渥肯建材 (VMC) 2003 Q2 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Vulcan Materials company second quarter report conference call. At this time, all participants are in a listen-only mode, with a question-and-answer session to follow. My name is Kelera, and I will be your conference coordinator today. If you wish to queue up for questions, press star one on your telephone key pad. If your question has been answered or you wish to withdraw your question, press star 2. If at any time during the call you require assistance, please press star followed by zero and a conference coordinator will be happy to assist you. As a reminder, this conference is being recorded today, Tuesday, July 29th, 2003. I would now like to turn the program over to your host for today's conference, Mr. Don James, chairman and Chief Executive Officer of Vulcan company. Please proceed, sir

Good Morning and Thank you for joining us for our conference call to discuss our second quarter results as well as our outlook the remainder of 2003. I'm Don James, chairman and Chief Executive Officer of Vulcan. With me today are Mark Tomkins our senior vice president and chief financial officer, Mac Badget senior vice president of construction materials east and Brad Rosenwald president of our Colactoate business unit. Before I begin, let me remind you that certain matters discussed in this conference call will contain forward-looking statements which are subject to risks, uncertainties, and assumption that could cause actual results to differ materially from those projected. Description of these are detailed in the company's SEC reports, including the report on Form 10-K for the year.

After I make a few brief comments, we would like to spend most of our time responding to questions from those of you who dialed into this call. We hope the dialogue will be helpful to you and others who choose to listen to this call through our web broadcast. A replay will be available approximately two hours after this call at Vulcan's web site. Let's begin by discussing the results for the second quarter. Net sales in the second quarter were 695 million, up 50 million from last year's second quarter. Earnings from continuing operations were 65 cents per diluted share.

On a comparable basis, last year's second quarter earnings from continuing operations was 66 cents per share. Including discontinued operations, net earnings were 55 cents in the quarter as compared 64 cents last year. Over the past several months we have completed our exit strategy for the performance chemicals businesses. Accordingly, financial results referable to these businesses are reported in discontinued operations. This divestment is consistent with the long-term strategic focus of our company. I will review the transactions in more detail when I talk about the chemicals segment in a minute. As a company, we continue to focus on cash generation, operating cash flow minus capital spending was approximately 61 million year to date, a $24 million improvement from the first six months of 2002. Moving now to construction materials, for the quarter, that segment earned 119 million on net sales of 557 million. In the second quarter of last year, the comparable figures were 130 million and 546 million respectively. Aggregates and asphalt sales approximated last year. The increase in net sales was mainly due to stronger volumes in ready mix concrete in Arizona and California.

Overall, aggregate sales volumes were up 1.5% from prior year. Several markets shows particular strength, including the Gulf Coast, Texas, and Alabama, while many other southeastern markets were weaker due to extremely wet weather in May. State highway spending continued to have a mixed impact across our markets. Pricing for aggregates was relatively flat with the prior year due, in part, to product and market mix, compared to last yearthe mix of aggregate sold in the quarter was weighted more toward lower price products and geographic markets with lower prices. Turning to the cost side of the operations, our unit production costs were higher in the quarter due, mainly, to hire unit costs for diesel, liquid asphalt, increased medical and pension costs and the impact of lower budgeted production volumes. Diesel costs was up over 30% compared with the prior year second quarter, and liquid asphalt was up over 18%. The total cost impact for these two energy related materials was approximately $6 million for the quarter.

Medical and pension costs impacted segment earnings of approximate by 5 million in the quarter. Turning now to chemicals, the segment lost 11.6 million, which was a $10 million improvement from the prior year. Net sales increased 39 million from the prior year to 138 million. The sales increase was due to hire chlorine and caustic soda prices and sales from our new 5 CP plant. Pricing for both caustic soda and chlorine were up substantially over the prior year second quarter. Plant operating performance improved from the prior year. Plant utilization improved 10%. Natural gas prices increased over 30% from the prior year. Two key raw materials, methenol and ethelien have increased over 75% and 15% respectively versus the second quarter of last year. As mentioned in our press release, we have completed the exit strategy from performance chemicals. In the first quarter, the company realized a pretax gain of 1.9 million from the sale of the municipal waste water treatment business. During the second quarter the company recorded, a loss of 7 cents per diluted share on the sale of its dalton and Smyrna plants. Finally the sale of the industrial water treatment and Vulcan papers businesses was completed on July 3. We estimate the gain from asset dispositions in the third quarter will be approximately 6 cents per share, which will be, of course, recorded in the third quarter.

For the year, discontinued operations are expected to reflect a loss of approximately 10 cents per diluted share. Moving now to our outlook for the third quarter, we expect construction materials earnings to be up over last year. Chemicals third quarter results should be significantly favorable to the third quarter of last year. As a result, we expect to earn between 75 and 85 cents per diluted share in the quarter. This guidance excludes the results of continued operations as well as the first quarter adoption of FAS 143. Moving now to our outlook for the full year of 2003, based on our current economic outlook for the year, we expect do earn between $1.85 did $2.05 per diluted share from continuing operations and before accounting changes. Furthermore, cash flow generation should remain strong as we continue our focus on cost control and discipline capital spending. Operating cash flow, minus capital expenditure, is expected to exceed $200 million for the third year in a row. Increases in pension and medical costs of approximately 20 million versus last year should continue to partially offset cost savings achieved in each of our segments. For the year, we expect construction materials to earn in the range of 350 to 370 million. Our earnings guidance is predicated on some key assumptions. We now expect aggregate demand to increase modestly for the full year and pricing to be relatively flat. We expect residential construction will remain at current, strong levels. Nonresidential construction will remain at current low levels for the rest of the year.

Highway construction, we expect, to remain to flat or slightly down, compared to last year, and costs for diesel fuel and liquid asphalt are expected to be higher than last year. With respect to chemicals, we believe the timing of economic recovery in the industrial sector is still in question. However, when it occurs, improved product demand and higher pricing for caustic soda and chlorine should result. We are encouraged by the improved operating performance of our plants and will continue our improvement efforts. Furthermore, our chemicals outlook assumes higher energy and raw material costs for the full year. As a result of these assumptions for chemicals, we are narrowing the range of the segment loss to 20 to 30 million for the year. This guidance excludes the discontinued operations discussed earlier. As we have indicated previously, we will continue to give quarterly and annual earnings guidance. We will issue press releases to revise earnings guidance if new information indicates earnings per share on eitherly quarterly basis or annual basis are to be outside your last published guidance. We believe this will be a more efficient process than commenting on analyst consensus estimates. Now we would be happy to respond to your questions.

Your first question comes from Jack Kelly of Goldman Sachs. Please go ahead

Good morning, Don.

Good morning, Jack. How are you?

Good. A couple questions. On the diesel question. You mentioned, you know, that and asphalt hit the quarter by 6 million. Then in your forecast it said it will continue. Could you give us -- let's maybe just focus on diesel costs per gallon, and then maybe on a per ton basis. Can you relate it where we were year-over-year on a per gallon basis rather than the aggregate number? And then when does that start to anniversary assuming, you know, assuming prices say about where they are? The second question, you mentioned highway construction kind of mixed across the various states. Could you give us a little more color on that. It seems the federal money should be fine, meaning flat to maybe up, but what states are getting hit by these budget crisis and do you see that persisting for the next couple quarters?

Jack, on diesel fuel prices in the second quarter this year, our price was about 94 cents a gallon, compared to about 72 cents a gallon last year. As we look for the remainder of the year, we see that gap closing. We expect pricing to go down in the third and fourth quarters, probably in 87, 88-cent a gallon range, compared to a range last year of, probably, 78 cents to about 84 cents. So the impact of higher diesel will still be there, but it will not be as great, in our view, as it was in the second quarter. Now, with respect to highway construction being mixed, I have to give you relatively anecdotal information for the second quarter because we do not have final figures from the government on construction put in place by state for the second quarter. It is not available at this point.

As we look at our markets, you know, Texas remains very good. Alabama was good. Some of the states that have been weak, North Carolina has been relatively weak, Virginia has been relatively weak. It is hard to separate the impact of the very wet weather we had in the second quarter in many southeastern states where the impact of highway spending. I will note that with the confirmation of the federal '03 spending levels, which occurred earlier this year in March, I believe, our expectation is that the states will be more aggressive in highway contracts second half than they were before that number was confirmed by the Congress. There is some anecdotal evidence of that, I guess, in the most recent highway awards in June, but it's too early to say that. With respect to California, we are watching very closely what's going on with the state government there. Obviously, we find it impossible to predict how the budget situation in California is going to work out. I will note that our business in California remains very, very good. Part of it, I think, is because we are relatively less dependent on DOT spending in California than we are in the rest of our markets, and that's simply because California has been relatively weak in DOT spending, compared to the rest of the country, for some time. Residential construction remains really strong in California. So our -- while our product mix is not dramatically different in California, highways is a lower portion of our business there and residential is a bigger portion of our business.

Just a final question. In terms of chlorine cost. Can you give us the year-over-year increase in realized prices for chlorine and caustic?

Yeah. In caustic, quarter-over-quarter is about $80 or $85 a ton, improvement in pricing. In chlorine, year-over-year is about $130 a ton. Of course, the caustic has the much bigger impact on us than the chlorine. We had good price increases in the second quarter in both chlorine and caustic

Thank you.

Thanks, Jack.

Your next question comes from David Weaver of Legg Mason. Please go ahead

Good morning, Don.

Good morning, David.

Could you give us an idea -- did you have a chemicals plant outage during the quarter that you planned?

Yes. We had a large outage at our largest plant in Geismer, Louisiana. It was a scheduled annual outage. Certainly, the results of the quarter reflect that both in terms of higher maintenance spending for the quarter as well as lower operating rates and, therefore, lower volume and production volume and the absorption that goes along with that. But that's behind us. We expect to run very well in that plant for the rest of the year. We will have an outage at our Wichita plant in the third quarter, but it won't be nearly as large as the Geismer outage in terms of performance.

Any price increases announced for either product coming up?

We don't have anything for the -- that will impact the third quarter on either caustic or chlorine that we expect to see in that quarter

Okay. On the construction materials, is there any land sales from Cal Matt that came in the quarter?

In the quarter, year-to-date, we've sold about 2.7 million, which had a gain of 2.1. In the quarter -- that's all in the second quarter. David, by way of summary, in total we've sold about $181 million of real estate in Cal Matt, and we've got about, in our estimation, about another 113 million to sell. There's a possibility we will have further sales this year, but that's, you know, land sales occur when they occur. So we try not to include much of that, if anything, in our projections.

Okay. You've got a piece of debt coming due in the spring. Is that correct?

We have about 5 million coming due in September. We have about 35 million coming due in December, and 243 million coming due in April. We expect to be able to retire all of that out of our existing cash resources

Okay. Thank you very much. That's it.

Your next question comes from Trip Rogers of UBS. Please go ahead

Thank you. Good morning, Don

How are you?

Good. Could you talk about -- I guess this isn't a question but a first remark, where you stand as far as hedging for the second half.

We are about 50% hedged for the second half at about 470m, Trip.

Okay. About 40?

Yes. About 40% hedged at 460m.

Okay. Does your chemical outlook assume prices stay, I guess, at the current level. It seems like in the late quarter you saw erosion in caustic pricing, the prices you had earlier. Can you tell us what you are assuming as far as chemical pricing?

I think for the third quarter we're expecting prices to approximate current levels, and we expect some increase, modest increase above that level in the fourth quarter.

Okay. Switching gears to construction materials, this may be a question I've asked in prior conference calls. Does it seem you are gaining a market share? It seems with flat volumes this year you got pricing really flat. You may be outperforming your peers and that may be making up potentially lost volumes you had a year ago when volumes were down about 8%?

Yes. What's your question?

I guess my question is, Do you feel like because you may not be pushing pricing as hard this year, your price increases aren't as large this year, that you're getting made back some lost market share you might have had before?

Trip, I don't believe that's a good read. I think we are not focused on trying to gain market share. We are focused on trying to serve our customers and run our plants as efficiently as we can. So, you know, over as many markets as we're in, you know, volume can evenflow a little bit and price can evenflow with geographic mix and product mix. So there's no real -- we felt like we were not losing market share last year, and we don't feel we're gaining it this year

Fair enough. I guess one final question. If you look at your customers' backlog, they got impacted by weather in the second quarter, do you see prelogs, backlogs still as your customers that because some of that weather worksmen defer because of the weather ?

Yes. I think our highway construction customers have, generally, very large backlogs. I have been in touch with some of them recently and, certainly, most of them had very good Junes, and I think they're all out working hard in July. May was a washout in much of the southeast, and, certainly, the better part of the first half for highway contractors was very bad in terms of getting work out. That accounts for a significant portion of their large backlogs. But, you know, June was a very good month for us. After a very poor May and, you know, we only do well when our customers do well. I believe our highway contractor customers are out working and going strong at this point

Great. Thanks a lot.

Your next question comes from Jeff Peck of Janney Montgomery

Good morning.

How are you, Jeff?

Very good. Three questions. The guidance on the construction materials, the $350 to 370m. Could you elaborate on what kind of volume type of assumptions you have going forward in that estimate, and, also, I guess this relates to the last question on the construction materials side. Is the pricing being flat -- it seems to me like it's just a kind of mix issue, and it's nothing to do with any type of competitive pressure. Am I reading that right? Those are the two questions. I may have a chemical question when you're done. Thanks.

I think for the full year we're expecting aggregate volumes to be up 1 to 2%, hopefully closer to 2%. Pricing to be relatively flat, maybe up 1%. You are absolutely correct. Mix is a significant issue in many markets based on sales for substantially less than asphalt, stone, and ready mix stone. There is a difference in the cost of production, but it shows up in our average selling price. If there's a product mix, perhaps as significantly or maybe more significantly, we have some markets where the average price may be a dollar or $2 a ton lower than other markets and as volumes evenflow between markets, we can see average price changes that do not reflect the actual price of a particular product in a particular market. We believe we're still getting price increases on a product by product market by market basis, but when you add in the sort of geographic and product mix we had in the second quarter, you see some impact on average sale price. We don't -- you know, there is -- when there is a slowdown in commercial construction, as there has been, you know, that does have some impact on our ability to raise the price. The inability of our highway contractors to run at full rates in the second quarter, probably, also had an impact on the average sales price because, generally, asphalt stone is a higher-priced product than some of the other products because it costs more to make.

Okay. That's great. And then in the chemical segment, there's been some problems in getting -- the chlorine prices have been going up for the past 12 months, but some of the derivative, or a lot of the chlorine derivatives you produce have not been seeing any price increases. Can you give us an update there? Are you starting to see price improvement in the chlorine derivatives you produce, or is that a still a tough issue?

We're still getting price increases in the clorinated organic product lines. The big issue there is the very high cost of Methanol, which is a component of many of those products. We've been able to get some price increases there. Obviously, the big demand driver for those products is the industrial economy in the U.S., and that's what we need is to see some pickup in industrial activity to help us get improved volumes and pricing for those clorinated derivatives.

You're getting some prices through, but the Methanol costs are hurting the margins there.

Correct. But Methanol, we believe, peaked in the second quarter. As wesaid we believe it was 75% quarter over quarter from second quarter last year to second quarter this year. We believe it will come down some as the year moves on, which will help our margin

Thanks a lot, Don.

Your next question comes from Stephen Kim of Smith Barny. Please go ahead.

Thanks. Don, I was wondering if you could comment on the discontinued operations run rate. I know in your press release you indicated that those discontinued operations for the year have a loss of 10 cents per share. We weren't certain whether that included the one-time impact of the gain or loss, or whether that was sort of a good going forward run rate for those operations.

Stephen, that's the total impact of both the gain and loss on the sale as well as the operating results for the full year. Now, under the accounting rules, some of the things that historically would have gone into gain and loss on sale of assets now go into operating results. So, you know, the way the accounting rules currently work on the gain and loss on sale after tax is, essentially, a wash. That is, there's no after-tax gain or loss on the disposition, and the operating results will account for the full 10 cents, but because of accounting changes, some of that would have been charges that would otherwise have gone into the sale. So, you know, it's 10 cents for the total

Got it. Okay. To bottom line it

Stephen?

Yes.

One of the differences in bonuses now go to operating instead of gain on sale. So all of the severance and stay-on bonuses and those kinds of things will now hit operating instead of the gain or loss. That bumps up the run rate

Right. Got it. Okay. You also indicated you would expect volumes to be up, I think you said, 1 to 2%. In your comments, you were saying in the quarter, I think, highway -- no. You were looking for highway to be flat to slightly down for the year. Is highway running right now flat or down? Year-to-date so far.

Stephen, our best information is that it's flat. You know, the jury is still out on what happens in the third and fourth quarter. A lot depends on the content of the bid lidings that occurred in June and July. If there is resurfacing components, we will see the impact of that, if it's large highway construction, bridges, and right-of-way acquisition and that sort of thing . We won't see impact of that. We're, I think, cautious about highway spending. I think passage of the new six-year bill safety, if it occurs earlier in the fall rather than later, we'll certainly give the DOTs a shot in the arm. I don't believe the passage of that is likely to have any significant impact on our '03 results in the second half. I think the benefit we'll get is from the higher level of '03 appropriation which occurred in March

Right, right. Yeah. It still looks like it's going to be a while before we get resolution on the '04. I guess the last question I had related to the bump-up in contracts, which you referenced that we saw in June, I should say. We were trying to figure out on our end whether or not that was related to perhaps a anonomolous or one-time bump-up related to the fiscal year-ends the states have. I was wondering whether or not you had any insight unto that. Do you get the sense contract awards in July were continuing in the strong pace we saw year-over-year in June, or was that an anonomolous lus situation?

We've run all sorts of analysis on highway dollars and state spending. One analysis that we have done would indicate that if the states want to obligate all of their federal money before September 30, they're -- they will have to have some very significant bid lettings between now and September 30. Whether that flows through into '03 or not is speculation at this point. But there is a lot of money available to the states right now that is not obligated. Some of it they can carry over past September 30, but much of it they cannot unless they obligate it. So that may explain what happened in June, and we hope will explain what will happen in the remainder of the third quarter.

Okay. Great. Thanks very much.

Ladies and gentlemen, again, if you would like to ask a question, please key star one on your touchtone phone. Your next question comes from Fritz Van Karp of sage asset management. Please go ahead

Good Morning A couple of questions. First, on California. Could you give us a little more detail. When you say you're doing well there now. What does that mean exactly? Does it mean flat at a good level, up, or whatever? More color on your expectations for California business for the remainder of the year.

In California, my remarks were based on historical year-to-date kind of numbers. We are, you know, flattish in California. That's on aggregate. Asphalt is also relatively flat, perhaps down a little. Ready mix is up significantly, which I think is an indication that housing is very strong in California and highways are not so strong.

Now, you said less of your mix there -- as we look forward, you said less of the mix is highway than average. What, roughly, would that be? What would be the business mix in California that's different, in rough numbers?

On a percentage basis, you know, overall, we believe that highways account for in the low 30 'S of your volume nationwide and in California it would be in the high 20 'S

So a little bit less.

Yeah. A little bit less

the results of some of the construction companies would indicate there is an unfolding problem in California that is maybe not entirely unfolded yet from the standpoint of people putting aggregate on the road. What's your take on that and how have you worked that into your overall guidance in the company?

Fritz, we don't have any -- I suppose that last look the Senate in California had passed a budget and the assembly was moving into the 18th or 20th hour of a session trying to pass a bill

Yeah m they didn't pass it

Okay. So it is very difficult for us to anticipate what the California situation is going to be for the rest of the year. Obviously, you've seen much of the information. I think you have seen it, that's come out of the states and local government in California are continuing with projects, essentially lending money to the state. But we don't know -- we don't have a good basis of saying that California results are going to be significantly changed one way or another. It is a fact that we have to look at carefully. We certainly haven't -- my remarks that our business has been good in California, I think based on what someone would have read in the newspapers last fall and early this year, we would not have expected our California business to be as good as it is

Right. Held by residential?

Yeah. So residential is strong, and the flip side of your earlier question is that in California, our -- the amount of our demand, both aggregate and concrete that goes into housing is higher than it is in the rest of the country. That's a reflection of the California economy.

Right. And you're saying, basically, for the outlook for the rest of the year, basically, you're saying you don't know. There's not visability yet?

Yeah. We expect to have relatively good business in California for the rest of the year, but, , things -- that could be changed on the public side. We don't expect it to change on the private side. From the public side, that could change. I don't think construction in California is going to shut down. You've got a governor who is struggling to remain in office, and I don't believe he's going to shut the state down between now and the vote in October. I find it's interesting there is a ballot initiative on that same ballot to spend more money on infrastructure, including schools and highways, in California

Okay. Thank you very much.

Your next question comes from John Fox of Fenemore asset management. Please go ahead

Hi. Good morning, everyone.

Hi, John

I have two cash flow questions. The one is, with the chemicals closing July 3rd. Will there be a cash collection for that disposition in the third quarter?

Yes. It will be about 43, $44 million.

Okay. Great. And cap ex is running 100 million year-to-date, which I think is below what the original guidance was. Should we expect more around 200 million this year?

Maybe 225 would be a good number.

Okay. All right. Thank you very much.

Your next question comes from David Weaver of Legg Mason. Please go ahead.

Don, a follow-up on the chemicals segment. On the July 3rd divestiture. Can you give us an idea what it does to sales in terms of an annual rate in terms of what we should be accounting for in that business?

David, that will take about 130 million annually out of revenue on the chemicals side.

That was the piece that was divested on the 3rd?

No. That's the total. It is about $80 million annually on the piece that came out July 3rd.

the -- some of the pieces of that business were sold in the first quarter and so some sales, some of the sales were sales adjustment has already occurred.

Okay. Going forward, do you have plans to divest any more of the chemicals business?

We don't have anything new to add to that. As I've indicated before, you know, we're looking at the options of our business for our business. The colrolcala business is improving. Prices have improved, but, more significantly for us, I think our operating results, our plant performance is improving, which is a key. We don't have much influence on pricing in the chemicals industry, but we have a lot of influence on our operating costs and overhead costs and that's where we have to continue to focus. But we are continuing to look at what is best for that business and for our shareholders

One last question. On the construction materials business, anymore progress being made on the cost side for either tarmac this quarter versus a year ago?

David, I don't have -- I'm sorry. I do not have the quarterly cost information on Car Mak and Cal Matt in front of me. Certainly our plan is that costs in both operations will continue to improve. Some of my colleagues are looking through their information right now for the second quarter. We'll give you a call on that, David.

Okay. That's all I have. Thanks a lot.

Thank you.

Your next question comes from John Lynch of Lynch research

Good morning. Don

How are you?

I'm quite well thank you. About California, your earlier questionarre with Fritz raised well I think fairly serious questions. It is mostly anecdotal. You're right There is little hard information. In our issue last week and the proposition is that the continued high level of construction by companies like granite has been by borrowing against future revenues on existing contracts but that, in fact, contracts are no longer being let. When the current batch is finished, which could well be next week, that there's simply nothing coming along that each company cannot borrow against anticipated contracts. Now, I guess the question is, are there going to be more lettings between now and October 7th? It is not entirely up to Gray Davis? The opposition to him, I assume, would like to continue stirring things up. I know it is a political question. It is a bit like standing on a speeding train saying seeing the split in the tracks ahead. It is a little a little bit more than political because some things are visibly happening

John, I can't speculate as to what the state of California and what Cal Trans will do this week, next week, next month. I do know that when we decided to go to California, we looked at that state and economy a long time. We are long-term investors. You know, California -- whatever is going to happen in the next 30, 60, or 90 days, we can't influence. We think California being what it is, the fifth largest economy in the world with a growing population and a very strong base of intellectual property is going to be a great market for us for the long term. California can't cut highway spending forever, and, as you know, the federal highway administration has said California now is 50 out of 50 states in highway quality. So there is a pent up demand there that is going to have to change, and we're going to be ready to address that market when it occurs. Whether that happens in one quarter or two quarters or four quarter, I can't predict. But we are in place there. We will benefit from recovery in California. We may be penalized by the crisis in California in the near term, but I can't predict the impact, if any, that's going to be.

Okay. I have one other small question. You indicated that the gulf was particularly strong and in aggregate. Is that product coming out of Mexico, or is it being produced locally on land?

Primarily, it's coming out of Mexico. Florida is, by far, the best market in the country right now. It didn't get rained out like Georgia and south Carolina, North Carolina and Tennessee and much of northern Alabama did in the second quarter. So our business in Florida is very, very good. Our business in Texas is very, very good. You know, the Gulf Coast general was much better than a little further north where there was a weather impact. Some of that material is coming down by barge from the read core in Kentucky. Much of the volume is coming from Mexico

I got two last questions. First one is, are your costs in Mexico in production and shipping stable? Are they changing?

They're very good and stable.

Okay. Second one is, has la foriges announced they are selling their tap operations had any impact. Do you expect it to?

No. Those are cement terminals. That doesn't impact us you at all

Thank you.

Sir, your final question comes from Stephen Kim of Smith Barney

Thanks. A clean-up question. You indicated that you realized pricing and costing of chlorine were up in various increments year to year. Could you give us that the first quarter and forth quarter of last year.

First quarter and fourth quarter. You're looking for the increment in second quarter over fourth quarter last year?

No. I'm looking for the first quarter realized pricing versus the first quarter of '02 and the fourth quarter of '02 realized pricing versus the fourth quarter of '01.

We're talking about the change between first quarter of '02 and first quarter of '03?

That's right.

Okay. And the change is -- Stephen, they're roughly flat first quarter to fourth quarter for caustic. In chlorine, it was up sharply, like, $130.

Okay.

Then Q4 to -- what's the second comparison you wanted?

Both of these are year-over-year I'm looking for.

Q4 to Q4?

Yes.

That would be '01 to '02?

Yes.

'01 to '02, caustic change was relatively modest, probably -- no. It was down about 60 bucks. Chlorine was up about 100 bucks in that period.

Okay. Great. Thanks very much.

I believe that was our last question. Let me say that we are pleased with your interest in Vulcan. We think we are headed in the right direction. We believe divesture of performance chemicals will improve our overall operations and our focus. We are looking forward to the third quarter and the remainder of the year. We have some uncertainties and highway spending and in the overall economy, but we believe both of those factors, for the longer term, will be very positive for our company. We hope you will continue to be interested in Vulcan. Thank you very much.

Ladies and gentlemen, this concludes your conference call for Vulcan Materials second quarters report. Thank you for your participation today. You may now disconnect.--- 0