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Vulcan Materials
2019 Annual Report

Vulcan Reports Fourth Quarter and Full Year Results

02/18/20
Double-Digit Growth in Revenues Drives Aggregates Unit Profitability in 2019
Double-Digit Growth in Earnings Expected in 2020

BIRMINGHAM, Ala., Feb. 18, 2020 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today announced results for the quarter ended December 31, 2019.

Higher segment earnings in Aggregates and Asphalt helped drive 15 percent year-over-year growth in the Company's fourth quarter earnings from continuing operations.  Solid shipment growth, up 4 percent, and compounding price improvements, up 5.5 percent, led to improved earnings in aggregates.  Asphalt earnings benefited from double-digit revenue growth and improving unit margins.

Full year revenues were $4.9 billion, up 12 percent as compared to the prior year, and net earnings were $618 million, an increase of 20 percent.  Adjusted EBITDA increased 12 percent to $1.27 billion.  At year end, total debt was $2.8 billion, or 2.2 times trailing-twelve month Adjusted EBITDA.

Tom Hill, Chairman and Chief Executive Officer, said, "2019 marks another year of strong earnings growth and cash generation.  We are particularly proud of our people who worked hard to achieve these results while ensuring another year of world-class safety performance.  Widespread improvements in pricing helped drive 8 percent growth in our industry-leading unit profitability and double-digit growth in Adjusted EBITDA, a strong result despite some higher than expected costs in the fourth quarter.  Industry leadership in safety and pace-setting unit margins are both evidence of our strong and healthy business.  Going forward, our compounding unit margins and our disciplined capital allocation position us to increase our cash flows and improve our return on invested capital again in 2020.

"Looking ahead, demand in our markets will continue to benefit from higher levels of highway funding and continued growth in residential and nonresidential markets.  This visibility into demand growth has already set the stage for solid price improvement in 2020.  Price improvement coupled with our four strategic initiatives (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing) should continue to increase unit profitability.  For the full year, we expect earnings from continuing operations between $5.20 and $5.80 per diluted share with Adjusted EBITDA between $1.385 and $1.485 billion." 

Highlights as of December 31, 2019 include:


Fourth Quarter


Full Year

Amounts in millions, except per unit data

2019

2018


2019

2018

Total revenues

$1,186.2

$1,088.0


$4,929.1

$4,382.9

Gross profit

$   293.1

$   275.3


$1,255.9

$1,100.9

Aggregates segment






Segment sales

$   960.2

$   874.0


$3,990.3

$3,513.6

Freight-adjusted revenue

$   720.6

$   657.6


$3,014.2

$2,667.3

Gross profit

$   274.5

$   256.4


$1,146.6

$   991.9

Shipments (tons)

51.6

49.7


215.5

201.4

Freight-adjusted sales price per ton

$   13.96

$   13.23


$   13.99

$   13.25

Gross profit per ton

$     5.32

$     5.16


$     5.32

$     4.93

Asphalt, Concrete & Calcium segment gross profit

$     18.6

$     18.9


$   109.3

$   109.1

Selling, Administrative and General (SAG)

$     95.8

$     84.4


$   370.5

$   333.4

SAG as % of Total revenues

8.1%

7.8%


7.5%

7.6%

Earnings from continuing operations before income taxes

$   166.0

$   153.9


$   757.7

$   623.3

Net earnings

$   141.1

$   124.0


$   617.7

$   515.8

Adjusted EBIT

$   202.8

$   195.8


$   895.4

$   785.5

Adjusted EBITDA

$   298.5

$   285.6


$1,270.0

$1,131.7

Earnings from continuing operations per diluted share

$     1.07

$     0.93


$     4.67

$     3.87

Adjusted earnings from continuing operations per diluted share

$     1.08

$     0.99


$     4.70

$     4.05

 

Segment Results

Aggregates
Fourth quarter segment sales increased 10 percent, and gross profit increased 7 percent to $275 million, or $5.32 per ton.  These improvements resulted from growth in shipments and improved pricing.

Fourth quarter aggregates shipments increased 4 percent as compared to the prior year quarter.  Markets in the Southeast and Southwest reported strong shipment growth, including double-digit growth in Florida and along the Gulf Coast.  All of the Company's key markets reported year-over-year price growth.  For the quarter, freight-adjusted average sales price increased 5.5 percent (4.8 percent on mix-adjusted basis) versus the prior year's quarter.  The 70 basis points benefit from mix was due in part to above average growth in the Company's remote-served markets.  Positive trends in booking pace, along with demand visibility and customer confidence, support our expectations for continued price improvement.

Fourth quarter profitability was negatively impacted by higher repairs and maintenance costs, geographic volume mix including higher sales volumes in rail-served remote markets, as well as lower tipping fees for clean fill.

For the full year, segment sales increased 14 percent, driven by 7 percent (6 percent same-store) volume growth and 5.6 percent price growth (5.2 percent on mix-adjusted basis).  Gross profit increased 16 percent, and unit profitability grew by 8 percent to $5.32 per ton.  The Company remains focused on compounding its industry-leading unit margins.  Cash gross profit for the year was $6.74 per ton.

Asphalt, Concrete and Calcium
Asphalt segment gross profit was $11 million for the fourth quarter, an increase of $4 million from the prior year.  Asphalt mix shipments increased 10 percent and selling prices increased 3 percent in the fourth quarter.  California, the Company's largest asphalt market, reported volume growth in the fourth quarter after a soft first half of the year due in part to weather.  The average unit cost for liquid asphalt was 12 percent lower than the prior year quarter.  Gross profit per ton in the quarter improved by 52 percent to $3.64.  

Concrete segment gross profit was $7 million, $5 million lower than the prior year.  Shipments increased 1 percent, and average selling prices increased 2 percent when compared to the prior year's fourth quarter.  Project delays, along with higher repair and maintenance costs, contributed to the year-over-year decline in gross profit.

Calcium segment gross profit was $0.8 million, up from the prior year quarter.

For the full year, Asphalt segment gross profit increased 12 percent to $63 million.  Gross profit improved year-over-year in each of the last 3 quarters, despite a 6 percent increase in the unit cost of liquid asphalt for the year.  Concrete gross profit was $43 million for the full year, down from $50 million in 2018.  Backlogs remain good.  The majority of the year-over-year change occurred in the fourth quarter as a result of project delays.    

Capital Allocation and Financial Position

In 2019, the Company realized strong cash generation, and return on invested capital improved 130 basis points to 13.9 percent on an Adjusted EBITDA basis.

Full year core operating and maintenance capital investment totaled $239 million, and internal growth projects investment was $165 million.  The Company's full-year expectations for 2020 include $275 million for core operating and maintenance capital and $200 million for internal growth projects that are largely underway.  During the year, the Company returned $167 million to shareholders through dividends and share repurchases. 

At year-end, total debt was $2.8 billion, or 2.2 times trailing-twelve month Adjusted EBITDA, down from 2.6 times at the end of the prior year.  The Company's weighted-average debt maturity was 14 years, and the weighted-average interest rate was 4.4 percent.

Selling, Administrative and General (SAG)

SAG expense was $96 million in the quarter compared to $84 million in the prior year.  The year-over-year increase was due mainly to compensation-related expense as well as higher professional fees.  For the full year, SAG expense was $371 million, or 7.5 percent of total revenues, 10 basis points lower than the prior year.  The Company remains focused on further leveraging its overhead structure. 

Outlook

Regarding the Company's outlook, Mr. Hill stated, "In 2020, we expect another year of strong earnings growth.  Vulcan-served markets should continue to benefit from public construction demand, led by higher levels of highway funding in our key states.  We anticipate residential construction in our markets to continue strengthening after experiencing some softness in certain markets during the second half of 2019.  Private nonresidential construction activity should also improve as leading indicators point to positive growth in 2020.  Demand fundamentals, including population and employment growth, continue to support longer-term growth in residential and nonresidential construction.  We are seeing a positive pricing environment driven by shipment momentum in private demand and visibility of public demand.  Our focus remains the same – compounding our unit margins through all parts of the cycle and improving our returns on capital." 

Management expectations for 2020 include:

  • Aggregates shipments growth of 2 to 4 percent
  • Aggregates freight-adjusted price increase of 4 to 6 percent
  • 10 to 15 percent growth in Asphalt, Concrete and Calcium gross profit, collectively
  • SAG expenses of approximately $365 million
  • Interest expense of approximately $125 million
  • Depreciation, depletion, accretion and amortization expense of approximately $385 million
  • An effective tax rate of approximately 20 percent
  • Earnings from continuing operations of $5.20 to $5.80 per diluted share
  • Adjusted EBITDA of $1.385 to $1.485 billion

Conference Call

Vulcan will host a conference call at 10:00 a.m. CT on February 18, 2020.  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 800-347-6311, or 323-794-2094 if outside the U.S., approximately 10 minutes before the scheduled start.  The conference ID is 6815558.  The conference call will be recorded and available for replay at the Company's website approximately two hours after the call.

Vulcan Materials Company, a member of the S&P 500 Index with headquarters in Birmingham, Alabama, is the nation's largest producer of construction aggregates – primarily crushed stone, sand and gravel – and a major producer of aggregates-based construction materials, including asphalt mix and ready-mixed concrete.  For additional information about Vulcan, go to www.vulcanmaterials.com.

FORWARD-LOOKING STATEMENT DISCLAIMER

This document contains forward-looking statements.  Statements that are not historical fact, including statements about Vulcan's beliefs and expectations, are forward-looking statements.  Generally, these statements relate to future financial performance, results of operations, business plans or strategies, projected or anticipated revenues, expenses, earnings (including EBITDA and other measures), dividend policy, shipment volumes, pricing, levels of capital expenditures, intended cost reductions and cost savings, anticipated profit improvements and/or planned divestitures and asset sales.  These forward-looking statements are sometimes identified by the use of terms and phrases such as "believe," "should," "would," "expect," "project," "estimate," "anticipate," "intend," "plan," "will," "can," "may" or similar expressions elsewhere in this document.  These statements are subject to numerous risks, uncertainties, and assumptions, including but not limited to general business conditions, competitive factors, pricing, energy costs, and other risks and uncertainties discussed in the reports Vulcan periodically files with the SEC.

Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary significantly from those expressed in or implied by the forward-looking statements.  The following risks related to Vulcan's business, among others, could cause actual results to differ materially from those described in the forward-looking statements: general economic and business conditions; Vulcan's dependence on the construction industry, which is subject to economic cycles; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction; changes in Vulcan's effective tax rate; the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, 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; the highly competitive nature of the construction 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, including the impact of climate change and the availability of water; 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; the impact of a discontinuation of the London Interbank Offered Rate (LIBOR); volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental cleanup 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 effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan's products are distributed; 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


Twelve Months Ended

Consolidated Statements of Earnings


December 31


December 31

(Condensed and unaudited)


2019


2018


2019


2018












Total revenues


$1,186,152


$1,088,047


$4,929,103


$4,382,869

Cost of revenues


893,071


812,763


3,673,202


3,281,924

 Gross profit


293,081


275,284


1,255,901


1,100,945

Selling, administrative and general expenses


95,801


84,382


370,548


333,371

Gain on sale of property, plant & equipment









 and businesses


12,770


6,570


23,752


14,944

Other operating expense, net


(16,474)


(10,983)


(31,647)


(34,805)

 Operating earnings


193,576


186,489


877,458


747,713

Other nonoperating income, net


3,289


292


9,243


13,000

Interest expense, net


30,835


32,857


129,000


137,423

Earnings from continuing operations









 before income taxes


166,030


153,924


757,701


623,290

Income tax expense


23,434


29,645


135,198


105,449

Earnings from continuing operations


142,596


124,279


622,503


517,841

Loss on discontinued operations, net of tax


(1,504)


(256)


(4,841)


(2,036)

Net earnings


$141,092


$124,023


$617,662


$515,805












Basic earnings (loss) per share









 Continuing operations


$1.08


$0.94


$4.71


$3.91

 Discontinued operations


($0.01)


$0.00


($0.04)


($0.01)

 Net earnings


$1.07


$0.94


$4.67


$3.90












Diluted earnings (loss) per share









 Continuing operations


$1.07


$0.93


$4.67


$3.87

 Discontinued operations


($0.01)


$0.00


($0.04)


($0.02)

 Net earnings


$1.06


$0.93


$4.63


$3.85























Weighted-average common shares outstanding









 Basic


132,467


132,060


132,300


132,393

 Assuming dilution


133,467


133,369


133,385


133,926

Depreciation, depletion, accretion and amortization


$95,671


$89,783


$374,596


$346,246

Effective tax rate from continuing operations


14.1%


19.3%


17.8%


16.9%

 

 








Table B

Vulcan Materials Company






and Subsidiary Companies













(in thousands)

Consolidated Balance Sheets


December 31



December 31

(Condensed and unaudited)


2019



2018

Assets






Cash and cash equivalents


$271,589



$40,037

Restricted cash


2,917



4,367

Accounts and notes receivable






 Accounts and notes receivable, gross


573,241



542,868

 Allowance for doubtful accounts


(3,125)



(2,090)

Accounts and notes receivable, net


570,116



540,778

Inventories






  Finished products


391,666



372,604

  Raw materials


31,318



27,942

  Products in process


5,604



3,064

  Operating supplies and other


29,720



25,720

 Inventories


458,308



429,330

Other current assets


76,396



64,633

Total current assets


1,379,326



1,079,145

Investments and long-term receivables


60,709



44,615

Property, plant & equipment






 Property, plant & equipment, cost


8,749,217



8,457,619

 Allowances for depreciation, depletion & amortization


(4,433,179)



(4,220,312)

Property, plant & equipment, net


4,316,038



4,237,307

Operating lease right-of-use assets, net


408,189



0

Goodwill


3,167,061



3,165,396

Other intangible assets, net


1,091,475



1,095,378

Other noncurrent assets


225,995



210,289

Total assets


$10,648,793



$9,832,130

Liabilities






Current maturities of long-term debt


25



23

Short-term debt


0



133,000

Trade payables and accruals


265,159



216,473

Other current liabilities


270,379



253,054

Total current liabilities


535,563



602,550

Long-term debt


2,784,315



2,779,357

Deferred income taxes, net


633,039



567,283

Deferred revenue


179,880



186,397

Operating lease liabilities


388,042



0

Other noncurrent liabilities


506,097



493,640

Total liabilities


$5,026,936



$4,629,227

Equity






Common stock, $1 par value


132,371



131,762

Capital in excess of par value


2,791,353



2,798,486

Retained earnings


2,895,871



2,444,870

Accumulated other comprehensive loss


(197,738)



(172,215)

Total equity


$5,621,857



$5,202,903

Total liabilities and equity


$10,648,793



$9,832,130

 

 








Table C

Vulcan Materials Company





and Subsidiary Companies












(in thousands)






Twelve Months Ended

Consolidated Statements of Cash Flows


December 31

(Condensed and unaudited)


2019


2018

Operating Activities





Net earnings




$617,662


$515,805

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





 Depreciation, depletion, accretion and amortization


374,596


346,246

 Noncash operating lease expense


35,344


0

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


(23,752)


(14,944)

 Contributions to pension plans


(8,882)


(109,631)

 Share-based compensation expense


31,843


25,215

 Deferred tax expense (benefit)


76,011


64,639

 Cost of debt purchase


0


6,922

 Changes in assets and liabilities before initial





effects of business acquisitions and dispositions


(147,218)


(6,974)

Other, net





28,518


5,499

Net cash provided by operating activities


$984,122


$832,777

Investing Activities





Purchases of property, plant & equipment


(384,094)


(469,088)

Proceeds from sale of property, plant & equipment


22,661


22,210

Proceeds from sale of businesses


1,744


11,256

Payment for businesses acquired, net of acquired cash


(44,151)


(221,419)

Other, net





(11,997)


(12,850)

Net cash used for investing activities


($415,837)


($669,891)

Financing Activities





Proceeds from short-term debt


366,900


739,900

Payment of short-term debt


(499,900)


(606,900)

Payment of current maturities and long-term debt


(23)


(892,055)

Proceeds from issuance of long-term debt


0


850,000

Debt issuance and exchange costs


0


(45,513)

Settlements of interest rate derivatives


0


3,378

Purchases of common stock


(2,602)


(133,983)

Dividends paid




(163,973)


(148,109)

Share-based compensation, shares withheld for taxes


(38,585)


(31,846)

Net cash used for financing activities


($338,183)


($265,128)

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


230,102


(102,242)

Cash and cash equivalents and restricted cash at beginning of year


44,404


146,646

Cash and cash equivalents and restricted cash at end of year


$274,506


$44,404

 

 












Table D

Segment Financial Data and Unit Shipments












(in thousands, except per unit data)






Three Months Ended


Twelve Months Ended






December 31


December 31






2019


2018


2019


2018

Total Revenues









Aggregates 1


$960,164


$873,996


$3,990,275


$3,513,649

Asphalt 2


206,331


185,819


855,821


733,182

Concrete 


95,258


92,595


395,627


401,999

Calcium 


2,118


1,974


8,191


8,110

Segment sales


$1,263,871


$1,154,384


$5,249,914


$4,656,940

Aggregates intersegment sales


(77,719)


(66,337)


(320,811)


(274,071)

Total revenues


$1,186,152


$1,088,047


$4,929,103


$4,382,869

Gross Profit









Aggregates


$274,516


$256,374


$1,146,649


$991,858

Asphalt



11,073


6,627


63,023


56,480

Concrete 


6,664


11,795


43,151


49,893

Calcium 





828


488


3,078


2,714

Total




$293,081


$275,284


$1,255,901


$1,100,945

Depreciation, Depletion, Accretion and Amortization




Aggregates


$77,787


$73,221


$305,046


$281,641

Asphalt



8,856


8,562


35,199


31,290

Concrete 


3,958


3,035


13,620


12,539

Calcium 


55


65


232


272

Other




5,015


4,900


20,499


20,504

Total




$95,671


$89,783


$374,596


$346,246

Average Unit Sales Price and Unit Shipments





Aggregates









Freight-adjusted revenues 3


$720,584


$657,580


$3,014,157


$2,667,291

Aggregates - tons


51,620


49,716


215,465


201,375

Freight-adjusted sales price 4


$13.96


$13.23


$13.99


$13.25













Other Products









Asphalt Mix - tons


3,041


2,769


12,665


11,318

Asphalt Mix - sales price


$57.87


$56.03


$57.79


$55.13













Ready-mixed concrete - cubic yards

744


737


3,104


3,223

Ready-mixed concrete - sales price


$126.97


$124.34


$126.38


$123.35













Calcium - tons


78


69


294


285

Calcium - sales price


$27.30


$28.48


$27.85


$28.44













1Includes product sales (crushed stone, sand and gravel, sand, and other aggregates), as well as freight & delivery

     costs that we pass along to our customers, and service revenues related to aggregates.

2Includes product sales, as well as service revenues from our asphalt construction paving business.

3Freight-adjusted revenues are Aggregates segment sales excluding freight & delivery revenues and immaterial

     other revenues related to services, such as landfill tipping fees that are derived from our aggregates business.

4Freight-adjusted sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments.













 

 












Appendix 1

1.   Reconciliation of Non-GAAP Measures



















Aggregates segment freight-adjusted revenues is not a Generally Accepted Accounting Principle (GAAP) measure. We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. It also excludes immaterial other revenues related to services, such as landfill tipping fees, that are derived from our aggregates business. Additionally, we use this metric as the basis for calculating the average sales price of our aggregates products. Reconciliation of this metric to its nearest GAAP measure is presented below:
















Aggregates Segment Freight-Adjusted Revenues
























(in thousands, except per ton data)



Three Months Ended


Twelve Months Ended



December 31


December 31



2019


2018


2019


2018

Aggregates segment









Segment sales


$960,164


$873,996


$3,990,275


$3,513,649

Less:       Freight & delivery revenues 1


225,139


203,518


921,064


796,929

              Other revenues


14,441


12,898


55,054


49,429

Freight-adjusted revenues


$720,584


$657,580


$3,014,157


$2,667,291

Unit shipment - tons


51,620


49,716


215,465


201,375

Freight-adjusted sales price


$13.96


$13.23


$13.99


$13.25













1At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote

  distribution sites.





















Aggregates segment incremental gross profit flow-through rate is not a GAAP measure and represents the year-over-year change in gross profit divided by the year-over-year change in segment sales excluding freight & delivery (revenues and costs). 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. Reconciliations of these metrics to their nearest GAAP measures are presented below:















Aggregates Segment Incremental Gross Profit Margin in Accordance with GAAP















(dollars in thousands)



Three Months Ended


Twelve Months Ended



December 31


December 31



2019


2018


2019


2018

Aggregates segment









Gross profit


$274,516


$256,374


$1,146,649


$991,858

Segment sales


$960,164


$873,996


$3,990,275


$3,513,649

Gross profit margin


28.6%


29.3%


28.7%


28.2%

Incremental gross profit margin


21.1%




32.5%















Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP)













(dollars in thousands)






Three Months Ended


Twelve Months Ended






December 31


December 31






2019


2018


2019


2018

Aggregates segment









Gross profit


$274,516


$256,374


$1,146,649


$991,858

Segment sales


$960,164


$873,996


$3,990,275


$3,513,649

Less:      Freight & delivery revenues 1


225,139


203,518


921,064


796,929

    Segment sales excluding freight & delivery


$735,025


$670,478


$3,069,211


$2,716,720

Gross profit flow-through rate


37.3%


38.2%


37.4%


36.5%

Incremental gross profit flow-through rate


28.1%




43.9%















1At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote

  distribution sites.





















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















Aggregates Segment Cash Gross Profit















(in thousands, except per ton data)



Three Months Ended


Twelve Months Ended



December 31


December 31



2019


2018


2019


2018

Aggregates segment









Gross profit


$274,516


$256,374


$1,146,649


$991,858

Depreciation, depletion, accretion and amortization


77,787


73,221


305,046


281,641

    Aggregates segment cash gross profit


$352,303


$329,595


$1,451,695


$1,273,499

Unit shipments - tons


51,620


49,716


215,465


201,375

Aggregates segment cash gross profit per ton


$6.82


$6.63


$6.74


$6.32

 

 












Appendix 2

Reconciliation of Non-GAAP Measures (Continued)

















GAAP does not define "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) and it should not be considered as an alternative to earnings measures defined by GAAP. We use this metric to assess the operating performance of our business and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of earnings performance from period to period. Reconciliation of this metric to its nearest GAAP measure is presented below:
















EBITDA and Adjusted EBITDA
























(in thousands)



Three Months Ended


Twelve Months Ended



December 31


December 31



2019


2018


2019


2018

Net earnings


$141,092


$124,023


$617,662


$515,805

Income tax expense


23,434


29,645


135,198


105,449

Interest expense, net


30,835


32,857


129,000


137,423

Loss on discontinued operations, net of tax


1,504


256


4,841


2,036

EBIT




$196,865


$186,781


$886,701


$760,713

Depreciation, depletion, accretion and amortization


95,671


89,783


374,596


346,246

EBITDA



$292,536


$276,564


$1,261,297


$1,106,959

    Gain on sale of businesses


(9,289)


0


(13,353)


(2,929)

    Property donation


10,847


0


10,847


0

    Business interruption claims recovery


0


0


0


(2,253)

    Charges associated with divested operations


3,033


8,497


3,033


18,545

    Business development 1


1,345


0


1,748


5,202

    Restructuring charges 2


0


513


6,457


6,219

Adjusted EBITDA


$298,472


$285,574


$1,270,029


$1,131,743

    Depreciation, depletion, accretion and amortization


(95,671)


(89,783)


(374,596)


(346,246)

Adjusted EBIT


$202,801


$195,791


$895,433


$785,497

1Represents non-routine charges associated with acquisitions including the cost impact of purchase accounting inventory valuations.

2Restructuring charges are included within other operating expenses. The 2019 charges relate to a managerial restructuring.













Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted EPS from continuing operations 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


Twelve Months Ended








December 31




December 31






2019


2018


2019


2018

Diluted EPS from continuing operations


$1.07


$0.93


$4.67


$3.87

     Items included in Adjusted EBITDA above


0.01


0.06


0.03


0.14

    Debt refinancing costs


0.00


0.00


0.00


0.04

Adjusted Diluted EPS


$1.08


$0.99


$4.70


$4.05













The following reconciliation to the mid-point of the range of 2020 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount). Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP.  Reconciliation of this metric to its nearest GAAP measure is presented below:














2020 Projected EBITDA

















(in millions)









Mid-point

Net earnings








$735

Income tax expense








190

Interest expense, net








125

Discontinued operations, net of tax








0

Depreciation, depletion, accretion and amortization








385

Projected EBITDA








$1,435

 

 












Appendix 3

Reconciliation of Non-GAAP Measures (Continued)

















We define Return on Invested Capital (ROIC) as Adjusted EBITDA for the trailing-twelve months divided by average invested capital (as illustrated below) during the trailing 5-quarters. Our calculation of ROIC is considered a non-GAAP financial measure because we calculate ROIC using the non-GAAP metric EBITDA. We believe that our ROIC metric is meaningful because it helps investors assess how effectively we are deploying our assets. Although ROIC is a standard financial metric, numerous methods exist for calculating a company's ROIC. As a result, the method we use to calculate our ROIC may differ from the methods used by other companies.
















Return on Invested Capital

















(in thousands)







2019


2018

Adjusted EBITDA






$1,270,029


$1,131,743










Property, plant & equipment






4,281,342


4,095,448

Goodwill







3,165,685


3,150,290

Other intangible assets






1,084,113


1,095,218

Fixed and Intangible Assets






$8,531,140


$8,340,956













Current Assets






1,224,316


1,125,912

Less: Cash and cash equivalents






93,528


68,349

Less: Deferred tax






12,633


0

Adjusted Current Assets






1,118,155


1,057,563













Current Liabilities






599,319


626,188

Less: Current maturities of long-term debt






24


8,295

Less: Short-term borrowings






89,700


178,600

Adjusted Current Liabilities






509,595


439,293

Adjusted Net Working Capital






$608,560


$618,270













Average Invested Capital






$9,139,700


$8,959,226













Return on Invested Capital






13.9%


12.6%

 

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

 

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SOURCE Vulcan Materials Company

Contact

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

Tel: (205) 298-3000