NYSE | VMC: $103.90 -$2.64 -2.48% Volume: 1,144,600 November 19, 2018
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Vulcan Announces First Quarter 2018 Results

05/03/18

EPS from Continuing Operations Increases Sharply to $0.40 per Share
Aggregates Gross Profit per Ton Expands
Management Reaffirms Full-Year Outlook

BIRMINGHAM, Ala., May 3, 2018 /PRNewswire/ -- Vulcan Materials Company (NYSE:VMC), the nation's largest producer of construction aggregates, today announced results for the first quarter ended March 31, 2018.

First quarter earnings from continuing operations increased 23 percent year-over-year to $53 million on a 9 percent increase in total revenues.  Gross profit was $159 million, led by a 7 percent increase in Aggregates segment gross profit to $148 million.  Asphalt, Concrete and Calcium segment gross profit was $11 million, as delayed work and higher input costs negatively impacted Asphalt margins.  Selling, administrative, and general expenses declined $4 million to $78 million.  Adjusted Earnings from Continuing Operations of $0.44 per diluted share compares to $0.34 per share in the prior year's first quarter.  Adjusted EBITDA increased 12 percent to $168 million

In the Company's core Aggregates segment, unit margins improved despite higher energy costs and shipment delays due to unusually cold and wet weather in certain markets.  On a same-store basis, the aggregates business delivered cash gross profit per ton of $5.33, a record for the first quarter.  This $0.19 per ton increase over the prior year period was achieved despite an $0.11 per ton increase in diesel.  Same-store shipments grew 1 percent for the quarter, with a 7 percent increase in daily shipment rates in March as weather conditions improved.  Adjusted for mix, freight-adjusted average selling price rose 3 percent over the prior year.  Same-store total cost of revenues per ton declined year-over-year despite the aforementioned weather and energy cost headwinds as well as the planned shutdown of certain large production facilities for maintenance ahead of the construction season.

Tom Hill, Chairman and Chief Executive Officer, said, "Our first quarter results represent a solid start to the year and were consistent with our internal plans and full-year expectations despite difficult weather and higher than anticipated energy costs.  Key leading indicators, as well as our shipment patterns through the first quarter and through April, support our full-year volume expectations.  Aggregates pricing momentum continues to improve, supported by demand visibility, higher diesel prices, and tight logistics capacity.  And as seen in our first quarter results, we've begun to turn the corner with respect to cost challenges faced in 2017.  As such, 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 $1.150 and $1.250 billion."

First Quarter Summary (compared with prior year's first quarter)

  • Total revenues increased $67 million, or 9 percent, to $854 million
  • Gross profit was $159 million versus $158 million in the prior year
  • Aggregates segment sales increased $49 million to $700 million and freight-adjusted revenues increased $33 million, or 7 percent, to $529 million
    • Shipments increased 2.3 million tons, or 6 percent, to 40.5 million tons
    • Freight-adjusted sales price increased 1 percent to $13.06 per ton
    • Segment gross profit increased $9 million, or 7 percent, to $148 million
  • Asphalt, Concrete and Calcium segment gross profit decreased $8 million, collectively
  • SAG was $78 million, $4 million lower than the prior year
  • Net earnings were $53 million versus $45 million in the prior year
  • Adjusted EBIT was $86 million versus $78 million in the prior year
  • Adjusted EBITDA was $168 million, an increase of $19 million, or 12 percent
  • Earnings from continuing operations were $0.40 per diluted share versus $0.32 per diluted share
  • Adjusted earnings from continuing operations were $0.44 per diluted share versus $0.34 per diluted share (see appendix 3 for reconciliation)

Trailing-Twelve-Month Summary (compared with the prior twelve month period)

  • Total revenues were $3.96 billion, an increase of $332 million, or 9 percent
  • Gross profit was $995 million, an increase of $12 million, or 1 percent
  • Aggregates segment sales increased $168 million to $3.15 billion and freight-adjusted revenues increased $121 million, or 5 percent, to $2.43 billion
    • Shipments increased 3 percent, to 185.5 million tons
    • Freight-adjusted sales price increased $0.31 per ton, or 2 percent
    • Segment gross profit increased $10 million to $864 million
  • Asphalt, Concrete and Calcium segment gross profit improved $3 million, collectively
  • SAG was $321 million, or 8.1 as a percentage of total revenues
  • Net earnings were $609 million versus $424 million in the prior year
  • Adjusted EBIT was $685 million, an increase of 2 percent
  • Adjusted EBITDA was $1.0 billion, up 4 percent from the prior year
  • Earnings from continuing operations were $4.48 per diluted share versus $3.12 per diluted share
  • Adjusted earnings from continuing operations were $3.14 per diluted share versus $2.96 per diluted share (see appendix 3 for reconciliation)

Segment Results

Aggregates

First quarter Aggregates segment gross profit increased 7 percent to $148 million, or $3.66 per ton.  Solid operating disciplines and the absence of one-time costs (e.g. California flooding) experienced in the prior year's first quarter helped offset a 26 percent increase in the unit cost for diesel fuel, the planned shutdown of three large facilities for repairs ahead of the construction season, and above normal distribution costs due to lingering storm-related ship and barge movement inefficiencies.  The Company has taken possession of one of its two new, more efficient, Panamax-class ships, and expects to take possession of the second ship during the second quarter.

First quarter aggregates shipments increased 6 percent (1 percent on a same-store basis) versus the prior year's quarter.  After being down 3 percent through February, same-store daily shipment rates for aggregates were up 7 percent year-over-year in March, reflecting demand fundamentals consistent with our full-year expectations.  Shipments in Arizona, California, Florida and coastal Texas experienced double-digit gains due to solid demand growth and the start of some large projects.  Shipment growth in other Texas markets, particularly north Texas, were held back due to wet weather. Wetter and colder weather led to reduced shipments in a number of other southeastern markets and Virginia.  On a same-store basis, shipments in Georgia and South Carolina were down double-digits and Virginia decreased high-single digits.  Daily shipping rates in these markets strengthened in April, and the Company's overall shipment momentum remained consistent with full-year plans. 

With respect to the balance of 2018, leading indicators such as employment growth and construction starts indicate a continued recovery in demand across Vulcan's footprint.  Private demand, both residential and nonresidential, continues to recover across Vulcan-served markets, and highway demand is again growing after a disappointing 2017.  Transportation agencies appear to be catching up to new, higher funding levels in key Vulcan-served states.  Construction starts data for Vulcan markets – as well as the Company's backlogs, booking rates for future work, and shipment patterns – all suggest improved demand visibility.  Certain markets do face near-term logistics challenges, including disappointing rail-service quality, although the Company expects these pressures to ease over the balance of the year.

Demand visibility, customer confidence, diesel prices, and logistics constraints support continued upward pricing movements in many markets.  For the quarter, freight-adjusted average sales price for aggregates increased 1 percent versus the prior year, despite a negative geographic and product mix impact.  Excluding mix impact, aggregates price increased 3 percent.  Pricing remained particularly strong in California, Georgia and other southeastern markets that are supported by clear demand visibility for both private and public construction.  Texas, particularly coastal Texas, experienced relative pricing weakness in the quarter due to higher inbound freight costs and the mix of work – although the Company expects this trend to reverse over the remainder of the year.  April price increases to key customers were executed well, and the Company expects additional price increases in several markets later in the year.

Asphalt, Concrete and Calcium

Asphalt segment gross profit was $8 million lower than the prior year due to weather impacts on volumes, lower materials margin and the comparative timing of an acquisition that closed during the first quarter last year.  On a same-store basis, shipments were in line with the prior year, with cold and wet weather in key markets limiting paving activity.  Deferred volumes should be recovered later in the year.  Although average asphalt selling prices increased 4 percent, an 11 percent increase in unit costs for liquid asphalt compressed margins.  This year's first quarter also included January results – a negative gross profit month – for a business acquired in February of the prior year. 

Concrete segment gross profit was $10 million in the quarter, in line with the prior year.  Total shipments increased 3 percent year-over-year.  Average price increases of 9 percent allowed for a 5 percent gain in the material margins.  The Company divested its Georgia ready-mix concrete operations in March.  Full-year expectations for concrete segment gross profit remain unchanged.

Calcium segment gross profit was $0.5 million versus $0.7 million in the prior year's first quarter.

Growth, Capital Allocation, and Financial Position

The Company actively manages its business portfolio with a view toward driving long-term growth of cash flows from earnings after tax.  In addition to the aforementioned divestiture of its Georgia ready-mix operations, the Company closed on three acquisitions in the first quarter including aggregates and asphalt operations complementing its existing positions in Alabama and Texas.   

Total capital expenditures in the first quarter were $129 million.  This amount included $65 million of core operating and maintenance capital investments to improve or replace existing property, plant and equipment, in line with expectations.  In addition, the Company invested $64 million in internal growth projects to secure new aggregates reserves, develop new production sites, enhance the Company's distribution capabilities, and support the targeted growth of its asphalt and concrete operations.

The Company continues to expect operating and maintenance capital spending for 2018 of approximately $250 million to support an increased level of shipments and further improve production costs and operating efficiencies.  We also plan for $350 million in internal growth capital expenditures during 2018, including the development of strategic aggregates sites in California and Texas.

The Company continues to position its debt portfolio consistent with the long-lived nature of its asset base, the cyclicality of materials demand, and the long-term price appreciation expected for aggregates.  Concluding the refinancing plans commenced in December 2017, the Company in the first quarter issued $850 million of senior notes with maturities of 3 and 30 years, and retired $885 million of debt with maturities inside 4 years.  Additionally, $111 million of senior notes due 2037 were exchanged for a like amount of senior notes due 2048 and cash.  Since year-end 2016, the weighted-average life of the debt portfolio has more than doubled to approximately 16 years, while the weighted-average interest rate has declined from approximately 6.5 percent to approximately 4.0 percent.  First quarter results include a $7 million pretax charge associated with these transactions.

During the quarter, the Company returned $93 million to shareholders through dividends paid ($37 million) and share repurchases ($56 million).   

Selling, Administrative and General (SAG), Other Operating Expense and Taxes

SAG expenses in the quarter were $78 million, $4 million lower than the prior year.  On a trailing-twelve-month basis, SAG expense as a percentage of total revenues, declined from 8.9 percent to 8.1 percent.  The Company completed an organizational restructuring in January resulting in the elimination of approximately 50 positions.  First quarter results reflect a $4 million charge resulting from this action.

Other operating expense was $4 million in the first quarter versus $6 million in the prior year.  Over the past five years, other operating expenses, exclusive of discrete items, have averaged approximately $3 to $4 million per quarter. 

The Company continues to project an effective tax rate for the full year of 20 percent.  The first quarter tax provision includes a discrete adjustment related to stock-based incentive compensation, similar to the prior year's first quarter.

The Company currently projects 2018 cash taxes of approximately $75 million before the effects of debt refinancing actions, use of various credits, and refunds from prior period over-payments.  The current year's projected cash taxes are approximately $100 million lower than if under the prior tax law.

Demand and Earnings Outlook

Regarding the Company's earnings outlook for 2018, Mr. Hill stated, "We like the trends we've seen so far and the leading indicators we monitor support our full-year outlook for strong earnings growth.  We expect earnings from continuing operations of $4.00 to $4.65 per diluted share and Adjusted EBITDA of $1.150 to $1.250 billion.  All other aspects of our outlook are consistent with our outlook in February."

Conference Call

Vulcan will host a conference call at 10:00 a.m. CDT on May 3, 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 800-239-9838, or 323-794-2551 approximately 10 minutes before the scheduled start.  The conference ID is 3160919.  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 and a major producer of other construction materials – 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; the potential of goodwill or long-lived asset impairment; changing technologies 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

Consolidated Statements of Earnings








March 31

(Condensed and unaudited)






2018


2017












Total revenues






$854,474


$787,328

Cost of revenues






695,140


629,107

Gross profit






159,334


158,221

Selling, administrative and general expenses






78,340


82,383

Gain on sale of property, plant & equipment









and businesses






4,164


369

Other operating expense, net






(3,975)


(5,828)

Operating earnings






81,183


70,379

Other nonoperating income, net






5,083


4,045

Interest expense, net






37,774


34,076

Earnings from continuing operations









before income taxes






48,492


40,348

Income tax benefit






(4,903)


(3,175)

Earnings from continuing operations






53,395


43,523

Earnings (loss) on discontinued operations, net of tax





(416)


1,398

Net earnings






$52,979


$44,921












Basic earnings per share









Continuing operations






$0.40


$0.33

Discontinued operations






$0.00


$0.01

Net earnings






$0.40


$0.34












Diluted earnings (loss) per share









Continuing operations






$0.40


$0.32

Discontinued operations






($0.01)


$0.01

Net earnings






$0.39


$0.33























Weighted-average common shares outstanding









Basic






132,690


132,636

Assuming dilution






134,359


134,968

Cash dividends per share of common stock






$0.28


$0.25

Depreciation, depletion, accretion and amortization






$81,439


$71,563

Effective tax rate from continuing operations






-10.1%


-7.9%












 

 









Table B

Vulcan Materials Company







and Subsidiary Companies















(in thousands)

Consolidated Balance Sheets


March 31


December 31


March 31

(Condensed and unaudited)


2018


2017


2017

Assets







Cash and cash equivalents


$38,141


$141,646


$286,957

Restricted cash


8,373


5,000


0

Accounts and notes receivable







Accounts and notes receivable, gross


492,103


590,986


471,590

Less: Allowance for doubtful accounts


(2,667)


(2,649)


(2,757)

Accounts and notes receivable, net


489,436


588,337


468,833

Inventories







Finished products


340,666


327,711


306,012

Raw materials


29,393


27,152


26,213

Products in process


1,303


1,827


1,314

Operating supplies and other


28,392


27,648


29,860

Inventories


399,754


384,338


363,399

Prepaid expenses


75,495


60,780


38,573

Total current assets


1,011,199


1,180,101


1,157,762

Investments and long-term receivables


35,056


35,115


34,311

Property, plant & equipment







Property, plant & equipment, cost


8,116,439


7,969,312


7,432,388

Allowances for depreciation, depletion & amortization


(4,090,574)


(4,050,381)


(3,980,567)

Property, plant & equipment, net


4,025,865


3,918,931


3,451,821

Goodwill


3,130,161


3,122,321


3,101,241

Other intangible assets, net


1,060,831


1,063,630


829,114

Other noncurrent assets


190,099


184,793


170,075

Total assets


$9,453,211


$9,504,891


$8,744,324

Liabilities







Current maturities of long-term debt


22


41,383


139

Short-term debt


200,000


0


0

Trade payables and accruals


188,163


197,335


175,906

Other current liabilities


195,122


204,154


184,853

Total current liabilities


583,307


442,872


360,898

Long-term debt


2,775,687


2,813,482


2,329,248

Deferred income taxes, net


479,430


464,081


703,491

Deferred revenue


190,731


191,476


196,739

Other noncurrent liabilities


510,846


624,087


633,187

Total liabilities


$4,540,001


$4,535,998


$4,223,563

Equity







Common stock, $1 par value


132,290


132,324


132,222

Capital in excess of par value


2,787,848


2,805,587


2,792,720

Retained earnings


2,138,885


2,180,448


1,734,448

Accumulated other comprehensive loss


(145,813)


(149,466)


(138,629)

Total equity


$4,913,210


$4,968,893


$4,520,761

Total liabilities and equity


$9,453,211


$9,504,891


$8,744,324

 

 








Table C

Vulcan Materials Company





and Subsidiary Companies










(in thousands)






Three Months Ended

Consolidated Statements of Cash Flows




March 31

(Condensed and unaudited)


2018


2017

Operating Activities





Net earnings




$52,979


$44,921

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



Depreciation, depletion, accretion and amortization


81,439


71,563

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


(4,164)


(369)

Contributions to pension plans


(102,443)


(2,374)

Share-based compensation expense


6,794


6,488

Deferred tax expense (benefit)


7,968


153

Cost of debt purchase


6,922


0

Changes in assets and liabilities before initial





effects of business acquisitions and dispositions


39,832


(28,069)

Other, net





3,641


1,839

Net cash provided by operating activities


$92,968


$94,152

Investing Activities





Purchases of property, plant & equipment


(128,688)


(133,022)

Proceeds from sale of property, plant & equipment


1,701


1,239

Proceeds from sale of businesses


11,256


0

Payment for businesses acquired, net of acquired cash


(76,259)


(185,067)

Other, net





(34)


0

Net cash used for investing activities


($192,024)


($316,850)

Financing Activities





Proceeds from short-term debt


252,000


0

Payment of short-term debt


(52,000)


0

Payment of current maturities and long-term debt


(892,038)


(5)

Proceeds from issuance of long-term debt


850,000


350,000

Debt issuance and exchange costs


(45,513)


(4,565)

Settlements of interest rate derivatives


3,378


0

Purchases of common stock


(55,568)


(49,221)

Dividends paid




(37,176)


(33,152)

Share-based compensation, shares withheld for taxes


(24,159)


(21,421)

Net cash provided by (used for) financing activities


($1,076)


$241,636

Net increase (decrease) in cash and cash equivalents and restricted cash


(100,132)


18,938

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


$46,514


$286,957

 

 












Table D

Segment Financial Data and Unit Shipments












 

(in thousands, except per unit data)










Three Months Ended












March 31










2018


2017

Total Revenues









Aggregates 1






$699,657


$650,300

Asphalt







103,835


95,776

Concrete 






100,962


88,750

Calcium 






1,942


1,886

Segment sales






$906,396


$836,712

Aggregates intersegment sales






(51,922)


(49,384)

Total revenues






$854,474


$787,328

Gross Profit









Aggregates






$148,221


$138,791

Asphalt







246


8,482

Concrete 






10,320


10,225

Calcium 









547


723

Total








$159,334


$158,221

Depreciation, Depletion, Accretion and Amortization




Aggregates






$65,953


$57,656

Asphalt







7,002


5,731

Concrete 






3,414


3,023

Calcium 






69


195

Other








5,001


4,958

Total








$81,439


$71,563

Average Unit Sales Price and Unit Shipments





Aggregates









Freight-adjusted revenues 2






$529,414


$496,805

Aggregates - tons






40,532


38,246

Freight-adjusted sales price 3






$13.06


$12.99













Other Products









Asphalt Mix - tons






1,793


1,778

Asphalt Mix - sales price






$53.30


$51.23













Ready-mixed concrete - cubic yards





816


792

Ready-mixed concrete - sales price






$122.47


$112.00













Calcium - tons






67


67

Calcium - sales price






$28.96


$28.18














1Includes product sales as well as freight & delivery costs that we pass along to our customers, and service


revenues related to aggregates.









2Freight-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.

3Freight-adjusted sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments.

 

 












Appendix 1


1.   Reconciliation of Non-GAAP Measures





















Gross profit margin excluding freight & delivery (revenues and costs) is not a Generally Accepted Accounting Principle (GAAP) measure. We present this metric as it is consistent with the basis by which we review our operating results. Likewise, we believe that this presentation is consistent with our competitors and consistent with the basis by which investors analyze our operating results considering that freight & delivery services represent pass-through activities (we do not generate a profit associated with the transportation component of the selling price of the product). Reconciliation of this metric to its nearest GAAP measure is presented below:




















Gross Profit Margin in Accordance with GAAP





















(dollars in thousands)













Three Months Ended













March 31











2018


2017















Gross profit






$159,334


$158,221


Total revenues






$854,474


$787,328



Gross profit margin






18.6%


20.1%















Gross Profit Margin Excluding Freight & Delivery





















(dollars in thousands)













Three Months Ended













March 31











2018


2017















Gross profit






$159,334


$158,221


Total revenues






$854,474


$787,328


Freight & delivery revenues 1






129,690


118,103



Total revenues excluding freight & delivery






$724,784


$669,225


Gross profit margin excluding freight & delivery






22.0%


23.6%















1 Includes freight & delivery to remote distribution sites.























Aggregates Segment Freight-Adjusted Revenues























Aggregates segment freight-adjusted revenues is not a GAAP measure. We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes 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:


















(dollars in thousands)













Three Months Ended













March 31











2018


2017


Aggregates segment










Segment sales






$699,657


$650,300


Less













Freight & delivery revenues 1






158,944


147,898



Other revenues






11,299


5,597


Freight-adjusted revenues






$529,414


$496,805


Unit shipment - tons






40,532


38,246


Freight-adjusted sales price






$13.06


$12.99















1 At the segment level, freight & delivery revenues include intersegment freight & delivery revenues, which are eliminated at the





  consolidated level.










 

 












Appendix 2


Reconciliation of Non-GAAP Measures (Continued)



















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 revenues represents the year-over-year change in gross profit divided by the year-over-year change in segment sales excluding freight & delivery revenues. Reconciliations of these metrics to their nearest GAAP measures are presented below:






















Aggregates Segment Gross Profit Margin in Accordance with GAAP

















(dollars in thousands)













Three Months Ended













March 31











2018


2017


Aggregates segment










Gross profit






$148,221


$138,791


Segment sales






$699,657


$650,300


Gross profit margin






21.2%


21.3%


Incremental gross profit margin






19.1%

















Aggregates Segment Gross Profit as a Percentage of Segment Sales Excluding Freight & Delivery













(dollars in thousands)













Three Months Ended













March 31











2018


2017


Aggregates segment










Gross profit






$148,221


$138,791


Segment sales






$699,657


$650,300


Less













Freight & delivery revenues 1






158,944


147,898



Segment sales excluding freight & delivery






$540,713


$502,402


Gross profit as a percentage of segment sales











excluding freight & delivery






27.4%


27.6%


Incremental gross profit as a percentage of











segment sales excluding freight & delivery






24.6%

















1 At the segment level, freight & delivery revenues include intersegment freight & delivery revenues, which are eliminated at the





  consolidated level.























GAAP does not define "Aggregates segment cash gross profit" and it should not be considered as an alternative to earnings measures defined by GAAP. We present this metric for the convenience of investment professionals who use such metrics in their analyses and for shareholders who need to understand the metrics we use to assess performance. We and the investment community use this metric to assess the operating performance of our business. Additionally, we present this metric as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources.  Aggregates segment cash gross profit per ton is computed by dividing Aggregates segment cash gross profit by tons shipped. Reconciliation of this metric to its nearest GAAP measure is presented below:





















Aggregates Segment Cash Gross Profit





















(in thousands, except per ton data)













Three Months Ended













March 31











2018


2017


Aggregates segment










Gross profit






$148,221


$138,791


Depreciation, depletion, accretion and amortization






65,953


57,656



Aggregates segment cash gross profit






$214,174


$196,447


Unit shipments - tons






40,532


38,246


Aggregates segment cash gross profit per ton






$5.28


$5.14


 

 
















Appendix 3


Reconciliation of Non-GAAP Measures (Continued)



























GAAP does not define "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) and it should not be considered as an alternative to earnings measures defined by GAAP. We present this metric for the convenience of investment professionals who use such metrics in their analyses and for shareholders who need to understand the metrics we use to assess performance. We use this metric to assess the operating performance of our business and 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




TTM













March 31




March 31











2018


2017


2018


2017


Net earnings






$52,979


$44,921


$609,244


$424,254


Income tax expense (benefit)






(4,903)


(3,175)


(233,803)


133,146


Interest expense, net






37,774


34,076


294,784


133,613


(Earnings) loss on discontinued operations, net of tax






416


(1,398)


(5,982)


(290)


EBIT








$86,266


$74,424


$664,243


$690,723


Depreciation, depletion, accretion and amortization






81,439


71,563


315,841


287,097


EBITDA







$167,705


$145,987


$980,084


$977,820



Gain on sale of real estate and businesses






($2,929)


$0


($13,437)


($16,216)



Property donation






0


0


4,290


0



Business interruption claims recovery, net of incentives




(1,694)


0


(1,694)


(11,014)



Charges associated with divested operations






0


1,379


16,683


6,511



Business development, net of termination fee 1






516


0


3,580


0



One-time employee bonuses






0


0


6,716


0



Asset impairment






0


0


0


860



Restructuring charges






4,245


1,942


4,245


1,942


Adjusted EBITDA






$167,843


$149,308


$1,000,467


$959,903



Depreciation, depletion, accretion and amortization






(81,439)


(71,563)


(315,841)


(287,097)


Adjusted EBIT






$86,404


$77,745


$684,626


$672,806



















1 Includes only non-routine business development charges.































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




TTM













March 31




March 31











2018


2017


2018


2017


Diluted EPS






$0.40


$0.32


$4.48


$3.12



Items included in Adjusted EBITDA above






0.00


0.02


0.09


(0.08)



Interest charges associated with debt purchase






0.00


0.00


0.02


0.00



Debt refinancing costs






0.04


0.00


0.75


0.00



Tax reform income tax savings






0.00


0.00


(1.99)


0.00



Alabama NOL carryforward valuation allowance






0.00


0.00


(0.21)


(0.03)



Foreign tax credit carryforward utilization






0.00


0.00


0.00


(0.05)


Adjusted Diluted EPS






$0.44


$0.34


$3.14


$2.96



















The following reconciliation to the mid-point of the range of 2018 Projected EBITDA excludes adjustments for charges associated with divested operations, asset impairment and other unusual gains and losses. Due to the difficulty of forecasting the timing or amount of items that have not yet occurred, are out of our control, or cannot be reasonably predicted, we are unable to estimate the significance of this unavailable information.






















2018 Projected EBITDA

























(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






 

Vulcan Materials Company, Birmingham, AL. (PRNewsFoto/Vulcan Materials Company) (PRNewsFoto/) (PRNewsFoto/)

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/vulcan-announces-first-quarter-2018-results-300641618.html

SOURCE Vulcan Materials Company

Investor Contact: Mark Warren, (205) 298-3220; 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