VULCAN MATERIALS COMPANY BIRMINGHAM, Ala., May 3, 2016 /PRNewswire/ -- Vulcan Materials Company (NYSE:VMC), the nation's largest producer of construction aggregates, today announced results for the first quarter ending March 31, 2016.
Logo - http://photos.prnewswire.com/prnh/20090710/CL44887LOGO
The Company's first quarter results reflect continued strong revenue growth and margin expansion. Total revenues grew 20 percent. Total gross profit more than doubled, with growth in all segments. First quarter Adjusted EBITDA was $156 million. Compared with the prior year's first quarter, aggregates shipments rose 5.7 million tons, or 17 percent, and freight-adjusted aggregates pricing increased $1.08 per ton, or 9.5 percent.
For the trailing twelve months, Adjusted EBITDA of $914 million represents a 42 percent gain over the prior year period. Same-store aggregates shipments for this period grew 9 percent, and freight-adjusted pricing grew 8 percent. Incremental aggregates gross profit equaled 71 percent of incremental freight-adjusted revenues. Aggregates gross profit as a percentage of freight-adjusted revenues expanded to 38 percent from 31 percent.
Tom Hill, Chairman and Chief Executive Officer, said, "The recovery in construction activity continues across most of our markets and our strong first quarter volume growth - along with the growth we've seen over the past several quarters - reflects that sustained strengthening in demand. Several factors contributed to the above-trend volume growth seen in the first quarter, including relatively favorable weather conditions in certain of our markets, our customers' success in winning and executing new project work, incremental improvements in public construction spending, and an additional shipping day in the quarter due to Leap Year.
Our local leadership teams continue to capitalize on the recovery in demand for our products, serving our customers well and doing so efficiently and safely. As a result of their efforts and our improving business fundamentals, we currently project full year adjusted EBITDA at or near the high-end of our guidance range and supported by 8 to 9 percent growth in full year aggregates shipments over 2015."
First Quarter Summary (compared with prior year's first quarter)
-- Total revenues increased $123 million, or 20 percent, to $755 million
-- Gross profit increased $87 million, or 112 percent, to $165 million
-- Aggregates freight-adjusted revenues increased $107 million, or 28
percent, to $487 million
-- Shipments increased 17 percent, or 5.7 million tons, to 39 million
tons
-- Freight-adjusted sales price increased 9.5 percent
-- Segment gross profit increased $81 million, or 119 percent, to $148
million
-- Asphalt, Concrete and Calcium segment gross profit improved $6 million,
or 60 percent, collectively
-- SAG declined approximately 50 basis points as a percentage of total
revenues
-- Adjusted EBIT was $86 million, an increase of $75 million
-- Adjusted EBITDA was $156 million, an increase of $78 million, or 100
percent
-- Earnings from continuing operations were $0.15 per diluted share versus
a loss of $0.28 per diluted share in the first quarter of 2015
-- The current quarter's earnings include $0.11 per diluted share for
impairment of leased property and certain charges recorded in Other
Operating Expense (detailed on page 4 of this release)
-- The prior year's results include $0.12 per diluted share for net
charges related to a debt purchase, gain on sale of assets,
restructuring and business development costs
-- Adjusted for these items, earnings from continuing operations were
$0.26 per diluted share in the first quarter of 2016 versus a loss
of $0.16 per diluted share in the prior year
Trailing Twelve Months Summary (compared with the prior twelve month period)
-- Total revenues increased $495 million, or 16 percent, to $3.5 billion
-- Gross profit increased $313 million, or 50 percent, to $944 million
-- Aggregates freight-adjusted revenues increased $370 million, or 20
percent, to $2.2 billion
-- Total shipments increased 11 percent, or 17.7 million tons, to 184
million tons; same-store shipments increased 9 percent
-- Freight-adjusted sales price increased 8 percent
-- Segment gross profit increased $263 million, or 46 percent, to $836
million
-- Asphalt, Concrete and Calcium segment gross profit improved 86 percent,
or $50 million, collectively
-- SAG declined as a percentage of total revenues by 60 basis points
-- Adjusted EBIT was $637 million, an increase of $271 million, or 74
percent
-- Adjusted EBITDA was $914 million, an increase of $272 million, or 42
percent
-- Earnings from continuing operations were $2.14 per diluted share versus
$0.87 per share
-- These results include gains on sale of assets, as well as charges
related to debt refinancing, impairment of leased property certain
charges recorded in Other Operating Expense (noted above for first
quarter 2016), business development activities, restructuring and
certain income tax items
-- Excluding these items, earnings from continuing operations were
$2.57 per diluted share versus $1.04 per diluted share
Segment Results
Aggregates
The gradual recovery in construction activity and demand for aggregates continued across most of the Company's footprint in the first quarter. On a same-store basis, most of the Company's key states realized strong double-digit volume growth, aided by relatively favorable weather for construction as well as strong performance by our customers in winning and executing projects. In contrast, California shipments fell more than 10 percent from the prior year, and shipments in Texas grew only 2 percent. Wet weather negatively impacted shipments in both states. In addition, California experienced a slowdown in larger public construction activity, and Texas experienced softening demand in the Houston metro region.
For the twelve months ended March 31, same-store shipments rose 9 percent over the year-earlier period. This quarter was the eleventh consecutive quarter in which the rate of shipments, on a consecutive trailing twelve months basis, has increased. Despite these recent gains, demand for aggregates remains well below demographic-driven historical trend lines in the U.S. The passage of the FAST Act and key state-level transportation funding measures does not appear yet to have impacted construction activity significantly. The Company believes conditions remain in place for a sustained, multi-year recovery in demand for aggregates.
For the quarter, freight-adjusted average sales price for aggregates increased 9.5 percent, or $1.08 per ton, versus the prior year. On a trailing twelve months basis, pricing in all of the Company's major markets has increased versus the prior year's comparable period. The overall pricing climate remains favorable as construction materials producers remain focused on earning adequate returns on capital.
First quarter unit cost of sales in the Aggregates segment was lower than the prior year by approximately $0.68 per ton. Improved leverage of fixed costs with higher production, as well as lower average diesel costs, underpinned this improvement versus a weather-challenged comparison period. Repair and maintenance costs in the first quarter remained higher than the prior year period, consistent with the Company's experience over the last few quarters. For the trailing twelve months, unit costs of sales, excluding the impact of lower diesel costs, was essentially flat. These results reflect the Company's continued commitment to plant-level cost controls and operating disciplines.
Aggregates segment unit margins continued to expand faster than unit pricing. Gross profit per ton increased $1.76, or 87 percent, from the prior year. Cash gross profit per ton increased $1.57, or 43 percent, from the prior year. On a trailing twelve months basis, unit gross profit has increased 32 percent, while unit cash gross profit has increased 20 percent to $5.80 per ton. These results reflect the Company's continued commitment to plant-level cost controls and operating disciplines.
For the quarter, aggregates gross profit flow-through rate was strong. Freight-adjusted revenues increased $107 million, while gross profit for the segment increased $81 million. On a same-store basis, incremental gross profit was 77 percent of incremental freight-adjusted revenues. 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 months same-store basis, this flow-through rate was 71 percent and has consistently exceeded the Company's stated goal of 60 percent in each of the quarters since volumes began to recover in the second half of 2013.
Asphalt, Concrete and Calcium
In the first quarter, asphalt gross profit was $12 million versus $9 million in the prior year. This year-over-year improvement was due to solid sales and operating disciplines as well as effective materials margin management. On a total and same-store basis, volumes declined 4 percent due primarily to extremely wet weather in California in January and March of this year compared to an unseasonably mild first quarter last year.
Concrete gross profit improved $2.7 million from the prior year. On a same-store basis, sales volumes increased sharply versus the prior year due to strong shipment growth in Georgia, Texas and Virginia. Pricing and unit profitability also continued to improve.
In the first quarter, the Company's Calcium segment reported gross profit of $0.6 million, a 13 percent improvement over the prior year.
Selling, Administrative and General (SAG), Asset Impairment, and Other Operating Expense
Selling, administrative and general (SAG) expenses increased $9.7 million versus the prior year but decreased approximately 50 basis points as a percentage of total revenues. The year-over-year increase results primarily from certain compensation-related charges during the first quarter of 2016 as a result of the significant improvement in both business performance and the Company's stock price.
During the first quarter, the Company recognized approximately $22 million in charges not reflected in Adjusted EBITDA. Included in this amount is $9.6 million impairment relating to a leased property we no longer intend to develop (reference impairment of long-lived assets on the Consolidated Statements of Earnings). Also included are charges associated with office space no longer needed and vacated ($5.2 million), the write-off of a prepaid royalty asset resulting from a change in long-term mining plans ($3.6 million), a property litigation settlement ($1.9 million), and environmental liability accruals associated with previously divested properties ($1.2 million). These items drove the $10 million increase in Other Operating Expense over the prior year's first quarter ($13.9 million vs. $3.9 million). A reconciliation of Net Earnings to EBITDA and Adjusted EBITDA can be found on Appendix 4 to the attached first quarter financial statements.
Credit Position and Capital Allocation
At the end of the first quarter, total debt outstanding was approximately $2 billion, including $235 million of floating-rate borrowings, and the ratio of total debt to trailing twelve months Adjusted EBITDA was 2.2 times. The quarter end cash balance was $192 million.
In March, the Company's financial strength and flexibility was recognized with investment-grade ratings by Standard & Poor's Financial Services LLC and Fitch Ratings, Inc. The Company is committed to maintaining investment-grade ratings through the business cycle.
Cash capital expenditures in the first quarter were $108 million, including $28 million invested in the purchase of two replacement ships to transport aggregates from the Company's high-volume quarry in Mexico, new site development and other growth opportunities. For the full year, core capital expenditures, excluding acquisitions and internal growth capital investments, are expected to be approximately $275 million.
In the first quarter, the Company returned $50 million to shareholders through dividends and share repurchases.
Demand and Earnings Outlook
Regarding the Company's earnings outlook for 2016, Mr. Hill stated, "The strong fundamentals of our aggregates-focused business and the execution of our teams led to strong earnings growth in 2015 and to a fast start in 2016. Our fast start through the first quarter has put us ahead of our original plans and tracking towards the high end of our full year Adjusted EBITDA guidance of $1.0 to $1.1 billion. In addition, we now project full year 2016 aggregates shipments to be 8 to 9 percent higher than 2015 (vs. our prior 7 percent growth estimate). Other management expectations (e.g., aggregates price, gross profit growth and SAG expense) remain consistent with those outlined during our fourth quarter 2015 communications.
Mr. Hill concluded, "Our early 2016 results and full year outlook align well with our longer range market expectations and performance goals. Since the beginning of this recovery in the second half of 2013, our teams' efforts have resulted in trailing twelve months aggregates gross profit increasing nearly $480 million on a 44 million tons increase in annualized shipments. We remain on track to deliver further gains in profitability and cash flow as the recovery moves forward. I'm very pleased with the way our people have executed, and I'm proud of their commitment to continuous improvement in safety, customer service, and operating efficiency."
Conference Call
Vulcan will host a conference call at 10:00 a.m. CDT on May 3, 2016. 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 888-427-9419 approximately 10 minutes before the scheduled start. International participants can dial 719-325-2393. The conference ID is 9719747. 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; 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 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
(in thousands, except per share data)
------------------------------------
Three Months Ended
Consolidated Statements of
Earnings March 31
--------
(Condensed and unaudited) 2016 2015
------------------------ ---- ----
Total revenues $754,728 $631,293
Cost of revenues 590,010 553,428
---------------- ------- -------
Gross profit 164,718 77,865
Selling, administrative and
general expenses 76,468 66,763
Gain on sale of property, plant &
equipment
and businesses
555 6,375
Impairment of long-lived assets (9,646) 0
Restructuring charges (320) (2,818)
Other operating expense, net (13,918) (3,900)
---------------------------- ------- ------
Operating earnings 64,921 10,759
Other nonoperating income
(expense), net (694) 979
Interest expense, net 33,732 62,480
--------------------- ------ ------
Earnings (loss) from continuing
operations
before income taxes
30,495 (50,742)
Provision for (benefit from)
income taxes 9,764 (14,075)
---------------------------- ----- -------
Earnings (loss) from continuing
operations 20,731 (36,667)
Loss on discontinued operations,
net of tax (1,807) (3,011)
-------------------------------- ------ ------
Net earnings (loss) $18,924 ($39,678)
------------------ ------- --------
Basic earnings (loss) per share
Continuing operations $0.15 ($0.28)
Discontinued operations ($0.01) ($0.02)
Net earnings (loss) $0.14 ($0.30)
Diluted earnings (loss) per share
Continuing operations $0.15 ($0.28)
Discontinued operations ($0.01) ($0.02)
Net earnings (loss) $0.14 ($0.30)
Weighted-average common shares
outstanding
Basic 133,821 132,659
Assuming dilution 135,452 132,659
Cash dividends per share of
common stock $0.20 $0.10
Depreciation, depletion,
accretion and amortization $69,406 $66,723
Effective tax rate from
continuing operations 32.0% 27.7%
----------------------- ---- ----
Table B
Vulcan Materials Company
and Subsidiary Companies
(in thousands)
-------------
Consolidated Balance Sheets March 31 December 31 March 31
(Condensed and unaudited) 2016 2015 2015
------------------------ ---- ---- ----
Assets
Cash and cash equivalents $191,886 $284,060 $392,657
Restricted cash 0 1,150 0
Accounts and notes receivable
Accounts and notes receivable,
gross 449,538 423,600 375,196
Less: Allowance for doubtful
accounts (5,775) (5,576) (5,244)
---------------------------- ------ ------ ------
Accounts and notes receivable, net 443,763 418,024 369,952
Inventories
Finished products 288,891 297,925 285,313
Raw materials 22,160 21,765 21,203
Products in process 1,221 1,008 1,189
Operating supplies and other 25,486 26,375 25,987
---------------------------- ------ ------ ------
Inventories 337,758 347,073 333,692
Current deferred income taxes 0 0 39,881
Prepaid expenses 34,096 34,284 58,483
Total current assets 1,007,503 1,084,591 1,194,665
Investments and long-term
receivables 38,895 40,558 41,613
Property, plant & equipment
Property, plant & equipment, cost 6,984,417 6,891,287 6,671,537
Reserve for depreciation,
depletion & amortization (3,786,590) (3,734,997) (3,587,444)
------------------------- ---------- ---------- ----------
Property, plant & equipment, net 3,197,827 3,156,290 3,084,093
Goodwill 3,094,824 3,094,824 3,094,824
Other intangible assets, net 753,372 766,579 764,072
Other noncurrent assets 154,604 158,790 147,258
Total assets $8,247,025 $8,301,632 $8,326,525
------------ ---------- ---------- ----------
Liabilities
Current maturities of long-term
debt 131 130 365,441
Trade payables and accruals 185,653 175,729 157,829
Other current liabilities 170,701 177,620 180,066
Total current liabilities 356,485 353,479 703,336
Long-term debt 1,981,425 1,980,334 1,888,365
Noncurrent deferred income taxes 663,364 681,096 682,849
Deferred revenue 205,892 207,660 212,987
Other noncurrent liabilities 618,806 624,875 678,821
Total liabilities $3,825,972 $3,847,444 $4,166,358
----------------- ---------- ---------- ----------
Equity
Common stock, $1 par value 133,348 133,172 132,660
Capital in excess of par value 2,823,116 2,822,578 2,765,391
Retained earnings 1,584,344 1,618,507 1,418,901
Accumulated other comprehensive
loss (119,755) (120,069) (156,785)
Total equity $4,421,053 $4,454,188 $4,160,167
Total liabilities and equity $8,247,025 $8,301,632 $8,326,525
---------------------------- ---------- ---------- ----------
Table C
Vulcan Materials Company
and Subsidiary Companies
(in thousands)
-------------
Three Months Ended
Consolidated Statements of Cash
Flows March 31
--------
(Condensed and unaudited) 2016 2015
------------------------ ---- ----
Operating Activities
Net earnings (loss) $18,924 ($39,678)
Adjustments to reconcile net
earnings to net cash provided by
operating activities
Depreciation, depletion,
accretion and amortization 69,406 66,723
Net gain on sale of property,
plant & equipment and businesses (555) (6,375)
Contributions to pension plans (2,343) (1,447)
Share-based compensation 4,321 4,700
Excess tax benefits from share-
based compensation (21,235) (7,575)
Deferred tax provision (benefit) (17,879) (11,592)
Cost of debt purchase 0 21,734
Changes in assets and liabilities
before initial
effects of business acquisitions
and dispositions
19,668 4,575
Other, net (27,450) (11,911)
Net cash provided by operating
activities $42,857 $19,154
------------------------------ ------- -------
Investing Activities
Purchases of property, plant &
equipment (108,284) (49,611)
Proceeds from sale of property,
plant & equipment 1,086 2,354
Payment for businesses acquired,
net of acquired cash (1,611) 0
Decrease in restricted cash 1,150 0
Other, net 1,549 (334)
Net cash used for investing
activities ($106,110) ($47,591)
--------------------------- --------- --------
Financing Activities
Payments of current maturities
and long-term debt (5) (145,918)
Proceeds from issuance of long-
term debt 0 400,000
Purchases of common stock (23,433) 0
Dividends paid (26,718) (13,253)
Proceeds from exercise of stock
options 0 31,416
Excess tax benefits from share-
based compensation 21,235 7,575
Other, net 0 1
Net cash provided by (used for)
financing activities ($28,921) $279,821
------------------------------- -------- --------
Net increase (decrease) in cash
and cash equivalents (92,174) 251,384
Cash and cash equivalents at
beginning of year 284,060 141,273
Cash and cash equivalents at end
of period $191,886 $392,657
-------------------------------- -------- --------
Table D
Segment Financial Data and Unit Shipments
(in thousands, except per unit data)
-----------------------------------
Three Months Ended
March 31
--------
2016 2015
---- ----
Total
Revenues
Aggregates
(1) $634,868 $503,509
Asphalt Mix
(2) 89,099 103,071
Concrete (2) 70,397 59,789
Calcium (3) 1,910 1,855
---------- ----- -----
Segment
sales $796,274 $668,224
Aggregates
intersegment
sales (41,546) (36,931)
Total
revenues $754,728 $631,293
--------- -------- --------
Gross Profit
Aggregates $148,383 $67,665
Asphalt Mix
(2) 12,214 8,818
Concrete (2) 3,477 810
Calcium (3) 644 572
----------
Total $164,718 $77,865
----- -------- -------
Depreciation,
Depletion,
Accretion
and
Amortization
Aggregates $57,511 $55,515
Asphalt Mix
(2) 4,232 3,909
Concrete (2) 2,981 2,728
Calcium (3) 183 162
Other 4,499 4,409
Total $69,406 $66,723
----- ------- -------
Average Unit
Sales Price
and Unit
Shipments
Aggregates
Freight-
adjusted
revenues 4 $486,917 $379,880
Aggregates -
tons 39,206 33,504
Freight-
adjusted
sales price
5 $12.42 $11.34
Other
Products
Asphalt Mix
-tons 1,699 1,768
Asphalt Mix
-sales
price $52.04 $53.13
Ready-mixed
concrete -
cubic yards 648 573
Ready-mixed
concrete -
sales price $108.58 $104.25
Calcium -
tons 72 67
Calcium -
sales price $26.47 $26.61
------------ ------ ------
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 In January 2015, we exchanged our California ready-mixed concrete operations for 13 asphalt mix plants,
primarily in Arizona.
3 Includes cement and calcium products.
4 Freight-adjusted revenues are Aggregates segment sales excluding freight, delivery and transportation revenues,
and other revenues related to services, such as landfill tipping fees that are derived from our aggregates business.
5 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:
(in thousands)
-------------
Three Months Ended
March 31
--------
2016 2015
---- ----
Cash Payments
Interest (exclusive of amount capitalized) $2,715 $21,869
Income taxes 6,486 2,062
Noncash Investing and Financing Activities
Accrued liabilities for purchases of property, plant & equipment 25,880 13,340
Accrued liabilities for common stock purchases 3,164 0
Amounts referable to business acquisitions
Fair value of noncash assets and liabilities exchanged 0 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
(dollars in thousands)
---------------------
Three Months Ended
March 31
--------
2016 2015
---- ----
Gross profit $164,718 $77,865
Total revenues $754,728 $631,293
Gross profit margin 21.8% 12.3%
------------------- ---- ----
Gross Profit Margin Excluding Freight and Delivery Revenues
(dollars in thousands)
---------------------
Three Months Ended
March 31
--------
2016 2015
---- ----
Gross profit $164,718 $77,865
------------ -------- -------
Total revenues $754,728 $631,293
Freight and delivery revenues (1) 121,211 106,372
--------------------------------
Total revenues excluding freight and delivery revenues $633,517 $524,921
------------------------------------------------------ -------- --------
Gross profit margin excluding freight and delivery revenues 26.0% 14.8%
----------------------------------------------------------- ---- ----
1 Includes freight to remote distributions sites.
Appendix 2
Reconciliation of Non-GAAP Measures (Continued)
Aggregates segment gross profit margin 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 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.
Reconciliations of these metrics to their nearest GAAP measures are presented below:
Aggregates Segment Gross Profit Margin in Accordance with GAAP
(dollars in thousands)
---------------------
Three Months Ended
March 31
--------
2016 2015
---- ----
Aggregates segment
Gross profit $148,383 $67,665
Segment sales $634,868 $503,509
Gross profit margin 23.4% 13.4%
------------------- ---- ----
Incremental gross profit margin 61.4%
------------------------------- ----
Aggregates Segment Gross Profit as a Percentage of Freight-Adjusted Revenues
(dollars in thousands)
---------------------
Three Months Ended
March 31
--------
2016 2015
---- ----
Aggregates segment
Gross profit $148,383 $67,665
------------ -------- -------
Segment sales $634,868 $503,509
Less
Freight, delivery and transportation revenues (1) $143,750 $117,398
Other revenues 4,201 6,231
--------------
Freight-adjusted revenues $486,917 $379,880
------------------------- -------- --------
Gross profit as a percentage of freight-adjusted revenues 30.5% 17.8%
--------------------------------------------------------- ---- ----
Incremental gross profit as a percentage of freight-adjusted revenues
---------------------------------------------------------------------
75.4%
----
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 "Aggregates segment cash gross profit" and "Earnings Before Interest,
Taxes, Depreciation and Amortization" (EBITDA). Thus, 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. The investment community often uses these metrics as indicators to assess the
operating performance of a company's businesses. We use Aggregates segment cash gross profit
and EBITDA to assess 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
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.
(in thousands)
-------------
Three Months Ended
March 31
--------
2016 2015
---- ----
Aggregates segment
Gross profit $148,383 $67,665
DDA&A 57,511 55,515
Aggregates segment cash gross
profit $205,894 $123,180
------------------------------ -------- --------
Unit shipments - tons 39,206 33,504
--------------------- ------ ------
Aggregates segment cash gross
profit per ton $5.25 $3.68
----------------------------- ----- -----
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.
(in thousands)
-------------
Three Months Ended
March 31
--------
2016 2015
---- ----
Reconciliation of Net Earnings to
EBITDA
Net earnings (loss) $18,924 ($39,678)
Provision for (benefit from) income
taxes 9,764 (14,075)
Interest expense, net 33,732 62,480
Loss on discontinued operations, net
of tax 1,807 3,011
EBIT $64,227 $11,738
Depreciation, depletion, accretion
and amortization 69,406 66,723
EBITDA $133,633 $78,461
------ -------- -------
Adjusted EBITDA and Adjusted EBIT
EBITDA $133,633 $78,461
Gain on sale of real estate and
businesses 0 (5,886)
Charges associated with
acquisitions and divestitures 12,282 2,429
Asset impairment 9,646 0
Restructuring charges 320 2,818
Adjusted EBITDA $155,881 $77,822
Depreciation, depletion,
accretion and amortization (69,406) (66,723)
Adjusted EBIT $86,475 $11,099
------------- ------- -------
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/vulcan-announces-first-quarter-2016-results-300261377.html
SOURCE Vulcan Materials Company
