Good third-quarter 2019 growth for Vulcan in aggregate shipments, pricing

Hill

Third-quarter aggregate sales increased 15 percent at Vulcan Materials Co., and gross profit was up 18 percent to $357 million.

According to Vulcan, unit margins increased 46 cents per ton, or 9 percent, to $5.87 per ton.

“We continued to execute well during the third quarter,” says Tom Hill, Vulcan chairman and CEO. “The growth in our aggregates shipments and improvement in pricing were strong.”

A healthy demand environment, led by transportation-related construction, was the principal driver of volume growth and price improvement, according to Vulcan.

Third-quarter aggregate shipments jumped 8 percent compared to the prior-year quarter. Most of Vulcan’s markets reported solid shipment growth, including double-digit growth in certain markets in the Mid-Atlantic, Southeast and Texas.

All of the company’s key markets reported year-over-year price growth in aggregate.

“We remain focused on creating long-term value by compounding unit margins through our four strategic initiatives – commercial excellence, operational excellence, strategic sourcing and logistics innovation, which enhance price growth and operating efficiencies,” Hill says.

Looking to 2020

Hill expects Vulcan to finish 2019 strong, achieving another year of double-digit earnings growth.

“Looking ahead to 2020, we expect another year of strong earnings growth, led by improvement in aggregates unit margins,” Hill says. “With respect to aggregates shipments, our preliminary outlook is for low- to mid-single-digit growth.”

Vulcan-served markets should continue to benefit from public construction demand, he adds, led by significantly higher levels of highway funding in the company’s key states.

“Private construction shipment momentum remains positive across most of our markets,” Hill says. “We expect this shipment momentum to continue into 2020.”

According to Hill, demand fundamentals, including population and employment growth, continue to support longer-term growth in residential and nonresidential construction.

“We also expect a positive pricing environment as the shipment momentum in private demand and visibility of public demand should help drive sales price increases similar to 2019’s mid-single digits range,” he says.

Check out other top producers’ third-quarter results here.