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Vulcan Announces Second Quarter 2019 Results

EPS from Continuing Operations Increases 23 Percent to $1.48 per Diluted Share

Aggregates Unit Profitability Expands

BIRMINGHAM, Ala., July 25, 2019 /PRNewswire/ -- Vulcan Materials Company (VMC), the nation's largest producer of construction aggregates, today announced results for the quarter ended June 30, 2019.

Net earnings were $198 million, up 24 percent, and Adjusted EBITDA was $372 million, up 15 percent compared to last year's second quarter.  The double-digit growth was driven primarily by a 16 percent increase in Aggregates segment gross profit.  For the quarter, aggregates shipments increased 4 percent year-over-year, and freight-adjusted aggregates pricing increased 5.9 percent (5.4 percent mix-adjusted).  Same-store aggregates gross profit incremental flow-through rate for the trailing-twelve months was 65 percent. 

Tom Hill, Chairman and Chief Executive Officer, said, "We continued to execute well.  Our industry-leading unit profitability in aggregates increased from $5.16 to $5.74 per ton, an 11 percent increase compared to the prior year's second quarter.  We remain keenly focused on creating long-term value by compounding our aggregates unit margins, while continuing to operate safely.  Shipment growth in the second quarter was solid and consistent with full-year expectations.  Importantly, price improvements were widespread.  These results further highlight the strength of our aggregates-focused business, which serves Vulcan's attractive long-term growth markets. 

"Our key markets are benefitting from robust growth in public construction demand, driven by highways.  State-level transportation funding increases signed into law in recent years have led to new highway construction starts that are 21 percent higher than two years ago.  This significant increase will support continued shipment growth into transportation-related end markets in the coming years.  Shipments into private construction continue to grow as well.  Aggregates pricing momentum continues to improve, consistent with our expectations.  The continuing improvement in unit profitability is a direct result of our focus on operating disciplines and compounding pricing improvements.  As a result, we reiterate our full-year expectations for 2019 earnings from continuing operations of between $4.55 and $5.05 per diluted share and Adjusted EBITDA of between $1.250 and $1.330 billion."

Highlights as of June 30, 2019 include:


Second Quarter


Year-to-Date


Trailing Twelve Months

Amounts in millions, except per unit data

2019

2018


2019

2018


2019

2018

Total revenues

$1,327.7

$1,200.2


$2,324.2

$2,054.6


$  4,652.4

$  4,126.8

Gross profit

$   370.5

$   323.2


$   562.2

$   482.5


$  1,180.6

$  1,027.8

Aggregates segment









Segment sales

$1,062.1

$   956.3


$1,897.0

$1,655.9


$  3,754.8

$  3,284.1

Freight-adjusted revenues

$   806.4

$   730.5


$1,435.1

$1,259.9


$  2,842.4

$  2,524.4

Gross profit

$   329.2

$   283.5


$   514.9

$   431.7


$  1,075.1

$     896.0

Shipments (tons)

57.3

55.0


102.9

95.5


208.8

192.5

Freight-adjusted sales price per ton

$   14.07

$   13.29


$   13.94

$   13.19


$     13.61

$     13.12

Gross profit per ton

$     5.74

$     5.16


$     5.00

$     4.52


$       5.15

$       4.66

Asphalt, Concrete & Calcium segment gross profit

$     41.3

$     39.7


$     47.2

$     50.8


$     105.5

$     131.8

Selling, Administrative and General (SAG)

$     95.7

$     89.0


$   186.0

$   167.4


$     351.9

$     326.9

SAG as % of Total Revenues

7.2%

7.4%


8.0%

8.1%


7.6%

7.9%

Earnings from continuing operations before income taxes

$   245.5

$   200.3


$   320.1

$   248.8


$     694.6

$     412.4

Net earnings

$   197.6

$   159.7


$   260.9

$   212.6


$     564.0

$     648.8

Adjusted EBIT

$   278.5

$   239.2


$   382.0

$   325.6


$     841.9

$     713.0

Adjusted EBITDA

$   372.0

$   324.8


$   564.7

$   492.7


$  1,203.8

$  1,037.6

Earnings from continuing operations per diluted share

$     1.48

$     1.20


$     1.97

$     1.59


$       4.25

$       4.84

Adjusted earnings from continuing operations per diluted share

$     1.48

$     1.23


$     1.94

$     1.66


$       4.33

$       3.45


Segment Results

Aggregates
Second quarter segment sales increased 11 percent, and gross profit increased 16 percent to $329 million.  Unit margins increased $0.58 per ton, or 11 percent, to $5.74 per ton.  This improvement resulted from solid growth in shipments, price improvements and execution of operating disciplines and efficiencies.

Second quarter aggregates shipments increased 4 percent (3 percent on a same-store basis) versus the prior year quarter.  The solid underlying demand fundamentals of increased public funding for highways, along with employment and population growth, helped drive shipment strength across most of the Company's footprint, particularly in the Southeast and Mid-Atlantic.  Wet weather delayed shipments across Illinois, Tennessee and Texas.  California overcame another quarter of wet weather to realize shipment growth compared to the prior year.  A healthy demand environment, led by transportation-related construction, is driving volume growth and price improvement.

All of the Company's key markets reported year-over-year price growth.  For the quarter, freight-adjusted average sales price increased 5.9 percent versus the prior year's quarter.  Mix-adjusted average sales price increased 5.4 percent.  Positive trends in backlogged project work, along with demand visibility and customer confidence, support similar price improvement throughout the remainder of 2019.

Second quarter same-store unit cost of sales (freight-adjusted) increased less than 2 percent compared to the prior year quarter.  Trailing-twelve month same-store incremental gross profit flow-through rate was 65 percent, which is slightly ahead of longer-term expectations of 60 percent.  Quarterly gross profit flow-through rates can vary widely from quarter to quarter; therefore, the Company evaluates this metric on a trailing-twelve month basis.  The Company remains focused on compounding improvements in unit margins throughout the cycle through fixed cost leverage, price growth and operating efficiencies.

Asphalt, Concrete and Calcium
Asphalt segment gross profit was $28 million for the second quarter, an increase of $2 million from the prior year.  Asphalt shipments increased 8 percent (5 percent same-store), and asphalt mix selling prices increased 8 percent, or $4.34 per ton, in the second quarter.  The average unit cost for liquid asphalt was 16 percent higher than the prior year quarter.  Liquid asphalt costs have remained relatively stable through the first half of the year and have allowed pricing gains to begin offsetting the higher unit costs for liquid asphalt.   

Concrete segment gross profit was $13 million, approximating the prior year quarter.  Shipments were 0.8 million cubic yards, down from 0.9 million cubic yards in the prior year.  Average selling prices increased 5 percent and led to modest gains in material margins. 

Calcium segment gross profit was $0.8 million, a slight increase versus the prior year quarter.

Capital Allocation and Financial Position

Capital expenditures in the second quarter included $64 million of core operating and maintenance capital to improve or replace existing property, plant and equipment.  In addition, the Company invested $40 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 operations.  Through the first six months of the year, core operating and maintenance capital investment totaled $131 million, and internal growth projects investment was $95 million.  The Company's full-year expectations for 2019 remain unchanged at $250 million on maintenance capital and $200 million on internal growth projects.

During the quarter, the Company returned $41 million to shareholders through dividends, an 11 percent increase versus the prior year quarter.  No shares were repurchased during the quarter.  At quarter-end, total debt was $2.9 billion, or 2.4 times trailing-twelve month Adjusted EBITDA.

Selling, Administrative and General (SAG) Expenses

SAG expense in the quarter was $96 million versus $89 million in the prior year quarter.  The year-over-year increase was due mainly to compensation related expense, including incentives that are tied to earnings expectations and the share price.  Additionally, we have made investments in people and processes to accelerate the benefits derived from our sales and operational initiatives.  On a trailing-twelve month basis, SAG expense as a percentage of total revenues was 7.6 percent, 30 basis points lower than the prior year period.  The Company remains focused on further leveraging its overhead structure.

Outlook

Regarding the Company's full-year outlook for 2019, Mr. Hill stated, "Overall demand growth in Vulcan markets remains healthy.  Public demand growth, led by highways, continues to be robust across our footprint.  Current shipments into private construction end markets continue to benefit from the ongoing economic recovery.  Demand fundamentals, including population and employment growth, underpin long-term growth in residential and private nonresidential construction.  We delivered good incremental earnings in the first half of this year.  Unit profitability in Aggregates increased 11 percent during this period, and we are well positioned to carry that momentum forward through the remainder of the year.  For the full year, we expect earnings from continuing operations of between $4.55 and $5.05 per diluted share and Adjusted EBITDA of between $1.250 and $1.330 billion."

Conference Call

Vulcan will host a conference call at 10:00 a.m. CT on July 25, 2019.  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 800-458-4121, or 720-543-0206 if outside the U.S., approximately 10 minutes before the scheduled start.  The conference ID is 3003613.  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 with headquarters in Birmingham, Alabama, is the nation's largest producer of construction aggregates – primarily crushed stone, sand and gravel – and a major producer of aggregates-based construction materials, including asphalt mix and ready-mixed concrete.  For additional information about Vulcan, go to www.vulcanmaterials.com.

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: general economic and business conditions; Vulcan's dependence on the construction industry, which is subject to economic cycles; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction; 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, 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; 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, including the impact of climate change; 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 cleanup 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 effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan's products are distributed; 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
















(in thousands, except per share data)







Three Months Ended



Six Months Ended


Consolidated Statements of Earnings




June 30




June 30


(Condensed and unaudited)


2019


2018


2019


2018














Total revenues


$1,327,682


$1,200,151


$2,324,193


$2,054,625


Cost of revenues


957,180


876,967


1,762,016


1,572,106


Gross profit


370,502


323,184


562,177


482,519


Selling, administrative and general expenses


95,689


89,043


185,957


167,383


Gain on sale of property, plant & equipment










and businesses


3,451


2,106


10,748


6,270


Other operating expense, net


(2,190)


(5,994)


(6,461)


(9,969)


Operating earnings


276,074


230,253


380,507


311,437


Other nonoperating income, net


2,466


3,339


5,595


8,421


Interest expense, net


33,035


33,244


65,969


71,018


Earnings from continuing operations










before income taxes


245,505


200,348


320,133


248,840


Income tax expense


47,598


40,046


58,291


35,143


Earnings from continuing operations


197,907


160,302


261,842


213,697


Loss on discontinued operations, net of tax


(349)


(650)


(985)


(1,066)


Net earnings


$197,558


$159,652


$260,857


$212,631














Basic earnings (loss) per share










Continuing operations


$1.50


$1.21


$1.98


$1.61


Discontinued operations


($0.01)


$0.00


($0.01)


($0.01)


Net earnings


$1.49


$1.21


$1.97


$1.60














Diluted earnings (loss) per share










Continuing operations


$1.48


$1.20


$1.97


$1.59


Discontinued operations


$0.00


($0.01)


($0.01)


($0.01)


Net earnings


$1.48


$1.19


$1.96


$1.58


























Weighted-average common shares outstanding










Basic


132,269


132,437


132,157


132,563


Assuming dilution


133,354


134,051


133,199


134,280


Depreciation, depletion, accretion and amortization


$93,497


$85,633


$182,677


$167,072


Effective tax rate from continuing operations


19.4%


20.0%


18.2%


14.1%


 










Table B


Vulcan Materials Company








and Subsidiary Companies
















(in thousands)


Consolidated Balance Sheets


June 30


December 31


June 30


(Condensed and unaudited)


2019


2018


2018


Assets








Cash and cash equivalents


$26,031


$40,037


$55,059


Restricted cash


491


4,367


6,056


Accounts and notes receivable








Accounts and notes receivable, gross


700,175


542,868


640,742


Allowance for doubtful accounts


(2,844)


(2,090)


(2,628)


Accounts and notes receivable, net


697,331


540,778


638,114


Inventories








Finished products


377,578


372,604


343,948


Raw materials


31,137


27,942


29,684


Products in process


6,332


3,064


1,882


Operating supplies and other


26,376


25,720


28,250


Inventories


441,423


429,330


403,764


Other current assets


89,739


64,633


80,209


Total current assets


1,255,015


1,079,145


1,183,202


Investments and long-term receivables


51,667


44,615


41,989


Property, plant & equipment








Property, plant & equipment, cost


8,613,500


8,457,619


8,241,164


Allowances for depreciation, depletion & amortization


(4,322,818)


(4,220,312)


(4,134,750)


Property, plant & equipment, net


4,290,682


4,237,307


4,106,414


Operating lease right-of-use assets, net


418,896


0


0


Goodwill


3,167,061


3,165,396


3,163,954


Other intangible assets, net


1,076,986


1,095,378


1,156,898


Other noncurrent assets


220,457


210,289


192,327


Total assets


$10,480,764


$9,832,130


$9,844,784


Liabilities








Current maturities of long-term debt


24


23


23


Short-term debt


137,000


133,000


360,000


Trade payables and accruals


284,875


216,473


231,913


Other current liabilities


241,689


253,054


219,860


Total current liabilities


663,588


602,550


811,796


Long-term debt


2,781,826


2,779,357


2,776,906


Deferred income taxes, net


601,189


567,283


545,756


Deferred revenue


182,666


186,397


188,826


Operating lease liabilities


396,952


0


0


Other noncurrent liabilities


483,096


493,640


500,870


Total liabilities


$5,109,317


$4,629,227


$4,824,154


Equity








Common stock, $1 par value


132,231


131,762


132,268


Capital in excess of par value


2,787,002


2,798,486


2,788,486


Retained earnings


2,623,747


2,444,870


2,244,545


Accumulated other comprehensive loss


(171,533)


(172,215)


(144,669)


Total equity


$5,371,447


$5,202,903


$5,020,630


Total liabilities and equity


$10,480,764


$9,832,130


$9,844,784












 









Table C


Vulcan Materials Company






and Subsidiary Companies













(in thousands)









Six Months Ended


Consolidated Statements of Cash Flows




June 30


(Condensed and unaudited)


2019


2018


Operating Activities






Net earnings




$260,857


$212,631


Adjustments to reconcile net earnings to net cash provided by operating activities





Depreciation, depletion, accretion and amortization


182,677


167,072


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


(10,748)


(6,270)


Contributions to pension plans


(4,638)


(104,794)


Share-based compensation expense


14,370


14,763


Deferred tax expense (benefit)


34,816


40,549


Cost of debt purchase


0


6,922


Changes in assets and liabilities before initial






effects of business acquisitions and dispositions


(201,256)


(55,415)


Other, net





25,838


302


Net cash provided by operating activities


$301,916


$275,760


Investing Activities






Purchases of property, plant & equipment


(225,837)


(247,166)


Proceeds from sale of property, plant & equipment


11,200


8,523


Proceeds from sale of businesses


1,744


11,256


Payment for businesses acquired, net of acquired cash


1,122


(218,996)


Other, net





(4,577)


(10,226)


Net cash used for investing activities


($216,348)


($456,609)


Financing Activities






Proceeds from short-term debt


360,100


506,200


Payment of short-term debt


(356,100)


(146,200)


Payment of current maturities and long-term debt


(11)


(892,044)


Proceeds from issuance of long-term debt


0


850,000


Debt issuance and exchange costs


0


(45,513)


Settlements of interest rate derivatives


0


3,378


Purchases of common stock


0


(74,921)


Dividends paid




(81,927)


(74,196)


Share-based compensation, shares withheld for taxes


(25,512)


(31,386)


Net cash provided by (used for) financing activities


($103,450)


$95,318


Net decrease in cash and cash equivalents and restricted cash


(17,882)


(85,531)


Cash and cash equivalents and restricted cash at beginning of year


44,404


146,646


Cash and cash equivalents and restricted cash at end of period


$26,522


$61,115











 













Table D


Segment Financial Data and Unit Shipments













(in thousands, except per unit data)








Three Months Ended



Six Months Ended









June 30




June 30







2019


2018


2019


2018


Total Revenues










Aggregates 1


$1,062,061


$956,265


$1,897,026


$1,655,922


Asphalt 2


247,163


211,828


379,253


315,663


Concrete 


103,768


106,723


187,405


207,685


Calcium 


2,003


2,282


3,954


4,224


Segment sales


$1,414,995


$1,277,098


$2,467,638


$2,183,494


Aggregates intersegment sales


(87,313)


(76,947)


(143,445)


(128,869)


Total revenues


$1,327,682


$1,200,151


$2,324,193


$2,054,625


Gross Profit










Aggregates


$329,215


$283,476


$514,931


$431,697


Asphalt



27,583


25,750


24,311


25,996


Concrete 


12,887


13,191


21,450


23,511


Calcium 





817


767


1,485


1,315


Total




$370,502


$323,184


$562,177


$482,519


Depreciation, Depletion, Accretion and Amortization





Aggregates


$75,760


$69,738


$148,281


$135,691


Asphalt



8,884


7,298


17,434


14,300


Concrete 


3,327


3,049


6,291


6,463


Calcium 


58


70


118


139


Other




5,468


5,478


10,553


10,479


Total




$93,497


$85,633


$182,677


$167,072


Average Unit Sales Price and Unit Shipments






Aggregates










Freight-adjusted revenues 3


$806,444


$730,513


$1,435,051


$1,259,927


Aggregates - tons


57,310


54,957


102,947


95,489


Freight-adjusted sales price 4


$14.07


$13.29


$13.94


$13.19















Other Products










Asphalt Mix - tons


3,595


3,330


5,617


5,149


Asphalt Mix - sales price


$58.31


$53.97


$57.45


$53.69















Ready-mixed concrete - cubic yards

815


876


1,484


1,692


Ready-mixed concrete - sales price


$126.12


$120.56


$125.14


$121.48















Calcium - tons


73


80


141


148


Calcium - sales price


$27.50


$28.11


$27.89


$28.49

















1Includes product sales (crushed stone, sand and gravel, sand, and other aggregates), as well as freight & delivery



costs that we pass along to our customers, and service revenues related to aggregates.


2Includes product sales, as well as service revenues from our asphalt construction paving business.


3Freight-adjusted revenues are Aggregates segment sales excluding freight & delivery revenues and immaterial



other revenues related to services, such as landfill tipping fees that are derived from our aggregates business.


4Freight-adjusted sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments.


 













Appendix 1


1.   Reconciliation of Non-GAAP Measures





















Aggregates segment freight-adjusted 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. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, 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. Additionally, we use this metric as the basis for calculating the average sales price of our aggregates products. Reconciliation of this metric to its nearest GAAP measure is presented below:








Aggregates Segment Freight-Adjusted Revenues



















(in thousands, except per ton data)








Three Months Ended



Six Months Ended









June 30




June 30







2019


2018


2019


2018


Aggregates segment










Segment sales


$1,062,061


$956,265


$1,897,026


$1,655,922


Less:


Freight & delivery revenues 1


241,354


213,474


436,508


372,417





Other revenues


14,263


12,278


25,467


23,578


Freight-adjusted revenues


$806,444


$730,513


$1,435,051


$1,259,927


Unit shipment - tons


57,310


54,957


102,947


95,489


Freight-adjusted sales price


$14.07


$13.29


$13.94


$13.19















1At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote


  distribution sites.























Aggregates segment incremental gross profit flow-through rate is not a GAAP measure and represents the year-over-year change in gross profit divided by the year-over-year change in segment sales excluding freight & delivery (revenues and costs). 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 revenues associated with freight & delivery, which are pass-through activities (we do not generate a profit associated with the transportation component of the selling price of the product). Reconciliations of these metrics to their nearest GAAP measures are presented below:







Aggregates Segment Incremental Gross Profit Margin in Accordance with GAAP













 

(dollars in thousands)








Three Months Ended



Six Months Ended









June 30




June 30







2019


2018


2019


2018


Aggregates segment










Gross profit


$329,215


$283,476


$514,931


$431,697


Segment sales


$1,062,061


$956,265


$1,897,026


$1,655,922


Gross profit margin


31.0%


29.6%


27.1%


26.1%


Incremental gross profit margin


43.2%




34.5%

















Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP)














 

(dollars in thousands)








Three Months Ended



Six Months Ended









June 30




June 30







2019


2018


2019


2018


Aggregates segment










Gross profit


$329,215


$283,476


$514,931


$431,697


Segment sales


$1,062,061


$956,265


$1,897,026


$1,655,922


Less:


Freight & delivery revenues 1


241,354


213,474


436,508


372,417



Segment sales excluding freight & delivery


$820,707


$742,791


$1,460,518


$1,283,505


Gross profit flow-through rate


40.1%


38.2%


35.3%


33.6%


Incremental gross profit flow-through rate


58.7%




47.0%

















1At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote


  distribution sites.























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 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



Six Months Ended









June 30




June 30







2019


2018


2019


2018


Aggregates segment










Gross profit


$329,215


$283,476


$514,931


$431,697


Depreciation, depletion, accretion and amortization


75,760


69,738


148,281


135,691



Aggregates segment cash gross profit


$404,975


$353,214


$663,212


$567,388


Unit shipments - tons


57,310


54,957


102,947


95,489


Aggregates segment cash gross profit per ton


$7.07


$6.43


$6.44


$5.94














 


















Appendix 2


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 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

























 

(in thousands)








Three Months Ended



Six Months Ended




TTM









June 30




June 30




June 30







2019


2018


2019


2018


2019


2018


Net earnings


$197,558


$159,652


$260,857


$212,631


$564,031


$648,756


Income tax expense (benefit)


47,598


40,046


58,291


35,143


128,597


(239,409)


Interest expense, net


33,035


33,244


65,969


71,018


132,374


289,572


Loss on discontinued operations, net of tax


349


650


985


1,066


1,955


3,060


EBIT




$278,540


$233,592


$386,102


$319,858


$826,957


$701,979


Depreciation, depletion, accretion and amortization


93,497


85,633


182,677


167,072


361,851


324,698


EBITDA



$372,037


$319,225


$568,779


$486,930


$1,188,808


$1,026,677



Gain on sale of businesses


0


0


(4,064)


(2,929)


(4,064)


(13,437)



Property donation


0


0


0


0


0


4,290



Business interruption claims recovery


0


0


0


(1,694)


(559)


(1,694)



Charges associated with divested operations


0


0


0


0


18,545


1,661



Business development 1


0


4,466


0


4,982


220


8,046



One-time employee bonuses


0


0


0


0


0


6,716



Restructuring charges


0


1,146


0


5,390


829


5,390


Adjusted EBITDA


$372,037


$324,837


$564,715


$492,679


$1,203,779


$1,037,649



Depreciation, depletion, accretion and amortization


(93,497)


(85,633)


(182,677)


(167,072)


(361,851)


(324,698)


Adjusted EBIT


$278,540


$239,204


$382,038


$325,607


$841,928


$712,951


1Represents non-routine charges associated with acquisitions including the cost impact of purchase accounting inventory valuations.






















Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted EPS from continuing operations 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



Six Months Ended




TTM









June 30




June 30




June 30







2019


2018


2019


2018


2019


2018


Diluted EPS from continuing operations


$1.48


$1.20


$1.97


$1.59


$4.25


$4.84



Items included in Adjusted EBITDA above


0.00


0.03


(0.03)


0.03


0.08


0.06



Debt refinancing costs


0.00


0.00


0.00


0.04


0.00


0.75



Tax reform income tax savings


0.00


0.00


0.00


0.00


0.00


(1.99)



Alabama NOL carryforward valuation allowance


0.00


0.00


0.00


0.00


0.00


(0.21)


Adjusted Diluted EPS


$1.48


$1.23


$1.94


$1.66


$4.33


$3.45



















The following reconciliation to the mid-point of the range of 2019 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount). Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP.  Reconciliation of this metric to its nearest GAAP measure is presented below:






















2019 Projected EBITDA



























(in millions)

















Mid-point




Net earnings










$640




Income tax expense










160




Interest expense, net










130




Discontinued operations, net of tax










0




Depreciation, depletion, accretion and amortization










360




Projected EBITDA










$1,290




















 

Vulcan Materials Company, Birmingham, AL. (PRNewsFoto/Vulcan Materials Company) (PRNewsFoto/) (PRNewsFoto/)
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