Vulcan Materials Earnings Cheat Sheet: Margins Suffer for Five Quarters Straight

S&P 500 (NYSE:SPY) component Vulcan Materials Company’s (NYSE:VMC) second quarter loss narrowed, beating estimates. Vulcan Materials Company is a producer of mainly crushed stone, sand and gravel, asphalt mix and concrete and cement.

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Vulcan Materials Company Earnings Cheat Sheet for the Second Quarter

Results: Loss narrowed to $8.1 million (loss of 6 cents per diluted share) from $24 million (loss of 19 cents per share) in the same quarter a year earlier.

Revenue: Fell 4.6% to $702 million from the year earlier quarter.

Actual vs. Wall St. Expectations: VMC reported adjusted net income of 7 cents per share. By that measure, the company beat the mean analyst estimate of a loss of 5 cents per share. It fell short of the average revenue estimate of $726 million.

Quoting Management: Commenting for the Company, Don James, Chairman and Chief Executive Officer, stated, “Business conditions remained challenging in the second quarter due to weaker than expected demand, as well as to April’s severe weather, flooding throughout the quarter in our river markets and a significant increase in diesel fuel costs. However, we are encouraged by the improved pricing in the second quarter in each of our segments. Cost control remains a priority – whether it’s lowering plant costs or reducing SAG expenses. In the second quarter, SAG costs decreased nine percent from the prior year and our aggregates operations continued to enhance production efficiency. These trends in pricing and cost control are consistent with our expectations.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 2.3 percentage points to 14.4% from the year earlier quarter. Over that time, margins have contracted on average 2.6 percentage points per quarter on a year-over-year basis.

Revenue has fallen in the past four quarters. Revenue declined 1.2% to $487.2 million in the first quarter. The figure fell 0.7% in the fourth quarter of the last fiscal year from the year earlier and dropped 4.5% in the third quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after falling short in the previous two quarters. In the first quarter, it missed the mark by 13 cents, and in the fourth quarter of the last fiscal year, it fell short by 17 cents.

Competitors to Watch: Martin Marietta Materials, Inc. (NYSE:MLM), Texas Industries, Inc. (NYSE:TXI), Eagle Materials, Inc. (NYSE:EXP), CRH PLC (NYSE:CRH), and United Basalt Products Ltd. (NYSE:UBP).

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(Source: Xignite Financials)