Vulcan Materials Q2 report: Average unit sales price up in all major product lines
Vulcan Materials Co. noted in its second quarter ended June 30, 2011 — released on Aug. 3 — that average unit sales price increased in all major product lines.
Second Quarter Summary and Comparisons with the Prior Year
- The average unit sales price increased in all major product lines.
- Freight-adjusted aggregates prices increased 2.5 percent, reflecting improved pricing across many markets;
- Asphalt mix prices increased 8 percent, leading to improved unit materials margin despite higher liquid asphalt costs;
- Ready-mixed concrete prices increased 8 percent with resultant improvement in unit materials margin; and
- Cement prices increased 2 percent.
- Aggregates shipments declined 9 percent, reflecting the impact of severe storms in April across many of the Company’s markets. Markets in California, Virginia and Maryland realized increased shipments due primarily to strength in infrastructure projects.
- Unit costs for diesel fuel and liquid asphalt increased 43 percent and 17 percent, respectively, reducing pretax earnings by $19 million.
- Selling, administrative and general (SAG) expenses were $7 million lower than the prior year.
- Earnings from continuing operations were a loss of $7 million, or $0.05 per diluted share, compared to a loss of $23 million, or $0.18 per diluted share, in the prior year.
- The current year’s loss includes a $0.12 per diluted share charge related to the Company’s tender offer and debt retirement in June;
- The prior year’s loss includes a $0.21 per diluted share charge due to the settlement of a lawsuit in Illinois; and
- Excluding these specific charges, earnings from continuing operations were $9 million, or $0.07 per diluted share, compared to $5 million, or $0.03 per diluted share in the prior year.
Commenting for the company, Don James, chairman and CEO, stated, “Business conditions remained challenging in the second quarter due to weaker than expected demand, as well as to April’s severe weather, flooding throughout the quarter in our river markets and a significant increase in diesel fuel costs. However, we are encouraged by the improved pricing in the second quarter in each of our segments. Cost control remains a priority – whether it’s lowering plant costs or reducing SAG expenses. In the second quarter, SAG costs decreased 9 percent from the prior year and our aggregates operations continued to enhance production efficiency. These trends in pricing and cost control are consistent with our expectations.”
Second Quarter Operating Results and Commentary
Aggregates segment earnings were $103 million versus $122 million in the prior year’s second quarter due to lower shipments. A number of Vulcan-served markets, most notably markets in the southeast and along the Mississippi River, experienced disruptions in construction activity due to flooding and unusually severe weather. However, aggregates shipments increased versus the prior year’s second quarter in California, Virginia, and Maryland due primarily to stronger demand from public infrastructure projects. More specifically, aggregates shipments in California were up more than 20 percent versus the prior year’s second quarter due to some large project work. The average sales price for aggregates increased 2.5 percent from the prior year due to improvements in many markets. The earnings effect of higher pricing offset the impact of a sharp increase in the unit cost of diesel fuel.
Asphalt mix segment earnings were $8 million in the second quarter versus $7 million in the prior year’s second quarter. Average sales price for asphalt mix increased approximately 8 percent, more than offsetting the earnings effect of higher liquid asphalt costs and leading to higher unit materials margin versus the prior year. Asphalt mix volume increased 3 percent from the prior year’s second quarter.
The Concrete segment reported a loss of $9 million versus a loss of $6 million in the prior year’s second quarter. Ready-mixed concrete average sales price increased 8 percent from the prior year’s second quarter leading to improved unit materials margin. However, the improved materials margin effect was more than offset by a 12 percent decline in volume. Cement segment earnings in the second quarter were a loss of $1 million, flat with the prior year.