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Vulcan Has Huge Fourth Quarter; Full Year


Vulcan Materials Co. announced results for the fourth quarter ending Dec. 31, 2014, and full-year 2014. Total fourth-quarter revenues increased $75 million, or 11 percent, to $755 million, while gross profit increased $52 million, or 45 percent, to $170 million. Aggregates freight-adjusted revenues increased $68 million, or 18 percent, to $455 million

Total 2014 revenues increased $223 million, or 8 percent, to $2,994 million. Gross profit increased $161 million, or 38 percent, to $588 million, while aggregates freight-adjusted revenues increased $218 million, or 14 percent, to $1,794 million.

Cash gross profit per ton was $4.75, an increase of 9 percent, or $0.38 per ton. Average sales price increased 2 percent, despite unfavorable mix impact.

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TOM HILL

Tom Hill, president and chief executive officer, said, "Our teams across the organization executed very well in the fourth quarter, capitalizing on the growing recovery in construction activity and demand for our products. Their efforts succeeded in converting more than 65 percent of our incremental aggregates revenues into incremental gross profit, and in doing so, they further improved the underlying profitability of our core aggregates business. These results, continuing the pattern of strong execution on our aggregates-focused strategy throughout the year, were achieved despite price gains muted by a negative geographic and product mix. This strong momentum bodes well for 2015, a year in which we expect a continued recovery in demand for our products and, importantly, an improving pricing and margin environment."

Vulcan Materials stated that the recovery in demand for its products and its strong local sales and operations execution continued in the fourth quarter. Aggregates sales were $594 million, up 20 percent from the prior year's fourth quarter, supported by strong volume growth across most of the company's footprint. On a same-store basis, total aggregates shipments increased 12 percent from the prior year. Overall, fourth quarter aggregates shipments increased 15 percent compared to the prior year.

Shipment momentum continued to improve across most of its footprint, driven not only by large projects but also by strengthening construction activity across all end-use markets. On a same-store basis, Arizona, Arkansas, Florida, Illinois, North Carolina, Texas and Virginia each saw shipments increase by more than 14 percent over the prior year's fourth quarter. Shipments in Georgia were relatively flat with the prior year due mostly to wet weather. In California, aggregates shipments for the quarter declined 9 percent due to unusually wet weather and delays on certain large projects.

Freight-adjusted average sales price for aggregates increased 2 percent, or $0.21 per ton, versus the prior year's fourth quarter, with almost all of its markets realizing price improvement. Excluding the impact of strong volume growth in several lower priced markets such as Illinois and Arkansas, the average price for aggregates increased 4 percent. A number of key states saw fourth quarter price increases of approximately 5 percent or more. Average sales price in two states saw modest declines due to negative product mix impact.

Despite modest price growth in the quarter, gross profit per ton increased 21 percent from the prior year. While average freight-adjusted selling prices increased $0.21, gross profit per ton increased $0.66, as local leadership teams excelled at balancing price for service, sales and production mix, and operating efficiency and leverage, according to the company.

On a trailing-12 month basis, and excluding the impact of recent acquisitions, gross profit per ton has increased 20 percent from the prior year to $3.39. Over the same period, and on the same basis, incremental gross profit as a percent of incremental freight-adjusted revenues was 65 percent. For the year, segment gross profit rose by 32 percent, or $131 million, while same-store aggregates shipments increased 10 percent, or 15 million tons.

Compared to last year, fourth quarter cost of revenues for the company benefitted approximately $7 million from lower diesel fuel costs, with most of this benefit realized in the Aggregates segment.