash flow for the full year. Through the first nine months of 2026, operations instead used $8.2 million of cash, even as the business reported $46.1 million in nine-month Adjusted EBITDA.
By our math, subtracting first-half figures shows operations generated $4.2 million of cash in the third quarter, or just 19% of quarterly Adjusted EBITDA. Paying down $18.4 million of supplier bills and funding $19.5 million in unpaid customer invoices over the nine months absorbed most of the cash from concrete sales.
What to watch: fourth-quarter operating cash flow and customer invoice collections. Hitting even the low end of the 60% annual cash target would require over $44 million of operating cash in the final quarter.
👓 Other Themes
Dispatch Technology and Fleet Integration Carry Ongoing Costs
Suncrete connects its decentralized batching plants and mixer trucks through a central dispatch software platform to route deliveries and manage pricing. Bringing five acquired businesses onto those systems cost $3.0 million in legal and advisory fees this quarter, plus $0.9 million for affiliated growth consultants. For the full year, the concrete supplier now projects $16.1 million in deal expenses, double the $8.1 million it budgeted in the spring.
💲 Other KPIs
Net debt — total borrowings minus cash — rose from $189.8 million in the second quarter by our math. Total debt reached $259.2 million against $49.0 million in cash after the concrete producer borrowed $106.1 million over the first nine months. Higher borrowings pushed quarterly net interest expense up 99% from a year ago to $5.2 million.
Unpaid customer invoices grew 15.8% from the second quarter's $69.4 million, slower than the 45.0% jump in quarterly sales. Across the first nine months, however, rising customer balances tied up $19.5 million in working capital, four times the $4.8 million outflow during the same period last year.
Weighted average diluted shares more than tripled from 22.4 million a year ago and rose 7.7% from 67.5 million in the second quarter. The US company issued shares to go public in April and used stock to help pay for the Hope Concrete, Nelson Bros. and Louisiana acquisitions.
🔮 Guidance
Cut. The middle of the full-year range fell by $29.0 million, or 6.4%, to $421.0 million. By our math, subtracting nine-month sales of $300.0 million leaves $121.0 million for the fourth quarter, a 14.2% drop from the third quarter as winter weather arrives and large commercial projects shift start dates into 2027.
Cut. Management lowered the middle of the range by $18.5 million, or 23.0%, after holding it steady in the second quarter. By our math, that leaves $15.9 million for the fourth quarter, down 28.8% from the third quarter and pointing to a 13.2% margin.
Cut. This measure, which excludes $3.6 million in full-year fees to an affiliated consultant, dropped by $17.9 million at the middle of the range. By our math, the outlook leaves $16.8 million for the fourth quarter, or 13.9% of implied fourth-quarter sales, compared to 16.5% this quarter.
Cut. The expected full-year loss widened by $27.7 million at the middle of the range. By our math, after a nine-month net loss of $38.8 million, the plan points to a fourth-quarter net loss of $7.9 million, driven by $5.6 million of implied interest expense and higher deal costs.
Cut. Removing the $26.9 million non-cash stock charge from the spring public listing, the outlook swung from an $8.0 million profit at the prior middle of the range to a $19.8 million loss. Higher acquisition legal fees and weaker second-half operating profit drove the revision.
❓ Key Questions
Why did overhead spending jump $6 million above plan?
Last quarter, finance chief Tommy Whertrob confirmed $25 million as the right quarterly run rate for selling, general and administrative expenses. In the third quarter, that line reached $31.1 million, and investors need to know how much of the increase is permanent.
Is the 60% cash conversion target off the table?
Management previously targeted converting 60% to 70% of full-year Adjusted EBITDA into operating cash flow. With nine-month operating cash flow still negative at $8.2 million, management has not said whether working capital will reverse enough in the fourth quarter.
How much revenue came from AI data centers?
On the second-quarter call, executives highlighted AI data centers across the Sunbelt as a high-margin growth driver requiring tens of thousands of yards per pour. The third-quarter release gave no update on data center bidding or whether any shifted into 2027.
Why did gross margin fall during the busiest quarter?
Third-quarter concrete volumes jumped 32% from the second quarter, which should spread fixed plant and truck costs over more yards. Even after stripping out the $1.7 million non-cash inventory charge, gross margin only matched the second quarter's 29.3%.