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Vulcan Materials (VMC) Shares Increase on Q2 Earnings Beat

Vulcan Materials Company VMC reported impressive results for second-quarter 2020. Both the top and bottom lines surpassed the Zacks Consensus Estimate backed by solid operational execution despite some disruptions in construction activity during the quarter. Shares of the company gained 2.1%, following the earnings release.

Inside the Headlines

Vulcan Materials — which is one of the largest producers of construction aggregates — reported adjusted earnings of $1.60 per share, which surpassed the consensus mark of $1.38 by 15.9%. Also, the company’s bottom line improved 8.1% from the year-ago level on the back of prudent cost-control efforts and higher pricing in aggregates.

Total revenues of $1,322.6 million topped the consensus mark by 1% but decreased 0.4% year over year.

Vulcan Materials Company Price, Consensus and EPS Surprise

Vulcan Materials Company Price, Consensus and EPS Surprise

Vulcan Materials Company price-consensus-eps-surprise-chart | Vulcan Materials Company Quote

Segments in Detail

Aggregates

Revenues from the segment increased 1% year over year to $1,070.6 million owing to higher pricing, partly offset by lower shipments.

Aggregate shipments (volumes) were down 2% year over year as shipping patterns varied widely across the company's footprint as a result of economic uncertainty. Also, wet weather added to the woes.

During the quarter, freight-adjusted average sales price increased 3% from the prior-year quarter. Freight-adjusted revenues also rose 1% from the prior-year quarter to $814.7 million.

Gross profit of $351.2 million was up 6.7% year over year, backed by widespread growth in pricing and effective cost control. Gross margin — as a percentage of segment sales — improved 220 basis points (bps) to 42.3% (excluding freight & delivery).

Asphalt, Concrete and Calcium

Revenues from the Asphalt segment were $223 million, up 9.8% year over year. The segment recorded gross profit of $30.5 million, up 10.4% from the year-ago quarter. Although asphalt volumes for the quarter declined 5% from a year ago, it captured the benefits from lower liquid asphalt costs.    

Total revenues from the Concrete segment were $100.7 million, down 3% year over year. However, gross profit totaled $14.2 million, up 10.4% year over year. Shipments were down 4% year over year. Average selling prices grew 1% year over year.

Total revenues from the Calcium segment were down 5.7% from the prior-year figure to $1.9 million. The segment reported gross profit of $0.7 million, down 18.5% from the prior-year quarter.

Operating Highlights

Selling, Administrative and General or SAG expenses — as a percentage of total revenues — improved 31 bps in the quarter. The improvement was mainly driven by cost-reduction initiatives, lower incentive compensation costs and general cost control in response to the COVID-19 pandemic. Adjusted EBIT grew 10.7% from the prior-year quarter to $308.3 million. Adjusted EBITDA was also up 9.6% year over year to $407.8 million.

Financials

As of Jun 30, 2020, cash and cash equivalents were $816.8 million, up from $26 million in the comparable year-ago period and $271.6 million at 2019-end. Long-term debt was $2.79 billion, slightly up from the year-ago quarter and 2019-end.

During the quarter, Vulcan Materials returned $45 million to shareholders through dividends, reflecting a 10% increase from the prior year. However, it did not repurchase any shares in the quarter.

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Despite the fact that the economic environment is showing signs of improvement, the pandemic’s effect on demand and the broader economy remains uncertain. As a result, Vulcan Materials did not re-issue any earnings guidance.

Zacks Rank & Peer Release

Vulcan Materials — which shares space with Summit Materials, Inc. SUM and Eagle Materials Inc. EXP in the Zacks Building Products - Concrete and Aggregates industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Martin Marietta Materials, Inc. MLM reported better-than-expected second-quarter 2020 earnings and revenues (products and services) backed by higher demand and operational excellence.

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