Vulcan Materials Company (VMC) filed Quarterly Report for the period ended 2009-09-30.
Vulcan Materials Company is the nation's foremost producer of constructionaggregates a major producer of other construction materials and a leadingchemicals manufacturer supplying chloralkali and other industrial andspecialty chemicals. They lead the nation in the production of construction aggregates; primarily crushed stone sand and gravel. They are also a leader in the production of other construction materials as well as a major manufacturer of chemicals. Vulcan Materials Company has a market cap of $5.87 billion; its shares were traded at around $47 with a P/E ratio of 88.6 and P/S ratio of 1.5. The dividend yield of Vulcan Materials Company stocks is 2.1%. Vulcan Materials Company had an annual average earning growth of 7.7% over the past 10 years.
Highlight of Business Operations:
Asphalt mix and Concrete segment revenues decreased $97.5 million, or 29%, to $243.2 million in the third quarter of 2009 as compared with $340.7 million in the third quarter of 2008. Shipments of asphalt mix and ready-mixed concrete declined 19% and 29%, respectively. Gross profit for the Asphalt mix and Concrete segment increased $8.1 million, or 63%, to $20.7 million in the third quarter of 2009 compared with $12.6 million in the third quarter of 2008. Asphalt mix earnings were higher this quarter as compared with the third quarter of 2008 as material margins improved due to lower costs for liquid asphalt, more than offsetting the earnings effect of the 19% decline in volumes. Concrete earnings decreased from the prior year’s third quarter due primarily to lower volumes.
Net sales in the first nine months of 2009 were $1,987.9 million compared with $2,696.6 million in the first nine months of 2008. Aggregates shipments declined 27%, reducing earnings $1.67 per diluted share while improved aggregates pricing increased earnings $0.20 per diluted share. Net earnings per diluted share were $0.37 for the first nine months of 2009 compared with $1.93 in the first nine months of 2008. Current year net earnings include earnings per diluted share of $0.10 referable to discontinued operations and $0.26 referable to the 48% comparative decrease in the unit cost for diesel fuel. Prior year results include net earnings per diluted share of $0.34 referable to the sale of quarry sites divested as a condition for approval by the Department of Justice of the Florida Rock acquisition. Additionally, the effective tax rate from continuing operations was a 44.5% benefit for the first nine months of 2009, versus a 29.8% expense in the prior year.
Cash flows from operating activities contributed $354.8 million to cash during the first nine months of 2009 as compared with $278.2 million during the same period in 2008. The $76.6 million increase in cash from operating activities is primarily attributable to favorable changes in certain working capital accounts, in particular, accounts receivable, inventories, and accruals for incentives and other compensation. Additionally, net gains on sale of property, plant & equipment and businesses decreased $75.2 million. While these gains increase net earnings, the associated cash received is appropriately adjusted out of operating activities and presented as a component of investing activities. These favorable comparative changes in operating cash flows were partially offset by a $170.1 million decrease in net earnings and a $24.4 million increase in contributions to pension plans.
Net cash used by investing activities during the first nine months of 2009 totaled $77.4 million compared with $135.0 million during the same period in 2008. In light of the weak demand environment, we continued to evaluate the strategic nature and timing of all capital projects leading to a $242.9 million comparative reduction in purchases of property, plant & equipment and business acquisitions. The cash savings from significant reductions in capital spending were largely offset by a $220.1 reduction in proceeds from the sale of property, plant and equipment and businesses primarily attributable to the divestitures required in connection with the Florida Rock acquisition. Additionally, during the nine months ended September 30, 2008, $37.0 million in assets held in money market and other money funds at The Reserve were reclassified from cash equivalents to medium-term investments (see Note 5 to the condensed consolidated financial statements). We received redemptions totaling $30.6 million of these investments during the first nine months of 2009 resulting in a net comparative increase in cash flows of $67.6 million. This favorable change in investing cash flows was partially offset by $28.6 million in cash received during 2008 from a loan against the cash surrender value of life insurance policies acquired in the Florida Rock transaction.
with $87.2 million during the same period in 2008. During 2009, proceeds from the issuance of long-term debt (net of debt issuance costs) of $394.6 million and common stock of $587.1 million were used to retire $296.6 million of short-term debt and current maturities and contributed largely to the $798.1 million reduction in commercial paper and bank line of credit borrowings. During 2008, proceeds from the issuance of long-term debt (net of debt issuance costs) of $943.4 million were used primarily to pay down $928.0 million of bank lines of credit. Dividends of $140.0 million and $160.8 million were paid during the first nine months of 2009 and 2008, respectively.
Working capital, the excess of current assets over current liabilities, totaled $209.7 million at September 30, 2009, an increase of $978.9 million from ($769.2) million at December 31, 2008 and an increase of $987.0 million from ($777.3) million at September 30, 2008. The increase in working capital over the nine month period ended September 30, 2009 primarily resulted from a $796.1 million reduction in short-term borrowings and a $251.3 million reduction in current maturities. Proceeds from the issuance of long-term debt in February 2009 and proceeds from the issuance of stock in June 2009 were primarily used to pay down short-term debt. The increase in working capital over the twelve month period ended September 30, 2009 primarily resulted from a comparable decrease in short-term borrowings and current maturities of $877.1 million and $284.3 million, respectively. The reduction in short-term debt primarily resulted from the aforementioned issuances of long-term debt and common stock during the nine month period ended September 30, 2009. Partially offsetting the comparative increase in working capital was a $120.2 million decrease in accounts and notes receivable.
VMC is in the portfolios of Wallace Weitz of Weitz Wallace R & Co, Wallace Weitz of Weitz Wallace R & Co, Brian Rogers of T Rowe Price Equity Income Fund, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Chris Davis of Davis Selected Advisers, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, PRIMECAP Management, Dodge & Cox, George Soros of Soros Fund Management LLC, Richard Aster Jr of Meridian Fund, Kenneth Fisher of Fisher Asset Management, LLC.
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