BIRMINGHAM, Ala., May 10, 2017 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today announced results for the first quarter ended March 31, 2017.

Net earnings were $45 million and Adjusted EBITDA was $149 million.  The Company's first quarter results reflect solid price growth in aggregates, the continuing recovery in construction materials demand, and strong profitability in its Concrete and Asphalt segments.  First quarter results were in line with the Company's full year plans, and management reaffirms its expectation for full year Adjusted EBITDA of between $1.125 billion and $1.225 billion.

Tom Hill, Chairman and Chief Executive Officer, said, "These results mark a good start to the year.  Aggregates shipments declined 2 percent, but effectively matched last year's very strong first quarter pace when excluding the impact of weather disruptions on our shipments in California.  Aggregates pricing increased 5 percent, consistent with full year expectations, and a good indication of the market's visibility to further demand recovery.  Solid operational execution by our management teams led to record trailing-twelve-month unit profitability for a first quarter and helped offset $14 million of timing-related incremental costs which included the effects of higher unit cost of diesel fuel, increased stripping expense in anticipation of growing demand, and costs related to flooding in California.  The four acquisitions we've closed since January, and our overall rate of reinvestment in the business, tie to our confidence in both improving market conditions and the quality of our internal execution.  We remain focused on continuous, compounding improvements in profitability and cash flows, and expect them to continue in 2017 and for years to come."

First Quarter Summary (compared with prior year's first quarter)

• Total revenues increased $33 million, or 4 percent, to $787 million
• Gross profit decreased $5 million, or 3 percent, to $160 million
• Aggregates segment sales increased $15 million, or 2 percent, to $650 million, and aggregates freight-adjusted revenues increased $10 million, or 2 percent, to $497 million
• Shipments decreased 2 percent, or 1.0 million tons, to 38.2 million tons
• Freight-adjusted sales price increased 5 percent, or $0.57 per ton
• Segment gross profit decreased $8 million, or 6 percent, to $140 million
• Asphalt, Concrete and Calcium gross profit improved $3.5 million, or 21 percent, collectively
• SAG was $82 million versus $76 million in the prior year
• Net earnings were $45 million, an increase of $5 million, or 12 percent
• Adjusted EBIT was $78 million, a decrease of $8 million, or 10 percent
• Adjusted EBITDA was $149 million, a decrease of $6 million, or 4 percent
• Earnings from continuing operations were $0.32 per diluted share versus $0.31 per diluted share
• Adjusted earnings from continuing operations were $0.34 per diluted share versus $0.41 per diluted share

Trailing-Twelve-Month Summary (compared with prior twelve month period)

• Total revenues increased $80 million, or 2 percent, to $3.63 billion
• Gross profit increased $52 million, or 5 percent, to $996 million
• Aggregates segment sales increased $68 million, or 2 percent, to $2.98 billion, and aggregates freight-adjusted revenues increased $85 million, or 4 percent, to $2.30 billion
• Shipments decreased 2 percent, or 4 million tons, to 180 million tons
• Freight-adjusted sales price increased 6 percent
• Segment gross profit increased $29 million, or 3 percent, to $865 million
• Unit gross profit increased 5 percent to $4.79 per ton
• Asphalt, Concrete and Calcium segment gross profit improved $23 million, collectively
• SAG was $321 million, an increase of 50 basis points as a percentage of total revenues
• Net earnings were $424 million, an increase of $123 million, or 41 percent
• Adjusted EBIT was $673 million, an increase of $37 million, or 6 percent
• Adjusted EBITDA was $960 million, an increase of $47 million, or 5 percent
• Earnings from continuing operations were $3.12 per diluted share versus $2.31 per diluted share
• Adjusted earnings from continuing operations were $2.96 per diluted share versus $2.72 per diluted share

Segment Results

Aggregates

Excluding California markets adversely affected by record rainfall, overall shipments approximated the prior year's exceptionally strong first quarter.  California's wet weather and flooding halted construction activity and impaired shipments in January and February.  Daily shipping rates for aggregates in each of these two months declined more than 20 percent versus the prior year.  In March, as job site conditions improved, California daily shipping rates recovered accordingly.  California's passage of a long-term transportation bill resolved Caltrans' funding uncertainty and should, along with other factors, support sustained shipping rate improvements.  Demand continues to recover across our Mid-Atlantic and Southeastern markets, with most operations experiencing solid shipment growth even against last year's strong comparison. 

Trailing-twelve-month construction start activity, both public and private, has steadily improved since July.  The backlog of construction projects in development continues to grow across our key states.  In addition, state and local governments continue to pass measures to increase public infrastructure investment significantly, and a number of projects supported by FAST Act funding have moved further toward the active construction stage.  The Company continues to expect full year shipment growth of between 5 and 8 percent, with the ultimate result dependent on the timing of shipments to new, larger public transportation projects.   

For the quarter, freight-adjusted average sales price for aggregates increased 5 percent, or $0.57 per ton, versus the prior year despite a modest negative mix impact.  The overall pricing climate remains favorable as visibility to a sustained recovery improves and as construction materials producers stay focused on earning adequate returns on capital.  California and Georgia each experienced price growth of more than 10 percent, again supported by clear and improving visibility to sustained demand growth.  Substantially all of the Company's markets realized price growth in the first quarter. 

First quarter Aggregates segment gross profit declined $8 million, or 6 percent, to $140 million, or $3.66 per ton.  Segment results in the quarter were negatively impacted by a 35 percent increase in the unit cost of diesel fuel, flood-related costs in California, increased stripping expenses and costs related to the transition to two new, more efficient ships to transport aggregates from our quarry in Mexico. In total, these items negatively impacted segment gross profit by $14 million in comparison to the prior year.  Despite the timing of these costs, trailing-twelve-month cash gross profit reached a record level for the first quarter.

Asphalt, Concrete and Calcium

For our non-aggregates segments in total, first quarter gross profit was $20 million, a 21 percent increase over the prior year's period.  Solid demand growth in our northern Virginia market led to strong growth in concrete shipments and segment earnings.  In our Asphalt segment, results were negatively impacted by severe wet weather and flooding conditions in California.

Asphalt segment gross profit decreased $3.6 million to $8.6 million.  Shipments increased 5 percent as incremental shipments from acquisitions offset weather-related decreases in California, the Company's largest asphalt market.  However, segment profits declined due to modestly lower material margins and acquisition-related costs.

Concrete segment gross profit was $10 million in the quarter compared to $3 million in the prior year period.  Shipments increased 22 percent versus the prior year as volumes increased in each of the Company's concrete markets, particularly Virginia, the Company's largest concrete market.  Material margins in concrete also improved versus the prior year.

In the first quarter, the Calcium segment reported gross profit of $0.7 million versus $0.6 million in the prior year.

On a trailing-twelve-month basis, total gross profit in our non-aggregates segments was $131 million, a 21 percent increase from the prior year's comparable period.

Growth, Capital Allocation, and Financial Position

The Company remains active in the pursuit of bolt-on acquisitions and other value-creating growth investments.  Since January, the Company has closed four acquisitions totaling $198 million.  These acquisitions complement our leading aggregates positions in certain California, New Mexico and Tennessee markets. 

Capital expenditures were $133 million, including both core capital expenditures and internal growth capital investments.  Internal growth capital investments were approximately $35 million, which included the acquisition of additional reserves in Texas and investment in the purchase of two replacement ships to transport aggregates.  Core capital expenditures to replace existing property, plant and equipment made up the balance of the capital expenditures.

In March, the Company issued $350 million of 10-year debt with a coupon of 3.9 percent.  During the quarter, the Company returned $82 million to shareholders through dividends and share repurchases.  At the end of the first quarter, total debt outstanding was $2.3 billion.  The quarter end cash balance was $287 million.

Selling, Administrative and General (SAG) and Taxes

Selling, Administrative and General (SAG) expenses were $82 million versus $76 million in the prior year's period.  This increase was due primarily to higher severance costs as well as higher business development expenses.  Trailing-twelve-month SAG expenses were approximately $320 million, in line with full year expectations, which remain unchanged.

With the Company's adoption of Accounting Standards Update (ASU) 2016-09, excess tax benefits (tax deductions in excess of book expense) from stock-based compensation are reflected in the income tax provision rather than shareholder's equity.  Excess tax benefits in the first quarter of this year were $15 million, contributing to a net tax benefit for the quarter of $3 million.  In the first quarter of 2016, the excess tax benefit was $21 million.  Expectations for the full year 2017 effective tax rate continue to be 28 percent.

Demand and Earnings Outlook

Regarding the Company's earnings outlook for 2017, Mr. Hill stated, "For the full year we expect strong year-over-year growth in earnings, and our first quarter results are consistent with that expectation.  First quarter aggregates shipments were just below last year's seasonally strong first quarter levels and the pricing environment remains favorable, with growth across the vast majority of our markets.  Our expectation for full year Adjusted EBITDA of $1.125 to $1.225 billion is driven by a continuing recovery in shipments, with higher levels of publicly funded construction activity beginning to join the ongoing recovery in private demand.  Other management expectations (e.g. aggregates price and volume, gross profit growth and SAG expense) remain as outlined in our fourth quarter 2016 earnings communications."

Mr. Hill concluded, "Our unmatched asset base and industry-leading core profitability in aggregates position us well for the balance of 2017 and beyond.  Trailing-twelve-month Aggregates segment cash gross profit is more than $6 per ton, or 46 percent growth so far in this recovery, with additional improvement to come.  We are committed to continuous improvement in safety, customer service, and operational efficiencies and remain focused on the execution details that add up to outstanding results."

Conference Call

Vulcan will host a conference call at 10:00 a.m. CDT on May 10, 2017.  A webcast will be available via the Company's website at www.vulcanmaterials.com.  Investors and other interested parties in the U.S. may also access the teleconference live by calling 877-718-5111 approximately 10 minutes before the scheduled start.  International participants can dial 719-325-4806.  The conference ID is 3906362.  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, is the nation's largest producer of construction aggregates, and a major producer of other construction materials.

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.

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: those associated with general economic and business conditions; the timing and amount of federal, state and local funding for infrastructure; changes in Vulcan's effective tax rate; the increasing reliance on information technology infrastructure for Vulcan's ticketing, procurement, financial statements and other processes which could adversely affect operations in the event that the infrastructure does not work as intended or 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; changes in the level of spending for private residential and private nonresidential construction; the highly competitive nature of the construction materials industry; the impact of future regulatory or legislative actions, including those relating to climate change, greenhouse gas emissions, or the definition of minerals or international trade; the outcome of pending legal proceedings; pricing of Vulcan's products; weather and other natural phenomena; 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; volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental clean-up 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 potential of goodwill or long-lived asset impairment; 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.  

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SOURCE Vulcan Materials Company