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): August 2, 2017

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:

Not Applicable
(Former name or former address if changed since last report)
 
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))	

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 August 2, 2017, Vulcan Materials Company announced its financial results for the second quarter ended June 30, 2017. 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 August 2, 2017.	

 

 
 
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:  August 2, 2017	By:     	/s/ Jerry F. Perkins Jr.	
 	 	Name:  Jerry F. Perkins Jr.	
 	 	Title:    General Counsel and Secretary	

 

 
Exhibit 99.1  

August 2, 2017
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
                  Media Contact: David Donaldson (205) 298-3220

 
VULCAN ANNOUNCES SECOND QUARTER 2017 RESULTS
 
Continued Improvement in Aggregates Unit Profitability
Extreme Wet Weather in the Southeast and Mid-Atlantic Slowed Shipments
Fundamental Demand Drivers Continue to Strengthen

Birmingham, Alabama – August 2, 2017 – Vulcan Materials Company (NYSE:VMC), the nation’s largest producer of construction aggregates, today announced results for the second quarter ended June 30, 2017.
 
Net earnings were $120 million and Adjusted EBITDA was $288 million. The Company’s second quarter results reflect record unit profitability in its Aggregates segment despite wet weather and difficult operating conditions across many of its Southeastern and mid-Atlantic markets. Extreme wet weather across the Southeast and weaker demand in Illinois and coastal Texas contributed to a 3 percent decline in same-store aggregates shipments compared to the prior year. Same-store pricing in aggregates improved 5 percent.
 
Tom Hill, Chairman and Chief Executive Officer, said, “Aggregates shipments in the quarter were hit hard by prolonged and extremely wet weather in the Southeast, particularly in May and June, and the absence or delayed timing of large project work in Illinois and coastal Texas compared to last year. This shortfall in second quarter aggregates shipments drove most of the difference in our reported results versus our plan.
 
“Despite the volume shortfall in the quarter, I am very encouraged by what I see happening behind the reported numbers. Private demand in our markets continued to strengthen. Highway project starts accelerated in the second quarter, signaling an end to the softness in starts that we have been working through for the last year. Our shipment backlog for public highway work hasn’t been this high in at least three years. California and Virginia, important states for us, have returned to shipment growth. Our recent acquisitions are performing well. And, our core profitability in aggregates continues to improve. Aggregates unit gross profit was a second quarter record despite the wet weather we experienced in some of our strongest markets. Aggregates pricing, adjusted for mix, was consistent with full year expectations. These results are a good indication of the market’s visibility to further demand recovery.
 
“Our business remains on track with our longer-term goals and expectations. We remain confident in the sustained, multi-year recovery in materials demand across our markets and in the further, compounding improvements to our unit profitability. We anticipate 5 to 10 percent growth in shipments from August through the end of the year. However, given the shortfall in shipments to date, we now expect full year aggregates shipments of 182 to 187 million tons and full year Adjusted EBITDA of $1.05 to $1.13 billion.”

 

 	Page  2 

August 2, 2017

Second Quarter Summary (compared with prior year’s second quarter)
 
	●	Total revenues increased $74 million, or 8 percent, to $1.03 billion	
	●	Gross profit was $292 million, in line with the prior year	
	●	Aggregates segment sales increased $26 million, or 3 percent, to $818 million, and aggregates freight-adjusted revenues increased $17 million, or 3 percent, to $631 million	
	§	Shipments decreased 0.8 million tons, or 2 percent, to 48.0 million tons	
	§	Freight-adjusted sales price increased $0.55 per ton, or 4 percent	
	§	Segment gross profit was $253 million, approximating the prior year	
	●	Asphalt, Concrete and Calcium segment gross profit improved 2 percent, collectively, to $39 million	
	●	SAG was $83 million, flat with the prior year and down 60 basis points as a percentage of total revenues	
	●	Net earnings were $120 million, a decrease of $5 million, or 4 percent	
	●	Adjusted EBIT was $211 million, an increase of $3 million, or 2 percent	
	●	Adjusted EBITDA was $288 million, an increase of $8 million, or 3 percent	
	●	Earnings from continuing operations were $0.83 per diluted share versus $0.93 per diluted share	
	●	Adjusted earnings from continuing operations were $0.90 per diluted share in both the current year’s second quarter and prior year	
 
Trailing-Twelve-Month Summary (compared with prior twelve month period)
 
	●	Total revenues were $3.70 billion, an increase of $92 million, or 3 percent	
	●	Gross profit was $996 million, a decrease of $6 million, or 1 percent	
	●	Aggregates segment sales increased $36 million, or 1 percent, to $3.00 billion, and aggregates freight-adjusted revenues increased $45 million, or 2 percent, to $2.32 billion	
	§	Shipments decreased 5.7 million tons, or 3 percent, to 179.6 million tons	
	§	Freight-adjusted sales price increased $0.64 per ton, or 5 percent	
	§	Segment gross profit decreased $19 million, or 2 percent, to $864 million	
	●	Asphalt, Concrete and Calcium segment gross profit improved $13 million, collectively	
	●	SAG was $321 million, in line with full year expectations	
	●	Net earnings were $420 million, an increase of $42 million, or 11 percent	
	●	Adjusted EBIT was $676 million, a decrease of $5 million, or 1 percent	
	●	Adjusted EBITDA was $968 million, an increase of $6 million, or 1 percent	
	●	Earnings from continuing operations were $3.02 per diluted share versus $2.86 per diluted share	
	●	Adjusted earnings from continuing operations were $2.95 per diluted share versus $2.98 per diluted share	

 	Page  3 

August 2, 2017

Segment Results
 
Aggregates
 
Shipment trends in aggregates varied widely across the Company’s footprint, largely due to weather and the timing of large projects. Aggregates shipments decreased 2 percent versus the prior year’s quarter and same-store shipments declined 3 percent. Alabama, Florida, Georgia, Louisiana and Mississippi combined saw shipments decline 12 percent versus the prior year’s second quarter. Severe wet weather and flooding slowed construction activity and impaired shipments in May and June, two key months of the construction season. Aggregates shipments in Florida and Georgia, for example, declined double-digits in June despite very strong underlying market conditions. Coastal Texas and Illinois also experienced significant shipment declines. In Illinois, shipments declined 19 percent versus the prior year due in part to the absence of a state budget to support public construction. Coastal Texas shipments in the quarter were impacted by a softer local economy and the relative timing of DOT spending and other large project activity; however, backlogs for that market remain strong. Markets outside of these areas combined to grow 6 percent versus the prior year’s second quarter – more in line with trend and despite weather challenges in Virginia, the Carolinas and Tennessee. Shipments in California grew 10 percent, driven by private construction activity and the catch-up on work deferred from the very wet first quarter. California’s passage of a long-term transportation bill resolved Caltrans’ funding uncertainty and should, along with other factors, support sustained shipping rate improvements over the coming years.
 
Fundamental demand drivers and leading indicators for shipment growth continued to strengthen in the quarter for Vulcan-served markets. Trailing-twelve-month construction starts in our markets have steadily improved from a year ago, outpacing non-Vulcan markets by a wide margin. Private construction starts remain strong, led by continued growth in both residential and nonresidential buildings. Importantly, public construction starts have turned positive due to growth in highway and road spending. Additionally, the pre-construction pipeline of projects continues to grow across our footprint. State and local governments have continued to pass funding measures to increase public infrastructure investment significantly, and more projects supported by federal FAST Act funding have moved further toward the active construction stage.
 
Broad pricing momentum continued across the Company’s footprint with substantially all markets realizing price growth in the second quarter. For the quarter, same-store freight-adjusted average sales price for aggregates increased 5 percent versus the prior year, or $0.59 per ton, despite a negative mix impact. The overall pricing climate remains favorable as visibility to a sustained recovery improves and as construction materials producers stay focused on earning adequate returns on capital. California and Georgia each realized high-single digit price growth, again supported by clear and improving visibility to sustained growth in demand.
 
Second quarter Aggregates segment gross profit was $253 million, or $5.27 per ton. Segment results in the quarter were negatively impacted by product shipment mix, acquisition-related integration costs, a 15 percent increase in the unit cost of diesel fuel and costs related to the transition to two new, more efficient ships to transport aggregates from our quarry in Mexico. In total, these items negatively impacted segment gross profit by $16 million in comparison to the prior year .

 

 	Page  4 

August 2, 2017

Asphalt, Concrete and Calcium
 
Our non-aggregates segments’ second quarter gross profit was $39 million, a 2 percent increase over the prior year’s period. Asphalt segment gross profit decreased $2 million to $29 million. Shipments increased 16 percent in total and 6 percent on a same-store basis. Arizona and California (the Company’s largest asphalt market) drove most of the same-store growth in shipments. Solid volume growth was offset by lower price, higher liquid asphalt unit cost, and costs related to integration of recent acquisitions.
 
Concrete segment gross profit was $9 million in the quarter compared to $6 million in the prior year period. Shipments increased 21 percent versus the prior year as volumes increased in most of the Company’s concrete markets, including Texas and Virginia (the Company’s largest concrete market). On a same-store basis, volumes increased 11 percent. Materials margins and unit gross profit in concrete also improved versus the prior year.
 
Calcium segment gross profit was $0.6 million versus $1.1 million in the prior year.
 
On a trailing-twelve-month basis, total gross profit in our non-aggregates segments was $132 million, an 11 percent increase from the prior year’s comparable period.
 
Growth, Capital Allocation, and Financial Position
 
As of June 30, year-to-date capital expenditures were $291 million. This amount included $107 million invested in internal growth projects to enhance the Company’s aggregates distribution network to markets without local aggregates reserves, as well as development of new sites and other growth investment projects. Core capital investments to replace existing property, plant and equipment made up the remaining $184 million, and are expected to be approximately $300 million for the full year.
 
The Company remains active in the pursuit of bolt-on acquisitions and other value-creating growth investments. Since January, the Company has closed acquisitions totaling $212 million. These acquisitions complement our leading positions in certain California, Illinois, New Mexico and Tennessee markets.
 
At the end of the second quarter, total debt was $3.4 billion and cash was $1.1 billion. Total debt included $1 billion of new notes issued in June to help fund acquisitions and other growth investments, including the previously announced agreement to acquire the assets of Aggregates USA, and to retire $523 million of notes due in June and December of 2018. Retirement of the 2018 maturities was completed on July 12 for $566 million using proceeds from the new notes and cash. Full year interest expense will be approximately $193 million, including $46 million of one-time charges incurred in the third quarter for the early debt retirement.
 
During the quarter, the Company returned $44 million to shareholders through dividends and share repurchases, bringing the year-to-date total to $126 million.

 	Page  5 

August 2, 2017

Selling, Administrative and General (SAG), Other Operating Expense and Taxes
 
Selling, Administrative and General (SAG) expenses were $83 million, flat with the prior year. Trailing-twelve-month SAG expenses were $321 million, in line with full-year expectations, which remain unchanged.
 
Other operating expenses were $18 million in the second quarter versus $6 million in the prior year. The year-over-year change is primarily due to certain charges associated with previously divested operations.
 
Expectations for the full-year 2017 effective tax rate continue to be 28 percent.
 
Demand and Earnings Outlook
 
Regarding the Company’s earnings outlook for 2017, Mr. Hill stated, “We are excited about the growth opportunities ahead of us. Leading indicators, such as growth in the pre-construction pipeline and in construction starts in our markets, as well as growth in our own order backlogs, point toward a return to growth in the second half of this year and beyond. However, the rate of growth through the remainder of this year will depend on the pace at which our customers catch up on deferred work and on the timing of our shipments to large projects in our backlog. Given these factors and the significant shortfall to plan experienced in the second quarter, we have revised our outlook for shipments to between 182 and 187 million tons. Primarily due to this lower expectation for 2017 aggregates shipments, we now project full year Adjusted EBITDA of between $1.05 and $1.13 billion. Other management expectations (e.g. aggregates price improvement, asphalt and concrete gross profit growth, SAG expense, capital spending, and effective tax rate) remain as outlined in our fourth quarter 2016 earnings communication.
 
“Our confidence in the longer term outlook for our business remains strong. Our industry-leading core profitability in aggregates keeps improving. Operational excellence, solid sales execution and cost control continue to have a strong positive impact on the bottom line, in spite of the last twelve months of uneven growth. We have the financial strength to continue making smart growth investments that fit us best and we are committed to continuous improvement in safety, customer service and operational efficiencies.”
 
Conference Call
 
Vulcan will host a conference call at 10:00 a.m. CDT on August 2, 2017. A webcast will be available via the Company’s website at www.vulcanmaterials.com. Investors and other interested parties in the U.S. may also access the teleconference live by calling 866-564-2842 approximately 10 minutes before the scheduled start. International participants can dial 323-794-2130. The conference ID is 4834215. 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, is the nation's largest producer of construction aggregates, and a major producer of other construction materials.

 	Page  6 

August 2, 2017

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: those associated with general economic and business conditions; the timing and amount of federal, state and local funding for infrastructure; changes in Vulcan’s effective tax rate; the increasing reliance on information technology infrastructure for Vulcan’s ticketing, procurement, financial statements and other processes could adversely affect operations in the event that the infrastructure does not work as intended or 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; changes in the level of spending for private residential and private nonresidential construction; the highly competitive nature of the construction materials industry; the impact of future regulatory or legislative actions, including those relating to climate change, greenhouse gas emissions, the definition of minerals or international trade; the outcome of pending legal proceedings; pricing of Vulcan's products; weather and other natural phenomena; 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; volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental clean-up 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; modification to the terms of the acquisition of Aggregates USA, LLC may be required in order to satisfy approvals or conditions; business disruption during the pendency of, or following the acquisition of, Aggregates USA, LLC, including diversion of management time; the potential of goodwill or long-lived asset impairment; 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	 	 	Six Months Ended	 	
Consolidated Statements of Earnings	 	June 30	 	 	June 30	 	
(Condensed and unaudited)	 	2017	 	 	2016	 	 	2017	 	 	2016	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	 	$	1,030,763	 	 	$	956,825	 	 	$	1,818,091	 	 	$	1,711,552	 	
Cost of revenues	 	 	738,988	 	 	 	664,641	 	 	 	1,366,337	 	 	 	1,254,649	 	
Gross profit	 	 	291,775	 	 	 	292,184	 	 	 	451,754	 	 	 	456,903	 	
Selling, administrative and general expenses	 	 	82,793	 	 	 	82,681	 	 	 	164,914	 	 	 	159,149	 	
Gain on sale of property, plant & equipment and businesses	 	 	2,773	 	 	 	356	 	 	 	3,142	 	 	 	911	 	
Business interruption claims recovery	 	 	0	 	 	 	10,962	 	 	 	0	 	 	 	10,962	 	
Impairment of long-lived assets	 	 	0	 	 	 	(860	)	 	 	0	 	 	 	(10,506	)	
Other operating expense, net	 	 	(17,768	)	 	 	(6,175	)	 	 	(23,595	)	 	 	(20,414	)	
Operating earnings	 	 	193,987	 	 	 	213,786	 	 	 	266,387	 	 	 	278,707	 	
Other nonoperating income (expense), net	 	 	1,869	 	 	 	29	 	 	 	3,893	 	 	 	(666	)	
Interest expense, net	 	 	38,455	 	 	 	33,333	 	 	 	72,531	 	 	 	67,065	 	
Earnings from continuing operations before income taxes	 	 	157,401	 	 	 	180,482	 	 	 	197,749	 	 	 	210,976	 	
Income tax expense	 	 	45,652	 	 	 	53,241	 	 	 	42,477	 	 	 	41,772	 	
Earnings from continuing operations	 	 	111,749	 	 	 	127,241	 	 	 	155,272	 	 	 	169,204	 	
Earnings (loss) on discontinued operations, net of tax	 	 	8,390	 	 	 	(2,532	)	 	 	9,788	 	 	 	(4,338	)	
Net earnings	 	$	120,139	 	 	$	124,709	 	 	$	165,060	 	 	$	164,866	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	 	$	0.84	 	 	$	0.95	 	 	$	1.17	 	 	$	1.27	 	
Discontinued operations	 	$	0.07	 	 	$	(0.02	)	 	$	0.08	 	 	$	(0.04	)	
Net earnings	 	$	0.91	 	 	$	0.93	 	 	$	1.25	 	 	$	1.23	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	 	$	0.83	 	 	$	0.93	 	 	$	1.15	 	 	$	1.24	 	
Discontinued operations	 	$	0.06	 	 	$	(0.01	)	 	$	0.07	 	 	$	(0.03	)	
Net earnings	 	$	0.89	 	 	$	0.92	 	 	$	1.22	 	 	$	1.21	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	132,413	 	 	 	133,419	 	 	 	132,524	 	 	 	133,619	 	
Assuming dilution	 	 	134,735	 	 	 	136,208	 	 	 	134,925	 	 	 	136,136	 	
Cash dividends per share of common stock	 	$	0.25	 	 	$	0.20	 	 	$	0.50	 	 	$	0.40	 	
Depreciation, depletion, accretion and amortization	 	$	76,775	 	 	$	71,908	 	 	$	148,339	 	 	$	141,314	 	
Effective tax rate from continuing operations	 	 	29.0	%	 	 	29.5	%	 	 	21.5	%	 	 	19.8	%	

 

 	

Table B

Vulcan Materials Company
and Subsidiary Companies

(in thousands)	 	
Consolidated Balance Sheets	 	June 30	 	 	December 31	 	 	June 30	 	
(Condensed and unaudited)	 	2017	 	 	2016	 	 	2016	 	
Assets	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	1,129,799	 	 	$	258,986	 	 	$	91,902	 	
Restricted cash	 	 	0	 	 	 	9,033	 	 	 	0	 	
Accounts and notes receivable	 	 	 	 	 	 	 	 	 	 	 	 	
Accounts and notes receivable, gross	 	 	573,029	 	 	 	494,634	 	 	 	537,127	 	
Less: Allowance for doubtful accounts	 	 	(2,943	)	 	 	(2,813	)	 	 	(4,332	)	
Accounts and notes receivable, net	 	 	570,086	 	 	 	491,821	 	 	 	532,795	 	
Inventories	 	 	 	 	 	 	 	 	 	 	 	 	
Finished products	 	 	318,465	 	 	 	293,619	 	 	 	295,405	 	
Raw materials	 	 	27,106	 	 	 	22,648	 	 	 	25,366	 	
Products in process	 	 	1,210	 	 	 	1,480	 	 	 	2,223	 	
Operating supplies and other	 	 	28,148	 	 	 	27,869	 	 	 	24,872	 	
Inventories	 	 	374,929	 	 	 	345,616	 	 	 	347,866	 	
Prepaid expenses	 	 	109,998	 	 	 	31,726	 	 	 	50,844	 	
Total current assets	 	 	2,184,812	 	 	 	1,137,182	 	 	 	1,023,407	 	
Investments and long-term receivables	 	 	38,888	 	 	 	39,226	 	 	 	38,924	 	
Property, plant & equipment	 	 	 	 	 	 	 	 	 	 	 	 	
Property, plant & equipment, cost	 	 	7,531,536	 	 	 	7,185,818	 	 	 	7,052,051	 	
Allowances for depreciation, depletion & amortization	 	 	(3,992,728	)	 	 	(3,924,380	)	 	 	(3,834,680	)	
Property, plant & equipment, net	 	 	3,538,808	 	 	 	3,261,438	 	 	 	3,217,371	 	
Goodwill	 	 	3,101,439	 	 	 	3,094,824	 	 	 	3,094,824	 	
Other intangible assets, net	 	 	834,971	 	 	 	769,052	 	 	 	754,341	 	
Other noncurrent assets	 	 	171,025	 	 	 	169,753	 	 	 	161,246	 	
Total assets	 	$	9,869,943	 	 	$	8,471,475	 	 	$	8,290,113	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	
Current maturities of long-term debt	 	 	525,776	 	 	 	138	 	 	 	131	 	
Trade payables and accruals	 	 	202,753	 	 	 	145,042	 	 	 	176,476	 	
Other current liabilities	 	 	197,264	 	 	 	227,064	 	 	 	156,071	 	
Total current liabilities	 	 	925,793	 	 	 	372,244	 	 	 	332,678	 	
Long-term debt	 	 	2,809,293	 	 	 	1,982,751	 	 	 	1,982,527	 	
Deferred income taxes, net	 	 	706,726	 	 	 	702,854	 	 	 	683,999	 	
Deferred revenue	 	 	195,020	 	 	 	198,388	 	 	 	203,800	 	
Other noncurrent liabilities	 	 	631,007	 	 	 	642,762	 	 	 	607,778	 	
Total liabilities	 	$	5,267,839	 	 	$	3,898,999	 	 	$	3,810,782	 	
Equity	 	 	 	 	 	 	 	 	 	 	 	 	
Common stock, $1 par value	 	 	132,181	 	 	 	132,339	 	 	 	133,027	 	
Capital in excess of par value	 	 	2,797,269	 	 	 	2,807,995	 	 	 	2,804,279	 	
Retained earnings	 	 	1,810,528	 	 	 	1,771,518	 	 	 	1,661,459	 	
Accumulated other comprehensive loss	 	 	(137,874	)	 	 	(139,376	)	 	 	(119,434	)	
Total equity	 	$	4,602,104	 	 	$	4,572,476	 	 	$	4,479,331	 	
Total liabilities and equity	 	$	9,869,943	 	 	$	8,471,475	 	 	$	8,290,113	 	

 

 	

Table C
 
Vulcan Materials Company
and Subsidiary Companies

(in thousands)	 	
 	 	Six Months Ended	 	
Consolidated Statements of Cash Flows	 	 	 	 	June 30	 	
(Condensed and unaudited)	 	2017	 	 	2016	 	
Operating Activities	 	 	 	 	 	 	
Net earnings	 	$	165,060	 	 	$	164,866	 	
Adjustments to reconcile net earnings to net cash provided by operating activities	 	 	 	 	 	 	 	 	
Depreciation, depletion, accretion and amortization	 	 	148,339	 	 	 	141,314	 	
Net gain on sale of property, plant & equipment and businesses	 	 	(3,142	)	 	 	(911	)	
Contributions to pension plans	 	 	(4,744	)	 	 	(4,737	)	
Share-based compensation expense	 	 	13,671	 	 	 	10,832	 	
Deferred tax expense (benefit)	 	 	2,901	 	 	 	2,592	 	
Changes in assets and liabilities before initial effects of business acquisitions and dispositions	 	 	(170,701	)	 	 	(157,216	)	
Other, net	 	 	3,838	 	 	 	(1,738	)	
Net cash provided by operating activities	 	$	155,222	 	 	$	155,002	 	
Investing Activities	 	 	 	 	 	 	 	 	
Purchases of property, plant & equipment	 	 	(291,034	)	 	 	(199,764	)	
Proceeds from sale of property, plant & equipment	 	 	8,530	 	 	 	2,427	 	
Payment for businesses acquired, net of acquired cash	 	 	(210,562	)	 	 	(1,611	)	
Decrease in restricted cash	 	 	9,033	 	 	 	1,150	 	
Other, net	 	 	405	 	 	 	1,862	 	
Net cash used for investing activities	 	$	(483,628	)	 	$	(195,936	)	
Financing Activities	 	 	 	 	 	 	 	 	
Proceeds from line of credit	 	 	5,000	 	 	 	3,000	 	
Payment of line of credit	 	 	(5,000	)	 	 	(3,000	)	
Payment of current maturities and long-term debt	 	 	(235,007	)	 	 	(9	)	
Proceeds from issuance of long-term debt	 	 	1,600,000	 	 	 	0	 	
Debt discounts and issuance costs	 	 	(15,046	)	 	 	0	 	
Purchases of common stock	 	 	(60,303	)	 	 	(69,156	)	
Dividends paid	 	 	(66,194	)	 	 	(53,338	)	
Share-based compensation, shares withheld for taxes	 	 	(24,231	)	 	 	(28,721	)	
Net cash provided by (used for) financing activities	 	$	1,199,219	 	 	$	(151,224	)	
Net increase (decrease) in cash and cash equivalents	 	 	870,813	 	 	 	(192,158	)	
Cash and cash equivalents at beginning of year	 	 	258,986	 	 	 	284,060	 	
Cash and cash equivalents at end of period	 	$	1,129,799	 	 	$	91,902	 	

 

 	

Table D
 
Segment Financial Data and Unit Shipments

 	 	(in thousands, except per unit data)	 	
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	June 30	 	 	June 30	 	
 	 	2017	 	 	2016	 	 	2017	 	 	2016	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Revenues	 	 	 	 	 	 	 	 	 	 	 	 	
Aggregates 1	 	$	817,586	 	 	$	791,497	 	 	$	1,467,886	 	 	$	1,426,365	 	
Asphalt	 	 	175,758	 	 	 	142,055	 	 	 	271,534	 	 	 	231,154	 	
Concrete	 	 	105,213	 	 	 	81,246	 	 	 	193,963	 	 	 	151,643	 	
Calcium	 	 	1,971	 	 	 	2,448	 	 	 	3,857	 	 	 	4,358	 	
Segment sales	 	$	1,100,528	 	 	$	1,017,246	 	 	$	1,937,240	 	 	$	1,813,520	 	
Aggregates intersegment sales	 	 	(69,765	)	 	 	(60,421	)	 	 	(119,149	)	 	 	(101,968	)	
Total revenues	 	$	1,030,763	 	 	$	956,825	 	 	$	1,818,091	 	 	$	1,711,552	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross Profit	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aggregates	 	$	252,791	 	 	$	254,008	 	 	$	392,953	 	 	$	402,392	 	
Asphalt	 	 	28,918	 	 	 	30,925	 	 	 	37,558	 	 	 	43,139	 	
Concrete	 	 	9,481	 	 	 	6,146	 	 	 	19,935	 	 	 	9,623	 	
Calcium	 	 	585	 	 	 	1,105	 	 	 	1,308	 	 	 	1,749	 	
Total	 	$	291,775	 	 	$	292,184	 	 	$	451,754	 	 	$	456,903	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation, Depletion, Accretion and Amortization	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aggregates	 	$	60,832	 	 	$	59,414	 	 	$	118,488	 	 	$	116,925	 	
Asphalt	 	 	6,615	 	 	 	4,136	 	 	 	12,347	 	 	 	8,368	 	
Concrete	 	 	3,672	 	 	 	3,088	 	 	 	6,695	 	 	 	6,069	 	
Calcium	 	 	192	 	 	 	196	 	 	 	387	 	 	 	379	 	
Other	 	 	5,464	 	 	 	5,074	 	 	 	10,422	 	 	 	9,573	 	
Total	 	$	76,775	 	 	$	71,908	 	 	$	148,339	 	 	$	141,314	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Unit Sales Price and Unit Shipments	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aggregates	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Freight-adjusted revenues 2	 	$	631,425	 	 	$	614,778	 	 	$	1,128,230	 	 	$	1,101,695	 	
Aggregates - tons	 	 	47,967	 	 	 	48,766	 	 	 	86,213	 	 	 	87,973	 	
Freight-adjusted sales price 3	 	$	13.16	 	 	$	12.61	 	 	$	13.09	 	 	$	12.52	 	
Other Products	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Asphalt Mix - tons	 	 	2,917	 	 	 	2,515	 	 	 	4,695	 	 	 	4,214	 	
Asphalt Mix - sales price	 	$	52.90	 	 	$	54.10	 	 	$	52.26	 	 	$	53.27	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ready-mixed concrete - cubic yards	 	 	910	 	 	 	752	 	 	 	1,702	 	 	 	1,400	 	
Ready-mixed concrete - sales price	 	$	115.08	 	 	$	108.06	 	 	$	113.65	 	 	$	108.30	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Calcium - tons	 	 	70	 	 	 	91	 	 	 	136	 	 	 	163	 	
Calcium - sales price	 	$	28.39	 	 	$	26.91	 	 	$	28.29	 	 	$	26.72	 	

	1	Includes crushed stone, sand and gravel, sand, other aggregates, as well as freight, delivery and transportation revenues, and other revenues related to services.	
	2	Freight-adjusted revenues are Aggregates segment sales excluding freight, delivery and transportation revenues, and other revenues related to services, such as landfill tipping fees that are derived from our aggregates business.	
	3	Freight-adjusted sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments.	

 

 	

Appendix 1

	1.	Supplemental Cash Flow Information	
 
Supplemental information referable to the Condensed Consolidated Statements of Cash Flows is summarized below:
 
(in thousands)	 	
 	 	Six Months Ended	 	
 	 	June 30	 	
 	 	2017	 	 	2016	 	
 	 	 	 	 	 	 	
Cash Payments	 	 	 	 	 	 	
Interest (exclusive of amount capitalized)	 	$	67,849	 	 	$	67,679	 	
Income taxes	 	 	117,204	 	 	 	64,556	 	
 	 	 	 	 	 	 	 	 	
Noncash Investing and Financing Activities	 	 	 	 	 	 	 	 	
Accrued liabilities for purchases of property, plant & equipment	 	$	17,924	 	 	$	20,850	 	
Amounts referable to business acquisitions	 	 	 	 	 	 	 	 	
Liabilities assumed	 	 	1,935	 	 	 	0	 	

	2.	Reconciliation of Non-GAAP Measures	
 
Gross profit margin excluding freight and delivery 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. Likewise, we believe that this presentation is consistent with our competitors and consistent with the basis by which investors analyze our operating results considering that freight and delivery services represent pass-through activities. Reconciliation of this metric to its nearest GAAP measure is presented below:

Gross Profit Margin in Accordance with GAAP  
 
 	 	(dollars in thousands)	 	
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	June 30	 	 	June 30	 	
 	 	2017	 	 	2016	 	 	2017	 	 	2016	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	$	291,775	 	 	$	292,184	 	 	$	451,754	 	 	$	456,903	 	
Total revenues	 	$	1,030,763	 	 	$	956,825	 	 	$	1,818,091	 	 	$	1,711,552	 	
Gross profit margin	 	 	28.3	%	 	 	30.5	%	 	 	24.8	%	 	 	26.7	%	
  
Gross Profit Margin Excluding Freight and Delivery Revenues  

(dollars in thousands)	 	
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	June 30	 	 	June 30	 	
 	 	2017	 	 	2016	 	 	2017	 	 	2016	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	$	291,775	 	 	$	292,184	 	 	$	451,754	 	 	$	456,903	 	
Total revenues	 	$	1,030,763	 	 	$	956,825	 	 	$	1,818,091	 	 	$	1,711,552	 	
Freight and delivery revenues 1	 	 	136,167	 	 	 	142,300	 	 	 	254,269	 	 	 	263,511	 	
Total revenues excluding freight and delivery revenues	 	$	894,596	 	 	$	814,525	 	 	$	1,563,822	 	 	$	1,448,041	 	
Gross profit margin excluding freight and delivery revenues	 	 	32.6	%	 	 	35.9	%	 	 	28.9	%	 	 	31.6	%	

	1	Includes freight to remote distribution sites.	

 

 	

Appendix 2

Reconciliation of Non-GAAP Measures (Continued)
 
Aggregates segment gross profit margin as a percentage of freight-adjusted revenues is not a 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 freight, delivery and transportation revenues, 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. Incremental gross profit as a percentage of freight-adjusted revenues represents the year-over-year change in gross profit divided by the year-over-year change in freight-adjusted revenues. Reconciliations of these metrics to their nearest GAAP measures are presented below:

Aggregates Segment Gross Profit Margin in Accordance with GAAP

(dollars in thousands)	 	
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	June 30	 	 	June 30	 	
 	 	2017	 	 	2016	 	 	2017	 	 	2016	 	
Aggregates segment	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	$	252,791	 	 	$	254,008	 	 	$	392,953	 	 	$	402,392	 	
Segment sales	 	$	817,586	 	 	$	791,497	 	 	$	1,467,886	 	 	$	1,426,365	 	
Gross profit margin	 	 	30.9	%	 	 	32.1	%	 	 	26.8	%	 	 	28.2	%	
Incremental gross profit margin	 	 	N/A  	 	 	 	 	 	 	 	N/A  	 	 	 	 	 	

Aggregates Segment Gross Profit as a Percentage of Freight-Adjusted Revenues

(dollars in thousands)	 	
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	June 30	 	 	June 30	 	
 	 	2017	 	 	2016	 	 	2017	 	 	2016	 	
Aggregates segment	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	$	252,791	 	 	$	254,008	 	 	$	392,953	 	 	$	402,392	 	
Segment sales	 	$	817,586	 	 	$	791,497	 	 	$	1,467,886	 	 	$	1,426,365	 	
Less	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Freight, delivery and transportation revenues 1	 	 	176,395	 	 	 	173,397	 	 	 	324,293	 	 	 	317,147	 	
Other revenues	 	 	9,766	 	 	 	3,322	 	 	 	15,363	 	 	 	7,523	 	
Freight-adjusted revenues	 	$	631,425	 	 	$	614,778	 	 	$	1,128,230	 	 	$	1,101,695	 	
Gross profit as a percentage of freight-adjusted revenues	 	 	40.0	%	 	 	41.3	%	 	 	34.8	%	 	 	36.5	%	
Incremental gross profit as a percentage
of freight-adjusted revenues	 	 	N/A	 	 	 	 	 	 	 	N/A	 	 	 	 	 	

	1	At the segment level, freight, delivery and transportation revenues include intersegment freight & delivery revenues, which are eliminated at the consolidated level.	

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 present this metric for the convenience of investment professionals who use such metrics in their analyses and for shareholders who need to understand the metrics we use to assess performance. 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	 	 	Six Months Ended	 		
 	 	June 30	 	 	June 30	 		
 	 	2017	 	 	2016	 	 	2017	 	 	2016	 		
Aggregates segment	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	$	252,791	 	 	$	254,008	 	 	$	392,953	 	 	$	402,392	 		
Depreciation, depletion, accretion and amortization	 	 	60,832	 	 	 	59,414	 	 	 	118,488	 	 	 	116,925	 		
Aggregates segment cash gross profit	 	$	313,623	 	 	$	313,422	 	 	$	511,441	 	 	$	519,317	 		
Unit shipments - tons	 	 	47,967	 	 	 	48,766	 	 	 	86,213	 	 	 	87,973	 		
Aggregates segment cash gross profit per ton	 	$	6.54	 	 	$	6.43	 	 	$	5.93	 	 	$	5.90	 		

 

 	

Appendix 3

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 present this metric for the convenience of investment professionals who use such metrics in their analyses and for shareholders who need to understand the metrics we use to assess performance. We use this metric to assess the operating performance of our business and for a basis of 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	 	 	Six Months Ended	 	
 	 	June 30	 	 	June 30	 	
 	 	2017	 	 	2016	 	 	2017	 	 	2016	 	
Net earnings	 	$	120,139	 	 	$	124,709	 	 	$	165,060	 	 	$	164,866	 	
Income tax expense	 	 	45,652	 	 	 	53,241	 	 	 	42,477	 	 	 	41,772	 	
Interest expense, net	 	 	38,455	 	 	 	33,333	 	 	 	72,531	 	 	 	67,065	 	
(Earnings) loss on discontinued operations, net of tax	 	 	(8,390	)	 	 	2,532	 	 	 	(9,788	)	 	 	4,338	 	
EBIT	 	$	195,856	 	 	$	213,815	 	 	$	270,280	 	 	$	278,041	 	
Depreciation, depletion, accretion and amortization	 	 	76,775	 	 	 	71,908	 	 	 	148,339	 	 	 	141,314	 	
EBITDA	 	$	272,631	 	 	$	285,723	 	 	$	418,619	 	 	$	419,355	 	
Gain on sale of real estate and businesses	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 	
Business interruption claims recovery, net of incentives	 	 	0	 	 	 	(10,962	)	 	 	0	 	 	 	(10,962	)	
Charges associated with divested operations	 	 	15,023	 	 	 	3,847	 	 	 	16,401	 	 	 	15,697	 	
Fair market value adjustments for acquired inventory	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Asset impairment	 	 	0	 	 	 	860	 	 	 	0	 	 	 	10,506	 	
Restructuring charges	 	 	0	 	 	 	0	 	 	 	1,942	 	 	 	320	 	
Adjusted EBITDA	 	$	287,654	 	 	$	279,468	 	 	$	436,962	 	 	$	434,916	 	
Depreciation, depletion, accretion and amortization	 	 	(76,775	)	 	 	(71,908	)	 	 	(148,339	)	 	 	(141,314	)	
Adjusted EBIT	 	$	210,879	 	 	$	207,560	 	 	$	288,623	 	 	$	293,602	 	

Adjusted EBITDA for 2016 has been revised to conform with the 2017 presentation which no longer includes an adjustment for charges associated with business development. We no longer exclude charges associated with business development as they are deemed to represent normal recurring operating expenses.
 
Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted EPS 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	 	Six Months Ended	 	
 	 	June 30	 	 	June 30	 	
 	 	2017	 	 	2016	 	 	2017	 	 	2016	 	
Diluted EPS	 	$	0.83	 	 	$	0.93	 	 	$	1.15	 	 	$	1.24	 	
Items included in Adjusted EBITDA above	 	 	0.07	 	 	 	(0.03	)	 	 	0.09	 	 	 	0.08	 	
Alabama NOL carryforward valuation allowance	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 	
Foreign tax credit carryforward impairment	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 	
Adjusted Diluted EPS	 	$	0.90	 	 	$	0.90	 	 	$	1.24	 	 	$	1.32	 	

The following reconciliation to the mid-point of the range of 2017 Projected EBITDA excludes adjustments for the future outcome of legal proceedings, charges associated with divested operations, asset impairment and other unusual gains and losses. Due to the difficulty of forecasting the timing or amount of items that have not yet occurred, are out of our control, or cannot be reasonably predicted, we are unable to estimate the significance of this unavailable information.

2017 Projected EBITDA	 	 	 	
 	 	 	 	
 	 	(in millions)	 	
 	 	Mid-point	 	
Net earnings	 	$	430	 	
Income tax expense	 	 	170	 	
Interest expense, net	 	 	190	 	
Discontinued operations, net of tax	 	 	0	 	
Depreciation, depletion, accretion and amortization	 	 	300	 	
Projected EBITDA	 	$	1,090