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Vulcan Materials
2018 Annual Report

Vulcan Announces Fourth Quarter Results

02/09/09
Effective cost management continues despite weak demand

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Feb. 9, 2009-- Vulcan Materials Company (NYSE:VMC) announced results today for the fourth quarter and full year ended December 31, 2008.

Full Year Highlights

  • Aggregates shipments declined 12 percent.
  • The average selling price for aggregates increased 7 percent.
  • Net sales increased 12 percent.
  • Cash earnings per ton of aggregates improved from the prior year.
  • On a comparable basis, selling, administrative and general expenses declined 11 percent.
  • EBITDA was $886 million versus $981 million in the prior year.
  • Earnings from continuing operations were $231 million, or $2.08 per diluted share.
  • Cash earnings were $624 million.
  • Dividends paid were $215 million.
  • Total debt was reduced by $109 million.

Fourth Quarter Highlights

  • Net sales were $757 million, a decrease of 6 percent.
  • Aggregates shipments declined 23 percent.
  • The average selling price for aggregates increased 6 percent.
  • The average selling price for asphalt mix increased 27 percent, more than offsetting higher prices for key raw materials.
  • On a comparable basis, selling, administrative and general expenses declined 8 percent.
  • EBITDA was $164 million versus $221 million in the prior year.
  • Earnings from continuing operations were $0.14 per diluted share compared with $0.83 per diluted share in the prior year.

Commenting for the Company, Don James, Vulcan’s Chairman and Chief Executive Officer, stated, “During the fourth quarter, we continued to reduce our operating costs by limiting operating hours, streamlining our work force, and focusing on production efficiencies in the face of a sharp decline in demand for our products. The financial and economic turmoil in the U.S. is unprecedented and the external factors affecting the construction industry continue to present unique challenges for our business. Aggregates demand and our shipments have declined for three consecutive years. Our legacy aggregates shipments in 2008 were down 30 percent from the peak level achieved in 2005. Throughout this period, we have focused aggressively on controlling costs while realizing higher pricing for our products to reflect their value in the attractive markets we serve. As a result of these actions, the cash earnings per ton of aggregates in our legacy operations increased over 50 percent during that same period. The cash earnings generated on each ton of aggregates sold in 2008 was higher than in any other period in our history. The increased level of unit profitability supports our optimism about the earnings potential of our business when demand begins to recover.”

Fourth Quarter Operating Results Commentary

According to Mr. James, “Lower fourth quarter volumes more than offset the earnings effect from price improvement and prudent cost control. Aggregates pricing increased 6 percent from the prior year’s fourth quarter. Aggregates shipments were sharply lower versus the prior year in all markets except the Gulf Coast where large energy-related and industrial construction projects have sustained aggregates demand. We continue to respond aggressively to further weakness in demand for our products by making tough decisions regarding operating hours, production rationalization, and manning levels. As a result, employment levels across the Company are down 14 percent and cash period costs for legacy Vulcan aggregates operations declined 15 percent from the prior year’s fourth quarter. The unit price for diesel fuel decreased 23 percent from the prior year’s fourth quarter, increasing net earnings approximately $0.03 per diluted share.”

Asphalt earnings in the fourth quarter were lower due mostly to lower sales volume. The average selling price for asphalt mix increased 27 percent from the prior year’s fourth quarter, more than offsetting higher unit costs for raw materials. The average unit cost for purchased liquid asphalt increased 68 percent from the prior year’s fourth quarter. The increase in the unit cost for liquid asphalt reduced net earnings by approximately $0.12 per diluted share. Concrete earnings decreased from the prior year’s fourth quarter due to weaker demand and higher costs for key raw materials.

Cement earnings were higher than the prior year’s fourth quarter due to the inclusion of the Florida Rock operations for the entire period in the current year.

Selling, administrative and general expenses (SAG) in the fourth quarter increased $11 million from the prior year’s fourth quarter. Lower performance-based compensation was more than offset by the inclusion of the legacy Florida Rock businesses, $5 million of expenses for the fair market value of donated property, and costs related to the replacement of legacy IT systems and the related consolidation of certain administrative support functions. Excluding the aforementioned items, on a comparable basis, SAG expenses declined 8 percent from the prior year’s fourth quarter.

Interest expense increased $20 million from the prior year’s fourth quarter due primarily to debt incurred for the acquisition of Florida Rock.

All results are unaudited.

Outlook Highlights and Commentary

  • Leading indicators including contract awards for construction spending are continuing to slow.
  • Full year aggregates pricing is expected to increase 6 to 8 percent from the prior year.
  • Full year aggregates shipments are expected to decline 5 to 10 percent from 2008 levels, excluding any incremental demand from the economic stimulus bill.
  • The economic stimulus bill currently moving through Congress should provide incremental demand for all major product lines starting in the second half of 2009.
  • Diesel fuel and liquid asphalt prices have been declining since the third quarter of 2008 and both are expected to be lower compared to 2008 levels.
  • Our sharp focus on cash generation and liquidity will continue.

Commenting on the Company’s outlook for 2009, Mr. James stated, “Broad-based economic weakness and extremely tight credit markets continue to hamper construction activity and foster uncertainty in projecting demand for our products. Reduced levels of contract awards in Vulcan-served markets point toward lower residential, private nonresidential, and highway construction activity in 2009, excluding the impact of an economic stimulus plan. In certain Vulcan-served markets, large industrial projects are, to some extent, mitigating the effects of slowing demand from the other construction end markets.

“We will continue to operate the business in a manner consistent with the reduced levels of demand with an emphasis on cost control and productivity improvement. We expect higher selling prices in 2009 for our products to help offset the earnings effects of lower volumes. The average selling price for asphalt mix in 2009 should increase from 2008 as lower-priced sales orders in the backlog are replaced with more recent higher-priced orders.

“The economic stimulus plan being debated in Congress includes much-needed funding for transportation and other infrastructure-related projects that will benefit the construction industry, hard hit by above-average unemployment and weak demand. Our available production capacity located in attractive markets coupled with our strong unit cash earnings, position Vulcan to participate efficiently and effectively in an economic stimulus plan designed to benefit our economy. Key Vulcan-served states such as California, Florida and Texas should receive the largest percentage of highway funding under the stimulus plan and are likely targets for above-average funding for other stimulus spending for infrastructure because of their high growth and large population base. Vulcan sales in these three states should benefit from our aggregates-focused strategy that is complemented by asphalt and concrete operations.

“Last week, we issued $400 million of long-term debt and used the proceeds to reduce short-term bank borrowing, thereby freeing up a like amount of liquidity under our lines of credit. Debt reduction and achieving target debt ratios remain a priority use of cash flows. We expect to reduce total debt by $200 million during 2009, excluding any earnings effect from the economic stimulus plan. For the full year 2009, we expect capital spending to be approximately $200 million, down sharply from the $401 million spent in 2008.”

Conference Call

Vulcan will host a conference call at 10:00 a.m. CST on February 10, 2009. Investors and other interested parties in the U.S. may access the teleconference live by calling 888.679.8038 approximately 10 minutes before the scheduled start. International participants can dial 617.213.4850. The access code is 51887388. A live webcast will be available via the Internet through Vulcan’s home page at www.vulcanmaterials.com. The conference call will be recorded and available for replay approximately two hours after the call through February 17, 2009.

Vulcan Materials Company, a member of the S&P 500 index, is the nation’s largest producer of construction aggregates, a major producer of asphalt mix and concrete and a leading producer of cement in Florida.

Certain matters discussed in this release, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to, those associated with general economic and business conditions; changes in interest rates; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for residential and private nonresidential construction; the highly competitive nature of the construction materials industry; the impact of future regulatory or legislative actions; the outcome of pending legal proceedings; pricing; weather and other natural phenomena; energy costs; costs of hydrocarbon-based raw materials; increasing healthcare costs; the timing and amount of any future payments to be received under the 5CP earn-out contained in the agreement for the divestiture of the Company’s Chemicals business; the Company’s ability to secure and permit aggregates reserves in strategically located areas; the Company’s ability to manage and successfully integrate acquisitions; risks and uncertainties related to the Company’s acquisition of Florida Rock Industries, Inc., including the ability to successfully integrate its operations and to achieve the anticipated cost savings and operational synergies; the possibility that business may suffer because management’s attention is diverted to integration concerns; the impact of the global financial crisis on our business and financial condition; and other assumptions, risks and uncertainties detailed from time to time in the Company’s SEC reports, including the report on Form 10-K for the year. Forward-looking statements speak only as of the date hereof, and Vulcan assumes no obligation to publicly update such statements.

  Table A
Vulcan Materials Company
and Subsidiary Companies
 
    (Amounts and shares in thousands,
except per share data)
       
Three Months Ended Twelve Months Ended
Consolidated Statements of Earnings December 31 December 31
(Condensed and unaudited)   2008   2007   2008   2007
 
 
Net sales $ 756,523 $ 807,190 $3,453,081 $3,090,133
Delivery revenues 42,676   49,700   198,357   237,654  
Total revenues 799,199 856,890 3,651,438 3,327,787
 
Cost of goods sold 607,333 586,107 2,703,369 2,139,230
Delivery costs 42,676   49,700   198,357   237,654  
Cost of revenues 650,009   635,807   2,901,726   2,376,884  
 
Gross profit 149,190 221,083 749,712 950,903
Selling, administrative and general expenses 88,863 77,496 342,584 289,604

Gain on sale of property, plant & equipment and businesses, net

7,537 1,877 94,227 58,659
Other operating (income) expense, net (371 ) (425 ) (128 ) 5,390

Minority interest in (earnings) losses of a consolidated subsidiary

-   (151 ) 283   (151 )
Operating earnings 68,235 145,738 501,766 714,417
 
Other income (expense), net (1,323 ) (4,822 ) (4,357 ) (5,322 )
Interest income 502 3,541 3,126 6,625
Interest expense 46,583   26,994   172,813   48,218  

Earnings from continuing operations before income taxes

20,831 117,463 327,722 667,502
Provision for income taxes 5,357   31,324   96,722   204,416  
Earnings from continuing operations 15,474 86,139 231,000 463,086

Loss on discontinued operations, net of tax

(661 ) (1,527 ) (2,449 ) (12,176 )
Net earnings   $ 14,813     $ 84,612     $ 228,551     $ 450,910  
Basic earnings (loss) per share:
Earnings from continuing operations $ 0.14 $ 0.85 $ 2.10 $ 4.77
Discontinued operations (0.01 ) (0.02 ) (0.02 ) (0.12 )
Net earnings per share $ 0.13 $ 0.83 $ 2.08 $ 4.65
 
Diluted earnings (loss) per share:
Earnings from continuing operations $ 0.14 $ 0.83 $ 2.08 $ 4.66
Discontinued operations (0.01 ) (0.01 ) (0.02 ) (0.12 )
  Net earnings per share   $ 0.13     $ 0.82     $ 2.06     $ 4.54  
 

Weighted-average common shares outstanding:

Basic 110,394 101,574 109,774 97,036
Assuming dilution 111,233 103,475 110,954 99,403

Cash dividends declared per share of common stock

$ 0.49 $ 0.46 $ 1.96 $ 1.84

Depreciation, depletion, accretion and amortization from continuing operations

$ 97,570 $ 80,405 $ 389,060 $ 271,475
Effective tax rate from continuing operations   25.7 %   26.7 %   29.5 %   30.6 %
  Table B
Vulcan Materials Company
and Subsidiary Companies
       
(Amounts in thousands)
 
Consolidated Balance Sheets December 31 December 31
(Condensed and unaudited)   2008   2007
 
 
Assets
Cash and cash equivalents $ 10,194 $ 34,888
Medium-term investments 36,734 -
Accounts and notes receivable:
Accounts and notes receivable, gross 365,688 427,876
Less: Allowance for doubtful accounts (8,711 ) (6,015 )
Accounts and notes receivable, net 356,977 421,861
Inventories:
Finished products 295,525 286,591
Raw materials 28,568 28,330
Products in process 4,475 4,115
Operating supplies and other 35,743   37,282  
Inventories 364,311 356,318
Deferred income taxes 70,231 44,210
Prepaid expenses 52,960 40,177
Assets held for sale -   259,775  
Total current assets 891,407 1,157,229
Investments and long-term receivables 27,998 25,445
Property, plant and equipment:
Property, plant and equipment, cost 6,673,493 5,805,789

Less: Reserve for depr., depl., & amort.

(2,480,061 ) (2,185,695 )
Property, plant and equipment, net 4,193,432 3,620,094
Goodwill 3,309,498 3,789,091
Other assets 753,455   344,511  
Total assets $ 9,175,790   $ 8,936,370  
 
 
 
Liabilities and Shareholders' Equity
Current maturities of long-term debt $ 311,685 $ 35,181
Short-term borrowings 1,082,500 2,091,500
Trade payables and accruals 147,104 219,548
Other current liabilities 121,777 175,649
Liabilities of assets held for sale -   6,309  
Total current liabilities 1,663,066 2,528,187
Long-term debt 2,153,588 1,529,828
Deferred income taxes 1,002,299 671,518
Other noncurrent liabilities 572,056 446,827
Minority interest 409   410  
Total liabilities 5,391,418   5,176,770  
Shareholders' equity:
Common stock, $1 par value 110,270 108,234
Capital in excess of par value 1,734,835 1,607,865
Retained earnings 2,095,579 2,083,718
Accumulated other comprehensive loss (156,312 ) (40,217 )
Shareholders' equity 3,784,372   3,759,600  
    Total liabilities and shareholders' equity   $ 9,175,790     $ 8,936,370  
  Table C
Vulcan Materials Company
and Subsidiary Companies
         
(Amounts in thousands)
Twelve Months Ended
Consolidated Statements of Cash Flows December 31
(Condensed and unaudited)   2008   2007
 
 
Operating Activities
Net earnings $ 228,551 $ 450,910

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation, depletion, accretion and amortization 389,060 271,475
Net gain on sale of property, plant & equipment and businesses (94,227 ) (58,659 )
Contributions to pension plans (3,127 ) (1,808 )
Share-based compensation 19,096 16,942

Decrease in assets before initial effects of business acquisitions and dispositions

7,282 2,835

Increase (decrease) in liabilities before initial effects of business acquisitions and dispositions

(86,511 ) 5,021
Other, net

24,298

  21,428  
Net cash provided by operating activities

484,422

  708,144  
 
 
Investing Activities
Purchases of property, plant and equipment

(400,565

) (483,322 )
Proceeds from sale of property, plant & equipment 25,542 88,939
Proceeds from sale of businesses 225,783 30,560
Payment for businesses acquired, net of acquired cash (84,057 ) (3,297,898 )
Reclassification from cash equivalents to medium-term investments (36,734 ) -
(Increase) decrease in investments and long-term receivables (1,201 ) 5,026
Proceeds from loan on life insurance policies 28,646 -
Withdrawal from nonconsolidated companies, net 1,685 -
Other, net 4,492   2,396  
Net cash used for investing activities

(236,409

) (3,654,299 )
 
 
Financing Activities
Net short-term borrowings (payments) (1,009,000 ) 1,892,600
Payment of short-term debt and current maturities (48,794 ) (2,075 )
Proceeds from issuance of long-term debt, net of discounts 949,078 1,223,579
Debt issuance costs (5,633 ) (9,173 )
Settlements of forward starting swaps (32,474 ) (57,303 )
Purchases of common stock - (4,800 )
Proceeds from issuance of common stock 55,072 -
Dividends paid (214,783 ) (181,315 )
Proceeds from exercise of stock options 24,602 35,074
Excess tax benefits from share-based compensation 9,340 29,220
Other, net (115 ) 6  
Net cash provided by (used for) financing activities (272,707 ) 2,925,813  
 
Net decrease in cash and cash equivalents (24,694 ) (20,342 )
Cash and cash equivalents at beginning of year 34,888   55,230  
Cash and cash equivalents at end of year   $ 10,194     $ 34,888  
  Table D
Segment Financial Data and Unit Shipments
 
        (Amounts in thousands, except per unit data)
Three Months Ended   Twelve Months Ended
December 31 December 31
2008   2007 2008   2007
Total Revenues    

Aggregates(a)

$ 527,205 $ 609,440 $ 2,404,474 $ 2,445,545

Asphalt mix and Concrete(b)

268,511 232,179 1,201,191 765,884

Cement(c)

20,614 14,172 106,468 14,172
Intersegment sales (59,807 ) (48,601 ) (259,052 ) (135,468 )
Total net sales 756,523 807,190 3,453,081 3,090,133
Delivery revenues 42,676   49,700   198,357   237,654  
Total revenues $ 799,199   $ 856,890   $ 3,651,438   $ 3,327,787  
 
Gross Profit
Aggregates $ 127,618 $ 192,282 $ 657,566 $ 828,703
Asphalt mix and Concrete 18,426 28,801 74,463 122,200
Cement 3,146   -   17,683   -  
Total gross profit $ 149,190   $ 221,083   $ 749,712   $ 950,903  
 
Unit Shipments
Aggregates
Customer tons 40,209 52,879 188,344 219,237

Internal tons(d)

3,302   3,547   15,908   11,989  
Aggregates - tons 43,511   56,426   204,252   231,226  
 
Asphalt mix - tons 2,026 2,630 9,535 10,535
Ready-mixed concrete - cubic yards 1,352 971 6,350 2,584
 
Cement
Customer tons 117 80 595 80

Internal tons(d)

87   62   444   62  
Cement - tons 204   142   1,039   142  
 
Average Unit Sales Price (including internal sales)

Aggregates (freight-adjusted)(e)

$ 9.91 $ 9.37 $ 9.98 $ 9.35
Asphalt mix $ 62.08 $ 48.89 $ 55.94 $ 48.47
Ready-mixed concrete $ 97.76 $ 94.93 $ 97.78 $ 95.56
Cement $ 95.11 $ 93.85 $ 96.75 $ 93.85
 
 
(a) Includes crushed stone, sand and gravel, sand, other aggregates, as well as transportation and service revenues associated with the aggregates business.
 
(b) Includes asphalt mix, ready-mixed concrete, concrete block, precast and prestressed concrete, as well as building materials purchased for resale.
 
(c) Includes cement and calcium products.
 
(d) Represents tons shipped primarily to our downstream operations (e.g., asphalt mix and ready-mixed concrete). Sales from internal shipments are eliminated in net sales presented above and in the accompanying Condensed Consolidated Statements of Earnings.
 
(e) Freight-adjusted sales price is calculated as total sales dollars (internal and external) less freight to remote distribution sites divided by total sales units (internal and external).
  Table E
Supplemental Cash Flow Information
               
Supplemental information referable to the Condensed Consolidated Statements of Cash Flows for the Twelve Months Ended December 31 is summarized below (amounts in thousands):
 
                  2008   2007
 
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest, net of amount capitalized

$ 179,880

$ 41,933
Income taxes 91,544 132,697
 
Supplemental Schedule of Noncash Investing and Financing Activities
Liabilities assumed in business acquisitions 2,024 588,184
Accrued liabilities for purchases of property, plant and equipment 22,974 32,065
Carrying value of noncash assets and liabilities exchanged 42,974 -
Debt issued for purchases of property, plant and equipment 389 19
Proceeds receivable from exercise of stock options 325 152
Fair value of stock issued in business acquisitions 25,023 1,436,487
        Table F
               
Reconciliation of Non-GAAP Performance Measures
 
(Amounts in thousands, except per share data)
 
Three Months Ended Twelve Months Ended
December 31 December 31
2008   2007 2008   2007
 
GAAP earnings from continuing operations before income taxes $ 20,831 $ 117,463 $ 327,722 $ 667,502

Gain on sale of California real estate, net(1)

- 943 - (40,023 )

Gain on sale of required divestitures, net(2)

- - (73,847 ) -

Gain from adjustment in the carrying value of the ECU earn-out(3)

- - -   (1,929 )

Earnings from continuing operations before income taxes, as adjusted(5)

$ 20,831 $ 118,406 $ 253,875   $ 625,550  
 
 
GAAP diluted earnings per share from continuing operations $ 0.14 $ 0.83 $ 2.08 $ 4.66

After-tax gain per diluted share resulting from sale of California real estate, net(1)

- 0.01 - (0.24 )

After-tax gain per diluted share resulting from sale of required divestitures, net(2)

- - (0.40 ) -

After-tax gain per diluted share resulting from the adjustment in the carrying value of the ECU earn-out(3)

- - - (0.01 )

Income tax expense on divested Florida Rock assets(4)

- - 0.06   -  

Earnings per share from continuing operations, net of tax, as adjusted(5)

$ 0.14 $ 0.84 $ 1.74   $ 4.41  
 
 
(1) In January 2007, the Company sold approximately 125 acres of vacant land located in San Bernardino County, California resulting in a pretax gain of $43.8 million. The amounts shown above are net of the related incentives ratably applied in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
 
(2) During the second quarter of 2008, the Company recognized a $74 million pretax gain from the sale of an aggregates production facility and a greenfield (undeveloped) aggregates site owned by Vulcan prior to the acquisition of Florida Rock. The Company was required to divest these assets as a condition for approval by the Antitrust Division of the U.S. Department of Justice of our acquisition of Florida Rock.
 
(3) In June 2005, the Company sold substantially all the assets of its Chemicals business, known as Vulcan Chemicals, to a subsidiary of Occidental Chemical Corporation, Basic Chemicals. Subject to certain conditions as defined in a separate earn-out agreement, Basic Chemicals was required to make payments based on ECU and natural gas prices during the five-year period beginning July 1, 2005. In September 2007, the Company received the final payment under the ECU earn-out of $22.1 million, bringing cumulative cash receipts to the $150 million cap. The ECU earn-out was accounted for as a derivative instrument; accordingly, it was reported at fair value. The amount presented in the table above for 2007 reflects the change to the fair value of the ECU derivative, which was recorded within continuing operations pursuant to SAB Topic 5:Z:5.
 
(4) On November 16, 2007, the Company acquired 100% of the outstanding common stock of Florida Rock Industries, Inc. In connection with the acquisition, the Company was required by the Antitrust Division of the U.S. Department of Justice to divest of certain Florida Rock and Vulcan assets. For book purposes, the Florida Rock assets were recorded at their estimated fair values through purchase accounting, including approximately $18 million in nondeductible goodwill. As a result, there was no pretax gain or loss recognized on the sale of these assets. However, Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” prohibits recognizing a deferred tax liability related to goodwill for which amortization is not deductible for tax purposes. Therefore, the income tax related to the gain associated with the goodwill at these sites could not be recognized as a deferred tax liability through purchase accounting, but rather was recognized as a current charge to income tax expense.
 
(5) The Company prepares and reports its financial statements in accordance with GAAP. Internally, management monitors the operating performance of its Construction Materials business using non-GAAP metrics similar to those above. These non-GAAP measures exclude the effects of the items described more fully above.
 
In Management's opinion, these non-GAAP measures are important indicators of the ongoing operations of our Construction Materials business. These measures provide better comparability between reporting periods because they exclude items that may not be indicative of or are unrelated to our core business and provide a better baseline for analyzing trends in our core operations. The Company does not, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company believes the disclosure of the effects of these items increases the reader's understanding of the underlying performance of the business and that such non-GAAP financial measures provide investors with an additional tool to evaluate our financial results and assess our prospects for future performance.
Table G
             
Reconciliation of Non-GAAP Measures
EBITDA and Cash Earnings Reconciliations
 
(Amounts in thousands)
Three Months Ended Twelve Months Ended
December 31 December 31
          2008   2007   2008   2007
 
Reconciliation of Net Cash Provided by Operating Activities to EBITDA and Cash Earnings
 
 
Net cash provided by operating activities

$ 170,206

$ 286,830

$ 484,422

$ 708,144

Changes in operating assets and liabilities before initial effects of business acquisitions and dispositions

(28,428 ) (113,387 ) 79,229 (7,856 )
Other items, net

(29,395

) (8,426 )

53,960

22,097
Discontinued operations, net of tax 661 1,527 2,449 12,176
Income tax expense 5,357 31,324 96,722 204,416
Interest expense, net 46,081   23,453   169,687   41,593  
 
EBITDA $ 164,482   $ 221,321   $ 886,469   $ 980,570  

Interest income (expense), net

(46,081 ) (23,453 ) (169,687 ) (41,593 )
Current taxes 1,578   (40,707 ) (92,346 ) (199,930 )
Cash earnings $ 119,979   $ 157,161   $ 624,436   $ 739,047  
 
Reconciliation of Operating Earnings to EBITDA and Cash Earnings
 
Operating earnings $ 68,235 $ 145,738 $ 501,766 $ 714,417
Other income (expense), net (1,323 ) (4,822 ) (4,357 ) (5,322 )
EBIT 66,912 140,916 497,409 709,095

Depreciation, depletion, accretion and amortization from continuing operations

97,570   80,405   389,060   271,475  
 
EBITDA $ 164,482   $ 221,321   $ 886,469   $ 980,570  

Interest income (expense), net

(46,081 ) (23,453 ) (169,687 ) (41,593 )
Current taxes 1,578   (40,707 ) (92,346 ) (199,930 )
Cash earnings $ 119,979   $ 157,161   $ 624,436   $ 739,047  
                       
 

EBITDA and Earnings Per Share (EPS) Bridge

EBITDA

EPS

(millions)

(diluted)
 

Fourth Quarter Continuing Operations - 2007 Actual

$ 221 $ 0.83
Increase / (Decrease) due to:

Aggregates:

Volumes

(88

) (0.64 )
Selling prices 20 0.14
Costs

11

0.06
Asphalt mix and Concrete

(5

) (0.01 )
Cement 7 0.05
Selling, administrative and general expenses:
- Contribution of property (5 ) (0.03 )
- All other (6 ) (0.04 )
Gain on sale of PP&E (contribution of property) 5 0.03
Depreciation, depletion, accretion and amortization n/a (0.10 )
Interest expense, net n/a (0.13 )
Additional shares outstanding and other

4

  (0.02 )
 
Fourth Quarter Continuing Operations - 2008 Actual $ 164   $ 0.14  
                       
 
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. Cash earnings adjusts EBITDA for net interest and current taxes. These financial metrics are often used by the investment community as indicators of a company’s ability to incur and service debt. They are not defined by Generally Accepted Accounting Principles (GAAP); thus, it should not be considered as an alternative to net cash provided by operating activities, operating earnings, or any other liquidity or performance measure defined by GAAP.
 

These metrics are presented for the convenience of investment professionals that use such metrics in their analysis and to provide the Company's shareholders an understanding of metrics management uses to assess performance and to monitor our cash and liquidity positions. Due to the significant write-up of the assets acquired in the November 2007 acquisition of Florida Rock resulting from the application of SFAS 141, Business Combinations, Vulcan’s management internally uses EBITDA, cash earnings and other such measures to assess the operating performance of the acquired Florida Rock assets and consolidated company. Vulcan’s management does not use these metrics as a measure to allocate resources internally.

Source: Vulcan Materials Company

Vulcan Materials Company
Investor Contact:
Mark Warren, 205-298-3220
or
Media Contact:
David Donaldson, 205-298-3220

Contact

Vulcan Materials Company
Corporate Office
1200 Urban Center Drive
P.O. Box 385014
Birmingham, AL 35242

Tel: (205) 298-3000