Pricing gains propel public producers in third quarter

By |  November 24, 2022

Most of the aggregate industry’s public producers had published their third-quarter performance reports as P&Q went to press this month, attributing much of their success to sizable gains in aggregate pricing. Here are insights from 10 industry companies:

Logo: Vulcan Materials Company

Vulcan Materials

Continued pricing gains were central to Vulcan Materials’ success in the third quarter, with the company achieving increases to the average selling price of its product lines.

Vulcan’s aggregate business was among the areas to put forth price increases in the quarter. The company says freight-adjusted pricing was $16.79 per ton – an increase of $1.86 per ton, or 12 percent, over the prior year.

“Consistent with our expectations for the second half of the year, strong pricing momentum and solid operational execution led to earnings growth in each of our operating segments,” says Tom Hill, chairman and CEO of Vulcan Materials. “Aggregates cash gross profit per ton improved by 9 percent, a considerable acceleration from the first half of the year. This momentum, along with the ongoing favorable pricing environment and current visibility into private nonresidential and infrastructure demand, reinforces our confidence in our ability to deliver strong earnings growth in 2022.”

The third-quarter gross profit in Vulcan’s aggregate segment was $436 million, an increase of 17 percent from the prior year’s third quarter. Cash gross profit per ton increased 9 percent in the quarter to $8.41 per ton.

Total aggregate shipments jumped 9 percent, reflecting what the company characterizes as “shipment contribution from acquisitions and healthy construction activity levels.” On a same-store basis, Vulcan says shipments increased 3 percent. Shipment growth was geographically widespread, the company adds, and it was particularly strong in the Southeast and California.

“As we look ahead to 2023, leading indicators suggest that growing public construction activity – particularly highways – and the recovery in private nonresidential contract awards should help to offset contracting single-family residential demand,” Hill says. “The pricing environment remains positive, and we carry strong momentum into 2023.”

Logo: Martin Marietta

Martin Marietta

At Martin Marietta, double-digit price increases drove record profitability in the third quarter despite relatively flat aggregate shipments.

Martin Marietta says its building materials business generated record products and services revenues of $1.61 billion in the quarter – a 15.9 percent increase – thanks to acquisitions and pricing growth across all product lines. Products and services gross profit within the building materials business, meanwhile, jumped 13.1 percent.

According to Martin Marietta, third-quarter organic aggregate shipments were flat, largely due to logistical constraints, cement shortages and inclement weather in some markets. Organic aggregate pricing, however, increased 11.9 percent.

“Martin Marietta’s track record of success throughout various business cycles proves the resiliency and durability of our aggregates-led business model, chosen geographies and our ability to adapt to the challenges inherent in a dynamic macroeconomic environment,” says Ward Nye, chairman and CEO of Martin Marietta. “Importantly, we expect that the carryover effects of our 2022 pricing momentum, coupled with our broad-based Jan. 1, 2023 announced price increases, will drive accelerated aggregates unit margin expansion next year.”

Martin Marietta says its third-quarter aggregate product gross profit improved 12.8 percent to a record $330.3 million, while product gross margin declined to 32.5 percent because of increased energy, internal freight, and repair and maintenance costs.

“Martin Marietta’s strategic coast-to-coast footprint is well-positioned for long-term growth, driven by favorable population migration trends, housing shortages in our markets and a long-term federal highway bill complemented by healthy Department of Transportation budgets in the company’s key states,” Nye says. “Near term, we expect affordability-driven headwinds in the single-family residential end market will be offset by a significant acceleration in public infrastructure investment and continued strength in large-scale energy, domestic manufacturing and multifamily residential projects.

Heidelberg Materials logo

Heidelberg Materials

Heidelberg Materials, formerly HeidelbergCement, says its aggregate volume was up slightly in North America in the third quarter, although global deliveries of aggregates fell 3.4 percent.

Companywide, Heidelberg Materials says its revenue increased 13 percent in the third quarter.

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