Vulcan Announces First Quarter 2014 Results

BIRMINGHAM, Ala., May 6, 2014 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today announced results for the first quarter ending March 31, 2014.

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

• Net sales increased $44 million, or 9 percent
• Gross profit increased $16 million, or 93 percent.  Gross profit margin increased 270 basis points
• Aggregates segment gross profit improved $14 million, or 55 percent
  • Shipments increased 6 percent, or 1.8 million tons
  • Pricing increased 2 percent
  • Cash gross profit per ton improved 8 percent
• Non-aggregates gross profit improved approximately $3 million
• Earnings from continuing operations were $0.41 per diluted share.  Included in the current year results are:
  • $1.04 per diluted share of income related to the sale of the Company's Florida-area cement and concrete assets in March
  • $0.35 per diluted share in charges to interest expense referable to the $506 million of debt purchased in March
  • Adjusted for these one-time items, earnings from continuing operations were a loss of $0.28 per diluted share versus a loss of $0.47 per diluted share in the prior year
• Adjusted EBITDA was $39 million as compared to $26 million

Don James, Chairman and Chief Executive Officer, said, "Our aggregates business reported solid growth in the first quarter despite extremely cold weather in most of our markets, and we remain confident in the full year expectations we announced in early February.  We continue to experience strengthening demand in each of our end markets and across most of our footprint.  Our operations and sales teams continue to deliver strong incremental margins.  On a 6 percent increase in aggregates volume, our teams delivered a 55 percent increase in aggregates gross profit – despite the production and shipping challenges that come with a cold, wet winter.  Aggregates pricing continues to benefit from improving demand, and we are realizing price improvements across virtually all of our markets.

"Although construction activity and aggregates consumption remain far below historical levels, our aggregates shipments have now increased year-over-year for four consecutive quarters.  With the strength of our aggregates reserves positions, our continuing profit enhancements, the divestitures of non-strategic operations, and significant debt reduction, Vulcan remains very well positioned to grow earnings faster than sales during this period of aggregates demand recovery."

Commentary on First Quarter 2014 Segment Results

Aggregates
Aggregates segment total revenue increased 13 percent and gross profit increased 55 percent versus the prior year.  Gross profit as a percent of total segment revenues increased 260 basis points versus the prior year.

Aggregates shipments increased 6 percent versus the prior year despite abnormally cold weather in most of our markets.  Shipments in California, Florida, Georgia, Illinois and Texas showed strength, each increasing by more than 15 percent versus the first quarter of last year.  In contrast, first quarter shipments in certain other markets were lower versus the prior year due to unfavorable weather, including key markets in Virginia, North Carolina and South Carolina.    

Overall, pricing increased 2 percent versus the prior year's first quarter.  Prices improved broadly with virtually all of the Company's markets realizing price increases in the quarter versus the prior year.  Despite the unfavorable weather impact, cash gross profit per ton of aggregates continued to expand, increasing 8 percent above the prior year. 

Asphalt, Concrete and Cement
Gross profit from non-aggregates businesses improved $3 million versus the prior year due mostly to higher volume and materials margin in the Asphalt Mix segment.  Concrete segment gross profit improved $1 million versus the first quarter of last year.  Unit profitability for asphalt and concrete, as measured by materials margin, increased 7 percent and 11 percent, respectively, versus the prior year level.

Other Items
On March 7, 2014, the Company completed the sale of its cement and concrete operations in the Florida area for gross proceeds of $720 million.  This transaction resulted in a pretax gain of $230 million and related charges of $9 million.  In the two months prior to the sale, these operations reported a gross profit loss of $4 million.

Additionally, during the first quarter, the Company completed its tender offer to purchase $506 million principal amount of its outstanding debt.  Charges associated with this transaction increased first quarter net interest expense by $73 million.

Consistent with Vulcan's ongoing strategy to generate value through effective land management, the Company completed the sale of two reclaimed former operating sites in the first quarter.  Total gross proceeds of $18 million were realized with associated gains of $6 million.

2014 Outlook

Regarding the Company's 2014 outlook, Mr. James stated, "Vulcan-served markets are expected to outperform other markets, led by continued improvement in private construction activity.  Leading indicators such as housing starts, nonresidential contract awards and employment continue to show favorable growth trends in Vulcan-served markets.  Additionally, we continue to pursue a number of large-scale transportation and industrial projects, which we are well positioned to supply.  While timing can be difficult to forecast, we expect these projects to play a meaningful role in our full year volumes in 2014.  Additionally, we expect any shipment delays due to severe winter weather in the first quarter to be recovered during the remainder of the year. 

"Trailing twelve month aggregates shipments have increased for four consecutive quarters and we expect this volume growth to provide positive momentum for broad-based price growth.  This top-line growth in aggregates coupled with tight management of our production costs should result in further margin expansion in aggregates.      

"We remain optimistic about the volume and margin opportunities for 2014 and beyond as underlying fundamentals that help drive aggregates demand continue to improve.  Sales momentum over the last twelve months supports our confidence in the full year aggregates volume and price growth projections we provided in February.  In our non-aggregates businesses, we expect full year volume and price improvements in both asphalt and our continuing concrete businesses, driven mostly by increased private construction activity." 

Conference Call
Vulcan will host a conference call at 10:00 a.m. CDT on May 6, 2014.  A live webcast will be available via the Company's website at www.vulcanmaterials.com.  Investors and other interested parties in the U.S. may also access the teleconference live by calling 855-877-0343 approximately 10 minutes before the scheduled start.  International participants can dial 678-509-8772.  The access code is 33654085.  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, is the nation's largest producer of construction aggregates, and a major producer of asphalt mix and concrete.

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 that can adversely impact results; the increasing reliance on information technology infrastructure for Vulcan's ticketing, procurement, financial statements and other processes could adversely affect operations in the event such 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; 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; the impact of Vulcan's below investment grade debt rating on Vulcan's cost of capital; 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 previously divested businesses; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully integrate acquisitions; Vulcan's ability to implement successfully a management succession plan; the potential of goodwill or long-lived asset impairment; the potential impact of future legislation or regulations relating to climate change or greenhouse gas emissions or the definition of minerals; and other assumptions, risks and uncertainties detailed from time to time in the 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.  

SOURCE Vulcan Materials Company