EX-99.1 2 tv525852_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

July 25, 2019

FOR IMMEDIATE RELEASE

Investor Contact:  Mark Warren (205) 298-3220

Media Contact:   Janet Kavinoky (205) 298-3220

 

VULCAN ANNOUNCES SECOND QUARTER 2019 RESULTS

 

EPS from Continuing Operations Increases 23 Percent to $1.48 per Diluted Share

Aggregates Unit Profitability Expands

 

Birmingham, Alabama – July 25, 2019 – Vulcan Materials Company (NYSE:VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter ended June 30, 2019.

 

Net earnings were $198 million, up 24 percent, and Adjusted EBITDA was $372 million, up 15 percent compared to last year’s second quarter. The double-digit growth was driven primarily by a 16 percent increase in Aggregates segment gross profit. For the quarter, aggregates shipments increased 4 percent year-over-year, and freight-adjusted aggregates pricing increased 5.9 percent (5.4 percent mix-adjusted). Same-store aggregates gross profit incremental flow-through rate for the trailing-twelve months was 65 percent.

 

Tom Hill, Chairman and Chief Executive Officer, said, “We continued to execute well. Our industry-leading unit profitability in aggregates increased from $5.16 to $5.74 per ton, an 11 percent increase compared to the prior year’s second quarter. We remain keenly focused on creating long-term value by compounding our aggregates unit margins, while continuing to operate safely. Shipment growth in the second quarter was solid and consistent with full-year expectations. Importantly, price improvements were widespread. These results further highlight the strength of our aggregates-focused business, which serves Vulcan’s attractive long-term growth markets.

 

“Our key markets are benefitting from robust growth in public construction demand, driven by highways. State-level transportation funding increases signed into law in recent years have led to new highway construction starts that are 21 percent higher than two years ago. This significant increase will support continued shipment growth into transportation-related end markets in the coming years. Shipments into private construction continue to grow as well. Aggregates pricing momentum continues to improve, consistent with our expectations. The continuing improvement in unit profitability is a direct result of our focus on operating disciplines and compounding pricing improvements. As a result, we reiterate our full-year expectations for 2019 earnings from continuing operations of between $4.55 and $5.05 per diluted share and Adjusted EBITDA of between $1.250 and $1.330 billion.”

 

 

Page 2

July 25, 2019

FOR IMMEDIATE RELEASE

 

Highlights as of June 30, 2019 include:

 

   Second Quarter   Year-to-Date   Trailing Twelve Months 
Amounts in millions, except per unit data  2019   2018   2019   2018   2019   2018 
Total revenues  $1,327.7   $1,200.2   $2,324.2   $2,054.6   $4,652.4   $4,126.8 
Gross profit  $370.5   $323.2   $562.2   $482.5   $1,180.6   $1,027.8 
Aggregates segment                              
Segment sales  $1,062.1   $956.3   $1,897.0   $1,655.9   $3,754.8   $3,284.1 
Freight-adjusted revenues  $806.4   $730.5   $1,435.1   $1,259.9   $2,842.4   $2,524.4 
Gross profit  $329.2   $283.5   $514.9   $431.7   $1,075.1   $896.0 
Shipments (tons)   57.3    55.0    102.9    95.5    208.8    192.5 
Freight-adjusted sales price per ton  $14.07   $13.29   $13.94   $13.19   $13.61   $13.12 
Gross profit per ton  $5.74   $5.16   $5.00   $4.52   $5.15   $4.66 
Asphalt, Concrete & Calcium segment gross profit  $41.3   $39.7   $47.2   $50.8   $105.5   $131.8 
Selling, Administrative and General (SAG)  $95.7   $89.0   $186.0   $167.4   $351.9   $326.9 
SAG as % of Total Revenues   7.2%   7.4%   8.0%   8.1%   7.6%   7.9%
Earnings from continuing operations before income taxes  $245.5   $200.3   $320.1   $248.8   $694.6   $412.4 
Net earnings  $197.6   $159.7   $260.9   $212.6   $564.0   $648.8 
Adjusted EBIT  $278.5   $239.2   $382.0   $325.6   $841.9   $713.0 
Adjusted EBITDA  $372.0   $324.8   $564.7   $492.7   $1,203.8   $1,037.6 
Earnings from continuing operations per diluted share  $1.48   $1.20   $1.97   $1.59   $4.25   $4.84 
Adjusted earnings from continuing operations per diluted share  $1.48   $1.23   $1.94   $1.66   $4.33   $3.45 

 

Segment Results

 

Aggregates

Second quarter segment sales increased 11 percent, and gross profit increased 16 percent to $329 million. Unit margins increased $0.58 per ton, or 11 percent, to $5.74 per ton. This improvement resulted from solid growth in shipments, price improvements and execution of operating disciplines and efficiencies.

 

Second quarter aggregates shipments increased 4 percent (3 percent on a same-store basis) versus the prior year quarter. The solid underlying demand fundamentals of increased public funding for highways, along with employment and population growth, helped drive shipment strength across most of the Company’s footprint, particularly in the Southeast and Mid-Atlantic. Wet weather delayed shipments across Illinois, Tennessee and Texas. California overcame another quarter of wet weather to realize shipment growth compared to the prior year. A healthy demand environment, led by transportation-related construction, is driving volume growth and price improvement.

 

All of the Company’s key markets reported year-over-year price growth. For the quarter, freight-adjusted average sales price increased 5.9 percent versus the prior year’s quarter. Mix-adjusted average sales price increased 5.4 percent. Positive trends in backlogged project work, along with demand visibility and customer confidence, support similar price improvement throughout the remainder of 2019.

 

Page 3

July 25, 2019

FOR IMMEDIATE RELEASE

 

Second quarter same-store unit cost of sales (freight-adjusted) increased less than 2 percent compared to the prior year quarter. Trailing-twelve month same-store incremental gross profit flow-through rate was 65 percent, which is slightly ahead of longer-term expectations of 60 percent. Quarterly gross profit flow-through rates can vary widely from quarter to quarter; therefore, the Company evaluates this metric on a trailing-twelve month basis. The Company remains focused on compounding improvements in unit margins throughout the cycle through fixed cost leverage, price growth and operating efficiencies.

 

Asphalt, Concrete and Calcium

Asphalt segment gross profit was $28 million for the second quarter, an increase of $2 million from the prior year. Asphalt shipments increased 8 percent (5 percent same-store), and asphalt mix selling prices increased 8 percent, or $4.34 per ton, in the second quarter. The average unit cost for liquid asphalt was 16 percent higher than the prior year quarter. Liquid asphalt costs have remained relatively stable through the first half of the year and have allowed pricing gains to begin offsetting the higher unit costs for liquid asphalt.

 

Concrete segment gross profit was $13 million, approximating the prior year quarter. Shipments were 0.8 million cubic yards, down from 0.9 million cubic yards in the prior year. Average selling prices increased 5 percent and led to modest gains in material margins.

 

Calcium segment gross profit was $0.8 million, a slight increase versus the prior year quarter.

 

Capital Allocation and Financial Position

 

Capital expenditures in the second quarter included $64 million of core operating and maintenance capital to improve or replace existing property, plant and equipment. In addition, the Company invested $40 million in internal growth projects to secure new aggregates reserves, develop new production sites, enhance the Company’s distribution capabilities and support the targeted growth of its asphalt operations. Through the first six months of the year, core operating and maintenance capital investment totaled $131 million, and internal growth projects investment was $95 million. The Company’s full-year expectations for 2019 remain unchanged at $250 million on maintenance capital and $200 million on internal growth projects.

 

During the quarter, the Company returned $41 million to shareholders through dividends, an 11 percent increase versus the prior year quarter. No shares were repurchased during the quarter. At quarter-end, total debt was $2.9 billion, or 2.4 times trailing-twelve month Adjusted EBITDA.

 

Selling, Administrative and General (SAG) Expenses

 

SAG expense in the quarter was $96 million versus $89 million in the prior year quarter. The year-over-year increase was due mainly to compensation related expense, including incentives that are tied to earnings expectations and the share price. Additionally, we have made investments in people and processes to accelerate the benefits derived from our sales and operational initiatives. On a trailing-twelve month basis, SAG expense as a percentage of total revenues was 7.6 percent, 30 basis points lower than the prior year period. The Company remains focused on further leveraging its overhead structure.

 

Page 4

July 25, 2019

FOR IMMEDIATE RELEASE

 

Outlook

 

Regarding the Company’s full-year outlook for 2019, Mr. Hill stated, “Overall demand growth in Vulcan markets remains healthy. Public demand growth, led by highways, continues to be robust across our footprint. Current shipments into private construction end markets continue to benefit from the ongoing economic recovery. Demand fundamentals, including population and employment growth, underpin long-term growth in residential and private nonresidential construction. We delivered good incremental earnings in the first half of this year. Unit profitability in Aggregates increased 11 percent during this period, and we are well positioned to carry that momentum forward through the remainder of the year. For the full year, we expect earnings from continuing operations of between $4.55 and $5.05 per diluted share and Adjusted EBITDA of between $1.250 and $1.330 billion.”

 

Conference Call

 

Vulcan will host a conference call at 10:00 a.m. CT on July 25, 2019. 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 800-458-4121, or 720-543-0206 if outside the U.S., approximately 10 minutes before the scheduled start. The conference ID is 3003613. 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.

 

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.

 

Page 5

July 25, 2019

FOR IMMEDIATE RELEASE

 

Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary significantly from those expressed in or implied by the forward-looking statements. The following risks related to Vulcan's business, among others, could cause actual results to differ materially from those described in the forward-looking statements: general economic and business conditions; 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 for Vulcan’s ticketing, procurement, financial statements and other processes could adversely affect operations in the event 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 materials 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; 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 cleanup costs and other liabilities relating to existing and/or divested businesses; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully integrate acquisitions; the effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan’s products are distributed; and other assumptions, risks and uncertainties detailed from time to time in the reports filed by Vulcan with the SEC. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement.  Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this document except as required by law.

 

 

 

  

Table A

 

Vulcan Materials Company

and Subsidiary Companies

 

   (in thousands, except per share data) 
   Three Months Ended   Six Months Ended 
Consolidated Statements of Earnings  June 30   June 30 
(Condensed and unaudited)  2019   2018   2019   2018 
                 
Total revenues  $1,327,682   $1,200,151   $2,324,193   $2,054,625 
Cost of revenues   957,180    876,967    1,762,016    1,572,106 
Gross profit   370,502    323,184    562,177    482,519 
Selling, administrative and general expenses   95,689    89,043    185,957    167,383 
Gain on sale of property, plant & equipment and businesses   3,451    2,106    10,748    6,270 
Other operating expense, net   (2,190)   (5,994)   (6,461)   (9,969)
Operating earnings   276,074    230,253    380,507    311,437 
Other nonoperating income, net   2,466    3,339    5,595    8,421 
Interest expense, net   33,035    33,244    65,969    71,018 
Earnings from continuing operations before income taxes   245,505    200,348    320,133    248,840 
Income tax expense   47,598    40,046    58,291    35,143 
Earnings from continuing operations   197,907    160,302    261,842    213,697 
Loss on discontinued operations, net of tax   (349)   (650)   (985)   (1,066)
Net earnings  $197,558   $159,652   $260,857   $212,631 
                     
Basic earnings (loss) per share                    
Continuing operations  $1.50   $1.21   $1.98   $1.61 
Discontinued operations  $(0.01)  $0.00   $(0.01)  $(0.01)
Net earnings  $1.49   $1.21   $1.97   $1.60 
                     
Diluted earnings (loss) per share                    
Continuing operations  $1.48   $1.20   $1.97   $1.59 
Discontinued operations  $0.00   $(0.01)  $(0.01)  $(0.01)
Net earnings  $1.48   $1.19   $1.96   $1.58 
                     
Weighted-average common shares outstanding                    
Basic   132,269    132,437    132,157    132,563 
Assuming dilution   133,354    134,051    133,199    134,280 
Depreciation, depletion, accretion and amortization  $93,497   $85,633   $182,677   $167,072 
Effective tax rate from continuing operations   19.4%   20.0%   18.2%   14.1%

 

 

 

 

                Table B
Vulcan Materials Company            
and Subsidiary Companies            

 

           (in thousands) 
Consolidated Balance Sheets  June 30   December 31   June 30 
(Condensed and unaudited)  2019   2018   2018 
Assets               
Cash and cash equivalents  $26,031   $40,037   $55,059 
Restricted cash   491    4,367    6,056 
Accounts and notes receivable               
Accounts and notes receivable, gross   700,175    542,868    640,742 
Allowance for doubtful accounts   (2,844)   (2,090)   (2,628)
Accounts and notes receivable, net   697,331    540,778    638,114 
Inventories               
Finished products   377,578    372,604    343,948 
Raw materials   31,137    27,942    29,684 
Products in process   6,332    3,064    1,882 
Operating supplies and other   26,376    25,720    28,250 
Inventories   441,423    429,330    403,764 
Other current assets   89,739    64,633    80,209 
Total current assets   1,255,015    1,079,145    1,183,202 
Investments and long-term receivables   51,667    44,615    41,989 
Property, plant & equipment               
Property, plant & equipment, cost   8,613,500    8,457,619    8,241,164 
Allowances for depreciation, depletion & amortization   (4,322,818)   (4,220,312)   (4,134,750)
Property, plant & equipment, net   4,290,682    4,237,307    4,106,414 
Operating lease right-of-use assets, net   418,896    0    0 
Goodwill   3,167,061    3,165,396    3,163,954 
Other intangible assets, net   1,076,986    1,095,378    1,156,898 
Other noncurrent assets   220,457    210,289    192,327 
Total assets  $10,480,764   $9,832,130   $9,844,784 
Liabilities               
Current maturities of long-term debt   24    23    23 
Short-term debt   137,000    133,000    360,000 
Trade payables and accruals   284,875    216,473    231,913 
Other current liabilities   241,689    253,054    219,860 
Total current liabilities   663,588    602,550    811,796 
Long-term debt   2,781,826    2,779,357    2,776,906 
Deferred income taxes, net   601,189    567,283    545,756 
Deferred revenue   182,666    186,397    188,826 
Operating lease liabilities   396,952    0    0 
Other noncurrent liabilities   483,096    493,640    500,870 
Total liabilities  $5,109,317   $4,629,227   $4,824,154 
Equity               
Common stock, $1 par value   132,231    131,762    132,268 
Capital in excess of par value   2,787,002    2,798,486    2,788,486 
Retained earnings   2,623,747    2,444,870    2,244,545 
Accumulated other comprehensive loss   (171,533)   (172,215)   (144,669)
Total equity  $5,371,447   $5,202,903   $5,020,630 
Total liabilities and equity  $10,480,764   $9,832,130   $9,844,784 

 

 

 

 

              Table C
Vulcan Materials Company        
and Subsidiary Companies        

 

       (in thousands) 
   Six Months Ended 
Consolidated Statements of Cash Flows  June 30 
(Condensed and unaudited)  2019   2018 
Operating Activities          
Net earnings  $260,857   $212,631 
Adjustments to reconcile net earnings to net cash provided by operating activities          
Depreciation, depletion, accretion and amortization   182,677    167,072 
Net gain on sale of property, plant & equipment and businesses   (10,748)   (6,270)
Contributions to pension plans   (4,638)   (104,794)
Share-based compensation expense   14,370    14,763 
Deferred tax expense (benefit)   34,816    40,549 
Cost of debt purchase   0    6,922 
Changes in assets and liabilities before initial effects of business acquisitions and dispositions   (201,256)   (55,415)
Other, net   25,838    302 
Net cash provided by operating activities  $301,916   $275,760 
Investing Activities          
Purchases of property, plant & equipment   (225,837)   (247,166)
Proceeds from sale of property, plant & equipment   11,200    8,523 
Proceeds from sale of businesses   1,744    11,256 
Payment for businesses acquired, net of acquired cash   1,122    (218,996)
Other, net   (4,577)   (10,226)
Net cash used for investing activities  $(216,348)  $(456,609)
Financing Activities          
Proceeds from short-term debt   360,100    506,200 
Payment of short-term debt   (356,100)   (146,200)
Payment of current maturities and long-term debt   (11)   (892,044)
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   0    (74,921)
Dividends paid   (81,927)   (74,196)
Share-based compensation, shares withheld for taxes   (25,512)   (31,386)
Net cash provided by (used for) financing activities  $(103,450)  $95,318 
Net decrease in cash and cash equivalents and restricted cash   (17,882)   (85,531)
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 period  $26,522   $61,115 

 

 

 

 

                      Table D
Segment Financial Data and Unit Shipments    

 

(in thousands, except per unit data)  
   Three Months Ended   Six Months Ended 
   June 30   June 30 
   2019   2018   2019   2018 
Total Revenues                    
Aggregates 1  $1,062,061   $956,265   $1,897,026   $1,655,922 
Asphalt 2   247,163    211,828    379,253    315,663 
Concrete   103,768    106,723    187,405    207,685 
Calcium   2,003    2,282    3,954    4,224 
Segment sales  $1,414,995   $1,277,098   $2,467,638   $2,183,494 
Aggregates intersegment sales   (87,313)   (76,947)   (143,445)   (128,869)
Total revenues  $1,327,682   $1,200,151   $2,324,193   $2,054,625 
Gross Profit                    
Aggregates  $329,215   $283,476   $514,931   $431,697 
Asphalt   27,583    25,750    24,311    25,996 
Concrete   12,887    13,191    21,450    23,511 
Calcium   817    767    1,485    1,315 
Total  $370,502   $323,184   $562,177   $482,519 
Depreciation, Depletion, Accretion and Amortization                    
Aggregates  $75,760   $69,738   $148,281   $135,691 
Asphalt   8,884    7,298    17,434    14,300 
Concrete   3,327    3,049    6,291    6,463 
Calcium   58    70    118    139 
Other   5,468    5,478    10,553    10,479 
Total  $93,497   $85,633   $182,677   $167,072 
Average Unit Sales Price and Unit Shipments                    
Aggregates                    
Freight-adjusted revenues 3  $806,444   $730,513   $1,435,051   $1,259,927 
Aggregates - tons   57,310    54,957    102,947    95,489 
Freight-adjusted sales price 4  $14.07   $13.29   $13.94   $13.19 
Other Products                    
Asphalt Mix - tons   3,595    3,330    5,617    5,149 
Asphalt Mix - sales price  $58.31   $53.97   $57.45   $53.69 
                     
Ready-mixed concrete - cubic yards   815    876    1,484    1,692 
Ready-mixed concrete - sales price  $126.12   $120.56   $125.14   $121.48 
                     
Calcium - tons   73    80    141    148 
Calcium - sales price  $27.50   $28.11   $27.89   $28.49 

 

1Includes 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.
2Includes product sales, as well as service revenues from our asphalt construction paving business.
3Freight-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.
4Freight-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   Six Months Ended 
   June 30   June 30 
   2019   2018   2019   2018 
Aggregates segment                    
Segment sales  $1,062,061   $956,265   $1,897,026   $1,655,922 
Less:   Freight & delivery revenues 1   241,354    213,474    436,508    372,417 
Other revenues   14,263    12,278    25,467    23,578 
Freight-adjusted revenues  $806,444   $730,513   $1,435,051   $1,259,927 
Unit shipment - tons   57,310    54,957    102,947    95,489 
Freight-adjusted sales price  $14.07   $13.29   $13.94   $13.19 

 

1At 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 (we do not generate a profit associated with the transportation component of the selling price of the product). 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   Six Months Ended 
   June 30   June 30 
   2019   2018   2019   2018 
Aggregates segment                    
Gross profit  $329,215   $283,476   $514,931   $431,697 
Segment sales  $1,062,061   $956,265   $1,897,026   $1,655,922 
Gross profit margin   31.0%   29.6%   27.1%   26.1%
Incremental gross profit margin   43.2%        34.5%     

 

Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP)

 

   (dollars in thousands) 
   Three Months Ended   Six Months Ended 
   June 30   June 30 
   2019   2018   2019   2018 
Aggregates segment                    
Gross profit  $329,215   $283,476   $514,931   $431,697 
Segment sales  $1,062,061   $956,265   $1,897,026   $1,655,922 
Less:    Freight & delivery revenues 1   241,354    213,474    436,508    372,417 
Segment sales excluding freight & delivery  $820,707   $742,791   $1,460,518   $1,283,505 
Gross profit flow-through rate   40.1%   38.2%   35.3%   33.6%
Incremental gross profit flow-through rate   58.7%        47.0%     

 

1At 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   Six Months Ended 
   June 30   June 30 
   2019   2018   2019   2018 
Aggregates segment                    
Gross profit  $329,215   $283,476   $514,931   $431,697 
Depreciation, depletion, accretion and amortization   75,760    69,738    148,281    135,691 
Aggregates segment cash gross profit  $404,975   $353,214   $663,212   $567,388 
Unit shipments - tons   57,310    54,957    102,947    95,489 
Aggregates segment cash gross profit per ton  $7.07   $6.43   $6.44   $5.94 

 

 

 

 

Appendix 2

 

Reconciliation of Non-GAAP Measures (Continued)

 

GAAP does not define "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) and it should not be considered as an alternative to earnings measures defined by GAAP. We use this metric to assess the operating performance of our business and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of earnings performance from period to period. Reconciliation of this metric to its nearest GAAP measure is presented below:

 

EBITDA and Adjusted EBITDA

 

       (in thousands) 
   Three Months Ended   Six Months Ended       TTM 
   June 30   June 30   June 30 
   2019   2018   2019   2018   2019   2018 
Net earnings  $197,558   $159,652   $260,857   $212,631   $564,031   $648,756 
Income tax expense (benefit)   47,598    40,046    58,291    35,143    128,597    (239,409)
Interest expense, net   33,035    33,244    65,969    71,018    132,374    289,572 
Loss on discontinued operations, net of tax   349    650    985    1,066    1,955    3,060 
EBIT  $278,540   $233,592   $386,102   $319,858   $826,957   $701,979 
Depreciation, depletion, accretion and amortization   93,497    85,633    182,677    167,072    361,851    324,698 
EBITDA  $372,037   $319,225   $568,779   $486,930   $1,188,808   $1,026,677 
Gain on sale of businesses   0    0    (4,064)   (2,929)   (4,064)   (13,437)
Property donation   0    0    0    0    0    4,290 
Business interruption claims recovery   0    0    0    (1,694)   (559)   (1,694)
Charges associated with divested operations   0    0    0    0    18,545    1,661 
Business development 1   0    4,466    0    4,982    220    8,046 
One-time employee bonuses   0    0    0    0    0    6,716 
Restructuring charges   0    1,146    0    5,390    829    5,390 
Adjusted EBITDA  $372,037   $324,837   $564,715   $492,679   $1,203,779   $1,037,649 
Depreciation, depletion, accretion and amortization   (93,497)   (85,633)   (182,677)   (167,072)   (361,851)   (324,698)
Adjusted EBIT  $278,540   $239,204   $382,038   $325,607   $841,928   $712,951 

 

1Represents non-routine charges associated with acquisitions including the cost impact of purchase accounting inventory valuations.

 

Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted EPS from continuing operations to provide a more consistent comparison of earnings performance from period to period.

 

Adjusted Diluted EPS from Continuing Operations (Adjusted Diluted EPS)

 

   Three Months Ended   Six Months Ended   TTM 
   June 30   June 30   June 30 
   2019   2018   2019   2018   2019   2018 
Diluted EPS from continuing operations  $1.48   $1.20   $1.97   $1.59   $4.25   $4.84 
Items included in Adjusted EBITDA above   0.00    0.03    (0.03)   0.03    0.08    0.06 
Debt refinancing costs   0.00    0.00    0.00    0.04    0.00    0.75 
Tax reform income tax savings   0.00    0.00    0.00    0.00    0.00    (1.99)
Alabama NOL carryforward valuation allowance   0.00    0.00    0.00    0.00    0.00    (0.21)
Adjusted Diluted EPS  $1.48   $1.23   $1.94   $1.66   $4.33   $3.45 

 

The following reconciliation to the mid-point of the range of 2019 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:

 

2019 Projected EBITDA    
   (in millions) 
   Mid-point 
Net earnings  $640 
Income tax expense   160 
Interest expense, net   130 
Discontinued operations, net of tax   0 
Depreciation, depletion, accretion and amortization   360 
Projected EBITDA  $1,290