01—Abstract
Summary
Summary of the 10-K filed February 26, 2014. Cited figures are marked; the original filing is the authoritative source.
Vulcan Materials Company (VMC), the nation's largest producer of construction aggregates, reported 2013 net sales of $2.63 billiona, up from $2.41 billion in 2012, and net earnings of $24.4 million, or $0.19 per diluted share, versus a net loss of $52.6 million in 2012.
Adjusted EBITDA rose to $467.8 millionb from $411.3 million. Aggregates volume increased 4% and freight-adjusted aggregates pricing increased 3%. Gross profit reached $426.9 million, with a gross profit margin of 16.2% of net sales.
Operating cash flow was $356.5 millionc and free cash flow was $81.1 million, after capital purchases of $275.4 million that included a $117.0 million land purchase containing 136 million tons of reserves in California. The company's balance sheet and financing activity were central to its 2013 results. Total debt was $2.52 billion, representing 39.0% of total capital, and the company received $153.1 million in net proceeds from a second volumetric production payment on future aggregates production.
In January 2014, Vulcan agreed to sell its Florida cement and concrete businesses to Cementos Argos for gross cash proceeds of $720.0 milliond, expected to close in the first quarter of 2014. The company also initiated a tender offer to purchase $500.0 million of outstanding debt, contingent on that closing.
The filing also describes ongoing legal and environmental exposures, including the Texas Brine matter, which the company says it cannot reasonably estimate, and the Lower Passaic River Superfund matter, for which the company says it cannot reasonably estimate its liability. The Board declared a first-quarter 2014 dividend of $0.05 per share, up from $0.01 per quarter in 2013.
02—Key points
Key Highlights
- Net sales rose to $2,628.7 million in 2013 from $2,411.2 million in 2012, and net earnings improved to $24.4 million ($0.19 per diluted share) from a net loss of $52.6 million.
- Adjusted EBITDA increased to $467.8 million from $411.3 million; gross profit margin improved 2.3 percentage points to 16.2%.
- Aggregates volume increased 4% and freight-adjusted aggregates selling price increased 3%; aggregates segment cash gross profit per ton rose to $4.37.
- Agreement signed in January 2014 to sell Florida cement and concrete businesses to Cementos Argos for $720.0 million gross cash proceeds, expected to close in Q1 2014.
- Total debt of $2,522.4 million at December 31, 2013 represented 39.0% of total capital; a $500.0 million debt tender offer is contingent on the Argos closing.
- Second volumetric production payment generated $153.1 million in net cash proceeds, which lifted operating cash flow to $356.5 million.
- Quarterly dividend to be raised to $0.05 per share for Q1 2014, up from $0.01 per quarter paid in 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Vulcan Materials kept $0.01.
- Revenue$2.77B100.0%
- Cost of revenue−$2.34B84.6%
- Gross profit$426.9M15.4%
- Operating costs−$236.5M8.5%
- Operating income$190.4M6.9%
- Interest, other & tax−$166.0M6.0%
- Net income$24.4M0.9%
Where FY2013 revenue went
$2.77B- Cost of revenue: $2.34B, 85% of revenue
- Net income: $24.4M, 0.9% of revenue
- SG&A: $259.4M, 9.4% of revenue
- Interest, other & tax: $166.0M, 6.0% of revenue
Kept 0.9% as net incomeNet income $24.4M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 26, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $2.77B$2.57B | +7.9% |
| Cost of Revenue | $2.34B$2.23B | +4.9% |
| Gross Profit | $426.88M$334.03M | +27.8% |
| R&D Expenses | $0$0 | — |
| SG&A Expenses | $259.43M$259.14M | +0.1% |
| Operating Income | $190.40M$84.78M | +124.6% |
| Interest Expense | $202.59M$213.07M | −4.9% |
| Net Income | $24.38M-$52.59M | +146.4% |
| EPS (Basic) | $0.19$-0.41 | +146.3% |
| EPS (Diluted) | $0.19$-0.41 | +146.3% |
| Shares Outstanding (Basic) | 130.27M129.75M | +0.4% |
| Shares Outstanding (Diluted) | 131.47M129.75M | +1.3% |
05—Questions
Frequently Asked Questions
How did Vulcan's profitability change in 2013?
Net earnings were $24.4 million, or $0.19 per diluted share, compared with a net loss of $52.6 million, or $0.41 per diluted share, in 2012. The filing attributes the improvement to volume growth in each operating segment, disciplined pricing, and effective cost control. Operating earnings rose to $190.4 million from $84.8 million.
What is the status of the Florida cement and concrete divestiture?
On January 23, 2014, Vulcan agreed to sell its Florida cement and concrete businesses to Cementos Argos for gross cash proceeds of $720.0 million. Vulcan will retain its Florida aggregates operations and the Brooksville calcium operation, and will supply aggregates to the divested facilities under a 20-year agreement. The transaction is subject to Hart-Scott-Rodino review and is expected to close in the first quarter of 2014.
How is Vulcan managing its debt?
Total debt was $2,522.4 million at year-end 2013, down from $2,677.0 million, and the weighted-average effective rate on long-term debt was 7.73%. In 2013 the company retired $10.0 million of an 8.70% medium-term note and $140.4 million of 6.30% notes. After the Argos closing, it plans a tender offer for $500.0 million of outstanding debt. Its bank line of credit was reduced to $500.0 million, with $382.6 million of available borrowing capacity at year-end. S&P changed its outlook on senior unsecured debt to positive on January 23, 2014.
What are the main legal and environmental risks disclosed?
The filing describes the Texas Brine matter, a sinkhole-related litigation in Louisiana in which Vulcan has been named as a defendant and which the company says it cannot reasonably estimate. It also describes the Lower Passaic River Superfund study area, where the EPA's estimated remediation range was $0.9 billion to $3.5 billion for alternatives, and Vulcan says it cannot reasonably estimate its liability. The perchloroethylene cases relate to its former Chemicals business, which Vulcan says it is vigorously defending.
06—Continue