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Vulcan Materials (VMC) Q2 Earnings Lag, Revenues Top, Stock Up

Vulcan Materials Company VMC reported mixed second-quarter 2022 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same. Shares of the nation’s largest producer of construction aggregates edged up 0.5% in the pre-market trading session following second-quarter results.

Revenues increased year over year in the quarter, given higher shipments in each major product line, reflecting solid construction activity and the contribution from acquisitions. However, higher diesel fuel costs and inflationary pressures for many other parts and supplies weighed on the bottom line.

Looking ahead, chairman and CEO Tom Hill said, "Our teams continued to execute well and delivered another quarter of solid earnings growth amidst a challenging backdrop.  We are well on our way to delivering another year of double-digit earnings growth.”

Inside the Headlines

Adjusted earnings of $1.53 per share missed the consensus mark of $1.66. The company’s bottom line dropped 2.5% from the year-ago level.

Total revenues of $1,954.3 million, however, surpassed the consensus mark of $1,854 million by 5.4% and increased 43.6% year over year. This upside was led by the acquisition of U.S. Concrete operations and strong growth in the aggregates business.

Vulcan Materials Company Price, Consensus and EPS Surprise

Vulcan Materials Company Price, Consensus and EPS Surprise
Vulcan Materials Company Price, Consensus and EPS Surprise

Vulcan Materials Company price-consensus-eps-surprise-chart | Vulcan Materials Company Quote

Segments in Detail

Aggregates

Revenues from the segment increased 24.6% year over year to $1,401.8 million, owing to higher demand across all end-market segments. Aggregate shipments (volumes) increased 9% year over year (up 2% on a same-store basis). Strong demand and a positive pricing environment across the globe supported growth. This depicts growth in both private and public construction activity.

For the quarter, freight-adjusted average sales price inched up 9% (10% on a mix-adjusted basis) from the prior-year level. Freight-adjusted revenues also rose 18.6% from the prior-year quarter to $1,036.6 million.

Gross profit of $402.4 million was up 7.7% year over year, backed by price growth and solid operational execution, offsetting cost headwinds that includes higher diesel fuel costs and inflationary pressures for many other parts and supplies.

Asphalt, Concrete and Calcium

Revenues from the Asphalt segment were $274.8 million, up 29.3% year over year. The segment generated a gross profit of $13.6 million compared with $13.5 million a year ago. Volumes grew 9% driven by growth in Arizona, California and Texas, three of the company's largest asphalt markets. This was offset by higher pricing for liquid asphalt (high by 42%) and $4 million year-over-year increase in natural gas cost.

Total revenues from the Concrete segment were $422.3 million, up 339.4% year over year. Further, gross profit totaled $30 million, up from $10 million a year ago. The upside was attributable to higher shipments and price growth in its legacy operations, as well as the contribution from USCR operations. Shipments grew 287.3% year over year, and average selling prices increased 13.9% from the prior-year level.

Total revenues from the Calcium segment were down from the prior-year figure of $1.9 million to $1.4 million. The segment reported a gross profit of $0.2 million, down from $0.8 million a year ago.

Operating Highlights

Selling, administrative and general expenses — as a percentage of total revenues — improved to 6.9% from 7.4% a year ago. Adjusted EBITDA was up 10.9% year over year to $450.2 million.

Financials

As of Jun 30, 2022, cash and cash equivalents were $120.7 million, down from $235 million at 2021-end. Long-term debt was $3,873.7 million at June-end, almost in line with $3,874.8 million at 2021-end.

2022 Guidance Updated

For 2022, the company anticipates adjusted EBITDA in the range of $1.60-$1.70 billion versus $1.720-$1.820 billion expected earlier. Net earnings are expected within $680-$760 million versus $800-$890 million of prior expectation. The updated guidance depicts the solid pricing momentum in aggregates business and higher-than-expected energy-related cost inflation.

Zacks Rank

Vulcan Materials currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A Few Recent Construction Releases

Martin Marietta Materials, Inc. MLM reported impressive second-quarter 2022 results. Earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis, backed by improved pricing across businesses and higher demand.

Despite increased inflationary pressure from rising input costs and a challenging macroeconomic and geopolitical environment, solid execution of its strategic business plan and resilient aggregates-led business drove the result.

EMCOR Group, Inc. EME reported solid results for second-quarter 2022. The top and bottom lines surpassed the Zacks Consensus Estimate and increased year over year.

EME’s management approved a 15.4% hike in its regular quarterly dividend to 15 cents, payable on Oct 31 to stockholders of record as of Oct 18, 2022. Also, it authorized a new share repurchase program to repurchase up to an additional $500 million of its outstanding common stock.

United Rentals, Inc. URI posted better-than-expected second-quarter 2022 results. Better fleet productivity on broad-based rental demand in construction and industrial verticals, higher total and rental revenues along with stronger pricing helped the company to boost profit.

URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given broad-based end-market activity, contractor backlogs, customer sentiment and our visibility through the balance of the year.


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