The 2023 growth narrative largely continues for Vulcan Materials Co., which reported increases in total revenues, gross profit and adjusted EBITDA in the third quarter.
Additionally, Vulcan says aggregate pricing continued on its upward path in the quarter. The company’s aggregate shipments, however, dipped 2 percent.
“Through the first nine months of 2023, adjusted EBITDA has improved 23 percent over the prior year, and margin has expanded 340 basis points,” says Tom Hill, chairman and CEO of Vulcan. “Aggregates cash gross profit per ton has improved 21 percent and now exceeds $9 per ton. These strong results demonstrate the compounding benefits of our strategic disciplines and the durability of our aggregates-led business.”
The gross profit within Vulcan’s aggregate business increased 17 percent in the third quarter to $508 million. Cash gross profit per ton, meanwhile, improved 18 percent to $9.92 per ton.
Although companywide aggregate shipments decreased 2 percent, Vulcan says shipment growth in certain Southeast markets continued to benefit from healthy industrial project activity. The industrial projects dampened the impact of weakness in residential demand, the company adds.
According to Vulcan, pricing growth in the third quarter was consistently strong, as all markets realized year-over-year improvement. Freight-adjusted selling prices increased 15 percent, or $2.50 per ton, compared with the prior year – more than offsetting a 12 percent increase in freight-adjusted unit cash cost of sales.
“We continue to execute at a high level and successfully navigate the twists and turns of the broader macro economy,” Hill says. “Regardless of the macro environment, aggregates can be a price-cost winner in all parts of the cycle.
Hill says Vulcan’s year-to-date unit profitability growth of 20-plus percent demonstrates the durability of its business.
“Aggregates shipments continue to trend towards the upper end of full-year expectations, supported by industrial-related nonresidential projects in key markets and IIJA-related construction activity.” Hill says. “As a result, we expect full-year adjusted EBITDA of $1.95 to $2 billion – a 21 percent improvement at the midpoint.”
Vulcan expects 2024 to be another year of earnings growth and strong cash generation.
“Geographic footprint is important from both a diversification and growth standpoint, and ours is unmatched,” Hill says. “Leading indicators remain supportive of continued growth in public construction activity, and we are well positioned in high-growth markets where the need is greatest.
“On the private side, recovery in single-family construction activity and healthy shipment levels to large industrial-related projects – particularly manufacturing – will help partially offset continued softness in multifamily construction, as well as other categories of nonresidential,” Hill adds. “The overall pricing environment remains positive, and we carry good momentum into 2024.”
