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Vulcan's (VMC) Q1 Earnings & Revenues Top Estimates, Stock Up

Vulcan Materials Company VMC reported impressive first-quarter 2023 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate. The top and bottom lines grew on a year-over-year basis.

The nation’s largest producer of construction aggregates saw solid growth in aggregates-led business amid a challenging macro-environment. Focus on operating disciplines and strong pricing actions to overcome inflationary pressures were partly offset by unfavorable weather in California and Texas, and a slowdown in residential construction activity, along with high costs.

Share of the company rose 1.9% in the pre-market trading session on May 4, after the earnings release.

The company increased its full-year earnings view to reflect the pricing momentum and solid execution realized in the first-quarter results. It now expects full-year adjusted EBITDA in the range of $1.850 to $1.950 billion.

Inside the Headlines

Adjusted earnings of 95 cents per share topped the consensus mark of 64 cents by 48.4% and increased 30.1% from the year-ago level of 73 cents per share.

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

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Total revenues of $1,649 million surpassed the consensus mark of $1,581 million by 4.3% and increased 7% year over year.

Segments in Detail

Aggregates

Revenues from the segment increased 15.4% year over year to $1,294.3 million, owing to higher demand across all end-market segments. Aggregate shipments (volumes) declined 2% year over year. The weather across the Southeast and East coast favored shipments on the coasts in the quarter. However, heavy rainfall in California and Texas negatively impacted the company’s shipments throughout most of the quarter. Also, first-quarter volume benefited from a few delayed shipments in the fourth quarter due to unfavorable weather.

Freight-adjusted average sales price rose 20.3% to $18.67 per ton year over year. Freight-adjusted revenues rose 17.4% from the prior-year quarter to $965.9 million. Solid operational execution helped mitigate continued year-over-year inflationary pressure, particularly for parts and services. Effective pricing actions resulted in accelerated growth.

Gross profit of $302.8 million increased 24.7% from the prior year’s levels despite lower shipments. Gross margin expanded 170 basis points (bps) owing to solid pricing.

Asphalt, Concrete and Calcium

Revenues from the Asphalt segment were $169.8 million, up 1.6% year over year. The segment generated a gross profit of $0.8 million against a gross loss of $2.9 million a year ago. Volumes fell 11% year over year due to lower shipments in California and Arizona, the company’s largest asphalt markets, due to significant rainfall in the quarter. Asphalt pricing was up 15%, which was partially offset by 7% higher cost for liquid asphalt.

Total revenues from the Concrete segment were $285.1 million, down 20.9% year over year. Gross loss totaled $2.4 million against a gross profit of $28.2 million in the year-ago quarter due to unfavorable weather in California and Texas, a slowdown in residential construction activity and higher costs for diesel fuel. Shipments fell 30% year over year but average selling prices increased 12.1% to $161.3 per cubic yard from the prior-year level.

Total revenues from the Calcium segment were up to $2.3 million from the prior-year figure of $1.9 million. The segment reported a gross profit of $0.8 million, up from $0.7 million a year ago.

Operating Highlights

Selling, administrative and general (SAG) expenses — as a percentage of total revenues — improved 60 basis points to 7.1% from a year ago. Adjusted EBITDA was up 14.9% year over year to $337.6 million.

Financials

As of Mar 31, 2023, cash and cash equivalents were $139.6 million, down from $161.4 million at 2022-end. Long-term debt was $3,876.9 million at first-quarter 2023-end, compared with $3,875.2 million at 2022-end.

In first-quarter 2023, capital expenditures were $113 million. On Mar 31, 2023-end, total debt to trailing-12-months adjusted EBITDA was 2.3x, down from 2.7x from the year-ago quarter. Return on average invested capital was 13.7%, up 20 bps from 2022-end, on a trailing 12 months basis.

2023 Guidance

For 2023, the company anticipates adjusted EBITDA in the range of $1.850-$1.950 billion and net earnings of $815-$895 million. SAG expenses are expected to be $515-$530 million, with interest expenses of approximately $195 million, depreciation, depletion, accretion, and amortization expense of nearly $610 million, and an effective tax rate of 22%.

In the Aggregates segment, cash gross profit per ton is likely to improve from the 2022 level of $7.83. Total shipments are likely to be down 2-6%. Freight-adjusted price growth is likely to be approximately 15% and freight-adjusted cash cost is estimated to increase in high single digit.

In Asphalt, Concrete and Calcium segment, cash gross profit is expected to be in line with 2022. Asphalt is anticipated to grow on low single-digit growth in volume and price. Also, it is expected to contribute 40-50% of non-aggregates cash gross profit in 2023.

Concrete same-store volumes are expected to decline in the mid-single-digit due to slow residential construction activity. Price growth will likely offset higher raw material cost and contribute approximately 50-60% of non-aggregates cash gross profit.
 
In 2023, the company expects to incur capital expenditures of $600-$650 million.

Zacks Rank & Recent Construction Releases

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

PulteGroup Inc. PHM reported first-quarter 2023 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate and increased year over year.

PHM witnessed solid gross orders, closings and margins in the first quarter and posted a 28% increase in earnings per share and a 12-month return on equity of 32%.

D.R. Horton, Inc. DHI reported second-quarter fiscal 2023 (ended Mar 31, 2023) results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate.

Although earnings and revenues declined on a year-over-year basis on prevailing softness in the market, DHI highlighted that net sales orders increased 73% from the fiscal first quarter, defying the prevailing higher mortgage rates and inflationary pressure.

Meritage Homes Corporation MTH reported better-than-expected results for first-quarter 2023. Both earnings and total closing revenues surpassed the Zacks Consensus Estimate.

The metrics, however, declined from the year-ago quarter’s levels owing to ongoing macroeconomic woes. Impressively, MTH paid its first-ever cash dividend of 27 cents per share in the first quarter, totaling $9.9 million.

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Vulcan Materials Company (VMC) : Free Stock Analysis Report

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