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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 4, 2020

 

VULCAN MATERIALS COMPANY

(Exact name of registrant as specified in its charter)
 

New Jersey   001-33841   20-8579133
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer Identification No.)

 

1200 Urban Center Drive
Birmingham, Alabama 35242
(Address of principal executive offices) (zip code)


(205) 298-3000
Registrant's telephone number, including area code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which
registered
Common Stock, $1 par value VMC New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 2.02Results of Operations and Financial Condition.

 

On August 4, 2020, Vulcan Materials Company announced its financial results for the second quarter ended June 30, 2020. The press release announcing the results is furnished as Exhibit 99.1.

 

Item 9.01Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No. Description
   
99.1 Press Release, dated August 4, 2020
   
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  VULCAN MATERIALS COMPANY
     
     
Date: August 4, 2020 By: /s/ Denson N. Franklin III
  Name: Denson N. Franklin III
  Title: Senior Vice President, General Counsel and Secretary

 

 

 

Exhibit 99.1

 

 

 

August 4, 2020

FOR IMMEDIATE RELEASE

Investor Contact: Mark Warren (205) 298-3220

Media Contact: Janet Kavinoky (205) 298-3220

 

VULCAN REPORTS SECOND QUARTER RESULTS

 

Improved Segment Earnings Across All Major Product Lines

Cost Control and Price Growth Lead to Unit Margin Expansion in Aggregates

 

Birmingham, Alabama – August 4, 2020 – Vulcan Materials Company (NYSE: VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter ended June 30, 2020.

 

Tom Hill, Chairman and Chief Executive Officer, said, “Our second quarter results demonstrate the resiliency of our best in class aggregates-led business and reflect the proactive response by our employees to the COVID-19 pandemic. Our operational execution was integral to widespread gains in unit profitability, despite some disruptions to construction activity during the quarter. I am proud of our employees’ ability to quickly adapt to the necessary additional safety protocols we have put in place in this environment, while maintaining their focus on operating safely and positioning Vulcan for continued success.”

 

Earnings from continuing operations were $211 million, or $1.58 per diluted share, an increase of 7 percent from the prior year’s second quarter. Adjusted EBITDA was $408 million, an increase of 10 percent. The year-over-year earnings improvement was driven primarily by effective cost control and price growth in aggregates. Second quarter segment earnings improved in each major product line. Despite a 2 percent decline in aggregates shipments, mix-adjusted pricing improved 3.3 percent, and freight-adjusted unit cost of sales decreased 1 percent. As a result, aggregates unit gross profit increased 9 percent to $6.25 per ton.

 

Mr. Hill went on to say, “Certain leading indicators of demand have shown signs of improvement, and our quote activity remains robust. However, our visibility beyond the near-term remains restricted due to the evolving effects of the pandemic. The recent surge in new COVID-19 cases could impact the progress made so far if new restrictions on economic activity are put in place. We believe this uncertainty could continue to weigh on construction activity in the second half of the year, making it difficult to predict the level and timing of shipments. We are continuously reviewing our operating plans to ensure an effective response to demand shifts. Whatever the demand, we remain confident in our ability to successfully navigate the changing environment.”

 

 

 

 

Page 2

August 4, 2020

FOR IMMEDIATE RELEASE

 

Highlights as of June 30, 2020 include:

 

   Second Quarter   Year-to-Date   Trailing-Twelve Months 
Amounts in millions, except per unit data  2020   2019   2020   2019   2020   2019 
Total revenues  $1,322.6   $1,327.7   $2,371.8   $2,324.2   $4,976.7   $4,652.4 
Gross profit  $396.5   $370.5   $598.2   $562.2   $1,292.0   $1,180.6 
Aggregates segment                              
Segment sales  $1,070.6   $1,062.1   $1,938.8   $1,897.0   $4,032.1   $3,754.8 
Freight-adjusted revenues  $814.7   $806.4   $1,462.7   $1,435.1   $3,041.9   $2,842.4 
Gross profit  $351.2   $329.2   $545.3   $514.9   $1,177.0   $1,075.1 
Shipments (tons)   56.2    57.3    101.2    102.9    213.8    208.8 
Freight-adjusted sales price per ton  $14.50   $14.07   $14.45   $13.94   $14.23   $13.61 
Gross profit per ton  $6.25   $5.74   $5.39   $5.00   $5.51   $5.15 
Asphalt, Concrete & Calcium segment gross profit  $45.4   $41.3   $52.9   $47.2   $115.0   $105.5 
Selling, Administrative and General (SAG)  $91.2   $95.7   $177.6   $186.0   $362.2   $351.9 
SAG as % of Total revenues   6.9%   7.2%   7.5%   8.0%   7.3%   7.6%
Earnings from continuing operations before income taxes  $272.3   $245.5   $344.5   $320.1   $782.1   $694.6 
Net earnings  $209.9   $197.6   $270.2   $260.9   $627.0   $564.0 
Adjusted EBIT  $308.3   $278.5   $413.9   $382.0   $927.3   $841.9 
Adjusted EBITDA  $407.8   $372.0   $608.8   $564.7   $1,314.2   $1,203.8 
Earnings from continuing operations per diluted share  $1.58   $1.48   $2.03   $1.97   $4.73   $4.25 
Adjusted earnings from continuing operations per diluted share  $1.60   $1.48   $2.06   $1.94   $4.82   $4.33 

 

Segment Results

Aggregates

Second quarter segment sales increased 1 percent, and gross profit increased 7 percent to $351 million, or $6.25 per ton. The improvement resulted from widespread growth in pricing and effective cost control.

 

Second quarter aggregates shipments were 2 percent lower than the prior year’s second quarter. Shipping patterns varied widely across the Company’s footprint as a result of economic uncertainty and wet weather but were generally supported by healthy backlogs and our essential business status in our markets. Key markets in the Southeast and coastal Texas were negatively affected by wet weather while shipments in California were reduced by tighter restrictions on shelter-in-place. Shipments were higher in Georgia, Illinois, Tennessee and Texas. On a mix-adjusted basis, all of the Company’s key markets reported year-over-year price growth. For the quarter, freight-adjusted average sales price increased 3 percent versus the prior year’s quarter, inclusive of 30 basis points of unfavorable mix.

 

Freight-adjusted unit cost of sales decreased 1 percent versus the prior year’s second quarter. Effective operating efficiencies helped mitigate the cost impact of lower sales volumes and a reduction in inventory. Actions taken across the Company’s more than 360 locations reduced cash spending and controlled inventories in areas most impacted by shelter-in-place orders. The associated cost of reducing inventory offset the majority of a $14 million earnings benefit from lower diesel fuel costs.

 

Unit profitability improvements were widespread across the Company’s footprint. Cash gross profit per ton increased 9 percent from the prior year’s second quarter to $7.69 per ton. For the trailing-twelve months, cash gross profit was $6.98 per ton.

 

 

 

 

Page 3

August 4, 2020

FOR IMMEDIATE RELEASE

 

Asphalt, Concrete and Calcium

Asphalt segment gross profit was $30 million, an improvement of $3 million from the prior year. The year-over-year improvement was driven by higher material margins (sales price less cost of raw materials). Although asphalt volumes in the second quarter declined 5 percent versus the prior year, we captured the benefit of lower liquid asphalt costs.

 

Concrete segment gross profit was $14 million compared with $13 million in the prior year’s second quarter. Shipments decreased 4 percent versus the prior year, and average selling prices increased 1 percent compared to the prior year.

 

Calcium segment gross profit was $0.7 million, down slightly from the prior year quarter.

 

Selling, Administrative and General (SAG)

SAG expense declined 5 percent to $91 million in the quarter due mostly to continued execution of cost reduction initiatives, lower incentive compensation costs and general cost control in response to COVID-19. This year-over-year decline resulted in a 31 basis point improvement as a percentage of total revenues. On a trailing-twelve month basis, SAG expense as a percentage of total revenues stands at 7.3 percent. The Company remains focused on further leveraging its overhead cost structure.

 

Financial Position, Liquidity and Capital Allocation

Capital expenditures in the second quarter were $68 million ($177 million year-to-date). The Company continues to expect to spend between $275 and $325 million on capital this year, most of which is for core operating and maintenance projects. Given that the economic outlook is evolving quickly, we will continue to review our plans and adjust as needed, being thoughtful about preserving liquidity.

 

For the quarter, the Company returned $45 million to shareholders through dividends, a 10 percent increase versus the prior year. The Company did not repurchase any shares in the quarter.

 

At quarter-end, total debt to trailing-twelve month Adjusted EBITDA was 2.5 times (1.9 times on a net debt basis reflecting $817 million of cash on hand). The Company’s weighted-average debt maturity was 14 years, and the effective weighted-average interest rate was 4.1 percent.

 

On a trailing twelve month basis, return on invested capital increased 100 basis points as solid earnings growth was leveraged with disciplined capital management.

 

Outlook

Regarding the Company’s outlook, Mr. Hill stated, “Although the economic environment is showing signs of improvement, the pandemic’s effect on demand and the broader economy remains unclear. As a result, we are not reinstating earnings guidance at this time.

 

 

 

 

Page 4

August 4, 2020

FOR IMMEDIATE RELEASE

 

“While demand is subject to market fluctuations outside of our control, we remain focused on those things we can control such as our cost and our pricing discipline, both of which help to compound our unit margins. Our year-to-date results demonstrate those capabilities. On a trailing-twelve month basis our cash gross profit in aggregates is nearly $7 per ton. Our operating plans are underpinned by our four strategic initiatives (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. CDT on August 4, 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 833-962-1439, or 832-900-4623 if outside the U.S., approximately 10 minutes before the scheduled start. The conference ID is 8095639. 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 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.

 

 

 

 

Page 5

August 4, 2020

FOR IMMEDIATE RELEASE

 

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   Six Months Ended 
Consolidated Statements of Earnings  June 30   June 30 
(Condensed and unaudited)  2020   2019   2020   2019 
Total revenues  $1,322,575   $1,327,682   $2,371,817   $2,324,193 
Cost of revenues   926,056    957,180    1,773,575    1,762,016 
Gross profit   396,519    370,502    598,242    562,177 
Selling, administrative and general expenses   91,205    95,689    177,635    185,957 
Gain (loss) on sale of property, plant & equipment and businesses   (258)   3,451    741    10,748 
Other operating expense, net   (6,160)   (2,190)   (10,151)   (6,461)
Operating earnings   298,896    276,074    411,197    380,507 
Other nonoperating income (expense), net   7,367    2,466    (1,969)   5,595 
Interest expense, net   33,954    33,035    64,727    65,969 
Earnings from continuing operations before income taxes   272,309    245,505    344,501    320,133 
Income tax expense   61,352    47,598    73,546    58,291 
Earnings from continuing operations   210,957    197,907    270,955    261,842 
Loss on discontinued operations, net of tax   (1,041)   (349)   (781)   (985)
Net earnings  $209,916   $197,558   $270,174   $260,857 
                     
Basic earnings (loss) per share                    
Continuing operations  $1.59   $1.50   $2.04   $1.98 
Discontinued operations  $(0.01)  $(0.01)  $0.00   $(0.01)
Net earnings  $1.58   $1.49   $2.04   $1.97 
                     
Diluted earnings (loss) per share                    
Continuing operations  $1.58   $1.48   $2.03   $1.97 
Discontinued operations  $0.00   $0.00   $0.00   $(0.01)
Net earnings  $1.58   $1.48   $2.03   $1.96 
                     
Weighted-average common shares outstanding                    
Basic   132,552    132,269    132,560    132,157 
Assuming dilution   133,115    133,354    133,154    133,199 
Depreciation, depletion, accretion and amortization  $99,470   $93,497   $194,951   $182,677 
Effective tax rate from continuing operations   22.5%   19.4%   21.3%   18.2%

 

 

 

 

                Table B

Vulcan Materials Company            

and Subsidiary Companies            

 

           (in thousands) 
Consolidated Balance Sheets  June 30   December 31   June 30 
(Condensed and unaudited)  2020   2019   2019 
Assets               
Cash and cash equivalents  $816,765   $271,589   $26,031 
Restricted cash   434    2,917    491 
Accounts and notes receivable               
Accounts and notes receivable, gross   699,320    573,241    700,175 
Allowance for doubtful accounts   (3,460)   (3,125)   (2,844)
Accounts and notes receivable, net   695,860    570,116    697,331 
Inventories               
Finished products   383,483    391,666    377,578 
Raw materials   33,178    31,318    31,137 
Products in process   5,116    5,604    6,332 
Operating supplies and other   29,703    29,720    26,376 
Inventories   451,480    458,308    441,423 
Other current assets   65,571    76,396    89,739 
Total current assets   2,030,110    1,379,326    1,255,015 
Investments and long-term receivables   43,849    60,709    51,667 
Property, plant & equipment               
Property, plant & equipment, cost   8,921,990    8,749,217    8,613,500 
Allowances for depreciation, depletion & amortization   (4,538,980)   (4,433,179)   (4,322,818)
Property, plant & equipment, net   4,383,010    4,316,038    4,290,682 
Operating lease right-of-use assets, net   426,618    408,189    418,896 
Goodwill   3,172,112    3,167,061    3,167,061 
Other intangible assets, net   1,114,592    1,091,475    1,076,986 
Other noncurrent assets   228,433    225,995    220,457 
Total assets  $11,398,724   $10,648,793   $10,480,764 
Liabilities               
Current maturities of long-term debt   500,026    25    24 
Short-term debt   0    0    137,000 
Trade payables and accruals   278,102    265,159    284,875 
Other current liabilities   260,621    270,379    241,689 
Total current liabilities   1,038,749    535,563    663,588 
Long-term debt   2,785,646    2,784,315    2,781,826 
Deferred income taxes, net   671,097    633,039    601,189 
Deferred revenue   177,534    179,880    182,666 
Operating lease liabilities   405,578    388,042    396,952 
Other noncurrent liabilities   555,969    506,097    483,096 
Total liabilities  $5,634,573   $5,026,936   $5,109,317 
Equity               
Common stock, $1 par value   132,446    132,371    132,231 
Capital in excess of par value   2,789,801    2,791,353    2,787,002 
Retained earnings   3,049,943    2,895,871    2,623,747 
Accumulated other comprehensive loss   (208,039)   (197,738)   (171,533)
Total equity  $5,764,151   $5,621,857   $5,371,447 
Total liabilities and equity  $11,398,724   $10,648,793   $10,480,764 

 

 

 

 

              Table C

Vulcan Materials Company        

and Subsidiary Companies        

 

       (in thousands) 
   Six Months Ended 
Consolidated Statements of Cash Flows  June 30 
(Condensed and unaudited)  2020   2019 
Operating Activities          
Net earnings  $270,174   $260,857 
Adjustments to reconcile net earnings to net cash provided by operating activities          
Depreciation, depletion, accretion and amortization   194,951    182,677 
Noncash operating lease expense   17,977    17,549 
Net gain on sale of property, plant & equipment and businesses   (741)   (10,748)
Contributions to pension plans   (4,409)   (4,638)
Share-based compensation expense   15,220    14,370 
Deferred tax expense (benefit)   36,644    34,816 
Changes in assets and liabilities before initial effects of business acquisitions and dispositions   (101,271)   (201,256)
Other, net   (2,954)   8,289 
Net cash provided by operating activities  $425,591   $301,916 
Investing Activities          
Purchases of property, plant & equipment   (223,147)   (225,837)
Proceeds from sale of property, plant & equipment   3,063    11,200 
Proceeds from sale of businesses   651    1,744 
Payment for businesses acquired, net of acquired cash   (5,668)   1,122 
Other, net   5,575    (4,577)
Net cash used for investing activities  $(219,526)  $(216,348)
Financing Activities          
Proceeds from short-term debt   0    360,100 
Payment of short-term debt   0    (356,100)
Payment of current maturities and long-term debt   (250,012)   (11)
Proceeds from issuance of long-term debt   750,000    0 
Debt issuance and exchange costs   (10,762)   0 
Settlements of interest rate derivatives   (19,863)   0 
Purchases of common stock   (26,132)   0 
Dividends paid   (90,128)   (81,927)
Share-based compensation, shares withheld for taxes   (15,830)   (25,508)
Other, net   (645)   (4)
Net cash provided by (used for) financing activities  $336,628   $(103,450)
Net increase (decrease) in cash and cash equivalents and restricted cash   542,693    (17,882)
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 period  $817,199   $26,522 

 

 

 

 

                      Table D

Segment Financial Data and Unit Shipments    

 

       (in thousands, except per unit data) 
   Three Months Ended   Six Months Ended 
   June 30   June 30 
   2020   2019   2020   2019 
Total Revenues                    
Aggregates 1  $1,070,596   $1,062,061   $1,938,822   $1,897,026 
Asphalt 2   222,950    247,163    362,739    379,253 
Concrete   100,683    103,768    195,448    187,405 
Calcium   1,889    2,003    3,915    3,954 
Segment sales  $1,396,118   $1,414,995   $2,500,924   $2,467,638 
Aggregates intersegment sales   (73,543)   (87,313)   (129,107)   (143,445)
Total revenues  $1,322,575   $1,327,682   $2,371,817   $2,324,193 
Gross Profit                    
Aggregates  $351,162   $329,215   $545,293   $514,931 
Asphalt   30,464    27,583    28,029    24,311 
Concrete   14,227    12,887    23,440    21,450 
Calcium   666    817    1,480    1,485 
Total  $396,519   $370,502   $598,242   $562,177 
Depreciation, Depletion, Accretion and Amortization                    
Aggregates  $80,747   $75,760   $157,883   $148,281 
Asphalt   8,668    8,884    17,402    17,434 
Concrete   4,001    3,327    8,083    6,291 
Calcium   48    58    97    118 
Other   6,006    5,468    11,486    10,553 
Total  $99,470   $93,497   $194,951   $182,677 
Average Unit Sales Price and Unit Shipments                    
Aggregates                    
Freight-adjusted revenues 3  $814,713   $806,444   $1,462,746   $1,435,051 
Aggregates - tons   56,195    57,310    101,243    102,947 
Freight-adjusted sales price 4  $14.50   $14.07   $14.45   $13.94 
Other Products                    
Asphalt Mix - tons   3,403    3,595    5,460    5,617 
Asphalt Mix - sales price  $57.46   $58.31   $57.86   $57.45 
                     
Ready-mixed concrete - cubic yards   786    815    1,520    1,484 
Ready-mixed concrete - sales price  $127.35   $126.12   $127.62   $125.14 
                     
Calcium - tons   71    73    144    141 
Calcium - sales price  $26.55   $27.50   $27.06   $27.89 

 

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   Six Months Ended 
       June 30       June 30 
   2020   2019   2020   2019 
Aggregates segment                    
Segment sales  $1,070,596   $1,062,061   $1,938,822   $1,897,026 
Less: Freight & delivery revenues 1   240,880    241,354    446,588    436,508 
Other revenues   15,003    14,263    29,488    25,467 
Freight-adjusted revenues  $814,713   $806,444   $1,462,746   $1,435,051 
Unit shipment - tons   56,195    57,310    101,243    102,947 
Freight-adjusted sales price  $14.50   $14.07   $14.45   $13.94 

 

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   Six Months Ended 
       June 30       June 30 
   2020   2019   2020   2019 
Aggregates segment                    
Gross profit  $351,162   $329,215   $545,293   $514,931 
Segment sales  $1,070,596   $1,062,061   $1,938,822   $1,897,026 
Gross profit margin   32.8%   31.0%   28.1%   27.1%
Incremental gross profit margin   257.1%        72.6%     

 

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

 

     (dollars in thousands) 
   Three Months Ended   Six Months Ended 
       June 30       June 30 
   2020   2019   2020   2019 
Aggregates segment                    
Gross profit  $351,162   $329,215   $545,293   $514,931 
Segment sales  $1,070,596   $1,062,061   $1,938,822   $1,897,026 
Less: Freight & delivery revenues 1   240,880    241,354    446,588    436,508 
Segment sales excluding freight & delivery  $829,716   $820,707   $1,492,234   $1,460,518 
Gross profit margin excluding freight & delivery   42.3%   40.1%   36.5%   35.3%
Incremental gross profit flow-through rate   243.6%        95.7%     

 

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   Six Months Ended 
       June 30       June 30 
   2020   2019   2020   2019 
Aggregates segment                    
Gross profit  $351,162   $329,215   $545,293   $514,931 
Depreciation, depletion, accretion and amortization   80,747    75,760    157,883    148,281 
Aggregates segment cash gross profit  $431,909   $404,975   $703,176   $663,212 
Unit shipments - tons   56,195    57,310    101,243    102,947 
Aggregates segment cash gross profit per ton  $7.69   $7.07   $6.95   $6.44 

 

 

 

 

                      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   Six Months Ended   TTM 
       June 30       June 30       June 30 
   2020   2019   2020   2019   2020   2019 
Net earnings  $209,916   $197,558   $270,174   $260,857   $626,979   $564,031 
Income tax expense   61,352    47,598    73,546    58,291    150,453    128,597 
Interest expense, net   33,954    33,035    64,727    65,969    127,758    132,374 
Loss on discontinued operations, net of tax   1,041    349    781    985    4,637    1,955 
EBIT  $306,263   $278,540   $409,228   $386,102   $909,827   $826,957 
Depreciation, depletion, accretion and amortization   99,470    93,497    194,951    182,677    386,870    361,851 
EBITDA  $405,733   $372,037   $604,179   $568,779   $1,296,697   $1,188,808 
Gain on sale of businesses   0    0    0    (4,064)   (9,289)   (4,064)
Property donation   0    0    0    0    10,847    0 
Business interruption claims recovery   0    0    0    0    0    (559)
Charges associated with divested operations   774    0    774    0    3,807    18,545 
Business development 1   (3,519)   0    (2,459)   0    (711)   220 
COVID-19 direct incremental costs   4,361    0    5,009    0    5,009    0 
Restructuring charges 2   465    0    1,333    0    7,790    829 
Adjusted EBITDA  $407,814   $372,037   $608,836   $564,715   $1,314,150   $1,203,779 
Depreciation, depletion, accretion and amortization   (99,470)   (93,497)   (194,951)   (182,677)   (386,870)   (361,851)
Adjusted EBIT  $308,344   $278,540   $413,885   $382,038   $927,280   $841,928 

 

1Represents non-routine charges or gains associated with acquisitions including the cost impact of purchase accounting inventory valuations.
2Restructuring charges are included within other operating expenses. The charges relate to 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   Six Months Ended   TTM 
       June 30       June 30       June 30 
   2020   2019   2020   2019   2020   2019 
Diluted EPS from continuing operations  $1.58   $1.48   $2.03   $1.97   $4.73   $4.25 
Items included in Adjusted EBITDA above   0.02    0.00    0.03    (0.03)   0.09    0.08 
Adjusted Diluted EPS  $1.60   $1.48   $2.06   $1.94   $4.82   $4.33 

 

 

 

 

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) 
       TTM 
       June 30 
   2020   2019 
Adjusted EBITDA  $1,314,150   $1,203,779 
Average invested capital 1          
Property, plant & equipment   4,335,633    4,219,693 
Goodwill   3,168,072    3,165,574 
Other intangible assets   1,087,580    1,102,803 
Fixed and intangible assets  $8,591,285   $8,488,070 
           
Current assets   1,453,094    1,155,425 
Less: Cash and cash equivalents   265,920    41,243 
Less: Deferred tax   19,289    5,973 
Adjusted current assets   1,167,885    1,108,209 
           
Current liabilities   649,772    685,591 
Less: Current maturities of long-term debt   100,025    23 
Less: Short-term debt   27,400    201,700 
Adjusted current liabilities   522,347    483,868 
Adjusted net working capital  $645,538   $624,341 
Average invested capital  $9,236,823   $9,112,411 
Return on Invested Capital   14.2%   13.2%

 

1Average Invested Capital is based on a trailing 5-quarters.

 

 

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Aug. 04, 2020
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Entity File Number 001-33841
Entity Registrant Name VULCAN MATERIALS COMPANY
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Entity Tax Identification Number 20-8579133
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Entity Address, Address Line One 1200 Urban Center Drive
Entity Address, City or Town Birmingham
Entity Address, State or Province AL
Entity Address, Postal Zip Code 35242
City Area Code 205
Local Phone Number 298-3000
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Title of 12(b) Security Common Stock, $1 par value
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