A month has gone by since the last earnings report for Vulcan Materials (VMC). Shares have lost about 4.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Vulcan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Vulcan Materials (VMC) Q1 Earnings Top, View Up, Shares Rise
Vulcan Materials Company reported first-quarter 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Notably, both the top and bottom lines beat the consensus mark for the second straight quarter.
Tom Hill, chairman and chief executive officer of Vulcan, said, "Our first quarter results are a testament to the resiliency of our best-in-class aggregates business. While severe winter weather conditions in February resulted in an uneven start to the year, strong execution from our teams allowed us to drive earnings growth and margin expansion. As the construction season got underway during March, many of our key markets began to see shipments rebound. Our four strategic disciplines helped us grow our aggregates cash gross profit by 9 percent to $6.56 per ton."
Inside the Headlines
Vulcan Materials reported adjusted earnings of 69 cents per share, beating the consensus mark of 41 cents by 68.3%. The company’s bottom line also grew 46.8% on a year-over-year basis.
Total revenues of $1,068.3 million surpassed the consensus mark of $1,013 million by 5.5%. The top line also advanced 1.8% year over year.
Segments in Detail
For the first quarter, revenues in the segment grew 3% year over year to $894.9 million. Aggregate shipments (volumes) were up 3% year over year.
For the quarter under review, freight-adjusted average sales price increased 1.9% from the prior-year quarter. Prices are expected to increase sequentially for the remainder of the year as well. Freight-adjusted revenues also increased 5.1% year over year to $681.2 million.
Gross profit of $223.6 million was up 15.2% year over year. Adjusted gross margin — as a percentage of segment sales — expanded 260 basis points (bps) to 20.5% (excluding freight & delivery).
Asphalt, Concrete and Calcium
Revenues in the Asphalt segment were $147.2 million, up 5.3% year over year. The segment incurred gross loss of $3 million, wider than the year-ago loss of $2.4 million. This was mainly due to the impact of weather conditions in Alabama, Tennessee and Texas.
Total revenues in the Concrete segment were $81.4 million, down 14.1% year over year. Gross profit totaled $7.8 million, down from $9.2 million a year ago. For the first quarter, shipments fell 16% year over year, thanks to inclement weather in Virginia. Nonetheless, average selling prices rose 3% year over year.
Total revenues in the Calcium segment were up 1.7% year over year to $2.1 million. The segment reported gross profit of $0.9 million, unchanged from the prior-year level.
For the quarter, Selling, Administrative and General or SAG expenses — as a percentage of total revenues — remained unchanged from the year-ago level of 8.3%.
Adjusted EBIT increased 36.3% from the prior-year quarter to $143.9 million. Adjusted EBITDA also rose 21.5% year over year to $244.3 million. Adjusted EBITDA margin improved 370 bps year over year to 22.9%. Notably, the improvement was backed by aggregates price growth and effective cost management.
As of Mar 31, 2021, cash and cash equivalents were $744.3 million, down from $1,197.1 million at 2020-end. Long-term debt was $2,772.9 million, slightly up from $2,772.2 million at 2020-end.
Raised 2021 View
For 2021, the company now anticipates adjusted EBITDA in the range of $1.380-$1.460 billion versus $1.340-$1.440 billion expected earlier. SAG expenses are expected in the range of $365-$375 million. EPS for 2021 are anticipated between $4.85 and $5.30 versus prior expectation of $4.80-$5.40. Also, it expects aggregates shipments to grow between 1% and 4%. Earlier, it expected shipment growth between (2%) and 2%.
Meanwhile, the company expects year-over-year growth in aggregates freight-adjusted price between 2% and 4%. Depreciation, depletion, accretion and amortization expense is expected to be $400 million. It remains optimistic about the pricing environment for 2021.
For 2021, Vulcan Materials expects to spend between $450 and $475 million on capital expenditures, including growth projects.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
Currently, Vulcan has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Vulcan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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