Vulcan's (VMC) Q2 Earnings & Revenues Top Estimates, Stock Up
Vulcan Materials Company VMC reported stellar results for the second quarter of 2023, surpassing the Zacks Consensus Estimate for both earnings and revenues. The company experienced solid growth in both its top and bottom lines compared to the previous year. This performance can be attributed to the consistent strategic execution and the strong performance of its aggregates-led business. Additionally, the company benefited from large industrial projects and steady residential construction activity, which further contributed to its better-than-expected results.
Given the aggregates shipment trends and the earnings momentum in the Asphalt segment, the company lifted its full-year expectations.
Shares of the nation’s largest producer of construction aggregates jumped 1.6% on Aug 3 post the earnings release.
Vulcan Materials Company Price, Consensus and EPS Surprise
Vulcan Materials Company price-consensus-eps-surprise-chart | Vulcan Materials Company Quote
Inside the Headlines
Adjusted earnings per share (EPS) of $2.29 topped the consensus mark of $1.91 by 19.9% and increased 49.7% from the year-ago level of $1.53.
Total revenues of $2,113 million surpassed the consensus mark of $2,062 million by 2.5% and increased 8.1% year over year.
Segments in Detail
Aggregates
Revenues from the segment increased 12.6% year over year to $1,578.4 million due to higher pricing, wherein our model expected the segmental revenues to grow 6% to $1,486.3 million year over year. Aggregate shipments (volumes) declined 1% year over year, with variations observed across different geographic regions. After a weather-impacted first quarter, shipment activity in California rebounded strongly. Additionally, certain markets in the Southeast experienced robust shipment activity, primarily driven by demand from industrial projects.
Freight-adjusted average sales price rose 15% to $18.69 per ton year over year. Freight-adjusted revenues rose 14.3% from the prior-year quarter to $1,184.4 million. Solid operational execution helped mitigate continued year-over-year inflationary pressure. Effective pricing actions resulted in accelerated growth.
Gross profit of $498.6 million increased 23.9% from the prior year’s levels despite lower shipments. Gross margin expanded 290 basis points (bps) owing to solid pricing and higher efficiencies.
Asphalt, Concrete and Calcium
Revenues from the Asphalt segment were $337.4 million, up 22.8% year over year. This segment’s reported figure was up from our prediction of $264.8 million, which suggested a 3.6% decline from the prior year. The segment generated a gross profit of $56.6 million, up from $13.6 million a year ago. Shipments registered a substantial increase of 16%, driven by robust growth in Arizona and California, which are the company's largest asphalt markets. Asphalt pricing was up 9%.
Total revenues from the Concrete segment were $343.5 million, down 18.7% year over year. Our model predicted segment sales to be $402.3 million (down 4.7% year over year). Gross profit totaled $27 million, down from $30 million in the year-ago quarter. Shipments fell 25% year over year but average selling prices increased 10.1% to $163.83 per cubic yard from the prior-year level. The second-quarter shipments were influenced by two main factors: firstly, the impact of divesting the company's operations in New York, New Jersey, and Pennsylvania in the previous year, and secondly, a slowdown in residential construction activity.
Total revenues from the Calcium segment were up to $2.4 million from the prior-year figure of $1.4 million. The company reported better than our expectation of $2.3 million (up 62.4% year over year). The segment reported a gross profit of $1.1 million, up from $0.2 million a year ago.
Operating Highlights
Selling, administrative and general expenses — as a percentage of total revenues — improved 30 bps to 6.6% from a year ago. Adjusted EBITDA was up 32.2% year over year to $595.3 million.
Financials
As of Jun 30, 2023, cash and cash equivalents were $166 million, up from $161.4 million at 2022-end. Long-term debt was $3,873.2 million at the second quarter of 2023-end, slightly down from $3,875.2 million at 2022-end.
In the first half of 2023, capital expenditures were $270 million. On Jun 30, 2023, total debt to trailing-12-months adjusted EBITDA was 2.1x, down from 2.6x from the year-ago quarter. Return on average invested capital was 14.7%, up from 13.6% a year ago on a trailing 12 months basis.
2023 Guidance Raised
For 2023, the company now anticipates adjusted EBITDA in the range of $1.9-$2 billion and net earnings of $855-$935 million. In the Aggregates segment, total shipments are likely to be down 1-4%.
In Asphalt, Concrete and Calcium segment, cash gross profit is expected to be approximately $295 million.
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.
KBR, Inc. KBR reported mixed second-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus estimate for the seventh straight quarter. Revenues, on the other hand, surpassed the mark in three of the trailing seven quarters and missed on other four occasions.
Although KBR’s quarterly earnings were impacted by losses related to convertible notes and a legacy legal matter, the company delivered a strong quarter of financial performance and environmental, social and governance or ESG performance, underpinned by its mission focus and operational discipline.
EMCOR Group, Inc. EME reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing year over year. Strength across the segments and market helped the company to achieve 11% higher organic revenues.
EMCOR maintained annual revenue guidance in the range of $12-$12.5 billion. EPS is expected to be within $10.75-$11.25, indicating an improvement from the previously expected range of $9.25-$10.00. The effective tax rate is likely to be 27.5-28% for 2023.
RPM International Inc. RPM reported decent fourth-quarter fiscal 2023 (ended May 31, 2023) results, with earnings and sales beating the Zacks Consensus Estimate. Despite a year-over-year decline in earnings, the company marked its sixth consecutive quarter of record sales, suggesting an increase.
Although challenging conditions impacted certain end markets, RPM’s adaptability and diverse business model helped it grow. The company benefited from businesses selling engineered solutions for infrastructure and reshoring-related capital projects.
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