Vulcan Materials (VMC) Tops Q1 Earnings & Revenue Estimates

Vulcan Materials Company’s (NYSE:VMC) first-quarter 2017 adjusted earnings of 34 cents per share comfortably beat the Zacks Consensus Estimate of 22 cents by 54.5%. However, the bottom line decreased 17.1% from the prior-year quarter.

Total revenue of $787.3 million also surpassed the Zacks Consensus Estimate of $756.4 million by 4.1%. Sales also increased 4% from the prior-year quarter.

Segment Details

Aggregates

Revenues increased 2% year over year to $650.3 million. Freight-adjusted revenues increased 2% year over year to $496.8 million.

Aggregates shipments (volumes) decreased 2% due to California's wet weather. This along with flooding halted construction activity and impaired shipments in January and February. Both these months faced a decline in daily shipping rates for aggregates with more than 20% against the prior-year period.

Adjusted gross profit margin of 28.2% decreased 230 basis points (bps) compared with the prior-year quarter.

Non-Aggregates

Revenues at the Asphalt Mix segment were $95.8 million, up 7.5% owing to an increase in volumes. Asphalt segment gross profit was $8.6 million, down $3.6 million year over year owing to lower material margins and acquisition-related costs. Volumes increased 5%. However, segment results were adversely impacted by severe wet weather and flooding conditions in California, Vulcan’s largest asphalt market.

Total revenue at the Concrete segment was $88.8 million, up 26.1% year over year. Concrete segment gross profit was $10.5 million in the quarter compared with $3.5 million in the prior-year quarter. Sales volumes increased 22% from the prior-year quarter driven by increased volumes in each of the company's concrete markets.

Total revenue at the Calcium segment (formerly Cement) was $1.9 million, reflecting a decrease of 1.3% from the prior-year quarter. The segment reported gross profit of $0.7 million compared with $0.6 million in the prior-year quarter.

Margin

Adjusted gross margin of 23.9% decreased 210 bps in the first quarter. Adjusted EBITDA decreased 4% year over year to $149.3 million.

Financials

As of Mar 31, 2017, cash and cash equivalents were $287 million, up from $259 million at the end of 2016. During the first quarter, the company returned $82 million to shareholders through dividends and share repurchases. Total debt as of Mar 31, 2017 was 2.3 billion.

2017 Guidance Reaffirmed

Adjusted EBITDA is expected in the range of $1.125–$1.225 billion.

Aggregates shipments growth is expected in the range of 5–8% from 2016. The growth is expected more toward the second half of the year.

Asphalt, Concrete and Calcium gross profit growth is anticipated at around 15%.

Core capital spending is estimated at approximately $300 million to support increased level of shipments and bring down production costs and boost operating efficiencies.

Vulcan Materials carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Martin Marietta Materials, Inc.'s (NYSE:MLM) first-quarter 2017 adjusted earnings per share of 67 cents surpassed the Zacks Consensus Estimate of 66 cents by 1.5%. However, earnings declined 2.9% from the prior-year quarter.

Masco Corporation’s (NYSE:MAS) adjusted earnings of 41 cents per share in the first quarter of 2017 surpassed the Zacks Consensus Estimate of 35 cents by 17.1%. Adjusted earnings increased 28.1% year over year.

D.R. Horton, Inc. (NYSE:DHI) exhibited an impressive performance in the second quarter of fiscal 2017, with both earnings and revenues beating the Zacks Consensus Estimate by 1.7% and 5.2%, respectively.

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