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Vulcan Materials (VMC)
Q4 2011 Earnings Call
February 16, 2012 11:00 am ET
Donald M. James - Chairman, Chief Executive Officer and Chairman of Executive Committee
Daniel Sansone - Chief Financial Officer and Executive Vice President
John R. Mcpherson - Senior Vice President of Strategy and Business Development
Robert C. Wetenhall - RBC Capital Markets, LLC, Research Division
Ted Grace - Susquehanna Financial Group, LLLP, Research Division
Garik S. Shmois - Longbow Research LLC
John F. Kasprzak - BB&T Capital Markets, Research Division
Michael Betts - Jefferies & Company, Inc., Research Division
Kathryn I. Thompson - Thompson Research Group, LLC.
B.G. Dickey - Stephens Inc., Research Division
L. Todd Vencil - Sterne Agee & Leach Inc., Research Division
Keith B. Hughes - SunTrust Robinson Humphrey, Inc., Research Division
Rodny Nacier - KeyBanc Capital Markets Inc., Research Division
John A. Baugh - Stifel, Nicolaus & Co., Inc., Research Division
Scott J. Levine - JP Morgan Chase & Co, Research Division
Previous Statements by VMC
» Vulcan Materials' CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Vulcan Materials,'s CEO Discusses Q2 2011 Results - Earnings Call, Aug 03, 2011 Transcript
» Vulcan Materials,'s CEO Discusses Q1 2011 Results - Earnings Call, May 05, 2011 Transcript
Donald M. James
Good morning. Thank you for joining our call to discuss our results for the fourth quarter of 2011. We have posted to our website a few slides on our Profit Enhancement Plan and our planned asset sales that we announced today. These slides are also available to those of you on the webcast, and we'll be talking about those slides in a few minutes.
Joining me today are Dan Sansone, our Executive Vice President and Chief Financial Officer; Danny Shepherd, our Executive Vice President for Construction Materials; John Mcpherson, our Senior Vice President for Strategy and Business Development.
Before we begin, let me remind you that certain matters discussed in this conference call, as indicated on Slide 2 of our presentation, contain forward-looking statements, which are subject to risk and uncertainties. Descriptions of these risk and uncertainties are detailed in the company's SEC reports, including our most recent report on Form 10-K.
First, I want to take you through some key financial highlights from the fourth quarter and full year 2011. As you saw in our press release, we had significantly improved results in the fourth quarter. Earnings from continuing operations were a loss of $0.20 per share in the fourth quarter compared to a loss of $0.36 per share in the fourth quarter of 2010. This year's results include $0.05 per share related to the organizational restructuring costs and $0.01 per share related to the unsolicited exchange offer by Martin Marietta. Excluding those charges, fourth quarter 2011 results were a loss of $0.14 per share compared to a loss of $0.36 per share in the prior quarter.
Net sales for the quarter were $578 million, which is 5% increase from the fourth quarter of last year. Gross profit in the fourth quarter was $74 million, an increase of $24 million or 47% from last year's fourth quarter.
Gross margin as a percent of net sales increased 360 basis points, largely due to strong results in our aggregate segment. Our aggregate segment results demonstrate the impact of our effective cost controls and operating leverage.
Net sales increased $16 million or 4% from the prior year. Aggregates gross profit increased by $22 million or 37%, reflecting the strength of our operating leverage. Gross profit margins increased 500 basis points as a result of higher pricing and lower unit cost. Unit gross profit was up 34% to $2.29 per ton.
Aggregates shipments increased 3% in the fourth quarter compared to the year-ago period, due mostly to increases in shipments in California and the mid-Atlantic markets. Shipments in California and the mid-Atlantic were up 40% and 19%, respectively, versus last year. These increases are due primarily to large infrastructure project work, as well as favorable weather conditions.
Average freight-adjusted selling price increased by 1% in the fourth quarter due to improvements across a number of markets particularly in Florida, Tennessee, Texas and Virginia. Labor productivity and energy efficiency, which are both key operating measures for us, also improved versus the prior year's fourth quarter, helping to offset a 25% increase in the unit cost for diesel fuel.
Fourth quarter earnings in Asphalt were $5 million versus $8 million last year. This year-over-year decline in earnings was due primarily to higher liquid asphalt cost. The average sales price for asphalt mix increased approximately 9%, offsetting most of the earnings effect of the 16% increase in liquid asphalt cost. Asphalt mix volume decreased 1% from the prior year's fourth quarter.
The Concrete segment reported a $2 million improvement to a loss of $11 million in the fourth quarter compared to a loss of $13 million in the prior period. Volumes were flat with the prior year's fourth quarter. The average sales price increased 5%, contributing to improved unit materials margins, despite higher unit costs for us in Aggregates.
Finally, Cement segment earnings in the fourth quarter were $1 million, an improvement of $2 million from the prior year due to increased volume and lower operating cost. Our EBITDA in the fourth quarter of 2011 was $97 million, excluding restructuring charges and the expenses related to the Martin Marietta exchange offer compared to $65 million in the fourth quarter of 2010.
Fourth quarter SAG expenses were $8 million lower compared to the prior year, a decrease of 10%. This is a result of our cost initiatives and decreased spending on our new ERP and Shared Services platform, which I will discuss in a moment. Importantly, this $8 million decrease does not include the additional benefits from the restructuring we announced in December of 2011 and have now implemented.
EBITDA for the year was $425 million, including $87 million related to gains from the sale of nonstrategic assets and the legal settlement and also, including $15 million in expenses related to restructuring and the Martin Marietta exchange offer. Our SAG expenses for the year decreased by $38 million or 11% compared to the prior year period, primarily a result of our ongoing focus on reducing cost.