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Vulcan Materials' (VMC) Q3 Earnings Miss, Revenues Beat

Zacks Equity Research

Vulcan Materials Company’s VMC shares declined 7.1%, following its mixed third-quarter 2019 results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same.

Earnings and revenues improved on a year-over-year basis, given solid shipment growth and strong pricing in the aggregates business. Also, robust growth in public construction demand and continued improvement in private demand added to the positives.

Vulcan Materials — which is one of the largest producers of construction aggregates — reported adjusted earnings of $1.68 per share, lagging the consensus mark of $1.70 by 1.2%. However, the company’s bottom line improved 20% from the year-ago level.

Total revenues of $1,418.8 million outpaced the consensus mark of $1,368.3 million by 3.7% and increased 14.4% year over year.

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 15% year over year to $1,133.1 million. Freight-adjusted revenues also rose 14.5% from the prior-year quarter to $858.5 million. The upside was mainly driven by shipment growth, higher pricing, and solid execution of operating disciplines and efficiencies.

Aggregate shipments (volumes) were up 8.4% year over year, reflecting solid underlying demand, mainly arising from public funding for highways, and employment and population growth. The company registered double-digit growth in certain markets in the Mid-Atlantic, Southeast and Texas. All the markets served by Vulcan Materials recorded pricing improvement on a year-over-year basis.

Gross profit of $357.2 million was up 17.6% year over year. Also, gross margin — as a percentage of segment sales — expanded 60 basis points (bps) to 31.5% on the back of solid growth in shipments and price improvements.

Asphalt, Concrete and Calcium

Revenues from the Asphalt Mix segment were $270.2 million, up 16.6% year over year. The segment recorded gross profit of $27.6 million versus $23.9 million a year ago. Asphalt mix selling prices increased 3% or $1.62 per ton and shipments grew 18% from the prior-year quarter.

Unit cost of liquid asphalt recorded a 6% year-over-year increase in the third quarter.

Total revenues from the Concrete segment were $113 million, up 11.1% year over year. Moreover, gross profit totaled $15 million, up 3% year over year. Same-store shipments were up 12.5% year over year and average selling prices grew 1%.

Moreover, total revenues from the Calcium segment were up 10.8% from the prior-year figure to $2.1 million. The segment reported gross profit of $0.8 million versus $0.9 million in the prior-year quarter.

Operating Highlights

Selling, Administrative and General or SAG expenses were $88.8 million, increasing 8.8% year over year. As a percentage of revenues, the metric improved 30 bps year over year. Also, adjusted EBITDA was up 15.1% year over year to $406.8 million, driven by strong shipments and pricing.

Financials

As of Sep 30, 2019, cash and cash equivalents were $90.4 million, up from $40 million at the end of 2018, and $38 million in the comparable year-ago period.

In third-quarter 2019, Vulcan Materials returned $41 million to its shareholders through dividends, which is 11% higher than the year-ago level. Vulcan Materials repurchased $3 million worth of shares. At the end of the quarter, total debt — which amounted to $2.8 billion — was 2.2 times of its trailing 12-month adjusted EBITDA.

2019 Guidance Reiterated

Vulcan Materials expects double-digit earnings growth in 2019. Its earnings from continuing operations for the full year are expected within $4.55-$5.05 and adjusted EBITDA is projected in the range of $1.250-$1.330 billion.

Zacks Rank & Peer Release

Vulcan Materials — which share space with Martin Marietta Materials, Inc. MLM, Summit Materials, Inc. SUM and Eagle Materials Inc. EXP in the Zacks Building Products - Concrete and Aggregates industry — currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Martin Marietta recently reported third-quarter 2019 results, wherein earnings beat the consensus mark by 13.1% and increased 38.9% year over year. The upside was mainly driven by broad-based improvement in shipments, and pricing and profitability across the Building Materials business. This reflects disciplined execution of its strategic plan and operational excellence.

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