Vulcan Reports Mixed 4Q
Vulcan Materials Company (VMC) posted net earnings of 3 cents per share in the fourth quarter of 2012 in contrast to the Zacks Consensus Estimate of a loss of 11 cents per share by a wide margin. However, the loss was narrower than the prior year quarter’s loss of 20 cents as the top-line decline was offset by margin gains.
Total revenue of $608.4 million surpassed the Zacks Consensus Estimate of $593 million by 2.6%, due to strong pricing rise in all the segments. However, total revenue declined 1.0% from prior year quarter, dragged down by uneven volume performance.
Consolidated gross margins improved 90 basis points in the quarter on the back of lower net sales. Total selling, administrative and general (:SAG) expense declined 6.7% in the quarter to $66.9 million due to the company’s cost reduction efforts. Adjusted EBITDA was $90 million, versus $95 million from the prior-year quarter, driven by improved gross margins and lower SAG costs.
Segment Details
Aggregates
The construction Aggregates segment includes crushed stone, sand and gravel and recycled concrete. The segment serves markets in U.S. states, the District of Columbia, the Bahamas and Mexico. The company also sells railroads, ballast for construction and maintenance of railroad track and riprap and jetty stone for erosion control along waterways.
Revenues of the segment were $376.2 million in the fourth quarter 2012, down 0.6% y/y. The drop in revenue was due to a 3.0% decline in shipment. Average sales price grew 4% to $10.45 from the prior-year quarter due to increase in prices in all the markets.
The key markets of North Carolina, Arizona, Florida and Texas showed strong double-digit volume gains on the back of infrastructure construction activity, mainly highways and improvement in private sector work. However, there was decline in volumes in California, Virginia, Midwest and Georgia, owing to less number of large projects compared to the prior-year quarter.
Non Aggregates
Revenues in the Concrete segment were $103.1 million in the fourth quarter 2012, up 11% y/y, driven by 10.6% rise in volume of ready-mixed concrete, partially offset by 0.13% decline in average sales price to $91.38.
Revenues in the Asphalt Mix segment were $84.9 million in the fourth quarter of 2012, down 10.2% y/y, driven by double digit decline in volume. Asphalt mix volume declined 11.8% from the prior year. Average sales price increased slightly by 1.4% to $56.07 from the prior-year quarter. Revenues in the Cement segment were $10.8 million, down 12.9% y/y.
Fiscal 2012
Vulcan Materials Company posted a net loss of 42 cents per share in the full year 2012, narrower than the Zacks Consensus Estimate of a loss of 44 cents per share. However, the loss was narrower than the prior year’s loss of 58 cents. Total revenue of $2.57 billion lagged the Zacks Consensus Estimate of $2.43 billion. Total revenue improved very slightly from the prior year level.
Outlook
As the housing market is gaining momentum, the demand for Vulcan’s products is improving. As such, the company is optimistic about fiscal 2013 results on the back of pricing growth, funding stability, cost control and volume increase. The company expects the aggregate margins and profitability to improve in the upcoming quarters.
Vulcan carries a Zacks Rank #3 (Hold).
Other stocks that are doing well are NVR Inc.(NVR) carrying a Zacks Rank #1 (Strong Buy) and CEMEX, S.A.B. de C.V. (CX) and Texas Industries Inc. (TXI) both carrying a Zacks Rank #2 (Buy).
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