01—Abstract
Summary
Summary of the 10-K filed February 25, 2016. Cited figures are marked; the original filing is the authoritative source.
Vulcan Materials Company's 10-K for fiscal 2015 describes the company as the nation's largest producer of construction aggregates (crushed stone, sand and gravel) and a major producer of asphalt mix and ready-mixed concrete, with 344 active aggregates facilities as of December 31, 2015 and 15.7 billion tons of proven and probable aggregates reserves.
Total revenues rose $428.0 milliona, or 14%, to $3,422.2 million, and gross profit increased $270.0 million, or 46%, to $857.5 million. Aggregates shipments increased 10% to 178.3 million tons, the freight-adjusted sales price rose 7%, and Adjusted EBITDA increased $231.6 million, or 38%, to $836.3 million. Net earnings were $221.2 million ($1.64 per diluted share), compared with $204.9 million in 2014, which included a $227.9 million pretax gain on the Florida cement and concrete sale.
Management expects 2016 Adjusted EBITDA of $1.0 to $1.1 billionb, based on aggregates shipments of about 191 million tons and a 7% increase in freight-adjusted pricing. The company reported total debt of approximately $1.98 billion, with a debt-to-total-capital ratio of 30.8%, and a below-investment-grade rating profile (Moody's Ba2, S&P BB+, Fitch BB+). It also refinanced $635.1 million of debt in 2015 and entered a new $750.0 million unsecured line of credit maturing in June 2020.
The company declared a first-quarter 2016 dividend of $0.20c per share, up from $0.10. Key risks disclosed include exposure to public infrastructure funding timing, a $950 million to $1.73 billion EPA cost estimate for the Lower Passaic River Superfund remedy, the Texas Brine sinkhole litigation with damages claimed above $500 million, the Hewitt Landfill cleanup order, and pension obligations. The company also notes that its goodwill of $3.09 billion represents 37% of total assets.
02—Key points
Key Highlights
- Revenue of $3,422.2 million in 2015, up 14% from $2,994.2 million; gross profit of $857.5 million, up 46%.
- Aggregates shipments rose 10% to 178.3 million tons, and freight-adjusted sales price increased 7%.
- Adjusted EBITDA of $836.3 million in 2015, up 38%; 2016 outlook of $1.0 to $1.1 billion.
- Net earnings of $221.2 million, or $1.64 per diluted share, versus $204.9 million, or $1.54, in 2014 (2014 included a $227.9 million pretax gain on the Florida divestiture).
- Free cash flow of $214.1 million in 2015, compared with $35.4 million in 2014, with net cash from operations of $503.4 million.
- Total debt of approximately $1.98 billion, a debt-to-total-capital ratio of 30.8%, and non-investment-grade credit ratings; 2015 refinancing included a $400.0 million 4.50% notes issuance due 2025.
- Quarterly dividend raised to $0.20 per share for Q1 2016 from $0.10, and 2015 share repurchases of $21.5 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Vulcan Materials kept $0.06.
- Revenue$3.42B100.0%
- Cost of revenue−$2.56B74.9%
- Gross profit$857.5M25.1%
- Operating costs−$307.8M9.0%
- Operating income$549.8M16.1%
- Interest, other & tax−$328.6M9.6%
- Net income$221.2M6.5%
Where FY2015 revenue went
$3.42B- Cost of revenue: $2.56B, 75% of revenue
- Net income: $221.2M, 6.5% of revenue
- SG&A: $286.8M, 8.4% of revenue
- Other operating costs: $20.9M, 0.6% of revenue
- Interest, other & tax: $328.6M, 9.6% of revenue
Kept 6.5% as net incomeNet income $221.2M · 6.5%Other operating costs $20.9M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 25, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $3.42B$2.99B | +14.3% |
| Cost of Revenue | $2.56B$2.41B | +6.6% |
| Gross Profit | $857.53M$587.58M | +45.9% |
| SG&A Expenses | $286.84M$272.29M | +5.3% |
| Operating Income | $549.78M$538.14M | +2.2% |
| Interest Expense | $220.59M$243.37M | −9.4% |
| Net Income | $221.18M$204.92M | +7.9% |
| EPS (Basic) | $1.66$1.56 | +6.4% |
| EPS (Diluted) | $1.64$1.54 | +6.5% |
| Shares Outstanding (Basic) | 133.21M131.46M | +1.3% |
| Shares Outstanding (Diluted) | 135.09M132.99M | +1.6% |
05—Questions
Frequently Asked Questions
What drove the increase in Vulcan's 2015 profitability?
Aggregates segment gross profit rose $211.6 million to $755.7 million on higher volumes and better unit margins. Same-store aggregates flow-through was 77%, against a long-term goal of 60%, and the company cited a 7% increase in freight-adjusted sales price.
Why is 2015 net earnings only modestly higher than 2014 despite higher operating results?
The 2014 results included a $227.9 million pretax gain on the sale of the Florida cement and concrete businesses. Gain on sale of property, plant & equipment and businesses fell to $9.9 million in 2015. Interest expense included a $67.1 million charge for debt purchases in 2015.
What is management's 2016 outlook?
Management expects full-year Adjusted EBITDA of $1.0 to $1.1 billion, aggregates shipments of approximately 191 million tons (up 7%), a 7% increase in freight-adjusted aggregates pricing, and aggregates gross profit growth of 25%. Capital spending is expected to be about $275 million in core capital, with total capital spending of $400.0 million.
What are the largest legal and environmental exposures?
The Lower Passaic River Superfund site carries an EPA cost estimate of $950 million to $1.73 billion for the proposed remedy, though Vulcan recorded only an immaterial loss for its share. The Texas Brine sinkhole litigation claims damages above $500 million, with a first trial date set for March 2017, and the company cannot reasonably estimate a liability range. The Hewitt Landfill cleanup order is also pending.
How does Vulcan's balance sheet and debt profile look?
Total debt was approximately $1.98 billion at year-end 2015, with 88.3% fixed-rate debt. Vulcan had $284.1 million in cash and $476.1 million of available line-of-credit capacity. Its debt ratings are below investment grade, with Moody's at Ba2 (positive outlook), S&P at BB+ (positive outlook) and Fitch at BB+ (stable outlook).
06—Continue