Pricing momentum continues for Vulcan in third quarter

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

Vulcan’s aggregate business was among the areas to put forth price increases in the third 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 in the third quarter, 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.

Additionally, Vulcan says solid operational execution helped to offset cost headwinds, including higher diesel fuel costs and continued inflationary pressures for parts and supplies.

Companywide for the third quarter, Vulcan reports that its total revenues increased 38 percent; that gross profit was up 25 percent; and that adjusted earnings before interest, tax, depreciation and amortization were up 21 percent.

“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.”

According to Hill, Vulcan is positioned well for continued growth.

“We have a durable business model with strong fundamentals and less execution risk through economic cycles,” he says. “This durability is evidenced by the consistent growth in our aggregates unit profitability, despite ongoing volatility in the macro environment. We are positioned in geographic markets that will continue to outperform other parts of the country from a demand perspective – both in the near term and longer term – and we expect both the favorable pricing dynamics and our strong execution to lead to continued earnings growth.”

Featured photo: Vulcan Materials