Vulcan Materials (VMC) to Offer 11.5M Shares; Cuts Qtr. Dividend by 49% to $0.25; Guides Q2, FY09 Well Below the Street
Vulcan Materials Company (NYSE: VMC) today announced that it intends to offer 11.5 million shares of common stock in an underwritten public equity offering. At yesterday's closing price, this offering would yield gross proceeds of approximately $500 million.
In connection with this offering, the Company intends to grant the underwriters an option to purchase up to an additional 15 percent of the number of shares sold in the offering. The Company will use the capital raised through the equity offering for debt reduction and other corporate purposes, enhancing flexibility for strategic investments in organic and bolt-on growth opportunities. After giving effect to the offering, the Company's total debt to total capital ratio would equal 44 percent, down from 50 percent as of March 31, 2009. Goldman, Sachs & Co., Merrill Lynch & Co., J.P.Morgan and Wachovia Securities will act as the joint book-running managers of the offering.
In addition, the Company plans to reduce its quarterly dividend by 49%, effective for Q309, to $0.25 from $0.49 per share, which will increase cash available to the Company by approximately $100 million annually.
In conjunction with today's announced actions, the Company updated its outlook for 2009. Aggregates shipments in Q2 are expected to be 27-32% lower than the prior year's Q2 due to weak demand and unusually wet weather in key markets. Q2 aggregates prices are anticipated to increase 4-5% from the prior year.
Shipments in the second half of 2009 are expected to decline from the second half of 2008, but second half comparisons should improve over first half comparisons as the result of more normal weather patterns and the initial impacts of federal stimulus funds.
The Company now expects FY09 aggregate shipments, including some projected incremental demand in the second half of 2009 from the stimulus plan, to decline 17-20% from 2008 levels. Full year aggregates prices should increase 4-5% from the 2008 levels, reflecting stable price growth.
As a result, the Company estimates that Q2 earnings from continuing operations will be $0.15-$0.30, which compares to the Street estimate of $0.44. FY09 EPS from continuing operations are expected to be $0.70-$1.00, versus the consensus of $1.13.
For FY09, capital spending is expected to be approximately $175 million, down sharply from the $353 million spent in 2008. Debt reduction and achieving the Company's target debt ratio of 35-40% remain a priority use of cash flows, including the funds generated by the actions announced today. The Company now expects to reduce total debt by approximately $700 million during 2009.
In connection with this offering, the Company intends to grant the underwriters an option to purchase up to an additional 15 percent of the number of shares sold in the offering. The Company will use the capital raised through the equity offering for debt reduction and other corporate purposes, enhancing flexibility for strategic investments in organic and bolt-on growth opportunities. After giving effect to the offering, the Company's total debt to total capital ratio would equal 44 percent, down from 50 percent as of March 31, 2009. Goldman, Sachs & Co., Merrill Lynch & Co., J.P.Morgan and Wachovia Securities will act as the joint book-running managers of the offering.
In addition, the Company plans to reduce its quarterly dividend by 49%, effective for Q309, to $0.25 from $0.49 per share, which will increase cash available to the Company by approximately $100 million annually.
In conjunction with today's announced actions, the Company updated its outlook for 2009. Aggregates shipments in Q2 are expected to be 27-32% lower than the prior year's Q2 due to weak demand and unusually wet weather in key markets. Q2 aggregates prices are anticipated to increase 4-5% from the prior year.
Shipments in the second half of 2009 are expected to decline from the second half of 2008, but second half comparisons should improve over first half comparisons as the result of more normal weather patterns and the initial impacts of federal stimulus funds.
The Company now expects FY09 aggregate shipments, including some projected incremental demand in the second half of 2009 from the stimulus plan, to decline 17-20% from 2008 levels. Full year aggregates prices should increase 4-5% from the 2008 levels, reflecting stable price growth.
As a result, the Company estimates that Q2 earnings from continuing operations will be $0.15-$0.30, which compares to the Street estimate of $0.44. FY09 EPS from continuing operations are expected to be $0.70-$1.00, versus the consensus of $1.13.
For FY09, capital spending is expected to be approximately $175 million, down sharply from the $353 million spent in 2008. Debt reduction and achieving the Company's target debt ratio of 35-40% remain a priority use of cash flows, including the funds generated by the actions announced today. The Company now expects to reduce total debt by approximately $700 million during 2009.
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