VMC
$130.48
Vulcan Materials
$1.94
1.51%
Earnings Details
2nd Quarter June 2020
Tuesday, August 4, 2020 7:30:00 AM
Tweet Share Watch
Summary

Vulcan Materials Beats

Vulcan Materials (VMC) reported 2nd Quarter June 2020 earnings of $1.60 per share on revenue of $1.3 billion. The consensus earnings estimate was $1.38 per share on revenue of $1.3 billion. The Earnings Whisper number was $1.45 per share. Revenue fell 0.4% compared to the same quarter a year ago.

Vulcan Materials Co is a producer of construction aggregates, namely crushed stone, sand and gravel. It also produces asphalt mix and concrete and produces cement in Florida.

Results
Reported Earnings
$1.60
Earnings Whisper
$1.45
Consensus Estimate
$1.38
Reported Revenue
$1.32 Bil
Revenue Estimate
$1.27 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Vulcan Reports Second Quarter Results

BIRMINGHAM, Ala., Aug. 4, 2020 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today announced results for the quarter ended June 30, 2020.

Tom Hill, Chairman and Chief Executive Officer, said, "Our second quarter results demonstrate the resiliency of our best in class aggregates-led business and reflect the proactive response by our employees to the COVID-19 pandemic.  Our operational execution was integral to widespread gains in unit profitability, despite some disruptions to construction activity during the quarter.  I am proud of our employees' ability to quickly adapt to the necessary additional safety protocols we have put in place in this environment, while maintaining their focus on operating safely and positioning Vulcan for continued success." 

Earnings from continuing operations were $211 million, or $1.58 per diluted share, an increase of 7 percent from the prior year's second quarter.  Adjusted EBITDA was $408 million, an increase of 10 percent.  The year-over-year earnings improvement was driven primarily by effective cost control and price growth in aggregates.  Second quarter segment earnings improved in each major product line.  Despite a 2 percent decline in aggregates shipments, mix-adjusted pricing improved 3.3 percent, and freight-adjusted unit cost of sales decreased 1 percent.  As a result, aggregates unit gross profit increased 9 percent to $6.25 per ton. 

Mr. Hill went on to say, "Certain leading indicators of demand have shown signs of improvement, and our quote activity remains robust.  However, our visibility beyond the near-term remains restricted due to the evolving effects of the pandemic.  The recent surge in new COVID-19 cases could impact the progress made so far if new restrictions on economic activity are put in place.  We believe this uncertainty could continue to weigh on construction activity in the second half of the year, making it difficult to predict the level and timing of shipments.  We are continuously reviewing our operating plans to ensure an effective response to demand shifts.  Whatever the demand, we remain confident in our ability to successfully navigate the changing environment." 

Highlights as of June 30, 2020 include:


Second Quarter


Year-to-Date


Trailing-Twelve Months

Amounts in millions, except per unit data

2020

2019


2020

2019


2020

2019

Total revenues

$ 1,322.6

$ 1,327.7


$ 2,371.8

$ 2,324.2


$ 4,976.7

$ 4,652.4

Gross profit

$    396.5

$    370.5


$    598.2

$    562.2


$ 1,292.0

$ 1,180.6

Aggregates segment









Segment sales

$ 1,070.6

$ 1,062.1


$ 1,938.8

$ 1,897.0


$ 4,032.1

$ 3,754.8

Freight-adjusted revenues

$    814.7

$    806.4


$ 1,462.7

$ 1,435.1


$ 3,041.9

$ 2,842.4

Gross profit

$    351.2

$    329.2


$    545.3

$    514.9


$ 1,177.0

$ 1,075.1

Shipments (tons)

56.2

57.3


101.2

102.9


213.8

208.8

Freight-adjusted sales price per ton

$    14.50

$   14.07


$   14.45

$   13.94


$   14.23

$   13.61

Gross profit per ton

$      6.25

$     5.74


$     5.39

$     5.00


$     5.51

$     5.15

Asphalt, Concrete & Calcium segment gross profit

$      45.4

$     41.3


$     52.9

$     47.2


$   115.0

$   105.5

Selling, Administrative and General (SAG)

$      91.2

$     95.7


$   177.6

$   186.0


$   362.2

$   351.9

SAG as % of Total revenues

6.9%

7.2%


7.5%

8.0%


7.3%

7.6%

Earnings from continuing operations before income taxes

$    272.3

$   245.5


$   344.5

$   320.1


$    782.1

$    694.6

Net earnings

$    209.9

$   197.6


$   270.2

$   260.9


$    627.0

$    564.0

Adjusted EBIT

$    308.3

$   278.5


$   413.9

$   382.0


$    927.3

$    841.9

Adjusted EBITDA

$    407.8

$   372.0


$   608.8

$   564.7


$ 1,314.2

$ 1,203.8

Earnings from continuing operations per diluted share

$      1.58

$     1.48


$     2.03

$     1.97


$      4.73

$      4.25

Adjusted earnings from continuing operations per diluted share

$      1.60

$     1.48


$     2.06

$     1.94


$      4.82

$      4.33

Segment Results
Aggregates
Second quarter segment sales increased 1 percent, and gross profit increased 7 percent to $351 million, or $6.25 per ton.  The improvement resulted from widespread growth in pricing and effective cost control.

Second quarter aggregates shipments were 2 percent lower than the prior year's second quarter.  Shipping patterns varied widely across the Company's footprint as a result of economic uncertainty and wet weather but were generally supported by healthy backlogs and our essential business status in our markets.  Key markets in the Southeast and coastal Texas were negatively affected by wet weather while shipments in California were reduced by tighter restrictions on shelter-in-place.  Shipments were higher in Georgia, Illinois, Tennessee and Texas.  On a mix-adjusted basis, all of the Company's key markets reported year-over-year price growth.  For the quarter, freight-adjusted average sales price increased 3 percent versus the prior year's quarter, inclusive of 30 basis points of unfavorable mix. 

Freight-adjusted unit cost of sales decreased 1 percent versus the prior year's second quarter.  Effective operating efficiencies helped mitigate the cost impact of lower sales volumes and a reduction in inventory.  Actions taken across the Company's more than 360 locations reduced cash spending and controlled inventories in areas most impacted by shelter-in-place orders.  The associated cost of reducing inventory offset the majority of a $14 million earnings benefit from lower diesel fuel costs.    

Unit profitability improvements were widespread across the Company's footprint.  Cash gross profit per ton increased 9 percent from the prior year's second quarter to $7.69 per ton.  For the trailing-twelve months, cash gross profit was $6.98 per ton.

Asphalt, Concrete and Calcium
Asphalt segment gross profit was $30 million, an improvement of $3 million from the prior year.  The year-over-year improvement was driven by higher material margins (sales price less cost of raw materials).  Although asphalt volumes in the second quarter declined 5 percent versus the prior year, we captured the benefit of lower liquid asphalt costs.    

Concrete segment gross profit was $14 million compared with $13 million in the prior year's second quarter.  Shipments decreased 4 percent versus the prior year, and average selling prices increased 1 percent compared to the prior year. 

Calcium segment gross profit was $0.7 million, down slightly from the prior year quarter.

Selling, Administrative and General (SAG)
SAG expense declined 5 percent to $91 million in the quarter due mostly to continued execution of cost reduction initiatives, lower incentive compensation costs and general cost control in response to COVID-19. This year-over-year decline resulted in a 31 basis point improvement as a percentage of total revenues.  On a trailing-twelve month basis, SAG expense as a percentage of total revenues stands at 7.3 percent.  The Company remains focused on further leveraging its overhead cost structure. 

Financial Position, Liquidity and Capital Allocation
Capital expenditures in the second quarter were $68 million ($177 million year-to-date).  The Company continues to expect to spend between $275 and $325 million on capital this year, most of which is for core operating and maintenance projects.  Given that the economic outlook is evolving quickly, we will continue to review our plans and adjust as needed, being thoughtful about preserving liquidity. 

For the quarter, the Company returned $45 million to shareholders through dividends, a 10 percent increase versus the prior year.  The Company did not repurchase any shares in the quarter. 

At quarter-end, total debt to trailing-twelve month Adjusted EBITDA was 2.5 times (1.9 times on a net debt basis reflecting $817 million of cash on hand).  The Company's weighted-average debt maturity was 14 years, and the effective weighted-average interest rate was 4.1 percent.

On a trailing twelve month basis, return on invested capital increased 100 basis points as solid earnings growth was leveraged with disciplined capital management.

Outlook
Regarding the Company's outlook, Mr. Hill stated, "Although the economic environment is showing signs of improvement, the pandemic's effect on demand and the broader economy remains unclear.  As a result, we are not reinstating earnings guidance at this time.

"While demand is subject to market fluctuations outside of our control, we remain focused on those things we can control such as our cost and our pricing discipline, both of which help to compound our unit margins.  Our year-to-date results demonstrate those capabilities.  On a trailing-twelve month basis our cash gross profit in aggregates is nearly $7 per ton.  Our operating plans are underpinned by our four strategic initiatives (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing), a healthy balance sheet, strong liquidity, and the engagement of our people."

Conference Call
Vulcan will host a conference call at 10:00 a.m. CDT on August 4, 2020.  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 8095639.  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 with headquarters in Birmingham, Alabama, is the nation's largest producer 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 recent outbreak of COVID-19; 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; 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; 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.











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)


2020


2019


2020


2019












Total revenues


$1,322,575


$1,327,682


$2,371,817


$2,324,193

Cost of revenues


926,056


957,180


1,773,575


1,762,016

Gross profit


396,519


370,502


598,242


562,177

Selling, administrative and general expenses


91,205


95,689


177,635


185,957

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









and businesses


(258)


3,451


741


10,748

Other operating expense, net


(6,160)


(2,190)


(10,151)


(6,461)

Operating earnings


298,896


276,074


411,197


380,507

Other nonoperating income (expense), net


7,367


2,466


(1,969)


5,595

Interest expense, net


33,954


33,035


64,727


65,969

Earnings from continuing operations









before income taxes


272,309


245,505


344,501


320,133

Income tax expense


61,352


47,598


73,546


58,291

Earnings from continuing operations


210,957


197,907


270,955


261,842

Loss on discontinued operations, net of tax


(1,041)


(349)


(781)


(985)

Net earnings


$209,916


$197,558


$270,174


$260,857












Basic earnings (loss) per share









Continuing operations


$1.59


$1.50


$2.04


$1.98

Discontinued operations


($0.01)


($0.01)


$0.00


($0.01)

Net earnings


$1.58


$1.49


$2.04


$1.97












Diluted earnings (loss) per share









Continuing operations


$1.58


$1.48


$2.03


$1.97

Discontinued operations


$0.00


$0.00


$0.00


($0.01)

Net earnings


$1.58


$1.48


$2.03


$1.96























Weighted-average common shares outstanding









Basic


132,552


132,269


132,560


132,157

Assuming dilution


133,115


133,354


133,154


133,199

Depreciation, depletion, accretion and amortization


$99,470


$93,497


$194,951


$182,677

Effective tax rate from continuing operations


22.5%


19.4%


21.3%


18.2%

 









Table B

Vulcan Materials Company







and Subsidiary Companies















(in thousands)

Consolidated Balance Sheets


June 30


December 31


June 30

(Condensed and unaudited)


2020


2019


2019

Assets







Cash and cash equivalents


$816,765


$271,589


$26,031

Restricted cash


434


2,917


491

Accounts and notes receivable







Accounts and notes receivable, gross


699,320


573,241


700,175

Allowance for doubtful accounts


(3,460)


(3,125)


(2,844)

Accounts and notes receivable, net


695,860


570,116


697,331

Inventories







Finished products


383,483


391,666


377,578

Raw materials


33,178


31,318


31,137

Products in process


5,116


5,604


6,332

Operating supplies and other


29,703


29,720


26,376

Inventories


451,480


458,308


441,423

Other current assets


65,571


76,396


89,739

Total current assets


2,030,110


1,379,326


1,255,015

Investments and long-term receivables


43,849


60,709


51,667

Property, plant & equipment







Property, plant & equipment, cost


8,921,990


8,749,217


8,613,500

Allowances for depreciation, depletion & amortization


(4,538,980)


(4,433,179)


(4,322,818)

Property, plant & equipment, net


4,383,010


4,316,038


4,290,682

Operating lease right-of-use assets, net


426,618


408,189


418,896

Goodwill


3,172,112


3,167,061


3,167,061

Other intangible assets, net


1,114,592


1,091,475


1,076,986

Other noncurrent assets


228,433


225,995


220,457

Total assets


$11,398,724


$10,648,793


$10,480,764

Liabilities







Current maturities of long-term debt


500,026


25


24

Short-term debt


0


0


137,000

Trade payables and accruals


278,102


265,159


284,875

Other current liabilities


260,621


270,379


241,689

Total current liabilities


1,038,749


535,563


663,588

Long-term debt


2,785,646


2,784,315


2,781,826

Deferred income taxes, net


671,097


633,039


601,189

Deferred revenue


177,534


179,880


182,666

Operating lease liabilities


405,578


388,042


396,952

Other noncurrent liabilities


555,969


506,097


483,096

Total liabilities


$5,634,573


$5,026,936


$5,109,317

Equity







Common stock, $1 par value


132,446


132,371


132,231

Capital in excess of par value


2,789,801


2,791,353


2,787,002

Retained earnings


3,049,943


2,895,871


2,623,747

Accumulated other comprehensive loss


(208,039)


(197,738)


(171,533)

Total equity


$5,764,151


$5,621,857


$5,371,447

Total liabilities and equity


$11,398,724


$10,648,793


$10,480,764

 








Table C

Vulcan Materials Company





and Subsidiary Companies











(in thousands)






Six Months Ended

Consolidated Statements of Cash Flows




June 30

(Condensed and unaudited)


2020


2019

Operating Activities





Net earnings





$270,174


$260,857

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




Depreciation, depletion, accretion and amortization


194,951


182,677

Noncash operating lease expense


17,977


17,549

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


(741)


(10,748)

Contributions to pension plans


(4,409)


(4,638)

Share-based compensation expense


15,220


14,370

Deferred tax expense (benefit)


36,644


34,816

Changes in assets and liabilities before initial





effects of business acquisitions and dispositions


(101,271)


(201,256)

Other, net





(2,954)


8,289

Net cash provided by operating activities


$425,591


$301,916

Investing Activities





Purchases of property, plant & equipment


(223,147)


(225,837)

Proceeds from sale of property, plant & equipment


3,063


11,200

Proceeds from sale of businesses


651


1,744

Payment for businesses acquired, net of acquired cash


(5,668)


1,122

Other, net





5,575


(4,577)

Net cash used for investing activities


($219,526)


($216,348)

Financing Activities





Proceeds from short-term debt


0


360,100

Payment of short-term debt


0


(356,100)

Payment of current maturities and long-term debt


(250,012)


(11)

Proceeds from issuance of long-term debt


750,000


0

Debt issuance and exchange costs


(10,762)


0

Settlements of interest rate derivatives


(19,863)


0

Purchases of common stock


(26,132)


0

Dividends paid




(90,128)


(81,927)

Share-based compensation, shares withheld for taxes


(15,830)


(25,508)

Other, net





(645)


(4)

Net cash provided by (used for) financing activities


$336,628


($103,450)

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


542,693


(17,882)

Cash and cash equivalents and restricted cash at beginning of year


274,506


44,404

Cash and cash equivalents and restricted cash at end of period


$817,199


$26,522

 












Table D

Segment Financial Data and Unit Shipments














(in thousands, except per unit data)






Three Months Ended


Six Months Ended








June 30




June 30






2020


2019


2020


2019

Total Revenues









Aggregates 1


$1,070,596


$1,062,061


$1,938,822


$1,897,026

Asphalt 2


222,950


247,163


362,739


379,253

Concrete 


100,683


103,768


195,448


187,405

Calcium 



1,889


2,003


3,915


3,954

Segment sales


$1,396,118


$1,414,995


$2,500,924


$2,467,638

Aggregates intersegment sales


(73,543)


(87,313)


(129,107)


(143,445)

Total revenues


$1,322,575


$1,327,682


$2,371,817


$2,324,193

Gross Profit









Aggregates


$351,162


$329,215


$545,293


$514,931

Asphalt



30,464


27,583


28,029


24,311

Concrete 


14,227


12,887


23,440


21,450

Calcium 





666


817


1,480


1,485

Total




$396,519


$370,502


$598,242


$562,177

Depreciation, Depletion, Accretion and Amortization





Aggregates


$80,747


$75,760


$157,883


$148,281

Asphalt



8,668


8,884


17,402


17,434

Concrete 


4,001


3,327


8,083


6,291

Calcium 



48


58


97


118

Other




6,006


5,468


11,486


10,553

Total




$99,470


$93,497


$194,951


$182,677

Average Unit Sales Price and Unit Shipments





Aggregates









Freight-adjusted revenues 3


$814,713


$806,444


$1,462,746


$1,435,051

Aggregates - tons


56,195


57,310


101,243


102,947

Freight-adjusted sales price 4


$14.50


$14.07


$14.45


$13.94













Other Products









Asphalt Mix - tons


3,403


3,595


5,460


5,617

Asphalt Mix - sales price


$57.46


$58.31


$57.86


$57.45













Ready-mixed concrete - cubic yards


786


815


1,520


1,484

Ready-mixed concrete - sales price


$127.35


$126.12


$127.62


$125.14













Calcium - tons


71


73


144


141

Calcium - sales price


$26.55


$27.50


$27.06


$27.89



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. 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






2020


2019


2020


2019

Aggregates segment









Segment sales


$1,070,596


$1,062,061


$1,938,822


$1,897,026

Less:


Freight & delivery revenues 1


240,880


241,354


446,588


436,508




Other revenues


15,003


14,263


29,488


25,467

Freight-adjusted revenues


$814,713


$806,444


$1,462,746


$1,435,051

Unit shipment - tons


56,195


57,310


101,243


102,947

Freight-adjusted sales price


$14.50


$14.07


$14.45


$13.94



1

At 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).
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






2020


2019


2020


2019

Aggregates segment









Gross profit


$351,162


$329,215


$545,293


$514,931

Segment sales


$1,070,596


$1,062,061


$1,938,822


$1,897,026

Gross profit margin


32.8%


31.0%


28.1%


27.1%

Incremental gross profit margin


257.1%




72.6%















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














(dollars in thousands)






Three Months Ended


Six Months Ended








June 30




June 30






2020


2019


2020


2019

Aggregates segment









Gross profit


$351,162


$329,215


$545,293


$514,931

Segment sales


$1,070,596


$1,062,061


$1,938,822


$1,897,026

Less:


Freight & delivery revenues 1


240,880


241,354


446,588


436,508


Segment sales excluding freight & delivery


$829,716


$820,707


$1,492,234


$1,460,518

Gross profit margin excluding freight & delivery


42.3%


40.1%


36.5%


35.3%

Incremental gross profit flow-through rate


243.6%




95.7%





1

At 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






2020


2019


2020


2019

Aggregates segment









Gross profit


$351,162


$329,215


$545,293


$514,931

Depreciation, depletion, accretion and amortization


80,747


75,760


157,883


148,281


Aggregates segment cash gross profit


$431,909


$404,975


$703,176


$663,212

Unit shipments - tons


56,195


57,310


101,243


102,947

Aggregates segment cash gross profit per ton


$7.69


$7.07


$6.95


$6.44

 

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



2020


2019


2020


2019


2020


2019

Net earnings


$209,916


$197,558


$270,174


$260,857


$626,979


$564,031

Income tax expense


61,352


47,598


73,546


58,291


150,453


128,597

Interest expense, net


33,954


33,035


64,727


65,969


127,758


132,374

Loss on discontinued operations, net of tax


1,041


349


781


985


4,637


1,955

EBIT


$306,263


$278,540


$409,228


$386,102


$909,827


$826,957

Depreciation, depletion, accretion and amortization


99,470


93,497


194,951


182,677


386,870


361,851

EBITDA


$405,733


$372,037


$604,179


$568,779


$1,296,697


$1,188,808

    Gain on sale of businesses


0


0


0


(4,064)


(9,289)


(4,064)

    Property donation


0


0


0


0


10,847


0

    Business interruption claims recovery


0


0


0


0


0


(559)

    Charges associated with divested operations


774


0


774


0


3,807


18,545

    Business development 1


(3,519)


0


(2,459)


0


(711)


220

    COVID-19 direct incremental costs


4,361


0


5,009


0


5,009


0

    Restructuring charges 2


465


0


1,333


0


7,790


829

Adjusted EBITDA


$407,814


$372,037


$608,836


$564,715


$1,314,150


$1,203,779

    Depreciation, depletion, accretion and amortization


(99,470)


(93,497)


(194,951)


(182,677)


(386,870)


(361,851)

Adjusted EBIT


$308,344


$278,540


$413,885


$382,038


$927,280


$841,928



1

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

2

Restructuring charges are included within other operating expenses. The charges relate to managerial restructuring.

 

Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted EPS from continuing operations to provide a more consistent comparison
of earnings performance from period to period.


Adjusted Diluted EPS from Continuing Operations (Adjusted Diluted EPS)






























Three Months Ended


Six Months Ended




TTM








June 30




June 30




June 30






2020


2019


2020


2019


2020


2019

Diluted EPS from continuing operations


$1.58


$1.48


$2.03


$1.97


$4.73


$4.25

    Items included in Adjusted EBITDA above


0.02


0.00


0.03


(0.03)


0.09


0.08

Adjusted Diluted EPS


$1.60


$1.48


$2.06


$1.94


$4.82


$4.33

 

Appendix 3


Reconciliation of Non-GAAP Measures (Continued)


 

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.


Return on Invested Capital




















(in thousands)












TTM












June 30










2020


2019

Adjusted EBITDA






$1,314,150


$1,203,779

Average invested capital 1









    Property, plant & equipment






4,335,633


4,219,693

    Goodwill






3,168,072


3,165,574

    Other intangible assets






1,087,580


1,102,803

    Fixed and intangible assets






$8,591,285


$8,488,070













    Current assets






1,453,094


1,155,425

    Less: Cash and cash equivalents






265,920


41,243

    Less: Deferred tax






19,289


5,973

    Adjusted current assets






1,167,885


1,108,209













    Current liabilities






649,772


685,591

    Less: Current maturities of long-term debt






100,025


23

    Less: Short-term debt






27,400


201,700

    Adjusted current liabilities






522,347


483,868

    Adjusted net working capital






$645,538


$624,341













Average invested capital






$9,236,823


$9,112,411













Return on Invested Capital






14.2%


13.2%



1

Average 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