Investor Relations

Vulcan Reports Fourth Quarter And Full Year Results

02/16/21
Strong Full-Year Results Reflect Improvements in Aggregates Unit Profitability
Solid Earnings Growth Expected in 2021

BIRMINGHAM, Ala., Feb. 16, 2021 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today announced results for the quarter ended December 31, 2020.

Tom Hill, Chairman and Chief Executive Officer, said, "Our best-in-class aggregates business, along with the efforts and dedication of our employees, allowed us to overcome COVID-19 related disruptions in 2020.  Most impressive, we delivered year-over-year gains in aggregates unit profitability throughout each quarter in 2020.  Our ability to leverage Vulcan's four strategic disciplines enabled us to expand unit margins, deliver improved cash flows, and increase returns on invested capital.  Our team's hard work along with Vulcan's leading market positions and strong financial footing will enable us to capitalize on an improving demand outlook in 2021."

Net earnings were $115 million in the fourth quarter, and Adjusted EBITDA was $311 million.  Fourth quarter Adjusted EBITDA increased 4 percent despite a 1 percent decline in total revenues.  Effective cost management throughout the organization and aggregates price growth helped drive margin expansion. 

Full year revenues were $4.86 billion, 1 percent lower than the prior year, while gross profit margins expanded across each segment driving an improvement of 150 basis points in the Company's EBITDA margin.  Net earnings were $584 million, and Adjusted EBITDA was a record $1.324 billion.   

Mr. Hill continued, "Construction employment gains in key markets are a positive signal that activity levels are recovering across our footprint, as compelling fundamentals in residential construction support growing demand in 2021.  Shipments into private nonresidential continue to benefit from growth in heavy industrial projects such as data centers and warehouses, while construction starts in other categories remain below the prior year.  Recent improvements in highway lettings and contract awards indicate growing confidence and visibility fueling advancement of planned projects, particularly in the second half of 2021.  The pricing environment remains positive, and we continue to execute at a high level, positioning us well for 2021.  We expect our 2021 Adjusted EBITDA will range between $1.340 billion to $1.440 billion." 

Highlights as of December 31, 2020 include:


Fourth Quarter


Full Year

Amounts in millions, except per unit data

2020

2019


2020

2019

Total revenues

$ 1,175.1

$ 1,186.2


$ 4,856.8

$ 4,929.1

Gross profit

$    302.7

$    293.1


$ 1,281.5

$ 1,255.9

Aggregates segment






Segment sales

$    956.5

$    960.2


$ 3,944.3

$ 3,990.3

Freight-adjusted revenues

$    737.3

$    720.6


$ 3,007.6

$ 3,014.2

Gross profit

$    276.0

$    274.5


$ 1,159.2

$ 1,146.6

Shipments (tons)

51.1

51.6


208.3

215.5

Freight-adjusted sales price per ton

$    14.42

$    13.96


$    14.44

$    13.99

Gross profit per ton

$      5.40

$      5.32


$      5.57

$      5.32

Asphalt, Concrete & Calcium segment gross profit

$      26.7

$      18.6


$    122.3

$    109.3

Selling, Administrative and General (SAG)

$      98.6

$      95.8


$    359.8

$    370.5

SAG as % of Total revenues

8.4%

8.1%


7.4%

7.5%

Earnings from continuing operations before income taxes

$    141.2

$    166.0


$    743.8

$    757.7

Net earnings

$    114.5

$    141.1


$    584.5

$    617.7

Adjusted EBIT

$    210.3

$    202.8


$    926.7

$    895.4

Adjusted EBITDA

$    311.2

$    298.5


$ 1,323.5

$ 1,270.0

Earnings from continuing operations per diluted share

$      0.87

$      1.07


$      4.41

$      4.67

Adjusted earnings from continuing operations per diluted share

$      1.07

$      1.08


$      4.68

$      4.70

Reported earnings from continuing operations for the year were $588 million, or $4.41 per diluted share.  Comparing adjusted earnings from continuing operations of $4.68 per diluted share in 2020 to $4.70 per diluted share in 2019, the prior year benefited from a lower tax rate due to certain tax benefits and credits that were higher than in 2020.  The effect of the resulting higher tax rate in 2020 was $0.18 per diluted share. 

Segment Results

Aggregates

Fourth quarter gross profit increased to $276 million due to growth in pricing and effective cost control, despite a 1 percent decline in shipments.  Gains in unit profitability were widespread and marked the fourth consecutive quarter of growth in gross profit per ton.  For the full year, gross profit per ton increased 5 percent, despite 3 percent lower volumes.  This growth marks the tenth consecutive quarter of year-over-year improvement in the Company's trailing-twelve-month unit profitability.

The pricing environment continues to be positive across the Company's footprint.  On a mix-adjusted basis, all of the Company's markets reported full year price growth.  For the year, mix-adjusted pricing increased 3.1 percent (reported freight-adjusted sales price increased 3.2 percent) despite a 3 percent decline in shipments.  For the quarter, mix-adjusted sales price increased 1.8 percent, and reported freight-adjusted pricing increased 3.3 percent. 

Fourth quarter operating efficiencies and lower diesel fuel costs helped to mitigate increased spending to remove overburden ahead of future shipments and the timing of repair costs.  The Aggregates segment earnings impact from lower diesel fuel cost was $8 million in the quarter.  For the full year, freight-adjusted unit cost of sales increased 2 percent and 1 percent on a cash basis.  Flexible operating plans, disciplined cost control, and lower diesel fuel costs mitigated the impact of operational disruptions caused by the pandemic during the year.

Asphalt, Concrete and Calcium

Fourth quarter gross profit increased sharply in each segment.  Asphalt segment gross profit increased 53 percent to $17 million in the fourth quarter.  The year-over-year improvement was driven by higher material margins (sales price less unit cost of raw materials).  Segment earnings benefited from price discipline and effective cost containment, including lower liquid asphalt costs.  Shipments in the current year's quarter were lower than the prior year, as prior year shipments included certain large projects in the Arizona and Tennessee markets.

Fourth quarter concrete segment gross profit increased 28 percent to $9 million as a result of higher material margins.  Shipments decreased 12 percent versus the prior year, and average selling prices increased 2 percent compared to the prior year.  Fourth quarter shipments were impacted by the lingering effects of cement supply shortages in Northern California.

Calcium segment gross profit was $1.2 million versus $0.8 million in the prior year quarter.

Full year segment earnings increased 12 percent collectively, driven by strong year-over-year improvement in asphalt.  Each segment reported year-over-year margin expansion on lower revenues.

Selling, Administrative and General (SAG) and Other Nonoperating Expense

SAG expense was $99 million in the quarter and $360 million for the full year.  As a percentage of total revenues, SAG expense was 7.4 percent in 2020.  The Company remains focused on further leveraging its overhead cost structure.

Other nonoperating expense was $21 million, compared to income of $3 million in the prior year quarter.  This year-over-year change resulted from a non-cash pension settlement charge of $23 million, or $0.13 per diluted share, recorded in the fourth quarter in connection with a voluntary lump sum distribution of benefits to certain fully vested plan participants.  This action will benefit future expense and funding requirements.

Financial Position, Liquidity and Capital Allocation

Capital expenditures in the fourth quarter were $132 million and $361 million for the full year, most of which was directed toward core operating and maintenance projects.  During the fourth quarter, the Company restarted planned growth projects that were put on hold in March 2020 as a result of the pandemic.  In 2021, the Company expects to spend between $450 and $475 million on capital expenditures, including growth projects.  The Company will continue to review its plans and will adjust as needed, while being thoughtful about preserving liquidity. 

In 2020, the Company returned $180 million to shareholders through dividends, a 10 percent increase versus the prior year.  For the year, the Company repurchased $26 million in common stock.   

At year end, total debt to trailing-twelve month Adjusted EBITDA was 2.5 times or 1.6 times on a net debt basis reflecting $1.2 billion of cash on hand.  Approximately $500 million will be used to pay off certain debt maturities due in March 2021.  The Company's weighted-average debt maturity was 13 years, and the effective weighted-average interest rate was 4.1 percent.

Return on invested capital increased 40 basis points from the prior year to 14.3 percent.  Operating cash flows were $1.1 billion, up 9 percent versus the previous year.  Solid operating earnings growth coupled with disciplined capital management led to these results.

Outlook

Regarding the Company's outlook, Mr. Hill stated, "We are encouraged by the continued strength in residential construction activity, particularly single-family housing.  Our expectation is also supported by the recent improvement in highway awards and construction employment trends in key markets.  Data centers, distribution centers, and warehouses, which now comprise the largest share of new private nonresidential project awards, will continue to underpin demand in this end market.  We believe these leading indicators, along with sustaining a positive pricing environment, can be a catalyst for further recovery in construction activity during 2021."

Management expectations for 2021 include:

  • Aggregates shipments down 2 percent to up 2 percent versus 2020
  • Year-over-year aggregates freight-adjusted price increase of 2 to 4 percent
  • Asphalt, Concrete and Calcium gross profit up mid-to-high single digits
  • SAG expenses of $365 to $375 million
  • Interest expense of approximately $130 million
  • Depreciation, depletion, accretion and amortization expense of approximately $400 million
  • An effective tax rate of approximately 21 percent
  • Earnings from continuing operations of $4.80 to $5.40 per diluted share
  • Adjusted EBITDA of $1.340 to $1.440 billion
  • No major changes in COVID shelter-in-place restrictions

Mr. Hill concluded, "As we saw in 2020, demand for our products can be subject to market fluctuations outside of our control.  That said, we remained focused on the factors within our control, including our pricing and cost actions, both of which contributed to further improvement in our industry-leading unit margins in 2020.  We will carry that determination through 2021 and beyond.  Our operating plans are underpinned by our four strategic disciplines (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing), a healthy balance sheet, strong liquidity, and the engagement of our people."

Conference Call

Vulcan will host a conference call at 10:00 a.m. CT on February 16, 2021.  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 833-962-1439, or 832-900-4623 if outside the U.S., approximately 10 minutes before the scheduled start.  The conference ID is 5378297.  The conference call will be recorded and available for replay at the Company's website approximately two hours after the call.

About Vulcan Materials Company

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 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; a pandemic, epidemic or other public health emergency, such as the recent outbreak of COVID-19; 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 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)


2020


2019


2020


2019












Total revenues


$1,175,120


$1,186,152


$4,856,826


$4,929,103

Cost of revenues


872,379


893,071


3,575,345


3,673,202

Gross profit


302,741


293,081


1,281,481


1,255,901

Selling, administrative and general expenses


98,627


95,801


359,772


370,548

Gain on sale of property, plant & equipment









and businesses


1,681


12,770


3,997


23,752

Other operating expense, net


(9,366)


(16,474)


(29,975)


(31,647)

Operating earnings


196,429


193,576


895,731


877,458

Other nonoperating income (expense), net


(21,357)


3,289


(17,540)


9,243

Interest expense, net


33,884


30,835


134,393


129,000

Earnings from continuing operations









before income taxes


141,188


166,030


743,798


757,701

Income tax expense


25,273


23,434


155,803


135,198

Earnings from continuing operations


115,915


142,596


587,995


622,503

Loss on discontinued operations, net of tax


(1,397)


(1,504)


(3,515)


(4,841)

Net earnings


$114,518


$141,092


$584,480


$617,662












Basic earnings (loss) per share









Continuing operations


$0.87


$1.08


$4.44


$4.71

Discontinued operations


($0.01)


($0.01)


($0.03)


($0.04)

Net earnings


$0.86


$1.07


$4.41


$4.67












Diluted earnings (loss) per share









Continuing operations


$0.87


$1.07


$4.41


$4.67

Discontinued operations


($0.01)


($0.01)


($0.02)


($0.04)

Net earnings


$0.86


$1.06


$4.39


$4.63












Weighted-average common shares outstanding









Basic


132,619


132,467


132,578


132,300

Assuming dilution


133,367


133,467


133,245


133,385

Depreciation, depletion, accretion and amortization


$100,894


$95,671


$396,806


$374,596

Effective tax rate from continuing operations


17.9%


14.1%


20.9%


17.8%

 








Table B

Vulcan Materials Company






and Subsidiary Companies













(in thousands)

Consolidated Balance Sheets


December 31



December 31

(Condensed and unaudited)


2020



2019

Assets






Cash and cash equivalents


$1,197,068



$271,589

Restricted cash


945



2,917

Accounts and notes receivable






Accounts and notes receivable, gross


558,848



573,241

Allowance for doubtful accounts


(2,551)



(3,125)

Accounts and notes receivable, net


556,297



570,116

Inventories






Finished products


378,389



391,666

Raw materials


33,780



31,318

Products in process


4,555



5,604

Operating supplies and other


31,861



29,720

Inventories


448,585



458,308

Other current assets


74,270



76,396

Total current assets


2,277,165



1,379,326

Investments and long-term receivables


34,301



60,709

Property, plant & equipment






Property, plant & equipment, cost


9,102,086



8,749,217

Allowances for depreciation, depletion & amortization


(4,676,087)



(4,433,179)

Property, plant & equipment, net


4,425,999



4,316,038

Operating lease right-of-use assets, net


423,128



408,189

Goodwill


3,172,112



3,167,061

Other intangible assets, net


1,123,544



1,091,475

Other noncurrent assets


230,656



225,995

Total assets


$11,686,905



$10,648,793

Liabilities






Current maturities of long-term debt


515,435



25

Trade payables and accruals


273,080



265,159

Other current liabilities


259,368



270,379

Total current liabilities


1,047,883



535,563

Long-term debt


2,772,240



2,784,315

Deferred income taxes, net


706,050



633,039

Deferred revenue


174,045



179,880

Operating lease liabilities


399,582



388,042

Other noncurrent liabilities


559,775



506,097

Total liabilities


$5,659,575



$5,026,936

Equity






Common stock, $1 par value


132,516



132,371

Capital in excess of par value


2,802,012



2,791,353

Retained earnings


3,274,107



2,895,871

Accumulated other comprehensive loss


(181,305)



(197,738)

Total equity


$6,027,330



$5,621,857

Total liabilities and equity


$11,686,905



$10,648,793

 








Table C

Vulcan Materials Company





and Subsidiary Companies












(in thousands)






Twelve Months Ended

Consolidated Statements of Cash Flows



December 31

(Condensed and unaudited)


2020


2019

Operating Activities





Net earnings





$584,480


$617,662

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




Depreciation, depletion, accretion and amortization


396,806


374,596

Noncash operating lease expense


38,272


35,344

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


(3,997)


(23,752)

Contributions to pension plans


(8,819)


(8,882)

Share-based compensation expense


32,991


31,843

Deferred tax expense


62,018


76,011

Changes in assets and liabilities before initial





effects of business acquisitions and dispositions


(39,710)


(147,218)

Other, net





8,318


28,518

Net cash provided by operating activities


$1,070,359


$984,122

Investing Activities





Purchases of property, plant & equipment


(362,194)


(384,094)

Proceeds from sale of property, plant & equipment


11,461


22,661

Proceeds from sale of businesses


968


1,744

Payment for businesses acquired, net of acquired cash


(43,223)


(44,151)

Other, net





11,474


(11,997)

Net cash used for investing activities


($381,514)


($415,837)

Financing Activities





Proceeds from short-term debt


0


366,900

Payment of short-term debt


0


(499,900)

Payment of current maturities and long-term debt


(250,025)


(23)

Proceeds from issuance of long-term debt


750,000


0

Debt issuance and exchange costs


(15,394)


0

Settlements of interest rate derivatives


(19,863)


0

Purchases of common stock


(26,132)


(2,602)

Dividends paid




(180,216)


(163,973)

Share-based compensation, shares withheld for taxes


(22,144)


(38,522)

Other, net





(1,564)


(63)

Net cash provided by (used for) financing activities


$234,662


($338,183)

Net increase in cash and cash equivalents and restricted cash


923,507


230,102

Cash and cash equivalents and restricted cash at beginning of year


274,506


44,404

Cash and cash equivalents and restricted cash at end of year


$1,198,013


$274,506

 












Table D

Segment Financial Data and Unit Shipments












(in thousands, except per unit data)






Three Months Ended


Twelve Months Ended







December 31



December 31






2020


2019


2020


2019

Total Revenues









Aggregates 1


$956,502


$960,164


$3,944,286


$3,990,275

Asphalt 2


194,665


206,331


792,605


855,821

Concrete 


85,362


95,258


383,617


395,627

Calcium 



2,451


2,118


7,720


8,191

Segment sales


$1,238,980


$1,263,871


$5,128,228


$5,249,914

Aggregates intersegment sales


(63,860)


(77,719)


(271,402)


(320,811)

Total revenues


$1,175,120


$1,186,152


$4,856,826


$4,929,103

Gross Profit









Aggregates


$275,994


$274,516


$1,159,178


$1,146,649

Asphalt



16,987


11,073


75,233


63,023

Concrete 


8,562


6,664


44,159


43,151

Calcium 





1,198


828


2,911


3,078

Total




$302,741


$293,081


$1,281,481


$1,255,901

Depreciation, Depletion, Accretion and Amortization





Aggregates


$80,757


$77,787


$321,127


$305,046

Asphalt



8,910


8,856


34,956


35,199

Concrete 


3,940


3,958


16,010


13,620

Calcium 



43


55


189


232

Other




7,244


5,015


24,524


20,499

Total




$100,894


$95,671


$396,806


$374,596

Average Unit Sales Price and Unit Shipments





Aggregates









Freight-adjusted revenues 3


$737,313


$720,584


$3,007,634


$3,014,157

Aggregates - tons


51,132


51,620


208,295


215,465

Freight-adjusted sales price 4


$14.42


$13.96


$14.44


$13.99













Other Products









Asphalt Mix - tons


2,882


3,041


11,835


12,665

Asphalt Mix - sales price


$57.70


$57.87


$57.97


$57.79













Ready-mixed concrete - cubic yards


656


744


2,951


3,104

Ready-mixed concrete - sales price


$128.93


$126.97


$128.93


$126.38













Calcium - tons


88


78


282


294

Calcium - sales price


$27.64


$27.30


$27.32


$27.85

1

Includes 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.

2

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

3

Freight-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.

4

Freight-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






2020


2019


2020


2019

Aggregates segment









Segment sales


$956,502


$960,164


$3,944,286


$3,990,275

Less:


Freight & delivery revenues 1


205,034


225,139


877,003


921,064




Other revenues


14,155


14,441


59,649


55,054

Freight-adjusted revenues


$737,313


$720,584


$3,007,634


$3,014,157

Unit shipment - tons


51,132


51,620


208,295


215,465

Freight-adjusted sales price


$14.42


$13.96


$14.44


$13.99



1

At 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. Reconciliation of this metric to its nearest GAAP measure is 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






2020


2019


2020


2019

Aggregates segment









Gross profit


$275,994


$274,516


$1,159,178


$1,146,649

Segment sales


$956,502


$960,164


$3,944,286


$3,990,275

Gross profit margin


28.9%


28.6%


29.4%


28.7%

Incremental gross profit margin


N/A  




N/A  





 

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














(dollars in thousands)






Three Months Ended


Twelve Months Ended








December 31




December 31






2020


2019


2020


2019

Aggregates segment









Gross profit


$275,994


$274,516


$1,159,178


$1,146,649

Segment sales


$956,502


$960,164


$3,944,286


$3,990,275

Less:


Freight & delivery revenues 1


205,034


225,139


877,003


921,064


Segment sales excluding freight & delivery


$751,468


$735,025


$3,067,283


$3,069,211

Gross profit margin excluding freight & delivery


36.7%


37.3%


37.8%


37.4%

Incremental gross profit flow-through rate


9.0%




N/A 



1

At 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






2020


2019


2020


2019

Aggregates segment









Gross profit


$275,994


$274,516


$1,159,178


$1,146,649

Depreciation, depletion, accretion and amortization


80,757


77,787


321,127


305,046


Aggregates segment cash gross profit


$356,751


$352,303


$1,480,305


$1,451,695

Unit shipments - tons


51,132


51,620


208,295


215,465

Aggregates segment cash gross profit per ton


$6.98


$6.82


$7.11


$6.74


 

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






2020


2019


2020


2019

Net earnings


$114,518


$141,092


$584,480


$617,662

Income tax expense


25,273


23,434


155,803


135,198

Interest expense, net


33,884


30,835


134,393


129,000

Loss on discontinued operations, net of tax


1,397


1,504


3,515


4,841

EBIT




$175,072


$196,865


$878,191


$886,701

Depreciation, depletion, accretion and amortization


100,894


95,671


396,806


374,596

EBITDA



$275,966


$292,536


$1,274,997


$1,261,297


Gain on sale of businesses


0


(9,289)


0


(13,353)


Property donation


0


10,847


0


10,847


Charges associated with divested operations


269


3,033


6,935


3,033


Business development 1


9,447


1,345


7,334


1,748


COVID-19 direct incremental costs


2,781


0


10,170


0


Pension settlement charge


22,740


0


22,740


0


Restructuring charges


0


0


1,333


6,457

Adjusted EBITDA


$311,203


$298,472


$1,323,509


$1,270,029


Depreciation, depletion, accretion and amortization


(100,894)


(95,671)


(396,806)


(374,596)

Adjusted EBIT


$210,309


$202,801


$926,703


$895,433

Adjusted EBITDA margin


26.5%


25.2%


27.3%


25.8%


1

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

 

Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted earnings per share (EPS) from
continuing operations to provide a more consistent comparison of earnings performance from period to period.
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:


Adjusted Diluted EPS from Continuing Operations (Adjusted Diluted EPS)






















Three Months Ended


Twelve Months Ended








December 31




December 31






2020


2019


2020


2019

Diluted EPS from continuing operations


$0.87


$1.07


$4.41


$4.67


Items included in Adjusted EBITDA above


0.20


0.01


0.27


0.03

Adjusted Diluted EPS


$1.07


$1.08


$4.68


$4.70

 

Net debt to Adjusted EBITDA is not a GAAP measure and should not be considered as an alternative to metrics
defined by GAAP. We, the investment community and credit rating agencies use this metric to assess our leverage. 
Net debt subtracts cash and cash equivalents and restricted cash from total debt. Reconciliation to its nearest GAAP
measure is presented below:


Net Debt to Adjusted EBITDA



















(in thousands)










Twelve Months Ended











December 31










2020


2019

Debt











Current maturities of long-term debt






$515,435


$25

Long-term debt






2,772,240


2,784,315

Total debt






$3,287,675


$2,784,340

Less: Cash and cash equivalents and restricted cash






1,198,013


274,506

Net debt







$2,089,662


$2,509,834

Adjusted EBITDA






$1,323,509


$1,270,029

Total debt to Adjusted EBITDA






 2.5x 


 2.2x 

Net debt to Adjusted EBITDA






 1.6x 


 2.0x 

 

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




















(dollars in thousands)












TTM












December 31










2020


2019

Adjusted EBITDA






$1,323,509


$1,270,029

Average invested capital 1










Property, plant & equipment






$4,373,987


$4,281,342


Goodwill






3,170,092


3,165,685


Other intangible assets






1,104,044


1,084,113


Fixed and intangible assets






$8,648,123


$8,531,140














Current assets






$1,845,743


$1,224,316


Less: Cash and cash equivalents






698,944


93,528


Less: Current tax






18,545


12,633


Adjusted current assets






1,128,254


1,118,155














Current liabilities






833,553


599,319


Less: Current maturities of long-term debt






304,989


24


Less: Short-term debt






0


89,700


Adjusted current liabilities






528,564


509,595


Adjusted net working capital






$599,690


$608,560













Average invested capital






$9,247,813


$9,139,700













Return on invested capital






14.3%


13.9%

1

Average invested capital is based on a trailing 5-quarters.

 

The following reconciliation to the mid-point of the range of 2021 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:


2021 Projected EBITDA




















(in millions)












Mid-point

Net earnings








$680

Income tax expense








180

Interest expense, net








130

Discontinued operations, net of tax








0

Depreciation, depletion, accretion and amortization








400

Projected EBITDA








$1,390

 

 

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SOURCE Vulcan Materials Company