Vulcan Materials announces 46-percent increase in fourth-quarter, full-year earnings per share

Pit & Quarry, March, 2005

Vulcan Materials Co. announced record fourth quarter net earnings of $85 million, or $0.82 per diluted share, a 46 percent increase from last year's $0.56 per diluted share. Earnings from continuing operations were $65 million, or $0.62 per diluted share, compared to last year's fourth quarter of $0.61 per diluted share. Earnings from discontinued operations were $21 million, or $0.20 per diluted share, an increase of $26 million from the prior year. Net sales from continuing operations for the quarter increased 5 percent to $547 million on improved pricing and higher volumes for aggregates.

As announced during the quarter, the company has reached an agreement to sell its Chemicals business. The results of this business are now reported on an after-tax basis in discontinued operations and continuing operations are now comprised of Construction Materials.

For the full year, net earnings increased 46 percent to a record $2.77 per diluted share, compared to $1.90 per diluted share in the prior year. Earnings from continuing operations increased 10 percent from the prior year to $261 million, or $2.52 per diluted share. Earnings from discontinued operations were $0.25 per diluted share. Net sales from continuing operations increased 6 percent to $2.2 billion on record aggregates shipments and improved pricing.

In 2004, the company generated a record $377 million of cash from operations after capital expenditures on operating cash flows of $579 million, also a record. All results are preliminary and unaudited.

Commenting on 2004 results, Don James, chairman and CEO of Vulcan, says, "Record shipments in the fourth quarter and solid price improvement reflect the strength of our aggregates business. For the year, we shipped more aggregates than at any time in our history and achieved record Construction Materials sales and earnings, even with higher diesel and healthcare costs.

"While spending on several improvement projects at large plants also reduced full-year earnings, these projects are now substantially complete and should contribute to improved earnings in 2005. We have made changes to our healthcare plans for 2005, which should slow the rate of increase for those costs."

Net sales of $547 million for the fourth quarter increased 5 percent compared to the prior year. Aggregates pricing improved over 3 percent and shipments increased over 2 percent from last year's record levels. Asphalt sales were down slightly on lower volumes.

In the fourth quarter, earnings from continuing operations of $65 million increased slightly from the prior year. The earnings increase from higher aggregates shipments and pricing was offset by higher costs, principally for diesel fuel and liquid asphalt, increased healthcare costs and the effects of adverse weather on aggregates production.

For the year, net sales in Construction Materials increased 6 percent from last year to $2.2 billion. Aggregates pricing improved almost 3 percent and shipments increased over 4 percent as Vulcan-served states experienced strong demand. Ready-mixed concrete volumes increased 4 percent on strong demand in our California and Arizona markets while asphalt volumes were down slightly.

Earnings before interest and taxes were a record $411 million, an increase of 7 percent from the prior year. Earnings increases from higher volumes in aggregates and ready- mixed concrete and improved pricing for aggregates were partially offset by higher costs for diesel fuel, liquid asphalt, healthcare and performance-based compensation. Spending on several plant improvement projects, particularly in the second and third quarters, contributed to higher costs.

James says, "We see 2005 as another good year for aggregates demand. Construction spending should continue to benefit from economic growth. Residential construction activity should remain at high levels. Modest recovery in private nonresidential construction should continue. Highway construction should benefit from improving state and local tax receipts. Passage of a new multi-year, federal highway bill would also help state DOTs move forward with significant new projects.

"As a result, demand for Vulcan's aggregates should increase 2 to 4 percent above the record shipments of 2004. We expect to continue to achieve price improvements. Healthcare costs, even with our plan changes, and unit costs for diesel and liquid asphalt are projected to be higher.

"In light of these assumptions, we expect earnings from continuing operations to be in the range of $2.80 to $3.10 per diluted share for the year.