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Vulcan Revenues Top $1 Billion in First Quarter; Aggregates Sales Up

Vulcan Materials Co. reported first-quarter total revenue of $1.05 billion, versus $996.5 million for the same period in 2019. First quarter Aggregates segment sales increased 4%, and gross profit increased 5% to $194 million, or $4.31 per ton. These improvements resulted from growth in shipments in certain key markets and wide-spread growth in pricing, the company stated.

First quarter aggregates shipments were 1% lower than the prior year's strong first quarter, when aggregates shipments increased 13% as a result of delayed shipments from the fourth quarter of 2018. Many markets in the Southeast and the Southwest were negatively impacted by wet weather while shipments in California, Florida, Illinois and Virginia realized solid growth.  

On a mix-adjusted basis, all of the company's key markets reported year-over-year price growth. For the quarter, freight-adjusted average sales price increased 4.5% (4.8% on mix-adjusted basis) versus the prior year's quarter. 

As anticipated, first quarter cost of sales were negatively impacted by higher repairs, maintenance and stripping costs, which were incurred early in the quarter to take advantage of the seasonally low production volume. Wet weather inefficiencies also affected costs in certain markets. These were partially offset by the modestly lower unit cost of diesel fuel in the quarter. Cash gross profit per ton increased 6% from the prior year's first quarter to $6.02 per ton. For the trailing 12 months, cash gross profit was $6.82 per ton.

Tom Hill, chairman and chief executive officer, said, "Our first quarter earnings improved across all segments and were in line with our expectations, despite wet weather in certain key markets in the Southeast and Southwest. These results demonstrated the strong long-term fundamental position of our aggregates-led businesses and our commitment to leading the industry in pricing and unit profitability.

"We experienced minimal financial impact from the COVID-19 pandemic in the first quarter. Our main focus right now is ensuring the health and safety of our employees, maintaining our operational readiness, preserving liquidity and supporting the communities in which we operate. Our employees are engaged and ready to support one another, service our customers, and meet the challenges of today as we prepare for tomorrow. 

"From a position of strength, we are proactively planning for the potential impacts of the pandemic on construction activity. Our strengths are derived from the flexibility provided by our aggregates-focused business, our diverse geographic footprint, our balance sheet structure and recently enhanced liquidity, and our operational capabilities. Our leading market positions, built over more than 60 years, and our proven track record of strong operations also position us well. That said, we have undertaken a comprehensive review of our operating plans and have contingency plans in place to respond as efficiently as possible to demand shifts. Aggregates is far more adaptable to these demand shifts than any other construction materials, a characteristic that should serve us well during this period of disruption.  

“As a result, we will be well-equipped to manage our business effectively and serve our customers reliably through these unprecedented times. Our execution capabilities are supported by our four strategic disciplines (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing), which have been implemented over the last few years. These operating plans are underpinned by our healthy balance sheet and strong liquidity position, which we have further enhanced," Hill concluded.

Consistent with the company's expectations, Asphalt segment gross profit was a loss of $2 million for the seasonally slower first quarter, an improvement over last year's loss of $3 million. Asphalt shipments increased 2% and selling prices increased 5% in the first quarter. California, the company's largest asphalt market, reported volume growth in the first quarter, more than offsetting lower volumes in Texas. In both markets, weather contributed to the year-over-year change. The average unit cost for liquid asphalt was 6% lower than the prior-year quarter. 

Concrete segment gross profit was $9 million, an 8% improvement from the prior year. Shipments increased 1%, led by shipment growth in the company's two largest concrete markets, Northern Virginia and Northern California. Average selling prices increased 3% compared to the prior year's first quarter. 

Calcium segment gross profit was $0.8 million, up from the prior-year quarter.

Regarding the company's outlook, Hill stated, "The impact from the COVID-19 global pandemic continues to evolve quickly, and it is too early to estimate accurately the full-year impact on aggregates demand. Because we have been designated as an essential business, shipment activity today remains relatively strong across many of our markets as customers execute on their backlog of projects. However, we expect some project timelines will be modified as every market adjusts to economic disruptions. 

"Because of this uncertainty in aggregates demand, we are withdrawing our previous financial guidance for 2020.  We will continue to closely monitor trends in construction activity and work with our customers to meet their needs in this challenging operating environment. We will provide updates as more information becomes available and our visibility improves. While we do not have the ability to control demand, our advantage is our ability to control many other aspects of our business. We remain confident in our ability to successfully navigate the changing environment. We will continue to operate from a position of strength supported by the resiliency of our aggregates business, progress on the four strategic disciplines and the engagement of our people," Hill concluded.