Producers overcome adverse weather with price management

By Kevin Yanik| May 12, 2023

Wet weather hampered aggregate shipments in some U.S. regions during the first quarter, but aggressive pricing actions drove earnings for the industry’s public producers.

Both Vulcan Materials and Martin Marietta noted as much about the quarter. Vulcan says shipments declined 2 percent while Martin Marietta indicates they slipped 0.8 percent.

The nation’s top two producers, however, managed pricing effectively as a means to achieve growth.

At Vulcan, freight-adjusted selling prices increased 20 percent – or $3.15 per ton – versus the prior year. Vulcan says all markets realized year-over-year improvement. Also, adjusting for mix impacts, average selling prices at Vulcan increased 19 percent in the first quarter.

Aggregate pricing at Martin Marietta, meanwhile, increased 22.6 percent versus the prior-year first quarter.

“The cumulative effects of our 2022 and Jan. 1, 2023, pricing actions drove robust margin expansion despite continued inflationary pressure and modestly lower aggregates shipments,” says Ward Nye, chairman and CEO of Martin Marietta.

Similarly, CRH says robust first-quarter pricing more than offset the impact of unfavorable weather in certain markets.

“We had a positive start to the year in a seasonally quiet trading period,” says Albert Manifold, chief executive of CRH. “While some adverse weather conditions were experienced in Q1, sales and EBITDA (earnings before interest, tax, depreciation and amortization) were ahead.”

Summit Materials was yet another beneficiary of first-quarter price increases. The company says its average selling prices for aggregates jumped 20.5 percent, marking the strongest quarterly growth rate in Summit’s history.

“It’s clear by our record first-quarter results that we have a solid head start as we enter the prime construction season,” says Anne Noonan, president and CEO of Summit.

The narrative surrounding pricing was very much the same in the first quarter at Arcosa.

“Strong pricing momentum contributed to healthy organic revenue growth and solid unit profitability gains, overcoming volume headwinds in our natural aggregates business,” says Antonio Carrillo, president and CEO of Arcosa.

Weather impacted

While price increases played a role in the first-quarter performances of the industry’s public producers, adverse weather was a running theme for many.

Vulcan, for example, says shipments across the Southeast and East Coast benefited from more favorable weather while significant rainfall throughout most of the quarter impacted California and Texas significantly.

Martin Marietta characterized California’s weather in the first quarter as “historically wet,” but the company says mild weather in the Southeast contributed to strong demand.

Granite Construction president and CEO Kyle Larkin also touched on weather as he reflected on his company’s first quarter.

“With extreme weather in parts of our business, this was not the start of the year that we were hoping for,” says Larkin, whose company shared how aggregate volumes were down 21 percent. “However, I am confident that we are on the right path to realizing the targets of our strategic plan.”