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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

(Mark One)

þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2022


OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from                 to


Commission File Number 001-33841


VULCAN MATERIALS COMPANY
(Exact name of registrant as specified in its charter)


 New Jersey 
(State or other jurisdiction of incorporation)


20-8579133
(I.R.S. Employer Identification No.)


1200 Urban Center Drive, Birmingham, Alabama
(Address of principal executive offices)  


35242
(zip code)


(205) 298-3000
(Registrant's telephone number including area code)


Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class


Trading Symbol

Name of each exchange on
which registered

 Common Stock, $1 par value 

VMC

 New York Stock Exchange 


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer þ


Accelerated filer o


Smaller reporting company o


Non-accelerated filer o


Emerging growth company o


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ


Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:


                    Class                    

Shares outstanding
      at April 25, 2022      

Common Stock, $1 Par Value

132,895,988

 


9

VULCAN MATERIALS COMPANY

FORM 10-Q

QUARTER ENDED MARCH 31, 2022

Contents

Page

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

 2

 3

 4

 5

Item 2.

Management’s Discussion and Analysis of Financial

   Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About

   Market Risk

48

Item 4.

Controls and Procedures

48

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

49

Item 1A.

Risk Factors

49

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

49

Item 4.

Mine Safety Disclosures

50

Item 6.

Exhibits

50

Signatures

51

Unless otherwise stated or the context otherwise requires, references in this report to “Vulcan,” the “Company,” “we,” “our,” or “us” refer to Vulcan Materials Company and its consolidated subsidiaries.

 

 


1


part I financial information

  ITEM 1

FINANCIAL STATEMENTS

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

March 31

December 31

March 31

in millions

2022

2021

2021

Assets

Cash and cash equivalents

$         123.1 

$         235.0 

$         722.3 

Restricted cash

9.9 

6.5 

168.6 

Accounts and notes receivable

Accounts and notes receivable, gross

928.6 

849.0 

596.0 

Allowance for credit losses

(10.7)

(10.3)

(2.9)

Accounts and notes receivable, net

917.9 

838.7 

593.1 

Inventories

Finished products

412.2 

418.0 

368.8 

Raw materials

63.2 

59.9 

36.1 

Products in process

4.4 

4.2 

4.6 

Operating supplies and other

44.7 

39.2 

31.9 

Inventories

524.5 

521.3 

441.4 

Other current assets

87.2 

95.1 

67.6 

Total current assets

1,662.6 

1,696.6 

1,993.0 

Investments and long-term receivables

36.5 

34.1 

34.3 

Property, plant & equipment

Property, plant & equipment, cost

10,724.1 

10,444.4 

9,110.3 

Allowances for depreciation, depletion & amortization

(4,998.5)

(4,897.6)

(4,747.0)

Property, plant & equipment, net

5,725.6 

5,546.8 

4,363.3 

Operating lease right-of-use assets, net

679.7 

691.4 

421.6 

Goodwill

3,709.2 

3,696.7 

3,172.1 

Other intangible assets, net

1,751.9 

1,749.0 

1,114.6 

Other noncurrent assets

295.3 

268.0 

233.9 

Total assets

$    13,860.8 

$    13,682.6 

$    11,332.8 

Liabilities

Current maturities of long-term debt

3.9 

5.2 

15.4 

Short-term debt

100.0 

0.0 

0.0 

Trade payables and accruals

390.1 

365.5 

255.6 

Other current liabilities

398.7 

398.6 

294.9 

Total current liabilities

892.7 

769.3 

565.9 

Long-term debt

3,874.5 

3,874.8 

2,772.9 

Deferred income taxes, net

1,007.7 

1,005.9 

733.6 

Deferred revenue

166.8 

167.1 

172.4 

Noncurrent operating lease liabilities

631.7 

642.5 

397.3 

Other noncurrent liabilities

689.1 

655.3 

554.4 

Total liabilities

$      7,262.5 

$      7,114.9 

$      5,196.5 

Other commitments and contingencies (Note 8)

 

 

 

Equity

Common stock, $1 par value, Authorized 480.0 shares,

Outstanding 132.9, 132.7 and 132.7 shares, respectively

132.9 

132.7 

132.7 

Capital in excess of par value

2,806.8 

2,816.5 

2,797.7 

Retained earnings

3,787.2 

3,748.5 

3,385.6 

Accumulated other comprehensive loss

(151.6)

(152.7)

(179.7)

Total shareholders' equity

6,575.3 

6,545.0 

6,136.3 

Noncontrolling interest

23.0 

22.7 

0.0 

Total equity

$      6,598.3 

$      6,567.7 

$      6,136.3 

Total liabilities and equity

$    13,860.8 

$    13,682.6 

$    11,332.8 

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.


2


VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME

Three Months Ended

Unaudited

March 31

in millions, except per share data

2022

2021

Total revenues

$      1,540.7 

$      1,068.3 

Cost of revenues

1,271.9 

839.0 

Gross profit

268.8 

229.3 

Selling, administrative and general expenses

119.0 

88.6 

Gain on sale of property, plant & equipment

and businesses

2.6 

117.2 

Other operating expense, net

(5.4)

(8.4)

Operating earnings

147.0 

249.5 

Other nonoperating income, net

1.5 

5.9 

Interest expense, net

35.9 

33.1 

Earnings from continuing operations

before income taxes

112.6 

222.3 

Income tax expense

18.7 

60.6 

Earnings from continuing operations

93.9 

161.7 

Loss on discontinued operations, net of tax

(1.8)

(1.1)

Net earnings

92.1 

160.6 

(Earnings) loss attributable to noncontrolling interest

(0.3)

0.0 

Net earnings attributable to Vulcan

$           91.8 

$         160.6 

Other comprehensive income (loss), net of tax

Deferred loss on interest rate derivative

0.0 

0.0 

Amortization of prior interest rate derivative loss

0.4 

0.4 

Amortization of actuarial loss and prior service

cost for benefit plans

0.7 

1.2 

Other comprehensive income (loss)

1.1 

1.6 

Comprehensive income

93.2 

162.2 

Comprehensive (earnings) loss attributable to

noncontrolling interest

(0.3)

0.0 

Comprehensive income attributable to Vulcan

$           92.9 

$         162.2 

Basic earnings (loss) per share attributable to Vulcan

Continuing operations

$           0.70 

$           1.22 

Discontinued operations

(0.01)

(0.01)

Net earnings

$           0.69 

$           1.21 

Diluted earnings (loss) per share attributable to Vulcan

Continuing operations

$           0.70 

$           1.21 

Discontinued operations

(0.01)

(0.01)

Net earnings

$           0.69 

$           1.20 

Weighted-average common shares outstanding

Basic

133.0 

132.7 

Assuming dilution

133.6 

133.4 

Effective tax rate from continuing operations

16.6%

27.3%

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.


3


VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Unaudited

March 31

in millions

2022

2021

Operating Activities

Net earnings

$           92.1 

$         160.6 

Adjustments to reconcile net earnings to net cash provided by operating activities

Depreciation, depletion, accretion and amortization

141.0 

100.4 

Noncash operating lease expense

16.4 

10.5 

Net gain on sale of property, plant & equipment and businesses

(2.6)

(117.2)

Contributions to pension plans

(2.0)

(2.1)

Share-based compensation expense

7.5 

7.9 

Deferred tax expense

1.1 

26.9 

Changes in assets and liabilities before initial

effects of business acquisitions and dispositions

(77.8)

(17.0)

Other, net

(0.1)

(0.7)

Net cash provided by operating activities

$         175.6 

$         169.3 

Investing Activities

Purchases of property, plant & equipment

(160.4)

(100.7)

Proceeds from sale of property, plant & equipment

6.2 

186.5 

Payment for businesses acquired, net of acquired cash

(148.2)

0.0 

Other, net

(0.1)

0.0 

Net cash provided by (used for) investing activities

$      (302.5)

$           85.8 

Financing Activities

Proceeds from short-term debt

189.0 

0.0 

Payment of short-term debt

(89.0)

0.0 

Payment of current maturities and long-term debt

(2.3)

(500.0)

Debt issuance and exchange costs

(0.7)

0.0 

Payment of finance leases

(8.5)

(0.6)

Dividends paid

(53.2)

(49.1)

Share-based compensation, shares withheld for taxes

(17.1)

(12.1)

Other, net

0.2 

(0.4)

Net cash provided by (used for) financing activities

$           18.4 

$      (562.2)

Net decrease in cash and cash equivalents and restricted cash

(108.5)

(307.1)

Cash and cash equivalents and restricted cash at beginning of year

241.5 

1,198.0 

Cash and cash equivalents and restricted cash at end of period

$         133.0 

$         890.9 

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of the statements.

4


notes to condensed consolidated financial statements

Note 1: summary of significant accounting policies

NATURE OF OPERATIONS

Vulcan Materials Company (the “Company,” “Vulcan,” “we,” “our”), a New Jersey corporation, is the nation’s largest supplier of construction aggregates (primarily crushed stone, sand and gravel), a major producer of asphalt mix and ready-mixed concrete, and a supplier of construction paving services.

We operate primarily in the United States and our principal product — aggregates — is used in virtually all types of public and private construction projects and in the production of asphalt mix and ready-mixed concrete. We serve markets in twenty-two states, the U.S. Virgin Islands, Washington D.C., the Bahamas and the local markets surrounding our operations in British Columbia, Canada and Quintana Roo, Mexico. Our primary focus is serving metropolitan markets in the United States that are expected to experience the most significant growth in population, households and employment. These three demographic factors are significant drivers of demand for aggregates. While aggregates is our focus and primary business, we produce and sell asphalt mix and/or ready-mixed concrete in our Alabama, Arizona, California, Maryland, New Jersey, New Mexico, New York, Oklahoma, Pennsylvania, Tennessee, Texas, Virginia, the U.S. Virgin Islands, Washington D.C. and the Bahamas markets.

BASIS OF PRESENTATION

Our accompanying unaudited condensed consolidated financial statements were prepared in compliance with the instructions to Form 10-Q and Article 10 of Regulation S-X and thus do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. We prepared the accompanying condensed consolidated financial statements on the same basis as our annual financial statements, except for the adoption of new accounting standards, if any, as described in Note 17. Our Condensed Consolidated Balance Sheet as of December 31, 2021 was derived from the audited financial statement, but it does not include all disclosures required by GAAP. In the opinion of our management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. For further information, refer to the consolidated financial statements and footnotes included in our most recent Annual Report on Form 10-K.

Operating results for the three month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, particularly in light of the uncertainty over the economic and operational impacts of the ongoing COVID-19 pandemic as construction activity continues to be impacted by capacity constraints (including supply chain bottlenecks, labor shortages and transportation availability) and cost inflation. Additionally, period-over-period comparisons are significantly impacted by our August 2021 acquisition of U.S. Concrete (see Note 16).

Our condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues and expenses. The most significant estimates and assumptions included in the preparation of these financial statements are related to goodwill and long-lived asset impairments, business combinations and purchase price allocation, pension and other postretirement benefits, environmental compliance, claims and litigation including self-insurance, and income taxes. Events that relate to conditions arising after March 31, 2022, will be reflected in management’s estimates for future periods.

NONCONTROLLING INTEREST

In connection with our August 2021 U.S. Concrete acquisition, we obtained an 88% controlling interest in the Orca Sand and Gravel Limited Partnership (Orca). Orca was formed to develop the Orca quarry in British Columbia, Canada. The remaining 12% noncontrolling interest is held by the Namgis First Nation (Namgis). Noncontrolling interest consists of the Namgis’ share of the fair value equity in the partnership offset by capital contributions loaned to the Namgis by us. Our consolidated financial statements recognize the full fair value of all of the subsidiary’s assets and liabilities offset by the noncontrolling interest in total equity.

5


RESTRICTED CASH

Restricted cash primarily consists of cash proceeds from the sale of property held in escrow for the acquisition of replacement property under like-kind exchange agreements. The escrow accounts are administered by an intermediary. Cash restricted pursuant to like-kind exchange agreements remains restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property. Restricted cash may also include cash reserved by other contractual agreements (such as asset purchase agreements) for a specified purpose and therefore is not available for use for other purposes. Restricted cash is included with cash and cash equivalents in the accompanying Condensed Consolidated Statements of Cash Flows.

DISCONTINUED OPERATIONS

In 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation. The financial results of the Chemicals business are classified as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income for all periods presented. Results from discontinued operations are as follows: