UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549

 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): February 18, 2020
 
VULCAN MATERIALS COMPANY
(Exact name of registrant as specified in its charter)

New Jersey	 	001-33841	 	20-8579133	
(State or other jurisdiction
of incorporation)	 	(Commission File Number)	 	(IRS Employer Identification No.)	
 
1200 Urban Center Drive
Birmingham, Alabama 35242
 (Address of principal executive offices) (zip code)

(205) 298-3000
Registrant's telephone number, including area code
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class	Trading Symbol(s)	Name of each exchange on which
registered	
Common Stock, $1 par value	VMC	New York Stock Exchange	
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 
 
Item 2.02	Results of Operations and Financial Condition.	
 
On February 18, 2020, Vulcan Materials Company announced its financial results for the fourth quarter ended December 31, 2019. The press release announcing the results is furnished as Exhibit 99.1.
 
Item 9.01	Financial Statements and Exhibits.	
 
(d) Exhibits
 
Exhibit No.	 	Description	
 	 	 	
99.1	 	Press Release, dated February 18, 2020	
 	 	 	
104	 	Cover Page Interactive Data File (embedded within the Inline XBRL document)	

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	VULCAN MATERIALS COMPANY 	
 	 	 	
Date: February 18, 2020	By:	/s/ Suzanne H. Wood	
 	Name:	Suzanne H. Wood 	
 	Title:	Senior Vice President and Chief Financial Officer	

 

 

Exhibit 99.1

 
February 18, 2020
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: Janet Kavinoky (205) 298-3220
  
VULCAN REPORTS FOURTH QUARTER AND FULL YEAR RESULTS
 
Double-Digit Growth in Revenues Drives Aggregates Unit Profitability in 2019
Double-Digit Growth in Earnings Expected in 2020
 
Birmingham, Alabama – February 18, 2020 – Vulcan Materials Company (NYSE: VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter ended December 31, 2019.
 
Higher segment earnings in Aggregates and Asphalt helped drive 15 percent year-over-year growth in the Company’s fourth quarter earnings from continuing operations. Solid shipment growth, up 4 percent, and compounding price improvements, up 5.5 percent, led to improved earnings in aggregates. Asphalt earnings benefited from double-digit revenue growth and improving unit margins.
 
Full year revenues were $4.9 billion, up 12 percent as compared to the prior year, and net earnings were $618 million, an increase of 20 percent. Adjusted EBITDA increased 12 percent to $1.27 billion. At year end, total debt was $2.8 billion, or 2.2 times trailing-twelve month Adjusted EBITDA.
 
Tom Hill, Chairman and Chief Executive Officer, said, “2019 marks another year of strong earnings growth and cash generation. We are particularly proud of our people who worked hard to achieve these results while ensuring another year of world-class safety performance. Widespread improvements in pricing helped drive 8 percent growth in our industry-leading unit profitability and double-digit growth in Adjusted EBITDA, a strong result despite some higher than expected costs in the fourth quarter. Industry leadership in safety and pace-setting unit margins are both evidence of our strong and healthy business. Going forward, our compounding unit margins and our disciplined capital allocation position us to increase our cash flows and improve our return on invested capital again in 2020.
 
“Looking ahead, demand in our markets will continue to benefit from higher levels of highway funding and continued growth in residential and nonresidential markets. This visibility into demand growth has already set the stage for solid price improvement in 2020. Price improvement coupled with our four strategic initiatives (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing) should continue to increase unit profitability. For the full year, we expect earnings from continuing operations between $5.20 and $5.80 per diluted share with Adjusted EBITDA between $1.385 and $1.485 billion.”

 

Page 2
February 18, 2020
FOR IMMEDIATE RELEASE
  
Highlights as of December 31, 2019 include:
 
 	 	Fourth Quarter	 	 	Full Year	 	
Amounts in millions, except per unit data	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Total revenues	 	$	1,186.2	 	 	$	1,088.0	 	 	$	4,929.1	 	 	$	4,382.9	 	
Gross profit	 	$	293.1	 	 	$	275.3	 	 	$	1,255.9	 	 	$	1,100.9	 	
Aggregates segment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment sales	 	$	960.2	 	 	$	874.0	 	 	$	3,990.3	 	 	$	3,513.6	 	
Freight-adjusted revenue	 	$	720.6	 	 	$	657.6	 	 	$	3,014.2	 	 	$	2,667.3	 	
Gross profit	 	$	274.5	 	 	$	256.4	 	 	$	1,146.6	 	 	$	991.9	 	
Shipments (tons)	 	 	51.6	 	 	 	49.7	 	 	 	215.5	 	 	 	201.4	 	
Freight-adjusted sales price per ton	 	$	13.96	 	 	$	13.23	 	 	$	13.99	 	 	$	13.25	 	
Gross profit per ton	 	$	5.32	 	 	$	5.16	 	 	$	5.32	 	 	$	4.93	 	
Asphalt, Concrete & Calcium segment gross profit	 	$	18.6	 	 	$	18.9	 	 	$	109.3	 	 	$	109.1	 	
Selling, Administrative and General (SAG)	 	$	95.8	 	 	$	84.4	 	 	$	370.5	 	 	$	333.4	 	
SAG as % of Total revenues	 	 	8.1	%	 	 	7.8	%	 	 	7.5	%	 	 	7.6	%	
Earnings from continuing operations before income taxes	 	$	166.0	 	 	$	153.9	 	 	$	757.7	 	 	$	623.3	 	
Net earnings	 	$	141.1	 	 	$	124.0	 	 	$	617.7	 	 	$	515.8	 	
Adjusted EBIT	 	$	202.8	 	 	$	195.8	 	 	$	895.4	 	 	$	785.5	 	
Adjusted EBITDA	 	$	298.5	 	 	$	285.6	 	 	$	1,270.0	 	 	$	1,131.7	 	
Earnings from continuing operations per diluted share	 	$	1.07	 	 	$	0.93	 	 	$	4.67	 	 	$	3.87	 	
Adjusted earnings from continuing operations per diluted share	 	$	1.08	 	 	$	0.99	 	 	$	4.70	 	 	$	4.05	 	
 
Segment Results
 
Aggregates
 
Fourth quarter segment sales increased 10 percent, and gross profit increased 7 percent to $275 million, or $5.32 per ton. These improvements resulted from growth in shipments and improved pricing.
 
Fourth quarter aggregates shipments increased 4 percent as compared to the prior year quarter. Markets in the Southeast and Southwest reported strong shipment growth, including double-digit growth in Florida and along the Gulf Coast. All of the Company’s key markets reported year-over-year price growth. For the quarter, freight-adjusted average sales price increased 5.5 percent (4.8 percent on mix-adjusted basis) versus the prior year’s quarter. The 70 basis points benefit from mix was due in part to above average growth in the Company’s remote-served markets. Positive trends in booking pace, along with demand visibility and customer confidence, support our expectations for continued price improvement.
 
Fourth quarter profitability was negatively impacted by higher repairs and maintenance costs, geographic volume mix including higher sales volumes in rail-served remote markets, as well as lower tipping fees for clean fill.

 

Page 3
February 18, 2020
FOR IMMEDIATE RELEASE

For the full year, segment sales increased 14 percent, driven by 7 percent (6 percent same-store) volume growth and 5.6 percent price growth (5.2 percent on mix-adjusted basis). Gross profit increased 16 percent, and unit profitability grew by 8 percent to $5.32 per ton. The Company remains focused on compounding its industry-leading unit margins. Cash gross profit for the year was $6.74 per ton.
 
Asphalt, Concrete and Calcium
 
Asphalt segment gross profit was $11 million for the fourth quarter, an increase of $4 million from the prior year. Asphalt mix shipments increased 10 percent and selling prices increased 3 percent in the fourth quarter. California, the Company’s largest asphalt market, reported volume growth in the fourth quarter after a soft first half of the year due in part to weather. The average unit cost for liquid asphalt was 12 percent lower than the prior year quarter. Gross profit per ton in the quarter improved by 52 percent to $3.64.
 
Concrete segment gross profit was $7 million, $5 million lower than the prior year. Shipments increased 1 percent, and average selling prices increased 2 percent when compared to the prior year’s fourth quarter. Project delays, along with higher repair and maintenance costs, contributed to the year-over-year decline in gross profit.
 
Calcium segment gross profit was $0.8 million, up from the prior year quarter.
 
For the full year, Asphalt segment gross profit increased 12 percent to $63 million. Gross profit improved year-over-year in each of the last 3 quarters, despite a 6 percent increase in the unit cost of liquid asphalt for the year. Concrete gross profit was $43 million for the full year, down from $50 million in 2018. Backlogs remain good. The majority of the year-over-year change occurred in the fourth quarter as a result of project delays.
 
Capital Allocation and Financial Position
 
In 2019, the Company realized strong cash generation, and return on invested capital improved 130 basis points to 13.9 percent on an Adjusted EBITDA basis.
 
Full year core operating and maintenance capital investment totaled $239 million, and internal growth projects investment was $165 million. The Company’s full-year expectations for 2020 include $275 million for core operating and maintenance capital and $200 million for internal growth projects that are largely underway. During the year, the Company returned $167 million to shareholders through dividends and share repurchases.
 
At year-end, total debt was $2.8 billion, or 2.2 times trailing-twelve month Adjusted EBITDA, down from 2.6 times at the end of the prior year. The Company’s weighted-average debt maturity was 14 years, and the weighted-average interest rate was 4.4 percent.

 

Page 4
February 18, 2020
FOR IMMEDIATE RELEASE
 
Selling, Administrative and General (SAG)
 
SAG expense was $96 million in the quarter compared to $84 million in the prior year. The year-over-year increase was due mainly to compensation-related expense as well as higher professional fees. For the full year, SAG expense was $371 million, or 7.5 percent of total revenues, 10 basis points lower than the prior year. The Company remains focused on further leveraging its overhead structure.
 
Outlook
 
Regarding the Company’s outlook, Mr. Hill stated, “In 2020, we expect another year of strong earnings growth. Vulcan-served markets should continue to benefit from public construction demand, led by higher levels of highway funding in our key states. We anticipate residential construction in our markets to continue strengthening after experiencing some softness in certain markets during the second half of 2019. Private nonresidential construction activity should also improve as leading indicators point to positive growth in 2020. Demand fundamentals, including population and employment growth, continue to support longer-term growth in residential and nonresidential construction. We are seeing a positive pricing environment driven by shipment momentum in private demand and visibility of public demand. Our focus remains the same – compounding our unit margins through all parts of the cycle and improving our returns on capital.”
 
Management expectations for 2020 include:
 
	·	Aggregates shipments growth of 2 to 4 percent	
	·	Aggregates freight-adjusted price increase of 4 to 6 percent	
	·	10 to 15 percent growth in Asphalt, Concrete and Calcium gross profit, collectively	
	·	SAG expenses of approximately $365 million	
	·	Interest expense of approximately $125 million	
	·	Depreciation, depletion, accretion and amortization expense of approximately $385 million	
	·	An effective tax rate of approximately 20 percent	
	·	Earnings from continuing operations of $5.20 to $5.80 per diluted share	
	·	Adjusted EBITDA of $1.385 to $1.485 billion	
 
Conference Call
 
Vulcan will host a conference call at 10:00 a.m. CT on February 18, 2020. A webcast will be available via the Company’s website at www.vulcanmaterials.com. Investors and other interested parties may access the teleconference live by calling 800-347-6311, or 323-794-2094 if outside the U.S., approximately 10 minutes before the scheduled start. The conference ID is 6815558. The conference call will be recorded and available for replay at the Company’s website approximately two hours after the call.
 
Vulcan Materials Company, a member of the S&P 500 Index with headquarters in Birmingham, Alabama, is the nation's largest producer of construction aggregates – primarily crushed stone, sand and gravel – and a major producer of aggregates-based construction materials, including asphalt mix and ready-mixed concrete. For additional information about Vulcan, go to www.vulcanmaterials.com.

 

Page 5
February 18, 2020
FOR IMMEDIATE RELEASE

FORWARD-LOOKING STATEMENT DISCLAIMER
 
This document contains forward-looking statements.  Statements that are not historical fact, including statements about Vulcan's beliefs and expectations, are forward-looking statements. Generally, these statements relate to future financial performance, results of operations, business plans or strategies, projected or anticipated revenues, expenses, earnings (including EBITDA and other measures), dividend policy, shipment volumes, pricing, levels of capital expenditures, intended cost reductions and cost savings, anticipated profit improvements and/or planned divestitures and asset sales. These forward-looking statements are sometimes identified by the use of terms and phrases such as "believe," "should," "would," "expect," "project," "estimate," "anticipate," "intend," "plan," "will," "can," "may" or similar expressions elsewhere in this document.  These statements are subject to numerous risks, uncertainties, and assumptions, including but not limited to general business conditions, competitive factors, pricing, energy costs, and other risks and uncertainties discussed in the reports Vulcan periodically files with the SEC.
 
Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary significantly from those expressed in or implied by the forward-looking statements. The following risks related to Vulcan's business, among others, could cause actual results to differ materially from those described in the forward-looking statements: general economic and business conditions; Vulcan’s dependence on the construction industry, which is subject to economic cycles; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction; changes in Vulcan’s effective tax rate; the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; the impact of the state of the global economy on Vulcan’s businesses and financial condition and access to capital markets; the highly competitive nature of the construction industry; the impact of future regulatory or legislative actions, including those relating to climate change, wetlands, greenhouse gas emissions, the definition of minerals, tax policy or international trade; the outcome of pending legal proceedings; pricing of Vulcan's products; weather and other natural phenomena, including the impact of climate change and the availability of water; energy costs; costs of hydrocarbon-based raw materials; healthcare costs; the amount of long-term debt and interest expense incurred by Vulcan; changes in interest rates; the impact of a discontinuation of the London Interbank Offered Rate (LIBOR); volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully integrate acquisitions; the effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan’s products are distributed; and other assumptions, risks and uncertainties detailed from time to time in the reports filed by Vulcan with the SEC. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement.  Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this document except as required by law.

 

 
Table A
 
Vulcan Materials Company
and Subsidiary Companies 
 
 	 	 	 	 	 	 	 	(in thousands, except per share data)	 	
 	 	Three Months Ended	 	 	Twelve Months Ended	 	
Consolidated Statements of Earnings	 	 	 	 	December 31	 	 	 	 	 	December 31	 	
(Condensed and unaudited)	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Total revenues	 	$	1,186,152	 	 	$	1,088,047	 	 	$	4,929,103	 	 	$	4,382,869	 	
Cost of revenues	 	 	893,071	 	 	 	812,763	 	 	 	3,673,202	 	 	 	3,281,924	 	
Gross profit	 	 	293,081	 	 	 	275,284	 	 	 	1,255,901	 	 	 	1,100,945	 	
Selling, administrative and general expenses	 	 	95,801	 	 	 	84,382	 	 	 	370,548	 	 	 	333,371	 	
Gain on sale of property, plant & equipment and businesses	 	 	12,770	 	 	 	6,570	 	 	 	23,752	 	 	 	14,944	 	
Other operating expense, net	 	 	(16,474	)	 	 	(10,983	)	 	 	(31,647	)	 	 	(34,805	)	
Operating earnings	 	 	193,576	 	 	 	186,489	 	 	 	877,458	 	 	 	747,713	 	
Other nonoperating income, net	 	 	3,289	 	 	 	292	 	 	 	9,243	 	 	 	13,000	 	
Interest expense, net	 	 	30,835	 	 	 	32,857	 	 	 	129,000	 	 	 	137,423	 	
Earnings from continuing operations before income taxes	 	 	166,030	 	 	 	153,924	 	 	 	757,701	 	 	 	623,290	 	
Income tax expense	 	 	23,434	 	 	 	29,645	 	 	 	135,198	 	 	 	105,449	 	
Earnings from continuing operations	 	 	142,596	 	 	 	124,279	 	 	 	622,503	 	 	 	517,841	 	
Loss on discontinued operations, net of tax	 	 	(1,504	)	 	 	(256	)	 	 	(4,841	)	 	 	(2,036	)	
Net earnings	 	$	141,092	 	 	$	124,023	 	 	$	617,662	 	 	$	515,805	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	 	$	1.08	 	 	$	0.94	 	 	$	4.71	 	 	$	3.91	 	
Discontinued operations	 	$	(0.01	)	 	$	0.00	 	 	$	(0.04	)	 	$	(0.01	)	
Net earnings	 	$	1.07	 	 	$	0.94	 	 	$	4.67	 	 	$	3.90	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	 	$	1.07	 	 	$	0.93	 	 	$	4.67	 	 	$	3.87	 	
Discontinued operations	 	$	(0.01	)	 	$	0.00	 	 	$	(0.04	)	 	$	(0.02	)	
Net earnings	 	$	1.06	 	 	$	0.93	 	 	$	4.63	 	 	$	3.85	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	132,467	 	 	 	132,060	 	 	 	132,300	 	 	 	132,393	 	
Assuming dilution	 	 	133,467	 	 	 	133,369	 	 	 	133,385	 	 	 	133,926	 	
Depreciation, depletion, accretion and amortization	 	$	95,671	 	 	$	89,783	 	 	$	374,596	 	 	$	346,246	 	
Effective tax rate from continuing operations	 	 	14.1	%	 	 	19.3	%	 	 	17.8	%	 	 	16.9	%	

 

Table B
 
Vulcan Materials Company
and Subsidiary Companies  
 
 	 	 	 	 	(in thousands)	 	
Consolidated Balance Sheets	 	December 31	 	 	December 31	 	
(Condensed and unaudited)	 	2019	 	 	2018	 	
Assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	271,589	 	 	$	40,037	 	
Restricted cash	 	 	2,917	 	 	 	4,367	 	
Accounts and notes receivable	 	 	 	 	 	 	 	 	
Accounts and notes receivable, gross	 	 	573,241	 	 	 	542,868	 	
Allowance for doubtful accounts	 	 	(3,125	)	 	 	(2,090	)	
Accounts and notes receivable, net	 	 	570,116	 	 	 	540,778	 	
Inventories	 	 	 	 	 	 	 	 	
Finished products	 	 	391,666	 	 	 	372,604	 	
Raw materials	 	 	31,318	 	 	 	27,942	 	
Products in process	 	 	5,604	 	 	 	3,064	 	
Operating supplies and other	 	 	29,720	 	 	 	25,720	 	
Inventories	 	 	458,308	 	 	 	429,330	 	
Other current assets	 	 	76,396	 	 	 	64,633	 	
Total current assets	 	 	1,379,326	 	 	 	1,079,145	 	
Investments and long-term receivables	 	 	60,709	 	 	 	44,615	 	
Property, plant & equipment	 	 	 	 	 	 	 	 	
Property, plant & equipment, cost	 	 	8,749,217	 	 	 	8,457,619	 	
Allowances for depreciation, depletion & amortization	 	 	(4,433,179	)	 	 	(4,220,312	)	
Property, plant & equipment, net	 	 	4,316,038	 	 	 	4,237,307	 	
Operating lease right-of-use assets, net	 	 	408,189	 	 	 	0	 	
Goodwill	 	 	3,167,061	 	 	 	3,165,396	 	
Other intangible assets, net	 	 	1,091,475	 	 	 	1,095,378	 	
Other noncurrent assets	 	 	225,995	 	 	 	210,289	 	
Total assets	 	$	10,648,793	 	 	$	9,832,130	 	
Liabilities	 	 	 	 	 	 	 	 	
Current maturities of long-term debt	 	 	25	 	 	 	23	 	
Short-term debt	 	 	0	 	 	 	133,000	 	
Trade payables and accruals	 	 	265,159	 	 	 	216,473	 	
Other current liabilities	 	 	270,379	 	 	 	253,054	 	
Total current liabilities	 	 	535,563	 	 	 	602,550	 	
Long-term debt	 	 	2,784,315	 	 	 	2,779,357	 	
Deferred income taxes, net	 	 	633,039	 	 	 	567,283	 	
Deferred revenue	 	 	179,880	 	 	 	186,397	 	
Operating lease liabilities	 	 	388,042	 	 	 	0	 	
Other noncurrent liabilities	 	 	506,097	 	 	 	493,640	 	
Total liabilities	 	$	5,026,936	 	 	$	4,629,227	 	
Equity	 	 	 	 	 	 	 	 	
Common stock, $1 par value	 	 	132,371	 	 	 	131,762	 	
Capital in excess of par value	 	 	2,791,353	 	 	 	2,798,486	 	
Retained earnings	 	 	2,895,871	 	 	 	2,444,870	 	
Accumulated other comprehensive loss	 	 	(197,738	)	 	 	(172,215	)	
Total equity	 	$	5,621,857	 	 	$	5,202,903	 	
Total liabilities and equity	 	$	10,648,793	 	 	$	9,832,130	 	

 

 	 	 	 	 	Table C	 	
Vulcan Materials Company	 	 	 	 	 	 	
and Subsidiary Companies	 	 	 	 	 	 	
 	 	(in thousands)	 	
 	 	Twelve Months Ended	 	
Consolidated Statements of Cash Flows	 	December 31	 	
(Condensed and unaudited)	 	 	2019	 	 	 	2018	 	
Operating Activities	 	 	 	 	 	 	 	 	
Net earnings	 	$	617,662	 	 	$	515,805	 	
Adjustments to reconcile net earnings to net cash provided by operating activities	 	 	 	 	 	 	 	 	
Depreciation, depletion, accretion and amortization	 	 	374,596	 	 	 	346,246	 	
Noncash operating lease expense	 	 	35,344	 	 	 	0	 	
Net gain on sale of property, plant & equipment and businesses	 	 	(23,752	)	 	 	(14,944	)	
Contributions to pension plans	 	 	(8,882	)	 	 	(109,631	)	
Share-based compensation expense	 	 	31,843	 	 	 	25,215	 	
Deferred tax expense (benefit)	 	 	76,011	 	 	 	64,639	 	
Cost of debt purchase	 	 	0	 	 	 	6,922	 	
Changes in assets and liabilities before initial effects of business acquisitions and dispositions	 	 	(147,218	)	 	 	(6,974	)	
Other, net	 	 	28,518	 	 	 	5,499	 	
Net cash provided by operating activities	 	$	984,122	 	 	$	832,777	 	
 
Investing Activities	 	 	 	 	 	 	
Purchases of property, plant & equipment	 	 	(384,094	)	 	 	(469,088	)	
Proceeds from sale of property, plant & equipment	 	 	22,661	 	 	 	22,210	 	
Proceeds from sale of businesses	 	 	1,744	 	 	 	11,256	 	
Payment for businesses acquired, net of acquired cash	 	 	(44,151	)	 	 	(221,419	)	
Other, net	 	 	(11,997	)	 	 	(12,850	)	
Net cash used for investing activities	 	$	(415,837	)	 	$	(669,891	)	
 
Financing Activities	 	 	 	 	 	 	 	 	
Proceeds from short-term debt	 	 	366,900	 	 	 	739,900	 	
Payment of short-term debt	 	 	(499,900	)	 	 	(606,900	)	
Payment of current maturities and long-term debt	 	 	(23	)	 	 	(892,055	)	
Proceeds from issuance of long-term debt	 	 	0	 	 	 	850,000	 	
Debt issuance and exchange costs	 	 	0	 	 	 	(45,513	)	
Settlements of interest rate derivatives	 	 	0	 	 	 	3,378	 	
Purchases of common stock	 	 	(2,602	)	 	 	(133,983	)	
Dividends paid	 	 	(163,973	)	 	 	(148,109	)	
Share-based compensation, shares withheld for taxes	 	 	(38,585	)	 	 	(31,846	)	
Net cash used for financing activities	 	$	(338,183	)	 	$	(265,128	)	
Net increase (decrease) in cash and cash equivalents and restricted cash	 	 	230,102	 	 	 	(102,242	)	
Cash and cash equivalents and restricted cash at beginning of year	 	 	44,404	 	 	 	146,646	 	
Cash and cash equivalents and restricted cash at end of year	 	$	274,506	 	 	$	44,404	 	

 

 	 	 	 	 	 	 	 	 	 	 	Table D	 	
Segment Financial Data and Unit Shipments	 	 	 	
 	 	(in thousands, except per unit data)	 	
 	 	Three Months Ended	 	 	Twelve Months Ended	 	
 	 	December 31	 	 	December 31	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Total Revenues	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aggregates 1	 	$	960,164	 	 	$	873,996	 	 	$	3,990,275	 	 	$	3,513,649	 	
Asphalt 2	 	 	206,331	 	 	 	185,819	 	 	 	855,821	 	 	 	733,182	 	
Concrete	 	 	95,258	 	 	 	92,595	 	 	 	395,627	 	 	 	401,999	 	
Calcium	 	 	2,118	 	 	 	1,974	 	 	 	8,191	 	 	 	8,110	 	
Segment sales	 	$	1,263,871	 	 	$	1,154,384	 	 	$	5,249,914	 	 	$	4,656,940	 	
Aggregates intersegment sales	 	 	(77,719	)	 	 	(66,337	)	 	 	(320,811	)	 	 	(274,071	)	
Total revenues	 	$	1,186,152	 	 	$	1,088,047	 	 	$	4,929,103	 	 	$	4,382,869	 	
Gross Profit	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aggregates	 	$	274,516	 	 	$	256,374	 	 	$	1,146,649	 	 	$	991,858	 	
Asphalt	 	 	11,073	 	 	 	6,627	 	 	 	63,023	 	 	 	56,480	 	
Concrete	 	 	6,664	 	 	 	11,795	 	 	 	43,151	 	 	 	49,893	 	
Calcium	 	 	828	 	 	 	488	 	 	 	3,078	 	 	 	2,714	 	
Total	 	$	293,081	 	 	$	275,284	 	 	$	1,255,901	 	 	$	1,100,945	 	
Depreciation, Depletion, Accretion and Amortization	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aggregates	 	$	77,787	 	 	$	73,221	 	 	$	305,046	 	 	$	281,641	 	
Asphalt	 	 	8,856	 	 	 	8,562	 	 	 	35,199	 	 	 	31,290	 	
Concrete	 	 	3,958	 	 	 	3,035	 	 	 	13,620	 	 	 	12,539	 	
Calcium	 	 	55	 	 	 	65	 	 	 	232	 	 	 	272	 	
Other	 	 	5,015	 	 	 	4,900	 	 	 	20,499	 	 	 	20,504	 	
Total	 	$	95,671	 	 	$	89,783	 	 	$	374,596	 	 	$	346,246	 	
Average Unit Sales Price and Unit Shipments	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aggregates	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Freight-adjusted revenues 3	 	$	720,584	 	 	$	657,580	 	 	$	3,014,157	 	 	$	2,667,291	 	
Aggregates - tons	 	 	51,620	 	 	 	49,716	 	 	 	215,465	 	 	 	201,375	 	
Freight-adjusted sales price 4	 	$	13.96	 	 	$	13.23	 	 	$	13.99	 	 	$	13.25	 	
Other Products	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Asphalt Mix - tons	 	 	3,041	 	 	 	2,769	 	 	 	12,665	 	 	 	11,318	 	
Asphalt Mix - sales price	 	$	57.87	 	 	$	56.03	 	 	$	57.79	 	 	$	55.13	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ready-mixed concrete - cubic yards	 	 	744	 	 	 	737	 	 	 	3,104	 	 	 	3,223	 	
Ready-mixed concrete - sales price	 	$	126.97	 	 	$	124.34	 	 	$	126.38	 	 	$	123.35	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Calcium - tons	 	 	78	 	 	 	69	 	 	 	294	 	 	 	285	 	
Calcium - sales price	 	$	27.30	 	 	$	28.48	 	 	$	27.85	 	 	$	28.44	 	

 
1	Includes product sales (crushed stone, sand and gravel, sand, and other aggregates), as well as freight & delivery costs that we pass along to our customers, and service revenues related to aggregates.	
2	Includes product sales, as well as service revenues from our asphalt construction paving business.	
3	Freight-adjusted revenues are Aggregates segment sales excluding freight & delivery revenues and immaterial other revenues related to services, such as landfill tipping fees that are derived from our aggregates business.	
4	Freight-adjusted sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments.	

 

Appendix 1
 
1.   Reconciliation of Non-GAAP Measures
 
Aggregates segment freight-adjusted revenues is not a Generally Accepted Accounting Principle (GAAP) measure. We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. It also excludes immaterial other revenues related to services, such as landfill tipping fees, that are derived from our aggregates business. Additionally, we use this metric as the basis for calculating the average sales price of our aggregates products. Reconciliation of this metric to its nearest GAAP measure is presented below:
 
Aggregates Segment Freight-Adjusted Revenues                  
 
(in thousands, except per ton data)	
 	 	Three Months Ended	 	 	Twelve Months Ended	 	
 	 	 	 	 	December 31	 	 	 	 	 	December 31	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Aggregates segment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment sales	 	$	960,164	 	 	$	873,996	 	 	$	3,990,275	 	 	$	3,513,649	 	
Less:      Freight & delivery revenues 1	 	 	225,139	 	 	 	203,518	 	 	 	921,064	 	 	 	796,929	 	
   Other revenues	 	 	14,441	 	 	 	12,898	 	 	 	55,054	 	 	 	49,429	 	
Freight-adjusted revenues	 	$	720,584	 	 	$	657,580	 	 	$	3,014,157	 	 	$	2,667,291	 	
Unit shipment - tons	 	 	51,620	 	 	 	49,716	 	 	 	215,465	 	 	 	201,375	 	
Freight-adjusted sales price	 	$	13.96	 	 	$	13.23	 	 	$	13.99	 	 	$	13.25	 	
 
1 At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote distribution sites.
 
Aggregates segment incremental gross profit flow-through rate is not a GAAP measure and represents the year-over-year change in gross profit divided by the year-over-year change in segment sales excluding freight & delivery (revenues and costs). We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. Reconciliations of these metrics to their nearest GAAP measures are presented below:
 
Aggregates Segment Incremental Gross Profit Margin in Accordance with GAAP      
 
(dollars in thousands)	
 	 	Three Months Ended	 	 	Twelve Months Ended	 	
 	 	 	 	 	December 31	 	 	 	 	 	December 31	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Aggregates segment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	$	274,516	 	 	$	256,374	 	 	$	1,146,649	 	 	$	991,858	 	
Segment sales	 	$	960,164	 	 	$	873,996	 	 	$	3,990,275	 	 	$	3,513,649	 	
Gross profit margin	 	 	28.6	%	 	 	29.3	%	 	 	28.7	%	 	 	28.2	%	
Incremental gross profit margin	 	 	21.1	%	 	 	 	 	 	 	32.5	%	 	 	 	 	
 
Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP)        
 
(dollars in thousands)	
 	 	Three Months Ended	 	 	Twelve Months Ended	 	
 	 	 	 	 	December 31	 	 	 	 	 	December 31	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Aggregates segment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	$	274,516	 	 	$	256,374	 	 	$	1,146,649	 	 	$	991,858	 	
Segment sales	 	$	960,164	 	 	$	873,996	 	 	$	3,990,275	 	 	$	3,513,649	 	
Less:      Freight & delivery revenues 1	 	 	225,139	 	 	 	203,518	 	 	 	921,064	 	 	 	796,929	 	
Segment sales excluding freight & delivery	 	$	735,025	 	 	$	670,478	 	 	$	3,069,211	 	 	$	2,716,720	 	
Gross profit flow-through rate	 	 	37.3	%	 	 	38.2	%	 	 	37.4	%	 	 	36.5	%	
Incremental gross profit flow-through rate	 	 	28.1	%	 	 	 	 	 	 	43.9	%	 	 	 	 	
 
1 At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote distribution sites.
 
GAAP does not define "Aggregates segment cash gross profit" and it should not be considered as an alternative to earnings measures defined by GAAP. We and the investment community use this metric to assess the operating performance of our business. Additionally, we present this metric as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources.  Aggregates segment cash gross profit per ton is computed by dividing Aggregates segment cash gross profit by tons shipped. Reconciliation of this metric to its nearest GAAP measure is presented below:
 
Aggregates Segment Cash Gross Profit                  
 
(in thousands, except per ton data)	
 	 	Three Months Ended	 	 	Twelve Months Ended	 	
 	 	 	 	 	December 31	 	 	 	 	 	December 31	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Aggregates segment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	$	274,516	 	 	$	256,374	 	 	$	1,146,649	 	 	$	991,858	 	
Depreciation, depletion, accretion and amortization	 	 	77,787	 	 	 	73,221	 	 	 	305,046	 	 	 	281,641	 	
Aggregates segment cash gross profit	 	$	352,303	 	 	$	329,595	 	 	$	1,451,695	 	 	$	1,273,499	 	
Unit shipments - tons	 	 	51,620	 	 	 	49,716	 	 	 	215,465	 	 	 	201,375	 	
Aggregates segment cash gross profit per ton	 	$	6.82	 	 	$	6.63	 	 	$	6.74	 	 	$	6.32	 	

 

 
Appendix 2
 
Reconciliation of Non-GAAP Measures (Continued)
 
GAAP does not define "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) and it should not be considered as an alternative to earnings measures defined by GAAP. We use this metric to assess the operating performance of our business and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of earnings performance from period to period. Reconciliation of this metric to its nearest GAAP measure is presented below:
 
EBITDA and Adjusted EBITDA
 
 	 	(in thousands)	 	
 	 	Three Months Ended	 	 	Twelve Months Ended	 	
 	 	December 31	 	 	December 31	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Net earnings	 	$	141,092	 	 	$	124,023	 	 	$	617,662	 	 	$	515,805	 	
Income tax expense	 	 	23,434	 	 	 	29,645	 	 	 	135,198	 	 	 	105,449	 	
Interest expense, net	 	 	30,835	 	 	 	32,857	 	 	 	129,000	 	 	 	137,423	 	
Loss on discontinued operations, net of tax	 	 	1,504	 	 	 	256	 	 	 	4,841	 	 	 	2,036	 	
EBIT	 	$	196,865	 	 	$	186,781	 	 	$	886,701	 	 	$	760,713	 	
Depreciation, depletion, accretion and amortization	 	 	95,671	 	 	 	89,783	 	 	 	374,596	 	 	 	346,246	 	
EBITDA	 	$	292,536	 	 	$	276,564	 	 	$	1,261,297	 	 	$	1,106,959	 	
Gain on sale of businesses	 	 	(9,289	)	 	 	0	 	 	 	(13,353	)	 	 	(2,929	)	
Property donation	 	 	10,847	 	 	 	0	 	 	 	10,847	 	 	 	0	 	
Business interruption claims recovery	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(2,253	)	
Charges associated with divested operations	 	 	3,033	 	 	 	8,497	 	 	 	3,033	 	 	 	18,545	 	
Business development 1	 	 	1,345	 	 	 	0	 	 	 	1,748	 	 	 	5,202	 	
Restructuring charges 2	 	 	0	 	 	 	513	 	 	 	6,457	 	 	 	6,219	 	
Adjusted EBITDA	 	$	298,472	 	 	$	285,574	 	 	$	1,270,029	 	 	$	1,131,743	 	
Depreciation, depletion, accretion and amortization	 	 	(95,671	)	 	 	(89,783	)	 	 	(374,596	)	 	 	(346,246	)	
Adjusted EBIT	 	$	202,801	 	 	$	195,791	 	 	$	895,433	 	 	$	785,497	 	
 
1 Represents non-routine charges associated with acquisitions including the cost impact of purchase accounting inventory valuations.
2 Restructuring charges are included within other operating expenses. The 2019 charges relate to a managerial restructuring.
 
Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted EPS from continuing operations to provide a more consistent comparison of earnings performance from period to period.
 
Adjusted Diluted EPS from Continuing Operations (Adjusted Diluted EPS)
 
 	 	Three Months Ended	 	 	Twelve Months Ended	 	
 	 	December 31	 	 	December 31	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Diluted EPS from continuing operations	 	$	1.07	 	 	$	0.93	 	 	$	4.67	 	 	$	3.87	 	
Items included in Adjusted EBITDA above	 	 	0.01	 	 	 	0.06	 	 	 	0.03	 	 	 	0.14	 	
Debt refinancing costs	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 	 	 	0.04	 	
Adjusted Diluted EPS	 	$	1.08	 	 	$	0.99	 	 	$	4.70	 	 	$	4.05	 	
 
The following reconciliation to the mid-point of the range of 2020 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount). Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP.  Reconciliation of this metric to its nearest GAAP measure is presented below:
 
2020 Projected EBITDA  
 
 	 	(in millions)	 	
 	 	Mid-point	 	
Net earnings	 	$	735	 	
Income tax expense	 	 	190	 	
Interest expense, net	 	 	125	 	
Discontinued operations, net of tax	 	 	0	 	
Depreciation, depletion, accretion and amortization	 	 	385	 	
Projected EBITDA	 	$	1,435	 	

 
 
Appendix 3
 
Reconciliation of Non-GAAP Measures (Continued)          
  
We define Return on Invested Capital (ROIC) as Adjusted EBITDA for the trailing-twelve months divided by average invested capital (as illustrated below) during the trailing 5-quarters. Our calculation of ROIC is considered a non-GAAP financial measure because we calculate ROIC using the non-GAAP metric EBITDA. We believe that our ROIC metric is meaningful because it helps investors assess how effectively we are deploying our assets. Although ROIC is a standard financial metric, numerous methods exist for calculating a company's ROIC. As a result, the method we use to calculate our ROIC may differ from the methods used by other companies.
 
Return on Invested Capital
 
 	 	(in thousands)	 	
 	 	2019	 	 	2018	 	
Adjusted EBITDA	 	$	1,270,029	 	 	$	1,131,743	 	
 	 	 	 	 	 	 	 	 	
Property, plant & equipment	 	 	4,281,342	 	 	 	4,095,448	 	
Goodwill	 	 	3,165,685	 	 	 	3,150,290	 	
Other intangible assets	 	 	1,084,113	 	 	 	1,095,218	 	
Fixed and Intangible Assets	 	$	8,531,140	 	 	$	8,340,956	 	
 	 	 	 	 	 	 	 	 	
Current Assets	 	 	1,224,316	 	 	 	1,125,912	 	
Less: Cash and cash equivalents	 	 	93,528	 	 	 	68,349	 	
Less: Deferred tax	 	 	12,633	 	 	 	0	 	
Adjusted Current Assets	 	 	1,118,155	 	 	 	1,057,563	 	
 	 	 	 	 	 	 	 	 	
Current Liabilities	 	 	599,319	 	 	 	626,188	 	
Less: Current maturities of long-term debt	 	 	24	 	 	 	8,295	 	
Less: Short-term borrowings	 	 	89,700	 	 	 	178,600	 	
Adjusted Current Liabilities	 	 	509,595	 	 	 	439,293	 	
Adjusted Net Working Capital	 	$	608,560	 	 	$	618,270	 	
 	 	 	 	 	 	 	 	 	
Average Invested Capital	 	$	9,139,700	 	 	$	8,959,226	 	
 	 	 	 	 	 	 	 	 	
Return on Invested Capital	 	 	13.9	%	 	 	12.6	%