Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Vulcan Materials CO | d542094d8k.htm |
Exhibit 99.1
February 16, 2018
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: David Donaldson (205) 298-3220
VULCAN ANNOUNCES FOURTH QUARTER 2017 RESULTS
Fourth Quarter Aggregates Shipments Increase 7 Percent
EPS Growth of More Than 30 Percent Expected in 2018
Birmingham, Alabama – February 16, 2018 – Vulcan Materials Company (NYSE:VMC), the nation’s largest producer of construction aggregates, today announced results for the fourth quarter ended December 31, 2017.
Net earnings from continuing operations were $328 million, or $2.43 per diluted share, versus $108 million, or $0.80 per diluted share, in the prior year’s fourth quarter. Gross profit was $243 million, a 1 percent increase from the prior year. The Company closed its previously announced acquisition of Aggregates USA on December 29, 2017.
Tom Hill, Chairman and Chief Executive Officer, said, “Fourth quarter aggregates shipments showed encouraging momentum. Same-store daily shipment rates were up 8 percent in November and 11 percent in December after being down 3 percent in storm-impacted October. Total aggregates shipments grew 7 percent and aggregates pricing, adjusted for mix, improved 2 percent. Aggregates production costs were negatively impacted by lingering effects from Hurricanes Harvey and Irma as well as by Tropical Storm Nate, rising diesel and distribution costs, and production inefficiencies at certain facilities. Our asphalt and concrete operations, including recent acquisitions in those lines of business, continued to perform well.
“We expect fourth quarter shipment growth to continue into 2018. Private demand in Vulcan-served markets continues to recover, and public demand appears to be firming up after a disappointing 2017. The pricing climate for our materials remains positive, supported by solid demand visibility, rising diesel prices, rising cement prices, and expanding contractor margins. For 2018 we expect same-store aggregates shipment growth of 4 to 6 percent and aggregates pricing growth of 3 to 5 percent, albeit with significant variability across individual markets.
“We also expect our margin performance to return to its longer-term trend of continuous, compounding improvements. Weather-related cost pressures faced in 2017 should not repeat, and rising diesel and distribution costs should flow-through to pricing, although with a lag. Our record safety performance in 2017 underscores our confidence in the strength of our core operating disciplines. Tax reform and the acquisition of Aggregates USA will also support growth in earnings and cash flow.
“In total, we expect 2018 net earnings of between $4.00 and $4.65 per diluted share and Adjusted EBITDA of between $1.150 and $1.250 billion.”
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February 16, 2018
FOR IMMEDIATE RELEASE
Fourth Quarter Summary (compared with prior year’s fourth quarter)
| • | Total revenues increased $105 million, or 12 percent, to $977 million |
| • | Gross profit was $243 million versus $240 million in the prior year |
| • | Aggregates segment sales increased $56 million to $770 million and freight-adjusted revenues increased $45 million, or 8 percent, to $596 million |
| • | Shipments increased 2.9 million tons, or 7 percent, to 46.0 million tons |
| • | Freight-adjusted sales price increased $0.16 per ton, or 1 percent |
| • | Segment gross profit was $208 million, in line with the prior year |
| • | Asphalt, Concrete and Calcium segment gross profit improved $5 million, collectively |
| • | SAG was $86 million, improved 35 basis points as a percentage of total revenues |
| • | Net earnings were $328 million versus $113 million in the prior year |
| • | Adjusted EBIT was $155 million versus $159 million in the prior year |
| • | Adjusted EBITDA was $233 million, an increase of $3 million, or 1 percent |
| • | Earnings from continuing operations were $2.43 per diluted share versus $0.80 per diluted share. Current year results include costs associated with the early retirement of debt and a net tax benefit from enacted U.S. tax legislation. |
| • | Adjusted earnings from continuing operations were $0.74 per diluted share versus $0.69 per diluted share (see appendix 3 for reconciliation) |
Full Year Summary (compared with prior year)
| • | Total revenues were $3.89 billion, an increase of $298 million, or 8 percent |
| • | Gross profit was $1.0 billion, in line with the prior year |
| • | Aggregates segment sales increased $134 million to $3.10 billion and freight-adjusted revenues increased $98 million, or 4 percent, to $2.39 billion |
| • | Shipments increased 1.8 million tons, or 1 percent, to 183.2 million tons |
| • | Freight-adjusted sales price increased $0.41 per ton, or 3 percent |
| • | Segment gross profit decreased $13 million, or 2 percent, to $860 million |
| • | Asphalt, Concrete and Calcium segment gross profit improved $13 million, collectively |
| • | SAG was $324 million, improved 44 basis points as a percentage of total revenues |
| • | Net earnings were $601 million versus $419 million in the prior year |
| • | Adjusted EBIT was $676 million, a decrease of 1 percent |
| • | Adjusted EBITDA was $982 million, up 2 percent from the prior year |
| • | Earnings from continuing operations were $4.40 per diluted share versus $3.11 per diluted share |
| • | Adjusted earnings from continuing operations were $3.04 per diluted share versus $3.03 per diluted share (see appendix 3 for reconciliation) |
Segment Results
Aggregates
Fourth quarter aggregates shipments increased 7 percent (5 percent same-store basis) versus the prior year’s quarter. Shipment trends rebounded in November and December after a sluggish, wet start to the quarter in October. Fourth quarter shipments improved markedly in California and across the Southeast,
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February 16, 2018
FOR IMMEDIATE RELEASE
with most markets experiencing double-digit gains. In contrast, shipment rates continued to lag in Houston and other storm-impacted Gulf Coast markets, with fourth quarter shipments approximately 10 percent below the prior year in these areas.
For the quarter, freight-adjusted average sales price for aggregates increased to $12.95 per ton, a $0.16 or 1 percent gain versus the prior year, despite a negative geographic and product mix impact. Excluding mix impact, aggregates price increased 2 percent. Full year average sales price for aggregates, adjusted for mix, increased 4 percent, in line with expectations. Pricing remained particularly strong in California (up 7 percent) and Georgia (up 9 percent) supported by strong visibility to continued demand recovery. Texas, particularly coastal Texas, experienced relative pricing weakness as storms negatively impacted not only total demand but also freight costs and the mix of work.
Fourth quarter Aggregates segment gross profit was $208 million, or $4.52 per ton. These results were lower than the prior year in part due to a 23 percent increase in the cost for diesel fuel, the lingering effects from weather events in the current year’s third and fourth quarters and certain expenses related to integrating acquired operations. Distribution costs were higher due to storm-related ship-loading and barge movement inefficiencies, as well as the transition to new ships and increased transportation-related liability accruals. These items, along with the negative pricing mix noted above, negatively impacted segment gross profit by approximately $20 million in comparison to the prior year.
Asphalt, Concrete and Calcium
Our non-aggregates segments’ fourth quarter gross profit was $35 million, a 15 percent increase over the prior year.
Asphalt segment gross profit increased 6 percent to $23 million. Shipments were 2.6 million tons in total and 2.3 million tons on a same-store basis. Shipments increased 16 percent versus the prior year. Same-store shipments increased 3 percent versus the prior year, as volumes in Arizona and California (the Company’s largest asphalt market) drove most of the year over year increase. An 8 percent increase in liquid asphalt unit cost negatively affected materials margins.
Concrete segment gross profit was $12 million in the quarter compared to $8 million in the prior year period. Shipments increased 13 percent versus the prior year. On a same-store basis, volumes were in line versus the prior year. Materials margins and unit gross profit in concrete improved compared to the prior year.
Calcium segment gross profit was $0.5 million versus $0.9 million in the prior year’s fourth quarter.
On an annual basis, total gross profit in our non-aggregates segments was $141 million, a 10 percent increase from the prior year’s comparable period.
Aggregates USA Acquisition
The Company closed the acquisition of Aggregates USA on December 29, 2017 for $610 million, net of proceeds from divestitures. This transaction complements and expands Vulcan’s service offerings
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FOR IMMEDIATE RELEASE
in Georgia, South Carolina and Florida with 3 granite quarries and 16 rail distribution yards. The integration is proceeding as planned, although full synergy capture will require at least 18-24 months. For 2018, the Company expects the acquired assets to contribute approximately 7 million tons of aggregates shipments and $50 million of EBITDA. The Company expects the acquisition to be accretive to 2018 earnings.
Growth, Capital Allocation, and Financial Position
For the full year, capital expenditures were $460 million. This amount included $292 million of core operating and maintenance capital investments to improve or replace existing property, plant and equipment, in line with expectations. In addition, the Company invested $168 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 and concrete operations.
The Company remains active in the pursuit of bolt-on acquisitions and other value-creating growth investments. In addition to the Aggregates USA transaction noted above, the Company closed 7 other acquisitions during 2017 for total consideration of $226 million. These acquisitions complement our existing positions in Arizona, California, Illinois, New Mexico, Tennessee and Virginia markets.
At year end, total debt was $2.9 billion. In December, the Company retired via tender offer, $565 million of notes due in 2021 for $663 million. One-time charges related to this early debt retirement were $102 million, or $0.49 per diluted share – an amount excluded from Adjusted Earnings.
Full year pretax interest expense, net was $291 million, including one-time pretax charges of $153 million associated with refinancing activity. In total, these charges negatively impacted full-year reported earnings by $0.73 per diluted share.
During the year, the Company returned $193 million to shareholders through dividends paid and share repurchases.
Selling, Administrative and General (SAG), Other Operating Expense and Taxes
SAG expenses in the quarter were $85.7 million, $6.1 million higher than the prior year. As a component of its overall tax planning, the Company elected to pre-fund 2018 contributions to its charitable foundation, leading to a $2.6 million increase in 2017 SAG expense. Bad debt provisions and severance costs accounted for another $2.6 million of the quarterly increase in SAG.
SAG expense was $324 million for the full year. As a percentage of total revenues, SAG expense declined from 8.8 percent to 8.3 percent.
The Company works continuously to improve its organizational support of operations and create a more scalable and efficient overhead structure. In January of this year, the Company reorganized several of its staff functions for the purpose of more effectively and efficiently supporting long-term growth and margin improvement. As a result, the Company expects to record a restructuring charge of approximately $4 million during the first quarter of 2018 associated with eliminated positions.
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Other operating expense was $20 million in the fourth quarter and included $7 million of employee-related compensation, $4 million of real property donations, $4 million of non-routine business development and divestiture charges, and approximately $5 million of recurring expenses not included in cost of revenues. The first three items were removed from Adjusted Earnings for the quarter.
The Company recorded an income tax benefit of $314 million in the fourth quarter and $232 million for the full year. The fourth quarter tax benefit includes $268 million of net tax benefit associated with the revaluation of deferred tax liabilities and other effects of the Tax Cuts and Jobs Act (the “TCJA”) as well as $29 million of benefit tied to the partial release of a valuation allowance for state-level net operating loss carryforwards. The net tax impact of these items in the quarter was a benefit to earnings of $297 million, or approximately $2.20 per diluted share. This amount was removed from Adjusted Earnings for the quarter.
Estimated Impact of Tax Reform
While the full impact of the TCJA continues to be assessed, the Company expects earnings and cash flows will benefit meaningfully going forward. On a net basis, and leaving all other factors unchanged, the Company’s total effective tax rate should decline from approximately 28 percent to approximately 20 percent.
We continue to evaluate other aspects of TCJA including full expensing of certain qualified capital spending. At this time, we expect core capital spending to support an increased level of shipments and further improve production costs and operating efficiencies of approximately $250 million. We also plan for $350 million in internal growth capital expenditures during 2018, including the development of strategic quarry sites in California and Texas.
The Company currently projects 2018 cash taxes of $80 million before the effect of refunds and credits from prior payments, approximately $100 million lower than if under the prior tax law.
Demand and Earnings Outlook
Regarding the Company’s earnings outlook for 2018, Mr. Hill stated, “We expect strong earnings growth in 2018. Leading indicators, such as the pre-construction pipeline and construction starts in our markets, as well as our own order backlogs, point toward growth. Private demand continues to grow and public demand is strengthening after relative weakness in 2016 and part of 2017. These positive trends provide greater visibility into demand and indicate the continuation of a favorable pricing environment. Recent acquisitions are performing well and should make meaningful contributions to our earnings growth in 2018 and beyond. As a result, we expect strong earnings growth in 2018.”
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February 16, 2018
FOR IMMEDIATE RELEASE
Management expectations for 2018 include:
| • | Same-store aggregates shipments growth of 4 to 6 percent |
| • | Same-store aggregates freight-adjusted price increase of 3 to 5 percent |
| • | Approximately 7 million tons of aggregates shipments from Aggregates USA operations |
| • | High single-digit gross profit growth in Asphalt, Concrete and Calcium, collectively |
| • | SAG expenses of approximately $335 million, including $5 million related to Aggregates USA |
| • | Adjusted EBITDA of $1.150 to $1.250 billion, including $50 million from Aggregates USA |
| • | Interest expense of approximately $125 million, excluding charges associated with refinancing costs for 2018 |
| • | Depreciation, depletion, accretion and amortization expense of approximately $340 million |
| • | An effective tax rate of approximately 20 percent |
| • | Earnings from continuing operations of $4.00 to $4.65 per diluted share |
“The ultimate level and quarterly timing of shipments in 2018,” concluded Mr. Hill, “will depend in part on the pace of starts and construction activity for larger, publicly-funded projects. However, we have better visibility than we did one year ago. We expect pricing to improve throughout the year, partly in response to rising diesel costs and other inflationary trends. With a return to approximately 5 percent same-store shipment growth, we anticipate a return to the incremental flow-through rates delivered by the Company earlier in the recovery cycle.”
Conference Call
Vulcan will host a conference call at 10:00 a.m. CT on February 16, 2018. 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 866-548-4713, or 323-794-2093 approximately 10 minutes before the scheduled start. The conference ID is 6111858. 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.
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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; 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 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, 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; 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; changing technologies that could disrupt the way we do business and how our products are distributed; the effect of changes in tax laws, guidance and interpretations, including those related to the Tax Cuts and Jobs Act that was enacted December 22, 2017; 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.
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FOR IMMEDIATE RELEASE
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) |
2017 | 2016 | 2017 | 2016 | ||||||||||||
| Total revenues |
$ | 977,490 | $ | 872,975 | $ | 3,890,296 | $ | 3,592,667 | ||||||||
| Cost of revenues |
734,199 | 633,270 | 2,889,735 | 2,591,850 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
243,291 | 239,705 | 1,000,561 | 1,000,817 | ||||||||||||
| Selling, administrative and general expenses |
85,655 | 79,526 | 323,918 | 314,986 | ||||||||||||
| Gain on sale of property, plant & equipment and businesses |
13,197 | 12,498 | 17,827 | 15,431 | ||||||||||||
| Other operating income (expense), net |
(19,599 | ) | 1,122 | (47,362 | ) | (21,680 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating earnings |
151,234 | 173,799 | 647,108 | 679,582 | ||||||||||||
| Other nonoperating income (expense), net |
(384 | ) | 619 | 5,293 | 944 | |||||||||||
| Interest expense, net |
136,513 | 33,077 | 291,085 | 133,269 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings from continuing operations before income taxes |
14,337 | 141,341 | 361,316 | 547,257 | ||||||||||||
| Income tax expense (benefit) |
(313,632 | ) | 33,276 | (232,075 | ) | 124,851 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings from continuing operations |
327,969 | 108,065 | 593,391 | 422,406 | ||||||||||||
| Earnings (loss) on discontinued operations, net of tax |
(423 | ) | 4,536 | 7,794 | (2,915 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net earnings |
$ | 327,546 | $ | 112,601 | $ | 601,185 | $ | 419,491 | ||||||||
|
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|
|
|
|
|
|
|
|||||||||
| Basic earnings (loss) per share |
||||||||||||||||
| Continuing operations |
$ | 2.47 | $ | 0.82 | $ | 4.48 | $ | 3.17 | ||||||||
| Discontinued operations |
$ | 0.00 | $ | 0.03 | $ | 0.06 | ($ | 0.02 | ) | |||||||
| Net earnings |
$ | 2.47 | $ | 0.85 | $ | 4.54 | $ | 3.15 | ||||||||
| Diluted earnings (loss) per share |
||||||||||||||||
| Continuing operations |
$ | 2.43 | $ | 0.80 | $ | 4.40 | $ | 3.11 | ||||||||
| Discontinued operations |
$ | 0.00 | $ | 0.03 | $ | 0.06 | ($ | 0.02 | ) | |||||||
| Net earnings |
$ | 2.43 | $ | 0.83 | $ | 4.46 | $ | 3.09 | ||||||||
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|
|
|
|
|
|
|||||||||
| Weighted-average common shares outstanding |
||||||||||||||||
| Basic |
132,519 | 132,571 | 132,513 | 133,205 | ||||||||||||
| Assuming dilution |
134,815 | 135,362 | 134,878 | 135,790 | ||||||||||||
| Cash dividends per share of common stock |
$ | 0.25 | $ | 0.20 | $ | 1.00 | $ | 0.80 | ||||||||
| Depreciation, depletion, accretion and amortization |
$ | 77,991 | $ | 71,578 | $ | 305,965 | $ | 284,940 | ||||||||
| Effective tax rate from continuing operations |
-2187.6 | % | 23.5 | % | -64.2 | % | 22.8 | % | ||||||||
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Table B
Vulcan Materials Company
and Subsidiary Companies
| (in thousands) | ||||||||
| Consolidated Balance Sheets | December 31 | December 31 | ||||||
| (Condensed and unaudited) |
2017 | 2016 | ||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 141,646 | $ | 258,986 | ||||
| Restricted cash |
5,000 | 9,033 | ||||||
| Accounts and notes receivable |
||||||||
| Accounts and notes receivable, gross |
590,986 | 494,634 | ||||||
| Less: Allowance for doubtful accounts |
(2,649 | ) | (2,813 | ) | ||||
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|
|
|
|
|||||
| Accounts and notes receivable, net |
588,337 | 491,821 | ||||||
| Inventories |
||||||||
| Finished products |
327,711 | 293,619 | ||||||
| Raw materials |
27,152 | 22,648 | ||||||
| Products in process |
1,827 | 1,480 | ||||||
| Operating supplies and other |
27,648 | 27,869 | ||||||
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|
|
|
|
|||||
| Inventories |
384,338 | 345,616 | ||||||
| Prepaid expenses |
60,780 | 31,726 | ||||||
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|
|
|
|||||
| Total current assets |
1,180,101 | 1,137,182 | ||||||
| Investments and long-term receivables |
35,115 | 39,226 | ||||||
| Property, plant & equipment |
||||||||
| Property, plant & equipment, cost |
7,969,312 | 7,185,818 | ||||||
| Allowances for depreciation, depletion & amortization |
(4,050,381 | ) | (3,924,380 | ) | ||||
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|
|
|
|
|||||
| Property, plant & equipment, net |
3,918,931 | 3,261,438 | ||||||
| Goodwill |
3,122,321 | 3,094,824 | ||||||
| Other intangible assets, net |
1,063,630 | 769,052 | ||||||
| Other noncurrent assets |
184,793 | 169,753 | ||||||
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|
|
|
|||||
| Total assets |
$ | 9,504,891 | $ | 8,471,475 | ||||
|
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|
|
|
|||||
| Liabilities |
||||||||
| Current maturities of long-term debt |
41,383 | 138 | ||||||
| Short-term debt |
350,000 | 0 | ||||||
| Trade payables and accruals |
197,335 | 145,042 | ||||||
| Other current liabilities |
204,154 | 227,064 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
792,872 | 372,244 | ||||||
| Long-term debt |
2,463,482 | 1,982,751 | ||||||
| Deferred income taxes, net |
464,081 | 702,854 | ||||||
| Deferred revenue |
191,476 | 198,388 | ||||||
| Other noncurrent liabilities |
624,087 | 642,762 | ||||||
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|
|
|
|
|||||
| Total liabilities |
$ | 4,535,998 | $ | 3,898,999 | ||||
|
|
|
|
|
|||||
| Equity |
||||||||
| Common stock, $1 par value |
132,324 | 132,339 | ||||||
| Capital in excess of par value |
2,805,587 | 2,807,995 | ||||||
| Retained earnings |
2,180,448 | 1,771,518 | ||||||
| Accumulated other comprehensive loss |
(149,466 | ) | (139,376 | ) | ||||
|
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|
|
|
|||||
| Total equity |
$ | 4,968,893 | $ | 4,572,476 | ||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 9,504,891 | $ | 8,471,475 | ||||
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Table C
Vulcan Materials Company
and Subsidiary Companies
| (in thousands) | ||||||||
| Twelve Months Ended | ||||||||
| Consolidated Statements of Cash Flows | December 31 | |||||||
| (Condensed and unaudited) |
2017 | 2016 | ||||||
| Operating Activities |
||||||||
| Net earnings |
$ | 601,185 | $ | 419,491 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities |
|
|||||||
| Depreciation, depletion, accretion and amortization |
305,965 | 284,940 | ||||||
| Net gain on sale of property, plant & equipment and businesses |
(17,827 | ) | (15,431 | ) | ||||
| Contributions to pension plans |
(20,023 | ) | (9,576 | ) | ||||
| Share-based compensation expense |
26,635 | 20,670 | ||||||
| Deferred tax expense (benefit) |
(235,697 | ) | 33,591 | |||||
| Cost of debt purchase |
140,772 | 0 | ||||||
| Changes in assets and liabilities before initial effects of business acquisitions and dispositions |
(169,352 | ) | (92,788 | ) | ||||
| Other, net |
13,020 | 3,691 | ||||||
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|
|
|
|||||
| Net cash provided by operating activities |
$ | 644,678 | $ | 644,588 | ||||
|
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|
|
|
|||||
| Investing Activities |
||||||||
| Purchases of property, plant & equipment |
(459,566 | ) | (350,148 | ) | ||||
| Proceeds from sale of property, plant & equipment |
15,756 | 23,318 | ||||||
| Proceeds from sale of businesses, net of transaction costs |
287,292 | 0 | ||||||
| Payment for businesses acquired, net of acquired cash |
(1,109,725 | ) | (32,537 | ) | ||||
| Other, net |
(3,248 | ) | 2,173 | |||||
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|
|
|
|||||
| Net cash used for investing activities |
($ | 1,269,491 | ) | ($ | 357,194 | ) | ||
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|
|
|
|||||
| Financing Activities |
||||||||
| Proceeds from short-term debt |
355,000 | 3,000 | ||||||
| Payment of short-term debt |
(5,000 | ) | (3,000 | ) | ||||
| Payment of current maturities and long-term debt |
(1,463,308 | ) | (130 | ) | ||||
| Proceeds from issuance of long-term debt |
1,850,000 | 0 | ||||||
| Debt discounts and issuance costs |
(15,291 | ) | (1,860 | ) | ||||
| Purchases of common stock |
(60,303 | ) | (161,463 | ) | ||||
| Dividends paid |
(132,335 | ) | (106,333 | ) | ||||
| Share-based compensation, shares withheld for taxes |
(25,323 | ) | (34,799 | ) | ||||
|
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|
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|
|||||
| Net cash provided by (used for) financing activities |
$ | 503,440 | ($ | 304,585 | ) | |||
|
|
|
|
|
|||||
| Net decrease in cash and cash equivalents and restricted cash |
(121,373 | ) | (17,191 | ) | ||||
| Cash and cash equivalents and restricted cash at beginning of year |
268,019 | 285,210 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents and restricted cash at end of year |
$ | 146,646 | $ | 268,019 | ||||
|
|
|
|
|
|||||
Page 11
February 16, 2018
FOR IMMEDIATE RELEASE
Table D
Segment Financial Data and Unit Shipments
| (in thousands, except per unit data) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Total Revenues |
||||||||||||||||
| Aggregates 1 |
$ | 769,509 | $ | 713,661 | $ | 3,096,094 | $ | 2,961,835 | ||||||||
| Asphalt |
160,600 | 123,750 | 622,074 | 512,310 | ||||||||||||
| Concrete |
108,297 | 87,335 | 417,745 | 330,125 | ||||||||||||
| Calcium |
1,918 | 2,129 | 7,740 | 8,860 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Segment sales |
$ | 1,040,324 | $ | 926,875 | $ | 4,143,653 | $ | 3,813,130 | ||||||||
| Aggregates intersegment sales |
(62,834 | ) | (53,900 | ) | (253,357 | ) | (220,463 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | 977,490 | $ | 872,975 | $ | 3,890,296 | $ | 3,592,667 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross Profit | ||||||||||||||||
| Aggregates |
$ | 207,945 | $ | 208,964 | $ | 860,021 | $ | 873,118 | ||||||||
| Asphalt |
23,027 | 21,654 | 91,948 | 97,682 | ||||||||||||
| Concrete |
11,815 | 8,209 | 46,117 | 26,543 | ||||||||||||
| Calcium |
504 | 878 | 2,475 | 3,474 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 243,291 | $ | 239,705 | $ | 1,000,561 | $ | 1,000,817 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Depreciation, Depletion, Accretion and Amortization | ||||||||||||||||
| Aggregates |
$ | 62,592 | $ | 59,343 | $ | 245,151 | $ | 236,472 | ||||||||
| Asphalt |
6,559 | 4,328 | 25,400 | 16,797 | ||||||||||||
| Concrete |
3,536 | 2,988 | 13,822 | 12,129 | ||||||||||||
| Calcium |
110 | 197 | 677 | 774 | ||||||||||||
| Other |
5,194 | 4,722 | 20,915 | 18,768 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 77,991 | $ | 71,578 | $ | 305,965 | $ | 284,940 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Average Unit Sales Price and Unit Shipments | ||||||||||||||||
| Aggregates |
||||||||||||||||
| Freight-adjusted revenues 2 |
$ | 595,952 | $ | 551,446 | $ | 2,392,686 | $ | 2,294,227 | ||||||||
| Aggregates - tons |
46,021 | 43,124 | 183,179 | 181,374 | ||||||||||||
| Freight-adjusted sales price 3 |
$ | 12.95 | $ | 12.79 | $ | 13.06 | $ | 12.65 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other Products |
||||||||||||||||
| Asphalt Mix - tons |
2,606 | 2,249 | 10,391 | 9,353 | ||||||||||||
| Asphalt Mix - sales price |
$ | 52.84 | $ | 53.65 | $ | 52.64 | $ | 53.45 | ||||||||
| Ready-mixed concrete - cubic yards |
897 | 791 | 3,568 | 3,000 | ||||||||||||
| Ready-mixed concrete - sales price |
$ | 119.52 | $ | 110.39 | $ | 116.45 | $ | 110.02 | ||||||||
| Calcium - tons |
69 | 77 | 273 | 326 | ||||||||||||
| Calcium - sales price |
$ | 27.86 | $ | 27.29 | $ | 28.26 | $ | 27.08 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 1 | Includes crushed stone, sand and gravel, sand, other aggregates, as well as freight, delivery and transportation revenues, and service revenues related to aggregates. |
| 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. |
Page 12
February 16, 2018
FOR IMMEDIATE RELEASE
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 |
||||||||
| 2017 | 2016 | |||||||
| Cash Payments |
||||||||
| Interest (exclusive of amount capitalized) |
$ | 285,801 | $ | 135,039 | ||||
| Income taxes |
125,135 | 102,849 | ||||||
|
|
|
|
|
|||||
| Noncash Investing and Financing Activities |
||||||||
| Accrued liabilities for purchases of property, plant & equipment |
$ | 31,267 | $ | 26,676 | ||||
| Amounts referable to business acquisitions |
||||||||
| Liabilities assumed |
13,667 | 798 | ||||||
| Exchanges of noncash assets and liabilities: |
||||||||
| Fair value of noncash assets and liabilities exchanged |
9,900 | 0 | ||||||
|
|
|
|
|
|||||
| 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 our competitors and 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 December 31 |
Twelve Months Ended December 31 |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Gross profit |
$ | 243,291 | $ | 239,705 | $ | 1,000,561 | $ | 1,000,817 | ||||||||
| Total revenues |
$ | 977,490 | $ | 872,975 | $ | 3,890,296 | $ | 3,592,667 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit margin |
24.9 | % | 27.5 | % | 25.7 | % | 27.9 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Gross Profit Margin Excluding Freight and Delivery Revenues
| (dollars in thousands) | ||||||||||||||||
| Three Months Ended December 31 |
Twelve Months Ended December 31 |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Gross profit |
$ | 243,291 | $ | 239,705 | $ | 1,000,561 | $ | 1,000,817 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | 977,490 | $ | 872,975 | $ | 3,890,296 | $ | 3,592,667 | ||||||||
| Freight and delivery revenues 1 |
130,983 | 128,608 | 528,917 | 535,930 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues excluding freight and delivery revenues |
$ | 846,507 | $ | 744,367 | $ | 3,361,379 | $ | 3,056,737 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit margin excluding freight and delivery revenues |
28.7 | % | 32.2 | % | 29.8 | % | 32.7 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 1 | Includes freight to remote distribution sites. |
Page 13
February 16, 2018
FOR IMMEDIATE RELEASE
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 consistent with our competitors and 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 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Aggregates segment |
||||||||||||||||
| Gross profit |
$ | 207,945 | $ | 208,964 | $ | 860,021 | $ | 873,118 | ||||||||
| Segment sales |
$ | 769,509 | $ | 713,661 | $ | 3,096,094 | $ | 2,961,835 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit margin |
27.0 | % | 29.3 | % | 27.8 | % | 29.5 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Incremental gross profit margin |
N/A | N/A | ||||||||||||||
|
|
|
|
|
|||||||||||||
Aggregates Segment Gross Profit as a Percentage of Freight-Adjusted Revenues
| (dollars in thousands) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Aggregates segment |
||||||||||||||||
| Gross profit |
$ | 207,945 | $ | 208,964 | $ | 860,021 | $ | 873,118 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Segment sales |
$ | 769,509 | $ | 713,661 | $ | 3,096,094 | $ | 2,961,835 | ||||||||
| Less |
||||||||||||||||
| Freight, delivery and transportation revenues 1 |
165,101 | 157,868 | 670,676 | 651,885 | ||||||||||||
| Other revenues |
8,456 | 4,347 | 32,732 | 15,723 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Freight-adjusted revenues |
$ | 595,952 | $ | 551,446 | $ | 2,392,686 | $ | 2,294,227 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit as a percentage of freight-adjusted revenues |
34.9 | % | 37.9 | % | 35.9 | % | 38.1 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Incremental gross profit as a percentage of freight-adjusted revenues |
N/A | N/A | ||||||||||||||
|
|
|
|
|
|||||||||||||
| 1 | At the segment level, freight, delivery and transportation revenues include intersegment freight & delivery revenues, which are eliminated at the consolidated level. |
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 present this metric 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. We and the investment community use this metric to assess the operating performance of our business. Additionally, we present this metric as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. Aggregates segment cash gross profit per ton is computed by dividing Aggregates segment cash gross profit by tons shipped. Reconciliation of this metric to its nearest GAAP measure is presented below:
Aggregates Segment Cash Gross Profit
| (in thousands, except per ton data) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Aggregates segment |
||||||||||||||||
| Gross profit |
$ | 207,945 | $ | 208,964 | $ | 860,021 | $ | 873,118 | ||||||||
| Depreciation, depletion, accretion and amortization |
62,592 | 59,343 | 245,151 | 236,472 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Aggregates segment cash gross profit |
$ | 270,537 | $ | 268,307 | $ | 1,105,172 | $ | 1,109,590 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Unit shipments - tons |
46,021 | 43,124 | 183,179 | 181,374 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Aggregates segment cash gross profit per ton |
$ | 5.88 | $ | 6.22 | $ | 6.03 | $ | 6.12 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 14
February 16, 2018
FOR IMMEDIATE RELEASE
Appendix 3
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 present this metric 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. 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
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net earnings |
$ | 327,546 | $ | 112,601 | $ | 601,185 | $ | 419,491 | ||||||||
| Income tax expense (benefit) |
(313,632 | ) | 33,276 | (232,075 | ) | 124,851 | ||||||||||
| Interest expense, net |
136,513 | 33,077 | 291,085 | 133,269 | ||||||||||||
| (Earnings) loss on discontinued operations, net of tax |
423 | (4,536 | ) | (7,794 | ) | 2,915 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBIT |
$ | 150,850 | $ | 174,418 | $ | 652,401 | $ | 680,526 | ||||||||
| Depreciation, depletion, accretion and amortization |
77,991 | 71,578 | 305,965 | 284,940 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
$ | 228,841 | $ | 245,996 | $ | 958,366 | $ | 965,466 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gain on sale of real estate and businesses 1 |
(10,508 | ) | (16,216 | ) | (10,508 | ) | (16,216 | ) | ||||||||
| Property donation |
4,290 | 0 | 4,290 | 0 | ||||||||||||
| Business interruption claims recovery, net of incentives |
0 | 162 | 0 | (11,014 | ) | |||||||||||
| Charges associated with divested operations |
1,547 | 215 | 18,062 | 16,983 | ||||||||||||
| Business development, net of termination fee 2 |
2,280 | 0 | 3,064 | 0 | ||||||||||||
| One time employee bonuses |
6,716 | 0 | 6,716 | 0 | ||||||||||||
| Asset impairment |
0 | 0 | 0 | 10,506 | ||||||||||||
| Restructuring charges |
0 | 0 | 1,942 | 320 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | 233,166 | $ | 230,157 | $ | 981,932 | $ | 966,045 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Depreciation, depletion, accretion and amortization |
(77,991 | ) | (71,578 | ) | (305,965 | ) | (284,940 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBIT |
$ | 155,175 | $ | 158,579 | $ | 675,967 | $ | 681,105 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 1 | The 2016 amount includes a $4,345,000 gain (reflected within Other operating income, net) for plant relocation reimbursement. |
| 2 | Includes only non-routine business development charges. |
Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted EPS to provide a more consistent comparison of earnings performance from period to period.
Adjusted Diluted EPS from Continuing Operations (Adjusted Diluted EPS)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Diluted EPS |
$ | 2.43 | $ | 0.80 | $ | 4.40 | $ | 3.11 | ||||||||
| Items included in Adjusted EBITDA above |
0.02 | (0.08 | ) | 0.11 | 0.00 | |||||||||||
| Interest charges associated with debt purchase |
0.49 | 0.00 | 0.73 | 0.00 | ||||||||||||
| Tax reform income tax savings |
(1.99 | ) | 0.00 | (1.99 | ) | 0.00 | ||||||||||
| Alabama NOL carryforward valuation allowance |
(0.21 | ) | 0.00 | (0.21 | ) | 0.00 | ||||||||||
| Foreign tax credit carryforward utilization |
0.00 | (0.03 | ) | 0.00 | (0.08 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Diluted EPS |
$ | 0.74 | $ | 0.69 | $ | 3.04 | $ | 3.03 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The following reconciliation to the mid-point of the range of 2018 Projected EBITDA excludes adjustments for charges associated with divested operations, asset impairment and other unusual gains and losses. Due to the difficulty of forecasting the timing or amount of items that have not yet occurred, are out of our control, or cannot be reasonably predicted, we are unable to estimate the significance of this unavailable information.
2018 Projected EBITDA
| (in millions) | ||||
| Mid-point | ||||
| Net earnings |
$ | 585 | ||
| Income tax expense |
150 | |||
| Interest expense, net |
125 | |||
| Discontinued operations, net of tax |
0 | |||
| Depreciation, depletion, accretion and amortization |
340 | |||
|
|
|
|||
| Projected EBITDA |
$ | 1,200 | ||
|
|
|
|||