Vulcan Materials Company said its fourth-quarter earnings surged on continued growth in aggregates shipments and stronger average selling prices.
Vulcan Materials, based in Birmingham, Alabama and the largest US producer of construction aggregates, reported revenues up $223 million, (8%) to $2,994 million for the year ending December 2014.
Gross profit increased $161 million (38%) to $588 million.
Highlights for the financial year are:
- Aggregates freight-adjusted revenues increased $218 million, or 14 percent, to $1,794 million
- Shipments increased 11 percent, or 16.5 million tons
- Same-store shipments increased 10 percent, or 15.0 million tons
- Segment gross profit increased $131 million, or 32 percent, to $544 million
- Incremental gross profit as a percent of freight-adjusted revenues was 60 percent
- Incremental gross profit margin was 66 percent, excluding acquisitions
- Cash gross profit per ton was $4.75, an increase of 9 percent, or $0.38 per ton
- Average sales price increased 2 percent, despite unfavorable mix impact
- Exclusive of unfavorable mix, pricing increased 3 percent
- Non-aggregates gross profit improved $30 million, or 220 percent, collectively
- Adjusted EBITDA increased $131 million, or 28 percent, to $600 million.
Earnings from continuing operations were $1.56 per diluted share (including $0.65 per diluted share related to gains on sale of assets, debt tender offer costs, expenses related to business development activities and restructuring charges) as compared to $0.16 per diluted share in the prior year.
Tom Hill, chief executive, said, “Our teams across the organization executed very well in the fourth quarter, capitalizing on the growing recovery in construction activity and demand for our products.
“Their efforts succeeded in converting more than 65 percent of our incremental aggregates revenues into incremental gross profit, and in doing so, they further improved the underlying profitability of our core aggregates business. These results, continuing the pattern of strong execution on our aggregates-focused strategy throughout the year, were achieved despite price gains muted by a negative geographic and product mix.”
The company said in a statement: “The recovery in demand for our products and our strong local sales and operations execution continued in the fourth quarter. Aggregates sales were $594 million, up 20 percent from the prior year’s fourth quarter, supported by strong volume growth across most of the Company’s footprint. On a same-store basis, total aggregates shipments increased 12 percent from the prior year. Overall, fourth quarter aggregates shipments increased 15 percent compared to the prior year.
“Shipment momentum continued to improve across most of our footprint, driven not only by large projects but also by strengthening construction activity across all end-use markets. On a same-store basis, Arizona, Arkansas, Florida, Illinois, North Carolina, Texas and Virginia each saw shipments increase by more than 14 percent over the prior year’s fourth quarter. Shipments in Georgia were relatively flat with the prior year due mostly to wet weather. In California, aggregates shipments for the quarter declined 9 percent due to unusually wet weather and delays on certain large projects.
“Freight-adjusted average sales price for aggregates increased 2 percent, or $0.21 per ton, versus the prior year’s fourth quarter, with almost all of our markets realizing price improvement. Excluding the impact of strong volume growth in several lower priced markets such as Illinois and Arkansas, the average price for aggregates increased 4 percent. A number of key states saw fourth quarter price increases of approximately 5 percent or more. Average sales price in two states saw modest declines due to negative product mix impact.
“Despite modest price growth in the quarter, gross profit per ton increased 21 percent from the prior year. While average freight-adjusted selling prices increased $0.21, our gross profit per ton increased $0.66, as our local leadership teams excelled at balancing price for service, sales and production mix, and operating efficiency and leverage.
“On a trailing twelve month basis, and excluding the impact of recent acquisitions, gross profit per ton has increased 20 percent from the prior year to $3.39. Over the same period, and on the same basis, incremental gross profit as a percent of incremental freight-adjusted revenues was 65 percent. For the year, segment gross profit rose by 32 percent, or $131 million, while same-store aggregates shipments increased 10 percent, or 15 million tons.
“Compared to last year, fourth quarter cost of revenues for the Company benefitted approximately $7 million from lower diesel fuel costs, with most of this benefit realized in the Aggregates segment.
Asphalt, Concrete and Calcium Segments”In the fourth quarter, asphalt gross profit improved $2 million due to improved margins and earnings from recently completed acquisitions. Same-store asphalt volumes approximated those of the prior year but were short of expectations due to the delayed start of several large projects until 2015. For the full year, Asphalt segment gross profit increased $5 million from the prior year.
Concrete gross profit was $3 million compared to a loss of $5 million in the fourth quarter of the prior year. Last year’s fourth quarter results included the Company’s Florida concrete business that was sold in the first quarter of 2014. On a same-store basis, volume, pricing and unit profitability improved, driven primarily by increased private construction activity. As a result, same-store gross profit increased $3 million. For the full year, Concrete segment gross profit improved $27 million overall and $6 million on a same-store basis.
The company’s cement business was also sold in the first quarter along with the Florida concrete assets.
The company retained its calcium products business that is now reported separately as a segment. In the fourth quarter, the Calcium business reported revenues of $2.5 million and gross profit of $1.1 million – both results are improvements versus the prior year’s fourth quarter.
In January of 2015, the company exited the ready mix concrete business in California and added thirteen asphalt plant locations in Arizona that expand the company’s service capabilities.
“The company will continue to supply aggregates to its former ready mix concrete plants in California.
“These transactions, which continue the strategic redeployment of capital undertaken throughout 2014, should be immediately accretive to earnings.