Vulcan Materials Company (VMC) reported a loss of $7 million or 5 cents per share from continuing operations in the second quarter of 2011, much narrower than a loss of $23 million or 18 cents per share in the prior-year quarter.
The reported quarter included charges of 12 cents per share associated with the company’s tender offer and debt retirement in June. On the other hand, the year-ago quarter included charges of 21 cents per share related to a lawsuit settled with the Illinois Department of Transportation.
Excluding these items, Vulcan realized adjusted earnings of $9 million or 7 cents per share from continuing operations compared with $5 million or 3 cents per share in the year-ago quarter. Quarterly earnings were also higher than the Zacks Consensus Estimate of a loss of 6 cents per share.
Total revenue dropped 5.1% to $657.5 million from $692.8 million in the corresponding quarter of 2010. The year-over-year decline was primarily attributable to lower-than- expected demand, bad weather in the month of April, partly offset by stronger demand for public infrastructure projects in some markets and price rise across all the segments.
Segment Details
Net sales from the Aggregates segment were $98.2 million, down 6.5% from $105.0 million. Unit selling price increased 2.5% year over year on the back of improvement in many markets.
Unit shipments fell 9.0% to 39.2 million, driven by inclement weather conditions in April across many of the company’s key markets, partially offset by stronger demand for public infrastructure projects in the markets of California, Virginia and Maryland. Segment earnings for aggregates decreased to $103 million from $122 million in the prior-year quarter.
Net sales in the Concrete segment plunged 6.5% to $98.2 million from $105.0 million in the previous year, due to lower shipments, offset partly by higher average selling prices. Segment loss widened to $9 million from $6 million last year.
The Asphalt Mix segment reported an increase of 7.1% in net sales to $110.9 million from $103.5 million in the second quarter of the prior year. The segment was impacted by an 8% rise in asphalt mix prices along with a 5.3% growth in shipments. Segment earnings were $8 million compared with $7 million in the prior-year quarter.
Net sales in the Cement segment plunged 25.2% to $9.5 million from $12.7 million in the year-earlier quarter due to a 30.3% decrease in shipments, slightly offset by a 2.3% rise in average selling price. Segment loss in the quarter remained unchanged year over year at $1 million.
Financial Position
Vulcan Materials’ cash, cash equivalents and restricted cash improved to $106.8 million as of June 30, 2011 from $45.9 million at the end of the prior-year period. However, long-term debt rose to $2.79 billion at the end of the second quarter of 2011 from $2.00 billion at the end of the same quarter of 2010. Net cash generated by operating activities decreased sharply to $7.01 million in the first six months of 2011 from $18.7 million in the same period last year.
Outlook
Vulcan is optimistic about each of its operating segments, except the Cement segment, for the upcoming quarters. The Cement segment is expected to experience a higher loss at the end of the year, compared to the other segments. Better pricing, higher demand for infrastructure projects, product efficiency and cost control initiatives will likely drive higher growth across all the other segments.
Further, the company’s selling, general and administrative expenses in 2011 are expected to be $305 million and capital spending to be $100 million for the year.
Based in Birmingham, Alabama, Vulcan Materials, which has a Zacks#4 rank (Sell rating), is engaged in the production, distribution and sale of construction aggregates, and other construction materials and related services in the U.S. and Mexico. It is the nation’s largest producer of construction aggregates and a leading producer of other construction materials.
VULCAN MATLS CO (VMC): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment