Aggregate shipments slipped at Vulcan Materials Co. in the second quarter, but additional pricing growth fueled the company’s aggregate business.
Although Vulcan’s aggregate shipments dipped 1 percent, the company’s freight-adjusted selling prices for aggregates increased 15 percent, or $2.44 per ton, versus the prior year. According to Vulcan, pricing momentum and solid operational execution in its aggregate business drove a 22 percent improvement in cash gross profit per ton to $9.76 per ton in the quarter.
Companywide, Vulcan’s total revenue in the second quarter was up 8.1 percent to $2.11 billion. The company’s quarterly gross profit increased 30.7 percent to $583 million.
“Our earnings growth through the first half of 2023 reflects the compounding benefits of the consistent execution of our strategic disciplines and the strength of our aggregates-led business,” says Tom Hill, chairman and CEO of Vulcan. “Aggregates gross profit margin has expanded 230 basis points, and cash gross profit per ton has improved 23 percent to $8.98 per ton. Strong sales and operating momentum across our business is expected to carry through the rest of the year. Shipments have benefited from large industrial projects, and residential construction activity has been better than expected.
Vulcan now expects to deliver a full-year adjusted EBITDA in the range of $1.9 billion to $2.0 billion. That’s an increase of $150 million compared with the expectations the company communicated in February.
Vulcan’s aggregate business
In the second quarter, Vulcan’s aggregate segment gross profit increased 24 percent to $499 million ($7.87 per ton) while gross profit margin expanded 290 basis points. Vulcan says the improvement resulted from strong pricing growth and improving efficiencies. Earnings improvement was widespread across the company’s footprint.
Aggregate shipment activity in California was particularly strong following a weather-impacted first quarter. Certain markets in the Southeast benefited from healthy shipment activity to industrial projects, Vulcan says.
What’s next
As Vulcan looks to the remaining months of 2023, it expects aggregate shipments for the year to be down about 1 to 4 percent. The company produced 236.3 million tons of aggregates in 2022.
“Through the first half of the year, shipments have been in line with the upper end of our original expectations,” Hill says. “Private nonresidential construction activity has remained healthy and should partially offset declines in residential activity, which have been more moderate than anticipated. As a result, we are updating our aggregates volume outlook to reflect shipment levels through the first half.”
Related: How Vulcan fared in the first quarter of 2023
Featured photo: P&Q Staff
