Vulcan releases forth quarter results
Vulcan Materials Company, a producer of construction aggregates, has announced earnings for 2012.
Full Year Highlights
- Adjusted EBITDA increased $59 million on flat revenues.
- Gross profit increased $50 million and gross profit margins improved 210 basis points.
- Aggregates segment gross profit margins improved 270 basis points from the prior year due to lower unit cost of sales and higher pricing.
- Aggregates shipments declined one percent and pricing increased two percent.
- Cash gross profit per ton increased five percent.
- SAG expenses were $259 million versus $290 million in the prior year.
- Cash earnings were $210 million, an increase of 8 percent from the prior year.
- Gross cash proceeds of $174 million were realized from asset sales.
- The company retired $135 million of debt as scheduled.
Don James, chairman and chief executive officer, said, “Our full year results demonstrate our employees’ efforts in managing those aspects of the business that are under their control. Despite slightly weaker aggregates shipments, we achieved a 17 percent increase in adjusted EBITDA, reflecting aggressive actions to reduce costs and to take advantage of pricing opportunities across the markets we serve.”
Aggregates segment gross profit increased $2 million from the prior year’s fourth quarter and gross profit margin expanded due in part to a 4 percent increase in pricing and despite a three percent decline in aggregates shipments. Aggregates shipments in Florida, North Carolina, Texas and Arizona showed strength, each increasing more than 10 percent versus the prior year.
Some markets reported declines versus the prior year’s fourth quarter, due in part to very favorable weather in December 2011, as compared to more normalized weather in 2012. Shipments in Virginia, California, Georgia and the Midwest were lower versus the prior year due in part to less large-project work than in the prior year. Virtually all of the company’s markets realized increased pricing. Improved productivity in key energy efficiency metrics helped offset a seven percent increase in the unit cost for diesel fuel.
“Our outlook for another year of earnings growth is supported by improved pricing, aggressive cost control and some volume growth,” said James. “Our expectations are for aggregates margins and profitability to continue to expand.
“We believe economic and construction-related fundamentals that drive demand for our products are continuing to improve from the historically low levels created by the economic downturn.
“Leading indicators of private construction activity, specifically residential housing starts and contract awards for nonresidential buildings, continue to improve. Consequently, aggregates demand in private construction is growing. We are seeing tangible evidence of this growth in several key states, including Florida, Texas, California, Georgia and Arizona. Growth in residential construction has historically been a leading indicator of other construction end uses.”
James continued, “Demand for aggregates in our markets is expected to grow by mid-single digits in 2013. Aggregates demand from residential construction is expected to increase double-digits while demand from private non-residential buildings is expected to increase high single-digits versus 2012. Our current expectation for growth in aggregates demand into public construction, including highways and other infrastructure, is limited given the lead time required from award of contract to the start of construction. As we look at the projects that could impact our 2013 aggregates volumes, we see a disproportionately greater number of large, discrete highway and industrial projects. The timing of these projects is difficult to predict at this point in the year. As a result, our full year shipments in 2013 are expected to increase one to five percent with most of the expected year-over-year growth to occur in the second half of the year, due in part to favorable weather in the first quarter of 2012.”