Vulcan CEO reflects on fourth quarter, 2022

Aggregate shipments were down in the fourth quarter at Vulcan Materials Co., but the company’s gross profit deriving from aggregates was up.

Unfavorable weather contributed to shipments dropping 6 percent, Vulcan says, but gross profit grew to $327 million. The absence of materials from Vulcan’s Mexico operations impacted the quarter’s shipments.

Still, fourth quarter freight-adjusted selling prices increased 14 percent, and they were up 10 percent in 2022 over the prior year.

“Our aggregates-led business delivered solid results in 2022 as our teams executed well in a challenging macro-environment,” says Tom Hill, chairman and CEO of Vulcan Materials. “We continued to improve our aggregates unit profitability and demonstrate the resiliency of our business. Our relentless focus on our operating disciplines, coupled with nimble pricing actions to overcome inflationary pressures, led to a 12 percent increase in our full-year adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).”

According to Hill, Vulcan’s fourth-quarter results were negatively impacted by abnormally wet and cold weather that disrupted construction activity and materials shipments. Vulcan also experienced some softening in single-family residential demand.

“Despite these disruptions, our industry-leading aggregates cash gross profit per ton increased 11 percent in the fourth quarter,” Hill says. “We carry solid pricing momentum into 2023 and are focused on our operating disciplines to manage costs and improve efficiencies. By controlling what we can control, we expect to deliver another year of earnings growth.”

2023 outlook

Hill

Several indicators of demand remain healthy in the near term, according to Vulcan, and the company expects to carry its pricing growth momentum into 2023.

“Overall shipments will be dependent upon the depth and duration of the decline in residential construction activity, the timing of highway starts converting to aggregates shipments, and the impact of rising interest rates on private nonresidential construction activity as the year progresses,” Hill says. “We are encouraged by the strength in leading indicators that support growth in public construction activity, particularly highways, and we are well positioned to benefit in geographic markets where the need is greatest.”

Slowing single-family construction activity is outweighing continued growth in multi-family construction, Hill adds. This leads to overall declines in residential demand.

Nonresidential demand, however, remains at a healthy level. According to Vulcan, it continues to benefit from manufacturing and other heavy industrial projects.

“As always, we are focused on the things we can control, and our execution on our operating and commercial disciplines will lead to further improvement in our aggregates unit profitability and earnings growth in 2023,” Hill says.