Vulcan Materials Co. announced results for the first quarter ended March 31, 2015. The company’s first quarter results reflect “strong earnings growth and improvement in its industry-leading unit profitability in aggregates,” it stated in a release.
The company is reporting:
- Total revenues increased $57 million, or 10 percent, to $631 million.
- Total gross profit increased $44 million, or 128 percent, to $78 million.
- Aggregates freight-adjusted revenues increased $56 million, or 17 percent, to $380 million.
- Shipments increased 13 percent, or 3.9 million tons, to 33.5 million tons.
- Same-store shipments increased 9 percent, or 2.7 million tons.
- Segment gross profit increased $29 million, or 76 percent, to $68 million.
- Incremental gross profit as a percent of freight-adjusted revenues was 52 percent.
- On a same-store basis, this metric was 68 percent.
- Average freight-adjusted sales price increased 4 percent despite negative product mix.
- Shipments increased 13 percent, or 3.9 million tons, to 33.5 million tons.
- Asphalt, Concrete and Calcium segment gross profit improved $15 million, collectively.
- A net earnings loss of $39.7 million.
First quarter Adjusted EBITDA was $77 million, an increase of 97 percent from the prior year, with gross profit improving in all segments. Same-store aggregates shipments rose 9 percent despite challenging weather in certain key markets.
Same-store, freight-adjusted aggregates pricing rose $0.44 per ton, or 4 percent, in the quarter with further pricing gains expected throughout the year. Same-store gross profit per aggregates ton increased $0.81 over the prior year quarter, as the Company controlled costs and captured the benefit of lower diesel prices.
For the quarter, and for the trailing 12 months, incremental aggregates segment gross profit was 68 percent of incremental freight-adjusted revenues again on a same-store basis.
Tom Hill, president and chief executive officer, said, “Our local leadership teams continue to excel at balancing our core profit drivers: price for service, sales and production mix, and operating efficiency and leverage. Although demand for our products remains well below normal levels, the gradual recovery in construction activity continues across most of our markets. As a result of improving market conditions and our continued focus on internal profit improvements, both pricing and margins continue to expand. Looking ahead, we remain well positioned to serve our customers and to achieve strong earnings growth in 2015 and beyond.”
Shipment momentum continued across most of the company’s footprint in the first quarter, driven by strengthening construction activity across all end-use markets. On a same-store basis, Arizona, Florida, Illinois, North Carolina, Texas and Virginia each saw shipment growth greater than 10 percent. Same-store aggregates shipments in California increased 8 percent.
In contrast, Georgia aggregates shipments for the quarter declined 4 percent due to adverse weather conditions; although full year outlook for Georgia shipments remains unchanged. These shipment increases, coming despite weather limiting available construction days in several markets, reflect the growing strength of the recovery in aggregates demand in Vulcan-served markets.
For the 12 months ended March 31, same-store shipments rose 11 percent over the year-earlier period. This quarter was the seventh consecutive quarter in which the rate of shipment growth, on a consecutive trailing 12-month basis, has increased. Overall demand for aggregates remains well below historic levels despite these recent gains.
Freight-adjusted average sales price for aggregates increased approximately 4 percent on a same-store basis, or $0.44 per ton, versus the prior year’s first quarter, with most markets realizing accelerating price improvement. Product mix muted the impact of real price increases in some key markets, including Virginia, where large shipments of lower-priced fines product combined with delays in shipments to concrete and asphalt customers due to weather contributed to an approximately 5 percent decline in quarterly average selling prices over the prior year. In many markets, price increases announced April 1 have been well accepted. Given these and other indicators, we expect overall aggregates pricing to continue to rise throughout the year.
During the first quarter, the company’s same-store, per-ton margins continued to expand faster than per-ton pricing. Gross profit per ton increased $0.81, or 62 percent, from the prior year. Cash gross profit per ton increased $0.57, or 18 percent, from the prior year. On a trailing 12-month basis, same-store unit gross profit has increased 21 percent, while unit cash gross profit has increased 10 percent to $4.85 per ton a new 12-month high despite cyclically low volumes. These results, which were aided in the first quarter by the year-on-year decline in diesel costs, also reflect the company’s continued commitment to plant-level cost controls and operating disciplines.
For the quarter, aggregates same-store freight-adjusted revenues increased $44 million, while same-store gross profit for the segment increased $30 million, a flow-through rate of 68 percent.
Compared to last year, first quarter cost of revenues for the company benefitted by approximately $14 million from lower diesel fuel costs, with approximately $13 million of this benefit realized in the aggregates segment. Diesel-related cost-savings helped offset certain other production cost challenges inherent in meeting rising customer demand in winter weather conditions (e.g., difficulty maintaining consistent and efficient production schedules).
In total, the operations acquired by the company since the third quarter of 2014 recorded a $0.3 million gross profit loss in the first quarter. These results, which were in line with management expectations, reflect the higher costs of purchased inventory as well as the impact of fixed charges during a period of seasonally low volumes. The company’s full-year outlook for the performance of these operations remains unchanged.
As noted in the company’s fourth-quarter earnings release dated Feb. 5, 2015, the company completed an asset exchange transaction in January in which it exited the ready-mixed concrete business in California and added 13 asphalt plant locations, primarily in Arizona. The company will continue to supply aggregates to its former concrete plants in California. This transaction resulted in a gain of $6 million.