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Vulcan Materials Beats Q4 Earnings & Rev Ests

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Vulcan Materials Company’s (VMC - Analyst Report) reported earnings of 8 cents per share in the fourth quarter of 2013 surpassing the Zacks Consensus Estimate of a loss of 3 cents per share. Fourth quarter earnings were a significant improvement over the prior-year quarter earnings of 3 cents.

Total revenue of $680.3 million beat the Zacks Consensus Estimate of $637 million by 6.8%. Total revenue increased 11.8% from the prior-year quarter owing to pricing gains and volume growth in most of the segments. Total revenue in the fourth quarter comprised $652.9 million of net sales (up 13.6% year over year) and $27.4 million of delivery revenues.

The earnings and revenue beat was driven by an increase in volume in all the segments and pricing in most of the segments, except Asphalt Mix. The company benefited from improved product demand owing to broad based recovery in private construction activity, especially residential. Improved demand also favored pricing across most of its markets. Additionally, most of the volume and pricing increase was noted in the Aggregates segment.

Gross profit grew 48.2% to $117.4 million in the quarter due to solid volume and operating leverage in the Aggregates segment. Adjusted EBITDA (excluding gain on sale of real estate) was $129 million, up 43.3% from the prior-year quarter driven by a strong top line and solid cost control.

Segment Details

Aggregates

Revenues rose 11.5% year over year to $419.6 million (including inter-segment sales) in the quarter owing to gains from price increases and volume growth. Aggregates shipments (volumes) rose 7.0% year over year in the quarter, while average sales price increased 3.5% due to improvement in most markets.

The segment witnessed significant volume increase in Arizona, California, Florida, Georgia, North Carolina and Texas.  Most of the pricing increase was reported in Alabama, California, Florida, Texas and the Gulf Coast.

Gross margin improved 390 basis points (bps) in the quarter due to higher volumes and pricing.

Non-Aggregates

Revenues in the Concrete segment were $121.8 million in the fourth quarter of 2013, up 18.1% year over year, driven largely by volume growth. Volumes (shipments) grew 15.0% due to increased private construction activity. Pricing increased 1.9% in the quarter.

Revenues in the Asphalt Mix segment were $98.3 million in the reported quarter, up 15.8% year over year, due to improved volumes. Asphalt mix volume increased 11.5%. Pricing declined 2% in the quarter.

Revenues in the Cement segment were $13.2 million (excluding inter-segment sales), up 22.2% year over year due to growth in both volume and pricing. Volumes grew 13.9% in the quarter due to increased private construction activity. Pricing increased 9.8%.

Financial Update

The company reported cash and cash equivalents of $198.2 million as of Dec 31, 2013, compared with $245.8 million as of Sep 30, 2013.

Full Year 2013

Vulcan Materials Company reported earnings of 16 cents per share in full year 2013 surpassing the Zacks Consensus Estimate of a loss of 5 cents per share and improving drastically from the prior year loss of 42 cents on the back of a solid top line increase.

Total revenue of $2.77 billion beat the Zacks Consensus Estimate of $2.66 billion by 4.1%. Total revenue increased 7.8% from the prior-year quarter owing to pricing gains and volume growth in most of the segments. Total revenue comprised $2.63 billion of net sales (up 9.1% year over year) and $142 million of delivery revenues.

Outlook

With the housing market gaining momentum, demand for Vulcan’s products, both aggregates as well as non-aggregates, is improving. Average freight-adjusted selling price is expected to increase in the range of 3% to 5%.

Aggregates: Private construction demand is expected to grow. Aggregates volume is expected to increase in the range of 4% to 7%. The company expects segment margins to expand further.

Vulcan Materials carries a Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

Other stocks worth considering in the industrial goods sector include DR Horton Inc. (DHI - Analyst Report), USG Corp. (USG - Snapshot Report) and NVR, Inc. (NVR - Snapshot Report).  While DR Horton carries a Zacks Rank #1 (Strong Buy), USG Corporation and NVR carry a Zacks Rank #2 (Buy).

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