Vulcan Posts Loss, Misses Estimate

Vulcan Materials Company (VMC - Analyst Report) reported earnings of $22 million or 17 cents per share from continuing operations in the third quarter of 2011 compared with $11 million or 8 cents per share in the prior-year quarter.

The reported quarter included benefits of $63 million or 30 cents per share, a part of which related to the sale of non-strategic aggregates facilities and the remaining from an insurance related to the Illinois lawsuit settled in the second quarter of last year.

Excluding these items, Vulcan incurred an adjusted loss of $41 million or 13 cents per share from continuing operations, much below the Zacks Consensus Estimate of a profit of 7 cents.

Total revenue increased marginally to $760.8 million from $743.2 million in the year-ago quarter. The year-over-year improvement was primarily driven by favorable product pricing across all the segments and stronger demand for public infrastructure projects in some markets, partly offset by overall weak market conditions.

Segment Details

Net sales from the Aggregates segment increased marginally to $472.3 million from $469.5 million in the year-ago quarter. Unit selling price improved 1% year over year on the back of improvement in many markets.

Unit shipments fell 1.8% to 42.6 million tons, attributable to overall weak construction activities, partially offset by stronger demand for public infrastructure projects in California, North Carolina and Maryland. Segment earnings for aggregates decreased to $113 million from $125 million in the prior-year quarter.   

Net sales in the Concrete segment decreased 3.4% to $101.4 million from $105.0 million in the previous year due to lower shipments, offset by higher average selling prices. Segment loss narrowed to $9 million from $10 million last year.

The Asphalt Mix segment reported an increase of 11.3% in net sales to $128.9 million from $115.8 million in the third quarter of the prior year. The segment was impacted by a 10% rise in asphalt mix prices along with a 1% growth in shipments. Segment earnings were $12 million compared with $13 million in the prior-year quarter.

Net sales in the Cement segment climbed 31.9% to $12.4 million from $9.4 million in the year-earlier quarter, despite a marginal rise in shipments and an 8.7% fall in average selling price. Segment loss in the quarter narrowed to $1 million from $2 million in the 2010 quarter.

Financial Position

Vulcan Materials’ cash, cash equivalents and restricted cash improved to $233.4 million as of September 30, 2011 from $83.0 million at the end of the prior-year period. However, long-term debt rose to $2.82 billion at the end of the third quarter of 2011 from $2.43 billion at the end of the corresponding quarter of 2010.

In the first nine months of the year, the company generated cash of $121.7 million from operating activities compared with $127.8 million in the year-ago period. Meanwhile, capital expenditures increased to $77.3 million in the first three quarters from $62.1 million in the year-ago period.

Outlook

Vulcan is optimistic about each of its operating segments for the upcoming quarters. Almost all the segments are expected to witness higher volumes and higher prices for its products, offsetting higher costs.

Further, the company’s selling, general and administrative expenses in 2011 are projected to be approximately $25 million lower than the prior-year level. Vulcan Materials anticipates capital spending of $100 million for the year.

Based in Birmingham, Alabama, Vulcan Materials, a Zacks #3 Rank (Hold rating) stock, is engaged in the production, distribution and sale of construction aggregates, and other construction materials and related services in the U.S. and Mexico.

Vulcan Materials is the nation’s largest producer of construction aggregates and a leading producer of other construction materials. The company’s key competitors include CEMEX, S.A.B. de C.V. (CX - Snapshot Report), Lafarge S.A. (LFRGY - Snapshot Report), Cement Roadstone Holdings and Martin Marietta Materials Inc. (MLM - Snapshot Report).

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