Vulcan Touts Third-Quarter Results
- Published: Tuesday, 12 November 2013 11:26
- Written by Rock Products News
Vulcan Materials released its third-quarter report, and net sales increased $88 million, or 13 percent, versus the prior year's third quarter. Gross profit improved $32 million, or 25 percent, from the prior year.
Each major product line realized growth in unit shipments from the prior year, due mostly to continued improvement in private construction.
- Aggregates shipments increased 9 percent.
- Volumes in ready-mixed concrete and cement increased 17 percent and 10 percent, respectively.
- Asphalt mix volumes increased 4 percent.
- Aggregates gross profit increased $25 million and gross profit margin increased 130 basis points.
Don James, chairman and chief executive officer, said, “Our third-quarter results reflect the continued recovery of our markets and the benefits of the company’s powerful earnings leverage. A 9 percent increase in aggregates volume helped drive a 20 percent increase in aggregates gross profit. In the third quarter, cash gross profit per ton of aggregates increased to $4.83 per ton, our highest quarterly unit profitability in more than four years. As a result, cash gross profit per ton on a trailing 12-month basis now is 26 percent higher than at the prior peak level of shipments, setting the stage for better earnings leverage in this cycle. Pricing continues to benefit from an improving demand outlook and we are realizing price improvements across most of our markets. Demand for our products continues to benefit from recovery in private construction activity, particularly residential construction, in many of our key markets. Growth in residential construction activity, and its traditional follow-on impact on private nonresidential construction, continues to underpin our expectations for future volume growth and earnings improvement.”
Aggregates segment gross profit was $150 million, a $25 million increase from the prior year. This earnings improvement was due to volume growth in virtually all our markets and broad-based pricing gains. Aggregates shipments increased 9 percent compared to the prior year. On a same-store basis, aggregates shipments increased 10 percent.
Many markets realized double-digit volume growth including a number of the company's key markets. Strong private construction demand in Florida led to an increase in shipments of more than 35 percent versus last year’s third quarter. Shipments in Texas also benefited from stronger demand, particularly large industrial projects, increasing nearly 30 percent versus the prior year.
Increased private construction activity also benefited aggregates shipments in other key markets. Arizona, California, Georgia and North Carolina each increased more than 14 percent. Overall, freight-adjusted aggregates prices increased more than 2 percent compared to the prior year. In most markets we realized positive price growth versus the prior year with year-over-year price improvements ranging from low to mid-single digits.
In the third quarter, aggregates sales volumes exceeded production levels, lowering segment gross profit approximately $6 million. Additionally, cost of sales increased $2 million due to increased freight and distribution costs resulting from higher growth in shipments from sales yards along the Gulf Coast. Current inventory levels provide opportunity for higher production levels and greater efficiencies as demand continues to improve.
Each of the non-aggregates segments also benefited from volume growth and price improvement, leading to a $7 million overall improvement in gross profit compared to the prior year. Concrete shipments and pricing increased in each of the company’s markets versus the prior year. Overall, concrete shipments increased 17 percent from the prior year and segment gross profit improved $5 million.
Asphalt segment gross profit increased 24 percent from the prior year, benefitting from better materials margins and a 4 percent increase in asphalt mix shipments. Cement segment gross profit approximated the prior year.