We provide the basic materials for the infrastructure needed to maintain and expand the U.S. economy. We operate primarily in the U.S. and are 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. Our strategy and competitive advantage are based on our strength in aggregates which are used in most types of construction and in the production of asphalt mix and ready-mixed concrete. Demand for our products is dependent on construction activity and correlates positively with changes in population growth, household formation and employment. End uses include public construction (e.g., highways, bridges, buildings, airports, schools, prisons, sewer and waste disposal systems, water supply systems, dams, reservoirs and other public construction projects), private nonresidential construction (e.g., manufacturing, retail, offices, industrial and institutional) and private residential construction (e.g., single-family houses, duplexes, apartment buildings and condominiums). Aggregates have a very high weight-to-value ratio and, in most cases, must be produced near where they are used; if not, transportation can cost more than the materials, rendering them uncompetitive compared to locally produced materials. Exceptions to this typical market structure include areas along the U.S. Gulf Coast and the Eastern Seaboard where there are limited supplies of locally available, high-quality aggregates. We serve these markets from quarries that have access to cost-effective long-haul transportation - shipping by barge and rail - and from our quarry on Mexico's Yucatan Peninsula (see Known Trends or Uncertainties within this Item 2.) with our fleet of Panamax-class, self-unloading ships. Additionally, as a result of our 2021 acquisition of U.S. Concrete, we serve markets in California and Hawaii from our quarry in British Columbia, Canada by means of a long-term marine shipping agreement with CSL Americas.
There are limited substitutes for quality aggregates. Due to zoning and permitting regulation and high transportation costs relative to the value of the product, the location of reserves is a critical factor to our long-term success.
No material part of our business depends upon any single customer whose loss would have a significant adverse effect on our business. In 2021, our five largest customers accounted for 8% of our total revenues, and no single customer accounted for more than 2% of our total revenues. Although approximately 45% to 55% of our aggregates shipments have historically been used in publicly-funded construction, such as highways, airports and government buildings, a relatively small portion of our sales are made directly to federal, state, county or municipal governments/agencies. Therefore, although reductions in state and federal funding can curtail publicly-funded construction, the vast majority of our business is not directly subject to renegotiation of profits or termination of contracts with local, state or federal governments. In addition, our sales to government entities span several hundred entities coast-to-coast, ensuring that negative changes to various government budgets would have a muted impact across such a diversified set of government customers. While aggregates is our focus and primary business, we believe vertical integration between aggregates and downstream products, such as asphalt mix and ready-mixed concrete, can be managed effectively in certain markets to generate attractive financial returns and enhance financial returns in our core Aggregates segment. We produce and sell asphalt mix and/or ready-mixed concrete primarily 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. Aggregates comprise approximately 95% of asphalt mix by weight and 80% of ready-mixed concrete by weight. In both of these downstream businesses, aggregates are primarily supplied from our operations.
Seasonality and cyclical nature of our business
Almost all of our products are produced and consumed outdoors. Seasonal changes and other weather-related conditions can affect the production and sales volume of our products. Therefore, the financial results for any quarter do not necessarily indicate the results expected for the year. Normally, the highest sales and earnings are in the third quarter and the lowest are in the first quarter. Furthermore, our sales and earnings are sensitive to national, regional and local economic conditions, demographic and population fluctuations, and particularly to cyclical swings in construction spending, primarily in the private sector. ? 28
Financial highlights for Second Quarter 2022
Compared to second quarter of 2021: ?
?Total revenues increased $593.3 million, or 44%, to $1,954.3 million
?Gross profit increased $47.8 million, or 12%, to $446.2 million ?Aggregates segment sales increased $276.4 million, or 25%, to $1,401.8 million ?Aggregates segment freight-adjusted revenues increased $162.6 million, or 19%, to $1,036.6 million ?Shipments increased 9%, or 5.3 million tons, to 63.8 million tons ?Same-store shipments increased 2%, or 1.3 million tons, to 59.8 million tons ?Freight-adjusted sales price increased 8.8%, or $1.32 per ton to $16.25 ?Same-store freight-adjusted sales price increased 9.0%, or $1.35 per ton to $16.28 ?Aggregates segment gross profit increased $28.6 million, or 8%, to $402.4 million ?Unit profitability (as measured by gross profit per ton) decreased 1% to $6.31 per ton ?Asphalt, Concrete and Calcium segment gross profit increased $19.2 million, or 78%, to $43.8 million, collectively ?Selling, administrative and general (SAG) expenses increased $33.7 million but decreased 0.5 percentage points (50 basis points) as a percentage of total revenues ?Operating earnings increased $20.1 million, or 7%, to $307.6 million ?Earnings attributable to Vulcan from continuing operations were $1.50 per diluted share compared to $1.47 per diluted share ?Adjusted earnings attributable to Vulcan from continuing operations were $1.53 per diluted share, compared to $1.57 per diluted share ?Net earnings attributable to Vulcan were $187.3 million, a decrease of $8.0 million, or 4% ?Adjusted EBITDA was $450.2 million, an increase of $44.2 million, or 11% ?Includes an approximate $20 million negative impact related to our aggregates operations in Mexico that were unexpectedly and arbitrarily shut down in May ?Returned capital to shareholders via dividends ($53.2 million @ $0.40 per share versus $49.1 million @ $0.37 per share) Total revenues increased sharply from the prior year driven by double-digit growth in our legacy operations as well as the addition of U.S. Concrete operations. Our teams continued to execute well and delivered another quarter of solid earnings growth amidst a challenging backdrop. We are well on our way to delivering another year of double-digit earnings growth. During the trailing-twelve months, we increased our Aggregates segment gross profit by 11% despite ongoing inflation and other external headwinds. Robust growth in aggregates pricing and a relentless focus on operating disciplines will help us carry this momentum forward. Our asphalt pricing actions, which began late last year, are increasingly offsetting sharply higher liquid asphalt costs, and we remain focused on growing our gross profit in our Asphalt segment. In our Concrete segment, leading indicators for private nonresidential construction activity and a favorable pricing environment will support earnings growth in 2022. Capital expenditures in the second quarter were $117.4 million, including $56.3 million for growth projects (year-to-date $240.1 million and $90.7 million, respectively). For the full year, we expect to spend $600 million to $650 million on capital expenditures. Full-year capital expenditures include spending for U.S. Concrete operations (acquired in August 2021) as well as spending for projects put on hold in 2020 due to the pandemic. We will continue to review our plans and will adjust as needed, while being thoughtful about preserving liquidity. During the quarter, we completed acquisitions of Virginia ready-mixed concrete facilities (see Note 16 to the condensed consolidated financial statements). As of June 30, 2022, the ratio of total debt to trailing-twelve months Adjusted EBITDA was 2.6 times (2.5 times on a net debt basis). We remain committed to our stated long-term target leverage range of 2.0 to 2.5 times total debt to trailing-twelve months Adjusted EBITDA.
Interest expense, net of interest income, was $38.7 million in the second quarter compared with $41.7 million in the prior year.
On a trailing-twelve months basis, return on invested capital was 13.6%, 1.2 percentage points (120 basis points) lower than the comparable prior year period. We are focused on driving further improvement through solid operating earnings growth coupled with disciplined capital management. 29
We are revising our full-year Adjusted EBITDA guidance range to reflect the considerable pricing momentum in our aggregates business as well as higher than expected energy-related cost inflation that is currently impacting each of our segments. Additionally, our outlook now reflects the previously disclosed impact ($80 million to $100 million) of the closure of our Mexico operations for the balance of 2022. Updates to our expectations for 2022 include: ?
?Net earnings attributable to Vulcan of between $680 million to $760 million
?Adjusted EBITDA of between $1.60 billion to $1.70 billion ?Aggregates freight-adjusted price increase of 9% to 11% ($14.87 per ton in 2021) ?Mid-single digit growth in Aggregates segment cash gross profit per ton despite severe inflationary pressures from diesel fuel and other commodities and supply chain challenges ?Cash gross profit of $280 to $300 million in Asphalt, Concrete and Calcium segments, collectively, with the Concrete segment expected to account for approximately 80% of the total ?SAG expense of between $495 million to $505 million ?Interest expense of approximately $165 million ?Depreciation, depletion, accretion and amortization expense of approximately $565 million Our ability to grow our aggregates unit profitability consistently during the last two years of pandemic-related disruptions differentiates us from the rest of our industry. These results demonstrate the resiliency of our business and our ability to capitalize on changes in the macro environment. We are positioned in markets that will continue to outperform other parts of the country, from a demand perspective, both in the near-term and longer term, and we expect both the favorable pricing dynamics and our strong execution to lead to attractive growth in aggregates unit profitability in 2022 and beyond.
After the unexpected and arbitrary shut down of our Mexico operations on May 5, 2022, and upon suspension of its three-year customs permit (granted in March 2022) on May 13, 2022, we disclosed a potential EBITDA impact of $80 million to $100 million should we be unable to fully operate in Mexico for the balance of 2022. Operations remain shut down, and the aforementioned potential impact has now been incorporated into our full year 2022 outlook as noted above. On May 8, 2022, we filed an application in our NAFTA arbitration seeking permission to file an ancillary claim in connection with this latest shutdown of our remaining Mexico operations. On July 11, 2022, the NAFTA arbitration tribunal granted our application. The ancillary claim will be addressed as part of the pending arbitration, and it is expected that the NAFTA arbitration tribunal will issue a decision no earlier than 2023. 30
Total revenues are primarily derived from our product sales of aggregates, asphalt mix and ready-mixed concrete, and include freight & delivery costs that we pass along to our customers to deliver these products. We also generate service revenues from our asphalt construction paving business and services related to our aggregates business. We present separately our discontinued operations, which consist of our former Chemicals business.
The following table highlights significant components of our consolidated operating results including EBITDA and Adjusted EBITDA.
June 30 June 30 in millions, except unit and per unit data 2022 2021 2022 2021 Total revenues $ 1,954.3 $ 1,361.0 $ 3,495.0 $ 2,429.4 Cost of revenues 1,508.1 962.6 2,780.1 1,801.8 Gross profit $ 446.2 $ 398.4 $ 714.9 $ 627.6 Gross profit margin 22.8% 29.3% 20.5% 25.8% Selling, administrative and general (SAG) $ 134.4 $ 100.7 $ 253.4 $ 189.3 SAG as a percentage of total revenues 6.9% 7.4% 7.3% 7.8% Gain on sale of property, plant & equipment and businesses $ 2.0 $ 0.2 $ 4.6 $ 117.4 Operating earnings $ 307.6 $ 287.5 $ 454.5 $ 537.0 Interest expense, net $ 38.7 $ 41.7 $ 74.7 $ 74.8 Earnings from continuing operations before income taxes $ 264.2 $ 254.1 $ 376.8 $ 476.4 Income tax expense $ 63.7 $ 57.3 $ 82.4 $ 118.0 Effective tax rate from continuing operations 24.1% 22.5% 21.9% 24.8%
294.4 $ 358.4 Loss on discontinued operations, net of income taxes (13.1) (1.5) (14.9) (2.4) (Earnings) loss attributable to noncontrolling interest (0.1) 0.0 (0.4) 0.0
Net earnings attributable to Vulcan $ 187.3 $ 195.3 $
279.1 $ 356.0 Diluted earnings (loss) per share attributable to Vulcan Continuing operations $ 1.50 $ 1.47 $ 2.20 $ 2.69 Discontinued operations (0.10) (0.01) (0.11) (0.02) Diluted net earnings per share attributable to Vulcan $ 1.40 $ 1.46 $ 2.09 $ 2.67 EBITDA 1 $ 445.8 $ 398.9 $ 735.1 $ 754.7 Adjusted EBITDA 1 $ 450.2 $ 406.0 $ 744.1 $ 650.3 Average Sales Price and Unit Shipments Aggregates Tons (thousands) 63,809 58,528 116,830 104,965 Freight-adjusted sales price $ 16.25 $ 14.93 $ 15.91 $ 14.82 Asphalt Mix Tons (thousands) 3,422 3,134 5,743 5,351 Average sales price $ 69.42 $ 58.14 $ 67.25 $ 57.58 Ready-mixed concrete Cubic yards (thousands) 2,831 731 5,331 1,344 Average sales price $ 148.75 $ 130.61 $ 146.43 $ 131.03 Calcium Tons (thousands) 49 71 103 145 Average sales price $ 28.75 $ 27.64 $ 31.85 $ 27.64
1 Non-GAAP measures are defined and reconciled within this Item 2 under the
caption Reconciliation of Non-GAAP Financial Measures. 31
second quarter 2022 Compared to second Quarter 2021
Second quarter 2022 total revenues were $1,954.3 million, up 44% from the second quarter of 2021. Shipments increased in aggregates (+9%), asphalt mix (+9%) and ready-mixed concrete (+287%). Likewise, gross profit increased in the Aggregates (+$28.6 million or 8%), Concrete (+$19.7 million or +191%) and Asphalt (+$0.1 million or less than 1%) segments. A 102% increase in the unit cost of diesel fuel increased costs by $40.3 million from the prior year's second quarter with most ($32.2 million) of this cost increase reflected in the Aggregates segment. Net earnings attributable to Vulcan for the second quarter of 2022 were $187.3 million, or $1.40 per diluted share, compared to $195.3 million, or $1.46 per diluted share, in the second quarter of 2021. Each period's results were impacted by discrete items, as follows:
Net earnings attributable to Vulcan for the second quarter of 2022 include:
?pretax charges of $0.4 million associated with divested operations ?pretax charges of $3.1 million associated with non-routine business development ?pretax charges of $0.9 million for managerial restructuring (related to U.S. Concrete) ?pretax charges of $15.3 million for a litigation matter included in discontinued operations
Net earnings attributable to Vulcan for the second quarter of 2021 include:
?pretax charges of $0.4 million associated with divested operations ?pretax charges of $5.5 million associated with non-routine business development ?pretax charges of $1.3 million for COVID-19 pandemic direct incremental costs ?pretax interest charges of $9.4 million related to financing the acquisition of U.S. Concrete Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $1.53 per diluted share for the second quarter of 2022 compared to $1.57 per diluted share in the second quarter of 2021. Continuing Operations - Changes in earnings from continuing operations before income taxes for the second quarter of 2022 versus the second quarter of 2021 are summarized below:
earnings from continuing operations before income taxes
in millions Second quarter 2021 $ 254.1 Higher aggregates gross profit 28.6 Higher asphalt gross profit 0.1 Higher concrete gross profit 19.7 Lower calcium gross profit
Higher selling, administrative and general expenses
Higher gain on sale of property, plant & equipment and businesses 1.8 Lower interest expense, net 3.0 All other (8.8) Second quarter 2022 $ 264.2 Second quarter Aggregates segment sales increased 25%, while gross profit increased $28.6 million, or 8%, to $402.4 million ($6.31 per ton). Strong price growth and solid operational execution helped offset a $2.9 million unfavorable impact from selling acquired inventory after its markup to fair value, a $32.2 million unfavorable impact from significantly higher (102%) diesel fuel costs and inflationary pressures for many other parts and supplies. Cash gross profit per ton was $7.99 in the quarter compared to $7.83 in the prior year quarter. Excluding the impact of higher diesel fuel costs, cash gross profit per ton increased 9% to $8.50 per ton. Results in the second quarter were also negatively impacted by the unexpected and arbitrary shut down by the Mexican government of our Mexico operations in early May. Total aggregates shipments were 63.8 million tons versus 58.5 million in last year's second quarter, an increase of 9%. This increase reflects shipment contribution from acquisitions and construction activity consistent with our expectations. Same-store aggregates shipments increased 2%. Shipment activity was particularly good in many southeastern markets and Texas. Price growth in the second quarter was widespread across our markets. Freight-adjusted pricing was $16.25 per ton, an increase of 8.8% ($1.32 per ton) over the prior year. Same-store freight-adjusted average sales price increased 9.0%, or 32
-------------------------------------------------------------------------------- $1.35 per ton - excluding mix impact, aggregates price increased 9.6%. We expect this pricing momentum to continue throughout the remainder of the year as the second round of price increases gains traction across our markets. Freight-adjusted unit cash cost of sales increased 16%, or $1.16 per ton, as compared to the prior year's second quarter. Excluding the impact of higher diesel fuel costs and the impact of selling acquired inventory, cash cost of sales increased 8%, or $0.60 per ton.
Overall, non-aggregates segments gross profit of $43.8 million was $19.2 million higher than the prior year's second quarter.
Asphalt segment gross profit of $13.6 million was up $0.1 million from the prior year's second quarter. Asphalt pricing increased 19.4%, or $11.28 per ton, helping offset a 42% ($29.5 million) increase in the average price paid for liquid asphalt as well as a $3.8 million year-over-year increase in natural gas cost. Asphalt volumes increased 9% overall driven by growth in Arizona, California, and Texas, three of our largest asphalt markets. Strong price growth through the first half of the year (up 16.8%, or $9.67 per ton, year-over-year) helped preserve unit material margins (selling price per ton less cost of raw materials per ton) despite sharp increases in liquid asphalt as well as higher prices for aggregates supplied by our Aggregates segment. Concrete segment gross profit was $30.0 million for the second quarter compared to $10.3 million in the prior year. Concrete results benefited from the contribution of U.S. Concrete operations as well as strong price growth in our legacy operations. Material unit margins improved as higher selling prices helped offset higher raw materials costs, including aggregates supplied by our Aggregates segment. Segment results were negatively impacted by higher diesel prices and the availability of truck drivers and cement in certain markets.
Calcium segment gross profit of $0.2 million was $0.6 million lower than the prior year quarter.
SAG expenses were $134.4 million in the quarter, or 6.9% of total revenues, and included overhead expenses associated with U.S. Concrete that were not in the prior year's quarter. Additionally, increased routine business development activities and more normalized travel expenses, due in part to integration activities, contributed to the year-over-year increase. Trailing-twelve months SAG expenses were 7.3% of total revenues, down 0.3 percentage points (30 basis points) from the comparable prior year amount. Other operating expense, which has an approximate run-rate of $12.0 million a year (exclusive of discrete items), is composed primarily of idle facilities expense, environmental remediation costs, property abandonments and gain (loss) on settlement of AROs. Total other operating expense and significant items included in the total were:
?$6.2 million in second quarter 2022 - includes discrete items as follows: ?$0.4 million of charges associated with divested operations ?$0.2 million of non-routine business development charges (excludes items included in cost of goods sold) ?$0.9 million for managerial restructuring (related to U.S. Concrete)
?$10.4 million in second quarter 2021 - includes discrete items as follows: ?$0.4 million of charges associated with divested operations ?$5.5 million of non-routine business development charges ?$1.3 million for COVID-19 pandemic direct incremental costs
Other nonoperating income (expense) was a net expense of $4.7 million for the second quarter of 2022 and was unfavorable by $13.0 million from the second quarter of 2021. This unfavorable variance resulted primarily from unfavorable Rabbi Trust gains/losses and benefit plan costs of $6.3 million and $3.4 million, respectively. Net interest expense was $38.7 million in the second quarter of 2022 compared to $41.7 million in the second quarter of 2021. The prior year quarter included $9.4 million of interest expense related to financing the acquisition of U.S. Concrete (see Note 7 to the condensed consolidated financial statements). Income tax expense from continuing operations was $63.7 million in the second quarter of 2022 compared to $57.3 million in the second quarter of 2021. The increase in tax expense was primarily related to an increase in pretax earnings in 2022 and an increase in our reserve for uncertain tax positions.
Earnings attributable to Vulcan from continuing operations were $1.50 per diluted share in the second quarter of 2022 compared to $1.47 per diluted share in the second quarter of 2021.
33 -------------------------------------------------------------------------------- Discontinued Operations - Second quarter pretax loss from discontinued operations was $17.6 million in 2022 compared with a pretax loss of $1.9 million in 2021. Both periods include charges/credits related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business while the second quarter of 2022 includes an additional charge for a litigation matter. For additional details, see Note 1 to the condensed consolidated financial statements under the caption Discontinued Operations.
year-to-date june 30, 2022 Compared to year-to-date june 30, 2021
Total revenues for the first six months of 2022 were $3,495.0 million, up 44% from the first six months of 2021. Shipments increased in aggregates (+11%), asphalt mix (+7%) and ready-mixed concrete (+297%). Gross profit increased in the Aggregates (+$47.7 million or 8%), Asphalt (+$0.2 million or 1%) and Concrete (+$40.1 million or 222%) segments. An 83% increase in the unit cost of diesel fuel increased costs by $60.9 million from the first half of 2021 with most ($48.5 million) of this cost increase reflected in the Aggregates segment. Net earnings attributable to Vulcan for the first six months of 2022 were $279.1 million, or $2.09 per diluted share, compared to $356.0 million, or $2.67 per diluted share, in the first six months of 2021. Each period's results were impacted by discrete items, as follows:
Net earnings attributable to Vulcan for the first six months of 2022 include:
?pretax charges of $0.7 million associated with divested operations ?pretax charges of $5.6 million associated with non-routine business development
?pretax charges of $2.7 million for managerial restructuring (related to U.S. Concrete) ?pretax charges of $15.3 million for a litigation matter included in discontinued operations
Net earnings attributable to Vulcan for the first six months of 2021 include:
?$13.7 million of tax charges related to an increase in the Alabama NOL carryforward valuation allowance ?pretax net gain of $114.7 million related to the sale of a reclaimed quarry in Southern California ?pretax charges of $0.7 million associated with divested operations ?pretax charges of $5.9 million associated with non-routine business development ?pretax charges of $3.8 million for COVID-19 pandemic direct incremental costs ?pretax interest charges of $9.4 million related to financing the acquisition of U.S. Concrete
Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $2.25 per diluted share for the first half of 2022 compared to $2.26 per diluted share in the first half of 2021.
Continuing Operations - Changes in earnings from continuing operations before income taxes for year-to-date June 30, 2022 versus year-to-date June 30, 2021 are summarized below:
earnings from continuing operations before income taxes
in millions Year-to-date June 30, 2021 $ 476.4 Higher aggregates gross profit 47.7 Higher asphalt gross profit 0.2 Higher concrete gross profit 40.1 Lower calcium gross profit (0.7) Higher selling, administrative and general expenses (64.1) Lower gain on sale of property, plant & equipment and businesses (112.8) Lower interest expense, net 0.1 All other (10.1) Year-to-date June 30, 2022 $ 376.8 First half 2022 Aggregates segment sales of $2,523.0 million were up 25% while aggregates shipments increased 11%, or 11.9 million tons, compared to the prior year. Same-store aggregates shipments increased 4.5%, or 4.7 million tons. Freight-adjusted average sales price for aggregates increased 7.4%, or $1.09 per ton, versus the first half of 2021. Same-store freight-adjusted average sales price increased 7.8%, or $1.15 per ton - excluding mix impact, aggregates price increased 8.3%. 34
-------------------------------------------------------------------------------- Aggregates segment gross profit was $645.2 million ($5.52 per ton) versus $597.5 million ($5.69 per ton) in the first half of 2021. Cash gross profit per ton increased 1% from the prior year's first half to $7.33 per ton. First half 2022 freight-adjusted unit cost of sales increased 14%, or $1.26 per ton, versus the prior year. The average unit cost of diesel fuel increased 83% versus the first half of 2021, decreasing Aggregates segment gross profit by $48.5 million or $0.41 per ton. Additionally, first half results were negatively impacted by the aforementioned shut down by the Mexican government of our Mexico operations in early May.
On a trailing-twelve months basis, Aggregates segment gross profit margin as a percentage of segment sales excluding freight & delivery decreased 2.2 percentage points (220 basis points) to 36.1%.
Asphalt segment gross profit of $10.7 million was up $0.2 million from the first six months of 2021. Asphalt mix shipments increased 7% while average unit selling prices increased 16.8%, or $9.67 per ton. Compared to the prior year's first half, asphalt mix unit material margins only decreased 1% despite a 39% increase in the average unit cost for liquid asphalt.
Concrete segment gross profit was $58.2 million for the first six months of 2022, an increase of $40.1 million from the prior year period. Ready-mixed concrete shipments increased 297% (flat same-store) while the average sales price increased 11.8% and the unit material margins increased 18%.
Calcium segment's gross profit of $0.8 million was down $0.7 million compared to the first half of 2021.
SAG expenses were $253.4 million versus $189.3 million in the prior year's first half reflecting a 0.5 percentage point (50 basis point) decrease as a percentage of total revenues. The current year included overhead expenses associated with U.S. Concrete that were not in the prior year's first half. Gain on sale of property, plant & equipment and businesses was $4.6 million in the first half of 2022 versus $117.4 million in the first half of 2021. The 2021 amount includes the aforementioned net pretax gain of $114.7 million from the sale of a reclaimed quarry in Southern California. Other operating expense, which has an approximate run-rate of $12 million a year (exclusive of discrete items), is composed primarily of idle facilities expense, environmental remediation costs, property abandonments and gain (loss) on settlement of AROs. Total other operating expense and significant items included in the total were:
?$11.6 million in first half of 2022 - includes discrete items as follows: ?$0.7 million of charges associated with divested operations ?$0.2 million of non-routine business development charges (excludes items included in cost of goods sold) ?$2.7 million for managerial restructuring (related to U.S. Concrete)
?$18.7 million in first half of 2021 - includes discrete items as follows: ?$0.7 million of charges associated with divested operations ?$5.9 million of non-routine business development charges ?$3.8 million for COVID-19 pandemic direct incremental costs
Other nonoperating income (expense) was a net expense of $3.0 million for the first half of 2022, unfavorable by $17.2 million from the first half of 2021. This unfavorable variance resulted primarily from unfavorable Rabbi Trust gains/losses and benefit plan costs of $9.5 million and $7.3 million, respectively. Net interest expense was $74.7 million in the first half of 2022 compared to $74.8 million in the first half of 2021. The 2022 expense factored in a higher debt level resulting from financing the acquisition of U.S Concrete while 2021 included $9.4 million of interest expense related to financing the acquisition of U.S. Concrete (see Note 7 to the condensed consolidated financial statements). Income tax expense from continuing operations was $82.4 million in the first half of 2022 compared to $118.0 million in the first half of 2021. The decrease in tax expense was primarily related to a decrease in pretax earnings in 2022 and the 2021 increase in the valuation allowance against the Alabama net operating loss (NOL).
Earnings attributable to Vulcan from continuing operations were $2.20 per diluted share in the first half of 2022 compared to $2.69 per diluted share in the first half of 2021.
35 -------------------------------------------------------------------------------- Discontinued Operations - First half pretax loss from discontinued operations was $20.0 million in 2022 compared with a loss of $3.4 million in 2021. Both periods include charges/credits related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business while 2022 includes an additional charge for a litigation matter. For additional details, see Note 1 to the condensed consolidated financial statements under the caption Discontinued Operations.
Inflationary pressures and labor constraints are trends continuing to impact our operations in 2022. Although inflationary pressures can create short- to medium-term headwinds, the combination of inflation and improving visibility of demand has created and may continue to create a favorable environment for price increases. Additionally, labor constraints (especially truck drivers) have caused delays and inefficiencies in our operations as well as those of our customers. If labor constraints continue and demand remains strong, our operations may proceed at a slower pace, which may effectively extend the recovery while allowing us the opportunity to compound price, control costs and grow earnings. Further, recently, the Mexican government has taken actions adverse to our operations in that country. On May 5, 2022, Mexican government officials presented employees at our SAC TUN subsidiary in Quintana Roo, Mexico with arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations. On May 13, 2022, the Mexican government suspended the three-year customs permit granted in March 2022 to our SAC TUN subsidiary and began a proceeding that could result in the revocation of that permit. We strongly believe that the actions taken by Mexico are arbitrary and illegal. We have sought injunctive relief in Mexico that, if granted and complied with, would enable us to resume normal operations including the extraction, processing and export of materials. We intend to vigorously pursue all lawful avenues available to us in order to protect our rights, under both Mexican and international law, and resume normal operations as soon as permitted. Our second quarter results included an approximate $20 million impact from this shutdown while our full year 2022 Outlook includes a potential EBITDA impact of $80 million to $100 million should we be unable to fully operate in Mexico for the balance of 2022. 36
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
We have provided certain information on a same-store basis. When discussing our financial results in comparison to prior periods, we may exclude the operating results of recently acquired/divested businesses that do not have comparable results in the periods being discussed. These recently acquired/divested businesses are disclosed in Note 16 "Acquisitions and Divestitures." This approach allows us to evaluate the performance of our operations on a comparable basis. We believe that measuring performance on a same-store basis is useful to investors because it enables evaluation of how our operations are performing period over period without the effects of acquisition and divestiture activity. Our same-store information may not be comparable to similar measures used by other companies.
Aggregates segment freight-adjusted revenues is not a Generally Accepted Accounting Principle (GAAP) measure and should not be considered as an alternative to metrics defined by GAAP. We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. It also excludes other revenues related to services, such as landfill tipping fees, that are derived from our aggregates business. Additionally, we use this metric as the basis for calculating the average sales price of our aggregates products. Reconciliation of this metric to its nearest GAAP measure is presented below: Three Months Ended
June 30 June 30 in millions, except per ton data 2022 2021 2022 2021 Aggregates segment Segment sales $ 1,401.8 $ 1,125.4 $ 2,523.0 $ 2,020.3 Less Freight & delivery revenues 1 336.0 234.9 608.3 432.1 Other revenues 29.2 16.5 55.4 33.1 Freight-adjusted revenues $ 1,036.6 $ 874.0 $ 1,859.3 $ 1,555.1 Unit shipments - tons 63.8 58.5 116.8 105.0 Freight-adjusted sales price $ 16.25 $ 14.93 $ 15.91 $ 14.82 1 At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote distribution sites. 37
Aggregates segment incremental gross profit
Aggregates segment incremental gross profit flow-through rate is not a GAAP measure and represents the year-over-year change in gross profit divided by the year-over-year change in segment sales excluding freight & delivery (revenues and costs). This metric should not be considered as an alternative to metrics defined by GAAP. We evaluate this metric on a trailing-twelve months basis as quarterly gross profit flow-through rates can vary widely from quarter to quarter. We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. Reconciliation of this metric to its nearest GAAP measure is presented below:
margin in accordance with gaap
Three Months Ended Trailing-Twelve Months June 30 June 30 dollars in millions 2022 2021 2022 2021 Aggregates segment Gross profit $ 402.4 $ 373.8 $ 1,343.4 $ 1,211.4 Segment sales $ 1,401.8 $ 1,125.4 $ 4,847.7 $ 4,025.7 Gross profit margin 28.7% 33.2% 27.7% 30.1% Incremental gross profit margin 10.3% 16.1% FLOW-THROUGH RATE (non-gaap) Three Months Ended Trailing-Twelve Months June 30 June 30 dollars in millions 2022 2021 2022 2021 Aggregates segment Gross profit $ 402.4 $ 373.8 $ 1,343.4 $ 1,211.4 Segment sales $ 1,401.8 $ 1,125.4 $ 4,847.7 $ 4,025.7 Less: Freight & delivery revenues 1 336.0 234.9 1,128.2 862.4 Segment sales excluding freight & delivery $ 1,065.8 $ 890.5 $ 3,719.5 $ 3,163.3 Gross profit margin excluding freight & delivery 37.8% 42.0% 36.1% 38.3% Incremental gross profit flow-through rate 16.3% 23.7% 1 At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote distribution sites. 38
GAAP does not define "cash gross profit," and it should not be considered as an alternative to earnings measures defined by GAAP. We and the investment community use this metric to assess the operating performance of our business. Additionally, we present this metric as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. Cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization to gross profit. Aggregates segment cash gross profit per ton is computed by dividing Aggregates segment cash gross profit by tons shipped. Aggregates segment cash cost of sales per ton is computed by subtracting Aggregates segment cash gross profit per ton from Aggregates segment freight-adjusted sales price. Reconciliation of these metrics to their nearest GAAP measures are presented below: Three Months Ended
June 30 June 30 in millions, except per ton data 2022 2021 2022 2021 Aggregates segment Gross profit $ 402.4 $ 373.8 $ 645.2 $ 597.5 Depreciation, depletion, accretion and amortization 107.3 84.3 210.9 165.1
Aggregates segment cash gross profit $ 509.7 $ 458.1 $
856.1 $ 762.6 Unit shipments - tons 63.8 58.5 116.8 105.0 Aggregates segment gross profit per ton $ 6.31 $ 6.39 $ 5.52 $ 5.69 Aggregates segment cash gross profit per ton $ 7.99 $ 7.83 $ 7.33 $ 7.27 Aggregates segment freight-adjusted sales price $ 16.25 $ 14.93 $ 15.91 $ 14.82 Aggregates segment cash cost of sales per ton $ 8.26 $ 7.10 $ 8.58 $ 7.55 Asphalt segment Gross profit $ 13.6 $ 13.5 $ 10.7 $ 10.5 Depreciation, depletion, accretion and amortization 8.5 9.1 17.1 18.2
Asphalt segment cash gross profit $ 22.1 $ 22.6 $
27.8 $ 28.7 Concrete segment Gross profit $ 30.0 $ 10.3 $ 58.2 $ 18.1 Depreciation, depletion, accretion and amortization 20.7 4.0 41.8 8.0
Concrete segment cash gross profit $ 50.7 $ 14.3 $
100.0 $ 26.1 Calcium segment Gross profit $ 0.2 $ 0.8 $ 0.8 $ 1.5 Depreciation, depletion, accretion and amortization 0.1 0.0 0.1 0.1
Calcium segment cash gross profit $ 0.3 $ 0.8 $
GAAP does not define "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA), and it should not be considered as an alternative to earnings measures defined by GAAP. We use this metric to assess the operating performance of our business and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of earnings performance from period to period. Reconciliation of this metric to its nearest GAAP measure is presented below (numbers may not foot due to rounding): Three Months Ended Six Months Ended Trailing-Twelve Months June 30 June 30 June 30 in millions 2022 2021 2022 2021 2022 2021 Net earnings attributable to Vulcan $ 187.3 $ 195.3 $ 279.1 $ 356.0 $ 594.0 $ 670.3 Income tax expense 63.7 57.3 82.4 118.0 164.6 200.2 Interest expense, net of interest income 38.7 41.7 74.7 74.8 147.6 144.5 Loss on discontinued operations, net of tax 13.1 1.5 14.9 2.4 15.7 5.2 Depreciation, depletion, accretion and amortization 143.0 103.1 284.0 203.5 543.5 405.3 EBITDA $ 445.8 $ 398.9 $ 735.1 $ 754.7 $ 1,465.3 $ 1,425.5 Gain on sale of real estate and businesses, net $ 0.0 $ 0.0 $ 0.0 $ (114.7) $ 0.0 $ (114.7) Charges associated with divested operations 0.4 0.4 0.7 0.7 1.5 6.8 Business development 1 3.1 5.5 5.6 5.9 38.7 15.7 COVID-19 direct incremental costs 0.0 1.3 0.0 3.8 9.6 8.9 Pension settlement charge 0.0 0.0 0.0 0.0 12.1 22.7 Restructuring charges 0.9 0.0 2.7 0.0 17.7 0.0 Adjusted EBITDA $ 450.2 $ 406.0 $ 744.1 $ 650.3 $ 1,545.1 $ 1,365.0
1 Represents non-routine charges or gains associated with acquisitions and
dispositions. NET DEBT TO ADJUSTED EBITDA Net debt to Adjusted EBITDA is not a GAAP measure and should not be considered as an alternative to metrics defined by GAAP. We, the investment community and credit rating agencies use this metric to assess our leverage. Net debt subtracts cash and cash equivalents and restricted cash from total debt. Reconciliation of this metric to its nearest GAAP measure is presented below: June 30 in millions 2022 2021 Debt Current maturities of long-term debt $ 0.5 $ 15.4 Short-term debt 176.0 0.0 Long-term debt 3,873.7 2,769.9 Total debt $ 4,050.2 $ 2,785.3 Less: Cash and cash equivalents and restricted cash 123.7
Trailing-Twelve Months (TTM) Adjusted EBITDA $ 1,545.1 $
Total debt to TTM Adjusted EBITDA 2.6x
Net debt to TTM Adjusted EBITDA 2.5x 1.3x 40
Adjusted Diluted EPS attributable to vulcan from continuing Operations
Similar to our presentation of Adjusted EBITDA, we present Adjusted diluted earnings per share (EPS) attributable to Vulcan from continuing operations to provide a more consistent comparison of earnings performance from period to period. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below: Three Months Ended Six Months Ended June 30 June 30 2022 2021 2022 2021 Diluted Earnings Per Share Net earnings attributable to Vulcan $ 1.40 $ 1.46 $ 2.09 $ 2.67 Less: Discontinued operations (0.10) (0.01) (0.11) (0.02) Diluted EPS attributable to Vulcan from continuing operations $ 1.50 $ 1.47 $ 2.20 $ 2.69 Items included in Adjusted EBITDA above $ 0.03 $ 0.05 $ 0.05 $ (0.58) AL NOL carryforward valuation allowance 0.00 0.00 0.00 0.10 Acquisition financing interest costs 0.00 0.05 0.00 0.05 Adjusted diluted EPS attributable to Vulcan from continuing operations $ 1.53 $ 1.57 $ 2.25 $ 2.26 RETURN ON INVESTED CAPITAL We define "Return on Invested Capital" (ROIC) as Adjusted EBITDA for the trailing-twelve months divided by average invested capital (as illustrated below) during the trailing 5-quarters. Our calculation of ROIC is considered a non-GAAP financial measure because we calculate ROIC using the non-GAAP metric EBITDA. We believe that our ROIC metric is meaningful because it helps investors assess how effectively we are deploying our assets. Although ROIC is a standard financial metric, numerous methods exist for calculating a company's ROIC. As a result, the method we use to calculate our ROIC may differ from the methods used by other companies. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below (numbers may not foot due to rounding): Trailing-Twelve Months June 30 dollars in millions 2022 2021 Adjusted EBITDA $ 1,545.1 $ 1,365.0 Average invested capital Property, plant & equipment, net $ 5,385.6 $ 4,376.3 Goodwill 3,599.0 3,172.1 Other intangible assets 1,640.0 1,112.6 Fixed and intangible assets $ 10,624.6 $ 8,661.0 Current assets $ 1,835.5 $ 2,153.2 Less: Cash and cash equivalents 320.6 991.9 Less: Current tax 46.2 19.2 Adjusted current assets 1,468.7 1,142.2 Current liabilities 833.5 864.3 Less: Current maturities of long-term debt 7.5 311.2 Less: Short-term debt 55.2 0.0 Adjusted current liabilities 770.8 553.2 Adjusted net working capital $ 697.9 $ 589.0 Average invested capital $ 11,322.5 $ 9,250.0 Return on invested capital 13.6% 14.8% 41
The following reconciliation to the mid-point of the range of 2022 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount). Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below: 0 2022 Projected in millions Mid-point Net earnings attributable to Vulcan $ 720 Income tax expense 200 Interest expense, net of interest income 165 Depreciation, depletion, accretion and amortization 565 Projected EBITDA $ 1,650 Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures, other than the reconciliation of Projected EBITDA as noted above. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.
Our primary sources of liquidity are cash provided by our operating activities and a substantial, committed bank line of credit. Additional sources of capital include access to the capital markets, the sale of surplus real estate, and dispositions of nonstrategic operating assets. We believe these financial resources are sufficient to fund our business requirements for 2022, including: ?contractual obligations ?capital expenditures ?debt service obligations ?dividend payments ?potential acquisitions ?potential share repurchases
Our balanced approach to capital deployment remains unchanged. We intend to balance reinvestment in our business, growth through acquisitions and return of capital to shareholders, while sustaining financial strength and flexibility.
We actively manage our capital structure and resources in order to balance the cost of capital and the risk of financial stress. We seek to meet these objectives by adhering to the following principles:
?maintain substantial bank line of credit borrowing capacity ?proactively manage our debt maturity schedule such that repayment/refinancing risk in any single year is low ?maintain an appropriate balance of fixed-rate and floating-rate debt ?minimize financial and other covenants that limit our operating and financial flexibility 42
Included in our June 30, 2022 cash and cash equivalents and restricted cash balances of $123.7 million is $3.0 million of restricted cash as described in Note 1 under the caption Restricted Cash.
Six Months Ended June 30 in millions 2022 2021 Net earnings $ 279.5 $ 356.0
Depreciation, depletion, accretion and amortization (DDA&A)
Net gain on sale of property, plant & equipment and businesses
Other operating cash flows, net 1 (267.4)
Net cash provided by operating activities $ 325.5 $
1 Primarily reflects changes to working capital balances.
Net cash provided by operating activities was $325.5 million during the six months ended June 30, 2022, a $72.4 million decrease compared to the same period of 2021.
Days sales outstanding, a measurement of the time it takes to collect receivables, were 46.5 days at June 30, 2022 compared to 41.7 days at June 30, 2021. Additionally, our over 90 day balance of $39.1 million at June 30, 2022 was up from the $10.0 million at June 30, 2021. All customer accounts are actively managed and no losses in excess of amounts reserved are currently expected.
Net cash used for investing activities was $468.7 million during the first six months of 2022, a $467.2 million increase in cash used compared to cash used of $1.5 million in the same period of 2021. During the first six months of 2022, we invested $290.6 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $192.2 million in the prior year period. Of this $290.6 million, $90.7 million was invested in internal growth projects to enhance our distribution capabilities, develop new production sites and enhance existing production facilities and other growth opportunities. In the first six months of 2022, proceeds from the sale of property, plant & equipment were down $180.5 million from the first six months of 2021. In 2021, we sold reclaimed real estate in Southern California for net cash proceeds of $182.3 million. Additionally, during the first half of 2022 we acquired businesses for $188.1 million of cash consideration as compared to no business acquisitions in the same period of 2021 (see Note 16 to the condensed consolidated financial statements).
Net cash provided by financing activities in the first six months of 2022 was $25.4 million, compared to cash used of $626.0 million in the same period of 2021. The current year includes a $176.0 million net draw on our line of credit (see Note 7 to the condensed consolidated financial statements). The prior year period includes cash paid to retire the $500.0 million floating rate notes due March 2021 and $13.3 million of financing costs for a bridge facility commitment and delayed draw term loan.
Additionally, capital returned to our shareholders increased by $8.1 million as a result of higher dividends ($0.80 per share compared to $0.74 per share).
Certain debt measures are presented below:
June 30 December 31 June 30 dollars in millions 2022 2021 2021 Debt Current maturities of long-term debt $ 0.5 $ 5.2 $ 15.4 Short-term debt 176.0 0.0 0.0 Long-term debt 3,873.7 3,874.8 2,769.9 Total debt $ 4,050.2 $ 3,880.0 $ 2,785.3 Capital Total debt $ 4,050.2 $ 3,880.0 $ 2,785.3 Total equity 6,744.2 6,567.7 6,293.1 Total capital $ 10,794.4 $ 10,447.7 $ 9,078.4 Total Debt as a Percentage of Total Capital 37.5% 37.1% 30.7% Weighted-average Effective Interest Rates Line of credit 1 1.125% 1.125% 1.125% Term debt 4.05% 3.68% 4.63% Fixed versus Floating Interest Rate Debt Fixed-rate debt 69.0% 72.1% 100.0% Floating-rate debt 31.0% 27.9% 0.0%
1 Reflects the margin above SOFR for SOFR-based borrowings; we also paid
upfront fees that are amortized to interest expense and pay fees for unused
borrowing capacity and standby letters of credit.
At June 30, 2022, total debt to trailing-twelve months Adjusted EBITDA was 2.6 times (2.5 times on a net debt basis reflecting $123.7 million of cash on hand). Our weighted-average debt maturity was 11.4 years.
bridge facility, delayed draw term loan and line of credit
In June 2021, concurrent with the announcement of the pending acquisition of U.S. Concrete (see Note 16 for additional information), we obtained a $2,200.0 million bridge facility commitment from Truist Bank. Later, in June 2021, we entered into a $1,600.0 million unsecured delayed draw term loan with a subset of the banks that provide our line of credit and terminated the bridge facility commitment. The delayed draw term loan was drawn in August 2021 for $1,600.0 million upon the acquisition of U.S. Concrete and was paid down to $1,100.0 million in September 2021 (amounts repaid are no longer available for borrowing). In March 2022, the delayed draw term loan was amended to extend the maturity date from August 2024 to August 2026. The delayed draw term loan contains covenants customary for an unsecured investment-grade facility and mirror those in our line of credit. As of June 30, 2022, we were in compliance with the delayed draw term loan covenants. Borrowings, cost ranges and other details are described in Note 7 to the condensed consolidated financial statements. Financing costs for the bridge facility commitment and the delayed draw term loan facility totaled $13.3 million, $9.4 million of which was recognized as interest expense in the second quarter of 2021. Our unsecured $1,000.0 million line of credit was amended in March 2022 to extend the maturity date from September 2025 to September 2026. Our line of credit contains covenants customary for an unsecured investment-grade facility. Covenants, borrowings, cost ranges and other details are described in Note 7 to the condensed consolidated financial statements. As of June 30, 2022, we were in compliance with the line of credit covenants, the margin for the Secured Overnight Financing Rate (SOFR) borrowings was 1.125%, the margin for base rate borrowings was 0.125%, and the commitment fee for the unused amount was 0.100%.
As of June 30, 2022, our available borrowing capacity under the line of credit was $745.9 million. Utilization of the borrowing capacity was as follows:
?$176.0 million was borrowed ?$78.1 million was used to support standby letters of credit 44
Essentially all of our $3,941.9 million (face value) of term debt (which includes the $1,100.0 million delayed draw term loan) is unsecured. $2,840.2 million of such debt is governed by two essentially identical indentures that contain customary investment-grade type covenants. As of June 30, 2022, we were in compliance with all term debt covenants. In August 2021, we assumed $434.5 million (fair value) of senior notes due 2029 in connection with the acquisition of U.S. Concrete and retired these notes in September 2021.
CURRENT MATURITIES of long-term debt
The $0.5 million of current maturities of long-term debt as of June 30, 2022 is due as follows:
Current in millions Maturities Third quarter 2022 $0.0 Fourth quarter 2022 0.0 First quarter 2023 0.5 Second quarter 2023 0.0 debt ratings
Our debt ratings and outlooks as of June 30, 2022 are as follows:
Rating/Outlook Date Description Senior Unsecured Term Debt Fitch BBB/stable 2/22/2021 rating revised Moody> Baa2/stable 11/9/2020 rating revised Standard & Poor> BBB+/stable 2/28/2020 rating revised 45
The number of our common stock issuances and purchases for the year-to-date periods ended are as follows:
June 30 December 31 June 30 in millions 2022 2021 2021 Common stock shares at January 1, issued and outstanding 132.7 132.5 132.5 Common Stock Issuances Share-based compensation plans 0.2 0.2 0.2 Common Stock Purchases Purchased and retired 0.0 0.0 0.0 Common stock shares at end of period, issued and outstanding 132.9 132.7 132.7 As of June 30, 2022, there were 8,064,851 shares remaining under the February 2017 Board of Directors' share purchase authorization. Depending upon market, business, legal and other conditions, we may purchase shares from time to time through the open market (including plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934) and/or privately negotiated transactions. The authorization has no time limit, does not obligate us to purchase any specific number of shares, and may be suspended or discontinued at any time.
The detail of our common stock purchases (all of which were open market purchases) for the year-to-date periods ended are as follows:
June 30 December 31 June 30 in millions, except average cost 2022 2021 2021 Shares Purchased and Retired Number 0.0 0.0 0.0 Total purchase price $ 0.0 $ 0.0 $ 0.0 Average cost per share $ 0.00 $ 0.00 $ 0.00
There were no shares held in treasury as of June 30, 2022, December 31, 2021 and June 30, 2021.
We have no off-balance sheet arrangements, such as financing or unconsolidated variable interest entities.
For a discussion of our standby letters of credit, see Note 7 to the condensed consolidated financial statements.
We follow certain significant accounting policies when preparing our consolidated financial statements. A summary of these policies is included in our Annual Report on Form 10-K for the year ended December 31, 2021 (Form 10-K).
We prepare these financial statements to conform with accounting principles generally accepted in the United States of America. These principles require us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and contingent liabilities at the date of the financial statements. We base our estimates on historical experience, current conditions and various other assumptions we believe reasonable under existing circumstances and evaluate these estimates and judgments on an ongoing basis. The results of these estimates form the basis for our judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates. We believe that the accounting policies described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Form 10-K require the most significant judgments and estimates used in the preparation of our consolidated financial statements, so we consider these to be our critical accounting policies. There have been no changes to our critical accounting policies during the six months ended June 30, 2022.
For a discussion of the accounting standards recently adopted or pending adoption and the effect such accounting changes will have on our results of operations, financial position or liquidity, see Note 17 to the condensed consolidated financial statements.
Certain matters discussed in this report, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to:
?general economic and business conditions ?a pandemic, epidemic or other public health emergency, such as the COVID-19 outbreak ?our dependence on the construction industry, which is subject to economic cycles ?the timing and amount of federal, state and local funding for infrastructure ?changes in the level of spending for private residential and private nonresidential construction ?changes in our effective tax rate ?the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks ?the impact of the state of the global economy on our businesses and financial condition and access to capital markets ?international business operations and relationships, including recent actions taken by the Mexican government with respect to our property and operations in that country ?the highly competitive nature of the construction industry ?the impact of future regulatory or legislative actions, including those relating to climate change, wetlands, greenhouse gas emissions, the definition of minerals, tax policy or international trade ?the outcome of pending legal proceedings ?pricing of our products ?weather and other natural phenomena, including the impact of climate change and availability of water ?availability and cost of trucks, railcars, barges and ships, as well as their licensed operators, for transport of our materials ?energy costs ?costs of hydrocarbon-based raw materials ?healthcare costs ?labor shortages and constraints ?the amount of long-term debt and interest expense we incur ?changes in interest rates ?volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans ?the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses ?our ability to secure and permit aggregates reserves in strategically located areas ?our ability to manage and successfully integrate acquisitions ?the effect of changes in tax laws, guidance and interpretations ?significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets ?changes in technologies, which could disrupt the way we do business and how our products are distributed ?other assumptions, risks and uncertainties detailed from time to time in our periodic reports filed with the SEC All forward-looking statements are made as of the date of filing or publication. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. Investors are cautioned not to rely unduly on such forward-looking statements when evaluating the information presented in our filings, and are advised to consult any of our future disclosures in filings made with the Securities and Exchange Commission (SEC) and our press releases with regard to our business and consolidated financial position, results of operations and cash flows. 48
We make available on our website, www.vulcanmaterials.com, free of charge, copies of our:
?Annual Report on Form 10-K ?Quarterly Reports on Form 10-Q ?Current Reports on Form 8-K Our website also includes amendments to those reports filed with or furnished to the Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as well as all Forms 3, 4 and 5 filed with the SEC by our executive officers and directors, as soon as the filings are made publicly available by the SEC on its EDGAR database (www.sec.gov). In addition to accessing copies of our reports online, you may request a copy of our Annual Report on Form 10-K, including financial statements, by writing to Denson N. Franklin III, Senior Vice President, General Counsel and Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.
?Business Conduct Policy applicable to all employees and directors ?Code of Ethics for the CEO and Senior Financial Officers
Copies of the Business Conduct Policy and the Code of Ethics are available on our website under the heading "Corporate Governance." If we make any amendment to, or waiver of, any provision of the Code of Ethics, we will disclose such information on our website as well as through filings with the SEC.
Our Board of Directors has also adopted:
?Corporate Governance Guidelines ?Charters for its Audit, Compensation, Executive, Finance, Governance and Safety, Health & Environmental Affairs Committees
These documents meet all applicable SEC and New York Stock Exchange regulatory requirements.
The Charters of the Audit, Compensation and Governance Committees are available on our website under the heading "Corporate Governance" under the "Investor Relations" tab or you may request a copy of any of these documents by writing to Denson N. Franklin III, Senior Vice President, General Counsel and Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.
Information included on our website is not incorporated into, or otherwise made a part of, this report.
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