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Vulcan Materials (VMC) Up on Q2 Earnings & Revenue Beat

Zacks Equity Research

Vulcan Materials Company’s VMC shares gained 2.1%, following solid second-quarter 2019 results, wherein the top and bottom lines surpassed the respective Zacks Consensus Estimate. Also, earnings and revenues improved year over year, given shipment growth, price improvements and operating efficiencies in the aggregates business. Also, robust growth in public construction demand and continued improvement in private demand added to the positives.

The company — which is one of the largest producers of construction aggregates — reported adjusted earnings of $1.48 per share, surpassing the consensus mark of $1.45 by 2.1%. Total revenues of $1,327.7 million outpaced the consensus mark of $1,306 million by 1.7%.

On a year-over-year basis, its earnings and revenues grew 20.4% and 10.6%, respectively, in the quarter.

Segments in Detail

Aggregates

Revenues from the segment increased 11% year over year to $1,062.1 million. Freight-adjusted revenues also rose 10.4% from the prior-year quarter to $806.4 million. The upside was mainly driven by shipment growth, higher pricing, and solid execution of operating disciplines and efficiencies.

Aggregate shipments (volumes) were up 4% year over year, reflecting solid underlying demand, mainly arising from public funding for highways, and employment and population growth, particularly in Southeast and Mid-Atlantic regions. Yet, adverse weather delayed shipments across Illinois, Tennessee and Texas.

Gross profit of $329 million was up 16% year over year. Also, gross margin (as a percentage of segment sales) expanded 140 basis points (bps) to 31% on the back of solid growth in shipments and price improvements.

Asphalt, Concrete and Calcium

Revenues from the Asphalt Mix segment were $247.2 million, up 16.7% year over year. The segment recorded a gross profit of $27.6 million versus $25.8 million a year ago due to lower material margins. Asphalt mix selling prices increased 8% or $4.34 per ton and shipments grew 8% from the prior-year quarter.

Unit cost of liquid asphalt, which recorded a 16% year-over-year increase in the second quarter, was relatively stable throughout the first half of 2019.

Total revenues from the Concrete segment were $103.8 million, down 2.8% year over year. Moreover, gross profit totaled $12.9 million, down 2.3% year over year. Same-store shipments were down 11.1% year over year but average selling prices grew 5%.

Total revenues from the Calcium segment were down 12.2% from the prior-year figure to $2 million. The segment reported gross profit of $0.8 million versus $0.7 million in the prior-year quarter.

Vulcan Materials Company Price, Consensus and EPS Surprise

 

Vulcan Materials Company Price, Consensus and EPS Surprise

Vulcan Materials Company price-consensus-eps-surprise-chart | Vulcan Materials Company Quote

 

Operating Highlights

Selling, Administrative and General or SAG expenses were $95.7 million, increasing 7.5% year over year. As a percentage of revenues, the metric improved 20 bps year over year. Also, adjusted EBITDA was up 15% year over year to $372 million, driven by strong shipments and pricing.

Financials

As of Jun 30, 2019, cash and cash equivalents were $26 million, down from $40 million at the end of 2018, as well as $55.1 million recorded in the comparable year-ago period.

In second-quarter 2019, Vulcan Materials returned $41 million to its shareholders, which is 11% higher from the year-ago level. At the end of the quarter, total debt — which amounted to $2.9 billion — was 2.4 times of its trailing 12-month adjusted EBITDA.

2019 Guidance Reiterated

Vulcan Materials expects double-digit earnings growth in 2019. Its earnings from continuing operations for the full year are expected within $4.55-$5.05 and adjusted EBITDA is projected in the range of $1.250-$1.330 billion.

Zacks Rank & Peer Releases

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

United Rentals URI reported better-than-expected second-quarter 2019 earnings and revenues. However, the company trimmed its full-year guidance to reflect "a slightly slower than expected pace for the BlueLine integration, as well as historically bad weather in several key regions this past quarter."

Owens Corning’s OC second-quarter 2019 earnings and net sales not only topped the respective Zacks Consensus Estimate but also improved on a year-over-year basis, buoyed by increased organic growth, improved operating efficiencies, along with higher contribution from the Roofing business.

Masco Corporation MAS reported mixed second-quarter 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Also, on a year-over-year basis, the company’s bottom line improved owing to significant pricing actions and cost-control measures. However, its top line slipped marginally from the prior-year quarter due to lower volumes across the board.

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