UPDATE: Vulcan Materials (VMC) Misses Q4 EPS by 9c; Offers FY20 EPS Mid-Point Guidance Below Consensus
Vulcan Materials (NYSE: VMC) reported Q4 EPS of $1.08, $0.09 worse than the analyst estimate of $1.17. Revenue for the quarter came in at $1.19 billion versus the consensus estimate of $1.19 billion.
Tom Hill, Chairman and Chief Executive Officer, said, "2019 marks another year of strong earnings growth and cash generation. We are particularly proud of our people who worked hard to achieve these results while ensuring another year of world-class safety performance. Widespread improvements in pricing helped drive 8 percent growth in our industry-leading unit profitability and double-digit growth in Adjusted EBITDA, a strong result despite some higher than expected costs in the fourth quarter. Industry leadership in safety and pace-setting unit margins are both evidence of our strong and healthy business. Going forward, our compounding unit margins and our disciplined capital allocation position us to increase our cash flows and improve our return on invested capital again in 2020.
"Looking ahead, demand in our markets will continue to benefit from higher levels of highway funding and continued growth in residential and nonresidential markets. This visibility into demand growth has already set the stage for solid price improvement in 2020. Price improvement coupled with our four strategic initiatives (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing) should continue to increase unit profitability. For the full year, we expect earnings from continuing operations between $5.20 and $5.80 per diluted share with Adjusted EBITDA between $1.385 and $1.485 billion."
GUIDANCE:
Vulcan Materials sees FY2020 EPS of $5.20-$5.80, versus the consensus of $5.72.
Regarding the Company's outlook, Mr. Hill stated, "In 2020, we expect another year of strong earnings growth. Vulcan-served markets should continue to benefit from public construction demand, led by higher levels of highway funding in our key states. We anticipate residential construction in our markets to continue strengthening after experiencing some softness in certain markets during the second half of 2019. Private nonresidential construction activity should also improve as leading indicators point to positive growth in 2020. Demand fundamentals, including population and employment growth, continue to support longer-term growth in residential and nonresidential construction. We are seeing a positive pricing environment driven by shipment momentum in private demand and visibility of public demand. Our focus remains the same – compounding our unit margins through all parts of the cycle and improving our returns on capital."
Management expectations for 2020 include:
- Aggregates shipments growth of 2 to 4 percent
- Aggregates freight-adjusted price increase of 4 to 6 percent
- 10 to 15 percent growth in Asphalt, Concrete and Calcium gross profit, collectively
- SAG expenses of approximately $365 million
- Interest expense of approximately $125 million
- Depreciation, depletion, accretion and amortization expense of approximately $385 million
- An effective tax rate of approximately 20 percent
- Earnings from continuing operations of $5.20 to $5.80 per diluted share
- Adjusted EBITDA of $1.385 to $1.485 billion
For earnings history and earnings-related data on Vulcan Materials (VMC) click here.