Vulcan Materials Company (VMC) reported a net loss of 62 cents per share from continuing operations during the first quarter of 2011, deteriorating sharply from last year’s net loss of 53 cents per share from continuing operations. The realized loss was much higher than the Zacks Consensus Estimate of a loss of 49 cents per share.
The 2011 quarter loss excluded an income of 12 cents per share for recovery of costs related to the lawsuit settlement with the Illinois Department of Transportation. On the other hand, the 2010 first quarter excluded an income of 18 cents per share from the sale of its three non-strategic aggregates facilities in rural Virginia.
Total revenue dropped marginally to $487.2 million from $493.3 million in the corresponding quarter of 2010; but exceeded the Zacks Consensus Estimate of $472 million. The year-over-year decline was primarily attributable to a fall in shipments in South Carolina, Florida and regions along the Gulf Coast, despite a stronger demand from public infrastructure projects in Tennessee, Virginia and Georgia.
Segment Details
Net sales from the Aggregates segment were $301.8 million, down 2.4% from $309.3 million. Unit selling price remained almost stable but lower shipments as a result of an overall decrease in demand in some crucial end-use markets pulled sales down. Consequently, segment earnings for aggregates decreased to $10.7 million from $15.4 million during the prior-year quarter.
Net sales in the Concrete segment slid slightly to $82.2 million from $82.9 million in the previous year, due to lower shipments offset partly by higher average selling prices. Segment loss was $14.4 million versus $16.1 million last year.
The Asphalt Mix segment reported a marginal increase of 2.5% in net sales to $64.6 million from $63.0 million in the first quarter of the prior year. The segment was affected by a 2% decrease in asphalt volumes and higher liquid asphalt cost, partly offset by a 4% rise in selling prices for asphalt mix. Segment loss in asphalt was $192,000 compared with earnings of $1.1 million in the prior year’s quarter.
Net sales in the Cement segment plunged 19% to $7.6 million from $9.4 million a year-earlier due to a 11% fall in average selling price and a slight decrease in shipments. Accordingly, segment loss in the quarter amounted to $3.2 million compared with a profit of $552,000 a year ago.
Financial Position
Vulcan Materials’ cash and cash equivalents improved to $63.2 million as of March 31, 2011 from $36 million at the end of the prior-year period. However, long-term debt rose to $2.43 billion as of the above date from $2.10 billion a year ago. Net cash generated by operating activities increased sharply to $44.1 million in the first three months of 2011 from $6.4 million in the same months in 2010.
Outlook
Vulcan is optimistic about 2011, especially the second half of the year driven by growth in demand from large projects in key markets. The company expects improvements in each of its operating segments during the year. It forecasted a stable demand outlook along with a 1%–3% hike in aggregates price.
Further, the company’s selling, general and administrative expenses in 2011 are expected to be $305 million and capital spending to be $125 million for the year.
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