Vulcan Materials Q1 results released
The $8.4 million difference between the fair value of the donated real estate and the carrying value was recorded as a gain on sale of property, plant & equipment and businesses in the prior year. In March 2010, the company recorded a pretax gain of approximately $39 million on the sale of three non-strategic aggregates facilities in rural Virginia. There were no similar gains recorded in the current year’s first quarter.
The $25.5 million in recovery from legal settlement included in the current year’s first quarter results reflects the arbitration award from insurers related to the lawsuit settled last year with the Illinois Department of Transportation. Earnings from discontinued operations are due principally to receipt of an earn-out related to the 2005 sale of the company’s chemicals business as well as a $7.5 million pretax gain due to an insurance arbitration award referable to previously settled lawsuits against the company’s divested chemicals business.
All results are unaudited.
Outlook Highlights and Commentary
Commenting on the company’s outlook for the remainder of 2011, James stated, “While economic improvement and growth in construction activity across our footprint have not materialized equally, we expect aggregates shipments and pricing to increase from the prior year, leading to earnings growth in 2011.
“Looking more specifically at our construction end-markets, public construction activity, particularly highways, should continue to provide solid support for aggregates demand. In April, Congress passed and the President signed legislation to fund government programs through the remainder of the current fiscal year ending Sept. 30, 2011. That legislation maintains core federal-aid highway funding at fiscal year 2010 levels.
“During the three months ended March 2011, total contract awards for highway construction in Vulcan-served states, including awards for federal, state, and local projects, were in line with the prior year as compared to a decline for all other states. According to the Federal Highway Administration, approximately $6.0 billion, or 36 percent, of the total stimulus funds apportioned for highways in Vulcan-served states remains to be spent. This absolute level of funding is more than twice the $2.8 billion remaining for other states.
“In general, private construction activity remains at low levels. However, some indications of stability are developing. Single-family housing starts bottomed late in 2009 and multi-family starts have shown strength in recent months – both positive indicators for residential construction activity. Our current outlook for residential construction activity assumes continued growth in 2011, albeit from a small base.
“While private non-residential construction remains weak, the rate of decline in contract awards has slowed considerably. Trailing 12-month contract awards for construction activity referable to the manufacturing sector have been strong while modest growth in retail and office construction was realized in contract awards for the trailing three months ended March 2011 versus the prior year. A number of external forecasts are calling for private nonresidential construction activity to bottom in 2011 and these increases in contract award activity provide some support to those views. The start of a sustained recovery in this end-market will be influenced by employment growth, capacity utilization, and business investment and lending activity.
“Overall, expected growth in demand for our products in 2011 largely depends on modest growth in residential construction, the stabilization of private nonresidential construction and the continuity of federal funding for highways at current levels. More specifically, we expect the full year growth in volumes to be weighted more towards the second half of the year driven primarily by growth in demand.
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