BIRMINGHAM, Ala., May 4, 2015 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today announced results for the first quarter ending March 31, 2015.
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The Company's first quarter results reflect strong earnings growth and improvement in its industry-leading unit profitability in aggregates. First quarter Adjusted EBITDA was $77 million, an increase of 97 percent from the prior year, with gross profit improving in all segments. Same-store aggregates shipments rose 9 percent despite challenging weather in certain key markets. Same-store, freight-adjusted aggregates pricing rose $0.44 per ton, or 4 percent, in the quarter – with further pricing gains expected throughout the year. Same-store gross profit per aggregates ton increased $0.81 over the prior year quarter, as the Company controlled costs and captured the benefit of lower diesel prices. For the quarter, and for the trailing twelve months, incremental aggregates segment gross profit was 68 percent of incremental freight-adjusted revenues – again on a same-store basis. The remainder of this release provides additional detail regarding the Company's first quarter results and full year outlook.
First Quarter Summary (compared with prior year's first quarter)
- Total revenues increased $57 million, or 10 percent, to $631 million
- Total gross profit increased $44 million, or 128 percent, to $78 million
- Aggregates freight-adjusted revenues increased $56 million, or 17 percent, to $380 million
- Shipments increased 13 percent, or 3.9 million tons, to 33.5 million tons
- Same-store shipments increased 9 percent, or 2.7 million tons
- Segment gross profit increased $29 million, or 76 percent, to $68 million
- Incremental gross profit as a percent of freight-adjusted revenues was 52 percent
- On a same-store basis, this metric was 68 percent
- Average freight-adjusted sales price increased 4 percent despite negative product mix
- Shipments increased 13 percent, or 3.9 million tons, to 33.5 million tons
- Asphalt, Concrete and Calcium segment gross profit improved $15 million, collectively
- SAG was flat over the prior year, at approximately $67 million
- Adjusted EBITDA was $77 million, an increase of $38 million, or 97 percent
- Earnings from continuing operations were a loss of $0.28 per diluted share versus earnings of $0.41 per share in the first quarter of 2014. Included in these results are:
- $0.12 per diluted share in the current year's quarter for net charges related to debt purchase completed in March, gain on sale of assets, restructuring and business development costs
- Included in the prior year's first quarter results were $1.04 per diluted share of income related to the sale of the Company's Florida-area cement and concrete assets, and $0.35 per share in debt purchase charges
- Adjusted for these items, earnings from continuing operations were a loss of $0.16 per diluted share in the first quarter of 2015 versus a loss of $0.28 per diluted share in the prior year
Tom Hill, President and Chief Executive Officer, said, "Our local leadership teams continue to excel at balancing our core profit drivers: price for service, sales and production mix, and operating efficiency and leverage. Although demand for our products remains well below normal levels, the gradual recovery in construction activity continues across most of our markets. As a result of improving market conditions and our continued focus on internal profit improvements, both pricing and margins continue to expand. Looking ahead, we remain well positioned to serve our customers and to achieve strong earnings growth in 2015 and beyond."
Commentary on Quarterly Segment Results
Aggregates Segment
Shipment momentum continued across most of the Company's footprint in the first quarter, driven by strengthening construction activity across all end-use markets. On a same-store basis, Arizona, Florida, Illinois, North Carolina, Texas and Virginia each saw shipment growth greater than 10 percent. Same-store aggregates shipments in California increased 8 percent. In contrast, Georgia aggregates shipments for the quarter declined 4 percent due to adverse weather conditions; our full year outlook for Georgia shipments remains unchanged. These shipment increases, coming despite weather limiting available construction days in several markets, reflect the growing strength of the recovery in aggregates demand in Vulcan-served markets. For the twelve months ended March 31, same-store shipments rose 11 percent over the year-earlier period. This quarter was the seventh consecutive quarter in which the rate of shipment growth, on a consecutive trailing twelve month basis, has increased. Overall demand for aggregates remains well below historic levels despite these recent gains.
Freight-adjusted average sales price for aggregates increased approximately 4 percent on a same-store basis, or $0.44 per ton, versus the prior year's first quarter, with most markets realizing accelerating price improvement. Product mix muted the impact of real price increases in some key markets, including Virginia, where large shipments of lower-priced fines product combined with delays in shipments to concrete and asphalt customers due to weather contributed to an approximately 5 percent decline in quarterly average selling prices over the prior year. In many markets, price increases announced April 1 have been well accepted. Given these and other indicators, we expect overall aggregates pricing to continue to rise throughout the year.
During the first quarter, the Company's same-store, per-ton margins continued to expand faster than per-ton pricing. Gross profit per ton increased $0.81, or 62 percent, from the prior year. Cash gross profit per ton increased $0.57, or 18 percent, from the prior year. On a trailing twelve month basis, same-store unit gross profit has increased 21 percent, while unit cash gross profit has increased 10 percent to $4.85 per ton – a new twelve-month high despite cyclically low volumes. These results, which were aided in the first quarter by the year-on-year decline in diesel costs, also reflect the Company's continued commitment to plant-level cost controls and operating disciplines.
For the quarter, aggregates same-store freight-adjusted revenues increased $44 million, while same-store gross profit for the segment increased $30 million, a flow-through rate of 68 percent. Because quarterly results can be volatile due to seasonality and other factors, the Company encourages investors to also consider longer-term trends. On a trailing-twelve-month basis, this flow-through rate has consistently exceeded the Company's stated goal of 60 percent since volumes began to recover in the second half of 2013.
Asphalt, Concrete and Calcium Segments
In the first quarter, asphalt gross profit was $9 million versus $5 million in the prior year. This year-over-year improvement was due to improved margins and higher volumes. Same-store asphalt volumes increased 6 percent due to growth in Arizona and California.
Concrete gross profit improved $10 million from a loss of $9 million in the prior year. Last year's first quarter results included the Company's Florida concrete business that was sold in March 2014 as well as the Company's California concrete business that was divested via an asset swap in January 2015. On a same-store basis, sales volumes were flat versus the prior year due to unusually cold weather in Virginia and Maryland. Pricing and unit profitability improved, and same-store gross profit increased $6 million.
The Company's cement business was also sold in March of last year. The Company retained its calcium products business that is now reported separately as a segment. In the first quarter, the Calcium segment reported gross profit of $0.6 million, an improvement over the prior year.
Diesel Fuel and Other Cost Items
Compared to last year, first quarter cost of revenues for the Company benefitted by approximately $14 million from lower diesel fuel costs, with approximately $13 million of this benefit realized in the Aggregates segment. Diesel related cost-savings helped offset certain other production cost challenges inherent in meeting rising customer demand in winter weather conditions (e.g., difficulty maintaining consistent and efficient production schedules).
In total, the operations acquired by the Company since the third quarter of 2014 recorded a $0.3 million gross profit loss in the first quarter. These results, which were in line with management expectations, reflect the higher costs of purchased inventory as well as the impact of fixed charges during a period of seasonally low volumes. The Company's full-year outlook for the performance of these operations remains unchanged.
The Company expects that full-year pension and post retirement-related costs, a portion of which flow through selling, administrative and general (SAG), will be approximately $10 million higher than the prior year primarily due to changes in the assumptions used to value future obligations. In addition, certain compensation-related charges increased by approximately $2.5 million during the first quarter as a result of the rise in the Company's stock price. Despite these items, first quarter SAG expenses were approximately flat compared to the prior year. The Company intends to further leverage SAG expenses to sales throughout the remainder of the year.
Capital Allocation
During March and April, the Company completed major components of the refinancing plan announced during its February 25, 2015 Investor Day. The Company issued $400 million of 4.50 percent unsecured notes due in 2025, and repurchased or redeemed approximately $470 million of debt. Additionally, the Company has fully syndicated a $250 million increase to its revolving credit facility with an expected close of mid-May. The expanded capacity will be used to refinance the December 2015 note of $150 million. With the completed and planned actions, the Company has refinanced, redeemed or repurchased approximately $620 million of debt that would otherwise have matured over the next five years. The results of these actions include: total debt remaining at approximately $2 billion, enhanced financial flexibility, a better match of the debt portfolio duration to the Company's long-term asset base, and a lower weighted average interest rate.
Refinancing expenses, including the acceleration of previously deferred financing costs associated with the completed and planned actions, are expected to be approximately $69 million, approximately $22 million of which was incurred in the first quarter and was reported as part of interest expense. The remainder will be reported as part of interest expense in the second quarter. The timing of these actions resulted in a temporary $272 million increase to debt as of March 31, 2015. Subsequent to the April redemptions, total debt returned to approximately $2 billion.
As noted in the Company's fourth quarter earnings release dated February 5, 2015, the Company completed an asset exchange transaction in January in which it exited the ready-mixed concrete business in California and added thirteen asphalt plant locations, primarily in Arizona. The Company will continue to supply aggregates to its former concrete plants in California. This transaction resulted in a gain of $6 million.
Outlook
Regarding the Company's outlook for 2015, Mr. Hill stated, "Our teams throughout the Company are executing well. We are pleased with our first quarter results, despite challenging weather in several key markets. Our performance in the quarter directly reflects the great efforts of our people at all levels of the organization.
"Underlying demand remains strong, and we are seeing accelerating momentum in aggregates volumes and pricing throughout our markets. The growth rate in our trailing twelve month aggregates shipments has increased for seven consecutive quarters and, as expected, that momentum is beginning to benefit aggregates pricing. This momentum underscores our confidence in the full year expectations we provided in early February of this year.
"Those expectations for 2015 include Adjusted EBITDA of $775 to $825 million, driven by strong growth in aggregates gross profit, earnings improvement in our non-aggregates businesses and continuing leverage of our selling, administrative and general expenses. Supporting these expectations for strong earnings growth is an 11 percent increase in aggregates shipments (8 percent same-store) and a 6 percent increase in pricing. As noted, we realized cost savings from lower costs for diesel fuel in the first quarter. If diesel prices remain at current levels, our Adjusted EBITDA expectations would move towards the high end of our guidance.
"Momentum remains strong in Vulcan-served markets. We are optimistic about the volume growth, pricing momentum and strong margin expansion we see across our markets. We will remain focused on executing our sales and operating plans to deliver quality products and services to our customers safely and efficiently and on achieving significant future earnings growth and margin expansion."
Conference Call
Vulcan will host a conference call at 9:00 a.m. CDT on May 5, 2015. A 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 conference ID is 34657903. 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 other construction materials.
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 successfully implement our new divisional structure and changes in our management team; Vulcan's ability to manage and successfully integrate acquisitions; 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.
Table A |
||||||
Vulcan Materials Company |
||||||
and Subsidiary Companies |
||||||
(Amounts and shares in thousands, except per share data) |
||||||
Three Months Ended |
||||||
Consolidated Statements of Earnings |
March 31 |
|||||
(Condensed and unaudited) |
2015 |
2014 |
||||
Total revenues |
$631,293 |
$574,420 |
||||
Cost of revenues |
553,428 |
540,328 |
||||
Gross profit |
77,865 |
34,092 |
||||
Selling, administrative and general expenses |
66,763 |
66,119 |
||||
Gain on sale of property, plant & equipment |
||||||
and businesses, net |
6,375 |
236,364 |
||||
Restructuring charges |
(2,818) |
- |
||||
Other operating expense, net |
(3,900) |
(9,668) |
||||
Operating earnings |
10,759 |
194,669 |
||||
Other nonoperating income, net |
979 |
2,825 |
||||
Interest expense, net |
62,480 |
120,089 |
||||
Earnings (loss) from continuing operations |
||||||
before income taxes |
(50,742) |
77,405 |
||||
Provision for (benefit from) income taxes |
(14,075) |
22,900 |
||||
Earnings (loss) from continuing operations |
(36,667) |
54,505 |
||||
Loss on discontinued operations, net of taxes |
(3,011) |
(510) |
||||
Net earnings (loss) |
($39,678) |
$53,995 |
||||
Basic earnings (loss) per share |
||||||
Continuing operations |
($0.28) |
$0.42 |
||||
Discontinued operations |
($0.02) |
($0.01) |
||||
Net earnings (loss) |
($0.30) |
$0.41 |
||||
Diluted earnings (loss) per share |
||||||
Continuing operations |
($0.28) |
$0.41 |
||||
Discontinued operations |
($0.02) |
$0.00 |
||||
Net earnings (loss) |
($0.30) |
$0.41 |
||||
Weighted-average common shares outstanding |
||||||
Basic |
132,659 |
130,810 |
||||
Assuming dilution |
132,659 |
132,314 |
||||
Dividends declared per share |
$0.10 |
$0.05 |
||||
Depreciation, depletion, accretion and amortization |
$66,723 |
$69,378 |
||||
Effective tax rate from continuing operations |
27.7% |
29.6% |
||||
Table B |
||||||||
Vulcan Materials Company |
||||||||
and Subsidiary Companies |
||||||||
(Amounts in thousands, except per share data) |
||||||||
Consolidated Balance Sheets |
March 31 |
December 31 |
March 31 |
|||||
(Condensed and unaudited) |
2015 |
2014 |
2014 |
|||||
Assets |
||||||||
Cash and cash equivalents |
$392,657 |
$141,273 |
$268,773 |
|||||
Restricted cash |
- |
- |
63,024 |
|||||
Accounts and notes receivable |
||||||||
Accounts and notes receivable, gross |
375,196 |
378,947 |
353,601 |
|||||
Less: Allowance for doubtful accounts |
(5,244) |
(5,105) |
(5,264) |
|||||
Accounts and notes receivable, net |
369,952 |
373,842 |
348,337 |
|||||
Inventories |
||||||||
Finished products |
285,313 |
275,172 |
258,007 |
|||||
Raw materials |
21,203 |
19,741 |
19,431 |
|||||
Products in process |
1,189 |
1,250 |
875 |
|||||
Operating supplies and other |
25,987 |
25,641 |
27,520 |
|||||
Inventories |
333,692 |
321,804 |
305,833 |
|||||
Current deferred income taxes |
39,881 |
39,726 |
39,591 |
|||||
Prepaid expenses |
58,483 |
28,640 |
28,184 |
|||||
Assets held for sale |
- |
15,184 |
- |
|||||
Total current assets |
1,194,665 |
920,469 |
1,053,742 |
|||||
Investments and long-term receivables |
41,613 |
41,650 |
42,137 |
|||||
Property, plant & equipment |
||||||||
Property, plant & equipment, cost |
6,671,537 |
6,608,842 |
6,340,034 |
|||||
Reserve for depreciation, depletion & amortization |
(3,587,444) |
(3,537,212) |
(3,446,744) |
|||||
Property, plant & equipment, net |
3,084,093 |
3,071,630 |
2,893,290 |
|||||
Goodwill |
3,094,824 |
3,094,824 |
3,081,521 |
|||||
Other intangible assets, net |
764,072 |
758,243 |
633,870 |
|||||
Other noncurrent assets |
171,348 |
175,086 |
167,675 |
|||||
Total assets |
$8,350,615 |
$8,061,902 |
$7,872,235 |
|||||
Liabilities |
||||||||
Current maturities of long-term debt |
$365,441 |
$150,137 |
$171 |
|||||
Trade payables and accruals |
157,829 |
145,148 |
150,628 |
|||||
Other current liabilities |
180,066 |
156,073 |
190,069 |
|||||
Liabilities of assets held for sale |
- |
520 |
- |
|||||
Total current liabilities |
703,336 |
451,878 |
340,868 |
|||||
Long-term debt |
1,912,455 |
1,855,447 |
2,006,782 |
|||||
Noncurrent deferred income taxes |
682,849 |
691,137 |
693,234 |
|||||
Deferred revenue |
212,987 |
213,968 |
218,946 |
|||||
Other noncurrent liabilities |
678,821 |
672,773 |
581,286 |
|||||
Total liabilities |
4,190,448 |
3,885,203 |
3,841,116 |
|||||
Equity |
||||||||
Common stock, $1 par value |
132,660 |
131,907 |
130,802 |
|||||
Capital in excess of par value |
2,765,391 |
2,734,661 |
2,651,949 |
|||||
Retained earnings |
1,418,901 |
1,471,845 |
1,343,294 |
|||||
Accumulated other comprehensive loss |
(156,785) |
(161,714) |
(94,926) |
|||||
Total equity |
4,160,167 |
4,176,699 |
4,031,119 |
|||||
Total liabilities and equity |
$8,350,615 |
$8,061,902 |
$7,872,235 |
|||||
Table C |
|||||||
Vulcan Materials Company |
|||||||
and Subsidiary Companies |
|||||||
(Amounts in thousands) |
|||||||
Three Months Ended |
|||||||
Consolidated Statements of Cash Flows |
March 31 |
||||||
(Condensed and unaudited) |
2015 |
2014 |
|||||
Operating Activities |
|||||||
Net earnings (loss) |
($39,678) |
$53,995 |
|||||
Adjustments to reconcile net earnings to net cash provided by operating activities |
|||||||
Depreciation, depletion, accretion and amortization |
66,723 |
69,378 |
|||||
Net gain on sale of property, plant & equipment and businesses |
(6,375) |
(236,364) |
|||||
Contributions to pension plans |
(1,447) |
(1,355) |
|||||
Share-based compensation |
4,700 |
4,319 |
|||||
Excess tax benefits from share-based compensation |
(7,575) |
(2,997) |
|||||
Deferred tax provision (benefit) |
(11,592) |
(7,648) |
|||||
Cost of debt purchase |
21,734 |
72,949 |
|||||
Changes in assets and liabilities before initial |
|||||||
effects of business acquisitions and dispositions |
4,575 |
40,127 |
|||||
Other, net |
(11,911) |
2,624 |
|||||
Net cash provided by (used for) operating activities |
19,154 |
(4,972) |
|||||
Investing Activities |
|||||||
Purchases of property, plant & equipment |
(49,611) |
(46,006) |
|||||
Proceeds from sale of property, plant & equipment |
2,354 |
17,785 |
|||||
Proceeds from sale of businesses, net of transaction costs |
- |
720,056 |
|||||
Increase in restricted cash |
- |
(63,024) |
|||||
Other, net |
(334) |
- |
|||||
Net cash provided by (used for) investing activities |
(47,591) |
628,811 |
|||||
Financing Activities |
|||||||
Payment of current maturities, long-term debt and line of credit |
(145,918) |
(579,676) |
|||||
Proceeds from issuance of long-term debt |
400,000 |
- |
|||||
Proceeds from issuance of common stock |
- |
22,808 |
|||||
Dividends paid |
(13,253) |
(6,531) |
|||||
Proceeds from exercise of stock options |
31,416 |
11,599 |
|||||
Excess tax benefits from share-based compensation |
7,575 |
2,997 |
|||||
Other, net |
1 |
(1) |
|||||
Net cash provided by (used for) financing activities |
279,821 |
(548,804) |
|||||
Proceeds from line of credit |
- |
- |
|||||
Net increase in cash and cash equivalents |
251,384 |
75,035 |
|||||
Cash and cash equivalents at beginning of year |
141,273 |
193,738 |
|||||
Cash and cash equivalents at end of period |
$392,657 |
$268,773 |
|||||
Table D |
||||||||
Segment Financial Data and Unit Shipments |
||||||||
(Amounts in thousands, except per unit data) |
||||||||
Three Months Ended |
||||||||
March 31 |
||||||||
2015 |
2014 |
|||||||
Total Revenues |
||||||||
Aggregates 1 |
$503,509 |
$428,721 |
||||||
Asphalt Mix |
103,071 |
84,214 |
||||||
Concrete 2 |
59,789 |
96,009 |
||||||
Calcium 3 |
1,855 |
18,133 |
||||||
Segment sales |
$668,224 |
$627,077 |
||||||
Aggregates intersegment sales |
(36,931) |
(43,432) |
||||||
Calcium intersegment sales |
- |
(9,225) |
||||||
Total revenues |
$631,293 |
$574,420 |
||||||
Gross Profit |
||||||||
Aggregates |
$67,665 |
$38,477 |
||||||
Asphalt Mix |
8,818 |
4,711 |
||||||
Concrete 2 |
810 |
(9,226) |
||||||
Calcium 3 |
572 |
130 |
||||||
Total |
$77,865 |
$34,092 |
||||||
Depreciation, Depletion, Accretion and Amortization |
||||||||
Aggregates |
$55,515 |
$54,622 |
||||||
Asphalt Mix |
3,909 |
2,400 |
||||||
Concrete 2 |
2,728 |
6,037 |
||||||
Calcium 3 |
162 |
1,058 |
||||||
Other |
4,409 |
5,261 |
||||||
Total |
$66,723 |
$69,378 |
||||||
Average Unit Sales Price and Unit Shipments |
||||||||
Aggregates |
||||||||
Freight-adjusted revenues 4 |
$379,880 |
$324,203 |
||||||
Aggregates - tons 5 |
33,504 |
29,628 |
||||||
Freight-adjusted sales price 6 |
$11.34 |
$10.94 |
||||||
Other Products |
||||||||
Asphalt Mix - tons |
1,768 |
1,441 |
||||||
Asphalt Mix - sales price |
$53.13 |
$53.07 |
||||||
Ready-mixed concrete - cubic yards |
573 |
958 |
||||||
Ready-mixed concrete - sales price |
$104.25 |
$95.41 |
||||||
Calcium - tons |
67 |
70 |
||||||
Calcium - sales price |
$26.61 |
$27.05 |
1 Includes crushed stone, sand and gravel, sand, other aggregates, as well as freight, delivery and transportation revenues, and other revenues related to services. |
|||||||||||
2 Includes ready-mixed concrete. On March 7, 2014, we sold our concrete business in the Florida area which in addition to ready-mixed concrete, included |
|||||||||||
concrete block, precast concrete, as well as building materials purchased for resale. See Appendix 5 for adjusted segment data. |
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3 Includes cement and calcium products. On March 7, 2014, we sold our cement business. See Appendix 5 for adjusted segment data. |
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4 Freight-adjusted revenues are Aggregates segment sales excluding freight, delivery and transportation revenues, and other revenues related to services, |
|||||||||||
such as land fill tipping fees. |
|||||||||||
5 Includes tons marketed and sold on behalf of a third-party pursuant to volumetric production payment (VPP) agreements and tons shipped to |
|||||||||||
our down-stream operations (i.e., asphalt mix and ready-mixed concrete). |
|||||||||||
6 Freight-adjusted sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments. |
Appendix 1 |
|||||||||||
1. Supplemental Cash Flow Information |
|||||||||||
Supplemental information referable to the Condensed Consolidated Statements of Cash Flows is summarized below: |
|||||||||||
(Amounts in thousands) |
|||||||||||
Three Months Ended |
|||||||||||
March 31 |
|||||||||||
2015 |
2014 |
||||||||||
Cash Payments |
|||||||||||
Interest (exclusive of amount capitalized) |
$21,869 |
$83,801 |
|||||||||
Income taxes |
2,062 |
3,209 |
|||||||||
Noncash Investing and Financing Activities |
|||||||||||
Accrued liabilities for purchases of property, plant & equipment |
13,340 |
16,035 |
|||||||||
Fair value of noncash assets and liabilities exchanged |
20,000 |
- |
|||||||||
2. Reconciliation of Non-GAAP Measures |
|||||||||||
Gross profit margin excluding freight and delivery 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. Likewise, we believe that this presentation is consistent with the basis by which investors analyze our operating results considering that freight and delivery services represent pass-through activities. Reconciliation of this metric to its nearest GAAP measure is presented below: |
|||||||||||
Gross Profit Margin in Accordance with GAAP |
|||||||||||
(Amounts in thousands) |
|||||||||||
Three Months Ended |
|||||||||||
March 31 |
|||||||||||
2015 |
2014 |
||||||||||
Gross profit |
$77,865 |
$34,092 |
|||||||||
Total revenues |
$631,293 |
$574,420 |
|||||||||
Gross profit margin |
12.3% |
5.9% |
|||||||||
Gross Profit Margin Excluding Freight and Delivery Revenues |
|||||||||||
(Amounts in thousands) |
|||||||||||
Three Months Ended |
|||||||||||
March 31 |
|||||||||||
2015 |
2014 |
||||||||||
Gross profit |
$77,865 |
$34,092 |
|||||||||
Total revenues |
$631,293 |
$574,420 |
|||||||||
Freight and delivery revenues |
106,372 |
88,940 |
|||||||||
Total revenues excluding freight and delivery revenues |
$524,921 |
$485,480 |
|||||||||
Gross profit margin excluding freight and delivery revenues |
14.8% |
7.0% |
|||||||||
Appendix 2 |
|||||||||||
Reconciliation of Non-GAAP Measures (Continued) |
|||||||||||
Aggregates segment gross profit as a percentage of freight-adjusted revenues is not a 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 more meaningful to our investors as it excludes freight, delivery and transportation revenues 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. Incremental gross profit as a percentage of freight-adjusted revenues represents the year-over-year change in gross profit divided by the year-over-year change in freight-adjusted revenues. Reconciliation of these metrics to their nearest GAAP measures are presented below: |
|||||||||||
Aggregates Segment Gross Profit Margin in Accordance with GAAP |
|||||||||||
(Amounts in thousands) |
|||||||||||
Three Months Ended |
|||||||||||
March 31 |
|||||||||||
2015 |
2014 |
||||||||||
Aggregates segment |
|||||||||||
Gross profit |
$67,665 |
$38,477 |
|||||||||
Segment sales |
$503,509 |
$428,721 |
|||||||||
Gross profit margin |
13.4% |
9.0% |
|||||||||
Incremental gross profit margin |
39.0% |
||||||||||
Aggregates Segment Gross Profit as a Percentage of Freight-Adjusted Revenues |
|||||||||||
(Amounts in thousands) |
|||||||||||
Three Months Ended |
|||||||||||
March 31 |
|||||||||||
2015 |
2014 |
||||||||||
Aggregates segment |
|||||||||||
Gross profit |
$67,665 |
$38,477 |
|||||||||
Segment sales |
$503,509 |
$428,721 |
|||||||||
Excluding: |
|||||||||||
Freight, delivery and transportation revenues 1 |
117,398 |
100,222 |
|||||||||
Other revenues |
6,231 |
4,296 |
|||||||||
Freight-adjusted revenues |
$379,880 |
$324,203 |
|||||||||
Gross profit as a percentage of |
|||||||||||
freight-adjusted revenues |
17.8% |
11.9% |
|||||||||
Incremental gross profit as a percentage of |
|||||||||||
freight-adjusted revenues |
52.4% |
||||||||||
1 At the segment level, freight, delivery and transportation revenues include intersegment freight & delivery revenues, |
|||||||||||
which are eliminated at the consolidated level. |
Appendix 3 |
|||||||||||
Reconciliation of Non-GAAP Measures (Continued) |
|||||||||||
GAAP does not define "free cash flow," "Aggregates segment cash gross profit" and "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA). Thus, free cash flow should not be considered as an alternative to net cash provided by operating activities or any other liquidity measure defined by GAAP. Likewise, Aggregates segment cash gross profit and EBITDA should not be considered as alternatives to earnings measures defined by GAAP. We present these metrics for the convenience of investment professionals who use such metrics in their analyses and for shareholders who need to understand the metrics we use to assess performance and to monitor our cash and liquidity positions. The investment community often uses these metrics as indicators of a company's ability to incur and service debt and to assess the operating performance of a company's businesses. We use free cash flow, Aggregates segment cash gross profit, EBITDA and other such measures to assess liquidity and the operating performance of our various business units and the consolidated company. Additionally, we adjust EBITDA for certain items to provide a more consistent comparison of performance from period to period. We do not use these metrics as a measure to allocate resources. Reconciliations of these metrics to their nearest GAAP measures are presented below: |
|||||||||||
Free Cash Flow |
|||||||||||
Free cash flow deducts purchases of property, plant & equipment from net cash provided by operating activities. |
|||||||||||
(Amounts in thousands) |
|||||||||||
Three Months Ended |
|||||||||||
March 31 |
|||||||||||
2015 |
2014 |
||||||||||
Net cash provided by (used for) operating activities |
$19,154 |
($4,972) |
|||||||||
Purchases of property, plant & equipment |
(49,611) |
(46,006) |
|||||||||
Free cash flow |
($30,457) |
($50,978) |
|||||||||
Aggregates Segment Cash Gross Profit |
|||||||||||
Aggregates segment cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization (DDA&A) to Aggregates segment gross profit. Aggregates sement cash gross profit per ton is computed by dividing cash gross profit by tons shipped. |
|||||||||||
(Amounts in thousands) |
|||||||||||
Three Months Ended |
|||||||||||
March 31 |
|||||||||||
2015 |
2014 |
||||||||||
Aggregates segment |
|||||||||||
Gross profit |
$67,665 |
$38,477 |
|||||||||
DDA&A |
55,515 |
54,622 |
|||||||||
Cash gross profit |
$123,180 |
$93,099 |
|||||||||
Unit shipments - tons |
33,504 |
29,628 |
|||||||||
Cash gross profit per ton |
$3.68 |
$3.14 |
|||||||||
Appendix 4 |
|||||||||||||
Reconciliation of Non-GAAP Measures (Continued) |
|||||||||||||
EBITDA and Adjusted EBITDA |
|||||||||||||
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization and excludes discontinued operations. We adjust EBITDA for certain items to provide a more consistent comparison of performance from period to period. |
|||||||||||||
(Amounts in thousands) |
|||||||||||||
Three Months Ended |
|||||||||||||
March 31 |
|||||||||||||
2015 |
2014 |
||||||||||||
Reconciliation of Net Earnings to EBITDA |
|||||||||||||
Net earnings (loss) |
($39,678) |
$53,995 |
|||||||||||
Provision for (benefit from) income taxes |
(14,075) |
22,900 |
|||||||||||
Interest expense, net |
62,480 |
120,089 |
|||||||||||
Loss on discontinued operations, net of taxes |
3,011 |
510 |
|||||||||||
EBIT |
11,738 |
197,494 |
|||||||||||
Depreciation, depletion, accretion and amortization |
66,723 |
69,378 |
|||||||||||
EBITDA |
$78,461 |
$266,872 |
|||||||||||
Adjusted EBITDA and Adjusted EBIT |
|||||||||||||
EBITDA |
$78,461 |
$266,872 |
|||||||||||
Gain on sale of real estate and businesses |
(5,886) |
(236,020) |
|||||||||||
Charges associated with acquisitions and divestitures |
2,429 |
9,107 |
|||||||||||
Amortization of deferred revenue |
(981) |
(984) |
|||||||||||
Restructuring charges |
2,818 |
- |
|||||||||||
Adjusted EBITDA |
$76,841 |
$38,975 |
|||||||||||
Depreciation, depletion, accretion and amortization |
(66,723) |
(69,378) |
|||||||||||
Amortization of deferred revenue |
981 |
984 |
|||||||||||
Adjusted EBIT |
$11,099 |
($29,419) |
|||||||||||
Appendix 5 |
|||||||||
Adjusted Concrete and Calcium Segment Financial Data |
|||||||||
Comparative financial data adjusted for both the January 2015 exchange of our California concrete business and the March 2014 sale of our concrete and cement businesses in the Florida area is presented below: |
|||||||||
(Amounts in thousands) |
|||||||||
2015 |
2014 |
||||||||
Q1 |
Q1 |
Q2 |
Q3 |
Q4 |
|||||
Concrete Segment |
|||||||||
Segment sales |
|||||||||
As reported |
$59,789 |
$96,009 |
$93,834 |
$98,949 |
$87,014 |
||||
Adjusted |
54,675 |
48,186 |
74,360 |
79,697 |
70,316 |
||||
Total revenues |
|||||||||
As reported |
$59,789 |
$96,009 |
$93,834 |
$98,949 |
$87,014 |
||||
Adjusted |
54,675 |
48,186 |
74,360 |
79,697 |
70,316 |
||||
Gross profit |
|||||||||
As reported |
$810 |
($9,226) |
$3,221 |
$5,486 |
$2,753 |
||||
Adjusted |
1,602 |
(4,370) |
4,921 |
7,161 |
4,245 |
||||
Depreciation, depletion, accretion and amortization |
|||||||||
As reported |
$2,728 |
$6,037 |
$4,686 |
$4,955 |
$4,214 |
||||
Adjusted |
2,628 |
3,930 |
3,905 |
4,239 |
3,577 |
||||
Shipments - cubic yards |
|||||||||
As reported |
573 |
958 |
949 |
978 |
847 |
||||
Adjusted |
517 |
483 |
733 |
765 |
668 |
||||
Calcium Segment |
|||||||||
Segment sales |
|||||||||
As reported |
$1,855 |
$18,133 |
$2,174 |
$2,273 |
$2,451 |
||||
Adjusted |
1,855 |
2,137 |
2,174 |
2,273 |
2,451 |
||||
Total revenues |
|||||||||
As reported |
$1,855 |
$8,908 |
$2,174 |
$2,273 |
$2,451 |
||||
Adjusted |
1,855 |
2,165 |
2,174 |
2,273 |
2,451 |
||||
Gross profit |
|||||||||
As reported |
$572 |
$130 |
$949 |
$989 |
$1,131 |
||||
Adjusted |
572 |
424 |
949 |
989 |
1,131 |
||||
Depreciation, depletion, accretion and amortization |
|||||||||
As reported |
$162 |
$1,058 |
$191 |
$157 |
$148 |
||||
Adjusted |
162 |
97 |
191 |
157 |
148 |
||||
SOURCE Vulcan Materials Company
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