8-K
Vulcan Materials CO (VMC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION****Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2020
VULCAN MATERIALS COMPANY
(Exact name of registrant as specified in its charter)
| New Jersey | 001-33841 | 20-8579133 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1200 Urban Center DriveBirmingham, Alabama 35242(Address of principal executive offices) (zip code)
(205)
298-3000Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which<br><br>registered |
|---|---|---|
| Common Stock, $1 par value | VMC | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On May 6, 2020, Vulcan Materials Company announced its financial results for the first quarter ended March 31, 2020. The press release announcing the results is furnished as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated May 6, 2020 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VULCAN MATERIALS COMPANY | ||
|---|---|---|
| Date: May 6, 2020 | By: | /s/ Denson N. Franklin III |
| Name: | Denson N. Franklin III | |
| Title: | Senior Vice President, General Counsel and Secretary |
Exhibit 99.1
May 6, 2020
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: Janet Kavinoky (205) 298-3220
VULCAN REPORTS FIRST QUARTER RESULTS
Earnings Improve in Each Segment, Ledby Aggregates
Already Strong Liquidity Position Enhanced
Updates Full Year Outlook
Birmingham, Alabama – May 6, 2020 – Vulcan Materials Company (NYSE: VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter ended March 31, 2020.
Tom Hill, Chairman and Chief Executive Officer, said, “Our first quarter earnings improved across all segments and were in line with our expectations, despite wet weather in certain key markets in the Southeast and Southwest. These results demonstrated the strong long-term fundamental position of our aggregates-led businesses and our commitment to leading the industry in pricing and unit profitability.
“We experienced minimal financial impact from the COVID-19 pandemic in the first quarter. Our main focus right now is ensuring the health and safety of our employees, maintaining our operational readiness, preserving liquidity and supporting the communities in which we operate. Our employees are engaged and ready to support one another, service our customers, and meet the challenges of today as we prepare for tomorrow.
“From a position of strength, we are proactively planning for the potential impacts of the pandemic on construction activity. Our strengths are derived from the flexibility provided by our aggregates-focused business, our diverse geographic footprint, our balance sheet structure and recently enhanced liquidity, and our operational capabilities. Our leading market positions, built over more than 60 years, and our proven track record of strong operations also position us well. That said, we have undertaken a comprehensive review of our operating plans and have contingency plans in place to respond as efficiently as possible to demand shifts. Aggregates is far more adaptable to these demand shifts than any other construction materials, a characteristic that should serve us well during this period of disruption. As a result, we will be well-equipped to manage our business effectively and serve our customers reliably through these unprecedented times. Our execution capabilities are supported by our four strategic disciplines (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing), which have been implemented over the last few years. These operating plans are underpinned by our healthy balance sheet and strong liquidity position, which we have further enhanced.”
Page 2
May 6, 2020
FOR IMMEDIATE RELEASE
Highlights as of March 31, 2020 include:
| First Quarter | Trailing Twelve Months | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in millions, except per unit data | 2020 | 2019 | 2020 | 2019 | ||||||||
| Total revenues | $ | 1,049.2 | $ | 996.5 | $ | 4,981.8 | $ | 4,524.9 | ||||
| Gross profit | $ | 201.7 | $ | 191.7 | $ | 1,265.9 | $ | 1,133.3 | ||||
| Aggregates segment | ||||||||||||
| Segment sales | $ | 868.2 | $ | 835.0 | $ | 4,023.5 | $ | 3,649.0 | ||||
| Freight-adjusted revenue | $ | 648.0 | $ | 628.6 | $ | 3,033.6 | $ | 2,766.5 | ||||
| Gross profit | $ | 194.1 | $ | 185.7 | $ | 1,155.1 | $ | 1,029.4 | ||||
| Shipments (tons) | 45.0 | 45.6 | 214.9 | 206.5 | ||||||||
| Freight-adjusted sales price per ton | $ | 14.39 | $ | 13.77 | $ | 14.12 | $ | 13.40 | ||||
| Gross profit per ton | $ | 4.31 | $ | 4.07 | $ | 5.38 | $ | 4.99 | ||||
| Asphalt, Concrete & Calcium segment gross profit | $ | 7.6 | $ | 6.0 | $ | 110.9 | $ | 103.9 | ||||
| Selling, Administrative and General (SAG) | $ | 86.4 | $ | 90.3 | $ | 366.7 | $ | 345.3 | ||||
| SAG as % of Total revenues | 8.2 | % | 9.1 | % | 7.4 | % | 7.6 | % | ||||
| Earnings from continuing operations before income taxes | $ | 72.2 | $ | 74.6 | $ | 755.3 | $ | 649.4 | ||||
| Net earnings | $ | 60.3 | $ | 63.3 | $ | 614.6 | $ | 526.1 | ||||
| Adjusted EBIT | $ | 105.5 | $ | 103.5 | $ | 897.5 | $ | 802.6 | ||||
| Adjusted EBITDA | $ | 201.0 | $ | 192.7 | $ | 1,278.4 | $ | 1,156.6 | ||||
| Earnings from continuing operations per diluted share | $ | 0.45 | $ | 0.48 | $ | 4.64 | $ | 3.95 | ||||
| Adjusted earnings from continuing operations per diluted share | $ | 0.47 | $ | 0.46 | $ | 4.71 | $ | 4.07 |
First quarter revenues were $1.05 billion and net earnings were $60 million. Earnings from continuing operations were $0.45 per diluted share, and Adjusted EBITDA was $201 million. This year’s first quarter earnings included a pretax foreign currency balance sheet translation loss of $6 million, or $0.04 per diluted share, resulting from the rapid devaluation of the Mexican peso.
Segment revenues and gross profit improved versus the prior year in each of the Company’s product lines. Aggregates earnings benefited from continued price improvement and solid shipment growth in certain key markets. Asphalt and Concrete segment earnings reflected revenue growth and improved unit margins.
Segment Results
Aggregates
First quarter segment sales increased 4 percent, and gross profit increased 5 percent to $194 million, or $4.31 per ton. These improvements resulted from growth in shipments in certain key markets and wide-spread growth in pricing.
First quarter aggregates shipments were 1 percent lower than the prior year’s strong first quarter, when aggregates shipments increased 13 percent as a result of delayed shipments from the fourth quarter of 2018. Many markets in the Southeast and the Southwest were negatively impacted by wet weather while shipments in California, Florida, Illinois and Virginia realized solid growth. On a mix-adjusted basis, all of the Company’s key markets reported year-over-year price growth. For the quarter, freight-adjusted average sales price increased 4.5 percent (4.8 percent on mix-adjusted basis) versus the prior year’s quarter.
Page 3
May 6, 2020
FOR IMMEDIATE RELEASE
As anticipated, first quarter cost of sales were negatively impacted by higher repairs, maintenance and stripping costs, which were incurred early in the quarter to take advantage of the seasonally low production volume. Wet weather inefficiencies also affected costs in certain markets. These were partially offset by the modestly lower unit cost of diesel fuel in the quarter. Cash gross profit per ton increased 6 percent from the prior year’s first quarter to $6.02 per ton. For the trailing-twelve months, cash gross profit was $6.82 per ton.
Asphalt, Concrete and Calcium
Consistent with the Company’s expectations, Asphalt segment gross profit was a loss of $2 million for the seasonally slower first quarter, an improvement over last year’s loss of $3 million. Asphalt shipments increased 2 percent and selling prices increased 5 percent in the first quarter. California, the Company’s largest asphalt market, reported volume growth in the first quarter, more than offsetting lower volumes in Texas. In both markets, weather contributed to the year-over-year change. The average unit cost for liquid asphalt was 6 percent lower than the prior year quarter.
Concrete segment gross profit was $9 million, an 8 percent improvement from the prior year. Shipments increased 10 percent, led by shipment growth in the Company’s two largest concrete markets, Northern Virginia and Northern California. Average selling prices increased 3 percent compared to the prior year’s first quarter.
Calcium segment gross profit was $0.8 million, up from the prior year quarter.
Selling, Administrative and General (SAG)
SAG expense declined 4 percent to $86 million in the quarter due mostly to recently implemented cost reductions as well as adjustments to stock-based compensation to reflect a lower share price. This year-over-year decline coupled with revenue growth, resulted in a 90 basis point improvement as a percentage of total revenues. The Company remains focused on further leveraging its overhead structure.
Financial Position, Liquidity and Capital Allocation
Capital expenditures in the first quarter were $109 million. This amount included both core operating and maintenance capital investments to improve or replace existing property, plant and equipment as well as internal growth projects already underway. The Company’s full-year expectations for 2020 capital spending have been revised downward in response to the unknown impacts of the COVID-19 pandemic. The Company now expects to spend between $275 and $325 million (previously $475 million) on capital this year, most of which is for core operating and maintenance. Given that the economic outlook is evolving quickly, we will continue to review our plans and adjust as needed, being thoughtful about preserving liquidity. The Company will continue to take a disciplined approach to acquisitions, focusing on only those assets that are a strategic priority. During the quarter, there were no acquisitions.
The Company returned $45 million to shareholders through dividends, a 10 percent increase versus the prior year’s quarter. The Company also invested $26 million in share repurchases in the quarter.
Page 4
May 6, 2020
FOR IMMEDIATE RELEASE
At quarter-end, total debt to trailing-twelve month Adjusted EBITDA was 2.2 times (2.1 times on a net debt basis reflecting cash on hand). The Company’s weighted-average debt maturity is 14 years, and the effective weighted-average interest rate was 4.2 percent.
In April, the Company entered into a $750 million 364-day delayed draw term loan, which further enhanced the Company’s already strong liquidity position. At March 31, 2020 there were no borrowings outstanding under the existing $750 million revolving credit facility.
Outlook
Regarding the Company’s outlook, Mr. Hill stated, “The impact from the COVID-19 global pandemic continues to evolve quickly, and it is too early to estimate accurately the full year impact on aggregates demand. Because we have been designated as an essential business, shipment activity today remains relatively strong across many of our markets as customers execute on their backlog of projects. However, we expect some project timelines will be modified as every market adjusts to economic disruptions.
“Because of this uncertainty in aggregates demand, we are withdrawing our previous financial guidance for 2020. We will continue to closely monitor trends in construction activity and work with our customers to meet their needs in this challenging operating environment. We will provide updates as more information becomes available and our visibility improves. While we do not have the ability to control demand, our advantage is our ability to control many other aspects of our business. We remain confident in our ability to successfully navigate the changing environment. We will continue to operate from a position of strength supported by the resiliency of our aggregates business, progress on the four strategic disciplines and the engagement of our people.”
Conference Call
Vulcan will host a conference call at 10:00 a.m. CDT on May 6, 2020. A webcast will be available via the Company’s website at www.vulcanmaterials.com. Investors and other interested parties may access the teleconference live by calling 833-962-1439, or 832-900-4623 if outside the U.S., approximately 15 minutes before the scheduled start. The conference ID is 5190977. The conference call will be recorded and available for replay at the Company’s website approximately two hours after the call.
Vulcan Materials Company, a member of the S&P 500 Index with headquarters in Birmingham, Alabama, is the nation's largest producer of construction aggregates – primarily crushed stone, sand and gravel – and a major producer of aggregates-based construction materials, including asphalt mix and ready-mixed concrete. For additional information about Vulcan, go to www.vulcanmaterials.com.
FORWARD-LOOKING STATEMENT DISCLAIMER
This document contains forward-looking statements. Statements that are not historical fact, including statements about Vulcan's beliefs and expectations, are forward-looking statements. Generally, these statements relate to future financial performance, results of operations, business plans or strategies, projected or anticipated revenues, expenses, earnings (including EBITDA and other measures), dividend policy, shipment volumes, pricing, levels of capital expenditures, intended cost reductions and cost savings, anticipated profit improvements and/or planned divestitures and asset sales. These forward-looking statements are sometimes identified by the use of terms and phrases such as “believe,” “should,” “would,” “expect,” “project,” “estimate,” “anticipate,” “intend,” “plan,” “will,” “can,” “may” or similar expressions elsewhere in this document. These statements are subject to numerous risks, uncertainties, and assumptions, including but not limited to general business conditions, competitive factors, pricing, energy costs, and other risks and uncertainties discussed in the reports Vulcan periodically files with the SEC.
Page 5
May 6, 2020
FOR IMMEDIATE RELEASE
Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary significantly from those expressed in or implied by the forward-looking statements. The following risks related to Vulcan's business, among others, could cause actual results to differ materially from those described in the forward-looking statements: general economic and business conditions; a pandemic, epidemic or other public health emergency, such as the recent outbreak of COVID-19; Vulcan’s dependence on the construction industry, which is subject to economic cycles; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction; changes in Vulcan’s effective tax rate; the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; the impact of the state of the global economy on Vulcan’s businesses and financial condition and access to capital markets; the highly competitive nature of the construction industry; the impact of future regulatory or legislative actions, including those relating to climate change, wetlands, greenhouse gas emissions, the definition of minerals, tax policy or international trade; the outcome of pending legal proceedings; pricing of Vulcan's products; weather and other natural phenomena, including the impact of climate change and availability of water; energy costs; costs of hydrocarbon-based raw materials; healthcare costs; the amount of long-term debt and interest expense incurred by Vulcan; changes in interest rates; the impact of a discontinuation of the London Interbank Offered Rate (LIBOR); volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully integrate acquisitions; the effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan’s products are distributed; and other assumptions, risks and uncertainties detailed from time to time in the reports filed by Vulcan with the SEC. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement. Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this document except as required by law.
Table A
Vulcan Materials Company
and Subsidiary Companies
(in thousands, except per share data)
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| Consolidated Statements of Earnings | March 31 | |||||||
| (Condensed and unaudited) | 2020 | 2019 | ||||||
| Total revenues | $ | 1,049,242 | $ | 996,511 | ||||
| Cost of revenues | 847,519 | 804,836 | ||||||
| Gross profit | 201,723 | 191,675 | ||||||
| Selling, administrative and general expenses | 86,430 | 90,268 | ||||||
| Gain on sale of property, plant & equipment | ||||||||
| and businesses | 999 | 7,297 | ||||||
| Other operating expense, net | (3,991 | ) | (4,271 | ) | ||||
| Operating earnings | 112,301 | 104,433 | ||||||
| Other nonoperating income (expense), net | (9,336 | ) | 3,129 | |||||
| Interest expense, net | 30,773 | 32,934 | ||||||
| Earnings from continuing operations | ||||||||
| before income taxes | 72,192 | 74,628 | ||||||
| Income tax expense | 12,194 | 10,693 | ||||||
| Earnings from continuing operations | 59,998 | 63,935 | ||||||
| Earnings (loss) on discontinued operations, net of tax | 260 | (636 | ) | |||||
| Net earnings | $ | 60,258 | $ | 63,299 | ||||
| Basic earnings (loss) per share | ||||||||
| Continuing operations | $ | 0.45 | $ | 0.48 | ||||
| Discontinued operations | $ | 0.00 | $ | 0.00 | ||||
| Net earnings | $ | 0.45 | $ | 0.48 | ||||
| Diluted earnings (loss) per share | ||||||||
| Continuing operations | $ | 0.45 | $ | 0.48 | ||||
| Discontinued operations | $ | 0.00 | $ | 0.00 | ||||
| Net earnings | $ | 0.45 | $ | 0.48 | ||||
| Weighted-average common shares outstanding | ||||||||
| Basic | 132,567 | 132,043 | ||||||
| Assuming dilution | 133,259 | 133,054 | ||||||
| Depreciation, depletion, accretion and amortization | $ | 95,480 | $ | 89,181 | ||||
| Effective tax rate from continuing operations | 16.9 | % | 14.3 | % | ||||
| Table B | ||||||||
| --- | --- | |||||||
| Vulcan Materials Company | ||||||||
| and Subsidiary Companies | ||||||||
| (in thousands) | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Consolidated Balance Sheets | December 31 | March 31 | ||||||
| (Condensed and unaudited) | 2019 | 2019 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | 120,041 | $ | 271,589 | $ | 30,838 | |||
| Restricted cash | 232 | 2,917 | 270 | |||||
| Accounts and notes receivable | ||||||||
| Accounts and notes receivable, gross | 601,182 | 573,241 | 563,084 | |||||
| Allowance for doubtful accounts | (3,517 | ) | (3,125 | ) | (2,554 | ) | ||
| Accounts and notes receivable, net | 597,665 | 570,116 | 560,530 | |||||
| Inventories | ||||||||
| Finished products | 403,612 | 391,666 | 369,743 | |||||
| Raw materials | 33,676 | 31,318 | 27,951 | |||||
| Products in process | 5,010 | 5,604 | 4,976 | |||||
| Operating supplies and other | 28,449 | 29,720 | 26,727 | |||||
| Inventories | 470,747 | 458,308 | 429,397 | |||||
| Other current assets | 88,095 | 76,396 | 62,816 | |||||
| Total current assets | 1,276,780 | 1,379,326 | 1,083,851 | |||||
| Investments and long-term receivables | 57,987 | 60,709 | 50,952 | |||||
| Property, plant & equipment | ||||||||
| Property, plant & equipment, cost | 8,907,788 | 8,749,217 | 8,559,549 | |||||
| Allowances for depreciation, depletion & amortization | (4,506,700 | ) | (4,433,179 | ) | (4,284,211 | ) | ||
| Property, plant & equipment, net | 4,401,088 | 4,316,038 | 4,275,338 | |||||
| Operating lease right-of-use assets, net | 420,930 | 408,189 | 426,381 | |||||
| Goodwill | 3,167,061 | 3,167,061 | 3,161,842 | |||||
| Other intangible assets, net | 1,083,515 | 1,091,475 | 1,085,398 | |||||
| Other noncurrent assets | 222,021 | 225,995 | 213,090 | |||||
| Total assets | 10,629,382 | $ | 10,648,793 | $ | 10,296,852 | |||
| Liabilities | ||||||||
| Current maturities of long-term debt | 25 | 25 | 24 | |||||
| Short-term debt | 0 | 0 | 178,500 | |||||
| Trade payables and accruals | 243,019 | 265,159 | 248,119 | |||||
| Other current liabilities | 232,632 | 270,379 | 232,964 | |||||
| Total current liabilities | 475,676 | 535,563 | 659,607 | |||||
| Long-term debt | 2,785,566 | 2,784,315 | 2,780,589 | |||||
| Deferred income taxes, net | 648,405 | 633,039 | 568,229 | |||||
| Deferred revenue | 178,568 | 179,880 | 184,744 | |||||
| Operating lease liabilities | 399,489 | 388,042 | 403,426 | |||||
| Other noncurrent liabilities | 551,352 | 506,097 | 483,048 | |||||
| Total liabilities | 5,039,056 | $ | 5,026,936 | $ | 5,079,643 | |||
| Equity | ||||||||
| Common stock, 1 par value | 132,433 | 132,371 | 132,069 | |||||
| Capital in excess of par value | 2,782,738 | 2,791,353 | 2,789,864 | |||||
| Retained earnings | 2,885,084 | 2,895,871 | 2,467,201 | |||||
| Accumulated other comprehensive loss | (209,929 | ) | (197,738 | ) | (171,925 | ) | ||
| Total equity | 5,590,326 | $ | 5,621,857 | $ | 5,217,209 | |||
| Total liabilities and equity | 10,629,382 | $ | 10,648,793 | $ | 10,296,852 |
All values are in US Dollars.
| Table C | ||||||
|---|---|---|---|---|---|---|
| Vulcan Materials Company | ||||||
| and Subsidiary Companies | ||||||
| (in thousands) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended | ||||||
| Consolidated Statements of Cash Flows | March 31 | |||||
| (Condensed and unaudited) | 2020 | 2019 | ||||
| Operating Activities | ||||||
| Net earnings | $ | 60,258 | $ | 63,299 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities | ||||||
| Depreciation, depletion, accretion and amortization | 95,480 | 89,181 | ||||
| Noncash operating lease expense | 8,851 | 8,717 | ||||
| Net gain on sale of property, plant & equipment and businesses | (999 | ) | (7,297 | ) | ||
| Contributions to pension plans | (2,144 | ) | (2,320 | ) | ||
| Share-based compensation expense | 6,716 | 5,724 | ||||
| Deferred tax expense (benefit) | 19,671 | 774 | ||||
| Changes in assets and liabilities before initial | ||||||
| effects of business acquisitions and dispositions | (99,597 | ) | (47,733 | ) | ||
| Other, net | (5,761 | ) | 5,819 | |||
| Net cash provided by operating activities | $ | 82,475 | $ | 116,164 | ||
| Investing Activities | ||||||
| Purchases of property, plant & equipment | (142,650 | ) | (122,019 | ) | ||
| Proceeds from sale of property, plant & equipment | 2,536 | 6,512 | ||||
| Proceeds from sale of businesses | 0 | 1,744 | ||||
| Payment for businesses acquired, net of acquired cash | 0 | 1,122 | ||||
| Other, net | 9,872 | (7,237 | ) | |||
| Net cash used for investing activities | $ | (130,242 | ) | $ | (119,878 | ) |
| Financing Activities | ||||||
| Proceeds from short-term debt | 0 | 196,200 | ||||
| Payment of short-term debt | 0 | (150,700 | ) | |||
| Payment of current maturities and long-term debt | (6 | ) | (6 | ) | ||
| Settlements of interest rate derivatives | (19,863 | ) | 0 | |||
| Purchases of common stock | (26,132 | ) | 0 | |||
| Dividends paid | (45,100 | ) | (40,939 | ) | ||
| Share-based compensation, shares withheld for taxes | (15,365 | ) | (14,137 | ) | ||
| Net cash used for financing activities | $ | (106,466 | ) | $ | (9,582 | ) |
| Net decrease in cash and cash equivalents and restricted cash | (154,233 | ) | (13,296 | ) | ||
| Cash and cash equivalents and restricted cash at beginning of year | 274,506 | 44,404 | ||||
| Cash and cash equivalents and restricted cash at end of period | $ | 120,273 | $ | 31,108 | ||
| Table D | ||||||
| --- | --- | |||||
| Segment Financial Data and Unit Shipments | ||||||
| (in thousands, except per unit data) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended | ||||||
| March 31 | ||||||
| 2020 | 2019 | |||||
| Total Revenues | ||||||
| Aggregates ^1^ | $ | 868,226 | $ | 834,965 | ||
| Asphalt ^2^ | 139,789 | 132,090 | ||||
| Concrete | 94,765 | 83,637 | ||||
| Calcium | 2,026 | 1,951 | ||||
| Segment sales | $ | 1,104,806 | $ | 1,052,643 | ||
| Aggregates intersegment sales | (55,564 | ) | (56,132 | ) | ||
| Total revenues | $ | 1,049,242 | $ | 996,511 | ||
| Gross Profit | ||||||
| Aggregates | $ | 194,131 | $ | 185,716 | ||
| Asphalt | (2,435 | ) | (3,272 | ) | ||
| Concrete | 9,213 | 8,563 | ||||
| Calcium | 814 | 668 | ||||
| Total | $ | 201,723 | $ | 191,675 | ||
| Depreciation, Depletion, Accretion and Amortization | ||||||
| Aggregates | $ | 77,136 | $ | 72,521 | ||
| Asphalt | 8,734 | 8,550 | ||||
| Concrete | 4,082 | 2,964 | ||||
| Calcium | 49 | 60 | ||||
| Other | 5,479 | 5,086 | ||||
| Total | $ | 95,480 | $ | 89,181 | ||
| Average Unit Sales Price and Unit Shipments | ||||||
| Aggregates | ||||||
| Freight-adjusted revenues ^3^ | $ | 648,033 | $ | 628,607 | ||
| Aggregates - tons | 45,048 | 45,637 | ||||
| Freight-adjusted sales price ^4^ | $ | 14.39 | $ | 13.77 | ||
| Other Products | ||||||
| Asphalt Mix - tons | 2,057 | 2,022 | ||||
| Asphalt Mix - sales price | $ | 58.51 | $ | 55.91 | ||
| Ready-mixed concrete - cubic yards | 734 | 670 | ||||
| Ready-mixed concrete - sales price | $ | 127.91 | $ | 123.94 | ||
| Calcium - tons | 73 | 68 | ||||
| Calcium - sales price | $ | 27.56 | $ | 28.32 | ||
| ^1^ | Includes<br>product sales (crushed stone, sand and gravel, sand, and other aggregates), as well as freight & delivery costs that<br>we pass along to our customers, and service revenues related to aggregates. | |||||
| --- | --- | |||||
| ^2^ | Includes<br>product sales, as well as service revenues from our asphalt construction paving business. | |||||
| --- | --- | |||||
| ^3^ | Freight-adjusted<br>revenues are Aggregates segment sales excluding freight & delivery revenues and immaterial other revenues related to<br>services, such as landfill tipping fees that are derived from our aggregates business. | |||||
| --- | --- | |||||
| ^4^ | Freight-adjusted<br>sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments. | |||||
| --- | --- | |||||
| Appendix 1 | ||||||
| --- | ||||||
| 1. | Reconciliation of Non-GAAP Measures | |||||
| --- | --- |
Aggregates segment freight-adjusted revenues is not a Generally Accepted Accounting Principle (GAAP) measure. We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. It also excludes immaterial other revenues related to services, such as landfill tipping fees, that are derived from our aggregates business. Additionally, we use this metric as the basis for calculating the average sales price of our aggregates products. Reconciliation of this metric to its nearest GAAP measure is presented below:
Aggregates Segment Freight-Adjusted Revenues
| (in thousands, except per ton data) | ||||
|---|---|---|---|---|
| Three Months Ended | ||||
| March 31 | ||||
| 2020 | 2019 | |||
| Aggregates segment | ||||
| Segment sales | $ | 868,226 | $ | 834,965 |
| Less: Freight & delivery revenues ^1^ | 205,707 | 195,153 | ||
| Other revenues | 14,486 | 11,205 | ||
| Freight-adjusted revenues | $ | 648,033 | $ | 628,607 |
| Unit shipment - tons | 45,048 | 45,637 | ||
| Freight-adjusted sales price | $ | 14.39 | $ | 13.77 |
| ^1^ | At<br>the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated<br>level) and freight to remote distribution sites. | |||
| --- | --- |
Aggregates segment incremental gross profit flow-through rate is not a GAAP measure and represents the year-over-year change in gross profit divided by the year-over-year change in segment sales excluding freight & delivery (revenues and costs). We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. Reconciliation of this metrics to its nearest GAAP measure is presented below:
Aggregates Segment Incremental Gross Profit Margin in Accordance with GAAP
| (dollars in thousands) | |||||||
|---|---|---|---|---|---|---|---|
| Three Months Ended | |||||||
| March 31 | |||||||
| 2020 | 2019 | ||||||
| Aggregates segment | |||||||
| Gross profit | $ | 194,131 | $ | 185,716 | |||
| Segment sales | $ | 868,226 | $ | 834,965 | |||
| Gross profit margin | 22.4 | % | 22.2 | % | |||
| Incremental gross profit margin | 25.3 | % | |||||
| Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP) | |||||||
| --- | |||||||
| (dollars in thousands) | |||||||
| --- | --- | --- | --- | --- | --- | --- | |
| Three Months Ended | |||||||
| March 31 | |||||||
| 2020 | 2019 | ||||||
| Aggregates segment | |||||||
| Gross profit | $ | 194,131 | $ | 185,716 | |||
| Segment sales | $ | 868,226 | $ | 834,965 | |||
| Less: Freight & delivery revenues ^1^ | 205,707 | 195,153 | |||||
| Segment<br>sales excluding freight & delivery | $ | 662,519 | $ | 639,812 | |||
| Gross profit margin excluding freight & delivery | 29.3 | % | 29.0 | % | |||
| Incremental gross profit flow-through rate | 37.1 | % | |||||
| ^1^ | At<br>the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated<br>level) and freight to remote distribution sites. | ||||||
| --- | --- |
GAAP does not define "Aggregates segment cash gross profit" and it should not be considered as an alternative to earnings measures defined by GAAP. We and the investment community use this metric to assess the operating performance of our business. Additionally, we present this metric as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. Aggregates segment cash gross profit per ton is computed by dividing Aggregates segment cash gross profit by tons shipped. Reconciliation of this metric to its nearest GAAP measure is presented below:
Aggregates Segment Cash Gross Profit
| (in thousands, except per ton data) | |||||
|---|---|---|---|---|---|
| Three Months Ended | |||||
| **** | **** | March 31 | |||
| 2020 | 2019 | ||||
| Aggregates segment | |||||
| Gross profit | $ | 194,131 | $ | 185,716 | |
| Depreciation, depletion, accretion and amortization | 77,136 | 72,521 | |||
| Aggregates<br>segment cash gross profit | $ | 271,267 | $ | 258,237 | |
| Unit shipments - tons | 45,048 | 45,637 | |||
| Aggregates segment cash gross profit per ton | $ | 6.02 | $ | 5.66 | |
| Appendix 2 | |||||
| --- | --- | ||||
| Reconciliation of Non-GAAP Measures (Continued) |
GAAP does not define "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) and it should not be considered as an alternative to earnings measures defined by GAAP. We use this metric to assess the operating performance of our business and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of earnings performance from period to period. Reconciliation of this metric to its nearest GAAP measure is presented below:
EBITDA and Adjusted EBITDA
| (in thousands) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | TTM | |||||||||||
| March 31 | March 31 | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net earnings | $ | 60,258 | $ | 63,299 | $ | 614,621 | $ | 526,125 | ||||
| Income tax expense | 12,194 | 10,693 | 136,699 | 121,045 | ||||||||
| Interest expense, net | 30,773 | 32,934 | 126,839 | 132,583 | ||||||||
| (Earnings) loss on discontinued operations, net of tax | (260 | ) | 636 | 3,945 | 2,256 | |||||||
| EBIT | $ | 102,965 | $ | 107,562 | $ | 882,104 | $ | 782,009 | ||||
| Depreciation, depletion, accretion and amortization | 95,480 | 89,181 | 380,895 | 353,988 | ||||||||
| EBITDA | $ | 198,445 | $ | 196,743 | $ | 1,262,999 | $ | 1,135,997 | ||||
| Gain on sale of businesses | 0 | (4,064 | ) | (9,289 | ) | (4,064 | ) | |||||
| Property donation | 0 | 0 | 10,847 | 0 | ||||||||
| Business interruption claims recovery | 0 | 0 | 0 | (559 | ) | |||||||
| Charges associated with divested operations | 0 | 0 | 3,033 | 18,545 | ||||||||
| Business development ^1^ | 1,060 | 0 | 2,808 | 4,686 | ||||||||
| COVID-19 direct incremental costs | 648 | 0 | 648 | 0 | ||||||||
| Restructuring charges ^2^ | 868 | 0 | 7,325 | 1,974 | ||||||||
| Adjusted EBITDA | $ | 201,021 | $ | 192,679 | $ | 1,278,371 | $ | 1,156,579 | ||||
| Depreciation, depletion, accretion and amortization | (95,480 | ) | (89,181 | ) | (380,895 | ) | (353,988 | ) | ||||
| Adjusted EBIT | $ | 105,541 | $ | 103,498 | $ | 897,476 | $ | 802,591 | ||||
| ^1^ | Represents<br>non-routine charges associated with acquisitions including the cost impact of purchase accounting inventory valuations. | |||||||||||
| --- | --- | |||||||||||
| ^2^ | Restructuring<br>charges are included within other operating expenses. The charges relate to managerial restructuring. | |||||||||||
| --- | --- |
Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted EPS from continuing operations to provide a more consistent comparison of earnings performance from period to period.
Adjusted Diluted EPS from Continuing Operations (Adjusted Diluted EPS)
| Three Months Ended | TTM | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31 | March 31 | ||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| Diluted EPS from continuing operations | $ | 0.45 | $ | 0.48 | $ | 4.64 | $ | 3.95 | |
| Items included in Adjusted EBITDA above | 0.02 | (0.02 | ) | 0.07 | 0.11 | ||||
| Tax reform income tax savings | 0.00 | 0.00 | 0.00 | 0.01 | |||||
| Adjusted Diluted EPS | $ | 0.47 | $ | 0.46 | $ | 4.71 | $ | 4.07 | |
| Appendix 3 | |||||||||
| --- | --- | ||||||||
| Reconciliation of Non-GAAP Measures (Continued) |
We define Return on Invested Capital (ROIC) as Adjusted EBITDA for the trailing-twelve months divided by average invested capital (as illustrated below) during the trailing 5-quarters. Our calculation of ROIC is considered a non-GAAP financial measure because we calculate ROIC using the non-GAAP metric EBITDA. We believe that our ROIC metric is meaningful because it helps investors assess how effectively we are deploying our assets. Although ROIC is a standard financial metric, numerous methods exist for calculating a company's ROIC. As a result, the method we use to calculate our ROIC may differ from the methods used by other companies.
Return on Invested Capital
| (in thousands) | ||||||
|---|---|---|---|---|---|---|
| TTM | ||||||
| March 31 | ||||||
| 2020 | 2019 | |||||
| Adjusted EBITDA | $ | 1,278,371 | $ | 1,156,579 | ||
| Average Invested Capital ^1^ | ||||||
| Property, plant & equipment | 4,314,098 | 4,166,729 | ||||
| Goodwill | 3,166,018 | 3,158,194 | ||||
| Other intangible assets | 1,081,741 | 1,099,572 | ||||
| Fixed and Intangible Assets | $ | 8,561,857 | $ | 8,424,495 | ||
| Current Assets | 1,263,843 | 1,106,662 | ||||
| Less: Cash and cash equivalents | 108,702 | 45,242 | ||||
| Less: Deferred tax | 17,985 | 0 | ||||
| Adjusted Current Assets | 1,137,156 | 1,061,420 | ||||
| Current Liabilities | 573,944 | 669,535 | ||||
| Less: Current maturities of long-term debt | 24 | 23 | ||||
| Less: Short-term debt | 63,100 | 214,300 | ||||
| Adjusted Current Liabilities | 510,820 | 455,212 | ||||
| Adjusted Net Working Capital | $ | 626,336 | $ | 606,208 | ||
| Average Invested Capital | $ | 9,188,193 | $ | 9,030,703 | ||
| Return on Invested Capital | 13.9 | % | 12.8 | % | ||
| ^1^ | Average<br>Invested Capital is based on a trailing 5-quarters. | |||||
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