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Vulcan Materials Company (VMC - Free Report) showed a narrower loss of 14 cents per share in the fourth quarter of 2011 compared with 36 cents per share in the same quarter of 2010 (excluding special items) and the Zacks Consensus Estimate of a loss of 37 cents per share.

Total revenue in the quarter rose 5% to $614.6 million. It was higher than the Zacks Consensus Estimate of $573 million.

Gross profit increased 47% to $74.4 million while gross margins improved 360 basis points due to higher aggregates earnings. Adjusted EBITDA was $97 million, up significantly from $65 million in the fourth quarter of 2010.

Segment Results

Revenues in the Aggregates segment inched up 4% to $378.4 million in the quarter. Gross profit rose 37% to $79.2 million led by higher pricing and shipments and lower unit cost of sales. Aggregates shipments increased 3% from the prior year while average sales price inched up 1% from the prior year due to improvements in a number of markets, including Florida, Tennessee, Texas and Virginia.

Revenues in the Concrete segment scaled up 3% to $92.9 million. Gross profit improved $2 million to a loss of $11 million versus a loss of $13 million in the prior year. Ready-mixed concrete volumes were flat compared with the prior year. The average sales price increased 5% from the prior year, contributing to improved unit materials margin.

Revenues in the Asphalt Mix segment rose 8% to $94.5 million. Gross profit was $5 million versus $8 million in the prior year, due mainly to higher liquid asphalt costs. Asphalt mix volume dipped 1% from the prior year. The average sales price escalated 9%.

Revenues in Cement segment surged 44% to $12.3 million. Gross profit improved $2 million to $1 million from the prior year due to increased volumes and lower operating costs.

Full Year Results

For full year 2011, Vulcan reported a narrower loss of 52 cents per share compared with 79 cents per share in the prior year, excluding charges of 6 cents per share and 1 cent per share, respectively, relating to restructuring and the unsolicited exchange offer. The 2011-loss was narrower than the Zacks Consensus Estimate of a loss of $1.05 per share.

Revenues in the year were flat at $2.6 billion, However, it was higher than the Zacks Consensus Estimate of $2.4 billion.

EBITDA was $425 million, including $87 million related to gains from the sale of non-strategic assets and a legal settlement, and $15 million in expenses related to restructuring and the exchange offer.

Financial Position

Vulcan had cash and cash equivalents of $155.8 million as of December 31, 2011, up significantly from $47.5 million at the end of 2010. Total debt amounted to $2.8 billion as of December 31, 2011 compared with $2.7 billion as of December 31, 2010.

In 2011, Vulcan’s net cash flow from operating activities decreased to $169.0 million from $202.7 million a year-ago mainly due to a fall in deferred tax provision. Meanwhile, capital expenditures increased to $85.2 million from $72.7 million a year ago.


Vulcan expects segment earnings in each product line to improve in 2012 from the prior year due to higher pricing, modest growth in volumes and lower costs. Total aggregates shipments are expected to increase 1% to 2%, while same-store aggregates volume is expected to rise 2% to 3%.

The company anticipates Asphalt Mix segment earnings to increase due to higher pricing and modest growth in volumes. It expects ready-mixed concrete pricing to continue to improve. Meanwhile, it has projected cement earnings to approach break-even levels in 2012.

For the year, Vulcan anticipates EBITDA of $500 million, including $25 million due to its Profit Enhancement Plan, and excluding impacts from Planned Asset Sales and costs associated with the unsolicited exchange offer. Capital expenditures is expected to be $100 million fro the year.

Our Take

Vulcan Materials, a Zacks #2 Rank (Buy) 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. It is the nation’s largest producer of construction aggregates and a leading producer of other construction materials. The company’s main competitors include Martin Marietta Materials, Inc. (MLM - Free Report) and Cemex, S.A.B. de C.V. (CX - Free Report) .

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