In the midst of the COVID-19 pandemic, Vulcan Materials (VMC) has managed to increase revenue and gross profit in every business segment in which the company operates. Revenue for the latest quarter was $1.05 billion, up from $996.5 million in the same quarter last year.
VMC adjusted earnings per share came in at $0.47 versus $0.46 in 2019. VMC did take a currency hit of $6 million due to the decline in the Mexican peso.
VMC Chairman and CEO, Tom Hill, said the company was weathering the current environment and performing in line with expectations. Hill stated, “We experienced minimal financial impact from the COVID-19 pandemic in the first quarter. “
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Commenting on the quarter, Hill said, “Our first quarter earnings improved across all segments and were in line with our expectations, despite wet weather in certain key markets in the Southeast and Southwest. These results demonstrated the strong long-term fundamental position of our aggregates-led businesses and our commitment to leading the industry in pricing and unit profitability.”
VMC said reweakness, due to wet weather in the Southeast and Southwest, was offset by strong orders from states like California, Florida, Illinois and Virginia.
Sales prices in the company’s aggregates business increased 4.5% in the quarter. And, all of the company’s key markets for aggregates experienced year-over-year price increases. Asphalt shipments were up 2% in the quarter, and the company was able to increase asphalt prices by 5%.
Vulcan Materials believes the aggregate business is especially resilient in the current market environment. Commenting on aggregates, Hill noted, “Aggregates are far more adaptable to these demand shifts than any other construction materials, a characteristic that should serve us well during this period of disruption. As a result, we will be well-equipped to manage our business effectively and serve our customers reliably through these unprecedented times.”
The company returned $45 million to shareholders through dividend payments in the quarter, which was a 10% increase year-over-year. To ensure liquidity, Vulcan Materials also lined up a $750 million term loan.
Vulcan Materials’ stock is still off around 33% from highs experienced before the onset of COVID-19. Currently trading around $100, the stock has a PE of just under 22. And, the dividend yield comes in at 1.37%.
The company withdrew previously issued guidance for 2020, citing the uncertainty of the COVID-19 pandemic, and as CEO Hill stated,”… it is too early to estimate accurately the full year impact on aggregates demand.”
Steven Adams’s personal positions in Vulcan Materials: none.
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