Birmingham, Ala.-based Vulcan Materials reported that the company’s aggregates gross margin is up 220 basis points and its overhead expenses are down 16 percent from the second quarter 2011.

The nation’s largest producer of construction aggregates says that its continued earnings improvement is driven by increased profit margins and reduced overhead expenses.

This is welcome news, for Vulcan, which is in the middle of an attempted hostile takeover by Martin Marietta Materials. (For more on the Vulcan/Martin Marietta hostile takeover deal, check out these stories from AggMan: Sneak Peek: Martin Marietta proposes hostile takeover of Vulcan Materials; ^[1] Vulcan attempting $1 billion more from Martin Marietta takeover bid? ^[2]; Martin Marietta attacks Vulcan’s investor presentation ^[3]; and Vulcan: Martin Marietta ‘substantially undervalues’ us) ^[4]

According to the company’s second-quarter results summary, here is how Vulcan is doing:

• Aggregates segment gross profit improved $9 million, or 9 percent, reflecting lower unit cost of sales due to improved productivity and cost reduction initiatives. All key labor and energy efficiency metrics for aggregates improved for the quarter.
  • On a same-store basis, aggregates shipments increased slightly from the prior year period, notwithstanding the pull-forward effect of seasonally favorable weather conditions during the first quarter and the effects of Tropical Storm Debby in Florida in June. Overall, shipments decreased 1 percent due to the sale of operations in Indiana in 2011. 
  • Aggregates pricing increased slightly, offsetting some of the earnings effect of a less favorable geographic mix.
• Gross profit from non-aggregates segments decreased by $4 million, due principally to higher costs for liquid asphalt. 
• Selling, administrative and general (SAG) expenses in the second quarter decreased $12 million, or 16 percent, from the prior year due mainly to cost reduction and restructuring initiatives.  
• Adjusted EBITDA, as reflected in the attached financial tables, was $127 million in the second quarter of 2012, an increase of $10 million, or 8 percent, over the second quarter of last year. 

“The improvement in our second quarter operating results demonstrates the continuing benefits of our ongoing focus on reducing overhead costs and maximizing operating efficiency across the organization,” Don James, chairman and CEO of Vulcan Materials, said in a written statement which released the second-quarter earnings. “Despite weaker volumes in several of our most profitable markets, aggregates segment gross profit margin improved by 220 basis points. Cash earnings per ton of aggregates increased to $4.57 per ton. Both of these improvements demonstrate our cost reduction efforts and the earnings potential of our aggregates business, particularly as volume across our geographic markets recovers.” 

James noted that trends in both the private and public sector construction markets remain positive. He says Vulcan is particularly encouraged by the passage of the new multi-year highway bill by Congress, which he says “should provide state departments of transportation with funding certainty they need to move forward on infrastructure programs. We remain focused on executing our initiatives and aggressively managing other items under our control. This will enable us to continue to generate higher levels of earnings and cash flow, further improve our operating leverage, reduce overhead costs, and strengthen our credit profile.”