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Vulcan Materials Annual Report, Year Ended Dec 31, 2008

Filing Date
Filed March 2, 2009
Period End
December 31, 2008
Security
VMC
One revenue dollarkept$0.00
In the record · 2016–202610-K1110-Q338-K128

VMC filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 128 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Dec ’16Dec ’16
  2. FY2018 annual report10-K · Feb ’19Feb ’19
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 2, 2009. Cited figures are marked; the original filing is the authoritative source.

Vulcan Materials Company reported a net loss of $4.1 milliona, or $0.04 per diluted share, for 2008, compared with net earnings of $450.9 million, or $4.54 per diluted share, in 2007.

The result was driven by a $252.7 millionb pretax goodwill impairment charge on its Florida cement reporting unit, which was $227.6 million after tax and $2.07 per diluted share. Net sales rose to $3.45 billion from $3.09 billion, reflecting a full year of Florida Rock operations acquired in November 2007, while aggregates shipments declined 12% and legacy aggregates shipments were down 30% from the 2005 peak. Earnings from continuing operations before income taxes fell to $75.1 million from $667.5 million, largely due to the impairment and interest expense that rose to $172.8 million from $48.2 million on acquisition debt.

The company remains the nation's largest producer of construction aggregates, with 13.3 billion tons of zoned and permitted reserves, which it says are sufficient for an average of 51.7 years at current production rates. Management highlighted higher aggregates pricing and record cash earnings per ton in its legacy operations, while noting that demand from residential and commercial construction remains weak. Total debt was $3.55 billionc at year end, or 50.2% of total capital, and the company issued $400 million of notes in February 2009 to repay borrowings.

Management expects to reduce total debt by $200 milliond in 2009 and to cut capital spending to about $200 million. The filing also flags several risks for investors.

These include a $48.0 million write-down of pension trust assets invested with Westridge Capital Management, which is the subject of SEC and CFTC fraud actions, and ongoing litigation tied to former Chemicals operations. The filing also notes that the Lakebelt mining permits in Florida were invalidated again in January 2009, halting mining in most of the region, and that the Act signed in February 2009 is expected to provide incremental demand starting in the second half of 2009.

02—Key points

Key Highlights

  1. Net loss of $4.1 million ($0.04 per diluted share) in 2008, versus net earnings of $450.9 million ($4.54 per diluted share) in 2007
  2. Net sales of $3.45 billion, up from $3.09 billion, driven by a full year of Florida Rock operations acquired November 16, 2007
  3. $252.7 million pretax goodwill impairment on the Florida cement reporting unit ($227.6 million after tax, or $2.07 per diluted share)
  4. Interest expense rose to $172.8 million from $48.2 million, due mainly to debt incurred to acquire Florida Rock
  5. Aggregates shipments of 204.3 million tons; 13.3 billion tons of reserves, sufficient for 51.7 years at current production rates
  6. Total debt of $3.55 billion, 50.2% of total capital; $400 million of notes issued in February 2009 to reduce short-term borrowings
  7. Westridge Capital Management write-down of $48.0 million in pension trust assets amid SEC and CFTC fraud actions

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2008, Vulcan Materials kept $0.00.

  1. Revenue$3.65B100.0%
  2. Cost of revenue−$2.90B79.5%
  3. Gross profit$749.7M20.5%
  4. Operating costs−$500.6M13.7%
  5. Operating income$249.1M6.8%
  6. Interest, other & tax−$248.2M6.8%
  7. Net income$918,0000.0%
Computed from 10-KFY2008filed March 2, 2009Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2008 revenue went

$3.65B
  • Cost of revenue: $2.90B, 79% of revenue
  • Net income: $918,000, 0.0% of revenue
  • R&D: $1.5M, 0.0% of revenue
  • SG&A: $342.6M, 9.4% of revenue
  • Other operating costs: $156.5M, 4.3% of revenue
  • Interest, other & tax: $248.2M, 6.8% of revenue

Kept 0.0% as net incomeNet income $918,000 · 0.0%R&D $1.5M · 0.0%

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2008filed March 2, 2009
Revenue$3.65B20.5% Gross MarginNet Income$918K0.0% Net MarginEPS (Diluted)$0.01Total Assets$8.92BCash & Equivalents$10.19MFree Cash Flow$81.99M

Financial Statements

FY2008 against FY2007

Line itemFY2008FY2007Change
Revenue$3.65B$3.33B+9.7%
Cost of Revenue$2.90B$2.38B+22.1%
Gross Profit$749.71M$950.90M−21.2%
R&D Expenses$1.55M——
SG&A Expenses$342.58M$289.60M+18.3%
Operating Income$249.10M$714.42M−65.1%
Interest Expense$172.81M$48.22M+258.4%
Net Income$918K$450.91M−99.8%
EPS (Basic)$0.01$4.65−99.8%
EPS (Diluted)$0.01$4.54−99.8%
Shares Outstanding (Basic)109.77M97.04M+13.1%
Shares Outstanding (Diluted)110.95M99.40M+11.6%

05—Questions

Frequently Asked Questions

  1. Why did Vulcan report a net loss in 2008 after strong earnings in 2007?

    The main driver was a $252.7 million pretax goodwill impairment charge tied to the Florida cement business, which was $227.6 million after tax, or $2.07 per diluted share. Higher interest expense of $172.8 million, up from $48.2 million, from debt used to acquire Florida Rock also reduced earnings. Earnings from continuing operations before income taxes fell to $75.1 million from $667.5 million.

  2. How did sales and volumes perform in 2008?

    Net sales rose 12% to $3.45 billion, mainly because Florida Rock was included for the full year. Aggregates shipments fell 12% compared with 2007, and the average selling price rose 7%. Legacy aggregates shipments were down 30% from the 2005 peak, and asphalt mix shipments declined 9%.

  3. How much debt does Vulcan carry and what is it doing about it?

    Total debt was $3.55 billion at December 31, 2008, or 50.2% of total capital. Management plans to reduce total debt by $200 million in 2009 and to bring the debt-to-capital ratio to a 35% to 40% target range within five years. The company issued $400 million of notes in February 2009 to repay short-term borrowings and cut 2009 capital spending to about $200 million.

  4. What are the main risks identified in the filing?

    The filing identifies weak commercial and residential construction, potential reductions in public funding, and tight credit markets that could limit access to commercial paper and affect refinancing. It also cites a $48.0 million write-down of pension trust assets invested with Westridge Capital Management, subsequent legal actions, and the January 2009 invalidation of Florida Lakebelt mining permits that halted mining in most of the region.

06—Continue

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