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Vulcan Materials experiences a profitable fourth quarter

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World Cement,

Vulcan Materials Company, the US’ largest producer of construction aggregates, has announced its results for the fourth quarter ending 31 December 2013

4Q13 highlights

  • Earnings from continuing operations stood at US$0.08 per diluted share, against US$0.03 per share in 4Q12.
  • Adjusted EBITDA increased to US$129 million versus US$90 million in 4Q12.
  • Net sales rose by 14% y/y to US$78 million compared to 4Q12, as volumes continued to improve.
  • Gross profit improved by 48% y/y to US$38 million, primarily on the strength of the volume growth and operating leverage in aggregates.
  • Selling, administrative and general (SAG) expenses were reduced by US$3 million from the previous year.

Don James, Chairman and Chief Executive Officer, said: "Demand for our products continues to benefit from a recovery in private construction activity, particularly residential construction. As a result, each of our operating segments reported earnings improvement in the fourth quarter. In particular, our aggregates segment performed very well – reflecting the strong earnings leverage to volume growth. Higher aggregates pricing and shipments coupled with lower unit cost of sales led to a 37% improvement in segment earnings and a 390 basis point improvement in aggregates gross profit margin."

4Q13 segment results

The aggregates segment revenues totalled US$470 million and gross profit stood at US$112 million, an increase of 14% y/y and 37% y/y, respectively, compared to 4Q12. Cash gross profit was US$4.62/t of aggregates, an increase 12% against 4Q12 and 30% above the level at prior peak volumes in 2005. Many of the company's key markets realised double-digit volume growth compared to the previous year, most notably Arizona, California, Florida, Georgia, North Carolina and Texas. Similarly, the average sales price for aggregates increased from 4Q12 in most of the company's key markets, led by growth in Alabama, California, Florida, Texas and along the Gulf Coast.

Shipments in each of the non-aggregates segments increased compared to 4Q12, leading to an earnings improvement of US$8 million in total. Cement segment gross profit improved by US$4 million compared to the previous year, due to increased volumes and lower operating costs. Concrete segment gross profit improved by US$3 million, mainly due to a 15% increase in unit shipments. Gross profit in the asphalt mix segment increased slightly from 4Q12.

Update on initiatives

"Upon closing of the previously announced sale of our Florida cement and concrete operations for US$720 million, which is expected to occur in the first quarter of 2014, we will have delivered on our commitments made two years ago to enhance profitability, divest non-strategic assets and reduce debt. Since that time, we will have increased adjusted EBITDA by more than US$110 million, generated more than US$1 billion from the sales of non-strategic assets and future sales production agreements, and reduced total debt approximately US$800 million. In addition, we have continued to strengthen our core aggregates business through the acquisition of reserves and quarries in California, Georgia, Texas and Virginia.”

Adapted from press release by Rosalie Starling

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