Vulcan Reports Second Quarter 2021 Results

BIRMINGHAM, Ala., Aug. 4, 2021 /PRNewswire/ — Vulcan Materials Company (NYSE: VMC), the nation’s largest producer of construction aggregates, today…

BIRMINGHAM, Ala., Aug. 4, 2021 /PRNewswire/ — Vulcan Materials Company (NYSE: VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter ended June 30, 2021.

Second Quarter Financial and Operating Highlights:

  • Net earnings were $195 million, or $1.46 per diluted share
    • Net earnings include $0.10 per diluted share related to financing costs associated with the proposed acquisition of U.S. Concrete and other non-routine charges excluded from Adjusted EBITDA
  • Second quarter Adjusted EBITDA was $406 million
  • Aggregates gross profit increased $23 million, or 6 percent, to $374 million
  • Non-aggregates gross profit declined $21 million to $25 million
  • Announced U.S. Concrete acquisition, which is expected to close in the second half of 2021
  • Reiterate full-year 2021 Adjusted EBITDA guidance between $1.380 to $1.460 billion (excluding the gain from a land sale completed in the first quarter and the U.S. Concrete acquisition announced June 7, 2021)

Tom Hill, Chairman and Chief Executive Officer, said, «Our performance in the first half of 2021 has been supported by consistent execution on Vulcan’s four strategic disciplines. Our team’s efforts have allowed us to expand our aggregates gross profit margin by 150 basis points and increase our cash gross profit per ton by 5 percent.  Despite energy inflation and disruptive weather in the second quarter, aggregates gross profit margin improved 40 basis points, and cash gross profit grew by 2 percent to $7.83 per ton. Across our business, energy inflation reduced earnings by $25 million in the quarter, $15 million due to diesel and $10 million due to liquid asphalt.  Lower non-aggregates earnings dampened an otherwise strong performance.»

Mr. Hill continued, «We expect to carry forward the progress we have made through the first half of 2021 and will continue to diligently navigate the changing macro environment. Recent pricing actions across much of our footprint and a keen focus on improving operating efficiencies will continue to help offset spikes in certain input costs. The flexibility of our operating plans will enable us to maintain a high level of performance during the second half of the year and achieve our full-year 2021 targets. We remain excited and focused on closing the proposed acquisition of U.S. Concrete, which will expand Vulcan’s footprint in attractive geographies and accelerate our growth strategy.»

Highlights as of June 30, 2021 include:


Second Quarter


Year-to-Date


Trailing-Twelve-Months

Amounts in millions, except per unit data

2021

2020


2021

2020


2021

2020

Total revenues

$ 1,361.0

$ 1,322.6


$ 2,429.4

$ 2,371.8


$ 4,914.4

$ 4,976.7

Gross profit

$    398.4

$    396.5


$    627.6

$    598.2


$ 1,310.9

$ 1,292.0

Aggregates segment









Segment sales

$ 1,125.4

$ 1,070.6


$ 2,020.3

$ 1,938.8


$ 4,025.7

$ 4,032.1

Freight-adjusted revenues

$    874.0

$    814.7


$ 1,555.1

$ 1,462.7


$ 3,100.0

$ 3,041.9

Gross profit

$    373.8

$    351.2


$    597.5

$    545.3


$ 1,211.4

$ 1,177.0

Shipments (tons)

58.5

56.2


105.0

101.2


212.0

213.8

Freight-adjusted sales price per ton

$    14.93

$    14.50


$    14.82

$    14.45


$    14.62

$    14.23

Gross profit per ton

$      6.39

$      6.25


$      5.69

$      5.39


$      5.71

$      5.51

Asphalt, Concrete & Calcium segment gross profit

$      24.5

$      45.4


$      30.2

$      52.9


$      99.5

$    115.0

Selling, Administrative and General (SAG)

$    100.7

$      91.2


$    189.3

$    177.6


$    371.4

$    362.2

SAG as % of Total revenues

7.4%

6.9%


7.8%

7.5%


7.6%

7.3%

Earnings from continuing operations before income taxes

$    254.1

$    272.3


$    476.4

$    344.5


$    875.7

$    782.1

Net earnings

$    195.3

$    209.9


$    356.0

$    270.2


$    670.3

$    627.0

Adjusted EBIT

$    302.9

$    308.3


$    446.8

$    413.9


$    959.7

$    927.3

Adjusted EBITDA

$    406.0

$    407.8


$    650.3

$    608.8


$ 1,365.0

$ 1,314.2

Earnings from continuing operations per diluted share

$      1.47

$      1.58


$      2.69

$      2.03


$      5.07

$      4.73

Adjusted earnings from continuing operations per diluted share

$      1.57

$      1.60


$      2.26

$      2.06


$      4.90

$      4.82

Segment Results

Aggregates

Second quarter segment sales increased 5 percent, and gross profit increased 6 percent to $374 million.  Gross profit margin increased 40 basis points due to growth in both volume and price as well as effective cost control that helped to offset an estimated $14 million impact of rising diesel prices.  Earnings improvement was widespread across the Company’s footprint.

Aggregates shipments increased 4 percent from the prior year’s second quarter, reflecting improving demand across all end-market segments.  The pricing environment continues to be positive across the Company’s footprint as demand visibility improves.  For the quarter, freight-adjusted pricing increased 3 percent (mix-adjusted pricing increased 2.6 percent).  The rate of growth improved sequentially throughout the quarter, reflecting pricing actions taken in many areas.  These efforts are expected to help offset cost inflation forecasted for the rest of the year. 

Improved operating efficiencies helped offset both the sharp increase in the average unit cost of diesel fuel and the impact of any operational disruptions caused by the wet weather.  Freight adjusted unit cost of sales were 3.5 percent higher than the prior year’s second quarter but increased less than 1 percent excluding the impact of higher diesel prices. 

Asphalt, Concrete and Calcium

Overall, non-aggregates segments gross profit was $21 million lower than the prior year’s second quarter.  Asphalt segment gross profit was $14 million in the quarter compared to $30 million in the prior year period.  The decrease in earnings was primarily driven by the impact of higher liquid asphalt costs (approximately $10 million) and wet weather conditions that delayed project shipments.  Asphalt volumes declined 8 percent as volume growth in California and Tennessee was more than offset by lower volumes in Alabama, Arizona and Texas.  The average price for liquid asphalt increased 19 percent versus the prior year’s second quarter, outpacing the 1 percent increase in the average selling price.   

Second quarter Concrete segment gross profit was $10 million compared to $14 million in the prior year.  Shipments decreased 7 percent versus the prior year due to the timing of projects in Virginia, while average selling prices increased 3 percent compared to the prior year.

Calcium segment gross profit of $0.7 million was in line with the prior year quarter.

Selling, Administrative and General (SAG)

SAG expense was $101 million in the quarter compared with $91 million in the prior year.  The increase was primarily due to higher incentive compensation tied to business performance and increased business development activities.  On a trailing twelve-month basis, SAG expense was $371 million, or 7.6 percent as a percentage of total revenues.

Financial Position, Liquidity and Capital Allocation

Capital expenditures in the second quarter were $94 million, including $34 million for growth projects.  During the fourth quarter of 2020, the Company restarted planned growth projects that were put on hold in the first quarter of 2020 as a result of the pandemic.  For the full year 2021, the Company expects to spend between $450 and $475 million on capital expenditures, including growth projects.  The Company will continue to review its plans and will adjust as needed. 

As of June 30, 2021, total debt to trailing-twelve month Adjusted EBITDA was 2.0 times, or 1.3 times on a net debt basis reflecting $968 million of cash on hand.  The Company’s weighted-average debt maturity was 15 years, and its effective weighted-average interest rate was 4.6 percent.

Interest expense, net of interest income, was $42 million in the second quarter, up from $34 million in the prior year.  The increase includes $9 million of cost associated with financing the proposed acquisition of U.S. Concrete announced June 7, 2021.

On a trailing-twelve month basis, return on invested capital was 14.8 percent, 60 basis points higher than the comparable prior year period.  The Company remains committed to driving further improvement through solid operating earnings growth coupled with disciplined capital management and a balanced approach to growth.

Outlook

Regarding the Company’s expectations for 2021, Mr. Hill said, «We reiterate our full-year Adjusted EBITDA range of $1.380 to $1.460 billion.  Our operating performance in the first half of the year was strong, and we remain on track to achieve another year of earnings growth.  Our aggregates business is executing well, and we are focused on factors within our control, including pricing and operating disciplines.»

Conference Call

Vulcan will host a conference call at 10:00 a.m. CT on August 4, 2021.  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 9979328.  The conference call will be recorded and available for replay at the Company’s website approximately two hours after the call.

About Vulcan Materials Company

Vulcan Materials Company, a member of the S&P 500 Index with headquarters in Birmingham, Alabama, is the nation’s largest supplier 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.

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 COVID-19 outbreak; 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; availability and cost of trucks, railcars, barges and ships as well as their licensed operators for transport of Vulcan’s materials; 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; Vulcan’s proposed acquisition of U.S. Concrete, including (1) the risk that U.S. Concrete’s business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected, (2) the acquisition may not be completed in a timely manner, on the terms proposed, or at all, (3) the effect of the announcement or pendency of the proposed acquisition on Vulcan’s business relationships, operating results and business generally, (4) risks related to diverting management’s attention from ongoing business operations, and (5) the outcome of any legal proceedings related to the merger agreement or the proposed acquisition; 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.  

Investor Contact:  Mark Warren (205) 298-3220 

Media Contact:  Janet Kavinoky (205) 298-3220

 











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)


2021


2020


2021


2020












Total revenues


$1,361,047


$1,322,575


$2,429,391


$2,371,817

Cost of revenues


962,683


926,056


1,801,760


1,773,575

Gross profit


398,364


396,519


627,631


598,242

Selling, administrative and general expenses


100,667


91,205


189,260


177,635

Gain (loss) on sale of property, plant & equipment









and businesses


211


(258)


117,376


741

Other operating expense, net


(10,372)


(6,160)


(18,698)


(10,151)

Operating earnings


287,536


298,896


537,049


411,197

Other nonoperating income (expense), net


8,223


7,367


14,136


(1,969)

Interest expense, net


41,696


33,954


74,814


64,727

Earnings from continuing operations









before income taxes


254,063


272,309


476,371


344,501

Income tax expense


57,283


61,352


117,922


73,546

Earnings from continuing operations


196,780


210,957


358,449


270,955

Loss on discontinued operations, net of tax


(1,436)


(1,041)


(2,491)


(781)

Net earnings


$195,344


$209,916


$355,958


$270,174

Basic earnings (loss) per share









Continuing operations


$1.48


$1.59


$2.70


$2.04

Discontinued operations


($0.01)


($0.01)


($0.02)


$0.00

Net earnings


$1.47


$1.58


$2.68


$2.04












Diluted earnings (loss) per share









Continuing operations


$1.47


$1.58


$2.69


$2.03

Discontinued operations


($0.01)


$0.00


($0.02)


$0.00

Net earnings


$1.46


$1.58


$2.67


$2.03

Weighted-average common shares outstanding









Basic


132,781


132,552


132,765


132,560

Assuming dilution


133,507


133,115


133,455


133,154

Effective tax rate from continuing operations


22.5%


22.5%


24.8%


21.3%

 









Table B

Vulcan Materials Company







and Subsidiary Companies







(in thousands)

Consolidated Balance Sheets


June 30


December 31


June 30

(Condensed and unaudited)


2021


2020


2020

Assets







Cash and cash equivalents


$857,555


$1,197,068


$816,765

Restricted cash


110,851


945


434

Accounts and notes receivable







Accounts and notes receivable, gross


689,591


558,848


699,320

Allowance for doubtful accounts


(2,739)


(2,551)


(3,460)

Accounts and notes receivable, net


686,852


556,297


695,860

Inventories







Finished products


373,677


378,389


383,483

Raw materials


37,967


33,780


33,178

Products in process


5,099


4,555


5,116

Operating supplies and other


33,900


31,861


29,703

Inventories


450,643


448,585


451,480

Other current assets


94,524


74,270


65,571

Total current assets


2,200,425


2,277,165


2,030,110

Investments and long-term receivables


34,264


34,301


43,849

Property, plant & equipment







Property, plant & equipment, cost


9,094,689


9,102,086


8,921,990

Allowances for depreciation, depletion & amortization


(4,729,456)


(4,676,087)


(4,538,980)

Property, plant & equipment, net


4,365,233


4,425,999


4,383,010

Operating lease right-of-use assets, net


464,765


423,128


426,618

Goodwill


3,172,112


3,172,112


3,172,112

Other intangible assets, net


1,103,079


1,123,544


1,114,592

Other noncurrent assets


231,149


230,656


228,433

Total assets


$11,571,027


$11,686,905


$11,398,724

Liabilities







Current maturities of long-term debt


15,436


515,435


500,026

Trade payables and accruals


300,109


273,080


278,102

Other current liabilities


283,700


259,368


260,621

Total current liabilities


599,245


1,047,883


1,038,749

Long-term debt


2,769,892


2,772,240


2,785,646

Deferred income taxes, net


748,279


706,050


671,097

Deferred revenue


170,160


174,045


177,534

Noncurrent operating lease liabilities


443,128


399,582


405,578

Other noncurrent liabilities


547,210


559,775


555,969

Total liabilities


$5,277,914


$5,659,575


$5,634,573

Equity







Common stock, $1 par value


132,678


132,516


132,446

Capital in excess of par value


2,806,693


2,802,012


2,789,801

Retained earnings


3,531,861


3,274,107


3,049,943

Accumulated other comprehensive loss


(178,119)


(181,305)


(208,039)

Total equity


$6,293,113


$6,027,330


$5,764,151

Total liabilities and equity


$11,571,027


$11,686,905


$11,398,724

 








Table C

Vulcan Materials Company





and Subsidiary Companies












(in thousands)








Six Months Ended

Consolidated Statements of Cash Flows




June 30

(Condensed and unaudited)


2021


2020

Operating Activities





Net earnings





$355,958


$270,174

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




Depreciation, depletion, accretion and amortization


203,475


194,951

Noncash operating lease expense


20,867


17,977

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


(117,376)


(741)

Contributions to pension plans


(4,097)


(4,409)

Share-based compensation expense


17,688


15,220

Deferred tax expense


41,103


36,644

Changes in assets and liabilities before initial





effects of business acquisitions and dispositions


(135,007)


(101,271)

Other, net





15,262


(2,954)

Net cash provided by operating activities


$397,873


$425,591

Investing Activities





Purchases of property, plant & equipment


(192,234)


(223,147)

Proceeds from sale of property, plant & equipment


190,747


3,063

Proceeds from sale of businesses


0


651

Payment for businesses acquired, net of acquired cash


0


(5,668)

Other, net





15


5,575

Net cash used for investing activities


($1,472)


($219,526)

Financing Activities





Payment of current maturities and long-term debt


(500,013)


(250,012)

Proceeds from issuance of long-term debt


0


750,000

Debt issuance and exchange costs


(13,286)


(10,762)

Settlements of interest rate derivatives


0


(19,863)

Purchases of common stock


0


(26,132)

Dividends paid




(98,173)


(90,128)

Share-based compensation, shares withheld for taxes


(12,782)


(15,830)

Other, net





(1,754)


(645)

Net cash provided by (used for) financing activities


($626,008)


$336,628

Net increase (decrease) in cash and cash equivalents and restricted cash


(229,607)


542,693

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


$968,406


$817,199

 












Table D

Segment Financial Data and Unit Shipments





(in thousands, except per unit data)








Three Months Ended




Six Months Ended








June 30




June 30






2021


2020


2021


2020

Total Revenues









Aggregates 1


$1,125,367


$1,070,596


$2,020,276


$1,938,822

Asphalt 2


212,577


222,950


359,744


362,739

Concrete 


96,201


100,683


177,560


195,448

Calcium 



1,960


1,889


4,020


3,915

Segment sales


$1,436,105


$1,396,118


$2,561,600


$2,500,924

Aggregates intersegment sales


(75,058)


(73,543)


(132,209)


(129,107)

Total revenues


$1,361,047


$1,322,575


$2,429,391


$2,371,817

Gross Profit









Aggregates


$373,833


$351,162


$597,471


$545,293

Asphalt



13,532


30,464


10,541


28,029

Concrete 


10,293


14,227


18,061


23,440

Calcium 





706


666


1,558


1,480

Total




$398,364


$396,519


$627,631


$598,242

Depreciation, Depletion, Accretion and Amortization





Aggregates


$84,328


$80,747


$165,136


$157,883

Asphalt



9,060


8,668


18,155


17,402

Concrete 


4,026


4,001


7,978


8,083

Calcium 



39


48


78


97

Other




5,654


6,006


12,128


11,486

Total




$103,107


$99,470


$203,475


$194,951

Average Unit Sales Price and Unit Shipments





Aggregates









Freight-adjusted revenues 3


$873,971


$814,713


$1,555,126


$1,462,746

Aggregates – tons


58,528


56,195


104,965


101,243

Freight-adjusted sales price 4


$14.93


$14.50


$14.82


$14.45













Other Products









Asphalt Mix – tons


3,134


3,403


5,351


5,460

Asphalt Mix – sales price


$58.14


$57.46


$57.58


$57.86













Ready-mixed concrete – cubic yards


731


786


1,344


1,520

Ready-mixed concrete – sales price


$130.61


$127.35


$131.03


$127.62













Calcium – tons


71


71


145


144

Calcium – sales price


$27.64


$26.55


$27.64


$27.06


1 Includes 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.

2 Includes product sales, as well as service revenues from our asphalt construction paving business.

3 Freight-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.

4 Freight-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 and should not be considered as an alternative to metrics defined by GAAP. 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






2021


2020


2021


2020

Aggregates segment









Segment sales


$1,125,367


$1,070,596


$2,020,276


$1,938,822

Less:


Freight & delivery revenues 1


234,845


240,880


432,071


446,588




Other revenues


16,551


15,003


33,079


29,488

Freight-adjusted revenues


$873,971


$814,713


$1,555,126


$1,462,746

Unit shipment – tons


58,528


56,195


104,965


101,243

Freight-adjusted sales price


$14.93


$14.50


$14.82


$14.45













1At 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). This metric should not be considered as an alternative to metrics defined by GAAP. 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






2021


2020


2021


2020

Aggregates segment









Gross profit


$373,833


$351,162


$597,471


$545,293

Segment sales


$1,125,367


$1,070,596


$2,020,276


$1,938,822

Gross profit margin


33.2%


32.8%


29.6%


28.1%

Incremental gross profit margin


41.4%




64.1%















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
















(dollars in thousands)








Three Months Ended




Six Months Ended








June 30




June 30






2021


2020


2021


2020

Aggregates segment









Gross profit


$373,833


$351,162


$597,471


$545,293

Segment sales


$1,125,367


$1,070,596


$2,020,276


$1,938,822

Less:


Freight & delivery revenues 1


234,845


240,880


432,071


446,588


Segment sales excluding freight & delivery


$890,522


$829,716


$1,588,205


$1,492,234

Gross profit margin excluding freight & delivery


42.0%


42.3%


37.6%


36.5%

Incremental gross profit flow-through rate


37.3%




54.4%















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






2021


2020


2021


2020

Aggregates segment









Gross profit


$373,833


$351,162


$597,471


$545,293

Depreciation, depletion, accretion and amortization


84,328


80,747


165,136


157,883


Aggregates segment cash gross profit


$458,161


$431,909


$762,607


$703,176

Unit shipments – tons


58,528


56,195


104,965


101,243

Aggregates segment cash gross profit per ton


$7.83


$7.69


$7.27


$6.95

 
















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






2021


2020


2021


2020


2021


2020

Net earnings


$195,344


$209,916


$355,958


$270,174


$670,264


$626,979

Income tax expense


57,283


61,352


117,922


73,546


200,179


150,453

Interest expense, net


41,696


33,954


74,814


64,727


144,480


127,758

Loss on discontinued operations, net of tax


1,436


1,041


2,491


781


5,225


4,637

EBIT




$295,759


$306,263


$551,185


$409,228


$1,020,148


$909,827

Depreciation, depletion, accretion and amortization


103,107


99,470


203,475


194,951


405,330


386,870

EBITDA



$398,866


$405,733


$754,660


$604,179


$1,425,478


$1,296,697


Gain on sale of real estate and businesses, net


0


0


(114,695)


0


(114,695)


(9,289)


Property donation


0


0


0


0


0


10,847


Charges associated with divested operations


350


774


686


774


6,847


3,807


Business development 1


5,489


(3,519)


5,875


(2,459)


15,668


(711)


COVID-19 direct incremental costs


1,318


4,361


3,786


5,009


8,947


5,009


Pension settlement charge


0


0


0


0


22,740


0


Restructuring charges


0


465


0


1,333


0


7,790

Adjusted EBITDA


$406,023


$407,814


$650,312


$608,836


$1,364,985


$1,314,150


Depreciation, depletion, accretion and amortization


(103,107)


(99,470)


(203,475)


(194,951)


(405,330)


(386,870)

Adjusted EBIT


$302,916


$308,344


$446,837


$413,885


$959,655


$927,280

Adjusted EBITDA margin


29.8%


30.8%


26.8%


25.7%


27.8%


26.4%

1Represents non-routine charges or gains associated with acquisitions and dispositions including the cost impact of purchase accounting inventory valuations.




Similar to our presentation of Adjusted EBITDA, we present Adjusted diluted earnings per share (EPS) from continuing operations to provide a more consistent comparison of earnings performance from period to period. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:



Adjusted Diluted EPS from Continuing Operations (Adjusted Diluted EPS)
































Three Months Ended




Six Months Ended




TTM








June 30




June 30




June 30






2021


2020


2021


2020


2021


2020

Diluted EPS from continuing operations


$1.47


$1.58


$2.69


$2.03


$5.07


$4.73


Items included in Adjusted EBITDA above


0.05


0.02


(0.58)


0.03


(0.32)


0.09


Alabama NOL carryforward valuation allowance


0.00


0.00


0.10


0.00


0.10


0.00


Acquisition financing interest costs


0.05


0.00


0.05


0.00


0.05


0.00

Adjusted diluted EPS


$1.57


$1.60


$2.26


$2.06


$4.90


$4.82


Net debt to Adjusted EBITDA is not a GAAP measure and should not be considered as an alternative to metrics defined by GAAP. We, the investment community and credit rating agencies use this metric to assess our leverage. Net debt subtracts cash and cash equivalents and restricted cash from total debt. Reconciliation of this metric to its nearest GAAP measure is presented below:



Net Debt to Adjusted EBITDA




























(in thousands)
















June 30














2021


2020

Debt















Current maturities of long-term debt










$15,436


$500,026

Long-term debt










2,769,892


2,785,646

Total debt










$2,785,328


$3,285,672

Less: Cash and cash equivalents and restricted cash










968,406


817,199

Net debt











$1,816,922


$2,468,473

Trailing-Twelve Months (TTM) Adjusted EBITDA










$1,364,985


$1,314,150

Total debt to TTM Adjusted EBITDA










 2.0x 


 2.5x 

Net debt to TTM Adjusted EBITDA










 1.3x 


 1.9x 

 












Appendix 3

Reconciliation of Non-GAAP Measures (Continued)






The following reconciliation to the mid-point of the range of 2021 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount). Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:



2021 Projected EBITDA




















(in millions)












Mid-point

Net earnings








$670

Income tax expense








205

Interest expense, net of interest income








145

Discontinued operations, net of tax








0

Depreciation, depletion, accretion and amortization








400

Projected EBITDA








$1,420


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. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:



Return on Invested Capital




















(dollars in thousands)












TTM












June 30










2021


2020

Adjusted EBITDA






$1,364,985


$1,314,150

Average invested capital 1










Property, plant & equipment, net






$4,376,276


$4,335,633


Goodwill






3,172,113


3,168,072


Other intangible assets






1,112,585


1,087,580


Fixed and intangible assets






$8,660,974


$8,591,285














Current assets






$2,153,208


$1,453,094


Less: Cash and cash equivalents






991,857


265,920


Less: Current tax






19,167


19,289


Adjusted current assets






1,142,184


1,167,885














Current liabilities






864,325


649,772


Less: Current maturities of long-term debt






311,154


100,025


Less: Short-term debt






0


27,400


Adjusted current liabilities






553,171


522,347


Adjusted net working capital






$589,013


$645,538













Average invested capital






$9,249,987


$9,236,823













Return on invested capital






14.8%


14.2%













1Average invested capital is based on a trailing 5-quarters.



 

Vulcan Materials Company, Birmingham, AL. (PRNewsFoto/Vulcan Materials Company) (PRNewsFoto/) (PRNewsFoto/)

 

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SOURCE Vulcan Materials Company