Vulcan Materials announces earnings improvement

Vulcan Materials Co., the nation’s largest producer of construction aggregates, today announced what it calls significantly improved results for the first quarter ended March 31. Don James, chairman and CEO, said, “Our aggregates business delivered another quarter of strong improvement and the non-aggregates businesses continued to make progress. These results reflect the continued recovery of our markets and the benefits of the company’s powerful earnings leverage.

James added, “Demand for our products was solid during the quarter due primarily to public infrastructure projects and some recovery in private sector construction work. Results in the quarter were aided by favorable weather conditions.”

First quarter aggregates segment gross profit increased $23 million from the prior year reflecting growth in shipments across almost all geographic markets. Aggregates shipments increased 10 percent from the prior year and, coupled with lower unit cost of sales, led to a sharp increase in aggregates gross profit margin.

Vulcan’s aggregates businesses in California and Virginia continued to achieve strong volume gains from the prior year. The company’s aggregates businesses in eight other states also achieved double-digit volume gains over the prior year’s first quarter, most notably in Florida, Texas and Alabama.

The average sales price for aggregates decreased 1 percent from the prior year’s first quarter due mostly to a less favorable product mix. All key labor productivity and energy efficiency metrics improved from the prior year, more than offsetting an 11 percent increase in the unit cost for diesel fuel.

2012 outlook
For 2012, the company continues to expect earnings in each segment to improve versus the prior year owing to continued growth in volumes, higher pricing and reduced costs. Total aggregates shipments are now expected to increase approximately 2 to 4 percent. Aggregates freight-adjusted pricing is expected to increase by 1 to 3 percent. In addition, costs in the aggregates segment should be lower than in 2011, due to improved productivity, restructuring of overhead support functions and implementation of the company’s Profit Enhancement Plan.

As a result, aggregates segment earnings are expected to improve substantially from 2011. Overall, Vulcan anticipates 2012 EBITDA of approximately $500 million.

James said, “We remain focused on executing our initiatives, which will generate higher levels of earnings and cash flow, further improve our operating leverage, reduce overhead costs and strengthen our credit profile — all of which will enable Vulcan to restore a meaningful dividend as rapidly as possible.

“In summary, ” he added, “we are very encouraged by the continued signs of recovery we are seeing in the construction sector of the U.S. economy and in our businesses. We believe that Vulcan has tremendous upside potential as the economy improves and we continue reaping the benefits of strategic investments we have made in our ERP system and through our Profit Enhancement Plan.”