01—Abstract
Summary
Summary of the 10-K filed February 25, 2021. Cited figures are marked; the original filing is the authoritative source.
Vulcan Materials Company (VMC) reported 2020 total revenues of $4,856.8 milliona, down 1.5% from $4,929.1 million in 2019, while gross profit rose to $1,281.5 million and operating earnings increased to $895.7 million.
Net earnings were $584.5 millionb ($4.39 per diluted share), a decrease of $33.2 million, or 5%, from 2019, driven in part by a $22.7 million pension settlement charge and a higher effective tax rate of 20.9%. Adjusted EBITDA reached a record $1,323.5 million, up $53.5 million, or 4%. Aggregates freight-adjusted pricing rose 3.2% to $14.44 per ton even as aggregates shipments fell 3% to 208.3 million tons due to COVID-19 disruptions.
The company generated operating cash flow of $1,070.4 millionc, up $86.3 million from 2019, and ended the year with $1,198.0 million of cash and total debt of $3,287.7 million, giving a total debt to Adjusted EBITDA ratio of 2.5x and a net debt ratio of 1.6x. Return on invested capital increased 0.4 percentage points to 14.3%. Management's 2021 outlook calls for net earnings of $640 million to $720 million and Adjusted EBITDA of $1.340 billion to $1.440 billion, with aggregates shipments expected to range from down 2% to up 2% and freight-adjusted prices to rise 2% to 4%.
Capital returns continued through dividends of $180.2 milliond ($1.36 per share), while share repurchases were modest at $26.1 million. The company's 15.9 billion tons of permitted aggregates reserves and its focus on high-growth U.S. metropolitan markets remain central to its long-term strategy.
02—Key points
Key Highlights
- Total revenues of $4,856.8 million, down 1.5% from 2019; gross profit up $25.6 million to $1,281.5 million (26.4% gross margin).
- Net earnings of $584.5 million, or $4.39 per diluted share, versus $617.7 million ($4.63) in 2019; continuing operations EPS was $4.41.
- Adjusted EBITDA was a record $1,323.5 million, up $53.5 million, or 4%; adjusted diluted EPS from continuing operations was $4.68 versus $4.70.
- Aggregates freight-adjusted sales price increased 3.2% to $14.44 per ton, offsetting a 3% decline in shipments to 208.3 million tons.
- Operating cash flow of $1,070.4 million, up $86.3 million; ROIC improved 0.4 percentage points to 14.3%.
- Balance sheet: $1,198.0 million cash on hand, total debt of $3,287.7 million, total debt to Adjusted EBITDA of 2.5x (1.6x net), and investment-grade ratings.
- 2021 guidance: net earnings of $640 million to $720 million, Adjusted EBITDA of $1.340 billion to $1.440 billion, and capital expenditures of $450 million to $475 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Vulcan Materials kept $0.12.
- Revenue$4.86B100.0%
- Cost of revenue−$3.58B73.6%
- Gross profit$1.28B26.4%
- Operating costs−$385.8M7.9%
- Operating income$895.7M18.4%
- Interest, other & tax−$311.2M6.4%
- Net income$584.5M12.0%
Where FY2020 revenue went
$4.86B- Cost of revenue: $3.58B, 74% of revenue
- Net income: $584.5M, 12% of revenue
- SG&A: $359.8M, 7.4% of revenue
- Other operating costs: $26.0M, 0.5% of revenue
- Interest, other & tax: $311.2M, 6.4% of revenue
Kept 12% as net incomeNet income $584.5M · 12%Other operating costs $26.0M · 0.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 25, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $4.86B$4.93B | −1.5% |
| Cost of Revenue | $3.58B$3.67B | −2.7% |
| Gross Profit | $1.28B$1.26B | +2.0% |
| SG&A Expenses | $359.80M$370.50M | −2.9% |
| Operating Income | $895.70M$877.50M | +2.1% |
| Interest Expense | $136.00M$130.20M | +4.5% |
| Net Income | $584.50M$617.70M | −5.4% |
| EPS (Basic) | $4.41$4.67 | −5.6% |
| EPS (Diluted) | $4.39$4.63 | −5.2% |
| Shares Outstanding (Basic) | 132.60M132.30M | +0.2% |
| Shares Outstanding (Diluted) | 133.20M133.40M | −0.1% |
05—Questions
Frequently Asked Questions
How did the COVID-19 pandemic affect Vulcan's 2020 results?
Aggregates shipments declined 3% and asphalt mix shipments fell 7%, with disruptions varying widely across markets. The company stayed open as an essential business, incurred $10.2 million of direct incremental COVID-19 costs, and still reported record Adjusted EBITDA of $1,323.5 million.
Why did net earnings decline in 2020 despite higher gross profit?
Net earnings fell $33.2 million, or 5%, to $584.5 million. Contributing factors included a $22.7 million non-cash pension settlement charge, a higher effective tax rate of 20.9% versus 17.8% (partly from lower excess share-based compensation tax benefits), and lower other nonoperating income.
How strong is Vulcan's balance sheet and liquidity?
At December 31, 2020, available liquidity was $2,141.0 million, including $1,198.0 million of cash. Total debt to Adjusted EBITDA was 2.5x, within a stated 2.0 to 2.5x target, and the company has investment-grade ratings. About $500.0 million of debt maturing in March 2021 was planned to be repaid with cash on hand and proceeds from notes issued in May 2020.
What is Vulcan's outlook for 2021?
Management expects aggregates shipments of down 2% to up 2%, a freight-adjusted price increase of 2% to 4%, earnings from continuing operations of $4.80 to $5.40 per diluted share, and Adjusted EBITDA of $1.340 billion to $1.440 billion. Interest expense is projected at about $130 million and the effective tax rate at about 21%.
How does Vulcan allocate capital and return cash to shareholders?
Vulcan prioritizes operating capital, growth capital including acquisitions, dividend growth, and then returning excess cash primarily via share repurchases. In 2020 it paid dividends of $180.2 million ($1.36 per share) and repurchased $26.1 million of stock, with 8,064,851 shares remaining under its authorization.
06—Continue