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Vulcan Announces Earnings For The Third Quarter Of 2012

Continued Improvement in Aggregates Earnings Driven by Higher Pricing and Effective Cost Control

Aggregates Gross Profit Margin Up 340 Basis Points from Third Quarter 2011

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BIRMINGHAM, Ala., Nov. 8, 2012 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today announced earnings for the third quarter ended September 30, 2012.

(Logo:  http://photos.prnewswire.com/prnh/20090710/CL44887LOGO )

Third Quarter 2012 Results Summary

  • Aggregates segment gross profit improved $11 million, or 10 percent, reflecting increased pricing and lower unit cost of sales due to improved productivity and cost reduction initiatives.
    • Aggregates pricing increased 4 percent from the prior year, reflecting improvement in most markets.
    • Unit cost of sales decreased 1 percent from the prior year.
    • On a same-store basis, aggregates shipments decreased 6 percent from the prior year.
    • Aggregates cash gross profit was $4.75 per ton, a third quarter record.
    • Aggregates gross profit margin was 25.4 percent, an increase of 340 basis points from the prior year.
  • Gross profit from non-aggregates segments was in line with the prior year's third quarter as overall segment revenues approximated the prior year. 
  • Total gross profit increased 10 percent and gross profit margin expanded 230 basis points as the earnings effect of higher pricing and effective cost control more than offset the earnings effects of declines in aggregates and asphalt shipments.
  • Adjusted EBIT and EBITDA increased $19 million and $12 million, respectively, over the prior year.
  • Earnings from continuing operations were $0.12 per diluted share versus $0.17 per diluted share in the prior year.  The prior year's earnings included $0.30 per diluted share from the gain on sale of assets and recovery from a legal settlement.  On a comparable basis, as indicated on the table below, third quarter earnings from continuing operations were $0.14 per diluted share compared to a loss of $0.13 per diluted share in the prior year.

Don James, Chairman and Chief Executive Officer, stated, "This quarter marks the fourth consecutive quarter of year-over-year higher unit profitability in aggregates, lower SAG expense and growth in Adjusted EBITDA.  For the trailing twelve months ended September 30, 2012, cash gross profit per ton in aggregates was 8 percent higher than the prior twelve months, SAG expense was down 12 percent and Adjusted EBITDA increased 30 percent.  These results demonstrate the benefits of our ongoing focus on reducing controllable costs and maximizing operating efficiency across the organization."  

Mr. James continued, "In addition, leading indicators in private sector construction markets, including residential and nonresidential buildings, continue to improve.  This should benefit our aggregates, concrete and cement businesses going forward.  Year-to-date, concrete and cement volumes are up 8 percent and 23 percent, respectively, reflecting the upturn in private construction, particularly in Florida and Texas."

Commentary on 3Q 2012 Segment Results
Aggregates segment gross profit increased $11 million from the prior year's third quarter and gross profit margin expanded 340 basis points despite a 5 percent decline in segment revenues.  Third quarter aggregates cash gross profit per ton was $4.75, 10 percent higher than the prior year and a record for third quarter unit profitability.  Higher Aggregates segment earnings and unit profitability were driven by a 4 percent increase in the average sales price and lower unit costs.  The improvement in operating cost was due to increased productivity in a number of key operating metrics and was achieved despite lower production volume.  Most of the Company's markets realized increased pricing, including key markets in Florida, Texas and states in the Southeast, the mid-Atlantic and the Midwest.  Private construction activity, particularly residential, continued to improve during the third quarter, offsetting softness in highway construction resulting from the prolonged delay in renewing the federal highway bill.  The new bill, "MAP-21," was signed into law in July of this year, nearly three years after expiration of the previous multi-year bill.  On a same-store basis, aggregates shipments decreased 6 percent versus the prior year.  Total aggregates shipments in Arizona, Florida and Texas increased 12 percent, due primarily to growing demand from private construction.  Most other markets experienced declines in aggregates volumes compared to the third quarter of 2011, reflecting weakness in public construction activity that more than offset growth in private construction activity.

Collectively, third quarter earnings from the Company's non-aggregates segments were in-line with the prior year.  Earnings improvements in the Cement and Concrete segments offset a slight decrease in Asphalt Mix gross profit.  The unit cost for liquid asphalt increased 3 percent, reducing Asphalt segment earnings by $1 million.  Continued recovery in private construction activity led to solid increases in ready-mixed concrete and cement volumes as well as year-over-year growth in pricing for both products.

SAG expenses in the third quarter decreased $2 million from the prior year.  This marks the fourth consecutive quarterly decline in year-over-year SAG expenses.  Excluding the effects of certain accounting charges tied primarily to employee benefit plans and resulting from the increase in the Company's stock price, SAG expenses were reduced $10 million from the prior year's third quarter. 

The following table summarizes the year-over-year changes for key metrics.  

Year-over-Year Change (Millions)

Quarterly 
    Change   
 


Year-to-Date 
        Change       


Aggregates


(3.2)

 Shipments (tons)

(0.9)

(23.6)

 Segment Revenue $

(6.8)

11.5

Gross Profit $

43.8


Non-aggregates


0.2

Segment Revenue $

21.4

(0.3)

Gross Profit $

1.5


Total Company


(27.3)

Net Sales $ 

7.6

11.2

Gross Profit $

45.3

18.7

Adjusted EBIT $

84.0

11.8

Adjusted EBITDA $

63.7

The following table summarizes Adjusted EBITDA and Continuing Operations EPS.

EBITDA (Millions)


Continuing Operations
EPS, Diluted

3Q2012


3Q2011


3Q2012


3Q2011

$   141.8


$   193.9

As Reported

$   0.12


$   0.17

1.2


-

Exchange Offer Costs

0.01


-

3.0


0.9

Restructuring Costs

0.01


0.00

-


(39.7)

Gain on Sale of Assets

-


(0.19)

-


(20.9)

Legal Settlement

-


(0.11)

$   146.0


$   134.2

As Adjusted

$   0.14


$   (0.13)

EBITDA and Earnings from Continuing Operations for the third quarter of 2011 included a $40 million gain on the sale of assets in Indiana and $21 million related to the recovery from a legal settlement.  Adjusted EBITDA improved $12 million and adjusted earnings from continuing operations improved $0.27 per diluted share.

Cash and cash equivalents totaled $243 million at September 30, 2012.  Debt maturities in the fourth quarter of 2012 total $135 million which the Company expects to fund from available cash.  Capital spending is expected to be approximately $100 million in 2012.

2012 Outlook

Mr. James stated, "Employees throughout the Company are keenly focused on managing controllable costs.  Thanks to their continuing efforts, Adjusted EBITDA has increased 25 percent year-to-date and the earnings leverage in our aggregates business continues to increase, as evidenced by the increase in cash gross profit per ton.  Through the nine months ended September 30, 2012, Adjusted EBITDA, which excludes $18 million in real estate gains, was $321 million, up $64 million in the face of a 1 percent decline in aggregates volumes.  Cost reduction initiatives across a wide array of spending categories continue to improve Vulcan's run-rate profitability.  Through the first nine months of 2012, controllable costs have been reduced approximately $70 million.  The effect of these initiatives supports our expectations for full year SAG costs to be approximately $260 million, compared to $290 million in 2011." 

Mr. James continued, "We believe economic and construction-related fundamentals that drive demand for our products will continue to improve from the historically low levels created by the economic downturn.  Leading indicators of private construction activity, specifically residential housing starts and contract awards for nonresidential buildings, continue to improve in our markets.  Consequently, aggregates demand into private construction, particularly residential, is beginning to grow. We are seeing evidence of this growth in several key states, including Florida, Texas and Arizona.  However, the positive effect of these indicators takes time to materialize and impact our shipments given the low point from which the recovery began.  For public construction, the passage of a new federal highway bill in July will provide stability and predictability to future highway funding, although it had no material impact on third quarter shipments, which reflected softness in highway construction and the ending of stimulus-related construction activity.  The large increase in TIFIA (Transportation Infrastructure Finance and Innovation Act) funding contained in the new highway bill should positively impact demand in the future.  The uncertain timing of larger projects, including TIFIA funded projects, continues to make forecasting quarterly volume growth difficult.  We now expect full year same-store shipments in 2012 to approximate 2011 and total aggregates shipments to decrease approximately 1 percent.  In keeping with our successful efforts to offset the earnings effect of lower volumes in recent quarters, we will continue our efforts to reduce controllable costs and achieve improved pricing.  The geographic breadth of pricing gains achieved in the third quarter reinforces our expectations for full year freight-adjusted price growth of 1 to 3 percent in 2012."

Full year earnings improvements in the Company's Cement and Concrete segments are expected to offset lower Asphalt Mix segment earnings.  As a result, collectively, full year earnings from these segments are expected to approximate the prior year. 

Vulcan now expects 2012 Adjusted EBITDA of $435 to $455 million, an improvement of 23 to 29 percent from the prior year.  This guidance includes $29 million in gains from the sale of assets, of which $18 million has been realized through the first nine months of 2012.  The change in Adjusted EBITDA guidance reflects principally the earnings impact of lower shipments in aggregates and asphalt.  The Company continues to work on additional asset sales in the fourth quarter.  However, the ultimate timing of such transactions is difficult to predict and thus gains related to these transactions are excluded from current guidance.  The Company remains committed to completing transactions designed to strengthen Vulcan's balance sheet, unlock capital for more productive uses and create value for shareholders. 

Conference Call

Vulcan will host a conference call at 10:00 a.m. CST on November 8, 2012.  Investors and other interested parties in the U.S. may access the teleconference live by calling 888.895.5479 approximately 10 minutes before the scheduled start.  International participants can dial 847.619.6250.  The access code is 33645025.  A live webcast and accompanying slides will be available via the Internet through Vulcan's home page at www.vulcanmaterials.com.  The conference call will be recorded and available for replay approximately two hours after the call through November 15, 2012.

Vulcan Materials Company, a member of the S&P 500 Index, is the nation's largest producer of construction aggregates, a major producer of asphalt mix and concrete and a leading producer of cement in Florida.

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: risks that Vulcan's intentions, plans and results with respect to cost reductions, profit enhancements and asset sales, as well as streamlining and other strategic actions adopted by Vulcan, will not be able to be realized to the desired degree or within the desired time period and that the results thereof will differ from those anticipated or desired; uncertainties as to the timing and valuations that may be realized or attainable with respect to intended asset sales; those associated with general economic and business conditions; the timing and amount of federal, state and local funding for infrastructure; the impact of a prolonged economic recession on Vulcan's industry, business and financial condition and access to capital markets; changes in the level of spending for private residential and nonresidential construction; the highly competitive nature of the construction materials industry; the impact of future regulatory or legislative actions; 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; the impact of Vulcan's below investment grade debt rating on Vulcan's cost of capital; volatility in pension plan asset values which may require cash contributions to the pension plans; the impact of environmental clean-up costs and other liabilities relating to previously 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 impairment; the potential impact of future legislation or regulations relating to climate change or greenhouse gas emissions or the definition of minerals; 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



(Amounts and shares in thousands,






except per share data)















Three Months Ended


Nine Months Ended

Consolidated Statements of Earnings

September 30


September 30

(Condensed and unaudited)

2012


2011


2012


2011





















Net sales

$      687,616


$    714,947


$ 1,836,357


$ 1,828,720

Delivery revenues

41,245


45,805


122,522


121,203

Total revenues

728,861


760,752


1,958,879


1,949,923











Cost of goods sold

560,693


599,167


1,581,537


1,619,206

Delivery costs

41,245


45,805


122,522


121,203

Cost of revenues

601,938


644,972


1,704,059


1,740,409











Gross profit

126,923


115,780


254,820


209,514

Selling, administrative and general expenses

65,441


67,020


192,267


218,290

Gain on sale of property, plant & equipment









and businesses, net

2,009


41,457


21,687


44,831

Recovery from legal settlement

-


20,857


-


46,404

Restructuring charges

(3,056)


(839)


(9,018)


(2,977)

Exchange offer costs

(1,206)


-


(43,331)


-

Other operating income (expense), net

(3,363)


(3,567)


(2,642)


(10,509)

Operating earnings

55,866


106,668


29,249


68,973











Other nonoperating income (expense), net

1,806


(3,745)


4,196


(2,384)

Interest expense, net

53,043


50,678


158,997


163,839

Earnings (loss) from continuing operations









before income taxes

4,629


52,245


(125,552)


(97,250)

Provision for (benefit from) income taxes

(10,992)


29,833


(67,138)


(47,938)

Earnings (loss) from continuing operations

15,621


22,412


(58,414)


(49,312)

Earnings (loss) on discontinued operations, net of tax

(1,361)


(2,453)


2,338


6,399

Net earnings (loss)

$       14,260


$      19,959


$     (56,076)


$     (42,913)

Basic earnings (loss) per share:









Continuing operations

$           0.12


$         0.17


$        (0.45)


$        (0.38)


Discontinued operations

(0.01)


(0.02)


0.02


0.05


Net earnings (loss) per share

$           0.11


$         0.15


$        (0.43)


$        (0.33)











Diluted earnings (loss) per share:









Continuing operations

$           0.12


$         0.17


$        (0.45)


$        (0.38)


Discontinued operations

(0.01)


(0.02)


0.02


0.05


Net earnings (loss) per share

$           0.11


$         0.15


$        (0.43)


$        (0.33)











Weighted-average common shares








     outstanding:










Basic

129,753


129,493


129,674


129,341



Assuming dilution

130,215


129,768


129,674


129,341

Cash dividends declared per share









of common stock

$           0.01


$         0.25


$         0.03


$         0.75

Depreciation, depletion, accretion and









amortization

$       84,108


$     90,948


$   253,391


$   273,671

Effective tax rate from continuing operations

NMF 


57.1%


53.5%


49.3%











 








Table B

Vulcan Materials Company





and Subsidiary Companies
















(Amounts in thousands, except per share data)









Consolidated Balance Sheets

September 30


December 31

September 30

(Condensed and unaudited)

2012


2011


2011








As Restated

(a)

Assets






Cash and cash equivalents

$    243,126


$    155,839


$    152,379

Restricted cash

-


81


81

Accounts and notes receivable:







Accounts and notes receivable, gross

403,520


321,391


437,754


Less: Allowance for doubtful accounts

(6,106)


(6,498)


(7,715)



Accounts and notes receivable, net

397,414


314,893


430,039

Inventories:







Finished products

263,893


260,732


249,265


Raw materials

28,221


23,819


26,284


Products in process

6,209


4,198


3,473


Operating supplies and other

38,655


38,908


38,755



Inventories

336,978


327,657


317,777

Current deferred income taxes

45,353


43,032


48,743

Prepaid expenses

26,384


21,598


27,809

Assets held for sale

-


-


26,883



Total current assets

1,049,255


863,100


1,003,711

Investments and long-term receivables

42,226


29,004


28,917

Property, plant & equipment:







Property, plant & equipment, cost

6,690,448


6,705,546


6,665,937


Less: Reserve for depr., depl. & amort

(3,477,496)


(3,287,367)


(3,222,469)



Property, plant & equipment, net

3,212,952


3,418,179


3,443,468

Goodwill

3,086,716


3,086,716


3,086,716

Other intangible assets, net

693,308


697,502


698,703

Other noncurrent assets

141,459


134,813


122,011



Total assets

$  8,225,916


$  8,229,314


$  8,383,526

























Liabilities and Equity






Current maturities of long-term debt

$    285,153


$    134,762


$        5,215

Trade payables and accruals

133,209


103,931


134,853

Other current liabilities

213,735


167,560


239,438

Liabilities of assets held for sale

-


-


1,474



Total current liabilities

632,097


406,253


380,980

Long-term debt

2,527,450


2,680,677


2,816,223

Noncurrent deferred income taxes

680,880


732,528


794,921

Other noncurrent liabilities

618,292


618,239


524,485



Total liabilities 

4,458,719


4,437,697


4,516,609

Equity:







Common stock, $1 par value

129,596


129,245


129,233


Capital in excess of par value

2,567,859


2,544,740


2,538,987


Retained earnings

1,274,465


1,334,476


1,363,640


Accumulated other comprehensive loss

(204,723)


(216,844)


(164,943)



Total equity

3,767,197


3,791,617


3,866,917



Total liabilities and equity

$  8,225,916


$  8,229,314


$  8,383,526

(a)

The September 30, 2011 balance sheet reflects corrections of errors related to current and deferred income taxes, which have a corresponding impact on retained earnings.









 







Table C

Vulcan Materials Company




and Subsidiary Companies















(Amounts in thousands)





Nine Months Ended

Consolidated Statements of Cash Flows

September 30

(Condensed and unaudited)

2012


2011








Operating Activities




Net loss

$     (56,076)


$     (42,913)

Adjustments to reconcile net loss to





net cash provided by operating activities:






Depreciation, depletion, accretion and amortization

253,391


273,671



Net gain on sale of property, plant & equipment and businesses

(31,886)


(55,886)



Contributions to pension plans

(3,379)


(3,762)



Share-based compensation

9,362


12,991



Deferred tax provision

(66,194)


(58,569)



Cost of debt purchase

-


19,153



Changes in assets and liabilities before initial







effects of business acquisitions and dispositions

(9,886)


(31,858)

Other, net

(1,573)


8,899




Net cash provided by operating activities

93,759


121,726















Investing Activities




Purchases of property, plant & equipment

(49,418)


(77,332)

Proceeds from sale of property, plant & equipment

28,930


11,730

Proceeds from sale of businesses, net of transaction costs

10,690


72,830

Other, net

963


1,684




Net cash provided by (used for) investing activities

(8,835)


8,912








Financing Activities




Net short-term payments

-


(285,500)

Payment of current maturities and long-term debt

(120)


(737,952)

Cost of debt purchase

-


(19,153)

Proceeds from issuance of long-term debt

-


1,100,000

Debt issuance costs

-


(17,904)

Proceeds from settlement of interest rate swap agreements

-


23,387

Proceeds from issuance of common stock

-


4,936

Dividends paid

(3,885)


(96,878)

Proceeds from exercise of stock options

6,167


3,232

Other, net

201


32




Net cash provided by (used for) financing activities

2,363


(25,800)








Net increase in cash and cash equivalents

87,287


104,838

Cash and cash equivalents at beginning of year

155,839


47,541

Cash and cash equivalents at end of period

$    243,126


$    152,379








 










Table D

Segment Financial Data and Unit Shipments








(Amounts in thousands, except per unit data)














Three Months Ended


Nine Months Ended




September 30


September 30




2012


2011


2012


2011

Total Revenues

















Aggregates segment (a)

$      491,158


$      514,723


$   1,317,923


$ 1,324,754


Intersegment sales

(42,522)


(42,473)


(112,919)


(111,770)


Net sales

448,636


472,250


1,205,004


1,212,984


Concrete segment (b)

108,651


101,390


303,285


281,809


Intersegment sales

-


-


-


-


Net sales

108,651


101,390


303,285


281,809


Asphalt Mix segment

118,219


128,897


293,266


304,432


Intersegment sales

-


-


-


-


Net sales

118,219


128,897


293,266


304,432


Cement segment (c)

22,727


19,137


63,569


52,491


Intersegment sales

(10,617)


(6,727)


(28,767)


(22,996)


Net sales

12,110


12,410


34,802


29,495


Total









Net sales

687,616


714,947


1,836,357


1,828,720


Delivery revenues

41,245


45,805


122,522


121,203


Total revenues

$ 728,861


$ 760,752


$ 1,958,879


$ 1,949,923











Gross Profit



















Aggregates

$      124,882


$      113,391


$      270,768


$    227,007


Concrete

(8,506)


(8,887)


(29,850)


(32,327)


Asphalt Mix

10,976


12,292


15,498


20,418


Cement

(429)


(1,016)


(1,596)


(5,584)


Total gross profit

$      126,923


$      115,780


$      254,820


$    209,514











Depreciation, depletion, accretion and amortization
















Aggregates

$        62,320


$        70,287


$      191,832


$    211,502


Concrete

11,421


13,058


34,895


39,291


Asphalt Mix

2,314


1,953


7,131


5,877


Cement

6,405


4,505


14,965


13,554


Corporate and other unallocated

1,648


1,145


4,568


3,447


Total DDA&A

$        84,108


$        90,948


$      253,391


$    273,671











Unit Shipments



















Aggregates customer tons

36,390


39,461


99,556


100,389


Internal tons (d)

2,990


3,106


8,000


8,072


Aggregates - tons

39,380


42,567


107,556


108,461










Ready-mixed concrete - cubic yards

1,116


1,043


3,149


2,911


Asphalt Mix - tons

2,085


2,283


5,208


5,522






















Cement customer tons

123


124


328


251


Internal tons (d)

136


97


367


316


Cement - tons

259


221


695


567











Average Unit Sales Price (including internal sales)

















Aggregates (freight-adjusted) (e)

$          10.63


$          10.24


$         10.44


$       10.31


Ready-mixed concrete

$          93.18


$          93.06


$         92.47


$       92.38


Asphalt Mix

$          55.52


$          55.84


$         55.12


$       54.53


Cement

$          77.89


$          72.63


$         77.97


$       75.44


(a) Includes crushed stone, sand and gravel, sand, other aggregates, as well as transportation and service

      revenues associated with the aggregates business.

(b) Includes ready-mixed concrete, concrete block, precast concrete, as well as building materials purchased for resale.

(c) Includes cement and calcium products.

(d) Represents tons shipped primarily to our downstream operations (e.g., asphalt mix and ready-mixed concrete).

      Sales from internal  shipments are eliminated in net sales presented above and in the accompanying Condensed

      Consolidated Statements of Earnings.

(e) Freight-adjusted sales price is calculated as total sales dollars (internal and external) less freight to remote

      distribution sites divided by total sales units (internal and external).











 




Table E

1.   Supplemental Cash Flow Information




Supplemental information referable to the Condensed Consolidated Statements of Cash Flows

for the nine months ended September 30 is summarized below:



(Amounts in thousands)


2012


2011



Supplemental Disclosure of Cash Flow Information




Cash paid (refunded) during the period for:




    Interest

$      104,440


$    102,260

    Income taxes

19,219


(31,127)






Supplemental Schedule of Noncash Investing and Financing Activities




Liabilities assumed in business acquisition

-


13,774

Accrued liabilities for purchases of property, plant & equipment

4,316


6,511

Fair value of equity consideration for business acquisition

-


18,529









2.   Reconciliation of Non-GAAP Measures








Generally Accepted Accounting Principles (GAAP) does not define "free cash flow" "cash gross profit", "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) and "cash earnings."  Thus, free cash flow should not be considered as an alternative to net cash provided by operating activities or any other liquidity measure defined by GAAP.  Likewise, cash gross profit, EBITDA and cash earnings should not be considered as alternatives to earnings measures defined by GAAP.  We present these metrics 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 and to monitor our cash and liquidity positions.  The investment community often uses these metrics as indicators of a company's ability to incur and service debt.  We use free cash flow, cash gross profit, EBITDA, cash earnings and other such measures to assess the operating performance of our various business units and the consolidated company.  We do not use these metrics as a measure to allocate resources.  Reconciliations of these metrics to their nearest GAAP measures are presented below:





Free Cash Flow








Free cash flow deducts purchases of property, plant & equipment from net cash provided by operating activities














(Amounts in thousands)






Nine Months Ended






September 30






2012


2011









Net cash provided by operating activities


$      93,759


$   121,726

Purchases of property, plant & equipment


(49,418)


(77,332)

Free cash flow


$      44,341


$     44,394









Cash Gross Profit
















Cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization (DDA&A) to gross profit





(Amounts in thousands)




Three Months Ended


Nine Months Ended


September 30


September 30


2012


2011


2012


2011








Gross Profit

$      126,923


$      115,780


$      254,820


$    209,514

DDA&A

84,108


90,948


253,391


273,671

Cash gross profit

$      211,031


$      206,728


$      508,211


$    483,185
















 












Table F

Reconciliation of Non-GAAP Measures (Continued)















EBITDA and Cash Earnings














EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. Cash earnings adjusts EBITDA for net interest expense and current taxes.





















(Amounts in thousands)









Three Months Ended


Nine Months Ended







September 30


September 30







2012


2011


2012


2011















Reconciliation of Net Loss to EBITDA and Cash Earnings






















Net earnings (loss)

$     14,260


$  19,959


$   (56,076)


$   (42,913)


Provision for (benefit from) income taxes

(10,992)


29,833


(67,138)


(47,938)


Interest expense, net

53,043


50,678


158,997


163,839


(Earnings) loss on discontinued operations, net of tax

1,361


2,453


(2,338)


(6,399)


EBIT

57,672


102,923


33,445


66,589


Plus: Depreciation, depletion, accretion and amortization

84,108


90,948


253,391


273,671















EBITDA

$   141,780


$  193,871


$   286,836


$   340,260


Less:     Interest expense, net

(53,043)


(50,678)


(158,997)


(163,839)


               Current taxes

(4,244)


3,488


2,069


(10,278)


Cash earnings

$     84,493


$  146,681


$   129,908


$   166,143















Adjusted EBITDA and Adjusted EBIT






















EBITDA

$   141,780


$  193,871


$   286,836


$   340,260


Recovery from legal settlement

-


(20,857)


-


(46,404)


Gain on sale of real estate and businesses

-


(39,659)


(18,321)


(39,659)


Restructuring charges

3,056


839


9,018


2,977


Exchange offer costs

1,206


-


43,331


-


Adjusted EBITDA

$   146,042


$  134,194


$   320,864


$   257,174


Less: Depreciation, depletion, accretion and amortization

84,108


90,948


253,391


273,671


Adjusted EBIT

$    61,934


$   43,246


$    67,473


$   (16,497)




























EBITDA Bridge

Three Months Ended




Nine Months Ended




(Amounts in millions)

September 30




September 30









EBITDA




EBITDA




Continuing Operations - 2011 Actual

$        194




$       340




Plus: Recovery from legal settlement

(21)




(46)




     Gain on sale of real estate

(40)




(40)




     Restructuring charges

1




3




2011 Adjusted EBITDA from continuing operations

134




257

















Increase / (Decrease) due to:









Aggregates: Volumes

(18)




(5)




          Selling prices

15




14




          Lower costs and other items

7




16




Concrete

(1)




(2)




Asphalt Mix

(1)




(4)




Cement

3




5




Lower selling, administrative and general expenses

2




26




Other

5




14




2012 Adjusted EBITDA from continuing operations

146




321

















Plus: Gain on sale of real estate

-




18




     Restructuring charges

(3)




(9)




     Exchange offer costs

(1)




(43)




Continuing Operations - 2012 Actual

$       142




$       287

















 

SOURCE Vulcan Materials Company



RELATED LINKS
http://www.vulcanmaterials.com

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