Aggregate shipments rise at Vulcan Materials

Hill

Vulcan Materials‘ second-quarter net earnings were up significantly to $160 million, a jump from $112 million in the prior-year period.

The company experienced 11 percent growth in gross profit, led by a 13 percent increase in its core aggregate segment. Aggregate shipments increased 15 percent and the average selling price for aggregate, adjusted for mix, rose 3 percent over the prior-year period.

A 30 percent increase in diesel cost per gallon did, however, lower Vulcan’s aggregate segment gross profit by $7 million, the company says. Despite this headwind, Vulcan’s gross profit in aggregate in the quarter increased to $283 million.

“We remain on track with our full-year expectations,” says Tom Hill, chairman and CEO at Vulcan. “Vulcan-served markets are experiencing stronger growth in demand than other markets, and higher public funding for transportation infrastructure is now converting to higher shipments of aggregates.

“We expect the strong aggregates shipment growth seen in the second quarter to continue for the balance of the year,” Hill adds.

Vulcan also expects aggregate shipment growth for the balance of the year to be consistent with what the company experienced in the second quarter.

“We also expect aggregates pricing to strengthen throughout the remainder of the year and heading into 2019,” Hill says. “Geographic and product mix may continue to impact reported average selling prices, but the underlying direction remains clear, strongly supported by our strategic and tactical focus on compounding pricing improvements. The rate at which we convert same-store incremental revenues into incremental gross profit in the aggregates segment should improve further in the second half, particularly as we move past the storm-related costs of 2017.

“In total, we project full-year aggregates segment gross profit in line with our beginning-of-year expectations, as stronger shipments work to offset higher diesel and other input costs,” Hill adds.

As a whole, Vulcan’s total revenues increased by $169 million in the second quarter, or 16 percent, to $1.2 billion. The company’s quarterly gross profit was $323 million versus $290 million in the prior-year period.

“Our business is positioned for continued shipment growth, compounding pricing improvements, and further gains in unit profitability in the second half of the year and into 2019,” Hill says. “Public construction demand is beginning to join the sustained recovery in private demand and Vulcan-served markets are benefiting disproportionally.”