Exhibit 99.1
February 18, 2020
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: Janet Kavinoky (205) 298-3220
VULCAN REPORTS FOURTH QUARTER AND FULL YEAR RESULTS
Double-Digit Growth in Revenues Drives Aggregates Unit Profitability in 2019
Double-Digit Growth in Earnings Expected in 2020
Birmingham, Alabama – February 18, 2020 – Vulcan Materials Company (NYSE: VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter ended December 31, 2019.
Higher segment earnings in Aggregates and Asphalt helped drive 15 percent year-over-year growth in the Company’s fourth quarter earnings from continuing operations. Solid shipment growth, up 4 percent, and compounding price improvements, up 5.5 percent, led to improved earnings in aggregates. Asphalt earnings benefited from double-digit revenue growth and improving unit margins.
Full year revenues were $4.9 billion, up 12 percent as compared to the prior year, and net earnings were $618 million, an increase of 20 percent. Adjusted EBITDA increased 12 percent to $1.27 billion. At year end, total debt was $2.8 billion, or 2.2 times trailing-twelve month Adjusted EBITDA.
Tom Hill, Chairman and Chief Executive Officer, said, “2019 marks another year of strong earnings growth and cash generation. We are particularly proud of our people who worked hard to achieve these results while ensuring another year of world-class safety performance. Widespread improvements in pricing helped drive 8 percent growth in our industry-leading unit profitability and double-digit growth in Adjusted EBITDA, a strong result despite some higher than expected costs in the fourth quarter. Industry leadership in safety and pace-setting unit margins are both evidence of our strong and healthy business. Going forward, our compounding unit margins and our disciplined capital allocation position us to increase our cash flows and improve our return on invested capital again in 2020.
“Looking ahead, demand in our markets will continue to benefit from higher levels of highway funding and continued growth in residential and nonresidential markets. This visibility into demand growth has already set the stage for solid price improvement in 2020. Price improvement coupled with our four strategic initiatives (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing) should continue to increase unit profitability. For the full year, we expect earnings from continuing operations between $5.20 and $5.80 per diluted share with Adjusted EBITDA between $1.385 and $1.485 billion.”
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Highlights as of December 31, 2019 include:
| Fourth Quarter | Full Year | |||||||||||||||
| Amounts in millions, except per unit data | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Total revenues | $ | 1,186.2 | $ | 1,088.0 | $ | 4,929.1 | $ | 4,382.9 | ||||||||
| Gross profit | $ | 293.1 | $ | 275.3 | $ | 1,255.9 | $ | 1,100.9 | ||||||||
| Aggregates segment | ||||||||||||||||
| Segment sales | $ | 960.2 | $ | 874.0 | $ | 3,990.3 | $ | 3,513.6 | ||||||||
| Freight-adjusted revenue | $ | 720.6 | $ | 657.6 | $ | 3,014.2 | $ | 2,667.3 | ||||||||
| Gross profit | $ | 274.5 | $ | 256.4 | $ | 1,146.6 | $ | 991.9 | ||||||||
| Shipments (tons) | 51.6 | 49.7 | 215.5 | 201.4 | ||||||||||||
| Freight-adjusted sales price per ton | $ | 13.96 | $ | 13.23 | $ | 13.99 | $ | 13.25 | ||||||||
| Gross profit per ton | $ | 5.32 | $ | 5.16 | $ | 5.32 | $ | 4.93 | ||||||||
| Asphalt, Concrete & Calcium segment gross profit | $ | 18.6 | $ | 18.9 | $ | 109.3 | $ | 109.1 | ||||||||
| Selling, Administrative and General (SAG) | $ | 95.8 | $ | 84.4 | $ | 370.5 | $ | 333.4 | ||||||||
| SAG as % of Total revenues | 8.1 | % | 7.8 | % | 7.5 | % | 7.6 | % | ||||||||
| Earnings from continuing operations before income taxes | $ | 166.0 | $ | 153.9 | $ | 757.7 | $ | 623.3 | ||||||||
| Net earnings | $ | 141.1 | $ | 124.0 | $ | 617.7 | $ | 515.8 | ||||||||
| Adjusted EBIT | $ | 202.8 | $ | 195.8 | $ | 895.4 | $ | 785.5 | ||||||||
| Adjusted EBITDA | $ | 298.5 | $ | 285.6 | $ | 1,270.0 | $ | 1,131.7 | ||||||||
| Earnings from continuing operations per diluted share | $ | 1.07 | $ | 0.93 | $ | 4.67 | $ | 3.87 | ||||||||
| Adjusted earnings from continuing operations per diluted share | $ | 1.08 | $ | 0.99 | $ | 4.70 | $ | 4.05 | ||||||||
Segment Results
Aggregates
Fourth quarter segment sales increased 10 percent, and gross profit increased 7 percent to $275 million, or $5.32 per ton. These improvements resulted from growth in shipments and improved pricing.
Fourth quarter aggregates shipments increased 4 percent as compared to the prior year quarter. Markets in the Southeast and Southwest reported strong shipment growth, including double-digit growth in Florida and along the Gulf Coast. All of the Company’s key markets reported year-over-year price growth. For the quarter, freight-adjusted average sales price increased 5.5 percent (4.8 percent on mix-adjusted basis) versus the prior year’s quarter. The 70 basis points benefit from mix was due in part to above average growth in the Company’s remote-served markets. Positive trends in booking pace, along with demand visibility and customer confidence, support our expectations for continued price improvement.
Fourth quarter profitability was negatively impacted by higher repairs and maintenance costs, geographic volume mix including higher sales volumes in rail-served remote markets, as well as lower tipping fees for clean fill.
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For the full year, segment sales increased 14 percent, driven by 7 percent (6 percent same-store) volume growth and 5.6 percent price growth (5.2 percent on mix-adjusted basis). Gross profit increased 16 percent, and unit profitability grew by 8 percent to $5.32 per ton. The Company remains focused on compounding its industry-leading unit margins. Cash gross profit for the year was $6.74 per ton.
Asphalt, Concrete and Calcium
Asphalt segment gross profit was $11 million for the fourth quarter, an increase of $4 million from the prior year. Asphalt mix shipments increased 10 percent and selling prices increased 3 percent in the fourth quarter. California, the Company’s largest asphalt market, reported volume growth in the fourth quarter after a soft first half of the year due in part to weather. The average unit cost for liquid asphalt was 12 percent lower than the prior year quarter. Gross profit per ton in the quarter improved by 52 percent to $3.64.
Concrete segment gross profit was $7 million, $5 million lower than the prior year. Shipments increased 1 percent, and average selling prices increased 2 percent when compared to the prior year’s fourth quarter. Project delays, along with higher repair and maintenance costs, contributed to the year-over-year decline in gross profit.
Calcium segment gross profit was $0.8 million, up from the prior year quarter.
For the full year, Asphalt segment gross profit increased 12 percent to $63 million. Gross profit improved year-over-year in each of the last 3 quarters, despite a 6 percent increase in the unit cost of liquid asphalt for the year. Concrete gross profit was $43 million for the full year, down from $50 million in 2018. Backlogs remain good. The majority of the year-over-year change occurred in the fourth quarter as a result of project delays.
Capital Allocation and Financial Position
In 2019, the Company realized strong cash generation, and return on invested capital improved 130 basis points to 13.9 percent on an Adjusted EBITDA basis.
Full year core operating and maintenance capital investment totaled $239 million, and internal growth projects investment was $165 million. The Company’s full-year expectations for 2020 include $275 million for core operating and maintenance capital and $200 million for internal growth projects that are largely underway. During the year, the Company returned $167 million to shareholders through dividends and share repurchases.
At year-end, total debt was $2.8 billion, or 2.2 times trailing-twelve month Adjusted EBITDA, down from 2.6 times at the end of the prior year. The Company’s weighted-average debt maturity was 14 years, and the weighted-average interest rate was 4.4 percent.
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February 18, 2020
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Selling, Administrative and General (SAG)
SAG expense was $96 million in the quarter compared to $84 million in the prior year. The year-over-year increase was due mainly to compensation-related expense as well as higher professional fees. For the full year, SAG expense was $371 million, or 7.5 percent of total revenues, 10 basis points lower than the prior year. The Company remains focused on further leveraging its overhead structure.
Outlook
Regarding the Company’s outlook, Mr. Hill stated, “In 2020, we expect another year of strong earnings growth. Vulcan-served markets should continue to benefit from public construction demand, led by higher levels of highway funding in our key states. We anticipate residential construction in our markets to continue strengthening after experiencing some softness in certain markets during the second half of 2019. Private nonresidential construction activity should also improve as leading indicators point to positive growth in 2020. Demand fundamentals, including population and employment growth, continue to support longer-term growth in residential and nonresidential construction. We are seeing a positive pricing environment driven by shipment momentum in private demand and visibility of public demand. Our focus remains the same – compounding our unit margins through all parts of the cycle and improving our returns on capital.”
Management expectations for 2020 include:
| · | Aggregates shipments growth of 2 to 4 percent |
| · | Aggregates freight-adjusted price increase of 4 to 6 percent |
| · | 10 to 15 percent growth in Asphalt, Concrete and Calcium gross profit, collectively |
| · | SAG expenses of approximately $365 million |
| · | Interest expense of approximately $125 million |
| · | Depreciation, depletion, accretion and amortization expense of approximately $385 million |
| · | An effective tax rate of approximately 20 percent |
| · | Earnings from continuing operations of $5.20 to $5.80 per diluted share |
| · | Adjusted EBITDA of $1.385 to $1.485 billion |
Conference Call
Vulcan will host a conference call at 10:00 a.m. CT on February 18, 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 800-347-6311, or 323-794-2094 if outside the U.S., approximately 10 minutes before the scheduled start. The conference ID is 6815558. 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.
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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: general economic and business conditions; 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 the 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 | Twelve Months Ended | |||||||||||||||
| Consolidated Statements of Earnings | December 31 | December 31 | ||||||||||||||
| (Condensed and unaudited) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Total revenues | $ | 1,186,152 | $ | 1,088,047 | $ | 4,929,103 | $ | 4,382,869 | ||||||||
| Cost of revenues | 893,071 | 812,763 | 3,673,202 | 3,281,924 | ||||||||||||
| Gross profit | 293,081 | 275,284 | 1,255,901 | 1,100,945 | ||||||||||||
| Selling, administrative and general expenses | 95,801 | 84,382 | 370,548 | 333,371 | ||||||||||||
| Gain on sale of property, plant & equipment and businesses | 12,770 | 6,570 | 23,752 | 14,944 | ||||||||||||
| Other operating expense, net | (16,474 | ) | (10,983 | ) | (31,647 | ) | (34,805 | ) | ||||||||
| Operating earnings | 193,576 | 186,489 | 877,458 | 747,713 | ||||||||||||
| Other nonoperating income, net | 3,289 | 292 | 9,243 | 13,000 | ||||||||||||
| Interest expense, net | 30,835 | 32,857 | 129,000 | 137,423 | ||||||||||||
| Earnings from continuing operations before income taxes | 166,030 | 153,924 | 757,701 | 623,290 | ||||||||||||
| Income tax expense | 23,434 | 29,645 | 135,198 | 105,449 | ||||||||||||
| Earnings from continuing operations | 142,596 | 124,279 | 622,503 | 517,841 | ||||||||||||
| Loss on discontinued operations, net of tax | (1,504 | ) | (256 | ) | (4,841 | ) | (2,036 | ) | ||||||||
| Net earnings | $ | 141,092 | $ | 124,023 | $ | 617,662 | $ | 515,805 | ||||||||
| Basic earnings (loss) per share | ||||||||||||||||
| Continuing operations | $ | 1.08 | $ | 0.94 | $ | 4.71 | $ | 3.91 | ||||||||
| Discontinued operations | $ | (0.01 | ) | $ | 0.00 | $ | (0.04 | ) | $ | (0.01 | ) | |||||
| Net earnings | $ | 1.07 | $ | 0.94 | $ | 4.67 | $ | 3.90 | ||||||||
| Diluted earnings (loss) per share | ||||||||||||||||
| Continuing operations | $ | 1.07 | $ | 0.93 | $ | 4.67 | $ | 3.87 | ||||||||
| Discontinued operations | $ | (0.01 | ) | $ | 0.00 | $ | (0.04 | ) | $ | (0.02 | ) | |||||
| Net earnings | $ | 1.06 | $ | 0.93 | $ | 4.63 | $ | 3.85 | ||||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic | 132,467 | 132,060 | 132,300 | 132,393 | ||||||||||||
| Assuming dilution | 133,467 | 133,369 | 133,385 | 133,926 | ||||||||||||
| Depreciation, depletion, accretion and amortization | $ | 95,671 | $ | 89,783 | $ | 374,596 | $ | 346,246 | ||||||||
| Effective tax rate from continuing operations | 14.1 | % | 19.3 | % | 17.8 | % | 16.9 | % | ||||||||
Table B
Vulcan Materials Company
and Subsidiary Companies
| (in thousands) | ||||||||
| Consolidated Balance Sheets | December 31 | December 31 | ||||||
| (Condensed and unaudited) | 2019 | 2018 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 271,589 | $ | 40,037 | ||||
| Restricted cash | 2,917 | 4,367 | ||||||
| Accounts and notes receivable | ||||||||
| Accounts and notes receivable, gross | 573,241 | 542,868 | ||||||
| Allowance for doubtful accounts | (3,125 | ) | (2,090 | ) | ||||
| Accounts and notes receivable, net | 570,116 | 540,778 | ||||||
| Inventories | ||||||||
| Finished products | 391,666 | 372,604 | ||||||
| Raw materials | 31,318 | 27,942 | ||||||
| Products in process | 5,604 | 3,064 | ||||||
| Operating supplies and other | 29,720 | 25,720 | ||||||
| Inventories | 458,308 | 429,330 | ||||||
| Other current assets | 76,396 | 64,633 | ||||||
| Total current assets | 1,379,326 | 1,079,145 | ||||||
| Investments and long-term receivables | 60,709 | 44,615 | ||||||
| Property, plant & equipment | ||||||||
| Property, plant & equipment, cost | 8,749,217 | 8,457,619 | ||||||
| Allowances for depreciation, depletion & amortization | (4,433,179 | ) | (4,220,312 | ) | ||||
| Property, plant & equipment, net | 4,316,038 | 4,237,307 | ||||||
| Operating lease right-of-use assets, net | 408,189 | 0 | ||||||
| Goodwill | 3,167,061 | 3,165,396 | ||||||
| Other intangible assets, net | 1,091,475 | 1,095,378 | ||||||
| Other noncurrent assets | 225,995 | 210,289 | ||||||
| Total assets | $ | 10,648,793 | $ | 9,832,130 | ||||
| Liabilities | ||||||||
| Current maturities of long-term debt | 25 | 23 | ||||||
| Short-term debt | 0 | 133,000 | ||||||
| Trade payables and accruals | 265,159 | 216,473 | ||||||
| Other current liabilities | 270,379 | 253,054 | ||||||
| Total current liabilities | 535,563 | 602,550 | ||||||
| Long-term debt | 2,784,315 | 2,779,357 | ||||||
| Deferred income taxes, net | 633,039 | 567,283 | ||||||
| Deferred revenue | 179,880 | 186,397 | ||||||
| Operating lease liabilities | 388,042 | 0 | ||||||
| Other noncurrent liabilities | 506,097 | 493,640 | ||||||
| Total liabilities | $ | 5,026,936 | $ | 4,629,227 | ||||
| Equity | ||||||||
| Common stock, $1 par value | 132,371 | 131,762 | ||||||
| Capital in excess of par value | 2,791,353 | 2,798,486 | ||||||
| Retained earnings | 2,895,871 | 2,444,870 | ||||||
| Accumulated other comprehensive loss | (197,738 | ) | (172,215 | ) | ||||
| Total equity | $ | 5,621,857 | $ | 5,202,903 | ||||
| Total liabilities and equity | $ | 10,648,793 | $ | 9,832,130 | ||||
| Table C | ||||||||
| Vulcan Materials Company | ||||||||
| and Subsidiary Companies | ||||||||
| (in thousands) | ||||||||
| Twelve Months Ended | ||||||||
| Consolidated Statements of Cash Flows | December 31 | |||||||
| (Condensed and unaudited) | 2019 | 2018 | ||||||
| Operating Activities | ||||||||
| Net earnings | $ | 617,662 | $ | 515,805 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities | ||||||||
| Depreciation, depletion, accretion and amortization | 374,596 | 346,246 | ||||||
| Noncash operating lease expense | 35,344 | 0 | ||||||
| Net gain on sale of property, plant & equipment and businesses | (23,752 | ) | (14,944 | ) | ||||
| Contributions to pension plans | (8,882 | ) | (109,631 | ) | ||||
| Share-based compensation expense | 31,843 | 25,215 | ||||||
| Deferred tax expense (benefit) | 76,011 | 64,639 | ||||||
| Cost of debt purchase | 0 | 6,922 | ||||||
| Changes in assets and liabilities before initial effects of business acquisitions and dispositions | (147,218 | ) | (6,974 | ) | ||||
| Other, net | 28,518 | 5,499 | ||||||
| Net cash provided by operating activities | $ | 984,122 | $ | 832,777 | ||||
| Investing Activities | ||||||||
| Purchases of property, plant & equipment | (384,094 | ) | (469,088 | ) | ||||
| Proceeds from sale of property, plant & equipment | 22,661 | 22,210 | ||||||
| Proceeds from sale of businesses | 1,744 | 11,256 | ||||||
| Payment for businesses acquired, net of acquired cash | (44,151 | ) | (221,419 | ) | ||||
| Other, net | (11,997 | ) | (12,850 | ) | ||||
| Net cash used for investing activities | $ | (415,837 | ) | $ | (669,891 | ) | ||
| Financing Activities | ||||||||
| Proceeds from short-term debt | 366,900 | 739,900 | ||||||
| Payment of short-term debt | (499,900 | ) | (606,900 | ) | ||||
| Payment of current maturities and long-term debt | (23 | ) | (892,055 | ) | ||||
| Proceeds from issuance of long-term debt | 0 | 850,000 | ||||||
| Debt issuance and exchange costs | 0 | (45,513 | ) | |||||
| Settlements of interest rate derivatives | 0 | 3,378 | ||||||
| Purchases of common stock | (2,602 | ) | (133,983 | ) | ||||
| Dividends paid | (163,973 | ) | (148,109 | ) | ||||
| Share-based compensation, shares withheld for taxes | (38,585 | ) | (31,846 | ) | ||||
| Net cash used for financing activities | $ | (338,183 | ) | $ | (265,128 | ) | ||
| Net increase (decrease) in cash and cash equivalents and restricted cash | 230,102 | (102,242 | ) | |||||
| Cash and cash equivalents and restricted cash at beginning of year | 44,404 | 146,646 | ||||||
| Cash and cash equivalents and restricted cash at end of year | $ | 274,506 | $ | 44,404 |
| Table D | ||||||||||||||||
| Segment Financial Data and Unit Shipments | ||||||||||||||||
| (in thousands, except per unit data) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Total Revenues | ||||||||||||||||
| Aggregates 1 | $ | 960,164 | $ | 873,996 | $ | 3,990,275 | $ | 3,513,649 | ||||||||
| Asphalt 2 | 206,331 | 185,819 | 855,821 | 733,182 | ||||||||||||
| Concrete | 95,258 | 92,595 | 395,627 | 401,999 | ||||||||||||
| Calcium | 2,118 | 1,974 | 8,191 | 8,110 | ||||||||||||
| Segment sales | $ | 1,263,871 | $ | 1,154,384 | $ | 5,249,914 | $ | 4,656,940 | ||||||||
| Aggregates intersegment sales | (77,719 | ) | (66,337 | ) | (320,811 | ) | (274,071 | ) | ||||||||
| Total revenues | $ | 1,186,152 | $ | 1,088,047 | $ | 4,929,103 | $ | 4,382,869 | ||||||||
| Gross Profit | ||||||||||||||||
| Aggregates | $ | 274,516 | $ | 256,374 | $ | 1,146,649 | $ | 991,858 | ||||||||
| Asphalt | 11,073 | 6,627 | 63,023 | 56,480 | ||||||||||||
| Concrete | 6,664 | 11,795 | 43,151 | 49,893 | ||||||||||||
| Calcium | 828 | 488 | 3,078 | 2,714 | ||||||||||||
| Total | $ | 293,081 | $ | 275,284 | $ | 1,255,901 | $ | 1,100,945 | ||||||||
| Depreciation, Depletion, Accretion and Amortization | ||||||||||||||||
| Aggregates | $ | 77,787 | $ | 73,221 | $ | 305,046 | $ | 281,641 | ||||||||
| Asphalt | 8,856 | 8,562 | 35,199 | 31,290 | ||||||||||||
| Concrete | 3,958 | 3,035 | 13,620 | 12,539 | ||||||||||||
| Calcium | 55 | 65 | 232 | 272 | ||||||||||||
| Other | 5,015 | 4,900 | 20,499 | 20,504 | ||||||||||||
| Total | $ | 95,671 | $ | 89,783 | $ | 374,596 | $ | 346,246 | ||||||||
| Average Unit Sales Price and Unit Shipments | ||||||||||||||||
| Aggregates | ||||||||||||||||
| Freight-adjusted revenues 3 | $ | 720,584 | $ | 657,580 | $ | 3,014,157 | $ | 2,667,291 | ||||||||
| Aggregates - tons | 51,620 | 49,716 | 215,465 | 201,375 | ||||||||||||
| Freight-adjusted sales price 4 | $ | 13.96 | $ | 13.23 | $ | 13.99 | $ | 13.25 | ||||||||
| Other Products | ||||||||||||||||
| Asphalt Mix - tons | 3,041 | 2,769 | 12,665 | 11,318 | ||||||||||||
| Asphalt Mix - sales price | $ | 57.87 | $ | 56.03 | $ | 57.79 | $ | 55.13 | ||||||||
| Ready-mixed concrete - cubic yards | 744 | 737 | 3,104 | 3,223 | ||||||||||||
| Ready-mixed concrete - sales price | $ | 126.97 | $ | 124.34 | $ | 126.38 | $ | 123.35 | ||||||||
| Calcium - tons | 78 | 69 | 294 | 285 | ||||||||||||
| Calcium - sales price | $ | 27.30 | $ | 28.48 | $ | 27.85 | $ | 28.44 | ||||||||
| 1 | Includes product sales (crushed stone, sand and gravel, sand, and other aggregates), as well as freight & delivery costs that we pass along to our customers, and service revenues related to aggregates. |
| 2 | Includes product sales, as well as service revenues from our asphalt construction paving business. |
| 3 | Freight-adjusted revenues are Aggregates segment sales excluding freight & delivery revenues and immaterial other revenues related to services, such as landfill tipping fees that are derived from our aggregates business. |
| 4 | Freight-adjusted 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 | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Aggregates segment | ||||||||||||||||
| Segment sales | $ | 960,164 | $ | 873,996 | $ | 3,990,275 | $ | 3,513,649 | ||||||||
| Less: Freight & delivery revenues 1 | 225,139 | 203,518 | 921,064 | 796,929 | ||||||||||||
| Other revenues | 14,441 | 12,898 | 55,054 | 49,429 | ||||||||||||
| Freight-adjusted revenues | $ | 720,584 | $ | 657,580 | $ | 3,014,157 | $ | 2,667,291 | ||||||||
| Unit shipment - tons | 51,620 | 49,716 | 215,465 | 201,375 | ||||||||||||
| Freight-adjusted sales price | $ | 13.96 | $ | 13.23 | $ | 13.99 | $ | 13.25 | ||||||||
1 At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated 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. Reconciliations of these metrics to their nearest GAAP measures are presented below:
Aggregates Segment Incremental Gross Profit Margin in Accordance with GAAP
| (dollars in thousands) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Aggregates segment | ||||||||||||||||
| Gross profit | $ | 274,516 | $ | 256,374 | $ | 1,146,649 | $ | 991,858 | ||||||||
| Segment sales | $ | 960,164 | $ | 873,996 | $ | 3,990,275 | $ | 3,513,649 | ||||||||
| Gross profit margin | 28.6 | % | 29.3 | % | 28.7 | % | 28.2 | % | ||||||||
| Incremental gross profit margin | 21.1 | % | 32.5 | % | ||||||||||||
Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP)
| (dollars in thousands) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Aggregates segment | ||||||||||||||||
| Gross profit | $ | 274,516 | $ | 256,374 | $ | 1,146,649 | $ | 991,858 | ||||||||
| Segment sales | $ | 960,164 | $ | 873,996 | $ | 3,990,275 | $ | 3,513,649 | ||||||||
| Less: Freight & delivery revenues 1 | 225,139 | 203,518 | 921,064 | 796,929 | ||||||||||||
| Segment sales excluding freight & delivery | $ | 735,025 | $ | 670,478 | $ | 3,069,211 | $ | 2,716,720 | ||||||||
| Gross profit flow-through rate | 37.3 | % | 38.2 | % | 37.4 | % | 36.5 | % | ||||||||
| Incremental gross profit flow-through rate | 28.1 | % | 43.9 | % | ||||||||||||
1 At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated 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 | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Aggregates segment | ||||||||||||||||
| Gross profit | $ | 274,516 | $ | 256,374 | $ | 1,146,649 | $ | 991,858 | ||||||||
| Depreciation, depletion, accretion and amortization | 77,787 | 73,221 | 305,046 | 281,641 | ||||||||||||
| Aggregates segment cash gross profit | $ | 352,303 | $ | 329,595 | $ | 1,451,695 | $ | 1,273,499 | ||||||||
| Unit shipments - tons | 51,620 | 49,716 | 215,465 | 201,375 | ||||||||||||
| Aggregates segment cash gross profit per ton | $ | 6.82 | $ | 6.63 | $ | 6.74 | $ | 6.32 | ||||||||
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 | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net earnings | $ | 141,092 | $ | 124,023 | $ | 617,662 | $ | 515,805 | ||||||||
| Income tax expense | 23,434 | 29,645 | 135,198 | 105,449 | ||||||||||||
| Interest expense, net | 30,835 | 32,857 | 129,000 | 137,423 | ||||||||||||
| Loss on discontinued operations, net of tax | 1,504 | 256 | 4,841 | 2,036 | ||||||||||||
| EBIT | $ | 196,865 | $ | 186,781 | $ | 886,701 | $ | 760,713 | ||||||||
| Depreciation, depletion, accretion and amortization | 95,671 | 89,783 | 374,596 | 346,246 | ||||||||||||
| EBITDA | $ | 292,536 | $ | 276,564 | $ | 1,261,297 | $ | 1,106,959 | ||||||||
| Gain on sale of businesses | (9,289 | ) | 0 | (13,353 | ) | (2,929 | ) | |||||||||
| Property donation | 10,847 | 0 | 10,847 | 0 | ||||||||||||
| Business interruption claims recovery | 0 | 0 | 0 | (2,253 | ) | |||||||||||
| Charges associated with divested operations | 3,033 | 8,497 | 3,033 | 18,545 | ||||||||||||
| Business development 1 | 1,345 | 0 | 1,748 | 5,202 | ||||||||||||
| Restructuring charges 2 | 0 | 513 | 6,457 | 6,219 | ||||||||||||
| Adjusted EBITDA | $ | 298,472 | $ | 285,574 | $ | 1,270,029 | $ | 1,131,743 | ||||||||
| Depreciation, depletion, accretion and amortization | (95,671 | ) | (89,783 | ) | (374,596 | ) | (346,246 | ) | ||||||||
| Adjusted EBIT | $ | 202,801 | $ | 195,791 | $ | 895,433 | $ | 785,497 | ||||||||
1 Represents non-routine charges associated with acquisitions including the cost impact of purchase accounting inventory valuations.
2 Restructuring charges are included within other operating expenses. The 2019 charges relate to a 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 | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Diluted EPS from continuing operations | $ | 1.07 | $ | 0.93 | $ | 4.67 | $ | 3.87 | ||||||||
| Items included in Adjusted EBITDA above | 0.01 | 0.06 | 0.03 | 0.14 | ||||||||||||
| Debt refinancing costs | 0.00 | 0.00 | 0.00 | 0.04 | ||||||||||||
| Adjusted Diluted EPS | $ | 1.08 | $ | 0.99 | $ | 4.70 | $ | 4.05 | ||||||||
The following reconciliation to the mid-point of the range of 2020 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount). Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:
2020 Projected EBITDA
| (in millions) | ||||
| Mid-point | ||||
| Net earnings | $ | 735 | ||
| Income tax expense | 190 | |||
| Interest expense, net | 125 | |||
| Discontinued operations, net of tax | 0 | |||
| Depreciation, depletion, accretion and amortization | 385 | |||
| Projected EBITDA | $ | 1,435 | ||
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) | ||||||||
| 2019 | 2018 | |||||||
| Adjusted EBITDA | $ | 1,270,029 | $ | 1,131,743 | ||||
| Property, plant & equipment | 4,281,342 | 4,095,448 | ||||||
| Goodwill | 3,165,685 | 3,150,290 | ||||||
| Other intangible assets | 1,084,113 | 1,095,218 | ||||||
| Fixed and Intangible Assets | $ | 8,531,140 | $ | 8,340,956 | ||||
| Current Assets | 1,224,316 | 1,125,912 | ||||||
| Less: Cash and cash equivalents | 93,528 | 68,349 | ||||||
| Less: Deferred tax | 12,633 | 0 | ||||||
| Adjusted Current Assets | 1,118,155 | 1,057,563 | ||||||
| Current Liabilities | 599,319 | 626,188 | ||||||
| Less: Current maturities of long-term debt | 24 | 8,295 | ||||||
| Less: Short-term borrowings | 89,700 | 178,600 | ||||||
| Adjusted Current Liabilities | 509,595 | 439,293 | ||||||
| Adjusted Net Working Capital | $ | 608,560 | $ | 618,270 | ||||
| Average Invested Capital | $ | 9,139,700 | $ | 8,959,226 | ||||
| Return on Invested Capital | 13.9 | % | 12.6 | % | ||||