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Vulcan Aggregates Sales Rise in Second Quarter

Vulcan Materials Co. announced results for the quarter ended June 30. Total revenues were $1.323 million versus $1.328 million in the second quarter of 2019. Year-to-date revenues were $2.372 million versus $2.324 million in the first six months of 2019.

Aggregates segment sales were $1.071 million for the quarter, versus $1.062 for the second quarter of 2019. Year-to-date aggregates segment sales were $1.938 million versus $1.897 in the first six months of 2019.

Second quarter segment sales increased 1%, and gross profit increased 7% to $351 million, or $6.25 per ton. The improvement resulted from widespread growth in pricing and effective cost control, according to the company.

Second quarter aggregates shipments were 2%  lower than the prior-year's second quarter. Shipping patterns varied widely across the company's footprint as a result of economic uncertainty and wet weather but were generally supported by healthy backlogs and our essential business status in our markets. 

Key markets in the Southeast and coastal Texas were negatively affected by wet weather while shipments in California were reduced by tighter restrictions on shelter-in-place. Shipments were higher in Georgia, Illinois, Tennessee and Texas. 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 3% versus the prior year's quarter, inclusive of 30 basis points of unfavorable mix. 

Freight-adjusted unit cost of sales decreased 1% versus the prior year's second quarter. Effective operating efficiencies helped mitigate the cost impact of lower sales volumes and a reduction in inventory. Actions taken across the company's more than 360 locations reduced cash spending and controlled inventories in areas most impacted by shelter-in-place orders. The associated cost of reducing inventory offset the majority of a $14 million earnings benefit from lower diesel fuel costs.

Unit profitability improvements were widespread across the company's footprint. Cash gross profit per ton increased 9% from the prior-year's second quarter to $7.69 per ton. For the trailing-12 months, cash gross profit was $6.98 per ton.

Tom Hill, chairman and chief executive officer, said, "Our second quarter results demonstrate the resiliency of our best-in-class aggregates-led business and reflect the proactive response by our employees to the COVID-19 pandemic. Our operational execution was integral to widespread gains in unit profitability, despite some disruptions to construction activity during the quarter. I am proud of our employees' ability to quickly adapt to the necessary additional safety protocols we have put in place in this environment, while maintaining their focus on operating safely and positioning Vulcan for continued success." 

Earnings from continuing operations were $211 million, or $1.58 per diluted share, an increase of 7% from the prior-year's second quarter. Adjusted EBITDA was $408 million, an increase of 10%. The year-over-year earnings improvement was driven primarily by effective cost control and price growth in aggregates. Second quarter segment earnings improved in each major product line. Despite a 2% decline in aggregates shipments, mix-adjusted pricing improved 3.3%, and freight-adjusted unit cost of sales decreased 1%. As a result, aggregates unit gross profit increased 9% to $6.25 per ton. 

Hill went on to say, "Certain leading indicators of demand have shown signs of improvement, and our quote activity remains robust. However, our visibility beyond the near-term remains restricted due to the evolving effects of the pandemic. The recent surge in new COVID-19 cases could impact the progress made so far if new restrictions on economic activity are put in place. We believe this uncertainty could continue to weigh on construction activity in the second half of the year, making it difficult to predict the level and timing of shipments. We are continuously reviewing our operating plans to ensure an effective response to demand shifts.  Whatever the demand, we remain confident in our ability to successfully navigate the changing environment."