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): August 4, 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 August 4, 2020, Vulcan Materials Company announced its financial results for the second quarter ended June 30, 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 August 4, 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: August 4, 2020 | By: | /s/<br>Denson N. Franklin III |
| Name: | Denson N. Franklin III | |
| Title: | Senior Vice President, General Counsel and Secretary |
Exhibit 99.1
August4, 2020
FORIMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: Janet Kavinoky (205) 298-3220
VULCANREPORTS SECOND QUARTER RESULTS
ImprovedSegment Earnings Across All Major Product Lines
CostControl and Price Growth Lead to Unit Margin Expansion in Aggregates
Birmingham,Alabama – August 4, 2020 – Vulcan Materials Company (NYSE: VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter ended June 30, 2020.
Tom Hill, Chairman and Chief Executive Officer, said, “Our second quarter results demonstrate the resiliency of our best in class aggregates-led business and reflect the proactive response by our employees to the COVID-19 pandemic. Our operational execution was integral to widespread gains in unit profitability, despite some disruptions to construction activity during the quarter. I am proud of our employees’ ability to quickly adapt to the necessary additional safety protocols we have put in place in this environment, while maintaining their focus on operating safely and positioning Vulcan for continued success.”
Earnings from continuing operations were $211 million, or $1.58 per diluted share, an increase of 7 percent from the prior year’s second quarter. Adjusted EBITDA was $408 million, an increase of 10 percent. The year-over-year earnings improvement was driven primarily by effective cost control and price growth in aggregates. Second quarter segment earnings improved in each major product line. Despite a 2 percent decline in aggregates shipments, mix-adjusted pricing improved 3.3 percent, and freight-adjusted unit cost of sales decreased 1 percent. As a result, aggregates unit gross profit increased 9 percent to $6.25 per ton.
Mr. Hill went on to say, “Certain leading indicators of demand have shown signs of improvement, and our quote activity remains robust. However, our visibility beyond the near-term remains restricted due to the evolving effects of the pandemic. The recent surge in new COVID-19 cases could impact the progress made so far if new restrictions on economic activity are put in place. We believe this uncertainty could continue to weigh on construction activity in the second half of the year, making it difficult to predict the level and timing of shipments. We are continuously reviewing our operating plans to ensure an effective response to demand shifts. Whatever the demand, we remain confident in our ability to successfully navigate the changing environment.”
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August 4, 2020
FORIMMEDIATE RELEASE
Highlights as of June 30, 2020 include:
| Second Quarter | Year-to-Date | Trailing-Twelve Months | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in millions, except per unit data | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Total revenues | $ | 1,322.6 | $ | 1,327.7 | $ | 2,371.8 | $ | 2,324.2 | $ | 4,976.7 | $ | 4,652.4 | ||||||
| Gross profit | $ | 396.5 | $ | 370.5 | $ | 598.2 | $ | 562.2 | $ | 1,292.0 | $ | 1,180.6 | ||||||
| Aggregates segment | ||||||||||||||||||
| Segment sales | $ | 1,070.6 | $ | 1,062.1 | $ | 1,938.8 | $ | 1,897.0 | $ | 4,032.1 | $ | 3,754.8 | ||||||
| Freight-adjusted revenues | $ | 814.7 | $ | 806.4 | $ | 1,462.7 | $ | 1,435.1 | $ | 3,041.9 | $ | 2,842.4 | ||||||
| Gross profit | $ | 351.2 | $ | 329.2 | $ | 545.3 | $ | 514.9 | $ | 1,177.0 | $ | 1,075.1 | ||||||
| Shipments (tons) | 56.2 | 57.3 | 101.2 | 102.9 | 213.8 | 208.8 | ||||||||||||
| Freight-adjusted sales price per ton | $ | 14.50 | $ | 14.07 | $ | 14.45 | $ | 13.94 | $ | 14.23 | $ | 13.61 | ||||||
| Gross profit per ton | $ | 6.25 | $ | 5.74 | $ | 5.39 | $ | 5.00 | $ | 5.51 | $ | 5.15 | ||||||
| Asphalt, Concrete & Calcium segment gross profit | $ | 45.4 | $ | 41.3 | $ | 52.9 | $ | 47.2 | $ | 115.0 | $ | 105.5 | ||||||
| Selling, Administrative and General (SAG) | $ | 91.2 | $ | 95.7 | $ | 177.6 | $ | 186.0 | $ | 362.2 | $ | 351.9 | ||||||
| SAG as % of Total revenues | 6.9 | % | 7.2 | % | 7.5 | % | 8.0 | % | 7.3 | % | 7.6 | % | ||||||
| Earnings from continuing operations before income taxes | $ | 272.3 | $ | 245.5 | $ | 344.5 | $ | 320.1 | $ | 782.1 | $ | 694.6 | ||||||
| Net earnings | $ | 209.9 | $ | 197.6 | $ | 270.2 | $ | 260.9 | $ | 627.0 | $ | 564.0 | ||||||
| Adjusted EBIT | $ | 308.3 | $ | 278.5 | $ | 413.9 | $ | 382.0 | $ | 927.3 | $ | 841.9 | ||||||
| Adjusted EBITDA | $ | 407.8 | $ | 372.0 | $ | 608.8 | $ | 564.7 | $ | 1,314.2 | $ | 1,203.8 | ||||||
| Earnings from continuing operations per diluted share | $ | 1.58 | $ | 1.48 | $ | 2.03 | $ | 1.97 | $ | 4.73 | $ | 4.25 | ||||||
| Adjusted earnings from continuing operations per diluted share | $ | 1.60 | $ | 1.48 | $ | 2.06 | $ | 1.94 | $ | 4.82 | $ | 4.33 |
SegmentResults
Aggregates
Second quarter segment sales increased 1 percent, and gross profit increased 7 percent to $351 million, or $6.25 per ton. The improvement resulted from widespread growth in pricing and effective cost control.
Second quarter aggregates shipments were 2 percent lower than the prior year’s second quarter. Shipping patterns varied widely across the Company’s footprint as a result of economic uncertainty and wet weather but were generally supported by healthy backlogs and our essential business status in our markets. Key markets in the Southeast and coastal Texas were negatively affected by wet weather while shipments in California were reduced by tighter restrictions on shelter-in-place. Shipments were higher in Georgia, Illinois, Tennessee and Texas. 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 3 percent versus the prior year’s quarter, inclusive of 30 basis points of unfavorable mix.
Freight-adjusted unit cost of sales decreased 1 percent versus the prior year’s second quarter. Effective operating efficiencies helped mitigate the cost impact of lower sales volumes and a reduction in inventory. Actions taken across the Company’s more than 360 locations reduced cash spending and controlled inventories in areas most impacted by shelter-in-place orders. The associated cost of reducing inventory offset the majority of a $14 million earnings benefit from lower diesel fuel costs.
Unit profitability improvements were widespread across the Company’s footprint. Cash gross profit per ton increased 9 percent from the prior year’s second quarter to $7.69 per ton. For the trailing-twelve months, cash gross profit was $6.98 per ton.
Page 3
August 4, 2020
FORIMMEDIATE RELEASE
Asphalt,Concrete and Calcium
Asphalt segment gross profit was $30 million, an improvement of $3 million from the prior year. The year-over-year improvement was driven by higher material margins (sales price less cost of raw materials). Although asphalt volumes in the second quarter declined 5 percent versus the prior year, we captured the benefit of lower liquid asphalt costs.
Concrete segment gross profit was $14 million compared with $13 million in the prior year’s second quarter. Shipments decreased 4 percent versus the prior year, and average selling prices increased 1 percent compared to the prior year.
Calcium segment gross profit was $0.7 million, down slightly from the prior year quarter.
Selling,Administrative and General (SAG)
SAG expense declined 5 percent to $91 million in the quarter due mostly to continued execution of cost reduction initiatives, lower incentive compensation costs and general cost control in response to COVID-19. This year-over-year decline resulted in a 31 basis point improvement as a percentage of total revenues. On a trailing-twelve month basis, SAG expense as a percentage of total revenues stands at 7.3 percent. The Company remains focused on further leveraging its overhead cost structure.
FinancialPosition, Liquidity and Capital Allocation
Capital expenditures in the second quarter were $68 million ($177 million year-to-date). The Company continues to expect to spend between $275 and $325 million on capital this year, most of which is for core operating and maintenance projects. Given that the economic outlook is evolving quickly, we will continue to review our plans and adjust as needed, being thoughtful about preserving liquidity.
For the quarter, the Company returned $45 million to shareholders through dividends, a 10 percent increase versus the prior year. The Company did not repurchase any shares in the quarter.
At quarter-end, total debt to trailing-twelve month Adjusted EBITDA was 2.5 times (1.9 times on a net debt basis reflecting $817 million of cash on hand). The Company’s weighted-average debt maturity was 14 years, and the effective weighted-average interest rate was 4.1 percent.
On a trailing twelve month basis, return on invested capital increased 100 basis points as solid earnings growth was leveraged with disciplined capital management.
Outlook
Regarding the Company’s outlook, Mr. Hill stated, “Although the economic environment is showing signs of improvement, the pandemic’s effect on demand and the broader economy remains unclear. As a result, we are not reinstating earnings guidance at this time.
Page 4
August 4, 2020
FORIMMEDIATE RELEASE
“While demand is subject to market fluctuations outside of our control, we remain focused on those things we can control such as our cost and our pricing discipline, both of which help to compound our unit margins. Our year-to-date results demonstrate those capabilities. On a trailing-twelve month basis our cash gross profit in aggregates is nearly $7 per ton. Our operating plans are underpinned by our four strategic initiatives (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing), a healthy balance sheet, strong liquidity, and the engagement of our people.”
ConferenceCall
Vulcan will host a conference call at 10:00 a.m. CDT on August 4, 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 10 minutes before the scheduled start. The conference ID is 8095639. 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 and ready-mixed concrete. For additional information about Vulcan, go to www.vulcanmaterials.com.
FORWARD-LOOKINGSTATEMENT 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
August 4, 2020
FORIMMEDIATE 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 | Six Months Ended | |||||||||||
| Consolidated Statements of Earnings | June 30 | June 30 | ||||||||||
| (Condensed and unaudited) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Total revenues | $ | 1,322,575 | $ | 1,327,682 | $ | 2,371,817 | $ | 2,324,193 | ||||
| Cost of revenues | 926,056 | 957,180 | 1,773,575 | 1,762,016 | ||||||||
| Gross profit | 396,519 | 370,502 | 598,242 | 562,177 | ||||||||
| Selling, administrative and general expenses | 91,205 | 95,689 | 177,635 | 185,957 | ||||||||
| Gain (loss) on sale of property,<br> plant & equipment and businesses | (258 | ) | 3,451 | 741 | 10,748 | |||||||
| Other operating expense, net | (6,160 | ) | (2,190 | ) | (10,151 | ) | (6,461 | ) | ||||
| Operating earnings | 298,896 | 276,074 | 411,197 | 380,507 | ||||||||
| Other nonoperating income (expense), net | 7,367 | 2,466 | (1,969 | ) | 5,595 | |||||||
| Interest expense, net | 33,954 | 33,035 | 64,727 | 65,969 | ||||||||
| Earnings from continuing operations<br> before income taxes | 272,309 | 245,505 | 344,501 | 320,133 | ||||||||
| Income tax expense | 61,352 | 47,598 | 73,546 | 58,291 | ||||||||
| Earnings from continuing operations | 210,957 | 197,907 | 270,955 | 261,842 | ||||||||
| Loss on discontinued operations, net of tax | (1,041 | ) | (349 | ) | (781 | ) | (985 | ) | ||||
| Net earnings | $ | 209,916 | $ | 197,558 | $ | 270,174 | $ | 260,857 | ||||
| Basic earnings (loss) per share | ||||||||||||
| Continuing operations | $ | 1.59 | $ | 1.50 | $ | 2.04 | $ | 1.98 | ||||
| Discontinued operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | |
| Net earnings | $ | 1.58 | $ | 1.49 | $ | 2.04 | $ | 1.97 | ||||
| Diluted earnings (loss) per share | ||||||||||||
| Continuing operations | $ | 1.58 | $ | 1.48 | $ | 2.03 | $ | 1.97 | ||||
| Discontinued operations | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | (0.01 | ) | |||
| Net earnings | $ | 1.58 | $ | 1.48 | $ | 2.03 | $ | 1.96 | ||||
| Weighted-average common shares outstanding | ||||||||||||
| Basic | 132,552 | 132,269 | 132,560 | 132,157 | ||||||||
| Assuming dilution | 133,115 | 133,354 | 133,154 | 133,199 | ||||||||
| Depreciation, depletion, accretion and amortization | $ | 99,470 | $ | 93,497 | $ | 194,951 | $ | 182,677 | ||||
| Effective tax rate from continuing operations | 22.5 | % | 19.4 | % | 21.3 | % | 18.2 | % |
Table B
Vulcan Materials Company
and Subsidiary Companies
| (in thousands) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Consolidated Balance Sheets | December 31 | June 30 | ||||||
| (Condensed and unaudited) | 2019 | 2019 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | 816,765 | $ | 271,589 | $ | 26,031 | |||
| Restricted cash | 434 | 2,917 | 491 | |||||
| Accounts and notes receivable | ||||||||
| Accounts and notes receivable, gross | 699,320 | 573,241 | 700,175 | |||||
| Allowance for doubtful accounts | (3,460 | ) | (3,125 | ) | (2,844 | ) | ||
| Accounts and notes receivable, net | 695,860 | 570,116 | 697,331 | |||||
| Inventories | ||||||||
| Finished products | 383,483 | 391,666 | 377,578 | |||||
| Raw materials | 33,178 | 31,318 | 31,137 | |||||
| Products in process | 5,116 | 5,604 | 6,332 | |||||
| Operating supplies and other | 29,703 | 29,720 | 26,376 | |||||
| Inventories | 451,480 | 458,308 | 441,423 | |||||
| Other current assets | 65,571 | 76,396 | 89,739 | |||||
| Total current assets | 2,030,110 | 1,379,326 | 1,255,015 | |||||
| Investments and long-term receivables | 43,849 | 60,709 | 51,667 | |||||
| Property, plant & equipment | ||||||||
| Property, plant & equipment, cost | 8,921,990 | 8,749,217 | 8,613,500 | |||||
| Allowances for depreciation, depletion & amortization | (4,538,980 | ) | (4,433,179 | ) | (4,322,818 | ) | ||
| Property, plant & equipment, net | 4,383,010 | 4,316,038 | 4,290,682 | |||||
| Operating lease right-of-use assets, net | 426,618 | 408,189 | 418,896 | |||||
| Goodwill | 3,172,112 | 3,167,061 | 3,167,061 | |||||
| Other intangible assets, net | 1,114,592 | 1,091,475 | 1,076,986 | |||||
| Other noncurrent assets | 228,433 | 225,995 | 220,457 | |||||
| Total assets | 11,398,724 | $ | 10,648,793 | $ | 10,480,764 | |||
| Liabilities | ||||||||
| Current maturities of long-term debt | 500,026 | 25 | 24 | |||||
| Short-term debt | 0 | 0 | 137,000 | |||||
| Trade payables and accruals | 278,102 | 265,159 | 284,875 | |||||
| Other current liabilities | 260,621 | 270,379 | 241,689 | |||||
| Total current liabilities | 1,038,749 | 535,563 | 663,588 | |||||
| Long-term debt | 2,785,646 | 2,784,315 | 2,781,826 | |||||
| Deferred income taxes, net | 671,097 | 633,039 | 601,189 | |||||
| Deferred revenue | 177,534 | 179,880 | 182,666 | |||||
| Operating lease liabilities | 405,578 | 388,042 | 396,952 | |||||
| Other noncurrent liabilities | 555,969 | 506,097 | 483,096 | |||||
| Total liabilities | 5,634,573 | $ | 5,026,936 | $ | 5,109,317 | |||
| Equity | ||||||||
| Common stock, 1 par value | 132,446 | 132,371 | 132,231 | |||||
| Capital in excess of par value | 2,789,801 | 2,791,353 | 2,787,002 | |||||
| Retained earnings | 3,049,943 | 2,895,871 | 2,623,747 | |||||
| Accumulated other comprehensive loss | (208,039 | ) | (197,738 | ) | (171,533 | ) | ||
| Total equity | 5,764,151 | $ | 5,621,857 | $ | 5,371,447 | |||
| Total liabilities and equity | 11,398,724 | $ | 10,648,793 | $ | 10,480,764 |
All values are in US Dollars.
Table C
Vulcan Materials Company
and Subsidiary Companies
| (in thousands) | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended | ||||||
| Consolidated Statements of Cash Flows | June 30 | |||||
| (Condensed and unaudited) | 2020 | 2019 | ||||
| Operating Activities | ||||||
| Net earnings | $ | 270,174 | $ | 260,857 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities | ||||||
| Depreciation, depletion, accretion and amortization | 194,951 | 182,677 | ||||
| Noncash operating lease expense | 17,977 | 17,549 | ||||
| Net gain on sale of property, plant & equipment and businesses | (741 | ) | (10,748 | ) | ||
| Contributions to pension plans | (4,409 | ) | (4,638 | ) | ||
| Share-based compensation expense | 15,220 | 14,370 | ||||
| Deferred tax expense (benefit) | 36,644 | 34,816 | ||||
| Changes in assets and liabilities<br> before initial effects of business acquisitions and dispositions | (101,271 | ) | (201,256 | ) | ||
| Other, net | (2,954 | ) | 8,289 | |||
| Net cash provided by operating activities | $ | 425,591 | $ | 301,916 | ||
| Investing Activities | ||||||
| Purchases of property, plant & equipment | (223,147 | ) | (225,837 | ) | ||
| Proceeds from sale of property, plant & equipment | 3,063 | 11,200 | ||||
| Proceeds from sale of businesses | 651 | 1,744 | ||||
| Payment for businesses acquired, net of acquired cash | (5,668 | ) | 1,122 | |||
| Other, net | 5,575 | (4,577 | ) | |||
| Net cash used for investing activities | $ | (219,526 | ) | $ | (216,348 | ) |
| Financing Activities | ||||||
| Proceeds from short-term debt | 0 | 360,100 | ||||
| Payment of short-term debt | 0 | (356,100 | ) | |||
| Payment of current maturities and long-term debt | (250,012 | ) | (11 | ) | ||
| Proceeds from issuance of long-term debt | 750,000 | 0 | ||||
| Debt issuance and exchange costs | (10,762 | ) | 0 | |||
| Settlements of interest rate derivatives | (19,863 | ) | 0 | |||
| Purchases of common stock | (26,132 | ) | 0 | |||
| Dividends paid | (90,128 | ) | (81,927 | ) | ||
| Share-based compensation, shares withheld for taxes | (15,830 | ) | (25,508 | ) | ||
| Other, net | (645 | ) | (4 | ) | ||
| Net cash provided by (used for) financing activities | $ | 336,628 | $ | (103,450 | ) | |
| Net increase (decrease) in cash and cash equivalents and restricted cash | 542,693 | (17,882 | ) | |||
| 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 | $ | 817,199 | $ | 26,522 |
Table D
Segment Financial Data and Unit Shipments
| (in thousands, except per unit data) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three<br> Months Ended | Six<br> Months Ended | |||||||||||
| June<br> 30 | June<br> 30 | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Total Revenues | ||||||||||||
| Aggregates ^1^ | $ | 1,070,596 | $ | 1,062,061 | $ | 1,938,822 | $ | 1,897,026 | ||||
| Asphalt ^2^ | 222,950 | 247,163 | 362,739 | 379,253 | ||||||||
| Concrete | 100,683 | 103,768 | 195,448 | 187,405 | ||||||||
| Calcium | 1,889 | 2,003 | 3,915 | 3,954 | ||||||||
| Segment sales | $ | 1,396,118 | $ | 1,414,995 | $ | 2,500,924 | $ | 2,467,638 | ||||
| Aggregates intersegment sales | (73,543 | ) | (87,313 | ) | (129,107 | ) | (143,445 | ) | ||||
| Total revenues | $ | 1,322,575 | $ | 1,327,682 | $ | 2,371,817 | $ | 2,324,193 | ||||
| Gross Profit | ||||||||||||
| Aggregates | $ | 351,162 | $ | 329,215 | $ | 545,293 | $ | 514,931 | ||||
| Asphalt | 30,464 | 27,583 | 28,029 | 24,311 | ||||||||
| Concrete | 14,227 | 12,887 | 23,440 | 21,450 | ||||||||
| Calcium | 666 | 817 | 1,480 | 1,485 | ||||||||
| Total | $ | 396,519 | $ | 370,502 | $ | 598,242 | $ | 562,177 | ||||
| Depreciation, Depletion, Accretion and Amortization | ||||||||||||
| Aggregates | $ | 80,747 | $ | 75,760 | $ | 157,883 | $ | 148,281 | ||||
| Asphalt | 8,668 | 8,884 | 17,402 | 17,434 | ||||||||
| Concrete | 4,001 | 3,327 | 8,083 | 6,291 | ||||||||
| Calcium | 48 | 58 | 97 | 118 | ||||||||
| Other | 6,006 | 5,468 | 11,486 | 10,553 | ||||||||
| Total | $ | 99,470 | $ | 93,497 | $ | 194,951 | $ | 182,677 | ||||
| Average Unit Sales Price and Unit Shipments | ||||||||||||
| Aggregates | ||||||||||||
| Freight-adjusted revenues ^3^ | $ | 814,713 | $ | 806,444 | $ | 1,462,746 | $ | 1,435,051 | ||||
| Aggregates - tons | 56,195 | 57,310 | 101,243 | 102,947 | ||||||||
| Freight-adjusted sales price ^4^ | $ | 14.50 | $ | 14.07 | $ | 14.45 | $ | 13.94 | ||||
| Other Products | ||||||||||||
| Asphalt Mix - tons | 3,403 | 3,595 | 5,460 | 5,617 | ||||||||
| Asphalt Mix - sales price | $ | 57.46 | $ | 58.31 | $ | 57.86 | $ | 57.45 | ||||
| Ready-mixed concrete - cubic yards | 786 | 815 | 1,520 | 1,484 | ||||||||
| Ready-mixed concrete - sales price | $ | 127.35 | $ | 126.12 | $ | 127.62 | $ | 125.14 | ||||
| Calcium - tons | 71 | 73 | 144 | 141 | ||||||||
| Calcium - sales price | $ | 26.55 | $ | 27.50 | $ | 27.06 | $ | 27.89 | ||||
| ^1^ | Includes<br>product sales (crushed stone, sand and gravel, sand, and other aggregates), as well as freight & delivery costs that we pass<br>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<br>revenues related to 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 | Six Months Ended | ||||||||
| June 30 | June 30 | ||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| Aggregates segment | |||||||||
| Segment sales | $ | 1,070,596 | $ | 1,062,061 | $ | 1,938,822 | $ | 1,897,026 | |
| Less: Freight & delivery revenues ^1^ | 240,880 | 241,354 | 446,588 | 436,508 | |||||
| Other revenues | 15,003 | 14,263 | 29,488 | 25,467 | |||||
| Freight-adjusted revenues | $ | 814,713 | $ | 806,444 | $ | 1,462,746 | $ | 1,435,051 | |
| Unit shipment - tons | 56,195 | 57,310 | 101,243 | 102,947 | |||||
| Freight-adjusted sales price | $ | 14.50 | $ | 14.07 | $ | 14.45 | $ | 13.94 | |
| ^1^ | At the segment<br>level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level)<br>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 metric to its nearest GAAP measure is presented below:
| Aggregates Segment Incremental Gross Profit Margin in Accordance with GAAP | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| Three Months Ended | Six Months Ended | ||||||||||||
| June 30 | June 30 | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Aggregates segment | |||||||||||||
| Gross profit | $ | 351,162 | $ | 329,215 | $ | 545,293 | $ | 514,931 | |||||
| Segment sales | $ | 1,070,596 | $ | 1,062,061 | $ | 1,938,822 | $ | 1,897,026 | |||||
| Gross profit margin | 32.8 | % | 31.0 | % | 28.1 | % | 27.1 | % | |||||
| Incremental gross profit margin | 257.1 | % | 72.6 | % | |||||||||
| Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP) | |||||||||||||
| --- | |||||||||||||
| (dollars in thousands) | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended | Six Months Ended | ||||||||||||
| June 30 | June 30 | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Aggregates segment | |||||||||||||
| Gross profit | $ | 351,162 | $ | 329,215 | $ | 545,293 | $ | 514,931 | |||||
| Segment sales | $ | 1,070,596 | $ | 1,062,061 | $ | 1,938,822 | $ | 1,897,026 | |||||
| Less: Freight & delivery revenues ^1^ | 240,880 | 241,354 | 446,588 | 436,508 | |||||||||
| Segment sales excluding freight & delivery | $ | 829,716 | $ | 820,707 | $ | 1,492,234 | $ | 1,460,518 | |||||
| Gross profit margin excluding freight & delivery | 42.3 | % | 40.1 | % | 36.5 | % | 35.3 | % | |||||
| Incremental gross profit flow-through rate | 243.6 | % | 95.7 | % | |||||||||
| ^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 | Six Months Ended | |||||||
| June 30 | June 30 | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| Aggregates segment | ||||||||
| Gross profit | $ | 351,162 | $ | 329,215 | $ | 545,293 | $ | 514,931 |
| Depreciation, depletion, accretion and amortization | 80,747 | 75,760 | 157,883 | 148,281 | ||||
| Aggregates segment cash gross profit | $ | 431,909 | $ | 404,975 | $ | 703,176 | $ | 663,212 |
| Unit shipments - tons | 56,195 | 57,310 | 101,243 | 102,947 | ||||
| Aggregates segment cash gross profit per ton | $ | 7.69 | $ | 7.07 | $ | 6.95 | $ | 6.44 |
| 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 | Six Months Ended | TTM | |||||||||||||||||
| June 30 | June 30 | June 30 | |||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Net earnings | $ | 209,916 | $ | 197,558 | $ | 270,174 | $ | 260,857 | $ | 626,979 | $ | 564,031 | |||||||
| Income tax expense | 61,352 | 47,598 | 73,546 | 58,291 | 150,453 | 128,597 | |||||||||||||
| Interest expense, net | 33,954 | 33,035 | 64,727 | 65,969 | 127,758 | 132,374 | |||||||||||||
| Loss on discontinued operations, net of tax | 1,041 | 349 | 781 | 985 | 4,637 | 1,955 | |||||||||||||
| EBIT | $ | 306,263 | $ | 278,540 | $ | 409,228 | $ | 386,102 | $ | 909,827 | $ | 826,957 | |||||||
| Depreciation, depletion, accretion and amortization | 99,470 | 93,497 | 194,951 | 182,677 | 386,870 | 361,851 | |||||||||||||
| EBITDA | $ | 405,733 | $ | 372,037 | $ | 604,179 | $ | 568,779 | $ | 1,296,697 | $ | 1,188,808 | |||||||
| Gain on sale of businesses | 0 | 0 | 0 | (4,064 | ) | (9,289 | ) | (4,064 | ) | ||||||||||
| Property donation | 0 | 0 | 0 | 0 | 10,847 | 0 | |||||||||||||
| Business interruption claims recovery | 0 | 0 | 0 | 0 | 0 | (559 | ) | ||||||||||||
| Charges associated with divested operations | 774 | 0 | 774 | 0 | 3,807 | 18,545 | |||||||||||||
| Business development ^1^ | (3,519 | ) | 0 | (2,459 | ) | 0 | (711 | ) | 220 | ||||||||||
| COVID-19 direct incremental costs | 4,361 | 0 | 5,009 | 0 | 5,009 | 0 | |||||||||||||
| Restructuring charges ^2^ | 465 | 0 | 1,333 | 0 | 7,790 | 829 | |||||||||||||
| Adjusted EBITDA | $ | 407,814 | $ | 372,037 | $ | 608,836 | $ | 564,715 | $ | 1,314,150 | $ | 1,203,779 | |||||||
| Depreciation, depletion, accretion and amortization | (99,470 | ) | (93,497 | ) | (194,951 | ) | (182,677 | ) | (386,870 | ) | (361,851 | ) | |||||||
| Adjusted EBIT | $ | 308,344 | $ | 278,540 | $ | 413,885 | $ | 382,038 | $ | 927,280 | $ | 841,928 | |||||||
| ^1^ | Represents<br>non-routine charges or gains 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 | Six Months Ended | TTM | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | June 30 | June 30 | |||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||
| Diluted EPS from continuing operations | $ | 1.58 | $ | 1.48 | $ | 2.03 | $ | 1.97 | $ | 4.73 | $ | 4.25 | |
| Items included in Adjusted EBITDA above | 0.02 | 0.00 | 0.03 | (0.03 | ) | 0.09 | 0.08 | ||||||
| Adjusted Diluted EPS | $ | 1.60 | $ | 1.48 | $ | 2.06 | $ | 1.94 | $ | 4.82 | $ | 4.33 | |
| 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 | ||||||
| June 30 | ||||||
| 2020 | 2019 | |||||
| Adjusted EBITDA | $ | 1,314,150 | $ | 1,203,779 | ||
| Average invested capital ^1^ | ||||||
| Property, plant & equipment | 4,335,633 | 4,219,693 | ||||
| Goodwill | 3,168,072 | 3,165,574 | ||||
| Other intangible assets | 1,087,580 | 1,102,803 | ||||
| Fixed and intangible assets | $ | 8,591,285 | $ | 8,488,070 | ||
| Current assets | 1,453,094 | 1,155,425 | ||||
| Less: Cash and cash equivalents | 265,920 | 41,243 | ||||
| Less: Deferred tax | 19,289 | 5,973 | ||||
| Adjusted current assets | 1,167,885 | 1,108,209 | ||||
| Current liabilities | 649,772 | 685,591 | ||||
| Less: Current maturities of long-term debt | 100,025 | 23 | ||||
| Less: Short-term debt | 27,400 | 201,700 | ||||
| Adjusted current liabilities | 522,347 | 483,868 | ||||
| Adjusted net working capital | $ | 645,538 | $ | 624,341 | ||
| Average invested capital | $ | 9,236,823 | $ | 9,112,411 | ||
| Return on Invested Capital | 14.2 | % | 13.2 | % | ||
| ^1^ | Average<br>Invested Capital is based on a trailing 5-quarters. | |||||
| --- | --- |