Vulcan Materials Company announced first quarter net sales were US$772m compared to US$630m in the first quarter of 2007. EBITDA was US$160m in the first quarter as compared to US$199m in the prior year. Operating earnings were US$67m in the first quarter of 2008 compared to US$137m in the prior year. The prior year’s results included EBITDA and operating earnings of US$43m from a gain on sale of real estate in California.
Don James, Vulcan’s Chairman and Chief Executive Officer, stated, “Volumes in the quarter were adversely affected by the continuing sharp downturn in residential construction and less favorable weather in certain of our markets. Continued growth in construction activity related to major industrial projects in Texas and along the Gulf Coast mitigated some of this weakness. Pricing for our products remained resilient and helped offset higher energy-related costs and higher noncash charges for depreciation, depletion and amortization, as well as increased interest expense. Approximately one-fourth of the annual expenses for depreciation and interest related to the Florida Rock acquisition was absorbed in the first quarter, which is always the seasonally weakest quarter of the year.
“Integration of the former Florida Rock operations is essentially complete. Identified major one-time synergies have been realized and, by the end of the year, we will be on track to achieve the ongoing annual synergies we anticipated with the acquisition of Florida Rock. We have completed the divestitures required by the Department of Justice. As previously announced, we received both cash and strategic assets in three separate transactions. The cash portion totaled $214 million subject to certain post-closing adjustments. We also received two quarries in Virginia, one quarry in California, a quarry site in Texas, and fee simple ownership of a quarry-leasehold in North Carolina. In the second quarter, we will report an after-tax gain of approximately $0.41 per diluted share referable to the divested assets that were formerly owned by Vulcan prior to the acquisition of Florida Rock. After the divestitures, we control nearly 13 billion tons or an average of 44 years of reserves in highly attractive markets where reserves are limited and where demand for aggregates is expected to grow at above-average rates for many years to come.”
Commenting on the outlook for 2008, Mr. James stated, “Our current earnings outlook for 2008 is subject to a great deal of uncertainty with respect to the economy and financial markets. Our outlook reflects a prolonged and severe downturn in residential construction, weaker contract awards in other end markets, the impact of higher costs for construction inputs and the effect of increasing energy-related costs. In the first quarter, we were able to reduce operating hours and decrease cash fixed costs. We will continue to evaluate costs in all areas in order to ensure that they are aggressively managed in light of the weaker demand outlook. We continue to expect improved pricing for our products to help offset these higher costs."