01—Abstract
Summary
Summary of the 10-K filed February 25, 2022. Cited figures are marked; the original filing is the authoritative source.
Vulcan Materials Company (VMC), the nation's largest supplier of construction aggregates and a major producer of asphalt mix and ready-mixed concrete, reported 2021 total revenues of $5,552.2 milliona, up $695.4 million, or 14%, from 2020.
Gross profit rose $91.9 millionb, or 7%, to $1,373.4 million, and operating earnings increased $115.1 million, or 13%, to $1,010.8 million. Net earnings attributable to Vulcan were $670.8 million ($5.02 per diluted share), an increase of 15%. Adjusted EBITDA was $1,451.3 million, up 10%.
Aggregates shipments rose 7% to 222.9 million tons, freight-adjusted pricing rose 3.0% to $14.87c per ton, and aggregates gross profit per ton reached $5.81. The results include the August 2021 acquisition of U.S. Concrete for $1,634.5 million, which added debt and raised total debt to Adjusted EBITDA to 2.7x against a stated target range of 2.0x to 2.5x. Management expects 2022 net earnings attributable to Vulcan of $800 to $890 million and Adjusted EBITDA of $1,720 to $1,820 million, driven by freight-adjusted price increases of 6% to 8% and shipment growth of 5% to 7%.
Management also cites labor shortages, supply chain disruptions, and higher diesel and liquid asphalt costs as headwinds. Capital expenditures are planned at $600 to $650 milliond. Risk items highlighted in the filing include the Mexican government's actions affecting the Playa del Carmen quarry operations, a pending NAFTA arbitration with a decision expected in the second half of 2022, and legacy environmental and litigation matters including the Hewitt Landfill and Texas Brine cases.
The company ended 2021 with $241.5 million of cash and restricted cash, $3,949.6 million of face-value term debt, and investment-grade ratings. It repurchased no shares in 2021 and paid dividends of $1.48 per share, totaling $196.4 million.
02—Key points
Key Highlights
- Total revenues rose $695.4 million, or 14%, to $5,552.2 million; gross profit rose 7% to $1,373.4 million.
- Net earnings attributable to Vulcan were $670.8 million ($5.02 per diluted share), up 15%; Adjusted EBITDA was $1,451.3 million, up 10%.
- Aggregates shipments increased 7% to 222.9 million tons, with freight-adjusted price up 3.0% to $14.87 per ton and gross profit per ton of $5.81.
- The August 2021 U.S. Concrete acquisition for $1,634.5 million lifted total debt to Adjusted EBITDA to 2.7x, above the stated 2.0x to 2.5x target range.
- 2022 guidance calls for net earnings attributable to Vulcan of $800 to $890 million and Adjusted EBITDA of $1,720 to $1,820 million.
- Asphalt, Concrete and Calcium gross profit fell $44.6 million, or 36%, to $77.7 million, largely due to higher liquid asphalt costs.
- No share repurchases were made in 2021; dividends of $196.4 million were paid at $1.48 per share, and 8,064,851 shares remain under the authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Vulcan Materials kept $0.12.
- Revenue$5.55B100.0%
- Cost of revenue−$4.18B75.3%
- Gross profit$1.37B24.7%
- Operating costs−$362.6M6.5%
- Operating income$1.01B18.2%
- Interest, other & tax−$340.0M6.1%
- Net income$670.8M12.1%
Where FY2021 revenue went
$5.55B- Cost of revenue: $4.18B, 75% of revenue
- Net income: $670.8M, 12% of revenue
- SG&A: $417.6M, 7.5% of revenue
- Interest, other & tax: $340.0M, 6.1% of revenue
Kept 12% as net incomeNet income $670.8M · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 25, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $5.55B$4.86B | +14.3% |
| Cost of Revenue | $4.18B$3.58B | +16.9% |
| Gross Profit | $1.37B$1.28B | +7.2% |
| SG&A Expenses | $417.60M$359.80M | +16.1% |
| Operating Income | $1.01B$895.70M | +12.9% |
| Interest Expense | $149.30M$136.00M | +9.8% |
| Net Income | $670.80M$584.50M | +14.8% |
| EPS (Basic) | $5.05$4.41 | +14.5% |
| EPS (Diluted) | $5.02$4.39 | +14.4% |
| Shares Outstanding (Basic) | 132.80M132.60M | +0.2% |
| Shares Outstanding (Diluted) | 133.50M133.20M | +0.2% |
05—Questions
Frequently Asked Questions
What drove the increase in Vulcan's 2021 earnings?
Aggregates segment gross profit rose $136.5 million, or 12%, to $1,295.7 million, driven by a 7% increase in shipments and a 3.0% increase in freight-adjusted pricing. Operating earnings also benefited from a $114.7 million pretax gain on the sale of a reclaimed Southern California quarry. Those gains were partly offset by $39.0 million of non-routine business development charges and a $41.4 million unfavorable impact from higher diesel costs.
How did the U.S. Concrete acquisition affect Vulcan's financial position?
Vulcan acquired U.S. Concrete for $1,634.5 million in August 2021, financed with a $1,600.0 million delayed draw term loan. Total debt rose to $3,880.0 million at year end, and total debt to Adjusted EBITDA was 2.7x, or 2.5x on a net debt basis. The filing notes that $1,100.0 million of the term loan remained outstanding at year end and is due August 2024.
What does management expect for 2022?
Management projects net earnings attributable to Vulcan of $800 to $890 million and Adjusted EBITDA of $1,720 to $1,820 million. Assumptions include a freight-adjusted price increase of 6% to 8%, total shipment growth of 5% to 7%, interest expense of approximately $150 million, and capital expenditures of $600 to $650 million. Management also flagged that labor shortages and supply chain disruptions could limit shipment growth.
What are the main risks to Vulcan's operations flagged in the filing?
The filing highlights recent Mexican government actions, including delays in issuing a three-year customs permit for the deep-water port serving the Playa del Carmen quarry, which could affect supply to customers if operations are curtailed. A NAFTA arbitration hearing took place in July 2021, with a decision expected in the second half of 2022. Other risks include dependence on construction spending, energy and diesel costs, and legacy environmental and litigation matters such as the Hewitt Landfill and Texas Brine cases.
06—Continue