Vulcan Materials announced results for the third quarter ended Sept. 30, reporting total revenues of $2.186 billion versus $2.088 billion during the same period in 2022.
In the third quarter, segment gross profit increased 17% to $508 million ($7.95 per ton), and gross profit margin expanded 200 basis points. Cash gross profit per ton improved 18% to $9.92 per ton. These improvements resulted from continued pricing momentum and solid operational execution.
Aggregates shipments decreased 2% as compared to the prior year’s third quarter. Shipment growth in certain Southeastern markets continued to benefit from healthy industrial project activity, which dampened the impact of weakness in residential demand.
Price growth in the third quarter was consistently strong with all markets realizing year-over-year improvement. Freight-adjusted selling prices increased 15%, or $2.50 per ton, as compared to the prior year, more than offsetting a 12% increase in freight-adjusted unit cash cost of sales.
On a sequential basis, freight-adjusted selling prices continued to improve, reflecting momentum from mid-year price increases, price growth realized on backlogged projects, and the added benefit of positive geographic mix (approximately 200 basis points).
The favorable pricing environment coupled with strong operational execution has led to consistent improvement in unit profitability through the first nine months. On a year-to-date basis, cash gross profit per ton has improved 21% to $9.31 per ton. Gross profit margin has expanded year over year in each quarter and has improved 220 basis points year-to-date.
Tom Hill, Vulcan Materials’ president and chief executive officer, said, “Through the first nine months of 2023, Adjusted EBITDA has improved 23% over the prior year, and margin has expanded 340 basis points. Aggregates cash gross profit per ton has improved 21% and now exceeds $9 per ton. These strong results demonstrate the compounding benefits of our strategic disciplines and the durability of our aggregates-led business. We remain focused on finishing the year strong and carrying solid momentum into next year. As a result, we now expect our full-year Adjusted EBITDA to be $1.95 to $2.00 billion for 2023.”
- Asphalt segment gross profit was $56 million, an increase of $26 million over the prior year’s third quarter, and gross profit margin expanded 660 basis points.
- Concrete segment gross profit was $26 million, and gross profit margin expanded 120 basis points.
- Calcium segment gross profit approximated the prior year’s third quarter.
Regarding the company’s outlook for the remainder of 2023, Hill said, “We continue to execute at a high level and successfully navigate the twists and turns of the broader macro economy. Regardless of the macro environment, aggregates can be a price-cost winner in all parts of the cycle. Our year-to-date unit profitability growth of more than 20 percent demonstrates the durability of our business. Aggregates shipments continue to trend towards the upper end of full-year expectations, supported by industrial-related nonresidential projects in key markets and IIJA-related construction activity. As a result, we expect full-year Adjusted EBITDA of $1.95 to $2.00 billion, a 21 percent improvement at the midpoint.”
Hill continued, “We expect 2024 to be another year of earnings growth and strong cash generation. Geographic footprint is important, from both a diversification and growth standpoint, and ours is unmatched. Leading indicators remain supportive of continued growth in public construction activity, and we are well positioned in high growth markets where the need is greatest. On the private side, recovery in single-family construction activity and healthy shipment levels to large industrial-related projects, particularly manufacturing, will help partially offset continued softness in multi-family construction as well as other categories of nonresidential. The overall pricing environment remains positive, and we carry good momentum into 2024. We have a durable business model with strong fundamentals through economic cycles. We are positioned in geographic markets that will continue to outperform other parts of the country, and our continued execution on our operating and commercial disciplines will lead to another year of earnings growth in 2024.”