Vulcan Reports Second Quarter Results
BIRMINGHAM, Ala., Aug. 4, 2020 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today announced results for the quarter ended June 30, 2020.
Tom Hill, Chairman and Chief Executive Officer, said, "Our second quarter results demonstrate the resiliency of our best in class aggregates-led business and reflect the proactive response by our employees to the COVID-19 pandemic. Our operational execution was integral to widespread gains in unit profitability, despite some disruptions to construction activity during the quarter. I am proud of our employees' ability to quickly adapt to the necessary additional safety protocols we have put in place in this environment, while maintaining their focus on operating safely and positioning Vulcan for continued success."
Earnings from continuing operations were $211 million, or $1.58 per diluted share, an increase of 7 percent from the prior year's second quarter. Adjusted EBITDA was $408 million, an increase of 10 percent. The year-over-year earnings improvement was driven primarily by effective cost control and price growth in aggregates. Second quarter segment earnings improved in each major product line. Despite a 2 percent decline in aggregates shipments, mix-adjusted pricing improved 3.3 percent, and freight-adjusted unit cost of sales decreased 1 percent. As a result, aggregates unit gross profit increased 9 percent to $6.25 per ton.
Mr. Hill went on to say, "Certain leading indicators of demand have shown signs of improvement, and our quote activity remains robust. However, our visibility beyond the near-term remains restricted due to the evolving effects of the pandemic. The recent surge in new COVID-19 cases could impact the progress made so far if new restrictions on economic activity are put in place. We believe this uncertainty could continue to weigh on construction activity in the second half of the year, making it difficult to predict the level and timing of shipments. We are continuously reviewing our operating plans to ensure an effective response to demand shifts. Whatever the demand, we remain confident in our ability to successfully navigate the changing environment."
Highlights as of June 30, 2020 include:
Second Quarter Year-to-Date Trailing-Twelve Months
Amounts in millions,
except per unit
data 2020 2019 2020 2019 2020 2019
---
Total revenues $1,322.6 $1,327.7 $2,371.8 $2,324.2 $4,976.7 $4,652.4
Gross profit $396.5 $370.5 $598.2 $562.2 $1,292.0 $1,180.6
Aggregates segment
Segment sales $1,070.6 $1,062.1 $1,938.8 $1,897.0 $4,032.1 $3,754.8
Freight-adjusted
revenues $814.7 $806.4 $1,462.7 $1,435.1 $3,041.9 $2,842.4
Gross profit $351.2 $329.2 $545.3 $514.9 $1,177.0 $1,075.1
Shipments (tons) 56.2 57.3 101.2 102.9 213.8 208.8
Freight-adjusted
sales price per ton $14.50 $14.07 $14.45 $13.94 $14.23 $13.61
Gross profit per ton $6.25 $5.74 $5.39 $5.00 $5.51 $5.15
Asphalt, Concrete &
Calcium segment
gross profit $45.4 $41.3 $52.9 $47.2 $115.0 $105.5
Selling,
Administrative and
General (SAG) $91.2 $95.7 $177.6 $186.0 $362.2 $351.9
SAG as % of Total
revenues 6.9% 7.2% 7.5% 8.0% 7.3% 7.6%
Earnings from
continuing
operations before
income taxes $272.3 $245.5 $344.5 $320.1 $782.1 $694.6
Net earnings $209.9 $197.6 $270.2 $260.9 $627.0 $564.0
Adjusted EBIT $308.3 $278.5 $413.9 $382.0 $927.3 $841.9
Adjusted EBITDA $407.8 $372.0 $608.8 $564.7 $1,314.2 $1,203.8
Earnings from
continuing
operations per
diluted share $1.58 $1.48 $2.03 $1.97 $4.73 $4.25
Adjusted earnings
from continuing
operations per
diluted share $1.60 $1.48 $2.06 $1.94 $4.82 $4.33
Segment Results
Aggregates
Second quarter segment sales increased 1 percent, and gross profit increased 7 percent to $351 million, or $6.25 per ton. The improvement resulted from widespread growth in pricing and effective cost control.
Second quarter aggregates shipments were 2 percent lower than the prior year's second quarter. Shipping patterns varied widely across the Company's footprint as a result of economic uncertainty and wet weather but were generally supported by healthy backlogs and our essential business status in our markets. Key markets in the Southeast and coastal Texas were negatively affected by wet weather while shipments in California were reduced by tighter restrictions on shelter-in-place. Shipments were higher in Georgia, Illinois, Tennessee and Texas. On a mix-adjusted basis, all of the Company's key markets reported year-over-year price growth. For the quarter, freight-adjusted average sales price increased 3 percent versus the prior year's quarter, inclusive of 30 basis points of unfavorable mix.
Freight-adjusted unit cost of sales decreased 1 percent versus the prior year's second quarter. Effective operating efficiencies helped mitigate the cost impact of lower sales volumes and a reduction in inventory. Actions taken across the Company's more than 360 locations reduced cash spending and controlled inventories in areas most impacted by shelter-in-place orders. The associated cost of reducing inventory offset the majority of a $14 million earnings benefit from lower diesel fuel costs.
Unit profitability improvements were widespread across the Company's footprint. Cash gross profit per ton increased 9 percent from the prior year's second quarter to $7.69 per ton. For the trailing-twelve months, cash gross profit was $6.98 per ton.
Asphalt, Concrete and Calcium
Asphalt segment gross profit was $30 million, an improvement of $3 million from the prior year. The year-over-year improvement was driven by higher material margins (sales price less cost of raw materials). Although asphalt volumes in the second quarter declined 5 percent versus the prior year, we captured the benefit of lower liquid asphalt costs.
Concrete segment gross profit was $14 million compared with $13 million in the prior year's second quarter. Shipments decreased 4 percent versus the prior year, and average selling prices increased 1 percent compared to the prior year.
Calcium segment gross profit was $0.7 million, down slightly from the prior year quarter.
Selling, Administrative and General (SAG)
SAG expense declined 5 percent to $91 million in the quarter due mostly to continued execution of cost reduction initiatives, lower incentive compensation costs and general cost control in response to COVID-19. This year-over-year decline resulted in a 31 basis point improvement as a percentage of total revenues. On a trailing-twelve month basis, SAG expense as a percentage of total revenues stands at 7.3 percent. The Company remains focused on further leveraging its overhead cost structure.
Financial Position, Liquidity and Capital Allocation
Capital expenditures in the second quarter were $68 million ($177 million year-to-date). The Company continues to expect to spend between $275 and $325 million on capital this year, most of which is for core operating and maintenance projects. Given that the economic outlook is evolving quickly, we will continue to review our plans and adjust as needed, being thoughtful about preserving liquidity.
For the quarter, the Company returned $45 million to shareholders through dividends, a 10 percent increase versus the prior year. The Company did not repurchase any shares in the quarter.
At quarter-end, total debt to trailing-twelve month Adjusted EBITDA was 2.5 times (1.9 times on a net debt basis reflecting $817 million of cash on hand). The Company's weighted-average debt maturity was 14 years, and the effective weighted-average interest rate was 4.1 percent.
On a trailing twelve month basis, return on invested capital increased 100 basis points as solid earnings growth was leveraged with disciplined capital management.
Outlook
Regarding the Company's outlook, Mr. Hill stated, "Although the economic environment is showing signs of improvement, the pandemic's effect on demand and the broader economy remains unclear. As a result, we are not reinstating earnings guidance at this time.
"While demand is subject to market fluctuations outside of our control, we remain focused on those things we can control such as our cost and our pricing discipline, both of which help to compound our unit margins. Our year-to-date results demonstrate those capabilities. On a trailing-twelve month basis our cash gross profit in aggregates is nearly $7 per ton. Our operating plans are underpinned by our four strategic initiatives (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing), a healthy balance sheet, strong liquidity, and the engagement of our people."
Conference Call
Vulcan will host a conference call at 10:00 a.m. CDT on August 4, 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 833-962-1439, or 832-900-4623 if outside the U.S., approximately 10 minutes before the scheduled start. The conference ID is 8095639. 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 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.
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; a pandemic, epidemic or other public health emergency, such as the recent outbreak of COVID-19; 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 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 Six Months Ended
Consolidated Statements of Earnings June 30 June 30
(Condensed and unaudited) 2020 2019 2020 2019
---
Total revenues $1,322,575 $1,327,682 $2,371,817 $2,324,193
Cost of revenues 926,056 957,180 1,773,575 1,762,016
---
Gross profit 396,519 370,502 598,242 562,177
Selling, administrative and general expenses 91,205 95,689 177,635 185,957
Gain (loss) on sale of property, plant & equipment
and businesses (258) 3,451 741 10,748
Other operating expense, net (6,160) (2,190) (10,151) (6,461)
---
Operating earnings 298,896 276,074 411,197 380,507
Other nonoperating income (expense), net 7,367 2,466 (1,969) 5,595
Interest expense, net 33,954 33,035 64,727 65,969
---
Earnings from continuing operations
before income taxes 272,309 245,505 344,501 320,133
Income tax expense 61,352 47,598 73,546 58,291
---
Earnings from continuing operations 210,957 197,907 270,955 261,842
Loss on discontinued operations, net of tax (1,041) (349) (781) (985)
---
Net earnings $209,916 $197,558 $270,174 $260,857
---
Basic earnings (loss) per share
Continuing operations $1.59 $1.50 $2.04 $1.98
Discontinued operations ($0.01) ($0.01) $0.00 ($0.01)
Net earnings $1.58 $1.49 $2.04 $1.97
Diluted earnings (loss) per share
Continuing operations $1.58 $1.48 $2.03 $1.97
Discontinued operations $0.00 $0.00 $0.00 ($0.01)
Net earnings $1.58 $1.48 $2.03 $1.96
Weighted-average common shares outstanding
Basic 132,552 132,269 132,560 132,157
Assuming dilution 133,115 133,354 133,154 133,199
Depreciation, depletion, accretion and amortization $99,470 $93,497 $194,951 $182,677
Effective tax rate from continuing operations 22.5% 19.4% 21.3% 18.2%
---
Table B
Vulcan Materials Company
and Subsidiary Companies
(in thousands)
Consolidated Balance Sheets June 30
December 31
June 30
(Condensed and unaudited) 2020 2019 2019
---
Assets
Cash and cash equivalents $816,765 $271,589 $26,031
Restricted cash 434 2,917 491
Accounts and notes receivable
Accounts and notes receivable, gross 699,320 573,241 700,175
Allowance for doubtful accounts (3,460) (3,125) (2,844)
---
Accounts and notes receivable, net 695,860 570,116 697,331
Inventories
Finished products 383,483 391,666 377,578
Raw materials 33,178 31,318 31,137
Products in process 5,116 5,604 6,332
Operating supplies and other 29,703 29,720 26,376
---
Inventories 451,480 458,308 441,423
Other current assets 65,571 76,396 89,739
Total current assets 2,030,110 1,379,326 1,255,015
Investments and long-term receivables 43,849 60,709 51,667
Property, plant & equipment
Property, plant & equipment, cost 8,921,990 8,749,217 8,613,500
Allowances for depreciation, depletion & amortization (4,538,980) (4,433,179) (4,322,818)
---
Property, plant & equipment, net 4,383,010 4,316,038 4,290,682
Operating lease right-of-use assets, net 426,618 408,189 418,896
Goodwill 3,172,112 3,167,061 3,167,061
Other intangible assets, net 1,114,592 1,091,475 1,076,986
Other noncurrent assets 228,433 225,995 220,457
Total assets $11,398,724 $10,648,793 $10,480,764
---
Liabilities
Current maturities of long-term debt 500,026 25 24
Short-term debt 0 0 137,000
Trade payables and accruals 278,102 265,159 284,875
Other current liabilities 260,621 270,379 241,689
Total current liabilities 1,038,749 535,563 663,588
Long-term debt 2,785,646 2,784,315 2,781,826
Deferred income taxes, net 671,097 633,039 601,189
Deferred revenue 177,534 179,880 182,666
Operating lease liabilities 405,578 388,042 396,952
Other noncurrent liabilities 555,969 506,097 483,096
Total liabilities $5,634,573 $5,026,936 $5,109,317
---
Equity
Common stock, $1 par value 132,446 132,371 132,231
Capital in excess of par value 2,789,801 2,791,353 2,787,002
Retained earnings 3,049,943 2,895,871 2,623,747
Accumulated other comprehensive loss (208,039) (197,738) (171,533)
Total equity $5,764,151 $5,621,857 $5,371,447
Total liabilities and equity $11,398,724 $10,648,793 $10,480,764
---
Table C
Vulcan Materials Company
and Subsidiary Companies
(in thousands)
Six Months Ended
Consolidated Statements of Cash Flows June 30
(Condensed and unaudited) 2020 2019
---
Operating Activities
Net earnings $270,174 $260,857
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation, depletion, accretion and amortization 194,951 182,677
Noncash operating lease expense 17,977 17,549
Net gain on sale of property, plant & equipment and businesses (741) (10,748)
Contributions to pension plans (4,409) (4,638)
Share-based compensation expense 15,220 14,370
Deferred tax expense (benefit) 36,644 34,816
Changes in assets and liabilities before initial
effects of business acquisitions and dispositions (101,271) (201,256)
Other, net (2,954) 8,289
Net cash provided by operating activities $425,591 $301,916
---
Investing Activities
Purchases of property, plant & equipment (223,147) (225,837)
Proceeds from sale of property, plant & equipment 3,063 11,200
Proceeds from sale of businesses 651 1,744
Payment for businesses acquired, net of acquired cash (5,668) 1,122
Other, net 5,575 (4,577)
Net cash used for investing activities ($219,526) ($216,348)
---
Financing Activities
Proceeds from short-term debt 0 360,100
Payment of short-term debt 0 (356,100)
Payment of current maturities and long-term debt (250,012) (11)
Proceeds from issuance of long-term debt 750,000 0
Debt issuance and exchange costs (10,762) 0
Settlements of interest rate derivatives (19,863) 0
Purchases of common stock (26,132) 0
Dividends paid (90,128) (81,927)
Share-based compensation, shares withheld for taxes (15,830) (25,508)
Other, net (645) (4)
Net cash provided by (used for) financing activities $336,628 ($103,450)
---
Net increase (decrease) in cash and cash equivalents and restricted cash 542,693 (17,882)
Cash and cash equivalents and restricted cash at beginning of year 274,506 44,404
Cash and cash equivalents and restricted cash at end of period $817,199 $26,522
---
Table D
Segment Financial Data and Unit Shipments
(in thousands, except per unit
data)
Three Months Ended Six Months Ended
June 30 June 30
2020 2019 2020 2019
Total Revenues
Aggregates (1) $1,070,596 $1,062,061 $1,938,822 $1,897,026
Asphalt (2) 222,950 247,163 362,739 379,253
Concrete 100,683 103,768 195,448 187,405
Calcium 1,889 2,003 3,915 3,954
---
Segment sales $1,396,118 $1,414,995 $2,500,924 $2,467,638
Aggregates intersegment sales (73,543) (87,313) (129,107) (143,445)
Total revenues $1,322,575 $1,327,682 $2,371,817 $2,324,193
---
Gross Profit
Aggregates $351,162 $329,215 $545,293 $514,931
Asphalt 30,464 27,583 28,029 24,311
Concrete 14,227 12,887 23,440 21,450
Calcium 666 817 1,480 1,485
---
Total $396,519 $370,502 $598,242 $562,177
---
Depreciation, Depletion, Accretion and Amortization
Aggregates $80,747 $75,760 $157,883 $148,281
Asphalt 8,668 8,884 17,402 17,434
Concrete 4,001 3,327 8,083 6,291
Calcium 48 58 97 118
Other 6,006 5,468 11,486 10,553
Total $99,470 $93,497 $194,951 $182,677
---
Average Unit Sales Price and Unit Shipments
Aggregates
Freight-adjusted revenues (3) $814,713 $806,444 $1,462,746 $1,435,051
Aggregates - tons 56,195 57,310 101,243 102,947
Freight-adjusted sales price 4 $14.50 $14.07 $14.45 $13.94
Other Products
Asphalt Mix - tons 3,403 3,595 5,460 5,617
Asphalt Mix - sales price $57.46 $58.31 $57.86 $57.45
Ready-mixed concrete - cubic yards 786 815 1,520 1,484
Ready-mixed concrete - sales price $127.35 $126.12 $127.62 $125.14
Calcium - tons 71 73 144 141
Calcium - sales price $26.55 $27.50 $27.06 $27.89
---
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 Six Months Ended
June 30 June 30
2020 2019 2020 2019
Aggregates segment
Segment sales $1,070,596 $1,062,061 $1,938,822 $1,897,026
Less:
Freight & delivery revenues (1) 240,880 241,354 446,588 436,508
Other revenues 15,003 14,263 29,488 25,467
Freight-adjusted revenues $814,713 $806,444 $1,462,746 $1,435,051
---
Unit shipment - tons 56,195 57,310 101,243 102,947
Freight-adjusted sales price $14.50 $14.07 $14.45 $13.94
---
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. Reconciliation of this metric to its nearest GAAP measure is 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
2020 2019 2020 2019
Aggregates segment
Gross profit $351,162 $329,215 $545,293 $514,931
Segment sales $1,070,596 $1,062,061 $1,938,822 $1,897,026
Gross profit margin 32.8% 31.0% 28.1% 27.1%
---
Incremental gross profit margin 257.1% 72.6%
---
Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP)
(dollars in thousands)
Three Months Ended Six Months Ended
June 30 June 30
2020 2019 2020 2019
Aggregates segment
Gross profit $351,162 $329,215 $545,293 $514,931
---
Segment sales $1,070,596 $1,062,061 $1,938,822 $1,897,026
Less:
Freight & delivery revenues (1) 240,880 241,354 446,588 436,508
Segment sales excluding freight &
delivery $829,716 $820,707 $1,492,234 $1,460,518
---
Gross profit margin excluding freight & delivery 42.3% 40.1% 36.5% 35.3%
---
Incremental gross profit flow-through rate 243.6% 95.7%
---
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 Six Months Ended
June 30
June 30
2020 2019 2020 2019
Aggregates segment
Gross profit $351,162 $329,215 $545,293 $514,931
Depreciation, depletion, accretion and amortization 80,747 75,760 157,883 148,281
Aggregates segment cash gross
profit $431,909 $404,975 $703,176 $663,212
Unit shipments - tons 56,195 57,310 101,243 102,947
---
Aggregates segment cash gross profit per ton $7.69 $7.07 $6.95 $6.44
---
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)
TTM
Three Months Ended Six Months Ended
June 30 June 30
June 30
2020 2019 2020 2019 2020 2019
Net earnings $209,916 $197,558 $270,174 $260,857 $626,979 $564,031
Income tax expense 61,352 47,598 73,546 58,291 150,453 128,597
Interest expense, net 33,954 33,035 64,727 65,969 127,758 132,374
Loss on discontinued operations, net of tax 1,041 349 781 985 4,637 1,955
EBIT $306,263 $278,540 $409,228 $386,102 $909,827 $826,957
Depreciation, depletion, accretion and amortization 99,470 93,497 194,951 182,677 386,870 361,851
EBITDA $405,733 $372,037 $604,179 $568,779 $1,296,697 $1,188,808
---
0 0 0 (4,064) (9,289) (4,064)
Gain on sale of businesses
0 0 0 0 10,847 0
Property donation
0 0 0 0 0 (559)
Business interruption claims recovery
774 0 774 0 3,807 18,545
Charges associated with divested operations
(3,519) 0 (2,459) 0 (711) 220
Business development (1)
4,361 0 5,009 0 5,009 0
COVID-19 direct incremental costs
465 0 1,333 0 7,790 829
Restructuring charges (2)
Adjusted EBITDA $407,814 $372,037 $608,836 $564,715 $1,314,150 $1,203,779
---
(99,470) (93,497) (194,951) (182,677) (386,870) (361,851)
Depreciation, depletion, accretion and amortization
Adjusted EBIT $308,344 $278,540 $413,885 $382,038 $927,280 $841,928
---
1
Represents non-routine charges or gains associated with acquisitions including the cost impact of purchase accounting inventory valuations.
2
Restructuring charges are included within other operating expenses. The charges relate to 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)
TTM
Three Months Ended Six Months Ended
June 30 June 30 June 30
2020 2019 2020 2019 2020 2019
Diluted EPS from continuing operations $1.58 $1.48 $2.03 $1.97 $4.73 $4.25
0.02 0.00 0.03 (0.03) 0.09 0.08
Items included in Adjusted EBITDA above
Adjusted Diluted EPS $1.60 $1.48 $2.06 $1.94 $4.82 $4.33
---
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)
TTM
June 30
2020 2019
Adjusted EBITDA $1,314,150 $1,203,779
Average invested capital (1)
4,335,633 4,219,693
Property, plant & equipment
3,168,072 3,165,574
Goodwill
1,087,580 1,102,803
Other intangible assets
Fixed and intangible assets $8,591,285 $8,488,070
---
1,453,094 1,155,425
Current assets
265,920 41,243
Less: Cash and cash equivalents
19,289 5,973
Less: Deferred tax
Adjusted current assets 1,167,885 1,108,209
649,772 685,591
Current liabilities
100,025 23
Less: Current maturities of long-term debt
27,400 201,700
Less: Short-term debt
Adjusted current liabilities 522,347 483,868
Adjusted net working capital $645,538 $624,341
---
Average invested capital $9,236,823 $9,112,411
---
Return on Invested Capital 14.2% 13.2%
---
1
Average Invested Capital is based on a trailing 5-quarters.
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SOURCE Vulcan Materials Company
