Vulcan Materials (VMC) Tops Q4 EPS by 9c, Revenues Beat; Offers FY21 EPS Guidance
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Vulcan Materials (NYSE: VMC) reported Q4 EPS of $1.07, $0.09 better than the analyst estimate of $0.98. Revenue for the quarter came in at $1.18 billion versus the consensus estimate of $1.15 billion.
Tom Hill, Chairman and Chief Executive Officer, said, "Our best-in-class aggregates business, along with the efforts and dedication of our employees, allowed us to overcome COVID-19 related disruptions in 2020. Most impressive, we delivered year-over-year gains in aggregates unit profitability throughout each quarter in 2020. Our ability to leverage Vulcan's four strategic disciplines enabled us to expand unit margins, deliver improved cash flows, and increase returns on invested capital. Our team\'s hard work along with Vulcan\'s leading market positions and strong financial footing will enable us to capitalize on an improving demand outlook in 2021."
Net earnings were $115 million in the fourth quarter, and Adjusted EBITDA was $311 million. Fourth quarter Adjusted EBITDA increased 4 percent despite a 1 percent decline in total revenues. Effective cost management throughout the organization and aggregates price growth helped drive margin expansion.
Full year revenues were $4.86 billion, 1 percent lower than the prior year, while gross profit margins expanded across each segment driving an improvement of 150 basis points in the Company\'s EBITDA margin. Net earnings were $584 million, and Adjusted EBITDA was a record $1.324 billion.
Mr. Hill continued, "Construction employment gains in key markets are a positive signal that activity levels are recovering across our footprint, as compelling fundamentals in residential construction support growing demand in 2021. Shipments into private nonresidential continue to benefit from growth in heavy industrial projects such as data centers and warehouses, while construction starts in other categories remain below the prior year. Recent improvements in highway lettings and contract awards indicate growing confidence and visibility fueling advancement of planned projects, particularly in the second half of 2021. The pricing environment remains positive, and we continue to execute at a high level, positioning us well for 2021. We expect our 2021 Adjusted EBITDA will range between $1.340 billion to $1.440 billion."
Vulcan Materials sees FY2021 EPS of $4.80-$5.40, versus the consensus of $4.95.
Regarding the Company's outlook, Mr. Hill stated, "We are encouraged by the continued strength in residential construction activity, particularly single-family housing. Our expectation is also supported by the recent improvement in highway awards and construction employment trends in key markets. Data centers, distribution centers, and warehouses, which now comprise the largest share of new private nonresidential project awards, will continue to underpin demand in this end market. We believe these leading indicators, along with sustaining a positive pricing environment, can be a catalyst for further recovery in construction activity during 2021."
Management expectations for 2021 include:
- Aggregates shipments down 2 percent to up 2 percent versus 2020
- Year-over-year aggregates freight-adjusted price increase of 2 to 4 percent
- Asphalt, Concrete and Calcium gross profit up mid-to-high single digits
- SAG expenses of $365 to $375 million
- Interest expense of approximately $130 million
- Depreciation, depletion, accretion and amortization expense of approximately $400 million
- An effective tax rate of approximately 21 percent
- Earnings from continuing operations of $4.80 to $5.40 per diluted share
- Adjusted EBITDA of $1.340 to $1.440 billion
- No major changes in COVID shelter-in-place restrictions
Mr. Hill concluded, "As we saw in 2020, demand for our products can be subject to market fluctuations outside of our control. That said, we remained focused on the factors within our control, including our pricing and cost actions, both of which contributed to further improvement in our industry-leading unit margins in 2020. We will carry that determination through 2021 and beyond. Our operating plans are underpinned by our four strategic disciplines (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing), a healthy balance sheet, strong liquidity, and the engagement of our people."
For earnings history and earnings-related data on Vulcan Materials (VMC) click here.
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