The Industry’s Publicly Traded Companies Provide An Industry Barometer When They Release Their Quarterly Reports.
Vulcan Materials
Vulcan Materials Co. announced results for the quarter ended June 30. Total revenues increased sharply from the prior year driven by double-digit growth in the company’s legacy business as well as the addition of U.S. Concrete operations.
Total revenues were $1.954 billion, up from $1.361 billion in the second quarter of 2021. For the first six months of the year, total revenues were $3.495 billion versus $2.429 billion for the first six months of 2021.
- Gross profit increased $48 million, or 12%, to $446 million.
- Aggregates gross profit increased $29 million, or 8%, to $402 million.
- Non-aggregates gross profit increased $19 million, or 78%, to $44 million.
- Includes $74 million of higher energy-related costs compared to the prior year’s quarter.
- Average selling prices increased in each product line, helping to offset inflationary pressures.
- Aggregates pricing increased 9% (10% mix-adjusted).
- Average price for asphalt and concrete increased 19% and 14%, respectively.
- Shipments increased year-over-year in each major product line, reflecting construction activity consistent with the company’s expectations as well as the contribution from acquisitions.
Aggregates segment gross profit was $402 million, an increase of 8% from the prior year. Cash gross profit per ton increased 2% to $7.99 per ton. Strong price growth and solid operational execution helped offset cost headwinds, including significantly higher diesel fuel costs ($32 million) and inflationary pressures for many other parts and supplies. Second quarter results also included the impacts of the unexpected and arbitrary shut down by the Mexican government of the company’s Mexico operations in early May and a $3 million unfavorable impact from selling acquired inventory after its markup to fair value.
Price growth in the second quarter was widespread across the company’s markets. Freight-adjusted pricing was $16.25 per ton, an increase of $1.32 per ton, or 9% over the prior year. Adjusting for mix impacts, average selling price increased 10%. The company expects this pricing momentum to continue throughout the remainder of the year as the second round of price increases gains traction across the company’s markets.
Total aggregates shipments increased 9%, reflecting shipment contribution from acquisitions and construction activity consistent with the company’s expectations. On a same-store basis, shipments increased 2%. Shipment activity was particularly good in many southeastern markets and Texas.
Freight-adjusted unit cash cost of sales increased 16%, or $1.16 per ton, as compared to the prior year’s second quarter. Excluding the impact of higher diesel fuel costs and the impact of selling acquired inventory, cash cost of sales increased 8%, or $0.60 per ton.
Tom Hill, Vulcan Materials’ chairman and chief executive officer, stated, “Our teams continued to execute well and delivered another quarter of solid earnings growth amidst a challenging backdrop. We are well on our way to delivering another year of double-digit earnings growth. We increased our aggregates gross profit by 11% during the trailing 12 months despite ongoing inflation and other external headwinds.
Robust growth in aggregates pricing and a relentless focus on operating disciplines will help us carry this momentum forward. Our asphalt pricing actions, which began late last year, are increasingly offsetting sharply higher liquid asphalt costs, and we remain focused on growing our gross profit in our Asphalt segment. In concrete, leading indicators for private nonresidential construction activity and a favorable pricing environment will support earnings growth in 2022.”
Martin Marietta Materials
Martin Marietta Materials Inc. reported results for the second quarter ended June 30. The company is reporting revenues of $1.524 billion versus $1.295 billion in the second quarter of 2021, a 17.6% increase.
The Building Materials business generated record products and services revenues of $1.45 billion in the second quarter, an 18.3% increase, driven primarily by robust pricing growth across all product lines coupled with contributions from acquisitions.
Product gross profit of $400.8 million, a second-quarter record, increased 12.3%; however, higher energy, internal freight, contract services and supplies costs contributed to a gross margin decline of 140 basis points to 27.7%.
Second-quarter organic aggregates shipments increased 1.8% due to healthy underlying public and private product demand partially constrained by supply chain and logistics-related bottlenecks.
Organic pricing increased 8.8%, or 7.5% on a mix-adjusted basis, as the company began to benefit from price increases implemented on April 1, Including acquired operations, total aggregates shipments and pricing grew 9.3% and 8.4%, respectively.
- East Group total shipments decreased 1.0% as strong underlying demand was negatively impacted by unfavorable weather in April coupled with rail and marine shipping challenges. Pricing increased 7.6%.
- West Group total shipments improved 30.0%, driven primarily by contributions from acquired operations and strong Texas demand. Organic pricing increased 11.7%, or 8.3% on a mix-adjusted basis.
Second-quarter aggregates product gross profit improved 13.2% to $309.0 million, while gross margin declined 170 basis points to 32.3% primarily due to significantly higher energy, contract services, supplies and internal freight costs.
Cement shipments increased 19.8% to a new quarterly record of 1.1 million tons, while pricing increased 14.7%, or 12.5% on a mix-adjusted basis, driven by continued strong demand and tight cement supply in Texas.
Cement product gross profit grew to $51.1 million, an increase of 41.7%, and gross margins expanded 140 basis points to 32.4%, driven by volume and pricing gains but partially offset by significant energy related headwinds and unplanned kiln outages at both the Midlothian and Hunter plants in Texas.
On an organic basis, ready-mix concrete shipments and pricing increased 3.4% and 17.4%, respectively, driven by strong demand in Dallas/Fort Worth, Austin and San Antonio.
Ready-mix concrete product revenues and gross profit from continuing operations declined 15.8% and 25.1%, respectively, driven primarily by the divestiture of our Colorado and Central Texas ready-mix concrete businesses on April 1, but partially offset by acquired operations in Arizona.
Including contributions from the acquired West Coast operations, total asphalt shipments and pricing increased 40.2% and 24.0%, respectively. However, rapid acceleration of liquid asphalt, or bitumen, costs contributed to the gross margin compression of 880 basis points in the second quarter.
Ward Nye, chairman and CEO of Martin Marietta, stated, “I am pleased to report that Martin Marietta delivered second-quarter records for aggregates and cement shipments, revenues, gross profit, Adjusted EBITDA and Adjusted earnings per diluted share. Our strong financial performance this quarter demonstrates the successful execution of our strategic business plan and also serves as a testament to the focus of our remarkable team and resiliency of our aggregates-led business.
“Despite increased inflationary pressure from rising input costs, and a challenging overall macroeconomic and geopolitical operating environment, our differentiated business model once again delivered outstanding results as we capitalized on an attractive commercial environment for our business and diligently executed our value-over-volume commercial strategy. We expect to see a positive inflection in the current price/cost dynamic, as well as record second-half pricing growth rates which will facilitate attractive margin expansion and accelerated unit profitability growth going forward.
“In the second quarter, we closed two previously announced transactions finalizing the divestiture of our Colorado and Central Texas ready mixed concrete businesses and completing the divestiture of certain West Coast cement and ready mixed concrete operations. These portfolio optimizing transactions not only improve our product mix and margin profile, but also strengthen our balance sheet and the economic durability of our company. Importantly, these transactions provide flexibility to continue driving shareholder value by prudently investing in strategic acquisitions and organic growth initiatives, returning capital to shareholders and reducing our leverage to within our targeted range.”
Nye concluded, “Martin Marietta is well positioned to capitalize on strong demand trends across our coast-to-coast geographic footprint as increased infrastructure investment coupled with a recovery in light nonresidential construction, large scale energy projects and domestic manufacturing is expected to insulate product shipments from any near-term, affordability-driven headwinds in residential end markets. Our team remains steadfastly committed to employee health and safety, commercial and operational excellence, sustainable business practices and the execution of our SOAR 2025 initiatives as we build and maintain the world’s safest, best performing and most durable aggregates-led public company.”
Summit Materials
Summit Materials Inc. announced results for the second quarter ended July 2. Net revenue increased $13.4 million, or 2.2% in the second quarter to $631.9 million, due to increases in average sales prices across all lines of business that more than offset volume declines due primarily to divestitures.
Operating income increased $15.3 million, or 16.0% in the second quarter to $111.2 million, primarily as net revenue gains and decreases in depletion, amortization and accretion expenses outpaced increases in cost of revenue. Summit’s operating margin percentage for the three months ended July 2, increased to 17.6% from 15.5%, from the comparable period a year ago.
Net income attributable to Summit Inc. increased to $190.1 million, or $1.61 per basic share, compared to $56.7 million, or $0.48 per basic share in the comparable prior year period. Summit reported adjusted diluted net income of $71.8 million, or $0.60 per adjusted diluted share as compared to $58.0 million, or $0.49 per adjusted diluted share in the prior year period.
Aggregates net revenues increased by $8.0 million to $161.5 million in the second quarter. Aggregates adjusted cash gross profit margin decreased to 53.7% in the second quarter as compared to 55.9% in the second quarter 2021. Aggregates sales volume decreased 1.6% in the second quarter as solid organic volume growth driven by the West Segment was more than offset by volume decreases in certain markets due to divestitures. Average selling prices for aggregates increased 4.7% in the second quarter with growth across both reporting segments.
“Today, Summit is reporting record quarterly earnings and the lowest net leverage in company history as we continue to successfully execute on our Elevate Strategy,” commented Anne Noonan, Summit Materials president and CEO. “In 2022, we have already achieved a mid to high single digit price increases in each line of business, with asphalt achieving double digit price increases. We continue to characterize current market conditions as favorable towards the potential for additional price increases. Our portfolio optimization efforts are enhancing the contributions from materials and opening up opportunities to invest strategically. We are pulling all available self-help margin levers to improve performance and offset inflation. We are maintaining our 2022 Adjusted EBITDA guidance and remain confident that Summit Materials is on track for another year of strong performance.”
Brian Harris, CFO of Summit Materials, added, “Armed with the strongest balance sheet in Summit history, we are well positioned to pursue a broad range of high return capital allocation priorities that are value creative to Summit shareholders. As part of our Horizon Two objective, we will invest to grow priority markets. To us, that means advancing our market leadership position through growth initiatives, including greenfields, as well as pursuing attractive M&A opportunities that align with our portfolio optimization criteria. This financial flexibility together with sound execution sets Summit Materials up for growth and strong returns.”
In the three months ended July 2, 2022, Summit Materials sold one business in the East segment, resulting in cash proceeds of $293.9 million and a total gain on disposition of $156.1 million. To date, as part of its Elevate Summit Strategy, the company has received $470.1 million in proceeds from a total of 10 divestitures.
By geographical segment, the West segment operating income increased 17.6% to $62.6 million and Adjusted EBITDA increased 7.5% to $84.6 million in the second quarter due primarily to pricing gains and aggregates volume growth that more than offset lower downstream volumes and inflationary cost conditions.
Aggregates revenue in the second quarter increased 11.8% on 4.2% pricing growth and 7.3% volume growth, which was driven by strong demand conditions in Texas and British Columbia. Ready-mix concrete revenue in the second quarter increased 10.7% as 11.2% pricing growth was partially offset by lower volumes in the Intermountain West and North Texas. Asphalt revenue increased 10.8% in the second quarter as volumes decreased 5.0%, due to a divestiture made in the second quarter of 2021. Asphalt sales prices increased 19.2% in the period.
The East Segment operating income decreased 8.6% to $31.6 million and Adjusted EBITDA decreased 18.5% to $46.7 million in the second quarter. Lower operating income and Adjusted EBITDA reflects increased cost of revenue that exceeded pricing growth. Aggregates revenue decreased 4.1% versus the prior year period.
Aggregates volumes decreased 9.9% as growth in the Georgia market was more than offset by divestitures and wet conditions in Kansas. Average selling prices for aggregates increased 6.6% led by strong growth in Georgia. Ready-mix concrete revenue decreased 37.0% as volumes decreased 38.2% due to divestitures.
CEMEX
CEMEX, S.A.B. de C.V. announced continued solid top line growth, with second-quarter net sales of $4.080 million, an increase of 11%. Pricing was the main driver with cement, ready-mix and aggregates, increasing 16%, 12% and 14%, respectively.
CEMEX’s operations in the United States reported net sales of $1,296 million in the second quarter, an increase of 15%. Operating EBITDA decreased 24% to $162 million in the second quarter.
CEMEX’s operations in the South, Central America and the Caribbean region, reported net sales of $418 million in the second quarter, an increase of 10%. Operating EBITDA decreased 7% to $99 million in the quarter.
Net sales in Mexico increased 7% in the second quarter, to $998 million. Operating EBITDA decreased 4% in the second quarter, to $320 million.
In the Europe, Middle East, Africa and Asia region, net sales increased 12% in the second quarter, to $1,294 million. Operating EBITDA was $193 million for the quarter, 8% higher.
“I am pleased that our pricing strategy is yielding results and has fully offset inflationary costs in the quarter. With improved supply chain dynamics and continued success of our pricing and cost containment strategies, we remain confident we can recover 2021 margins,” said Fernando A. González, chief executive officer of CEMEX. “Our decarbonization program, Future in Action, continues making significant progress, with record levels of alternative fuel usage and clinker factor resulting in a 3% reduction in CO2 emissions in the first half of this year. We remain on track to achieve our ambitious 2030 goals, and on the right path to achieve carbon neutrality. On the digital innovation front, our industry-leading digital platform CEMEX Go continues evolving to provide our customers a superior fully automated digital experience.”
Eagle Materials
Eagle Materials Inc. reported financial results for the first quarter of fiscal 2023 ended June 30. The company is reporting record revenue of $561.4 million, up 18%; and record net earnings of $105.0 million, up 10%.
Revenue in the Heavy Materials sector, which includes cement, concrete and aggregates, joint venture and intersegment cement revenue, was $346.1 million, a 10% improvement. Heavy Materials operating earnings increased slightly to $68.1 million primarily because of higher cement sales prices partially offset by a decrease in cement sales volume and the effects of the equipment downtime experienced by its joint venture.
Cement revenue, including Joint Venture and intersegment revenue, was up 5% to $284.5 million. Operating earnings were down slightly to $62.3 million reflecting higher energy and maintenance costs partially offset by improved cement sales prices.
Profitability at its Joint Venture was also negatively affected by extended equipment downtime that reduced cement production in June. The issues causing the downtime were remedied in late July and the equipment is back on-line.
The average net cement sales price for the quarter increased 10% to $127.82 per ton. Cement sales volume for the quarter decreased 2% to 2.0 million tons, reflecting its sold-out position and the delay of some larger projects due to weather in the central part of the United States.
Concrete and aggregates revenue increased 38% to $61.6 million, reflecting improved concrete and aggregates prices and the contribution of approximately $11 million from a recently acquired business in northern Colorado. First quarter operating earnings increased 7% to $5.7 million, reflecting higher concrete and aggregates net sales prices.
Commenting on the first quarter results, Michael Haack, president and CEO, said, “Our results this quarter exceeded our expectations, as our portfolio of businesses performed well, and we executed on the opportunities available to us. We achieved record revenue of $561 million and adjusted EPS of $2.82, and we expanded gross margins by 30 bps to 26.9%. Construction activity remained healthy across our markets, and we realized broad pricing gains across our portfolio again this quarter.”
Haack continued, “In our Heavy Materials business, we implemented a second round of cement price increases in early July given the strong demand environment and our sold-out position. Looking ahead, we expect demand for cement to remain strong with infrastructure investment increasing as federal funding from the Infrastructure Investment and Jobs Act begins in earnest this fiscal year. In our light materials sector, wallboard shipments and orders remain strong, but we recognize quantitative tightening will likely have an impact on residential construction activity in the future. In the near term, we expect record home construction backlogs to support product demand this year. With Eagle’s excellent balance sheet, the favorable geographic positioning of our operations and consistent execution of our operating strategies, we are poised for a strong fiscal 2023.”
United States Lime & Minerals
United States Lime & Minerals Inc. reported the company’s revenues in the second quarter of 2022 were $60.5 million, compared to $49.2 million in the second quarter 2021, an increase of $11.3 million, or 23.0%.
Lime and limestone revenues were $59.6 million in the second quarter of 2022, compared to $48.7 million in the second quarter 2021, an increase of $10.9 million, or 22.3%.
For the first six months of 2022, company revenues were $111.4 million, compared to $90.8 million in the first six months 2021, an increase of $20.6 million, or 22.6%. For the first six months of 2022, lime and limestone revenues were $109.9 million, compared to $90.1 million in the first six months of 2021, an increase of $19.8 million, or 22.0%.
The increases in revenues in the second quarter and first six months of 2022 compared to the comparable 2021 periods resulted primarily from increased sales volumes of the company’s lime and limestone products, principally due to increased demand from the company’s construction and industrial customers, and increases in the average selling prices. Additionally, lime and limestone revenues in the first six months of 2022 benefited from increased sales to the company’s oil and gas services customers.
The company’s gross profit was $16.5 million in the second quarter of 2022, compared to $16.8 million in the second quarter of 2021, a decrease of $0.3 million, or 1.9%. Gross profit in the first six months of 2022 was $30.9 million, an increase of $2.3 million, or 8.2%, from $28.6 million in the first six months of 2021.
The company’s lime and limestone gross profit was $16.0 million in the second quarter of 2022, compared to $16.7 million in the second quarter of 2021, a decrease of $0.7 million or 4.2%. The company’s lime and limestone gross profit in the first six months of 2022 was $30.2 million, compared to $28.5 million in the first six months of 2021, an increase of $1.7 million, or 5.8%.
The decrease in lime and limestone gross profit in the second quarter of 2022 compared to the second quarter of 2021, resulted primarily from increased production costs, principally from higher energy, transportation, labor and supplies costs, partially offset by the increased revenues discussed above. The increase in lime and limestone gross profit in the first six months of 2022 compared to the first six months of 2021 resulted primarily from the increased revenues discussed above, partially offset by increased production costs.
The company continues to be challenged by a persistent overall inflationary environment that is disproportionately impacting its lime and limestone production costs. The company is also adjusting and acclimating to longer lead times as supply chain delays have settled into a new normal. If the increased production costs, particularly costs associated with energy and transportation, continue at their current rate, or accelerate, it could adversely affect the company’s profitability going forward.
“We are pleased with our increases in sales volumes and revenues,” said Timothy W. Byrne, president and chief executive officer. “While we were able to increase our prices in the first half of the year, our price increases were not nearly enough to offset the increased cost pressures that we have been experiencing. To that end, we have been working with our valued customers to pass along additional price increases during the second half of the year.”
Granite
Granite reported a second-quarter net loss from continuing operations of $2 million, or $0.05 per diluted share, compared to net income from continuing operations of $25 million, or $0.52 per diluted share, in the same period in the prior year.
Adjusted net income from continuing operations totaled $17 million, or $0.38 per diluted share, compared to adjusted net income from continuing operations of $30 million, or $0.66 per diluted share, in the same period in the prior year.
- Revenue decreased $67 million to $768 million compared to $835 million in the prior year.
- Gross profit decreased $20 million to $78 million compared to $98 million in the prior year; and gross profit margin decreased to 10.2% compared to 11.8% in the prior year.
- Selling, general and administrative expenses were $53 million or 6.9% of revenue, compared to $59 million or 7.0% of revenue in the prior year.
Materials revenue in the second quarter increased compared to the same period in the prior year as price increases in both aggregates and asphalt more than offset volume decreases in aggregates and asphalt.
Gross profit and gross profit margin were negatively impacted year over year by higher fuel and liquid asphalt costs as many sales completed in the second quarter were fulfilling orders placed prior to the energy surcharges being implemented in early April. This price impact associated with the timing difference is expected to decline in the third quarter.
“During the second quarter, we continued to implement our strategic plan,” said Kyle Larkin, Granite president and chief executive officer. “The divestiture of the remaining businesses of the legacy Water and Mineral Services group are moving forward. We also announced strategic investments in our home markets with the purchase of aggregates in Salt Lake City and a liquid asphalt terminal in California. Additionally, we secured long-term capital to support investment and growth with the execution of our amended credit facility and we executed on a $50 million accelerated share repurchase. Second quarter results were impacted by additional costs in the ORP as the portfolio continues to be challenging with our teams working to complete them as expeditiously as possible. Our estimate of remaining ORP work going into 2023 is on track and remains largely unchanged.
Looking beyond the ORP, our core business is getting stronger, illustrated by improved gross profit margins excluding the ORP and higher quality CAP in mix and margin. I am pleased with our CAP of $4.2 billion as of the end of the quarter and I am optimistic about the overall environment in our markets as we move into our busiest quarter. While we still have work to do to improve margins on bid day and in project execution, we are making progress and are tracking to the strategic plan projections provided in our last earnings call. We also took an important step forward this quarter as we accrued $12 million for an expected resolution of the SEC investigation.”
Larkin continued, “With our strong balance sheet and liquidity, we expect to continue to invest in our home markets organically as we also actively explore opportunistic bolt-on acquisitions. These investments should bolster and expand existing home markets and position the company for consistent profitable growth.”
Holcim
Holcim reported record net sales of CHF$14,681 million for the first half of 2022, up 16.9% in Swiss francs and 12.7% on a like-for-like basis compared to the prior year. The increase was driven by sales growth in all segments. Net sales in the second quarter alone were CHF$8,240 million, or 13.6% higher like-for-like than the prior-year period.
An outstanding performance was delivered in North America, led by double-digit growth. Market demand was excellent, supported by a significant contribution from the roofing business. Price momentum was also strong with a full order book and robust demand in all end-markets. Sales of aggregates were flat from the first half of 2021.
Holcim is making strong progress on its portfolio transformation with the continued expansion of roofing, insulation and specialty building solutions and eight bolt-ons in the first half of 2022. The Solutions & Products segment reached 18% of the group’s total net sales in the first half of the year, up from 8% for 2020, putting the company on track to reach its strategic goal of 30% of net sales from Solutions & Products by 2025.
Holcim continued to progress in its sustainability ambitions with ECOPact green concrete reaching 10% of ready-mix concrete net sales in the first half of 2022, on its way to delivering the strategic target of 25% of ready-mix sales by 2025. ECOPlanet green cement also achieved significant net sales growth and is now available in 16 markets. Driving circular construction, Holcim recycled 2.9 million tons of construction & demolition waste in its products in the first half of 2022, on track to reach 10 million tons by 2025.
Despite volatile market conditions and geopolitical uncertainty, Holcim expects growth momentum to continue with:
- Growth in net sales of at least 10% LFL, upgraded from 8%, and at least 10% in Swiss francs.
- Double-digit net sales growth in Solutions & Products to achieve net sales of above CHF$5 billion.
- Accelerated progress toward 2025 sustainability targets.
- Positive growth in Recurring EBIT like-for-like and in Swiss francs.
- Free Cash Flow above CHF$3 billion.
CEO Jan Jenisch said: “I would like to thank all members of the Holcim family for their continued resilience and outstanding performance in spite of our challenging times. Our teams are going above and beyond to keep our people and communities safe, while firmly leading our decarbonization journey. I am encouraged by how we are engineering scalable Carbon Capture Utilization and Storage technologies, which are receiving innovation grants in the EU to advance their impact.
“Our record results, from net sales to Recurring EBIT and earnings per share, are setting solid foundations to deliver our ‘Strategy 2025 – Accelerating Green Growth.’ Our roofing and insulation businesses stood out as growth engines, on track to reach pro-forma net sales of CHF$3.5 billion in 2022. This remarkable achievement gives us the confidence to revise our 2022 guidance to at least 10% net sales growth on a like-for-like basis.”