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Vulcan Materials Down On Stock Offering, Dividend

The Associated Press

NEW YORK (AP) — Vulcan Materials Co. fell Thursday, a day after the cement, asphalt and gravel supplier cut its dividend in half, announced plans to increase by about 10 percent its shares outstanding and forecast a weaker-than-expected profit.

Birmingham, Ala.-based Vulcan, which has about 110.6 million shares outstanding, said Tuesday it is publicly offering 11.5 million common shares for expected proceeds of about $500 million. Much of that will be used, along with other funds, to lower its $3.5 billion debt by about $700 million.

The company also said it expects full-year profit to range between 70 cents and $1 per share, well below the $1.13-per-share average estimate of analysts polled by Thomson Reuters.

Vulcan cited weak construction activity and wet weather for the modest forecast.

Standard & Poor's Ratings Services responded to the moves by maintaining its "BBB"/Stable" investment-grade rating on Vulcan's debt.

Sterne, Agee & Leech analyst Chase Jacobson said the dividend cut and equity offering plus reduced debt should enable Vulcan to break even this year, on a cash-flow basis.

But low volumes concern the analyst.

"With stimulus projects not commencing as quickly as originally expected, we continue to believe risk to this year's volume guidance would be to the downside, and believe projects would need to accelerate rapidly in the July and August time frame to see a significant amount of incremental demand in 2009," Jacobson wrote Wednesday in a client note.

He cut his 2009 earnings estimate to 67 cents per share from $1.10 per share and reiterated his "Sell" rating.

In late morning trading, shares fell $2.44, or 5.6 percent, to $41.53.