Vulcan Materials (VMC) Q4 Earnings Miss Estimates, Up Y/Y

Vulcan Materials Company’s (NYSE:VMC) shares declined 2.5%, following its fourth-quarter 2019 results, wherein earnings missed the Zacks Consensus Estimate but revenues almost met the same.

Earnings and revenues improved on a year-over-year basis, given solid shipment growth and strong pricing in the aggregates business. Also, robust growth in public construction demand and continued improvement in private demand added to the positives.

Vulcan Materials — which is one of the largest producers of construction aggregates — reported adjusted earnings of $1.08 per share, lagging the consensus mark of $1.12 by 3.6%. However, the company’s bottom line improved 9.1% from the year-ago level.

Total revenues of $1,186.2 million almost matched the consensus mark of $1,191 million and increased 9% year over year.

Segments in Detail

Aggregates

Revenues from the segment increased 9.9% year over year to $960.2 million owing to higher shipments and pricing. During the quarter, freight-adjusted average sales price increased 5.5% (4.8% on mix-adjusted basis) from the prior-year quarter. Freight-adjusted revenues also rose 9.6% from the prior-year quarter to $720.6 million.

Aggregate shipments (volumes) were up 4% year over year, reflecting strong shipment growth in Southeast and Southwest markets, including double-digit improvement in Florida and along the Gulf Coast.

Gross profit of $274.5 million was up 7.1% year over year. However, gross margin — as a percentage of segment sales — contracted 70 basis points (bps) to 28.6%. Profitability was negatively impacted by higher repair and maintenance costs, geographic volume mix including higher sales volumes in rail-served remote markets, as well as lower tipping fees for clean fill.

Asphalt, Concrete and Calcium

Revenues from the Asphalt Mix segment were $206.3 million, up 11% year over year. The segment recorded gross profit of $11.1 million, which grew 67.1% from a year ago. Asphalt mix selling prices increased 3% and shipments grew 10% from the prior-year quarter. The company's largest asphalt market — California — reported volume growth in the fourth quarter, after a soft first half of 2019 due in part to weather. The average unit cost for liquid asphalt was 12% lower than the prior-year quarter.

Total revenues from the Concrete segment were $95.3 million, up 2.9% year over year. Moreover, gross profit totaled $6.6 million, down 43.5% year over year. Same-store shipments were up 1% year over year and average selling prices grew 2%. Project delays and higher repair and maintenance costs resulted in the year-over-year decline in gross profit.

Total revenues from the Calcium segment were up 7.3% from the prior-year figure to $2.1 million. The segment reported gross profit of $0.8 million, up 69.7% from the prior-year quarter.

Operating Highlights

Selling, Administrative and General or SAG expenses were $96 million, increasing 14.3% year over year due to compensation-related expense as well as higher professional fees. As a percentage of revenues, the metric increased 30 bps year over year. Also, adjusted EBITDA was up 4.5% year over year to $298.5 million, driven by strong shipments and pricing.

Financials

As of Dec 31, 2019, cash and cash equivalents were $271.6 million, up from $40 million at the end of 2018.

In 2019, Vulcan Materials returned $167 million to its shareholders through dividends and share repurchases. At the end of 2019, total debt — which amounted to $2.8 billion — was 2.2 times of its trailing 12-month adjusted EBITDA.

2019 Highlights

Adjusted earnings came in at $4.70 per share, up 16% from the 2018 level. Total revenues of $4,929.1 million grew 12.5% from the 2018 level. Adjusted EBITDA increased 12% from a year ago to $1.27 billion.

2020 Guidance

Vulcan Materials expects double-digit earnings growth in 2020. Its earnings from continuing operations for the full year are expected within $5.20-$5.80 and adjusted EBITDA is projected in the range of $1.385-$1.485 billion.

Zacks Rank & Peer Release

Vulcan Materials — which shares space with Martin Marietta Materials, Inc. (NYSE:MLM) , Summit Materials, Inc. (NYSE:SUM) and Eagle Materials Inc. (NYSE:EXP) in the Zacks Building Products - Concrete and Aggregates industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Martin Marietta Materials, Inc. reported fourth-quarter 2019 adjusted earnings per share of $2.09, missing the Zacks Consensus Estimate of $2.18 by 4.1%. However, the reported figure increased an impressive 39.3% from the year-ago level of $1.50 per share.

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