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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

(Mark One)

þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2021

 


OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from                 to


Commission File Number 001-33841


VULCAN MATERIALS COMPANY
(Exact name of registrant as specified in its charter)


 New Jersey 
(State or other jurisdiction of incorporation)


20-8579133
(I.R.S. Employer Identification No.)


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


35242
(zip code)


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


Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class


Trading Symbol

Name of each exchange on
which registered

 Common Stock, $1 par value 

VMC

 New York Stock Exchange 


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer þ


Accelerated filer o


Smaller reporting company o


Non-accelerated filer o


Emerging growth company o


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. o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ


Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:


                    Class                    

Shares outstanding
      at April 22, 2021      

Common Stock, $1 Par Value

132,665,247

 


VULCAN MATERIALS COMPANY

FORM 10-Q

QUARTER ENDED MARCH 31, 2021

Contents

Page

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

 2

 3

 4

 5

Item 2.

Management’s Discussion and Analysis of Financial

   Condition and Results of Operations

27

Item 3.

Quantitative and Qualitative Disclosures About

   Market Risk

46

Item 4.

Controls and Procedures

46

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

47

Item 1A.

Risk Factors

47

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

47

Item 4.

Mine Safety Disclosures

47

Item 6.

Exhibits

48

Signatures

49

Unless otherwise stated or the context otherwise requires, references in this report to “Vulcan,” the “Company,” “we,” “our,” or “us” refer to Vulcan Materials Company and its consolidated subsidiaries.

 

 


1


part I financial information

  ITEM 1

FINANCIAL STATEMENTS

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

March 31

December 31

March 31

in thousands

2021

2020

2020

Assets

Cash and cash equivalents

$       722,344 

$    1,197,068 

$       120,041 

Restricted cash

168,595 

945 

232 

Accounts and notes receivable

Accounts and notes receivable, gross

596,006 

558,848 

601,182 

Allowance for doubtful accounts

(2,878)

(2,551)

(3,517)

Accounts and notes receivable, net

593,128 

556,297 

597,665 

Inventories

Finished products

368,758 

378,389 

403,612 

Raw materials

36,095 

33,780 

33,676 

Products in process

4,573 

4,555 

5,010 

Operating supplies and other

31,903 

31,861 

28,449 

Inventories

441,329 

448,585 

470,747 

Other current assets

67,612 

74,270 

88,095 

Total current assets

1,993,008 

2,277,165 

1,276,780 

Investments and long-term receivables

34,265 

34,301 

57,987 

Property, plant & equipment

Property, plant & equipment, cost

9,110,336 

9,102,086 

8,907,788 

Allowances for depreciation, depletion & amortization

(4,746,996)

(4,676,087)

(4,506,700)

Property, plant & equipment, net

4,363,340 

4,425,999 

4,401,088 

Operating lease right-of-use assets, net

421,625 

423,128 

420,930 

Goodwill

3,172,112 

3,172,112 

3,167,061 

Other intangible assets, net

1,114,617 

1,123,544 

1,083,515 

Other noncurrent assets

233,793 

230,656 

222,021 

Total assets

$  11,332,760 

$  11,686,905 

$  10,629,382 

Liabilities

Current maturities of long-term debt

15,436 

515,435 

25 

Trade payables and accruals

255,624 

273,080 

243,019 

Other current liabilities

294,797 

259,368 

232,632 

Total current liabilities

565,857 

1,047,883 

475,676 

Long-term debt

2,772,901 

2,772,240 

2,785,566 

Deferred income taxes, net

733,561 

706,050 

648,405 

Deferred revenue

172,377 

174,045 

178,568 

Operating lease liabilities

397,306 

399,582 

399,489 

Other noncurrent liabilities

554,517 

559,775 

551,352 

Total liabilities

$    5,196,519 

$    5,659,575 

$    5,039,056 

Other commitments and contingencies (Note 8)

 

 

 

Equity

Common stock, $1 par value, Authorized 480,000 shares,

Outstanding 132,664, 132,516 and 132,433 shares, respectively

132,664 

132,516 

132,433 

Capital in excess of par value

2,797,687 

2,802,012 

2,782,738 

Retained earnings

3,385,604 

3,274,107 

2,885,084 

Accumulated other comprehensive loss

(179,714)

(181,305)

(209,929)

Total equity

$    6,136,241 

$    6,027,330 

$    5,590,326 

Total liabilities and equity

$  11,332,760 

$  11,686,905 

$  10,629,382 

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.


2


VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME

Three Months Ended

Unaudited

March 31

in thousands, except per share data

2021

2020

Total revenues

$    1,068,344 

$    1,049,242 

Cost of revenues

839,077 

847,519 

Gross profit

229,267 

201,723 

Selling, administrative and general expenses

88,593 

86,430 

Gain on sale of property, plant & equipment

and businesses

117,165 

999 

Other operating expense, net

(8,326)

(3,991)

Operating earnings

249,513 

112,301 

Other nonoperating income (expense), net

5,913 

(9,336)

Interest expense, net

33,118 

30,773 

Earnings from continuing operations

before income taxes

222,308 

72,192 

Income tax expense

60,638 

12,194 

Earnings from continuing operations

161,670 

59,998 

Earnings (loss) on discontinued operations, net of tax

(1,056)

260 

Net earnings

$       160,614 

$         60,258 

Other comprehensive income (loss), net of tax

Deferred loss on interest rate derivative

0 

(14,680)

Amortization of prior interest rate derivative loss

356 

794 

Amortization of actuarial loss and prior service

cost for benefit plans

1,235 

1,695 

Other comprehensive income (loss)

1,591 

(12,191)

Comprehensive income

$       162,205 

$         48,067 

Basic earnings (loss) per share

Continuing operations

$             1.22 

$             0.45 

Discontinued operations

(0.01)

0.00 

Net earnings

$             1.21 

$             0.45 

Diluted earnings (loss) per share

Continuing operations

$             1.21 

$             0.45 

Discontinued operations

(0.01)

0.00 

Net earnings

$             1.20 

$             0.45 

Weighted-average common shares outstanding

Basic

132,749 

132,567 

Assuming dilution

133,415 

133,259 

Effective tax rate from continuing operations

27.3%

16.9%

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.


3


VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Unaudited

March 31

in thousands

2021

2020

Operating Activities

Net earnings

$       160,614 

$         60,258 

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

Depreciation, depletion, accretion and amortization

100,368 

95,480 

Noncash operating lease expense

10,528 

8,851 

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

(117,165)

(999)

Contributions to pension plans

(2,124)

(2,144)

Share-based compensation expense

7,869 

6,716 

Deferred tax expense

26,949 

19,671 

Changes in assets and liabilities before initial

effects of business acquisitions and dispositions

(16,992)

(99,597)

Other, net

(785)

(5,761)

Net cash provided by operating activities

$       169,262 

$         82,475 

Investing Activities

Purchases of property, plant & equipment

(100,650)

(142,650)

Proceeds from sale of property, plant & equipment

186,497 

2,536 

Other, net

25 

9,872 

Net cash provided by (used for) investing activities

$         85,872 

$     (130,242)

Financing Activities

Payment of current maturities and long-term debt

(500,006)

(6)

Settlements of interest rate derivatives

0 

(19,863)

Purchases of common stock

0 

(26,132)

Dividends paid

(49,085)

(45,100)

Share-based compensation, shares withheld for taxes

(12,086)

(15,064)

Other, net

(1,031)

(301)

Net cash used for financing activities

$     (562,208)

$     (106,466)

Net decrease in cash and cash equivalents and restricted cash

(307,074)

(154,233)

Cash and cash equivalents and restricted cash at beginning of year

1,198,013 

274,506 

Cash and cash equivalents and restricted cash at end of period

$       890,939 

$       120,273 

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of the statements.

4


notes to condensed consolidated financial statements

Note 1: summary of significant accounting policies

NATURE OF OPERATIONS

Vulcan Materials Company (the “Company,” “Vulcan,” “we,” “our”), a New Jersey corporation, is the nation's largest supplier of construction aggregates (primarily crushed stone, sand and gravel) and a major producer of asphalt mix and ready-mixed concrete.

We operate primarily in the United States and our principal product — aggregates — is used in virtually all types of public and private construction projects and in the production of asphalt mix and ready-mixed concrete. We serve markets in twenty states, Washington D.C., and the local markets surrounding our operations in Mexico. Our primary focus is serving metropolitan markets in the United States that are expected to experience the most significant growth in population, households and employment. These three demographic factors are significant drivers of demand for aggregates. While aggregates is our focus and primary business, we produce and sell asphalt mix and/or ready-mixed concrete in our Alabama, Arizona, California, Maryland, New Mexico, Tennessee, Texas, Virginia and Washington D.C. markets.

BASIS OF PRESENTATION

Our accompanying unaudited condensed consolidated financial statements were prepared in compliance with the instructions to Form 10-Q and Article 10 of Regulation S-X and thus do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. We prepared the accompanying condensed consolidated financial statements on the same basis as our annual financial statements, except for the adoption of new accounting standards as described in Note 17. Our Condensed Consolidated Balance Sheet as of December 31, 2020 was derived from the audited financial statement, but it does not include all disclosures required by GAAP. In the opinion of our management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. For further information, refer to the consolidated financial statements and footnotes included in our most recent Annual Report on Form 10-K. Operating results for the three month period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, particularly in light of the uncertainty over the economic and operational impacts of the current novel coronavirus (COVID-19) pandemic.

While we continue to operate as an essential business, the COVID-19 pandemic has impacted our industry and the economy. Our condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues and expenses. Such estimates and assumptions affect, among other things, our goodwill and long-lived asset valuations; inventory valuation; assessment of the annual effective tax rate; valuation of deferred income taxes; allowance for doubtful accounts; measurement of cash bonus plans; and pension plan assumptions. Events and changes in circumstances arising after March 31, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

Due to the 2005 sale of our Chemicals business as described within this Note under the caption Discontinued Operations, the results of the Chemicals business are presented as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income.

RESTRICTED CASH

Restricted cash primarily consists of cash proceeds from the sale of property held in escrow for the acquisition of replacement property under like-kind exchange agreements. The escrow accounts are administered by an intermediary. Cash restricted pursuant to like-kind exchange agreements remains restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property. Restricted cash may also include cash reserved by other contractual agreements (such as asset purchase agreements) for a specified purpose and therefore is not available for use for other purposes. Restricted cash is included with cash and cash equivalents in the accompanying Condensed Consolidated Statements of Cash Flows.

5


LEASES

Our nonmineral leases with initial terms in excess of one year are recognized on the balance sheet as right-of-use (ROU) assets and lease liabilities. Mineral leases are exempt from balance sheet recognition.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The lease term only includes options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU assets are adjusted for any prepaid lease payments and lease incentives. Except for equipment with monthly monitoring service where the service component accounts for a majority of the lease cost, the non-lease components of our lease agreements are not separated from the lease components.

For additional information about leases see Note 2.

DISCONTINUED OPERATIONS

In 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation. The financial results of the Chemicals business are classified as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income for all periods presented. Results from discontinued operations are as follows:

Three Months Ended

March 31

in thousands

2021

2020

Discontinued Operations

Pretax gain (loss)

$       (1,424)

$           354 

Income tax (expense) benefit

368 

(94)

Earnings (loss) on discontinued operations,

net of tax

$       (1,056)

$           260 

Our discontinued operations include charges/credits related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business (including certain matters as discussed in Note 8). There were no revenues from discontinued operations for the periods presented.

EARNINGS PER SHARE (EPS)

Earnings per share are computed by dividing net earnings by the weighted-average common shares outstanding (basic EPS) or weighted-average common shares outstanding assuming dilution (diluted EPS), as set forth below:

Three Months Ended

March 31

in thousands

2021

2020

Weighted-average common shares

outstanding

132,749 

132,567 

Dilutive effect of

Stock-Only Stock Appreciation Rights

296 

345 

Other stock compensation plans

370 

347 

Weighted-average common shares

outstanding, assuming dilution

133,415 

133,259 

All dilutive common stock equivalents are reflected in our earnings per share calculations. In periods of loss, shares that otherwise would have been included in our diluted weighted-average common shares outstanding computation would be excluded.

6


Antidilutive common stock equivalents are not included in our earnings per share calculations. The number of antidilutive common stock equivalents for which the exercise price exceeds the weighted-average market price is as follows: