Vulcan Materials Co. announced results for the quarter ended Dec. 31, 2021. The company is reporting:
- Total revenues increased 37% to $1.606 billion, driven by the addition of U.S. Concrete (USCR) operations as well as strong growth in the company’s legacy aggregates business.
- Average selling prices increased in each product line, reflecting the improved visibility into demand growth which helped to offset inflationary pressures.
- Same-store aggregates mix-adjusted pricing increased 4.2%.
- Average price for asphalt mix increased 4.9% and concrete 6.9%.
- Aggregates gross profit increased 18% to $326 million, or $5.64 per ton.
- Same-store volumes increased 7%, reflecting solid demand and favorable weather.
- Includes $15 million of higher diesel fuel costs and an $8 million impact from selling acquired inventory after its mark up to fair value.
- Non-aggregates gross profit was $26 million compared with $27 million in the prior year.
- Includes $18 million of higher liquid asphalt and diesel fuel costs.
For the full year 2021, the company is reporting:
- Total revenues increased 14% to $5.6 billion.
- Earnings from continuing operations increased 15% to $674 million.
- Strong earnings growth despite $93 million earnings impact from higher energy-related costs.
- Aggregates gross profit increased 12% to $1.296 billion, or $5.81 per ton.
- Aggregates cash gross profit increased 5% to $7.43 per ton.
- Successfully completed USCR acquisition Aug. 26, 2021.
In its Aggregates segment, in the fourth quarter, gross profit increased 18% to $326 million, or $5.64 per ton. Cash gross profit-per-ton improved 6% from the prior year to $7.41. The year-over-year earnings improvement was widespread across the company’s footprint and resulted from both volume and price growth, as well as effective cost control. This year’s fourth quarter results included an $8 million unfavorable impact from selling acquired inventory after its markup to fair value as part of the USCR acquisition and a $15 million unfavorable impact from significantly higher diesel fuel costs.
Total aggregates shipments increased 13% (7% on a same-store basis), reflecting improving demand across all end-market segments as well as the benefit of favorable weather in certain markets during November and December. As demand visibility improved, the pricing environment continued to strengthen, and the rate of pricing growth improved sequentially each quarter this year. In the fourth quarter, same-store freight-adjusted pricing increased 3.7% year-over-year (mix-adjusted pricing increased 4.2%) with the growth widespread across geographies.
Solid operational execution offset higher year-over-year costs for diesel fuel, inflation for certain parts and supplies, and operational disruptions caused by labor shortages. Freight-adjusted unit cash cost of sales increased 1% as compared to the prior year’s fourth quarter.
For the full year, cash unit profitability increased 5% from the prior year to $7.43 per ton. This year-over-year improvement was driven by 7% volume growth, 3% price growth and effective cost control despite a more than 50% increase in diesel fuel prices. Positive pricing opportunities and improved operating efficiencies are expected to continue to help offset some of the cost inflation going forward.
Tom Hill, Vulcan Materials’ chairman and chief executive officer, said, “Our teams finished the year strong, despite ongoing challenges from inflationary pressures and labor constraints. We expanded our industry-leading unit profitability again in the fourth quarter and for the full year by continuing to focus on our operating disciplines and taking pricing actions where necessary to mitigate these headwinds. We continue to make excellent progress integrating the USCR operations into our business. This acquisition extends our growth platform in certain existing markets as well as new geographies. These results demonstrate our ability to execute on Vulcan’s four strategic disciplines and enhance our operating leverage moving forward. We are well positioned to capitalize on the positive demand trends we see developing in 2022 and beyond.”
Hill concluded, “As demand and the pricing environment continue to strengthen, we expect healthy growth in unit profitability again in 2022. Robust growth in aggregates pricing and a continued focus on operational excellence will more than offset anticipated inflationary pressures. In our asphalt business, we expect recent pricing efforts to begin to mitigate higher liquid asphalt costs and lead to gross profit margin improvement beginning in the second half of 2022. In concrete, improvement in private nonresidential construction activity will help drive earnings growth in 2022.”
For the full year, Asphalt gross profit decreased from $75 million in the prior year to $21 million. The year-over-year change in gross profit was primarily due to sharply higher costs for liquid asphalt ($41 million impact) and a rise in natural gas prices ($6 million impact). Asphalt volumes decreased 4% from the prior year. Volume growth in California, the company’s largest asphalt market, was more than offset by lower volumes in Arizona, the company’s second largest market. Efforts to mitigate the earnings impact of persistent energy inflation will continue with positive results in price growth expected to contribute to unit profitability improvement in 2022.
For the full year, Concrete gross profit increased $10 million to $54 million. Earnings contributions from USCR operations more than offset the earnings impact from lower volumes in the company’s legacy Virginia operations. The lower volumes were due mostly to the timing of several large projects that were completed in the prior year. Material margins increased in the company’s legacy operations despite lower volumes.