Vulcan Materials Co (Holding Co) (NYSE:VMC) Q4 2019 Earnings Conference Call - Final Transcript

Feb 18, 2020 • 11:00 am ET


Vulcan Materials Co (Holding Co) (NYSE:VMC) Q4 2019 Earnings Conference Call - Final Transcript


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Good morning ladies and gentlemen, and welcome to Vulcan Materials Company's Fourth Quarter and Full Year Earnings Conference Call. My name is Kevin and I will be your conference call coordinator today. [Operator Instructions]

Now I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Mark D. Warren

Welcome everyone to the Vulcan Materials' fourth quarter and full year earnings call. With me today are Tom Hill, Chairman and CEO; and Suzanne Wood, Senior Vice President and Chief Financial Officer.

Today's call is accompanied by a press release issued this morning and a supplemental presentation posted to our website. Additionally, a recording of this call will be available for replay later today.

Before we begin, please be reminded that comments regarding the company's results, the projections -- and projections may include forward-looking statements which are subject to risks and uncertainties. These risks, along with other legal disclaimers are described in detail in the company's earnings release and in other filings with the Securities and Exchange Commission.

You can find a reconciliation of non-GAAP financial measures and other information in both our earnings release and at the end of our supplemental presentation.

I will now turn the call over to Tom.

J. Thomas Hill

Thank you, Mark, and thanks to everyone for joining the call today. We appreciate your interest in Vulcan Materials Company. 2019 represented another year of strong earnings growth and demonstrated the strength of our aggregate-centric business model. But before we talk about our accomplishments for the year, I want to spend a few minutes telling you about the good progress we made again in the fourth quarter.

Aggregates gross profit was $274 million dollars, a 7% improvement versus the prior year fourth quarter. Aggregate shipments increased by 4% with markets in the Southeast and Southwest reporting a strong growth. For the quarter, freight adjusted average sales prices increased by 5.5%. All key markets reported year-over-year price growth. And the 70 basis point benefit from mix was due in part to above average growth in Gulf Coast markets that are served by our unparalleled logistics network. This growth is noteworthy. The fourth quarter of 2018 made for a tough comparison with a 24% increase in Aggregates gross profit, 8% growth in volume and 5% mix adjusted price growth over 2017.

Gross profit per ton in the quarter improved to $5.32 and was negatively impacted by three things, most of which are timing and mix related. First, repair and maintenance costs were higher in the quarter. As we said before, certain types of repairs and maintenance are routined and scheduled, therefore the associated costs are more predictable. Other repair and maintenance activities are planned annually, but the exact timing is more difficult to predict with precision. We monitor the situation throughout the year to determine the optimal time to do the work and as a result, the cost can be lumpier. This quarter included several of these types of repairs. In