Vulcan Materials Q1 results released
Vulcan Materials Co., the nation’s largest producer of construction aggregates, announced results for the first quarter ended March 31, 2011.
A quick recap:
First Quarter Summary and Comparisons with the Prior Year
- Freight-adjusted aggregates pricing approximated the prior year level.
- Aggregates shipments declined about 3 percent, reflecting varied market conditions across Vulcan’s footprint as well as significantly more wet weather in March in many markets.
- Average unit selling prices for both ready-mixed concrete and asphalt mix increased 4 percent, contributing to higher unit materials margins in both product lines.
- Unit cost for diesel fuel and liquid asphalt increased 34 percent and 12 percent respectively, reducing pretax earnings by $10 million. Most of this earnings effect was offset by production efficiency gains in aggregates and higher pricing for asphalt mix.
- Selling, administrative, and general (SAG) expenses were down from the prior year due primarily to the $9 million noncash charge recorded in the prior year for the fair market value of donated real estate.
- Net earnings were a loss of $55 million, or $0.42 per diluted share. The quarter’s results include income of $0.08 per diluted share from discontinued operations as well as $0.12 per diluted share for the insurance arbitration award to the company for recovery of settlement costs and legal costs related to the lawsuit settled last year with the Illinois Department of Transportation.
Don James, Vulcan’s chairman and CEO, stated, “We are pleased with the improvements in first quarter production efficiencies in our aggregates business which offset most of the earnings effects of sharply higher diesel fuel costs. We are also encouraged with the pricing momentum in both our asphalt and concrete businesses. Shipments in all our businesses remained challenged in the first quarter. After a solid start in January and February, extremely wet weather hampered aggregates, asphalt, and concrete shipments in March in many of our key markets. We continue to expect volume and earnings growth for the full year in 2011.”
First Quarter Operating Results and Commentary
First quarter aggregates earnings were lower than the prior year due mostly to lower shipments. A number of Vulcan-served markets, most notably markets in California, the mid-Atlantic, and the Southeast experienced unusually wet weather in March. Despite the inclement March weather, Virginia, Tennessee, and Georgia aggregates businesses increased shipments versus the prior year’s first quarter, due primarily to stronger demand from public infrastructure projects. Markets that experienced declines in shipments include South Carolina, Florida, and along the Gulf Coast.
The average selling price for aggregates was in line with the prior year. Adjusted for freight to remote distribution yards and mix, the overall average selling price was slightly above last year’s level. The adjusted selling price in Florida increased from the prior year’s level. A number of other markets reported unit selling prices at or above the prior year’s first quarter price. However, some geographic and end-use markets that have experienced the steepest overall declines in demand reported lower average prices when compared with the prior year. Reflecting production efficiencies and effective cost control measures, aggregates unit costs of sales were in line with the first quarter of 2010 despite sharply higher costs for diesel. Overall, segment earnings in aggregates were $11 million versus $15 million in the prior year’s first quarter.
Segment earnings in asphalt were a loss of $0.2 million compared with earnings of $1 million in the prior year’s first quarter. Selling prices for asphalt mix increased approximately 4 percent, offsetting most of the earnings effect of higher liquid asphalt costs. Asphalt volumes decreased 2 percent from the prior year’s first quarter due primarily to wet weather in March. Unit materials margins in the first quarter were higher than the prior year and were in line with the improved levels achieved in the second half of 2010.
The concrete segment reported a loss of $14 million, an improvement from the prior year’s first quarter. Unit materials margins in ready-mixed concrete improved from the prior year’s first quarter due mostly to higher pricing. Concrete prices increased 4 percent from the prior year’s first quarter. Cement segment earnings in the first quarter were a loss of $3 million due mostly to a scheduled maintenance event in the current year first quarter.
SAG expenses in the first quarter were $77.5 million versus $86.5 million in the prior year’s first quarter. Excluding the effects of the donated real estate from the prior year’s first quarter, SAG expenses were flat with the prior year.
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