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Vulcan Materials
2018 Annual Report

Vulcan Announces Third Quarter Results

11/02/09
Cost management and continued focus on improving margins help position the Company for significant participation in U.S. economic recovery

BIRMINGHAM, Ala., Nov. 2 /PRNewswire-FirstCall/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, announced results today for the third quarter ended September 30, 2009.

Third Quarter Summary and Comparisons with the Prior Year

 -- Net earnings were $54 million, or $0.43 per diluted share, including $0.38 per diluted share from continuing operations. -- Aggregates shipments declined 20 percent, reducing earnings $0.46 per diluted share. -- Aggregates pricing increased 2.4 percent. -- Aggregates cash fixed costs decreased 12 percent. -- Asphalt margins improved. -- Year-to-date cash provided by operating activities was $355 million compared with $278 million in the prior year. -- EBITDA as a percent of net sales was 25 percent versus 23 percent in the prior year. 

Commenting for the Company, Don James, Vulcan's Chairman and Chief Executive Officer, stated, "Our employees continue to run the business in a cost-efficient manner. Although sales volumes in the third quarter were 19 to 29 percent lower than the prior year for our key product lines, overall gross profit as a percent of net sales equaled the prior year's third quarter. Gross profit as a percent of net sales, excluding depreciation, depletion and amortization, increased to 34 percent from 31 percent in last year's third quarter. Our ongoing focus on managing costs and improving productivity will enhance our ability to increase earnings as the economy recovers and construction activity improves.

"Economic stimulus funds of $27 billion designated for highway projects are working their way into the U.S. economy. While 73 percent of these funds had been obligated to specific projects by the end of September, only $2.4 billion of these stimulus funds had been paid to contractors for construction work performed. Vulcan-served states generally have obligated funds for new highway projects at the same pace as other states; however, our states have lagged the rest of the country when it comes to starting stimulus-related construction. At the end of September, our states had spent less than 7 percent of their available stimulus funds for work performed compared to 12 percent for the rest of the country. These differences in spending patterns between Vulcan-served states and other states are due in part to the types of projects planned."

Third Quarter Operating Results Commentary

Third quarter earnings for aggregates declined as the impact of lower shipments more than offset the earnings benefit from improved prices, lower unit costs for diesel fuel and cost control measures. Aggregates shipments declined 20 percent from the prior year due to weak demand and wet weather in certain key markets. Lower aggregates volumes reduced third quarter EBITDA by approximately $69 million versus the prior year. The increase in the average selling price for aggregates reflects wide variations across Vulcan-served markets. Many major markets realized price improvement from the prior year well above the 2.4 percent average, while markets in the West and in Florida reported year-over-year declines in average selling prices.

Stimulus projects in most Vulcan-served states were slow to get underway due in part to the types of projects being implemented by state transportation agencies. In Florida for example, most stimulus dollars are going to fund projects that will add lane capacity. These projects require more time for design and permitting. As a result, less than one percent of Florida's highway stimulus dollars had been spent by the end of September. Illinois and Tennessee were exceptions, with pavement improvement projects comprising most of the shovel-ready work in those states, resulting in relatively higher levels of stimulus-funded spending during the third quarter. As a result, aggregates sales volumes in most of the markets in these two states outperformed other Vulcan-served markets.

Throughout the recession, the Company has rationalized production, reduced operating hours, streamlined the workforce and effectively managed spending, thereby offsetting some of the cost impact related to lower volumes. Aggregates cash fixed costs were 12 percent lower than in the prior year's third quarter. In addition, the unit cost for diesel fuel decreased 43 percent from the prior year's third quarter, increasing earnings $0.08 per diluted share.

Asphalt earnings in the third quarter were higher than last year's third quarter as material margins improved due to lower costs for liquid asphalt, more than offsetting the earnings effect of a 19 percent decline in asphalt volumes. Concrete earnings decreased from the prior year's third quarter due primarily to lower volumes.

Cement earnings declined from last year's third quarter due to the effects of weaker sales volumes, slightly offset by lower energy costs.

Selling, administrative and general expenses in the third quarter were $80 million, as compared to $76 million in the prior year. The year-over-year increase was due to project costs related to the replacement of legacy IT systems and costs associated with reducing employment levels.

In the third quarter, the Company recorded a tax benefit of $6 million, compared with a tax expense in the prior year of $21 million. An adjustment to the current quarter's income tax provision was required so that the year-to-date provision reflects the expected annual tax rate.

All results are unaudited.

Outlook Highlights and Commentary

Commenting on the Company's outlook, Mr. James stated, "The construction environment remains challenging, reflecting continued weak private construction activity and uncertainty surrounding the timing and amount of a new multi-year federal highway program. Given the failure of Congress to pass a fully-funded extension of SAFETEA-LU, the previous highway bill that expired on September 30, transportation construction activity from the regular multi-year federal highway program is uncertain.

"Despite these challenges, we believe the cost management actions we have taken, along with our disciplined approach to pricing, and the improved liquidity and financial flexibility we have achieved, will enable us to participate fully in the economic recovery. Plant operating costs and overhead expenses are being tightly managed as we continue to adjust our cost structure to match the weak demand environment. Our aggregates production in the third quarter was lower than our shipments, reducing inventory and conserving cash. As we have throughout this downturn, we continue to aggressively manage controllable costs and to focus on cash margins and earnings.

"Debt reduction and achieving target debt ratios remain a priority use of cash flows. Through the first nine months of 2009, we reduced total debt by approximately $700 million. In the fourth quarter, our cash generation should be enhanced by a seasonal reduction in working capital requirements. For the full year, we now expect capital spending to be approximately $140 million, down from $175 million projected at the end of the second quarter and down sharply from the $353 million spent in 2008.

"Our outlook for aggregates demand in the fourth quarter now reflects further weakness expected in private construction as well as reduced highway construction activity. Our revised outlook for highway construction activity in the fourth quarter is due to the varied timing of spending of stimulus-related funding, the uncertainty regarding timing and duration of an extension of the federal highway bill as well as the lack of visibility regarding timing for ultimate passage of a new multi-year bill. Additionally, since our products are produced and consumed outside, weather can be a contributing factor to the timing of shipments, particularly in the fourth quarter. We expect higher selling prices for aggregates in 2009 to partially offset the earnings effects of lower volumes.

"Looking at demand for our products beyond 2009, Vulcan should benefit from our aggregates-focused strategy that is complemented by our asphalt and concrete operations in certain markets. Approximately $50 to $60 billion of stimulus-related construction has been identified that could use our products, including $27 billion for highways and bridges. Through the first nine months of 2009, highway construction awards have been buoyed by stimulus-related funding. Through September, contract awards for highways have increased 5 percent from the prior year and state departments of transportation and local governments continued to make good progress obligating stimulus dollars for transportation projects. In September, the Federal Highway Administration reported that approximately 4,000 stimulus-funded projects were under construction, involving $11 billion of stimulus funds. In addition, there are $8 billion of projects for which funds have been obligated but work has not yet begun. As of the end of September, approximately five months remain for each state to obligate the remaining federal stimulus funds apportioned for highways. Afterwards, unobligated funds must be returned to the Federal Highway Administration for redistribution.

"Our expectations for growth in demand for our products from stimulus-related construction activity, as well as improvement in residential construction, point toward growth in earnings. Our available production capacity, improved cost structure, and ongoing efforts to improve cash margins, position Vulcan to participate efficiently and effectively in the supply of material for stimulus projects and economic recovery."

Correction of Prior Period Financial Statements

During the third quarter of 2009, we completed a comprehensive analysis of our deferred income tax balances and concluded that our deferred income tax liabilities were overstated. These errors occurred in periods prior to 2009 and are not material to previously issued financial statements. The correction of these errors is reflected in our condensed consolidated balance sheets as of December 31, 2008 and September 30, 2008, and had no impact on our condensed consolidated Statements of Earnings or our condensed consolidated Statements of Cash Flows for any periods presented. A more detailed discussion of these errors will be included in our Quarterly Report on Form 10-Q for the period ended September 30, 2009.

Conference Call

Vulcan will host a conference call at 10:00 a.m. CST on November 3, 2009. Investors and other interested parties in the U.S. may access the teleconference live by calling 888.680.0860 approximately 10 minutes before the scheduled start. International participants can dial 617.213.4852. The access code is 18835229. 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 November 10, 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, including the federal stimulus funds; 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; healthcare costs; the amount of long-term debt and interest expense incurred by the Company; volatility in pension plan asset values which may require cash contributions to the pension plans; 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 impact of environmental clean-up costs and other liabilities relating to previously divested businesses; the Company's ability to secure and permit aggregates reserves in strategically located areas; the Company's ability to manage and successfully integrate acquisitions; the impact of the global financial crisis on our business and financial condition and access to the capital markets; 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) Consolidated Statements of Three Months Ended Nine Months Ended Earnings September 30 September 30 ------------------ ------------------ (Condensed and unaudited) 2009 2008 2009 2008 ------------------------- ------------------ ------------------ Net sales $738,664 $958,839 $1,987,939 $2,696,558 Delivery revenues 39,528 54,510 112,407 155,681 --------- --------- --------- --------- Total revenues 778,192 1,013,349 2,100,346 2,852,239 Cost of goods sold 584,184 757,993 1,610,018 2,096,036 Delivery costs 39,528 54,510 112,407 155,681 --------- --------- --------- --------- Cost of revenues 623,712 812,503 1,722,425 2,251,717 --------- --------- --------- --------- Gross profit 154,480 200,846 377,921 600,522 Selling, administrative and general expenses 79,558 76,364 238,629 253,721 Gain on sale of property, plant & equipment and businesses, net 7,496 2,247 10,653 86,690 Other operating income (expense), net 286 1,574 (2,885) 40 --------- --------- --------- --------- Operating earnings 82,704 128,303 147,060 433,531 Other income (expense), net 2,756 (3,825) 4,578 (3,034) Interest income 433 955 1,914 2,624 Interest expense 43,952 44,579 131,943 126,230 --------- --------- --------- --------- Earnings from continuing operations before income taxes 41,941 80,854 21,609 306,891 Provision (benefit) for income taxes (5,983) 21,038 (9,621) 91,365 --------- --------- --------- --------- Earnings from continuing operations 47,924 59,816 31,230 215,526 Earnings (loss) on discontinued operations, net of tax 6,308 (766) 12,433 (1,788) --------- --------- --------- --------- Net earnings $54,232 $59,050 $43,663 $213,738 ============ ========= ========= ========= ========= Basic earnings (loss) per share: Continuing operations $0.38 $0.54 $0.27 $1.97 Discontinued operations 0.05 - 0.10 (0.02) --------- --------- --------- --------- Net earnings per share $0.43 $0.54 $0.37 $1.95 Diluted earnings (loss) per share: Continuing operations $0.38 $0.54 $0.27 $1.94 Discontinued operations 0.05 (0.01) 0.10 (0.01) --------- --------- --------- --------- Net earnings per share $0.43 $0.53 $0.37 $1.93 ======================== ========= ========= ========= ========= Weighted-average common shares outstanding: Basic 125,361 110,114 116,533 109,565 Assuming dilution 125,859 111,270 117,047 110,837 Cash dividends declared per share of common stock $0.25 $0.49 $1.23 $1.47 Depreciation, depletion, accretion and amortization from continuing operations $99,243 $98,716 $298,158 $291,491 Effective tax rate from continuing operations -14.3% 26.0% -44.5% 29.8% ======================= ========= ========= ========= ========= Table B Vulcan Materials Company and Subsidiary Companies (Amounts in thousands) Consolidated Balance Sheets Sept. 30 Dec. 31 Sept. 30 (Condensed and unaudited) 2009 2008 2008 --------------------------- -------- ------- -------- As Restated As Restated (a) (a) Assets ------ Cash and cash equivalents $46,547 $10,194 $90,969 Medium-term investments 6,803 36,734 36,992 Accounts and notes receivable: Accounts and notes receivable, gross 392,922 365,688 526,933 Less: Allowance for doubtful accounts (9,394) (8,711) (7,738) ---------- ---------- ---------- Accounts and notes receivable, net 383,528 356,977 519,195 Inventories: Finished products 265,422 295,525 294,746 Raw materials 24,565 28,568 33,147 Products in process 5,085 4,475 4,832 Operating supplies and other 36,623 35,743 39,356 ---------- ---------- ---------- Inventories 331,695 364,311 372,081 Deferred income taxes 67,967 71,205 63,370 Prepaid expenses 48,951 54,469 42,938 ---------- ---------- ---------- Total current assets 885,491 893,890 1,125,545 Investments and long-term receivables 31,424 27,998 25,003 Property, plant & equipment: Property, plant & equipment, cost 6,678,317 6,635,873 6,121,159 Less: Reserve for depr., depl. & amort. (2,713,057) (2,480,061) (2,401,074) ---------- ---------- ---------- Property, plant & equipment, net 3,965,260 4,155,812 3,720,085 Goodwill 3,093,979 3,085,468 3,899,517 Other intangible assets 681,087 673,792 157,597 Other assets 105,927 79,664 199,373 ---------- ---------- ---------- Total assets $8,763,168 $8,916,624 $9,127,120 ========== ========== ========== Liabilities and Shareholders' Equity ----------------------------- Current maturities of long-term debt $60,421 $311,685 $344,753 Short-term borrowings 286,357 1,082,500 1,163,500 Trade payables and accruals 141,884 147,104 217,596 Other current liabilities 187,171 121,777 176,974 ---------- ---------- ---------- Total current liabilities 675,833 1,663,066 1,902,823 Long-term debt 2,506,170 2,153,588 2,168,807 Deferred income taxes 896,598 920,475 658,115 Other noncurrent liabilities 599,039 625,743 428,694 ---------- ---------- ---------- Total liabilities 4,677,640 5,362,872 5,158,439 ---------- ---------- ---------- Shareholders' equity: Common stock, $1 par value 125,401 110,270 110,146 Capital in excess of par value 2,342,765 1,734,835 1,724,343 Retained earnings 1,797,036 1,893,929 2,160,731 Accumulated other comprehensive loss (179,674) (185,282) (26,539) ---------- ---------- ---------- Shareholders' equity 4,085,528 3,553,752 3,968,681 ---------- ---------- ---------- Total liabilities and shareholders' equity $8,763,168 $8,916,624 $9,127,120 ===================== ========== ========== ========== (a) The December 31, 2008 and September 30, 2008 balance sheets reflect corrections of errors related to an overstatement of deferred income tax liabilities. Table C Vulcan Materials Company and Subsidiary Companies (Amounts in thousands) Nine Months Ended Consolidated Statements of Cash Flows September 30 (Condensed and unaudited) ---------------------- ------------------------- 2009 2008 ---------------------- Operating Activities -------------------- Net earnings $43,663 $213,738 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion, accretion and amortization 298,158 291,491 Net gain on sale of property, plant & equipment and businesses (11,465) (86,690) Contributions to pension plans (26,793) (2,419) Share-based compensation 21,870 14,383 Excess tax benefits from share-based compensation (1,329) (8,452) Deferred tax provision (26,477) (1,880) Changes in assets and liabilities before initial effects of business acquisitions and dispositions 51,845 (144,694) Other, net 5,350 2,765 -------- -------- Net cash provided by operating activities 354,822 278,242 -------- -------- Investing Activities -------------------- Purchases of property, plant & equipment (94,165) (294,885) Proceeds from sale of property, plant & equipment 6,399 16,797 Proceeds from sale of businesses 16,075 225,783 Payment for businesses acquired, net of acquired cash (36,980) (79,113) Reclassification from cash equivalents to medium-term investments - (36,992) Redemption of medium-term investments 30,590 - Proceeds from loan on life insurance policies - 28,646 Other, net 676 4,785 -------- -------- Net cash used for investing activities (77,405) (134,979) -------- -------- Financing Activities -------------------- Net short-term payments (798,118) (928,000) Payment of short-term debt and current maturities (296,555) (565) Proceeds from issuance of long-term debt, net of discounts 397,660 949,078 Debt issuance costs (3,033) (5,633) Settlements of forward starting swaps - (32,474) Proceeds from issuance of common stock 587,129 55,072 Dividends paid (140,048) (160,816) Proceeds from exercise of stock options 10,958 27,819 Excess tax benefits from share-based compensation 1,329 8,452 Other, net (386) (115) -------- -------- Net cash used for financing activities (241,064) (87,182) -------- -------- Net increase in cash and cash equivalents 36,353 56,081 Cash and cash equivalents at beginning of year 10,194 34,888 -------- -------- Cash and cash equivalents at end of period $46,547 $90,969 =========================================== ======== ======== Table D Segment Financial Data and Unit Shipments (Amounts in thousands, except per unit data) Three Months Ended Nine Months Ended September 30 September 30 ------------------ ----------------- 2009 2008 2009 2008 ------------------ ----------------- Total Revenues Aggregates (a) $532,936 $661,960 $1,432,353 $1,877,269 Asphalt mix and Concrete (b) 243,206 340,678 654,713 932,680 Cement (C) 19,829 25,605 56,423 85,854 Intersegment sales (57,307) (69,404) (155,550) (199,245) ---------- ---------- ---------- ---------- Total net sales 738,664 958,839 1,987,939 2,696,558 Delivery revenues 39,528 54,510 112,407 155,681 ---------- ---------- ---------- ---------- Total revenues $778,192 $1,013,349 $2,100,346 $2,852,239 ========== ========== ========== ========== Gross Profit Aggregates $133,229 $185,175 $323,675 $529,948 Asphalt mix and Concrete 20,730 12,697 55,558 56,037 Cement 521 2,974 (1,312) 14,537 ---------- ---------- ---------- ---------- Total gross profit $154,480 $200,846 $377,921 $600,522 ========== ========== ========== ========== Unit Shipments Aggregates Customer tons 41,090 51,734 108,424 148,135 Internal tons (d) 3,454 3,719 8,895 12,606 ---------- ---------- ---------- ---------- Aggregates - tons 44,544 55,453 117,319 160,741 ========== ========== ========== ========== Asphalt mix - tons 2,336 2,881 5,636 7,510 Ready-mixed concrete - cubic yards 1,191 1,678 3,407 4,998 Cement Customer tons 81 132 204 479 Internal tons (d) 97 115 287 356 ---------- ---------- ---------- ---------- Cement - tons 178 247 491 835 ========== ========== ========== ========== Average Unit Sales Price (including internal sales) Aggregates (freight- adjusted) (e) $10.20 $9.96 $10.27 $10.00 Asphalt mix $52.38 $58.68 $53.50 $54.28 Ready-mixed concrete $96.15 $96.89 $97.40 $97.78 Cement $93.31 $96.76 $96.17 $97.15 (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 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 nine months ended September 30 is summarized below (amounts in thousands): 2009 2008 -------- -------- Supplemental Disclosure of Cash Flow Information ------------------------------------------------- Cash paid (refunded) during the period for: Interest, net of amount capitalized $109,586 $109,724 Income taxes (9,706) 92,554 Supplemental Schedule of Noncash Investing and Financing Activities ---------------------------------------------- Liabilities assumed in business acquisitions - 2,035 Accrued liabilities for purchases of property & equipment 13,436 29,883 Note received from sale of businesses 1,450 - Carrying value of noncash assets and liabilities exchanged - 42,974 Debt issued for purchases of property, plant & equipment 1,984 389 Proceeds receivable from exercise of stock options - 8,184 Proceeds receivable from issuance of common stock 1,712 - Fair value of stock issued in business acquisitions - 25,023 Table F Reconciliation of Non-GAAP Measures EBITDA and Cash Earnings Reconciliations (Amounts in thousands) Three Months Ended Nine Months Ended September 30 September 30 ------------------ ----------------- 2009 2008 2009 2008 ------------------ ----------------- Reconciliation of Net Cash Provided by Operating Activities to EBITDA and Cash Earnings Net cash provided by operating activities $185,420 $144,190 $354,822 $278,242 Changes in operating assets and liabilities before initial effects of business acquisitions and dispositions (87,695) 18,129 (51,845) 144,694 Other net operating items (providing) using cash 55,750 (4,553) 38,844 82,293 (Earnings) loss on discontinued operations, net of tax (6,308) 766 (12,433) 1,788 Provision (benefit) for income taxes (5,983) 21,038 (9,621) 91,365 Interest expense, net 43,519 43,624 130,029 123,606 Less: Depreciation, depletion, accretion and amortization (99,243) (98,716) (298,158) (291,491) -------- -------- -------- -------- EBIT 85,460 124,478 151,638 430,497 Plus: Depreciation, depletion, accretion and amortization 99,243 98,716 298,158 291,491 -------- -------- -------- -------- EBITDA $184,703 $223,194 $449,796 $721,988 Less: Interest expense, net (43,519) (43,624) (130,029) (123,606) Current taxes (26,526) (23,918) (16,999) (93,924) -------- -------- -------- -------- Cash earnings $114,658 $155,652 $302,768 $504,458 ======== ======== ======== ======== Reconciliation of Operating Earnings to EBITDA and Cash Earnings Operating earnings $82,704 $128,303 $147,060 $433,531 Other income (expense), net 2,756 (3,825) 4,578 (3,034) -------- -------- -------- -------- EBIT 85,460 124,478 151,638 430,497 Plus: Depreciation, depletion, accretion and amortization 99,243 98,716 298,158 291,491 -------- -------- -------- -------- EBITDA $184,703 $223,194 $449,796 $721,988 Less: Interest expense, net (43,519) (43,624) (130,029) (123,606) Current taxes (26,526) (23,918) (16,999) (93,924) -------- -------- -------- -------- Cash earnings $114,658 $155,652 $302,768 $504,458 ======== ======== ======== ======== EBITDA and Earnings Per Share (EPS) Bridge EBITDA EPS (millions) (diluted) ---------- --------- Third Quarter Continuing Operations - 2008 Actual $223 $0.54 Increase / (Decrease) due to: Aggregates: Volumes (69) (0.46) Selling prices 11 0.07 Costs 7 0.05 Asphalt mix and Concrete 8 0.05 Cement (2) (0.01) Selling, administrative and general expenses (3) (0.02) Depreciation, depletion, accretion and amortization n/a - Interest expense, net n/a - Tax rate differential and discrete items n/a 0.15 Additional shares outstanding and other 10 0.01 ------ ------ Third Quarter Continuing Operations - 2009 Actual $185 $0.38 ====== ====== 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. Vulcan's management internally uses EBITDA, cash earnings and other such measures to assess the operating performance of its' various business units and the consolidated company. Vulcan's management does not use these metrics as a measure to allocate resources internally. Table G Reconciliation of Non-GAAP Measures Adjusted Gross Profit Margin and EBITDA Margin (Amounts in thousands) Three Months Ended September 30 ---------------------- 2009 2008 ---------------------- Gross Profit Margin in Accordance with Generally Accepted Accounting Principles Gross profit $154,480 $200,846 Net sales $738,664 $958,839 Gross profit margin 20.9% 20.9% Gross Profit Margin Adjusted for Depreciation, Depletion, and Amortization Gross profit $154,480 $200,846 Plus: Depreciation, depletion and amortization included in cost of goods sold 96,002 95,048 -------- -------- Gross profit adjusted for depreciation, depletion and amortization $250,482 $295,894 ======== ======== Net sales $738,664 $958,839 Gross profit margin adjusted for depreciation, depletion and amortization 33.9% 30.9% Operating Margin in Accordance with Generally Accepted Accounting Principles Operating earnings $82,704 $128,303 Net sales $738,664 $958,839 Operating margin 11.2% 13.4% EBITDA Margin EBITDA $184,703 $223,194 Net sales $738,664 $958,839 EBITDA margin 25.0% 23.3% Gross profit margin adjusted for depreciation, depletion and amortization and EBITDA margin are non-GAAP measures. Gross profit margin and operating margin are considered the most comparable financial measures prepared in accordance with generally accepted accounting principles. Adjusted gross profit margin and EBITDA margin 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. Vulcan's management internally uses metrics to measure or approximate cash earnings or margins, including adjusted gross profit metrics, EBITDA and associated margins, cash earnings and other such measures to assess the operating performance of its' various business units and the consolidated company. Vulcan's management does not use these metrics as a measure to allocate resources internally. 

SOURCE Vulcan Materials Company

Investors: Mark Warren, +1-205-298-3220; or Media: David Donaldson, +1-205-298-3220

Contact

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

Tel: (205) 298-3000