Exhibit 99.1
February 7, 2017
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: David Donaldson (205) 298-3220
VULCAN ANNOUNCES FOURTH QUARTER 2016 RESULTS
Fourth Quarter Diluted Earnings per Share Increase 16 Percent
Full Year Diluted Earnings per Share Increase 81 Percent
Company Expects Continued Earnings Growth in 2017
Birmingham, Alabama – February 7, 2017 – Vulcan Materials Company (NYSE:VMC), the nation’s largest producer of construction aggregates, today announced results for the fourth quarter ended December 31, 2016.
The Company’s fourth quarter results reflect solid price growth in aggregates and higher gross profits in the Company’s Asphalt and Concrete segments, partially offsetting the earnings effect from a 3.5 percent decline in aggregates shipments. Net earnings were $113 million, or 27 percent higher than the prior year’s fourth quarter, and Adjusted EBITDA was $230 million, or 6 percent lower than the prior year’s fourth quarter.
For the year, net earnings were $419 million and Adjusted EBITDA was $966 million, which represent gains of 90 percent and 16 percent, respectively, over the prior year. Aggregates shipments grew 2 percent, and pricing increased 7 percent. Incremental aggregates gross profit equaled 65 percent of incremental freight-adjusted revenues. Aggregates gross profit as a percentage of freight-adjusted revenues expanded to 38 percent from 36 percent. Total Company gross profit margin expanded to 28 percent from 25 percent, and total Company gross profit margin excluding freight and delivery revenues expanded to 33 percent from 30 percent.
Tom Hill, Chairman and Chief Executive Officer, said, “Vulcan’s operating momentum remains strong. While our fourth quarter results reflect a mid-December ramp-down of the construction season in many of our markets, which was earlier than in 2015, our solid full year results and outlook for 2017 demonstrate a continuation of longer-term trends in volume recovery, price increases, and margin expansion. Our daily aggregates shipment rates in October and November exceeded the prior year’s strong comparison before falling off in the second half of December. In addition, and important to our forward outlook, key measures of both public and private construction starts have improved steadily since July. Adjusted for product and geographic mix, aggregates pricing growth over last year’s fourth quarter was approximately 7 percent, in line with the full-year trend. Several temporary and timing-related factors combined to impact fourth quarter unit margin and flow-through comparisons. Full year results better represent the underlying trend and our forward expectations. For 2017, we expect to deliver Adjusted EBITDA of between $1.125 and $1.225 billion. We expect aggregates shipments to grow between 5 percent and 8 percent and average selling prices to increase between 5 percent and 7 percent. The flow-through of freight-adjusted revenues to gross profit in our Aggregates segment should remain in line with the longer-term trend of greater than 60 percent. We remain focused on continuous, compounding improvement in profitability and cash flows, and expect them to continue - not only for 2017 but for years to come.”
Page 2
February 7, 2017
FOR IMMEDIATE RELEASE
Fourth Quarter Summary (compared with prior year’s fourth quarter)
| ● | Total revenues increased $16 million, or 2 percent, to $873 million |
| ● | Gross profit decreased $14 million, or 6 percent, to $240 million |
| ● | Aggregates segment sales increased $4 million, or 1 percent, to $714 million, and aggregates freight-adjusted revenues increased $6 million, or 1 percent, to $551 million |
| o | Shipments decreased 3.5 percent, or 1.6 million tons, to 43.1 million tons |
| o | Freight-adjusted sales price increased 5 percent, and 7 percent exclusive of mix |
| o | Segment gross profit decreased $21 million, or 9 percent, to $209 million |
| ● | Asphalt, Concrete and Calcium segment gross profit improved $7 million, collectively |
| ● | SAG declined 20 basis points as a percentage of total revenues |
| ● | Net earnings were $113 million, an increase of $24 million, or 27 percent |
| ● | Adjusted EBIT was $159 million, a decrease of $15 million, or 9 percent |
| ● | Adjusted EBITDA was $230 million, a decrease of $14 million, or 6 percent |
| ● | Earnings from continuing operations were $0.80 per diluted share versus $0.69 per diluted share |
| ● | Adjusted earnings from continuing operations were $0.69 per diluted share versus $0.74 per diluted share |
Full Year Summary (compared with prior year)
| ● | Total revenues increased $170 million, or 5 percent, to $3.59 billion |
| ● | Gross profit increased $143 million, or 17 percent, to $1.00 billion |
| ● | Aggregates segment sales increased $184 million, or 7 percent, to $2.96 billion, and aggregates freight-adjusted revenues increased $182 million, or 9 percent, to $2.29 billion |
| o | Shipments increased 2 percent, or 3 million tons, to 181 million tons |
| o | Freight-adjusted sales price increased 7 percent |
| o | Segment gross profit increased $117 million, or 16 percent, to $873 million |
| ● | Asphalt, Concrete and Calcium segment gross profit improved $26 million, collectively |
| ● | SAG increased 40 basis points as a percentage of total revenues |
| ● | Net earnings were $419 million, an increase of $198 million, or 90 percent |
| ● | Adjusted EBIT was $681 million, an increase of $121 million, or 22 percent |
| ● | Adjusted EBITDA was $966 million, an increase of $131 million, or 16 percent |
| ● | Earnings from continuing operations were $3.11 per diluted share versus $1.72 per diluted share |
| ● | Adjusted earnings from continuing operations were $2.86 per diluted share versus $2.16 per diluted share |
Page 3
February 7, 2017
FOR IMMEDIATE RELEASE
Segment Results
Aggregates
The quarter-over-quarter decline in shipments primarily resulted from (i) an earlier ramp-down to the construction season relative to the prior year’s strong shipment rates through late December and (ii) continued volume weakness in California, Illinois and coastal Texas. Excluding these markets, daily shipment rates were 9 percent ahead of the prior year pace in October and November, but fell 7 percent below the prior year in December. In contrast, daily shipment rates for the quarter in California, Illinois and coastal Texas remained more than 15 percent below the prior year’s pace. With an earlier end to the construction season, Illinois shipments in December were more than 45 percent below the prior year. Price increases in California and Illinois partially offset the revenue impact of lower shipments. Average selling prices for these two states were more than 10 percent above the prior year.
For the year, shipments rose 2 percent over the prior year, with this gain coming despite double-digit shipment declines in California, Illinois and Texas. For the year, shipments in the Company’s other markets grew 10 percent on average. Trailing twelve month construction start activity, both public and private, has steadily improved since July. This improvement has helped reverse year-over-year declines from May to October, which negatively impacted our shipments in the second half of the year. The backlog of construction projects in development continues to grow as well. In addition, state and local governments continue to pass measures to increase public infrastructure investment. While the Company believes conditions remain in place for a sustained, multi-year recovery in demand for aggregates, quarter-to-quarter trends may vary significantly.
For the quarter, freight-adjusted average sales price for aggregates increased 5 percent, or $0.60 per ton, versus the prior year. Pricing was negatively impacted by product and geographic mix in the fourth quarter. Excluding this effect, overall pricing increased 7 percent. Full year pricing increased 7 percent, with virtually all of the Company’s markets realizing higher pricing versus the prior year. 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.
Fourth quarter unit cost of sales in the Aggregates segment increased 13 percent versus the prior year’s fourth quarter, and per ton profitability – although near record levels – declined for the first time in nearly 4 years. These quarter-over-quarter declines were driven primarily by reduced fixed cost absorption, the timing of repair and maintenance and stripping expenses, and other items and variances in end-of-year accounting adjustments for inventory.
For the year, unit cost of sales increased 3 percent. Unit gross profit increased 14 percent, to $4.81 per ton, while unit cash gross profit increased 11 percent to $6.12 per ton. The flow-through rate from freight-adjusted aggregates revenues to segment gross profit was 65 percent. These improvements in the Company’s core profitability were delivered despite modest shipment growth and a year-over-year decline in inventory levels.
Page 4
February 7, 2017
FOR IMMEDIATE RELEASE
Asphalt, Concrete and Calcium
In the fourth quarter, Asphalt segment gross profit increased 19 percent to $22 million. Shipments increased 4 percent and the average sales price decreased 2 percent. Solid sales and operating disciplines, as well as effective materials margin management, more than offset the modest decline in price.
For the full year, Asphalt segment gross profit increased 25 percent to $98 million. Volumes and price decreased 3 percent and 2 percent, respectively, versus the prior year while gross profit margin expanded 430 basis points due mostly to lower unit costs for liquid asphalt.
Concrete segment gross profit was $8 million in the quarter compared to $5 million in the prior year period. Sales volumes increased 16 percent versus the prior year as volumes increased in each of the Company’s concrete markets.
Full year Concrete segment gross profit increased 32 percent and margin expanded 130 basis points versus the prior year. Shipments increased 7 percent and the average sales price increased 3 percent. Material margins expanded, offsetting higher costs for internally supplied aggregates and other raw materials.
In the fourth quarter, the Company’s Calcium segment reported gross profit of $0.9 million versus approximately $1.0 million in the prior year.
For our non-aggregates segments in total, full year 2016 gross profit was $128 million, a 25 percent increase over 2015.
Credit Position, Capital Allocation, and Growth
At the end of the fourth quarter, total debt outstanding was approximately $2 billion, including $235 million of floating-rate borrowings. The quarter end cash balance was $259 million.
For the full year, cash capital expenditures were $350 million, including both core capital expenditures and internal growth capital investments. Internal growth capital investments were approximately $100 million, including $28 million invested in the purchase of two replacement ships to transport aggregates from the Company’s quarry in Mexico, as well as development of new sites and investment in other growth opportunities. During 2016, for example, the Company opened 5 new distribution sites to serve attractive markets in Georgia, South Carolina and Texas. Core capital expenditures to replace existing property, plant and equipment were approximately $250 million.
The Company remains active in the pursuit of bolt-on acquisitions. Since the end of September 2016, the Company has either closed or signed purchase agreements for 4 acquisitions that include both aggregates and asphalt assets. Since 2013, the Company has completed more than 15 transactions that position it to further strengthen its customer service capabilities and cash flows.
The Company also remains focused on realizing the full value of its land assets. During the fourth quarter, the Company completed the sales of excess land for a total cash value of approximately $26 million and a gain of $16 million. The Company excludes this gain from its calculation of Adjusted EBITDA. However, the on-going cost associated with land management and reclamation is treated as ordinary expenses.
Page 5
February 7, 2017
FOR IMMEDIATE RELEASE
During 2016, the Company returned $268 million to shareholders through dividends and share repurchases. The Company repurchased approximately 1.4 million shares at an average cost of $113.18 per share during the year.
Demand and Earnings Outlook
Regarding the Company’s earnings outlook for 2017, Mr. Hill stated, “The strong fundamentals of our aggregates-focused business and the outstanding improvement in our core profitability have led to strong earnings growth during the last three years of recovery. In 2017, we expect continued growth across the vast majority of our markets and across each of the end use segments we serve. 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 just beginning to join the ongoing recovery in private demand, as well as a favorable pricing environment.”
The following assumptions support the Company’s outlook for strong year-over-year growth in Adjusted EBITDA in 2017.
| · | Aggregates shipments growth of 5 to 8 percent from 2016, with growth weighted more toward the second half of the year |
| · | Freight-adjusted aggregates price increase of 5 to 7 percent, with unit margins continuing to grow faster than pricing |
| · | Asphalt, Concrete and Calcium gross profit growth of approximately 15 percent |
| · | SAG expenses of approximately $320 million, 2 percent higher than the prior year and excluding business development-related expenses |
Other expectations include:
| · | Core capital spending of approximately $300 million to support the increased level of shipments and further improve production costs and operating efficiencies |
| · | Interest expense of approximately $140 million |
| · | Depreciation, depletion, accretion and amortization expense of approximately $300 million |
| · | Effective tax rate of 28 percent |
Mr. Hill concluded, “Our 2017 outlook reflects earnings growth and unit margin performance consistent with recent trends as well as our longer range goals. Since the beginning of this recovery, our teams’ efforts have resulted in Aggregates segment gross profit increasing $515 million on a 41 million ton increase in shipments. During this period, unit cash gross profit in our core Aggregates segment has improved 46 percent on a trailing twelve month basis. We remain focused on continuous improvement and on turning in another strong year.”
Page 6
February 7, 2017
FOR IMMEDIATE RELEASE
Conference Call
Vulcan will host a conference call at 10:00 a.m. CT on February 7, 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 888-713-3596 approximately 10 minutes before the scheduled start. International participants can dial 913-312-0417. The conference ID is 8892027. 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 that can adversely impact results; the increasing reliance on information technology infrastructure for Vulcan’s ticketing, procurement, financial statements and other processes could adversely affect operations in the event such 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; 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.
| 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) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Total revenues | $ | 872,975 | $ | 857,285 | $ | 3,592,667 | $ | 3,422,181 | ||||||||
| Cost of revenues | 633,270 | 603,355 | 2,591,850 | 2,564,648 | ||||||||||||
| Gross profit | 239,705 | 253,930 | 1,000,817 | 857,533 | ||||||||||||
| Selling, administrative and general expenses | 79,526 | 79,494 | 314,986 | 286,844 | ||||||||||||
| Gain on sale of property, plant & equipment | ||||||||||||||||
| and businesses | 12,498 | 2,504 | 15,431 | 9,927 | ||||||||||||
| Business interruption claims recovery | 0 | 0 | 11,652 | 0 | ||||||||||||
| Impairment of long-lived assets | 0 | 0 | (10,506 | ) | (5,190 | ) | ||||||||||
| Other operating income (expense), net | 1,122 | (3,903 | ) | (22,826 | ) | (25,648 | ) | |||||||||
| Operating earnings | 173,799 | 173,037 | 679,582 | 549,778 | ||||||||||||
| Other nonoperating income (expense), net | 619 | 599 | 944 | (1,678 | ) | |||||||||||
| Interest expense, net | 33,077 | 36,311 | 133,269 | 220,243 | ||||||||||||
| Earnings from continuing operations | ||||||||||||||||
| before income taxes | 141,341 | 137,325 | 547,257 | 327,857 | ||||||||||||
| Income tax expense | 33,276 | 43,766 | 124,851 | 94,943 | ||||||||||||
| Earnings from continuing operations | 108,065 | 93,559 | 422,406 | 232,914 | ||||||||||||
| Earnings (loss) on discontinued operations, net of tax | 4,536 | (4,672 | ) | (2,915 | ) | (11,737 | ) | |||||||||
| Net earnings | $ | 112,601 | $ | 88,887 | $ | 419,491 | $ | 221,177 | ||||||||
| Basic earnings (loss) per share | ||||||||||||||||
| Continuing operations | $ | 0.82 | $ | 0.70 | $ | 3.17 | $ | 1.75 | ||||||||
| Discontinued operations | $ | 0.03 | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.09 | ) | |||||
| Net earnings | $ | 0.85 | $ | 0.67 | $ | 3.15 | $ | 1.66 | ||||||||
| Diluted earnings (loss) per share | ||||||||||||||||
| Continuing operations | $ | 0.80 | $ | 0.69 | $ | 3.11 | $ | 1.72 | ||||||||
| Discontinued operations | $ | 0.03 | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.08 | ) | |||||
| Net earnings | $ | 0.83 | $ | 0.65 | $ | 3.09 | $ | 1.64 | ||||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic | 132,571 | 133,592 | 133,205 | 133,210 | ||||||||||||
| Assuming dilution | 135,362 | 135,711 | 135,790 | 135,093 | ||||||||||||
| Cash dividends per share of common stock | $ | 0.20 | $ | 0.10 | $ | 0.80 | $ | 0.40 | ||||||||
| Depreciation, depletion, accretion and amortization | $ | 71,578 | $ | 70,054 | $ | 284,940 | $ | 274,823 | ||||||||
| Effective tax rate from continuing operations | 23.5 | % | 31.9 | % | 22.8 | % | 29.0 | % | ||||||||
| Table B | ||||||
| Vulcan Materials Company | ||||||
| and Subsidiary Companies | ||||||
| (in thousands) | ||||||
| Consolidated Balance Sheets | December 31 | December 31 | ||||||
| (Condensed and unaudited) | 2016 | 2015 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 258,986 | $ | 284,060 | ||||
| Restricted cash | 9,033 | 1,150 | ||||||
| Accounts and notes receivable | ||||||||
| Accounts and notes receivable, gross | 477,309 | 423,600 | ||||||
| Less: Allowance for doubtful accounts | (2,813 | ) | (5,576 | ) | ||||
| Accounts and notes receivable, net | 474,496 | 418,024 | ||||||
| Inventories | ||||||||
| Finished products | 293,619 | 297,925 | ||||||
| Raw materials | 22,648 | 21,765 | ||||||
| Products in process | 1,480 | 1,008 | ||||||
| Operating supplies and other | 27,869 | 26,375 | ||||||
| Inventories | 345,616 | 347,073 | ||||||
| Prepaid expenses | 31,726 | 34,284 | ||||||
| Total current assets | 1,119,857 | 1,084,591 | ||||||
| Investments and long-term receivables | 39,226 | 40,558 | ||||||
| Property, plant & equipment | ||||||||
| Property, plant & equipment, cost | 7,185,818 | 6,891,287 | ||||||
| Reserve for depreciation, depletion & amortization | (3,924,380 | ) | (3,734,997 | ) | ||||
| Property, plant & equipment, net | 3,261,438 | 3,156,290 | ||||||
| Goodwill | 3,094,824 | 3,094,824 | ||||||
| Other intangible assets, net | 769,052 | 766,579 | ||||||
| Other noncurrent assets | 169,753 | 158,790 | ||||||
| Total assets | $ | 8,454,150 | $ | 8,301,632 | ||||
| Liabilities | ||||||||
| Current maturities of long-term debt | 138 | 130 | ||||||
| Trade payables and accruals | 145,042 | 175,729 | ||||||
| Other current liabilities | 209,739 | 177,620 | ||||||
| Total current liabilities | 354,919 | 353,479 | ||||||
| Long-term debt | 1,982,751 | 1,980,334 | ||||||
| Noncurrent deferred income taxes | 702,853 | 681,096 | ||||||
| Deferred revenue | 198,388 | 207,660 | ||||||
| Other noncurrent liabilities | 642,763 | 624,875 | ||||||
| Total liabilities | $ | 3,881,674 | $ | 3,847,444 | ||||
| Equity | ||||||||
| Common stock, $1 par value | 132,339 | 133,172 | ||||||
| Capital in excess of par value | 2,807,995 | 2,822,578 | ||||||
| Retained earnings | 1,771,518 | 1,618,507 | ||||||
| Accumulated other comprehensive loss | (139,376 | ) | (120,069 | ) | ||||
| Total equity | $ | 4,572,476 | $ | 4,454,188 | ||||
| Total liabilities and equity | $ | 8,454,150 | $ | 8,301,632 | ||||
| Table C | |||||||
| Vulcan Materials Company | |||||||
| and Subsidiary Companies | |||||||
| (in thousands) | |||||||
| Twelve Months Ended | ||||||||
| Consolidated Statements of Cash Flows | December 31 | |||||||
| (Condensed and unaudited) | 2016 | 2015 | ||||||
| Operating Activities | ||||||||
| Net earnings | $ | 419,491 | $ | 221,177 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities | ||||||||
| Depreciation, depletion, accretion and amortization | 284,940 | 274,823 | ||||||
| Net gain on sale of property, plant & equipment and businesses | (15,431 | ) | (9,927 | ) | ||||
| Contributions to pension plans | (9,576 | ) | (14,047 | ) | ||||
| Share-based compensation expense | 20,670 | 18,248 | ||||||
| Excess tax benefits from share-based compensation | 0 | (18,376 | ) | |||||
| Deferred tax expense (benefit) | 33,591 | 3,069 | ||||||
| Cost of debt purchase | 0 | 67,075 | ||||||
| Changes in assets and liabilities before initial | ||||||||
| effects of business acquisitions and dispositions | (92,788 | ) | (23,120 | ) | ||||
| Other, net | 3,691 | 616 | ||||||
| Net cash provided by operating activities | $ | 644,588 | $ | 519,538 | ||||
| Investing Activities | ||||||||
| Purchases of property, plant & equipment | (350,148 | ) | (289,262 | ) | ||||
| Proceeds from sale of property, plant & equipment | 23,318 | 8,218 | ||||||
| Payment for businesses acquired, net of acquired cash | (32,537 | ) | (27,198 | ) | ||||
| Increase in restricted cash | (7,883 | ) | (1,150 | ) | ||||
| Other, net | 2,173 | (350 | ) | |||||
| Net cash used for investing activities | $ | (365,077 | ) | $ | (309,742 | ) | ||
| Financing Activities | ||||||||
| Proceeds from line of credit | 3,000 | 441,000 | ||||||
| Payment of line of credit | (3,000 | ) | (206,000 | ) | ||||
| Payment of current maturities and long-term debt | (130 | ) | (695,060 | ) | ||||
| Proceeds from issuance of long-term debt | 0 | 400,000 | ||||||
| Debt and line of credit issuance costs | (1,860 | ) | (7,382 | ) | ||||
| Purchases of common stock | (161,463 | ) | (21,475 | ) | ||||
| Dividends paid | (106,333 | ) | (53,214 | ) | ||||
| Proceeds from exercise of stock options | 0 | 72,971 | ||||||
| Share based compensation, shares withheld for taxes | (34,797 | ) | (16,160 | ) | ||||
| Excess tax benefits from share-based compensation | 0 | 18,376 | ||||||
| Other, net | (2 | ) | (65 | ) | ||||
| Net cash used for financing activities | $ | (304,585 | ) | $ | (67,009 | ) | ||
| Net increase (decrease) in cash and cash equivalents | (25,074 | ) | 142,787 | |||||
| Cash and cash equivalents at beginning of year | 284,060 | 141,273 | ||||||
| Cash and cash equivalents at end of year | $ | 258,986 | $ | 284,060 | ||||
| Table D | |||||||||||
| Segment Financial Data and Unit Shipments | |||||||||||
| (in thousands, except per unit data) | |||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Total Revenues | ||||||||||||||||
| Aggregates 1 | $ | 713,661 | $ | 710,087 | $ | 2,961,835 | $ | 2,777,758 | ||||||||
| Asphalt Mix | 123,750 | 119,758 | 512,310 | 530,692 | ||||||||||||
| Concrete | 87,335 | 72,852 | 330,125 | 299,252 | ||||||||||||
| Calcium | 2,129 | 2,143 | 8,860 | 8,596 | ||||||||||||
| Segment sales | $ | 926,875 | $ | 904,840 | $ | 3,813,130 | $ | 3,616,298 | ||||||||
| Aggregates intersegment sales | (53,900 | ) | (47,555 | ) | (220,463 | ) | (194,117 | ) | ||||||||
| Total revenues | $ | 872,975 | $ | 857,285 | $ | 3,592,667 | $ | 3,422,181 | ||||||||
| Gross Profit | ||||||||||||||||
| Aggregates | $ | 208,964 | $ | 229,851 | $ | 873,118 | $ | 755,666 | ||||||||
| Asphalt Mix | 21,654 | 18,252 | 97,682 | 78,225 | ||||||||||||
| Concrete | 8,209 | 4,872 | 26,543 | 20,152 | ||||||||||||
| Calcium | 878 | 955 | 3,474 | 3,490 | ||||||||||||
| Total | $ | 239,705 | $ | 253,930 | $ | 1,000,817 | $ | 857,533 | ||||||||
| Depreciation, Depletion, Accretion and Amortization | ||||||||||||||||
| Aggregates | $ | 59,343 | $ | 58,215 | $ | 236,472 | $ | 228,466 | ||||||||
| Asphalt Mix | 4,328 | 4,247 | 16,797 | 16,378 | ||||||||||||
| Concrete | 2,988 | 2,917 | 12,129 | 11,374 | ||||||||||||
| Calcium | 197 | 183 | 774 | 679 | ||||||||||||
| Other | 4,722 | 4,492 | 18,768 | 17,926 | ||||||||||||
| Total | $ | 71,578 | $ | 70,054 | $ | 284,940 | $ | 274,823 | ||||||||
| Average Unit Sales Price and Unit Shipments | ||||||||||||||||
| Aggregates | ||||||||||||||||
| Freight-adjusted revenues 2 | $ | 551,446 | $ | 545,115 | $ | 2,294,227 | $ | 2,112,460 | ||||||||
| Aggregates - tons | 43,124 | 44,708 | 181,374 | 178,272 | ||||||||||||
| Freight-adjusted sales price 3 | $ | 12.79 | $ | 12.19 | $ | 12.65 | $ | 11.85 | ||||||||
| Other Products | ||||||||||||||||
| Asphalt Mix - tons | 2,249 | 2,159 | 9,353 | 9,658 | ||||||||||||
| Asphalt Mix - sales price | $ | 53.65 | $ | 54.59 | $ | 53.45 | $ | 54.27 | ||||||||
| Ready-mixed concrete - cubic yards | 791 | 681 | 3,000 | 2,810 | ||||||||||||
| Ready-mixed concrete - sales price | $ | 110.39 | $ | 106.96 | $ | 110.02 | $ | 106.44 | ||||||||
| Calcium - tons | 77 | 83 | 326 | 321 | ||||||||||||
| Calcium - sales price | $ | 27.29 | $ | 25.90 | $ | 27.08 | $ | 26.70 | ||||||||
1 Includes crushed stone, sand and gravel, sand, other aggregates, as well as freight, delivery and transportation revenues, and other revenues related to services.
2 Freight-adjusted revenues are Aggregates segment sales excluding freight, delivery and transportation revenues, and other revenues related to services, such as, landfill tipping fees that are derived from our aggregates business.
3 Freight-adjusted sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments.
| Appendix 1 | |||||||||||
| 1. Supplemental Cash Flow Information | |||||||||||
| Supplemental information referable to the Condensed Consolidated Statements of Cash Flows is summarized below: | |||||||||||
| (in thousands) | |||||||||||
| Twelve Months Ended | ||||||||
| December 31 | ||||||||
| 2016 | 2015 | |||||||
| Cash Payments | ||||||||
| Interest (exclusive of amount capitalized) | $ | 135,039 | $ | 208,288 | ||||
| Income taxes | 102,849 | 53,623 | ||||||
| Noncash Investing and Financing Activities | ||||||||
| Accrued liabilities for purchases of property, plant & equipment | 26,676 | 31,883 | ||||||
| Amounts referable to business acquisitions | ||||||||
| Liabilities assumed | 798 | 2,645 | ||||||
| Fair value of noncash assets and liabilities exchanged | 0 | 20,000 | ||||||
2. Reconciliation of Non-GAAP Measures
Gross profit margin excluding freight and delivery 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. Likewise, we believe that this presentation is consistent with the basis by which investors analyze our operating results considering that freight and delivery services represent pass-through activities. Reconciliation of this metric to its nearest GAAP measure is presented below:
| Gross Profit Margin in Accordance with GAAP | |||||||||||
| (dollars in thousands) | |||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Gross profit | $ | 239,705 | $ | 253,930 | $ | 1,000,817 | $ | 857,533 | ||||||||
| Total revenues | $ | 872,975 | $ | 857,285 | $ | 3,592,667 | $ | 3,422,181 | ||||||||
| Gross profit margin | 27.5 | % | 29.6 | % | 27.9 | % | 25.1 | % | ||||||||
| Gross Profit Margin Excluding Freight and Delivery Revenues | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Gross profit | $ | 239,705 | $ | 253,930 | $ | 1,000,817 | $ | 857,533 | ||||||||
| Total revenues | $ | 872,975 | $ | 857,285 | $ | 3,592,667 | $ | 3,422,181 | ||||||||
| Freight and delivery revenues 1 | 128,608 | 134,633 | 535,930 | 538,127 | ||||||||||||
| Total revenues excluding freight and delivery revenues | $ | 744,367 | $ | 722,652 | $ | 3,056,737 | $ | 2,884,054 | ||||||||
| Gross profit margin excluding freight and delivery revenues | 32.2 | % | 35.1 | % | 32.7 | % | 29.7 | % | ||||||||
1 Includes freight to remote distribution sites.
| Appendix 2 | ||||||||||
| Reconciliation of Non-GAAP Measures (Continued) | ||||||||||
Aggregates segment gross profit margin as a percentage of freight-adjusted revenues is not a 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 meaningful to our investors as it excludes freight, delivery and transportation revenues 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. Incremental gross profit as a percentage of freight-adjusted revenues represents the year-over-year change in gross profit divided by the year-over-year change in freight-adjusted revenues. Reconciliations of these metrics to their nearest GAAP measures are presented below:
| Aggregates Segment Gross Profit Margin in Accordance with GAAP | ||||||||||
| (dollars in thousands) | ||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Aggregates segment | ||||||||||||||||
| Gross profit | $ | 208,964 | $ | 229,851 | $ | 873,118 | $ | 755,666 | ||||||||
| Segment sales | $ | 713,661 | $ | 710,087 | $ | 2,961,835 | $ | 2,777,758 | ||||||||
| Gross profit margin | 29.3 | % | 32.4 | % | 29.5 | % | 27.2 | % | ||||||||
| Incremental gross profit margin | N/A | 63.8 | % | |||||||||||||
| Aggregates Segment Gross Profit as a Percentage of Freight-Adjusted Revenues | |||||||||||
| (dollars in thousands) | |||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Aggregates segment | ||||||||||||||||
| Gross profit | $ | 208,964 | $ | 229,851 | $ | 873,118 | $ | 755,666 | ||||||||
| Segment sales | $ | 713,661 | $ | 710,087 | $ | 2,961,835 | $ | 2,777,758 | ||||||||
| Less | ||||||||||||||||
| Freight, delivery and transportation revenues 1 | $ | 157,868 | $ | 160,314 | $ | 651,885 | $ | 644,671 | ||||||||
| Other revenues | 4,347 | 4,658 | 15,723 | 20,627 | ||||||||||||
| Freight-adjusted revenues | $ | 551,446 | $ | 545,115 | $ | 2,294,227 | $ | 2,112,460 | ||||||||
| Gross profit as a percentage of freight-adjusted revenues | 37.9 | % | 42.2 | % | 38.1 | % | 35.8 | % | ||||||||
| Incremental gross profit as a percentage of freight-adjusted revenues | N/A | 64.6 | % | |||||||||||||
1 At the segment level, freight, delivery and transportation revenues include intersegment freight & delivery revenues, which are eliminated at the consolidated level.
Appendix 3
Reconciliation of Non-GAAP Measures (Continued)
GAAP does not define "Aggregates segment cash gross profit" and "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA). Thus, Aggregates segment cash gross profit and EBITDA should not be considered as alternatives to earnings measures defined by GAAP. We present these metrics for the convenience of investment professionals who use such metrics in their analyses and for shareholders who need to understand the metrics we use to assess performance. The investment community often uses these metrics to assess the operating performance of a company's businesses. We use Aggregates segment cash gross profit and EBITDA to assess the operating performance of our various business units and the consolidated company. Additionally, we adjust EBITDA for certain items to provide a more consistent comparison of performance from period to period. We do not use these metrics as a measure to allocate resources. Reconciliations of these metrics to their nearest GAAP measures are presented below:
Aggregates Segment Cash Gross Profit
Aggregates segment cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization (DDA&A) to Aggregates segment gross profit. Aggregates segment cash gross profit per ton is computed by dividing Aggregates segment cash gross profit by tons shipped.
(in thousands, except per ton data)
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31 | December 31 | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Aggregates segment | |||||||||||||||
| Gross profit | $ | 208,964 | $ | 229,851 | $ | 873,118 | $755,666 | ||||||||
| DDA&A | 59,343 | 58,215 | 236,472 | 228,466 | |||||||||||
| Aggregates segment cash gross profit | $ | 268,307 | $ | 288,066 | $ | 1,109,590 | $984,132 | ||||||||
| Unit shipments - tons | 43,124 | 44,708 | 181,374 | 178,272 | |||||||||||
| Aggregates segment cash gross profit per ton | $ | 6.22 | $ | 6.44 | $ | 6.12 | $5.52 | ||||||||
Appendix 4
Reconciliation of Non-GAAP Measures (Continued)
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization and excludes discontinued operations. We adjust EBITDA and Earnings Per Share (EPS) for certain items to provide a more consistent comparison of performance from period to period. Adjusted EBITDA for 2015 has been revised to conform with the 2016 presentation which no longer includes an adjustment for amortization of deferred revenue and charges associated with business development. Adjusting for amortization of deferred revenue is no longer meaningful as all periods presented include amortization of deferred revenue at amounts that are substantially equivalent. Additionally, we no longer exclude charges associated with business development as they represent normal recurring operating expenses.
| (in thousands, except per share data) | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Reconciliation of Net Earnings to EBITDA | ||||||||||||||||
| Net earnings | $ | 112,601 | $ | 88,887 | $ | 419,491 | $ | 221,177 | ||||||||
| Income tax expense | 33,276 | 43,766 | 124,851 | 94,943 | ||||||||||||
| Interest expense, net | 33,077 | 36,311 | 133,269 | 220,243 | ||||||||||||
| (Earnings) loss on discontinued operations, net of tax | (4,536 | ) | 4,672 | 2,915 | 11,737 | |||||||||||
| EBIT | $ | 174,418 | $ | 173,636 | $ | 680,526 | $ | 548,100 | ||||||||
| Depreciation, depletion, accretion and amortization | 71,578 | 70,054 | 284,940 | 274,823 | ||||||||||||
| EBITDA | $ | 245,996 | $ | 243,690 | $ | 965,466 | $ | 822,923 | ||||||||
| Adjusted EBITDA and Adjusted EBIT | ||||||||||||||||
| EBITDA | $ | 245,996 | $ | 243,690 | $ | 965,466 | $ | 822,923 | ||||||||
| Gain on sale of real estate and businesses | (16,216 | ) | (443 | ) | (16,216 | ) | (6,329 | ) | ||||||||
| Business interruption claims recovery, net of incentives | 162 | 0 | (11,014 | ) | 0 | |||||||||||
| Charges associated with divested operations | 215 | 352 | 16,983 | 7,202 | ||||||||||||
| Fair market value adjustments for acquired inventory | 0 | 0 | 0 | 965 | ||||||||||||
| Asset impairment | 0 | 0 | 10,506 | 5,190 | ||||||||||||
| Restructuring charges | 0 | 442 | 320 | 4,988 | ||||||||||||
| Adjusted EBITDA | $ | 230,157 | $ | 244,041 | $ | 966,045 | $ | 834,939 | ||||||||
| Depreciation, depletion, accretion and amortization | (71,578 | ) | (70,054 | ) | (284,940 | ) | (274,823 | ) | ||||||||
| Adjusted EBIT | $ | 158,579 | $ | 173,987 | $ | 681,105 | $ | 560,116 | ||||||||
| Adjusted Diluted Earnings Per Share From Continuing Operations (Adjusted Diluted EPS) | ||||||||||||||||
| Diluted EPS | $ | 0.80 | $ | 0.69 | $ | 3.11 | $ | 1.72 | ||||||||
| Items included in Adjusted EBITDA above | (0.08 | ) | 0.00 | 0.00 | 0.08 | |||||||||||
| Interest charges associated with debt refinancing | 0.00 | 0.00 | 0.00 | 0.35 | ||||||||||||
| Certain discrete tax items (including ASU 2016-09) | (0.03 | ) | 0.05 | (0.25 | ) | 0.01 | ||||||||||
| Adjusted Diluted EPS | $ | 0.69 | $ | 0.74 | $ | 2.86 | $ | 2.16 | ||||||||
The following reconciliation to the mid-point of the range of 2017 Projected EBITDA excludes adjustments for the future outcome of legal proceedings, charges associated with divested operations, asset impairment and other unusual gains and losses due to the uncertainty in predicting these items.
(in millions)
| 2017 Projected EBITDA | Mid-point | |||
| Net earnings | $ | 530 | ||
| Income tax expense | 205 | |||
| Interest expense, net | 140 | |||
| Loss on discontinued operations, net of tax | 0 | |||
| Depreciation, depletion, accretion and amortization | 300 | |||
| Projected EBITDA | $ | 1,175 | ||