Vulcan Materials Reports Huge First Quarter

Vulcan Materials Co. announced results for the quarter ended March 31. Total revenues increased 44% to $1.541 billion, up from $1,068 billion in 2021, driven by the addition of U.S. Concrete (USCR) operations as well as price and volume growth in the company’s legacy businesses.

  • Average selling prices increased in each product line, helping to offset inflationary pressures.
  • Same-store aggregates pricing increased 6% (7% mix-adjusted).
  • Average price for asphalt and concrete increased 13% and 9%, respectively.
  • Shipments increased year-over-year in each product line, reflecting growth in both private and public construction activity.
  • Aggregates gross profit increased $19 million, or 9%, to $243 million.
  • Includes $17 million of higher diesel fuel costs compared to the prior year as well as $2 million from selling acquired inventory after its markup to fair value.
  • Non-aggregates gross profit was $26 million compared with $6 million in the prior year.
  • Double-digit growth in asphalt selling prices helped offset $15 million of higher liquid asphalt and energy-related production costs.
  • Concrete results benefited from the addition of USCR operations and price growth, which helped offset $4 million of higher diesel fuel costs.

Aggregates Segment gross profit increased $19 million, or 9%, to $243 million ($4.58 per ton). These first quarter results included a $2 million unfavorable impact from selling acquired inventory after its markup to fair value and an unfavorable impact ($17 million) from significantly higher (62%) diesel fuel costs.  

Cash gross profit per ton was $6.53 in the quarter.  Excluding the impact of higher diesel fuel costs and the impact of selling acquired inventory, cash gross profit increased 5% to $6.90 per ton.

Total aggregates shipments increased 14% (7% on a same-store basis), reflecting construction activity consistent with the company’s expectations as well as the benefit of more typical weather in certain markets.  

Shipments in the prior year’s first quarter were impacted by severe winter weather conditions in February.  As a result, daily shipping rates in February of the current year were sharply higher while daily shipping rates in March (the start of construction activity in many of the company’s markets) were consistent with the full-year expectations.

Growth in average selling prices continues to accelerate as a result of improvement in demand visibility and increasing inflationary pressures. In the first quarter, freight-adjusted pricing increased 6% over the prior year, or $0.85 per ton (mix-adjusted pricing increased 7%). The growth was widespread across geographies.

Solid operational execution helped mitigate higher year-over-year costs for diesel fuel and for certain parts and supplies. Freight-adjusted unit cash cost of sales increased 11%, or $0.88 per ton, as compared to the prior year’s first quarter. 
Excluding the impact of higher diesel fuel costs and the impact of selling acquired inventory, cash cost of sales increased 6%, or $0.51 per ton. On a trailing 12-months basis, freight-adjusted cash costs were 5% higher versus the comparable 12-month period.

Asphalt segment gross profit was a loss of $3 million. Despite higher costs for liquid asphalt and natural gas in the first quarter of 2022, results were in line with the prior year.  The average cost of liquid asphalt was 33% higher ($14 million) than the prior year’s first quarter when liquid prices were favorable to segment gross profit.
 Average selling prices for asphalt mix increased 13%, or $7.28 per ton, versus the prior year’s first quarter as pricing actions initiated in the second half of last year continued to gain traction. Strong price growth helped maintain material margins (selling price less cost of raw materials) despite the significant year-over-year increase in liquid asphalt. Asphalt volumes increased 5% overall driven by growth in Arizona, California and Tennessee.

First quarter Concrete segment gross profit was $28 million, an increase from $8 million in the prior year. Segment results benefited mostly from the contribution of USCR operations but also from growth in shipments and price in the company’s legacy operations.  
Material margins improved as higher selling prices helped offset higher raw materials costs, including aggregates supplied by the company. Segment results were negatively impacted by higher diesel prices and the availability of drivers in certain markets.

Calcium segment gross profit was $0.7 million compared to $0.9 million in the prior year quarter.

Tom Hill, Vulcan Materials’ chairman and chief executive officer, said, “Consistent with our expectations, we delivered strong year-over-year earnings growth in the first quarter. Our teams executed well, despite macro environment challenges that included accelerating inflation, volatility in the energy markets, and ongoing disruptions in supply chains.  We remain focused on executing our strategic disciplines to control what we can control and to dampen the headwinds of things outside of our control.”

Hill continued, “We remain confident in our full-year outlook and our ability to deliver strong earnings growth in 2022.  Through robust growth in aggregates pricing and a relentless focus on operational excellence, we can continue to expand unit profitability, despite the macro challenges. In our asphalt business, pricing efforts mitigated higher liquid asphalt costs in the first quarter, and we remain focused on expanding our gross profit margins. In concrete, improvement in private nonresidential construction activity and a favorable pricing environment support earnings growth in 2022. We remain confident in our prospects for the year, particularly with respect to demand visibility, pricing opportunities, and cost reduction initiatives.” 

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