BIRMINGHAM, Ala., Nov. 1, 2017 /PRNewswire/ -- Vulcan
Materials Company (NYSE: VMC), the nation's largest producer of
construction aggregates, today announced results for the third
quarter ended September 30, 2017.
Hurricanes Harvey and Irma negatively affected more than half of
the Company's operational footprint in the third quarter.
Important Southeastern markets, particularly Florida and Georgia, as well as coastal markets in
Texas and along the central Gulf
Coast were disrupted. Prolonged extreme weather conditions
limited both revenue growth and profitability. Aggregates
shipments increased 1 percent and pricing improved 3 percent versus
the prior year's third quarter. Overall, both gross profit
and operating earnings improved slightly compared to the prior
year.
Tom Hill, Chairman and Chief
Executive Officer, said, "Storms disrupted the third quarter
shipment pattern in a number of our stronger growth markets.
Absent the impact of these storms, our daily shipping pace would
have been at least 7 percent higher than the prior year during
August and September, and in line with expectations. We are
still experiencing some lingering effects from these storms on
plant efficiency and shipment levels, which will take some time to
work through. Underlying demand, however, remains solid, the
pricing environment remains positive and our unit profitability in
aggregates continues to strengthen. On a same-store basis,
our third quarter gross profit per ton was essentially flat while
our cash gross profit per ton set a third quarter record despite
the severe weather. I am very encouraged by these trends, which
should provide good momentum into 2018.
"Our business remains on track with our longer-term goals and
expectations. Growth in new construction starts in our
markets continues to outpace the rest of the U.S. Recent
acquisitions are performing well and should make meaningful
contributions to our earnings growth in 2018 and beyond. We
remain confident in the sustained, multi-year recovery in materials
demand across our markets and in the further compounding
improvements to our unit profitability. However, given the
shortfall in shipments to date and due to certain lingering effects
of third quarter weather events on fourth quarter shipments,
pricing and costs, we now expect full year aggregates shipments to
approximate the prior year, with full year Adjusted EBITDA of
approximately $1 billion."
Third Quarter Summary (compared with prior year's third
quarter)
- Total revenues increased $87
million, or 9 percent, to $1.09
billion
- Gross profit was $306 million
versus $304 million in the prior
year
- Aggregates segment sales increased $37
million to $859 million and
freight-adjusted revenues increased $27
million, or 4 percent, to $669
million
-
- Shipments increased 0.7 million tons, or 1 percent, to 50.9
million tons
- Freight-adjusted sales price increased $0.37 per ton, or 3 percent
- Segment gross profit was $259
million versus $262 million in
the prior year
- Asphalt, Concrete and Calcium segment gross profit improved
$4 million, collectively
- SAG was $73 million, down
$3 million, or 90 basis points as a
percentage of total revenues
- Net earnings were $109 million
versus $142 million in the prior
year
- Adjusted EBIT was $232 million,
an increase of $3 million, or 1
percent
- Adjusted EBITDA was $312 million,
an increase of $11 million, or 4
percent
- Earnings from continuing operations were $0.82 per diluted share versus $1.07 per diluted share. Current year
results include charges of $0.22 per
share for early debt retirement in July
- Adjusted earnings from continuing operations were $1.04 per diluted share versus $1.02 per diluted share in the prior year
Trailing-Twelve-Month Summary (compared with prior
twelve-month period)
- Total revenues were $3.79
billion, an increase of $209
million, or 6 percent
- Gross profit was $997 million, a
decrease of $18 million, or 2
percent
- Aggregates segment sales increased $82
million to $3.04 billion and
freight-adjusted revenues increased $60
million, or 3 percent, to $2.35
billion
-
- Shipments decreased 2.7 million tons, or 1 percent, to 180.3
million tons
- Freight-adjusted sales price increased $0.52 per ton, or 4 percent
- Segment gross profit decreased $33
million, or 4 percent, to $861
million
- Asphalt, Concrete and Calcium segment gross profit improved
$15 million, collectively
- SAG was $318 million, in line
with full year expectations
- Net earnings were $386 million, a
decrease of $10 million
- Adjusted EBIT was $679 million, a
decrease of 2 percent
- Adjusted EBITDA was $979 million,
in line with the prior twelve months
- Earnings from continuing operations were $2.77 per diluted share versus $3.00 per diluted share
- Adjusted earnings from continuing operations were $2.97 per diluted share versus $3.08 per diluted share
Segment Results
Aggregates
Aggregates shipments increased 1 percent versus the prior year's
quarter. Shipment trends in aggregates were disrupted by
hurricanes across the Company's Florida, Georgia, Gulf Coast, North Carolina, South Carolina and coastal Texas markets. Markets outside of these
areas, combined to grow mid-single digit versus the prior year's
third quarter – more in line with trends and
expectations.
Broad pricing momentum continued across the Company's footprint
with most markets realizing price growth in the third
quarter. For the quarter, same-store freight-adjusted average
sales price for aggregates increased 3 percent versus the prior
year, or $0.42 per ton, despite a
negative geographic and product mix impact. Excluding mix
impact, aggregates price increased 4 percent. The overall
pricing climate remains favorable as visibility to a sustained
recovery improves and as construction materials producers stay
focused on earning adequate returns on capital.
Third quarter Aggregates segment gross profit was $259 million, or $5.09 per ton. These results were slightly
lower than the prior year as a result of weather events in the
current year's third quarter. Weather-related disruptions
impaired shipments and drove inefficiencies that limited revenue
growth and earnings improvement. Product mix, partly due to
aggregates needs immediately after the hurricanes, negatively
impacted price growth by approximately 100 basis points. An
18 percent increase in the unit cost of diesel fuel and costs
related to the transition to two new, more efficient ships to
transport aggregates from our quarry in Mexico negatively impacted segment gross
profit by $7 million in comparison to
the prior year.
Asphalt, Concrete and Calcium
Our non-aggregates segments' third quarter gross profit was
$46 million, a 9 percent increase
over the prior year period.
Asphalt segment gross profit decreased $2
million to $31 million.
Shipments were 3.1 million tons in total and 2.8 million tons on a
same-store basis. Shipments in the prior year were 2.9
million tons. An 18 percent increase in liquid asphalt unit
cost negatively affected materials margins.
Concrete segment gross profit was $14
million in the quarter compared to $9
million in the prior year period. Shipments increased
20 percent versus the prior year. On a same-store basis,
volumes increased 8 percent, as volumes in Virginia (the Company's largest concrete
market) drove most of the year-over-year increase. Materials
margins and unit gross profit in concrete also improved versus the
prior year.
Calcium segment gross profit was $0.7
million versus $0.8 million in
the prior year.
On a trailing-twelve-month basis, total gross profit in our
non-aggregates segments was $136
million, a 12 percent increase from the prior year's
comparable period.
Growth, Capital Allocation, and Financial Position
As of September 30, year-to-date
capital expenditures were $367
million. This amount included $137 million invested in internal growth projects
to enhance the Company's aggregates distribution network to markets
without local aggregates reserves, as well as development of new
sites and other growth investment projects. Core capital
investments to replace existing property, plant and equipment made
up the remaining $230 million, and
are expected to be approximately $300
million for the full year.
The Company remains active in the pursuit of bolt-on
acquisitions and other value-creating growth investments.
Since January, the Company has closed acquisitions totaling
$212 million. These
acquisitions complement our existing positions in certain
California, Illinois, New
Mexico and Tennessee
markets.
The Company expects to close the Aggregates USA acquisition during the fourth quarter of
this year.
At the end of the third quarter, total debt was $2.8 billion and cash was approximately
$700 million. Retirement of
notes due in June and December of 2018 was completed in July for
$566 million using part of the
proceeds from the $1 billion of new
notes issued in June. The remainder of the proceeds will be
used to help fund acquisitions and other growth investments
including the Aggregates USA
acquisition. One-time charges related to this early debt
retirement were $46 million, or
$0.22 per diluted share. Full
year pretax interest expense will be approximately $190 million, including the one-time charges
incurred in the third quarter for the early debt
retirement.
Selling, Administrative and General (SAG) and Other Operating
Expense
SAG expenses in the quarter were $73
million. Trailing-twelve-month SAG expenses were
$318 million, in line with full-year
expectations.
Other operating expense was $4
million in the third quarter and included non-routine
business development charges of $9
million, an asset purchase agreement termination fee
received totaling $8 million, and
approximately $3 million of recurring
expenses not included in cost of revenues. The first
two items were removed from adjusted earnings for the
quarter.
Demand and Earnings Outlook
Regarding the Company's earnings outlook for 2017, Mr. Hill
stated, "We are excited about the growth opportunities ahead of
us. Leading indicators, such as growth in the
pre-construction pipeline and in construction starts in our
markets, as well as growth in our own order backlogs, point toward
a return to growth in 2018 and beyond. Private demand
continues to grow and public demand is firming up after relative
weakness during the last 18 months.
"Our confidence in the longer term outlook for our business
remains strong. Our industry-leading core profitability in
aggregates keeps improving and positions us well for future
earnings growth. We have the financial strength to continue
making smart growth investments that fit us best and we are
committed to continuous improvement in safety, customer service and
operational efficiencies."
Conference Call
Vulcan will host a conference call at 9:00 a.m. CDT on November
2, 2017. A webcast will be available via the Company's
website at www.vulcanmaterials.com. Investors and other
interested parties may access the teleconference live by calling
323-794-2423 or 800-289-0438 approximately 10 minutes before the
scheduled start. The conference ID is 7396647. The
conference call will be recorded and available for replay at the
Company's website approximately two hours after the call.
Vulcan Materials Company, a member of the S&P 500 Index, is
the nation's largest producer of construction aggregates, and a
major producer of other construction materials.
FORWARD-LOOKING STATEMENT DISCLAIMER
This document
contains forward-looking statements. Statements that are not
historical fact, including statements about Vulcan's beliefs and
expectations, are forward-looking statements. Generally, these
statements relate to future financial performance, results of
operations, business plans or strategies, projected or anticipated
revenues, expenses, earnings (including EBITDA and other measures),
dividend policy, shipment volumes, pricing, levels of capital
expenditures, intended cost reductions and cost savings,
anticipated profit improvements and/or planned divestitures and
asset sales. These forward-looking statements are sometimes
identified by the use of terms and phrases such as "believe,"
"should," "would," "expect," "project," "estimate," "anticipate,"
"intend," "plan," "will," "can," "may" or similar expressions
elsewhere in this document. These statements are subject to
numerous risks, uncertainties, and assumptions, including but not
limited to general business conditions, competitive factors,
pricing, energy costs, and other risks and uncertainties discussed
in the reports Vulcan periodically files with the SEC.
Forward-looking statements are not guarantees of future
performance and actual results, developments, and business
decisions may vary significantly from those expressed in or implied
by the forward-looking statements. The following risks
related to Vulcan's business, among others, could cause actual
results to differ materially from those described in the
forward-looking statements: those associated with general economic
and business conditions; the timing and amount of federal, state
and local funding for infrastructure; changes in Vulcan's effective
tax rate; the increasing reliance on information technology
infrastructure for Vulcan's ticketing, procurement, financial
statements and other processes could adversely affect operations in
the event that the infrastructure does not work as intended or
experiences technical difficulties or is subjected to
cyber-attacks; the impact of the state of the global economy on
Vulcan's businesses and financial condition and access to capital
markets; changes in the level of spending for private residential
and private nonresidential construction; the highly competitive
nature of the construction materials industry; the impact of future
regulatory or legislative actions, including those relating to
climate change, greenhouse gas emissions, the definition of
minerals or international trade; the outcome of pending legal
proceedings; pricing of Vulcan's products; weather and other
natural phenomena; energy costs; costs of hydrocarbon-based raw
materials; healthcare costs; the amount of long-term debt and
interest expense incurred by Vulcan; changes in interest rates;
volatility in pension plan asset values and liabilities, which may
require cash contributions to the pension plans; the impact of
environmental clean-up costs and other liabilities relating to
existing and/or divested businesses; Vulcan's ability to secure and
permit aggregates reserves in strategically located areas; Vulcan's
ability to manage and successfully integrate acquisitions;
modification to the terms of the acquisition of Aggregates
USA, LLC may be required in order
to satisfy approvals or conditions; business disruption during the
pendency of, or following the acquisition of, Aggregates
USA, LLC, including diversion of
management time; the potential of goodwill or long-lived asset
impairment; and other assumptions, risks and uncertainties detailed
from time to time in the reports filed by Vulcan with the SEC. All
forward-looking statements in this communication are qualified in
their entirety by this cautionary statement. Vulcan disclaims
and does not undertake any obligation to update or revise any
forward-looking statement in this document except as required by
law.
|
|
|
|
|
|
|
Table A
|
Vulcan Materials
Company
|
|
|
|
|
|
|
|
and Subsidiary
Companies
|
|
|
|
|
|
|
|
|
(in thousands, except
per share data)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Consolidated
Statements of Earnings
|
September
30
|
|
September
30
|
(Condensed and
unaudited)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Total
revenues
|
$1,094,715
|
|
$1,008,140
|
|
$2,912,806
|
|
$2,719,693
|
Cost of
revenues
|
789,199
|
|
703,931
|
|
2,155,536
|
|
1,958,581
|
Gross profit
|
305,516
|
|
304,209
|
|
757,270
|
|
761,112
|
Selling,
administrative and general expenses
|
73,350
|
|
76,311
|
|
238,263
|
|
235,460
|
Gain on sale of
property, plant & equipment
|
|
|
|
|
|
|
|
and
businesses
|
1,488
|
|
2,023
|
|
4,630
|
|
2,934
|
Business interruption
claims recovery
|
0
|
|
690
|
|
0
|
|
11,652
|
Impairment of
long-lived assets
|
0
|
|
0
|
|
0
|
|
(10,506)
|
Other operating
expense, net
|
(4,167)
|
|
(3,535)
|
|
(27,763)
|
|
(23,949)
|
Operating earnings
|
229,487
|
|
227,076
|
|
495,874
|
|
505,783
|
Other nonoperating
income, net
|
1,784
|
|
990
|
|
5,677
|
|
325
|
Interest expense,
net
|
82,041
|
|
33,126
|
|
154,572
|
|
100,192
|
Earnings from
continuing operations
|
|
|
|
|
|
|
|
before income taxes
|
149,230
|
|
194,940
|
|
346,979
|
|
405,916
|
Income tax
expense
|
39,080
|
|
49,803
|
|
81,557
|
|
91,575
|
Earnings from
continuing operations
|
110,150
|
|
145,137
|
|
265,422
|
|
314,341
|
Earnings (loss) on
discontinued operations, net of tax
|
(1,571)
|
|
(3,113)
|
|
8,217
|
|
(7,451)
|
Net
earnings
|
$108,579
|
|
$142,024
|
|
$273,639
|
|
$306,890
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
|
|
|
|
|
|
|
Continuing operations
|
$0.83
|
|
$1.09
|
|
$2.00
|
|
$2.36
|
Discontinued operations
|
($0.01)
|
|
($0.02)
|
|
$0.07
|
|
($0.06)
|
Net
earnings
|
$0.82
|
|
$1.07
|
|
$2.07
|
|
$2.30
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
|
|
|
|
|
|
Continuing operations
|
$0.82
|
|
$1.07
|
|
$1.97
|
|
$2.31
|
Discontinued operations
|
($0.01)
|
|
($0.02)
|
|
$0.06
|
|
($0.05)
|
Net
earnings
|
$0.81
|
|
$1.05
|
|
$2.03
|
|
$2.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
132,484
|
|
133,019
|
|
132,510
|
|
133,418
|
Assuming dilution
|
134,765
|
|
135,823
|
|
134,853
|
|
135,932
|
Cash dividends per
share of common stock
|
$0.25
|
|
$0.20
|
|
$0.75
|
|
$0.60
|
Depreciation,
depletion, accretion and amortization
|
$79,636
|
|
$72,049
|
|
$227,974
|
|
$213,362
|
Effective tax rate
from continuing operations
|
26.2%
|
|
25.5%
|
|
23.5%
|
|
22.6%
|
|
|
|
|
|
Table B
|
Vulcan Materials
Company
|
|
|
|
|
|
and Subsidiary
Companies
|
|
|
|
|
|
|
|
|
(in
thousands)
|
Consolidated
Balance Sheets
|
September
30
|
|
December
31
|
|
September
30
|
(Condensed and
unaudited)
|
2017
|
|
2016
|
|
2016
|
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$701,163
|
|
$258,986
|
|
$135,365
|
Restricted
cash
|
0
|
|
9,033
|
|
0
|
Accounts and notes
receivable
|
|
|
|
|
|
Accounts and notes receivable,
gross
|
582,105
|
|
494,634
|
|
536,242
|
Less: Allowance for doubtful
accounts
|
(2,903)
|
|
(2,813)
|
|
(4,260)
|
Accounts and notes
receivable, net
|
579,202
|
|
491,821
|
|
531,982
|
Inventories
|
|
|
|
|
|
Finished products
|
307,046
|
|
293,619
|
|
283,266
|
Raw
materials
|
27,852
|
|
22,648
|
|
25,411
|
Products in process
|
1,652
|
|
1,480
|
|
2,753
|
Operating supplies and
other
|
29,276
|
|
27,869
|
|
26,612
|
Inventories
|
365,826
|
|
345,616
|
|
338,042
|
Prepaid
expenses
|
100,781
|
|
31,726
|
|
71,370
|
Total current
assets
|
1,746,972
|
|
1,137,182
|
|
1,076,759
|
Investments and
long-term receivables
|
35,999
|
|
39,226
|
|
38,914
|
Property, plant &
equipment
|
|
|
|
|
|
Property, plant & equipment,
cost
|
7,539,928
|
|
7,185,818
|
|
7,105,036
|
Allowances for depreciation,
depletion & amortization
|
(4,002,227)
|
|
(3,924,380)
|
|
(3,876,743)
|
Property, plant &
equipment, net
|
3,537,701
|
|
3,261,438
|
|
3,228,293
|
Goodwill
|
3,101,337
|
|
3,094,824
|
|
3,094,824
|
Other intangible
assets, net
|
835,269
|
|
769,052
|
|
753,314
|
Other noncurrent
assets
|
182,056
|
|
169,753
|
|
165,981
|
Total
assets
|
$9,439,334
|
|
$8,471,475
|
|
$8,358,085
|
Liabilities
|
|
|
|
|
|
Current maturities of
long-term debt
|
4,827
|
|
138
|
|
131
|
Trade payables and
accruals
|
181,207
|
|
145,042
|
|
163,139
|
Other current
liabilities
|
227,665
|
|
227,064
|
|
197,642
|
Total current
liabilities
|
413,699
|
|
372,244
|
|
360,912
|
Long-term
debt
|
2,809,966
|
|
1,982,751
|
|
1,983,639
|
Deferred income
taxes, net
|
716,165
|
|
702,854
|
|
706,715
|
Deferred
revenue
|
193,117
|
|
198,388
|
|
201,732
|
Other noncurrent
liabilities
|
621,253
|
|
642,762
|
|
601,117
|
Total
liabilities
|
$4,754,200
|
|
$3,898,999
|
|
$3,854,115
|
Equity
|
|
|
|
|
|
Common stock, $1 par
value
|
132,281
|
|
132,339
|
|
132,309
|
Capital in excess of
par value
|
2,803,106
|
|
2,807,995
|
|
2,805,355
|
Retained
earnings
|
1,886,006
|
|
1,771,518
|
|
1,685,412
|
Accumulated other
comprehensive loss
|
(136,259)
|
|
(139,376)
|
|
(119,106)
|
Total
equity
|
$4,685,134
|
|
$4,572,476
|
|
$4,503,970
|
Total liabilities and
equity
|
$9,439,334
|
|
$8,471,475
|
|
$8,358,085
|
|
|
|
Table C
|
Vulcan Materials
Company
|
|
|
|
and Subsidiary
Companies
|
|
|
|
|
(in
thousands)
|
|
Nine Months
Ended
|
Consolidated
Statements of Cash Flows
|
September
30
|
(Condensed and
unaudited)
|
2017
|
|
2016
|
Operating
Activities
|
|
|
|
Net
earnings
|
$273,639
|
|
$306,890
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
Depreciation, depletion, accretion
and amortization
|
227,974
|
|
213,362
|
Net
gain on sale of property, plant & equipment and
businesses
|
(4,630)
|
|
(2,934)
|
Contributions to pension
plans
|
(17,638)
|
|
(7,126)
|
Share-based compensation
expense
|
19,953
|
|
15,645
|
Deferred tax expense
(benefit)
|
11,298
|
|
25,094
|
Cost of debt purchase
|
43,048
|
|
0
|
Changes in assets and liabilities
before initial
|
|
|
|
effects of business
acquisitions and dispositions
|
(162,849)
|
|
(145,548)
|
Other, net
|
8,740
|
|
(774)
|
Net cash provided by
operating activities
|
$399,535
|
|
$404,609
|
Investing
Activities
|
|
|
|
Purchases of
property, plant & equipment
|
(366,845)
|
|
(287,440)
|
Proceeds from sale of
property, plant & equipment
|
10,403
|
|
5,865
|
Payment for
businesses acquired, net of acquired cash
|
(210,562)
|
|
(1,611)
|
Decrease in
restricted cash
|
9,033
|
|
1,150
|
Other, net
|
405
|
|
2,488
|
Net cash used for
investing activities
|
($557,566)
|
|
($279,548)
|
Financing
Activities
|
|
|
|
Proceeds from line of
credit
|
5,000
|
|
3,000
|
Payment of line of
credit
|
(5,000)
|
|
(3,000)
|
Payment of current
maturities and long-term debt
|
(800,572)
|
|
(14)
|
Proceeds from
issuance of long-term debt
|
1,600,000
|
|
0
|
Debt discounts and
issuance costs
|
(15,046)
|
|
0
|
Purchases of common
stock
|
(60,303)
|
|
(161,463)
|
Dividends
paid
|
(99,263)
|
|
(79,865)
|
Share-based
compensation, shares withheld for taxes
|
(24,608)
|
|
(32,414)
|
Net cash provided by
(used for) financing activities
|
$600,208
|
|
($273,756)
|
Net increase
(decrease) in cash and cash equivalents
|
442,177
|
|
(148,695)
|
Cash and cash
equivalents at beginning of year
|
258,986
|
|
284,060
|
Cash and cash
equivalents at end of period
|
$701,163
|
|
$135,365
|
|
|
|
|
|
|
|
Table D
|
Segment Financial
Data and Unit Shipments
|
|
|
|
|
(in thousands, except
per unit data)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Total
Revenues
|
|
|
|
|
|
|
|
Aggregates
1
|
$858,699
|
|
$821,809
|
|
$2,326,585
|
|
$2,248,174
|
Asphalt
|
189,940
|
|
157,406
|
|
461,474
|
|
388,560
|
Concrete
|
115,485
|
|
91,147
|
|
309,448
|
|
242,790
|
Calcium
|
1,965
|
|
2,373
|
|
5,822
|
|
6,732
|
Segment
sales
|
$1,166,089
|
|
$1,072,735
|
|
$3,103,329
|
|
$2,886,256
|
Aggregates
intersegment sales
|
(71,374)
|
|
(64,595)
|
|
(190,523)
|
|
(166,563)
|
Total
revenues
|
$1,094,715
|
|
$1,008,140
|
|
$2,912,806
|
|
$2,719,693
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
Aggregates
|
$259,122
|
|
$261,762
|
|
$652,075
|
|
$664,154
|
Asphalt
|
31,363
|
|
32,889
|
|
68,921
|
|
76,028
|
Concrete
|
14,367
|
|
8,711
|
|
34,302
|
|
18,334
|
Calcium
|
664
|
|
847
|
|
1,972
|
|
2,596
|
Total
|
$305,516
|
|
$304,209
|
|
$757,270
|
|
$761,112
|
|
|
|
|
|
|
|
|
Depreciation,
Depletion, Accretion and Amortization
|
|
Aggregates
|
$64,071
|
|
$60,204
|
|
$182,559
|
|
$177,129
|
Asphalt
|
6,494
|
|
4,100
|
|
18,841
|
|
12,468
|
Concrete
|
3,591
|
|
3,072
|
|
10,286
|
|
9,141
|
Calcium
|
180
|
|
198
|
|
567
|
|
577
|
Other
|
5,300
|
|
4,475
|
|
15,721
|
|
14,047
|
Total
|
$79,636
|
|
$72,049
|
|
$227,974
|
|
$213,362
|
|
|
|
|
|
|
|
|
Average Unit Sales
Price and Unit Shipments
|
|
Aggregates
|
|
|
|
|
|
|
|
Freight-adjusted
revenues 2
|
$668,504
|
|
$641,086
|
|
$1,796,734
|
|
$1,742,781
|
Aggregates -
tons
|
50,945
|
|
50,277
|
|
137,158
|
|
138,250
|
Freight-adjusted
sales price 3
|
$13.12
|
|
$12.75
|
|
$13.10
|
|
$12.61
|
|
|
|
|
|
|
|
|
Other
Products
|
|
|
|
|
|
|
|
Asphalt Mix -
tons
|
3,090
|
|
2,890
|
|
7,785
|
|
7,104
|
Asphalt Mix - sales
price
|
$53.05
|
|
$53.57
|
|
$52.57
|
|
$53.39
|
|
|
|
|
|
|
|
|
Ready-mixed concrete
- cubic yards
|
969
|
|
809
|
|
2,671
|
|
2,209
|
Ready-mixed concrete
- sales price
|
$118.53
|
|
$112.64
|
|
$115.42
|
|
$109.89
|
|
|
|
|
|
|
|
|
Calcium -
tons
|
69
|
|
86
|
|
204
|
|
249
|
Calcium - sales
price
|
$28.60
|
|
$27.56
|
|
$28.39
|
|
$27.01
|
|
1 Includes
crushed stone, sand and gravel, sand, other aggregates, as well as
freight, delivery and transportation
|
revenues, and service
revenues related to aggregates.
|
2
Freight-adjusted revenues are Aggregates segment sales excluding
freight, delivery and transportation revenues,
|
and other revenues related to services, such as
landfill tipping fees that are derived from our aggregates
business.
|
3
Freight-adjusted sales price is calculated as freight-adjusted
revenues divided by aggregates unit shipments.
|
|
|
|
|
|
|
|
Appendix 1
|
1.
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
Supplemental
information referable to the Condensed Consolidated Statements of
Cash Flows is summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
September
30
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Cash
Payments
|
|
|
|
|
|
|
|
Interest (exclusive
of amount capitalized)
|
|
|
|
|
$118,157
|
|
$69,865
|
Income
taxes
|
|
|
|
|
124,121
|
|
92,397
|
|
|
|
|
|
|
|
|
Noncash Investing
and Financing Activities
|
|
|
|
|
|
|
|
Accrued liabilities
for purchases of property, plant & equipment
|
|
$10,602
|
|
$10,493
|
Amounts referable to
business acquisitions
|
|
|
|
|
|
|
|
Liabilities
assumed
|
|
|
|
1,935
|
|
0
|
|
|
2.
Reconciliation of Non-GAAP Measures
|
|
Gross profit margin
excluding freight and delivery revenues is not a Generally Accepted
Accounting Principle (GAAP) measure. We present this metric as it
is consistent with the basis by which we review our operating
results. Likewise, we believe that this presentation is consistent
with our competitors and consistent with the basis by which
investors analyze our operating results considering that freight
and delivery services represent pass-through activities.
Reconciliation of this metric to its nearest GAAP measure is
presented below:
|
|
|
Gross Profit
Margin in Accordance with GAAP
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Gross
profit
|
$305,516
|
|
$304,209
|
|
$757,270
|
|
$761,112
|
Total
revenues
|
$1,094,715
|
|
$1,008,140
|
|
$2,912,806
|
|
$2,719,693
|
Gross profit
margin
|
27.9%
|
|
30.2%
|
|
26.0%
|
|
28.0%
|
|
|
|
|
|
|
|
|
Gross Profit
Margin Excluding Freight and Delivery Revenues
|
|
|
|
(dollars in
thousands)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Gross
profit
|
$305,516
|
|
$304,209
|
|
$757,270
|
|
$761,112
|
Total
revenues
|
$1,094,715
|
|
$1,008,140
|
|
$2,912,806
|
|
$2,719,693
|
Freight and delivery
revenues 1
|
143,664
|
|
143,811
|
|
397,933
|
|
407,321
|
Total revenues
excluding freight and delivery revenues
|
$951,051
|
|
$864,329
|
|
$2,514,873
|
|
$2,312,372
|
Gross profit margin
excluding freight and delivery revenues
|
32.1%
|
|
35.2%
|
|
30.1%
|
|
32.9%
|
|
|
|
|
|
|
|
|
1 Includes
freight to remote distribution sites.
|
|
|
|
|
|
|
|
Appendix 2
|
Reconciliation of
Non-GAAP Measures (Continued)
|
|
Aggregates segment
gross profit margin as a percentage of freight-adjusted revenues is
not a GAAP measure. We present this metric as it is consistent with
the basis by which we review our operating results. We believe that
this presentation is consistent with our competitors and meaningful
to our investors as it excludes freight, delivery and
transportation revenues, which are pass-through activities. It also
excludes immaterial other revenues related to services, such as
landfill tipping fees, that are derived from our aggregates
business. Incremental gross profit as a percentage of
freight-adjusted revenues represents the year-over-year change in
gross profit divided by the year-over-year change in
freight-adjusted revenues. Reconciliations of these metrics to
their nearest GAAP measures are presented below:
|
|
Aggregates Segment
Gross Profit Margin in Accordance with GAAP
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Aggregates
segment
|
|
|
|
|
|
|
|
Gross
profit
|
$259,122
|
|
$261,762
|
|
$652,075
|
|
$664,154
|
Segment
sales
|
$858,699
|
|
$821,809
|
|
$2,326,585
|
|
$2,248,174
|
Gross profit
margin
|
30.2%
|
|
31.9%
|
|
28.0%
|
|
29.5%
|
Incremental gross
profit margin
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Aggregates Segment
Gross Profit as a Percentage of Freight-Adjusted
Revenues
|
|
|
|
|
(dollars in
thousands)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Aggregates
segment
|
|
|
|
|
|
|
|
Gross
profit
|
$259,122
|
|
$261,762
|
|
$652,075
|
|
$664,154
|
Segment
sales
|
$858,699
|
|
$821,809
|
|
$2,326,585
|
|
$2,248,174
|
Less
|
|
|
|
|
|
|
|
Freight, delivery and
transportation revenues 1
|
181,281
|
|
176,870
|
|
505,574
|
|
494,017
|
Other
revenues
|
8,914
|
|
3,853
|
|
24,277
|
|
11,376
|
Freight-adjusted
revenues
|
$668,504
|
|
$641,086
|
|
$1,796,734
|
|
$1,742,781
|
|
|
|
|
|
|
|
|
Gross profit as a
percentage of freight-adjusted revenues
|
38.8%
|
|
40.8%
|
|
36.3%
|
|
38.1%
|
|
|
|
|
|
|
|
|
Incremental gross
profit as a percentage
|
|
|
|
|
|
|
|
of freight-adjusted
revenues
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
1 At the
segment level, freight, delivery and transportation revenues
include intersegment freight & delivery revenues, which are
eliminated at the
|
consolidated
level.
|
|
|
|
|
|
|
|
|
GAAP does not define
"Aggregates segment cash gross profit" and it should not be
considered as an alternative to earnings measures defined by GAAP.
We present this metric for the convenience of investment
professionals who use such metrics in their analyses and for
shareholders who need to understand the metrics we use to assess
performance. We and the investment community use this metric to
assess the operating performance of our business. Additionally, we
present this metric as we believe that it closely correlates to
long-term shareholder value. We do not use this metric as a measure
to allocate resources. Aggregates segment cash gross profit
per ton is computed by dividing Aggregates segment cash gross
profit by tons shipped. Reconciliation of this metric to its
nearest GAAP measure is presented below:
|
|
Aggregates Segment
Cash Gross Profit
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
per ton data)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Aggregates
segment
|
|
|
|
|
|
|
|
Gross
profit
|
$259,122
|
|
$261,762
|
|
$652,075
|
|
$664,154
|
Depreciation,
depletion, accretion and amortization
|
64,071
|
|
60,204
|
|
182,559
|
|
177,129
|
Aggregates segment cash
gross profit
|
$323,193
|
|
$321,966
|
|
$834,634
|
|
$841,283
|
Unit shipments -
tons
|
50,945
|
|
50,277
|
|
137,158
|
|
138,250
|
Aggregates segment
cash gross profit per ton
|
$6.34
|
|
$6.40
|
|
$6.09
|
|
$6.09
|
Appendix 3
|
Reconciliation of
Non-GAAP Measures (Continued)
|
|
GAAP does not define
"Earnings Before Interest, Taxes, Depreciation and Amortization"
(EBITDA) and it should not be considered as an alternative to
earnings measures defined by GAAP. We present this metric for the
convenience of investment professionals who use such metrics in
their analyses and for shareholders who need to understand the
metrics we use to assess performance. We use this metric to assess
the operating performance of our business and for a basis of
strategic planning and forecasting as we believe that it closely
correlates to long-term shareholder value. We do not use this
metric as a measure to allocate resources. We adjust EBITDA for
certain items to provide a more consistent comparison of earnings
performance from period to period. Reconciliation of this metric to
its nearest GAAP measure is presented below:
|
|
EBITDA and
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
TTM
|
|
September
30
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net
earnings
|
$108,579
|
|
$142,024
|
|
$273,639
|
|
$306,890
|
|
$386,240
|
|
$395,778
|
Income tax
expense
|
39,080
|
|
49,803
|
|
81,557
|
|
91,575
|
|
114,833
|
|
135,341
|
Interest expense,
net
|
82,041
|
|
33,126
|
|
154,572
|
|
100,192
|
|
187,649
|
|
136,504
|
(Earnings) loss on
discontinued operations, net of tax
|
1,571
|
|
3,113
|
|
(8,217)
|
|
7,451
|
|
(12,753)
|
|
12,122
|
EBIT
|
$231,271
|
|
$228,066
|
|
$501,551
|
|
$506,108
|
|
$675,969
|
|
$679,745
|
Depreciation,
depletion, accretion and amortization
|
79,636
|
|
72,049
|
|
227,974
|
|
213,362
|
|
299,552
|
|
283,415
|
EBITDA
|
$310,907
|
|
$300,115
|
|
$729,525
|
|
$719,470
|
|
$975,521
|
|
$963,160
|
Gain on sale of real
estate and businesses
|
$0
|
|
$0
|
|
$0
|
|
$0
|
|
($16,216)
|
|
($443)
|
Business interruption
claims recovery, net of incentives
|
0
|
|
(214)
|
|
0
|
|
(11,177)
|
|
163
|
|
(11,177)
|
Charges associated with
divested operations
|
114
|
|
1,071
|
|
16,515
|
|
16,768
|
|
16,730
|
|
17,121
|
Business development,
net of termination fee
|
784
|
|
0
|
|
784
|
|
0
|
|
784
|
|
0
|
Asset
impairment
|
0
|
|
0
|
|
0
|
|
10,506
|
|
0
|
|
10,506
|
Restructuring
charges
|
0
|
|
0
|
|
1,942
|
|
320
|
|
1,942
|
|
762
|
Adjusted
EBITDA
|
$311,805
|
|
$300,972
|
|
$748,766
|
|
$735,887
|
|
$978,924
|
|
$979,929
|
Depreciation,
depletion, accretion and amortization
|
(79,636)
|
|
(72,049)
|
|
(227,974)
|
|
(213,362)
|
|
(299,552)
|
|
(283,415)
|
Adjusted
EBIT
|
$232,169
|
|
$228,923
|
|
$520,792
|
|
$522,525
|
|
$679,372
|
|
$696,514
|
|
|
Adjusted EBITDA for
2016 has been revised to conform with the 2017 presentation which
no longer includes an adjustment for routine business development
charges. However, business development charges/credits that are
deemed to be non-routine are included as an adjustment.
|
|
Similar to our
presentation of Adjusted EBITDA, we present Adjusted Diluted EPS to
provide a more consistent comparison of earnings performance from
period to period.
|
|
Adjusted Diluted
EPS from Continuing Operations (Adjusted Diluted
EPS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
TTM
|
|
September
30
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Diluted
EPS
|
$0.82
|
|
$1.07
|
|
$1.97
|
|
$2.31
|
|
$2.77
|
|
$3.00
|
Items included in
Adjusted EBITDA above
|
0.00
|
|
0.00
|
|
0.09
|
|
0.08
|
|
0.02
|
|
0.08
|
Interest charges
associated with debt purchase
|
0.22
|
|
0.00
|
|
0.22
|
|
0.00
|
|
0.22
|
|
0.00
|
Alabama NOL
carryforward valuation allowance
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
(0.04)
|
|
0.00
|
Foreign tax credit
carryforward utilization
|
0.00
|
|
(0.05)
|
|
0.00
|
|
(0.05)
|
|
0.00
|
|
0.00
|
Adjusted Diluted
EPS
|
$1.04
|
|
$1.02
|
|
$2.28
|
|
$2.34
|
|
$2.97
|
|
$3.08
|
|
|
The following
reconciliation to the mid-point of the range of 2017 Projected
EBITDA excludes adjustments for charges associated with divested
operations, asset impairment and other unusual gains and losses.
Due to the difficulty of forecasting the timing or amount of items
that have not yet occurred, are out of our control, or cannot be
reasonably predicted, we are unable to estimate the significance of
this unavailable information.
|
|
2017 Projected
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
Mid-point
|
|
Net
earnings
|
|
|
|
|
|
|
$380
|
|
|
|
|
Income tax
expense
|
|
|
|
|
|
|
130
|
|
|
|
|
Interest expense,
net
|
|
|
|
|
|
|
190
|
|
|
|
|
Discontinued
operations, net of tax
|
|
|
|
|
|
|
0
|
|
|
|
|
Depreciation,
depletion, accretion and amortization
|
|
|
|
|
|
|
300
|
|
Projected
EBITDA
|
|
|
|
|
|
|
$1,000
|
|
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SOURCE Vulcan Materials Company