BIRMINGHAM, Ala., July 31, 2018 /PRNewswire/ -- Vulcan
Materials Company (NYSE: VMC), the nation's largest producer of
construction aggregates, today announced results for the second
quarter ended June 30, 2018.
Second quarter net earnings were $160
million. Earnings from continuing operations of
$160 million compared favorably to
$112 million in the prior year
period. Adjusted earnings from continuing operations were
$1.23 per diluted share versus
$0.90 per share in the prior year's
second quarter. Adjusted EBITDA increased 13 percent to
$325 million.
The Company reported 11 percent growth in gross profit led by a
13 percent increase in its core Aggregates segment. Aggregates
shipments increased 15 percent (11 percent on a same-store basis)
and aggregates average selling price, adjusted for mix, rose 3
percent over the prior year. A 30 percent increase in diesel
cost per gallon lowered Aggregates segment gross profit by
$7 million. Despite this
headwind, second quarter Aggregates segment gross profit increased
to $283 million and cash gross
profit, on a same-store basis, was $6.55 per ton. Year-to-date, the
flow-through rate on same-store incremental segment sales excluding
freight and delivery was 43 percent, or 56 percent excluding the
impact of higher diesel fuel costs.
Tom Hill, Chairman and Chief
Executive Officer, said, "We remain on track with our full year
expectations. Vulcan-served markets are experiencing stronger
growth in demand than other markets, and higher public funding for
transportation infrastructure is now converting to higher shipments
of aggregates. Apart from geographic mix impacts, our pricing
momentum continues to strengthen, including in our backlogged
work. Our operating disciplines remain strong, and margins
should continue to improve as we turn the corner on costs related
to last year's storms.
"We expect the strong aggregates shipment growth seen in the
second quarter to continue for the balance of the year. We
now project full year same-store shipment growth of between 7 and 9
percent, albeit at a lower-priced geographic mix. We
reiterate our full-year expectations for 2018 earnings from
continuing operations of between $4.00 and $4.65 per
diluted share and Adjusted EBITDA of between $1.15 and $1.25
billion."
Second Quarter Summary (compared with prior year's second
quarter)
- Total revenues increased $169
million, or 16 percent, to $1.2
billion
- Gross profit was $323 million
versus $290 million in the prior
year
- Aggregates segment sales increased $139
million to $956 million and
freight-adjusted revenues increased $99
million, or 16 percent, to $731
million
-
- Shipments increased 7 million tons, or 15 percent, to 55
million tons
- Freight-adjusted sales price increased 1 percent to
$13.29 per ton
- Segment gross profit increased $32
million, or 13 percent, to $283
million
- Asphalt, Concrete and Calcium segment gross profit was
$40 million, collectively
- SAG was $89 million, or 7.4 as a
percentage of total revenues
- Net earnings were $160 million
versus $120 million in the prior
year
- Adjusted EBIT was $239 million
versus $211 million in the prior
year
- Adjusted EBITDA was $325 million,
an increase of $37 million, or 13
percent
- Earnings from continuing operations were $1.20 per diluted share versus $0.83 per diluted share
- Adjusted earnings from continuing operations were $1.23 per diluted share versus $0.90 per diluted share (see Appendix 2 for
reconciliation)
Trailing-Twelve-Month Summary (compared with the prior twelve
month period)
- Total revenues were $4.13
billion, an increase of $428
million, or 12 percent
- Gross profit was $1.03 billion,
an increase of $48 million, or 5
percent
- Aggregates segment sales increased $281
million to $3.28 billion and
freight-adjusted revenues increased $204
million, or 9 percent, to $2.52
billion
-
- Shipments increased 7 percent, to 192 million tons
- Freight-adjusted sales price increased $0.20 per ton, or 2 percent
- Segment gross profit increased $44
million to $896 million
- Asphalt, Concrete and Calcium segment gross profit was
$132 million, collectively
- SAG was $327 million, or 7.9 as a
percentage of total revenues
- Net earnings were $649 million
versus $420 million in the prior
year
- Adjusted EBIT was $713 million,
an increase of 5 percent
- Adjusted EBITDA was $1.04
billion, up 7 percent from the prior year
- Earnings from continuing operations were $4.84 per diluted share versus $3.02 per diluted share
- Adjusted earnings from continuing operations were $3.45 per diluted share versus $2.98 per diluted share (see Appendix 2 for
reconciliation)
Segment Results
Aggregates
Segment gross profit through the first half of the year remains
on track with full year expectations, despite higher than expected
diesel cost. Second quarter Aggregates segment gross profit
increased 13 percent to $283 million,
or $5.16 per ton.
Second quarter aggregates shipments increased 15 percent (11
percent on a same-store basis) versus the prior year quarter.
Same-store daily shipment rates for aggregates were strong
throughout the quarter, reflecting solid underlying demand,
including sustained strength in public construction activity.
Many of the Company's markets are finally seeing the conversion of
higher public funding for transportation into higher shipments of
aggregates. Despite the overall shipment growth reported for
the second quarter, shipments in some markets, notably California, do not yet reflect the strength in
highway construction activity we see building into 2019 and
beyond.
For the quarter, freight-adjusted average sales price for
aggregates increased 1 percent versus the prior year quarter, with
the rate negatively impacted by relatively faster growth in
relatively lower-priced markets. Excluding this mix impact,
aggregates price increased 3 percent. California, Georgia and Virginia realized mid-to-high single digit
price growth while prices in Alabama, Arizona and Illinois decreased modestly versus the prior
year. Reported freight-adjusted pricing in long-haul markets,
where locally available aggregates are not available, was
negatively impacted by higher distribution costs versus the prior
year. Over time, these higher distribution costs will be
recovered in higher prices. Additionally, positive trends in
backlogged project work along with demand visibility, customer
confidence, rising diesel prices, and logistics constraints support
continued upward pricing movements for the remainder of the year
and into 2019.
Same-store unit cost of sales (freight-adjusted) increased 1
percent versus the prior year quarter as fixed cost leverage and
other operating efficiencies mostly offset the 30 percent increase
in the unit cost for diesel fuel. Excluding the impact of
higher diesel prices, same-store unit costs improved 1 percent
compared to the prior year. Through June, the Company also
continued to experience higher than normal distribution costs due
in part to last year's storm events. During the second
quarter, the Company completed the dredging of its coastal
Texas port facilities and took
possession of the second of its new, more efficient Panamax-class
ships.
The Company's Aggregates segment gross profit flow-through rate
has begun to move towards longer-term expectations of 60
percent. Through the first half of 2018, same-store
incremental gross profit was 43 percent of incremental segment
sales excluding freight and delivery, and 56 percent excluding the
impact of higher unit prices for diesel fuel – despite the negative
impact of geographic mix on these period-over-period comparisons.
Although quarterly gross profit flow-through rates can vary
widely from quarter to quarter, the Company expects continued
improvement in the second half of the year.
Asphalt, Concrete and Calcium
Asphalt segment gross profit of $26
million was $3 million lower
than the prior year quarter due to lower material margins. On
a same-store basis, shipments increased 3 percent from the prior
year. Although same-store asphalt mix selling prices
increased 4 percent, a 28 percent increase in unit costs for liquid
asphalt compressed margins. Year-to-date, higher liquid
asphalt costs have negatively affected segment earnings by
$16 million. Although Asphalt
segment material margins may improve in the second half of the
year, the Company expects them to remain below beginning-of-year
expectations.
Concrete segment gross profit of $13
million was $4 million higher
than the prior year quarter. Same-store shipments increased
10 percent year-over-year. Same-store average price increases
of 3 percent allowed for a 3 percent gain in the material
margins. Through the first half of 2018, Concrete segment
gross profit is in line with Company expectations.
Calcium segment gross profit was $0.8
million versus $0.6 million in
the prior year's second quarter.
Growth, Capital Allocation and Financial Position
During the second quarter, the Company invested $41 million on core operating and maintenance
capital, in line with expectations. The Company continues to
expect core operating and maintenance capital spending for the full
year of approximately $250
million.
For 2018, we expect the business to generate approximately
$825 million of after-tax cash flows
from earnings (defined as EBITDA less working capital growth,
operating and maintenance capital, and cash taxes). With
disciplined capital deployment and compounding improvements in unit
margins, our aggregates-centric business model should enable
further significant gains in after-tax cash flows from earnings as
the recovery moves forward.
The Company's capital allocation priorities remain unchanged, as
does its intent to maintain an investment-grade credit rating.
During the quarter, the Company invested $77 million in internal growth capital
projects. Current projects underway include securing new
aggregates reserves, developing new production sites, enhancing the
Company's distribution capabilities, and selectively expanding
asphalt and concrete production capabilities. The Company
plans for $350 million in internal
growth capital expenditures during 2018 and anticipates a
significantly lower figure for 2019.
The Company completed three bolt-on acquisitions during the
first half of the year for total consideration of $219 million. These acquisitions complement
Vulcan's existing positions in Alabama, California and Texas. The Company also
divested its Georgia ready-mixed
concrete operations during the first half of the year.
Selling, Administrative and General (SAG), Other Operating
and Nonoperating Expense and Taxes
SAG expenses in the quarter were $89
million, $6 million higher
than the prior year. The year-over-year increase primarily was
attributable to acquired operations and the timing of certain
accruals. On a trailing-twelve-month basis, SAG expense as a
percentage of total revenues declined from 8.7 percent to 7.9
percent. Full year expectations for SAG expense remain
unchanged at $335 million.
Other operating expense was $6
million in the second quarter compared to $18 million in the prior year that included
$15 million of charges associated
with previously divested operations. Over the past five
years, other operating expenses, excluding discrete items, have
averaged approximately $3 to
$4 million per quarter.
Other nonoperating income of $3.3
million reflects the adoption of ASU 2017-07 relating to the
required presentation of certain benefit plan costs. For the
second quarter, this adoption increased cost of revenues and SAG by
$3.6 million and $0.5 million, respectively, with a corresponding
benefit to nonoperating income. Prior period figures have
also been revised. Although this change in presentation has
no net impact on net earnings or EBITDA, it does impact
period-over-period comparisons of segment profitability.
The full year projected effective tax rate remains 20 percent
and full year projected cash taxes are approximately $75 million before the effects of debt
refinancing actions, use of various credits, and refunds from prior
period overpayments.
Demand and Earnings Outlook
Regarding the Company's earnings outlook for 2018, Mr. Hill
stated, "Our business is positioned for continued shipment growth,
compounding pricing improvements, and further gains in unit
profitability in the second half of the year and into 2019.
Public construction demand is beginning to join the sustained
recovery in private demand and Vulcan-served markets are
benefitting disproportionally.
"As a result, we expect aggregates shipment growth for the
balance of the year consistent with that experienced in the second
quarter. We also expect aggregates pricing to
strengthen throughout the remainder of the year and heading into
2019. Geographic and product mix may continue to impact
reported average selling prices, but the underlying direction
remains clear, strongly supported by our strategic and tactical
focus on compounding pricing improvements. The rate at which we
convert same-store incremental revenues into incremental gross
profit in the Aggregates segment should improve further in the
second half, particularly as we move past the storm-related costs
of 2017. In total, we project full year Aggregates segment
gross profit in line with our beginning-of-year expectations, as
stronger shipments work to offset higher diesel and other input
costs.
"The full year 2018 gross profit contribution from our
downstream segments likely will fall short of our beginning-of-year
plans, primarily due to the impact of much higher liquid asphalt
prices on material margins in our Asphalt segment. Asphalt
prices have begun to rise in response to higher input costs, and we
expect material margins to stabilize in the second half of the
year.
"As noted, these trends continue to support our full year
outlook for net earnings and adjusted EBITDA. These trends,
particularly our strength in aggregates shipments supported by
growth in public transportation infrastructure construction
activity, also bode very well for Vulcan's continued progress
toward its mid-cycle goals in 2019 and beyond."
Conference Call
Vulcan will host a conference call at 10:00 a.m. CDT on July
31, 2018. 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 888-599-8686, or 323-994-2093 approximately 10 minutes
before the scheduled start. The conference ID is
8630268. 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 with
headquarters in Birmingham,
Alabama, is the nation's largest producer of construction
aggregates – primarily crushed stone, sand and gravel – and a major
producer of aggregates-based construction materials, including
asphalt mix and ready-mixed concrete. For additional
information about Vulcan, go to www.vulcanmaterials.com.
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, wetlands, greenhouse gas emissions, the definition
of minerals, tax policy 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; significant downturn in the
construction industry may result in the impairment of goodwill or
long-lived assets; changes in technologies, which could disrupt the
way we do business and how our products are distributed; the effect
of changes in tax laws, guidance and interpretations, including
those related to the Tax Cuts and Jobs Act that was enacted in
December 2017; 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
|
|
Six Months
Ended
|
Consolidated
Statements of Earnings
|
|
June
30
|
|
June
30
|
(Condensed and
unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
$1,200,151
|
|
$1,030,763
|
|
$2,054,625
|
|
$1,818,091
|
Cost of
revenues
|
|
876,967
|
|
740,746
|
|
1,572,106
|
|
1,369,853
|
Gross
profit
|
|
323,184
|
|
290,017
|
|
482,519
|
|
448,238
|
Selling,
administrative and general expenses
|
|
89,043
|
|
83,056
|
|
167,383
|
|
165,439
|
Gain on sale of
property, plant & equipment
|
|
|
|
|
|
|
|
|
and
businesses
|
|
2,106
|
|
2,773
|
|
6,270
|
|
3,142
|
Other operating
expense, net
|
|
(5,994)
|
|
(17,768)
|
|
(9,969)
|
|
(23,595)
|
Operating
earnings
|
|
230,253
|
|
191,966
|
|
311,437
|
|
262,346
|
Other nonoperating
income, net
|
|
3,339
|
|
3,890
|
|
8,421
|
|
7,934
|
Interest expense,
net
|
|
33,244
|
|
38,455
|
|
71,018
|
|
72,531
|
Earnings from
continuing operations
|
|
|
|
|
|
|
|
|
before income
taxes
|
|
200,348
|
|
157,401
|
|
248,840
|
|
197,749
|
Income tax
expense
|
|
40,046
|
|
45,652
|
|
35,143
|
|
42,477
|
Earnings from
continuing operations
|
|
160,302
|
|
111,749
|
|
213,697
|
|
155,272
|
Earnings (loss) on
discontinued operations, net of tax
|
|
(650)
|
|
8,390
|
|
(1,066)
|
|
9,788
|
Net
earnings
|
|
$159,652
|
|
$120,139
|
|
$212,631
|
|
$165,060
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$1.21
|
|
$0.84
|
|
$1.61
|
|
$1.17
|
Discontinued
operations
|
|
$0.00
|
|
$0.07
|
|
($0.01)
|
|
$0.08
|
Net
earnings
|
|
$1.21
|
|
$0.91
|
|
$1.60
|
|
$1.25
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$1.20
|
|
$0.83
|
|
$1.59
|
|
$1.15
|
Discontinued
operations
|
|
($0.01)
|
|
$0.06
|
|
($0.01)
|
|
$0.07
|
Net
earnings
|
|
$1.19
|
|
$0.89
|
|
$1.58
|
|
$1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
132,437
|
|
132,413
|
|
132,563
|
|
132,524
|
Assuming
dilution
|
|
134,051
|
|
134,735
|
|
134,280
|
|
134,925
|
Cash dividends per
share of common stock
|
|
$0.28
|
|
$0.25
|
|
$0.56
|
|
$0.50
|
Depreciation,
depletion, accretion and amortization
|
|
$85,633
|
|
$76,775
|
|
$167,072
|
|
$148,339
|
Effective tax rate
from continuing operations
|
|
20.0%
|
|
29.0%
|
|
14.1%
|
|
21.5%
|
|
|
|
|
|
|
|
|
Table B
|
Vulcan Materials
Company
|
|
|
|
|
|
|
and Subsidiary
Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
Consolidated
Balance Sheets
|
|
June
30
|
|
December
31
|
|
June
30
|
(Condensed and
unaudited)
|
|
2018
|
|
2017
|
|
2017
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$55,059
|
|
$141,646
|
|
$1,129,799
|
Restricted
cash
|
|
6,056
|
|
5,000
|
|
0
|
Accounts and notes
receivable
|
|
|
|
|
|
|
Accounts and
notes receivable, gross
|
|
640,742
|
|
590,986
|
|
573,029
|
Less:
Allowance for doubtful accounts
|
|
(2,628)
|
|
(2,649)
|
|
(2,943)
|
Accounts and
notes receivable, net
|
|
638,114
|
|
588,337
|
|
570,086
|
Inventories
|
|
|
|
|
|
|
Finished
products
|
|
343,948
|
|
327,711
|
|
318,465
|
Raw
materials
|
|
29,684
|
|
27,152
|
|
27,106
|
Products in
process
|
|
1,882
|
|
1,827
|
|
1,210
|
Operating
supplies and other
|
|
28,250
|
|
27,648
|
|
28,148
|
Inventories
|
|
403,764
|
|
384,338
|
|
374,929
|
Other current
assets
|
|
80,209
|
|
60,780
|
|
109,998
|
Total current
assets
|
|
1,183,202
|
|
1,180,101
|
|
2,184,812
|
Investments and
long-term receivables
|
|
41,989
|
|
35,115
|
|
38,888
|
Property, plant &
equipment
|
|
|
|
|
|
|
Property,
plant & equipment, cost
|
|
8,241,164
|
|
7,969,312
|
|
7,531,536
|
Allowances for
depreciation, depletion & amortization
|
|
(4,134,750)
|
|
(4,050,381)
|
|
(3,992,728)
|
Property,
plant & equipment, net
|
|
4,106,414
|
|
3,918,931
|
|
3,538,808
|
Goodwill
|
|
3,163,954
|
|
3,122,321
|
|
3,101,439
|
Other intangible
assets, net
|
|
1,156,898
|
|
1,063,630
|
|
834,971
|
Other noncurrent
assets
|
|
192,327
|
|
184,793
|
|
171,025
|
Total
assets
|
|
$9,844,784
|
|
$9,504,891
|
|
$9,869,943
|
Liabilities
|
|
|
|
|
|
|
Current maturities of
long-term debt
|
|
23
|
|
41,383
|
|
525,776
|
Short-term
debt
|
|
360,000
|
|
0
|
|
0
|
Trade payables and
accruals
|
|
231,913
|
|
197,335
|
|
202,753
|
Other current
liabilities
|
|
219,860
|
|
204,154
|
|
197,264
|
Total current
liabilities
|
|
811,796
|
|
442,872
|
|
925,793
|
Long-term
debt
|
|
2,776,906
|
|
2,813,482
|
|
2,809,293
|
Deferred income
taxes, net
|
|
545,756
|
|
464,081
|
|
706,726
|
Deferred
revenue
|
|
188,826
|
|
191,476
|
|
195,020
|
Other noncurrent
liabilities
|
|
500,870
|
|
624,087
|
|
631,007
|
Total
liabilities
|
|
$4,824,154
|
|
$4,535,998
|
|
$5,267,839
|
Equity
|
|
|
|
|
|
|
Common stock, $1 par
value
|
|
132,268
|
|
132,324
|
|
132,181
|
Capital in excess of
par value
|
|
2,788,486
|
|
2,805,587
|
|
2,797,269
|
Retained
earnings
|
|
2,244,545
|
|
2,180,448
|
|
1,810,528
|
Accumulated other
comprehensive loss
|
|
(144,669)
|
|
(149,466)
|
|
(137,874)
|
Total
equity
|
|
$5,020,630
|
|
$4,968,893
|
|
$4,602,104
|
Total liabilities and
equity
|
|
$9,844,784
|
|
$9,504,891
|
|
$9,869,943
|
|
|
|
|
|
|
|
Table C
|
Vulcan Materials
Company
|
|
|
|
|
and Subsidiary
Companies
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
Six Months
Ended
|
Consolidated
Statements of Cash Flows
|
|
|
|
June
30
|
(Condensed and
unaudited)
|
|
2018
|
|
2017
|
Operating
Activities
|
|
|
|
|
Net
earnings
|
|
|
|
$212,631
|
|
$165,060
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
Depreciation, depletion, accretion and
amortization
|
|
167,072
|
|
148,339
|
Net gain on
sale of property, plant & equipment and businesses
|
|
(6,270)
|
|
(3,142)
|
Contributions
to pension plans
|
|
(104,794)
|
|
(4,744)
|
Share-based
compensation expense
|
|
14,763
|
|
13,671
|
Deferred tax
expense (benefit)
|
|
40,549
|
|
2,901
|
Cost of debt
purchase
|
|
6,922
|
|
0
|
Changes in
assets and liabilities before initial
|
|
|
|
|
effects of
business acquisitions and dispositions
|
|
(55,415)
|
|
(170,701)
|
Other, net
|
|
|
|
|
302
|
|
3,838
|
Net cash provided by
operating activities
|
|
$275,760
|
|
$155,222
|
Investing
Activities
|
|
|
|
|
Purchases of
property, plant & equipment
|
|
(247,166)
|
|
(291,034)
|
Proceeds from sale of
property, plant & equipment
|
|
8,523
|
|
8,530
|
Proceeds from sale of
businesses
|
|
11,256
|
|
0
|
Payment for
businesses acquired, net of acquired cash
|
|
(218,996)
|
|
(210,562)
|
Other, net
|
|
|
|
|
(10,226)
|
|
405
|
Net cash used for
investing activities
|
|
($456,609)
|
|
($492,661)
|
Financing
Activities
|
|
|
|
|
Proceeds from
short-term debt
|
|
506,200
|
|
5,000
|
Payment of short-term
debt
|
|
(146,200)
|
|
(5,000)
|
Payment of current
maturities and long-term debt
|
|
(892,044)
|
|
(235,007)
|
Proceeds from
issuance of long-term debt
|
|
850,000
|
|
1,600,000
|
Debt issuance and
exchange costs
|
|
(45,513)
|
|
(15,046)
|
Settlements of
interest rate derivatives
|
|
3,378
|
|
0
|
Purchases of common
stock
|
|
(74,921)
|
|
(60,303)
|
Dividends
paid
|
|
|
|
(74,196)
|
|
(66,194)
|
Share-based
compensation, shares withheld for taxes
|
|
(31,386)
|
|
(24,231)
|
Net cash provided by
financing activities
|
|
$95,318
|
|
$1,199,219
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash
|
|
(85,531)
|
|
861,780
|
Cash and cash
equivalents and restricted cash at beginning of year
|
|
146,646
|
|
268,019
|
Cash and cash
equivalents and restricted cash at end of period
|
|
$61,115
|
|
$1,129,799
|
|
|
|
|
|
|
|
|
|
|
|
Table D
|
Segment Financial
Data and Unit Shipments
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
per unit data)
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
June
30
|
|
|
|
June
30
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Total
Revenues
|
|
|
|
|
|
|
|
|
Aggregates
1
|
|
$956,265
|
|
$817,586
|
|
$1,655,922
|
|
$1,467,886
|
Asphalt
|
|
|
211,828
|
|
175,758
|
|
315,663
|
|
271,534
|
Concrete
|
|
106,723
|
|
105,213
|
|
207,685
|
|
193,963
|
Calcium
|
|
2,282
|
|
1,971
|
|
4,224
|
|
3,857
|
Segment
sales
|
|
$1,277,098
|
|
$1,100,528
|
|
$2,183,494
|
|
$1,937,240
|
Aggregates
intersegment sales
|
|
(76,947)
|
|
(69,765)
|
|
(128,869)
|
|
(119,149)
|
Total
revenues
|
|
$1,200,151
|
|
$1,030,763
|
|
$2,054,625
|
|
$1,818,091
|
Gross
Profit
|
|
|
|
|
|
|
|
|
Aggregates
|
|
$283,476
|
|
$251,419
|
|
$431,697
|
|
$390,210
|
Asphalt
|
|
|
25,750
|
|
28,760
|
|
25,996
|
|
37,242
|
Concrete
|
|
13,191
|
|
9,253
|
|
23,511
|
|
19,478
|
Calcium
|
|
|
|
|
767
|
|
585
|
|
1,315
|
|
1,308
|
Total
|
|
|
|
$323,184
|
|
$290,017
|
|
$482,519
|
|
$448,238
|
Depreciation,
Depletion, Accretion and Amortization
|
|
|
|
Aggregates
|
|
$69,738
|
|
$60,832
|
|
$135,691
|
|
$118,488
|
Asphalt
|
|
|
7,298
|
|
6,615
|
|
14,300
|
|
12,347
|
Concrete
|
|
3,049
|
|
3,672
|
|
6,463
|
|
6,695
|
Calcium
|
|
70
|
|
192
|
|
139
|
|
387
|
Other
|
|
|
|
5,478
|
|
5,464
|
|
10,479
|
|
10,422
|
Total
|
|
|
|
$85,633
|
|
$76,775
|
|
$167,072
|
|
$148,339
|
Average Unit Sales
Price and Unit Shipments
|
|
|
|
|
Aggregates
|
|
|
|
|
|
|
|
|
Freight-adjusted
revenues 2
|
|
$730,513
|
|
$631,425
|
|
$1,259,927
|
|
$1,128,230
|
Aggregates -
tons
|
|
54,957
|
|
47,967
|
|
95,489
|
|
86,213
|
Freight-adjusted
sales price 3
|
|
$13.29
|
|
$13.16
|
|
$13.19
|
|
$13.09
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Products
|
|
|
|
|
|
|
|
|
Asphalt Mix -
tons
|
|
3,077
|
|
2,917
|
|
4,870
|
|
4,695
|
Asphalt Mix - sales
price
|
|
$54.70
|
|
$52.90
|
|
$54.18
|
|
$52.26
|
|
|
|
|
|
|
|
|
|
|
|
|
Ready-mixed concrete
- cubic yards
|
876
|
|
910
|
|
1,692
|
|
1,702
|
Ready-mixed concrete
- sales price
|
|
$120.56
|
|
$115.08
|
|
$121.48
|
|
$113.65
|
|
|
|
|
|
|
|
|
|
|
|
|
Calcium -
tons
|
|
80
|
|
70
|
|
148
|
|
136
|
Calcium - sales
price
|
|
$28.11
|
|
$28.39
|
|
$28.49
|
|
$28.29
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Includes
product sales as well as freight & delivery costs that we pass
along to our customers, and service
|
revenues related to aggregates.
|
|
|
|
|
|
|
|
2
Freight-adjusted revenues are Aggregates segment sales excluding
freight & delivery 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.
Reconciliation of Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregates segment
freight-adjusted 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.
We believe that this presentation is consistent with our
competitors and meaningful to our investors as it excludes revenues
associated with freight & delivery, 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. Additionally, we use this metric as the basis
for calculating the average sales price of our aggregates products.
Reconciliation of this metric to its nearest GAAP measure is
presented below:
|
|
Aggregates Segment
Freight-Adjusted Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
June
30
|
|
|
|
June
30
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Aggregates
segment
|
|
|
|
|
|
|
|
|
Segment
sales
|
|
$956,265
|
|
$817,586
|
|
$1,655,922
|
|
$1,467,886
|
Less:
Freight & delivery revenues
1
|
|
213,474
|
|
176,395
|
|
372,417
|
|
324,293
|
Other revenues
|
|
12,278
|
|
9,766
|
|
23,578
|
|
15,363
|
Freight-adjusted
revenues
|
|
$730,513
|
|
$631,425
|
|
$1,259,927
|
|
$1,128,230
|
Unit shipment -
tons
|
|
54,957
|
|
47,967
|
|
95,489
|
|
86,213
|
Freight-adjusted
sales price
|
|
$13.29
|
|
$13.16
|
|
$13.19
|
|
$13.09
|
|
|
|
|
|
|
|
|
|
|
|
|
1 At the
segment level, freight & delivery revenues include intersegment
freight & delivery, (which are eliminated at the consolidated
level) and
|
freight to remote
distribution sites.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregates segment
gross profit margin as a percentage of segment sales excluding
freight & delivery (revenues and costs) 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 revenues associated with freight & delivery,
which are pass-through activities (we do not generate a profit
associated with the transportation component of the selling price
of the product). Incremental gross profit as a percentage of
segment sales excluding freight & delivery represents the
year-over-year change in gross profit divided by the year-over-year
change in segment sales excluding freight & delivery.
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
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
June
30
|
|
|
|
June
30
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Aggregates
segment
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
$283,476
|
|
$251,419
|
|
$431,697
|
|
$390,210
|
Segment
sales
|
|
$956,265
|
|
$817,586
|
|
$1,655,922
|
|
$1,467,886
|
Gross profit
margin
|
|
29.6%
|
|
30.8%
|
|
26.1%
|
|
26.6%
|
Incremental gross
profit margin
|
|
23.1%
|
|
|
|
22.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregates Segment
Gross Profit as a Percentage of Segment Sales Excluding Freight
& Delivery
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
June
30
|
|
|
|
June
30
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Aggregates
segment
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
$283,476
|
|
$251,419
|
|
$431,697
|
|
$390,210
|
Segment
sales
|
|
$956,265
|
|
$817,586
|
|
$1,655,922
|
|
$1,467,886
|
Less:
Freight & delivery
revenues 1
|
|
213,474
|
|
176,395
|
|
372,417
|
|
324,293
|
Segment sales excluding freight & delivery
|
|
$742,791
|
|
$641,191
|
|
$1,283,505
|
|
$1,143,593
|
Gross profit as a
percentage of segment sales
|
|
|
|
|
|
|
|
|
excluding freight & delivery
|
|
38.2%
|
|
39.2%
|
|
33.6%
|
|
34.1%
|
Incremental gross
profit as a percentage of
|
|
|
|
|
|
|
|
|
segment sales excluding freight & delivery
|
|
31.6%
|
|
|
|
29.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 At the
segment level, freight & delivery revenues include intersegment
freight & delivery, (which are eliminated at the consolidated
level) and
|
freight to remote
distribution sites.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
June
30
|
|
|
|
June
30
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Aggregates
segment
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
$283,476
|
|
$251,419
|
|
$431,697
|
|
$390,210
|
Depreciation,
depletion, accretion and amortization
|
|
69,738
|
|
60,832
|
|
135,691
|
|
118,488
|
Aggregates segment
cash gross profit
|
|
$353,214
|
|
$312,251
|
|
$567,388
|
|
$508,698
|
Unit shipments -
tons
|
|
54,957
|
|
47,967
|
|
95,489
|
|
86,213
|
Aggregates segment
cash gross profit per ton
|
|
$6.43
|
|
$6.51
|
|
$5.94
|
|
$5.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Appendix 2
|
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 use this metric to assess the
operating performance of our business and as a basis for 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
|
|
Six Months
Ended
|
|
TTM
|
|
|
|
|
|
June
30
|
|
June
30
|
|
June
30
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net
earnings
|
|
$159,652
|
|
$120,139
|
|
$212,631
|
|
$165,060
|
|
$648,756
|
|
$419,685
|
Income tax expense
(benefit)
|
|
40,046
|
|
45,652
|
|
35,143
|
|
42,477
|
|
(239,409)
|
|
125,556
|
Interest expense,
net
|
|
33,244
|
|
38,455
|
|
71,018
|
|
72,531
|
|
289,572
|
|
138,735
|
(Earnings) loss on
discontinued operations, net of tax
|
|
650
|
|
(8,390)
|
|
1,066
|
|
(9,788)
|
|
3,060
|
|
(11,211)
|
EBIT
|
|
|
|
$233,592
|
|
$195,856
|
|
$319,858
|
|
$270,280
|
|
$701,979
|
|
$672,765
|
Depreciation,
depletion, accretion and amortization
|
|
85,633
|
|
76,775
|
|
167,072
|
|
148,339
|
|
324,698
|
|
291,965
|
EBITDA
|
|
|
$319,225
|
|
$272,631
|
|
$486,930
|
|
$418,619
|
|
$1,026,677
|
|
$964,730
|
Gain on sale of
businesses
|
|
$0
|
|
$0
|
|
($2,929)
|
|
$0
|
|
($13,437)
|
|
($16,216)
|
Property donation
|
|
0
|
|
0
|
|
0
|
|
0
|
|
4,290
|
|
0
|
Business interruption claims
recovery, net of incentives
|
|
0
|
|
0
|
|
(1,694)
|
|
0
|
|
(1,694)
|
|
(52)
|
Charges associated with
divested operations
|
|
0
|
|
15,023
|
|
0
|
|
16,401
|
|
1,661
|
|
17,687
|
Business development, net of
termination fee 1
|
|
4,466
|
|
0
|
|
4,982
|
|
0
|
|
8,046
|
|
0
|
One-time employee
bonuses
|
|
0
|
|
0
|
|
0
|
|
0
|
|
6,716
|
|
0
|
Restructuring
charges
|
|
1,146
|
|
0
|
|
5,390
|
|
1,942
|
|
5,390
|
|
1,942
|
Adjusted
EBITDA
|
|
$324,837
|
|
$287,654
|
|
$492,679
|
|
$436,962
|
|
$1,037,649
|
|
$968,091
|
Depreciation, depletion,
accretion and amortization
|
|
(85,633)
|
|
(76,775)
|
|
(167,072)
|
|
(148,339)
|
|
(324,698)
|
|
(291,965)
|
Adjusted
EBIT
|
|
$239,204
|
|
$210,879
|
|
$325,607
|
|
$288,623
|
|
$712,951
|
|
$676,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Represents non-routine charges associated with acquisitions
including the cost impact of purchase accounting inventory
valuations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Six Months
Ended
|
|
TTM
|
|
|
|
|
|
June
30
|
|
June
30
|
|
June
30
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Diluted
EPS
|
|
$1.20
|
|
$0.83
|
|
$1.59
|
|
$1.15
|
|
$4.84
|
|
$3.02
|
Items included in Adjusted
EBITDA above
|
|
0.03
|
|
0.07
|
|
0.03
|
|
0.09
|
|
$0.06
|
|
0.03
|
Debt refinancing
costs
|
|
0.00
|
|
0.00
|
|
0.04
|
|
0.02
|
|
$0.75
|
|
0.02
|
Tax reform income tax
savings
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
($1.99)
|
|
0.00
|
Alabama NOL carryforward
valuation allowance
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
($0.21)
|
|
(0.04)
|
Foreign tax credit
carryforward utilization
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
$0.00
|
|
(0.05)
|
Adjusted Diluted
EPS
|
|
$1.23
|
|
$0.90
|
|
$1.66
|
|
$1.26
|
|
$3.45
|
|
$2.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following
reconciliation to the mid-point of the range of 2018 Projected
EBITDA excludes adjustments which are difficult to forecast (timing
or amount). Due to the difficulty in forcasting such adjustments,
we are unable to estimate the significance of the
adjustments. Additionally, we present the metric Projected
After Tax Cash Flow from Earnings to assess the operating
performance of our business and as a basis for strategic planning
and forecasting. These metrics are not defined by GAAP and
should not be considered as alternatives to earnings measures
defined by GAAP. Reconciliation of these metrics to their
nearest GAAP measure is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Projected
EBITDA and After Tax Cash Flow from Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-point
|
Net
earnings
|
|
|
|
|
|
|
|
|
|
|
|
$585
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
140
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
135
|
Discontinued
operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
0
|
Depreciation,
depletion, accretion and amortization
|
|
|
|
|
|
|
|
|
|
|
|
340
|
Projected
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
$1,200
|
Less
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
change
|
|
|
|
|
|
|
|
|
|
|
|
50
|
Operating & maintenance
capital expenditures
|
|
|
|
|
|
|
|
|
|
|
|
250
|
Cash taxes before impact of
certain non-recurring benefits
|
|
|
|
|
|
|
|
|
|
75
|
Projected after tax
cash flow from earnings
|
|
|
|
|
|
|
|
|
|
|
|
$825
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/vulcan-announces-second-quarter-2018-results-300688760.html
SOURCE Vulcan Materials Company