Construction aggregates and materials manufacturer Vulcan Materials Co. (VMC) reported Monday a loss for the fourth quarter that sharply narrowed from last year as the year-ago quarter included a significant goodwill impairment, despite a drop in quarterly revenues amid continued weakness in private construction activity, and extremely wet weather. The company also expects fiscal 2010 to be the largest year of stimulus-related highway demand for its products followed by another solid year in 2011.
In a statement, chairman and chief executive officer, Don James said, "Our employees continue to run the business in a cost-efficient manner, maximizing our cash generation during the economic downturn. Their efforts in the fourth quarter contributed to further reductions in cash fixed costs in our operations as well as reductions in overhead expenses. Continued weakness in private construction activity, uncertainty surrounding the timing and amount of either a formal extension or reauthorization of the multi-year federal highway program, and extremely wet weather suppressed momentum gained from stimulus-related construction."
The company noted that it continues to believe that 2010 will be the biggest year for stimulus-related highway construction. Economic stimulus funds of $27.5 billion designated for highway projects under the American Recovery and Reinvestment Act of 2009 buoyed contract awards for highways in the second half of 2009. Vulcan-served states were apportioned 55% more funds than other states. The Birmingham, Alabama-based company reported a net loss of $13.35 million or $0.11 per share for the fourth quarter, sharply narrower than $212.82 million or $1.93 per share in the prior-year quarter.
The results for the latest quarter include loss from discontinued operations of $0.77 million or $0.01 per share, compared to loss of $0.66 million or $0.01 per share last year. Loss from continuing operations for the quarter sharply narrowed to $12.58 million or $0.10 per share from $212.16 million or $1.92 per share in the year-ago quarter.
On average, sixteen analysts surveyed by Thomson Reuters expected the company to earn $0.01 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Cash earnings for the quarter dropped to $66.52 million from $119.98 million a year ago.
Total revenues for the quarter dropped to $590.14 million from $799.20 million in the same quarter last year, and missed eleven Wall Street analysts' consensus estimate of $657.54 billion.
Total net sales for the fourth quarter were $555.77 million, down from $756.52 million in the comparable quarter a year ago, and delivery revenues declined to $34.38 million from $42.68 million in the fourth quarter of 2008.
Product wise, aggregates revenues fell to $369.08 million from $482.28 million in the year-ago quarter. Aggregates shipments declined 23%, reducing earnings by $0.57 per share, with pricing increasing 5% and cash fixed costs declining 8%.
Asphalt mix and concrete revenues of $178.41 million were also lower than $268.43 million in the prior-year quarter, and asphalt material margins declined as 29% lower costs for liquid asphalt were more than offset by lower selling prices. Revenues for cement were $8.27 million, down from $5.82 million last year.
Operating earnings for the fourth quarter was $1.39 million, compared to operating loss of $184.43 million in the prior-year quarter, while gross profit dropped to $68.04 million from $149.19 million in the year-ago quarter.
Cost of revenues declined to $522.10 million from $650.01 million in the same quarter last year. Selling, general and administrative expenses for the quarter decreased 7% to $82.98 million from $88.86 million in the year-ago quarter, and net gain on sale of property, plant & equipment and businesses totaled $16.45 million, higher than $7.54 million in the comparable quarter a year ago. The year-ago quarter included $252.66 million of goodwill impairment.
The company ended the fourth quarter with cash and cash equivalents of $22.27 million, compared to $10.19 million at end of the prior-year quarter.
For fiscal 2009, Vulcan reported net earnings of $30.31 million or $0.25 per share, sharply up from $0.92 million or $0.01 per share in the prior year. Earnings from continuing operations surged to $18.65 million or $0.16 per share from $3.37 million or $0.03 per share in the year ago. Analysts expected the company to report earnings of $0.28 per share for fiscal 2009.
Total revenues for the full year dropped to $2.69 billion from $3.65 billion reported in fiscal 2008. The Street was looking for full-year 2009 revenues of $2.74 billion.
Looking ahead...
"We expect 2010 to be the largest year of stimulus-related highway demand for our products followed by another solid year in 2011. By that time, we expect demand from private construction activity to be improving, accelerating the earnings leverage from our improved cost structure and disciplined approach to pricing," James added.
The company now expects fiscal 2010 capital spending to be about $125 million, up from $110 million spent in fiscal 2009 and sharply lower than $353 million spent in fiscal 2008.
The company's aggregates volumes for the full year 2009 are expected to be flat to up 5% from 2009 levels, and expect aggregates pricing to improve 2% to 3%. Sales volume in asphalt business is expected to increase about 5% from 2009 levels, with lower material margins.
VMC closed Monday's regular trading session at $43.50, down $0.16 or 0.37% on a volume of 1.54 million shares, higher than the three-month average volume of 1.04 million shares. In the past 52-week period, the stock has been trading in a range of $34.30 to $62.00.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.