Vulcan Posts Wider 1Q Loss

Zacks

Vulcan Materials Company (VMC) posted net loss of 42 cents per share in the first quarter of 2013, wider than the year-ago quarter loss of 40 cents per share. The Zacks Consensus Estimate for the quarter is a loss of 36 cents per share.

The loss for the first quarter of both 2011 and 2012 includes the impact of gains on sale of real estate and businesses and restructuring charges.

Total revenue of $538.2 million surpassed the Zacks Consensus Estimate of $514 million by 4.7%. Total revenue also increased 0.4% from the prior-year quarter, driven by price increase in the aggregates segment and volume growth in ready mix concrete and cement.

Top-line growth mostly benefitted from the increase in private construction activity, especially residential. Total revenue comprised $504.6 of net sales and $33.6 million of delivery revenues.

Adjusted EBITDA was $26.0 million, down 44.7% from the prior-year quarter. Selling, administrative and general (:SAG) costs declined 0.3% from the prior-year quarter to $64.7 million attributable to Vulcan’s cost saving efforts.

Segment Details

Aggregates

Revenues rose 0.3% to $325.4 million (including inter-segment sales) in the quarter as gains from price increases were partially offset by volume declines and strong year-ago comparisons, which included favorable weather conditions in 2012. Aggregates shipments (volumes) declined 5.0% year over year in the quarter. Average sales price increased 5% due to improvement in most markets.  

The company is witnessing a growing demand for private construction, including residential housing starts and contract awards for non-residential buildings, following a steady recovery in the overall housing industry. Due to growth in housing construction activity, Vulcan saw some shipment growth in the states of Arizona, California and Florida, with each state growing a double digit percentage increase in the quarter.

Non-Aggregates

Revenues of the Concrete and Cement segment witnessed a year-over-year increase on the back of volume growth and price increase. The Asphalt segment witnessed decline in revenues during the first quarter of 2013 due to weak volume and price dip.

Financial Update

The company reported cash and cash equivalents of $188.1 million as of March 31, 2013, compared with $275.5 million as of Dec 31, 2012.

2013 Outlook

With the housing market gaining momentum, demand for Vulcan’s products, both aggregates as well as non-aggregates, is improving. As such, the company expects earnings to improve in 2013 on the back of pricing growth, funding stability, aggressive cost control and volume increase.

Aggregates: Private construction demand is expected to grow. Though the number of large highway and industrial projects are expected to grow with increased funding certainty from the new highway bill, the timing of these projects is difficult to predict.

Aggregates shipments are expected to grow in the range of 1%-5% in 2013. However, volume growth will be weighted more toward the second half of the year due to difficult weather comparisons in the year-ago quarter.

Non-Aggregates: The company expects earnings to improve in all the three non-aggregates segments in 2013. While Concrete earnings are expected to gain from improving housing starts, Cement earnings are expected to get a boost from lower production costs.

Vulcan carries a Zacks Rank #3 (Hold).

Some other stocks, which are currently performing well in the construction sector include, Ryland Group Inc. (RYL), Eagle Materials Inc. (EXP) and Texas Industries Inc. (TXI). While Ryland carries a Zacks Rank #1 (Strong Buy), Eagle Materials and Texas Industries carry a Zacks Rank #2 (Buy).

Read the Full Research Report on VMC

Read the Full Research Report on TXI

Read the Full Research Report on RYL

Read the Full Research Report on EXP

Zacks Investment Research



More From Zacks.com

Rates

View Comments (0)