Ongoing recovery drives Vulcan’s third-quarter growth

Vulcan Materials Co.‘s third-quarter net sales increased 13 percent versus the prior year’s third quarter, the company announced upon releasing its results for the third quarter. In addition, the company’s gross profit increased 25 percent from the prior year as each of Vulcan’s major product lines grew in unit shipments from the prior year.

The company’s aggregates shipments increased 9 percent; volumes in ready-mixed concrete and cement increased 17 percent and 10 percent respectively; and asphalt mix volumes increased 4 percent.

“Our third quarter results reflect the continued recovery of our markets and the benefits of the company’s powerful earnings leverage,” says Don James, Vulcan’s chairman and CEO, in a press release. “A 9 percent increase in aggregates volume helped drive a 20 percent increase in aggregates gross profit.”

In the third quarter, cash gross profit per ton of aggregates increased to $4.83 per ton – Vulcan’s highest quarterly unit profitability in more than four years, according to James.

“As a result, cash gross profit per ton on a trailing 12-month basis now is 26 percent higher than at the prior peak level of shipments, setting the stage for better earnings leverage in this cycle,” he says. “Pricing continues to benefit from an improving demand outlook, and we are realizing price improvements across most of our markets.”

James adds that demand for Vulcan’s products continues to benefit from recovery in private construction activity, particularly residential construction, in many of the company’s key markets.

“Growth in residential construction activity and its traditional follow-on impact on private nonresidential construction, continues to underpin our expectations for future volume growth and earnings improvement,” James says.

According to Vulcan, many of its markets experienced double-digit volume growth. Strong private construction demand in Florida led to an increase in shipments of more than 35 percent in the state versus last year’s third quarter, the company said. Shipments in Texas also benefited from stronger demand, particularly large industrial projects, increasing nearly 30 percent versus the prior year.

Increased private construction activity also benefited aggregates shipments in other markets. Arizona, California, Georgia and North Carolina each increased more than 14 percent. Overall, freight-adjusted aggregates prices increased more than 2 percent compared to the prior year.

In the third quarter, Vulcan’s aggregates sales volumes exceeded production levels, lowering segment gross profit about $6 million. Additionally, cost of sales increased $2 million due to increased freight and distribution costs resulting from higher growth in shipments from sales yards along the Gulf Coast.