Vulcan Materials Co. (VMC) slashed its dividend almost in half
and set plans for a $500 million stock offering as it works to
boost financial flexibility as the downturn in construction
continues.
The nation's largest producer of construction aggregates also
said it expects second-quarter earnings from continuing operations
of 15 to 30 cents a share. Analysts estimated earnings, excluding
items, of 44 cents a share, according to a poll by Thomson
Reuters.
Shares fell 6.2% to $41.26 in after-hours trading.
Vulcan also predicted 2009 earnings from continuing operations
of 70 cents to $1 a share, compared with the an analyst estimate of
$1.13 excluding items.
The company will pay a third-quarter dividend of 25 cents, down
from 49 cents a share in previous quarters. The cut is expected to
increase the cash available to the company by about $100 million
annually.
"Today's actions will position Vulcan to participate more
effectively in the nation's economic recovery, while addressing the
effects of the current prolonged recession," said Chief Executive
Don James.
He said Vulcan has sufficient liquidity, but the dividend
reduction and 11.5-million-share stock sale will realign the
company's capital structure for the long term and give it the
flexibility to make acquisitions.
The stock offering will dilute current shares by about 10%.
James also said federal stimulus spending, renewal of the
federal highway bill and some recovery in the housing market by
2011 should boost its shipments through 2013.
As part of the stock offering, Vulcan plans to grant the
underwriters an option to purchase up to 15% more shares.
The company will use the capital raised in the offering for debt
reduction and other corporate purposes. Goldman Sachs & Co.,
Merrill Lynch & Co., J.P. Morgan and Wachovia Securities will
act as the joint book-running managers.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com
