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Vulcan Materials
2020 Annual Report

Vulcan Announces Second Quarter 2011 Results

08/02/11

BIRMINGHAM, Ala., Aug. 2, 2011 /PRNewswire via COMTEX/ --

Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates announced results today for the second quarter ended June 30, 2011.

Second Quarter Summary and Comparisons with the Prior Year

  • The average unit sales price increased in all major product lines.
    • Freight-adjusted aggregates prices increased 2.5 percent, reflecting improved pricing across many markets;
    • Asphalt mix prices increased 8 percent, leading to improved unit materials margin despite higher liquid asphalt costs;
    • Ready-mixed concrete prices increased 8 percent with resultant improvement in unit materials margin; and
    • Cement prices increased 2 percent.
  • Aggregates shipments declined 9 percent, reflecting the impact of severe storms in April across many of the Company's markets. Markets in California, Virginia and Maryland realized increased shipments due primarily to strength in infrastructure projects.
  • Unit costs for diesel fuel and liquid asphalt increased 43 percent and 17 percent, respectively, reducing pretax earnings by $19 million.
  • Selling, administrative and general (SAG) expenses were $7 million lower than the prior year.
  • Earnings from continuing operations were a loss of $7 million, or $0.05 per diluted share, compared to a loss of $23 million, or $0.18 per diluted share, in the prior year.
    • The current year's loss includes a $0.12 per diluted share charge related to the Company's tender offer and debt retirement in June;
    • The prior year's loss includes a $0.21 per diluted share charge due to the settlement of a lawsuit in Illinois; and
    • Excluding these specific charges, earnings from continuing operations were $9 million, or $0.07 per diluted share, compared to $5 million, or $0.03 per diluted share in the prior year.

Commenting for the Company, Don James, Chairman and Chief Executive Officer, stated, "Business conditions remained challenging in the second quarter due to weaker than expected demand, as well as to April's severe weather, flooding throughout the quarter in our river markets and a significant increase in diesel fuel costs. However, we are encouraged by the improved pricing in the second quarter in each of our segments. Cost control remains a priority - whether it's lowering plant costs or reducing SAG expenses. In the second quarter, SAG costs decreased 9 percent from the prior year and our aggregates operations continued to enhance production efficiency. These trends in pricing and cost control are consistent with our expectations."

Second Quarter Operating Results and Commentary

Aggregates segment earnings were $103 million versus $122 million in the prior year's second quarter due to lower shipments. A number of Vulcan-served markets, most notably markets in the southeast and along the Mississippi River, experienced disruptions in construction activity due to flooding and unusually severe weather. However, aggregates shipments increased versus the prior year's second quarter in California, Virginia, and Maryland due primarily to stronger demand from public infrastructure projects. More specifically, aggregates shipments in California were up more than 20 percent versus the prior year's second quarter due to some large project work. The average sales price for aggregates increased 2.5 percent from the prior year due to improvements in many markets. The earnings effect of higher pricing offset the impact of a sharp increase in the unit cost of diesel fuel.

Asphalt mix segment earnings were $8 million in the second quarter versus $7 million in the prior year's second quarter. Average sales price for asphalt mix increased approximately 8 percent, more than offsetting the earnings effect of higher liquid asphalt costs and leading to higher unit materials margin versus the prior year. Asphalt mix volume increased 3 percent from the prior year's second quarter.

The Concrete segment reported a loss of $9 million versus a loss of $6 million in the prior year's second quarter. Ready-mixed concrete average sales price increased 8 percent from the prior year's second quarter leading to improved unit materials margin. However, the improved materials margin effect was more than offset by a 12 percent decline in volume. Cement segment earnings in the second quarter were a loss of $1 million, flat with the prior year.

SAG expenses in the second quarter were $7 million lower than the prior year's level. This year-over-year decrease resulted from lower spending in most major categories, including the Company's legacy IT replacement project.

Net interest expense in the second quarter was $71 million versus $44 million in the prior year due specifically to $26.5 million of charges incurred in connection with the tender offer and debt retirement completed in June. These charges are due primarily to the difference between the purchase price and par value of the senior unsecured notes purchased in the tender offer and the noncash write-off of previously deferred issuance costs related to the debt retired in June.

All results are unaudited.

Outlook Highlights and Commentary

  • Aggregates segment earnings are expected to increase in 2011 versus the prior year.
    • Second half aggregates volume is expected to be 2 to 6 percent greater than in the second half of 2010, due in part to large project work in California, Virginia and Georgia;
    • Full year aggregates pricing is anticipated to be 1 to 3 percent higher, reflecting continued improvement across many markets; and
    • Focus on production efficiency gains and cost control measures will continue.
  • Improved materials margin in asphalt mix should lead to growth in 2011 segment earnings.
  • Concrete segment earnings are expected to improve somewhat in 2011 due to better pricing.
  • The Cement segment is expected to report a modestly higher loss in 2011 than in 2010.
  • SAG costs in the second half of 2011 are anticipated to be lower than in the prior year's second half with full year expenses of approximately $305 million versus $328 million in the prior year.
  • Planned 2011 capital spending of $100 million compares to the previous estimate of $125 million and the $86 million spent in 2010.
  • Highway construction activity in 2011 is supported by strong growth in contract awards in 2010 and early 2011 and increased stimulus spending in key Vulcan states that were slower to start work on stimulus funded projects.
  • Private construction activity remains hampered by uncertainty regarding the economic recovery.
    • Multi-family construction is increasing due to growth in population and households while single-family construction remains soft due to a weak job market and continuation of the problems that led to the downturn in the housing market; and
    • Nonresidential construction is expected to bottom in 2011.

Commenting on the Company's outlook for the remainder of the year, Mr. James stated, "Trailing twelve month contract awards for highways in Vulcan-served states, including awards for federal, state and local projects, were up 5 percent in 2010. In 2011, contract awards for highways in our states, after growing modestly in the first quarter, declined in the second quarter due mainly to the uncertainty regarding reauthorization of the federal highway program. Anticipated large project work in certain key markets provides additional support for our outlook for growth in aggregates shipments in the second half of 2011.

"Private construction remains at low levels with indications of improvement in certain categories. In residential construction, single-family housing starts have shown few signs of breaking out of the flat-to-downward trend of recent months. Multi-family starts, on the other hand, have increased sharply since late last year. In Vulcan-served states, multi-family starts have increased 24 percent versus 4 percent in other states - evidence that favorable demographics can provide support for construction activity even with weak economic conditions. Overall, we now expect shipments into residential construction to approximate the prior year.

"While private nonresidential construction remains weak, the rate of decline in contract awards has slowed considerably. Trailing twelve month contract awards for the manufacturing sector have been strong since late last year while awards for the retail and office sectors have increased modestly in 2011. Contract awards for the institutional and government sectors have continued to decline in 2011. Overall, the start of a sustained recovery in nonresidential construction will be influenced by employment growth, capacity utilization, and business investment and lending activity.

"While we are maintaining our aggregates volume growth expectations of 2 to 6 percent for the second half of 2011, we are reducing our full year volume forecast to flat to down 2 percent. Because of uncertainty regarding reauthorization of the federal highway program and lingering softness in single-family residential and nonresidential construction, we anticipate that most of the approximately 4 million tons aggregates volume shortfall in the second quarter will not be recovered in the second half.

"We are seeing some indications of relative stability in demand that should benefit pricing for our products going forward. However, the earnings effect of the increase in aggregates pricing is expected to be offset by the energy-related cost pressures expected throughout the remainder of the year.

"In asphalt mix, the average sales price continues to improve leading to higher unit materials margin despite the higher cost of liquid asphalt. We expect this trend to continue throughout the remainder of 2011. Overall, we expect asphalt earnings to increase from the prior year, reflecting a modest increase in volume as well as improved unit materials margin.

"In concrete, volume is expected to decrease from the prior year due to continuing softness in private construction, particularly single-family construction. However, we expect the loss reported in 2010 to narrow somewhat due mostly to higher pricing as a result of relatively more stable demand."

Conference Call

Vulcan will host a conference call at 10:00 a.m. CDT on August 3, 2011. Investors and other interested parties in the U.S. may access the teleconference live by calling 866.783.2138 approximately 10 minutes before the scheduled start. International participants can dial 857.350.1597. The access code is 39399653. A live webcast will be available via the Internet through Vulcan's home page at http://www.vulcanmaterials.com/. The conference call will be recorded and available for replay approximately two hours after the call through August 10, 2011.

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; the timing and amount of federal, state and local funding for infrastructure; the lack of a multi-year federal highway funding bill with an automatic funding mechanism; the reluctance of state departments of transportation to undertake highway projects without a reliable method of federal funding; the impact of the global economic recession on our business and financial condition and access to capital markets; changes in the level of spending for private residential and 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 of our 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 the Company; changes in interest rates; the impact of our below investment grade debt rating on our cost of capital; volatility in pension plan asset values which may require cash contributions to the pension plans; 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 potential impact of future legislation or regulations relating to climate change or greenhouse gas emissions or the definition of minerals; 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


Six Months Ended


Consolidated Statements of Earnings


June 30


June 30


(Condensed and unaudited)


2011


2010


2011


2010














Net sales


$ 657,457


$ 692,758


$ 1,113,773


$ 1,157,293


Delivery revenues


44,514


43,394


75,398


72,122


Total revenues


701,971


736,152


1,189,171


1,229,415














Cost of goods sold


556,617


570,423


1,020,039


1,034,063


Delivery costs


44,514


43,394


75,398


72,122


Cost of revenues


601,131


613,817


1,095,437


1,106,185














Gross profit


100,840


122,335


93,734


123,230


Selling, administrative and general expenses


75,893


83,376


153,408


169,872


Gain on sale of property, plant & equipment











and businesses, net


2,919


1,362


3,373


49,734


Recovery (charge) from legal settlement


-


(40,000)


25,546


(40,000)


Other operating income (expense), net


(4,378)


889


(6,940)


1,347


Operating earnings (loss)


23,488


1,210


(37,695)


(35,561)














Other nonoperating income (expense), net


(20)


(1,233)


1,361


144


Interest expense, net


70,911


43,723


113,161


87,016


Loss from continuing operations











before income taxes


(47,443)


(43,746)


(149,495)


(122,433)


Benefit from income taxes


(40,341)


(21,231)


(77,771)


(55,444)


Loss from continuing operations


(7,102)


(22,515)


(71,724)


(66,989)


Earnings (loss) on discontinued operations, net of tax


(1,037)


(1,477)


8,852


4,250


Net loss


$ (8,139)


$ (23,992)


$ (62,872)


$ (62,739)


Basic earnings (loss) per share:











Continuing operations


$ (0.05)


$ (0.18)


$ (0.55)


$ (0.53)



Discontinued operations


(0.01)


(0.01)


0.06


0.04



Net loss per share


$ (0.06)


$ (0.19)


$ (0.49)


$ (0.49)














Diluted earnings (loss) per share:











Continuing operations


$ (0.05)


$ (0.18)


$ (0.55)


$ (0.53)



Discontinued operations


(0.01)


(0.01)


0.06


0.04



Net loss per share


$ (0.06)


$ (0.19)


$ (0.49)


$ (0.49)














Weighted-average common shares










outstanding:












Basic


129,446


128,168


129,263


127,452




Assuming dilution


129,446


128,168


129,263


127,452


Cash dividends declared per share











of common stock


$ 0.25


$ 0.25


$ 0.50


$ 0.50


Depreciation, depletion, accretion and











amortization


$ 92,137


$ 97,280


$ 182,723


$ 191,476


Effective tax rate from continuing operations


85.0%


48.5%


52.0%


45.3%










Table B


Vulcan Materials Company


and Subsidiary Companies












(Amounts in thousands, except per share data)










Consolidated Balance Sheets


June 30


December 31


June 30


(Condensed and unaudited)


2011


2010


2010










As Restated (a)


Assets








Cash and cash equivalents


$ 106,744


$ 47,541


$ 42,173


Restricted cash


109


547


3,746


Medium-term investments


-


-


3,910


Accounts and notes receivable:









Accounts and notes receivable, gross


397,423


325,303


398,613



Less: Allowance for doubtful accounts


(7,641)


(7,505)


(9,290)




Accounts and notes receivable, net


389,782


317,798


389,323


Inventories:









Finished products


259,109


254,840


246,956



Raw materials


26,300


22,222


23,114



Products in process


4,930


6,036


3,784



Operating supplies and other


38,926


36,747


37,486




Inventories


329,265


319,845


311,340


Current deferred income taxes


44,794


53,794


57,575


Prepaid expenses


21,659


19,374


33,972


Assets held for sale


-


13,207


14,864




Total current assets


892,353


772,106


856,903


Investments and long-term receivables


37,251


37,386


34,078


Property, plant & equipment:









Property, plant & equipment, cost


6,739,908


6,692,814


6,632,580



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


(3,197,163)


(3,059,900)


(2,915,565)




Property, plant & equipment, net


3,542,745


3,632,914


3,717,015


Goodwill


3,097,016


3,097,016


3,096,300


Other intangible assets, net


694,509


691,693


681,059


Other noncurrent assets


121,736


106,776


101,610




Total assets


$ 8,385,610


$ 8,337,891


$ 8,486,965






















Liabilities and Shareholders' Equity








Current maturities of long-term debt


$ 5,230


$ 5,246


$ 425,300


Short-term borrowings


100,000


285,500


320,000


Trade payables and accruals


153,729


102,315


168,269


Other current liabilities


162,001


172,495


160,151


Liabilities of assets held for sale


-


116


409




Total current liabilities


420,960


565,672


1,074,129


Long-term debt


2,785,843


2,427,516


2,001,180


Noncurrent deferred income taxes


762,406


849,448


843,408


Other noncurrent liabilities


535,136


530,275


538,929




Total liabilities


4,504,345


4,372,911


4,457,646


Shareholders' equity:









Common stock, $1 par value


129,224


128,570


128,270



Capital in excess of par value


2,534,562


2,500,886


2,477,672



Retained earnings


1,385,208


1,512,863


1,610,835



Accumulated other comprehensive loss


(167,729)


(177,339)


(187,458)




Shareholders' equity


3,881,265


3,964,980


4,029,319




Total liabilities and shareholders' equity


$ 8,385,610


$ 8,337,891


$ 8,486,965


(a)

The June 30, 2010 balance sheet reflects corrections of errors related to an understatement of deferred income tax liabilities.









Table C


Vulcan Materials Company


and Subsidiary Companies














(Amounts in thousands)







Six Months Ended


Consolidated Statements of Cash Flows


June 30


(Condensed and unaudited)


2011


2010











Operating Activities






Net loss



$ (62,872)


$ (62,739)


Adjustments to reconcile net loss to







net cash provided by operating activities:








Depreciation, depletion, accretion and amortization


182,723


191,476




Net gain on sale of property, plant & equipment and businesses


(15,657)


(58,527)




Contributions to pension plans


(1,995)


(21,075)




Share-based compensation


8,849


10,524




Deferred tax provision


(92,031)


(54,755)




Changes in assets and liabilities before initial









effects of business acquisitions and dispositions


(37,591)


2,585




Cost of debt purchase


19,153


-


Other, net



6,437


11,167





Net cash provided by operating activities


7,016


18,656











Investing Activities






Purchases of property, plant & equipment


(51,512)


(42,158)


Proceeds from sale of property, plant & equipment


6,717


3,224


Proceeds from sale of businesses, net of transaction costs


12,284


50,954


Decrease (increase) in restricted cash


437


(3,746)


Other, net



927


(283)





Net cash provided by (used for) investing activities


(31,147)


7,991











Financing Activities






Net short-term borrowings (payments)


(185,500)


83,488


Payment of current maturities and long-term debt


(737,739)


(75,188)


Proceeds from issuance of long-term debt


1,100,000


-


Debt issuance costs


(17,904)


-


Proceeds from issuance of common stock


4,936


35,314


Dividends paid


(64,570)


(63,600)


Proceeds from exercise of stock options


3,232


12,597


Cost of debt purchase


(19,153)


-


Other, net



32


650





Net cash provided by (used for) financing activities


83,334


(6,739)











Net increase in cash and cash equivalents


59,203


19,908


Cash and cash equivalents at beginning of year


47,541


22,265


Cash and cash equivalents at end of period


$ 106,744


$ 42,173










Table D


Segment Financial Data and Unit Shipments












(Amounts in thousands, except per unit data)










Three Months Ended


Six Months Ended





June 30


June 30





2011


2010


2011


2010


Total Revenues






Aggregates segment (a)

$ 478,440


$ 513,844


$ 810,031


$ 855,160



Intersegment sales

(39,525)


(42,389)


(69,297)


(74,447)




Net sales

438,915


471,455


740,734


780,713



Concrete segment (b)

98,185


105,023


180,419


187,979



Intersegment sales

-


(1)


-


(7)




Net sales

98,185


105,022


180,419


187,972



Asphalt mix segment

110,888


103,549


175,535


166,521



Intersegment sales

-


-


-


-




Net sales

110,888


103,549


175,535


166,521



Cement segment (c)

16,824


22,903


33,354


40,848



Intersegment sales

(7,355)


(10,171)


(16,269)


(18,761)




Net sales

9,469


12,732


17,085


22,087



Total







Net sales

657,457


692,758


1,113,773


1,157,293




Delivery revenues

44,514


43,394


75,398


72,122




Total revenues

$ 701,971


$ 736,152


$ 1,189,171


$ 1,229,415













Gross Profit






Aggregates

$ 102,872


$ 122,017


$ 113,616


$ 137,386



Concrete

(9,030)


(5,574)


(23,440)


(21,666)



Asphalt mix

8,319


7,250


8,126


8,316



Cement

(1,321)


(1,358)


(4,568)


(806)



Total gross profit

$ 100,840


$ 122,335


$ 93,734


$ 123,230













Depreciation, depletion, accretion and amortization






Aggregates

$ 71,144


$ 74,877


$ 141,215


$ 148,048



Concrete

13,195


13,418


26,233


26,442



Asphalt mix

1,948


2,327


3,924


4,477



Cement

4,728


5,193


9,049


9,573



Corporate and other unallocated

1,122


1,465


2,302


2,936



Total DDA&A

$ 92,137


$ 97,280


$ 182,723


$ 191,476













Unit Shipments










Aggregates customer tons

36,405


39,925


60,928


65,065



Internal tons (d)

2,825


3,144


4,966


5,434



Aggregates - tons

39,230


43,069


65,894


70,499














Ready-mixed concrete - cubic yards

1,009


1,145


1,868


2,028



Asphalt mix - tons

1,998


1,934


3,239


3,204














Cement customer tons

74


100


127


174



Internal tons (d)

96


144


219


243



Cement - tons

170


244


346


417













Average Unit Sales Price (including internal sales)










Aggregates (freight-adjusted) (e)

$ 10.36


$ 10.11


$ 10.35


$ 10.20



Ready-mixed concrete

$ 92.81


$ 86.08


$ 92.00


$ 86.57



Asphalt mix

$ 55.00


$ 51.13


$ 53.61


$ 50.49



Cement

$ 78.38


$ 76.64


$ 77.23


$ 80.25


(a) Includes crushed stone, sand and gravel, sand, other aggregates, as well as transportation and service revenues associated with the aggregates business.


(b) Includes 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


1. Supplemental Cash Flow Information









Supplemental information referable to the Condensed Consolidated Statements of Cash Flows


for the six months ended June 30 is summarized below:







(Amounts in thousands)







2011


2010




















Supplemental Disclosure of Cash Flow Information






Cash paid (refunded) during the period for:







Interest


$ 102,984


$ 90,942



Income taxes


(33,070)


1,130











Supplemental Schedule of Noncash Investing and Financing Activities






Liabilities assumed in business acquisition


13,774


-


Accrued liabilities for purchases of property, plant & equipment


6,414


5,165


Stock issued for pension contribution


-


53,864


Proceeds receivable from issuance of common stock


-


1,453


Fair value of equity consideration for business acquisition


18,529


-




















2. Reconciliation of Non-GAAP Measures















Net cash provided by operating activities


$ 7,016


$ 18,656


Purchases of property, plant & equipment


(51,512)


(42,158)


Free cash flow


$ (44,496)


$ (23,502)











Free cash flow deducts purchases of property, plant & equipment from net cash provided by operating activities. This financial metric is used by the investment community as an indicator of the company's ability to incur and service debt. Generally Accepted Accounting Principles (GAAP) does not define "free cash flow." Thus, it should not be considered as an alternative to net cash provided by operating activities or any other liquidity measure defined by GAAP.



We present this metric for the convenience of investment professionals who use this metric in their analysis, and for shareholders who need to understand how we assess performance and monitor our cash and liquidity positions. We use free cash flow and other such measures to assess the operating performance of our various business units and the consolidated company. We do not use this metric as a measure to allocate resources.








Table F









Reconciliation of Non-GAAP Measures








EBITDA and Cash Earnings Reconciliations









(Amounts in thousands)


Three Months Ended


Six Months Ended


June 30


June 30


2011


2010


2011


2010









Reconciliation of Net Cash Provided by Operating Activities to EBITDA and Cash Earnings








Net cash (used for) provided by operating activities

$ (37,034)


$ 12,216


$ 7,016


$ 18,656

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

105,964


43,960


37,591


(2,585)

Other net operating items using cash

15,068


17,112


75,244


112,666

(Earnings) loss on discontinued operations, net of tax

1,037


1,477


(8,852)


(4,250)

Benefit from income taxes

(40,341)


(21,231)


(77,771)


(55,444)

Interest expense, net

70,911


43,723


113,161


87,016

Less: Depreciation, depletion, accretion and amortization

(92,137)


(97,280)


(182,723)


(191,476)

EBIT

23,468


(23)


(36,334)


(35,417)

Plus: Depreciation, depletion, accretion and amortization

92,137


97,280


182,723


191,476

EBITDA

$ 115,605


$ 97,257


$ 146,389


$ 156,059

Less: Interest expense, net

(70,911)


(43,723)


(113,161)


(87,016)

Current taxes

(2,167)


(3,715)


(13,766)


(2,909)

Cash earnings

$ 42,527


$ 49,819


$ 19,462


$ 66,134









Reconciliation of Net Loss to EBITDA and Cash Earnings








Net loss

$ (8,139)


$ (23,992)


$ (62,872)


$ (62,739)

Benefit from income taxes

(40,341)


(21,231)


(77,771)


(55,444)

Interest expense, net

70,911


43,723


113,161


87,016

(Earnings) loss on discontinued operations, net of tax

1,037


1,477


(8,852)


(4,250)

EBIT

23,468


(23)


(36,334)


(35,417)

Plus: Depreciation, depletion, accretion and amortization

92,137


97,280


182,723


191,476

EBITDA

$ 115,605


$ 97,257


$ 146,389


$ 156,059

Less: Interest expense, net

(70,911)


(43,723)


(113,161)


(87,016)

Current taxes

(2,167)


(3,715)


(13,766)


(2,909)

Cash earnings

$ 42,527


$ 49,819


$ 19,462


$ 66,134

















EBITDA Bridge

Three Months Ended




Six Months Ended



(Amounts in millions)

June 30




June 30




EBITDA




EBITDA



Continuing Operations - 2010 Actual

$ 97




$ 156



Increase / (Decrease) due to:








Legal settlement ($41 charge Q1, 2010; $25 recovery Q2, 2011)

41




67



Gain on Virginia divestiture

-




(39)



Aggregates:

Volumes

(23)




(27)




Selling prices

10




10




Costs and other items

(11)




(14)



Concrete

(3)




(2)



Asphalt mix

1




(1)



Cement

-




(4)



Selling, administrative and general expenses (a)

7




7



All other

(3)




(7)



Continuing Operations - 2011 Actual

$ 116




$ 146



















(a) Net of donations


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. Generally Accepted Accounting Principles (GAAP) does not define "EBITDA" and "cash earnings." Thus, they 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.


We present these metrics for the convenience of investment professionals who use such metrics in their analysis, and for shareholders who need to understand the metrics we use to assess performance and to monitor our cash and liquidity positions. We use EBITDA, cash earnings and other such measures to assess the operating performance of our various business units and the consolidated company. We do not use these metrics as a measure to allocate resources.

SOURCE Vulcan Materials Company