VULCAN REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS

by

in

Strong Earnings and Margin Expansion Underpinned by Uniquely Positioned Aggregates Business

Fourth Quarter Earnings per Share Increased 89% and Gross Profit Margin Expanded 550 bps

Earnings Growth Expected Again in 2024

BIRMINGHAM, Ala., Feb. 16, 2024 /PRNewswire/ — Vulcan Materials Company (NYSE:VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter and year ended December 31, 2023. 

Financial Highlights Include:

Fourth Quarter

Full Year

Amounts in millions, except per unit data

2023

2022

2023

2022

Total revenues

$       1,834

$       1,732

$       7,782

$       7,315

Gross profit

$          472

$          350

$       1,949

$       1,558

Selling, Administrative and General (SAG)

$          142

$          126

$          543

$          515

As % of Total revenues

7.8 %

7.3 %

7.0 %

7.0 %

Net earnings attributable to Vulcan

$          227

$          119

$          933

$          576

Adjusted EBITDA

$          476

$          375

$       2,011

$       1,626

Earnings attributable to Vulcan from
     continuing operations per diluted share

$         1.72

$         0.91

$         7.06

$         4.45

Adjusted earnings attributable to Vulcan from
     continuing operations per diluted share

$         1.46

$         1.08

$         7.00

$         5.11

Aggregates segment

Shipments (tons)

55.3

54.2

234.3

236.3

Freight-adjusted sales price per ton

$       19.32

$       16.96

$       19.00

$       16.40

Gross profit per ton

$         7.67

$         6.04

$         7.40

$         5.96

Cash gross profit per ton

$         9.92

$         8.19

$         9.46

$         7.83

 

Tom Hill, Vulcan Materials’ Chairman and Chief Executive Officer, said, “2023 was an exceptional year for Vulcan Materials.  We generated over $2 billion in Adjusted EBITDA, a 24 percent increase over the prior year, expanded EBITDA margin by 360 basis points and generated $1.5 billion of operating cash flow that can be deployed to grow our business.  Our industry leading aggregates cash gross profit per ton increased each quarter on a year-over-year basis and was $9.46 per ton for the full year, a 21 percent improvement over the prior year.  Six consecutive years of unit profitability improvement during a continuously shifting macro backdrop demonstrates the durability of our uniquely positioned aggregates-led business.  We carry momentum into 2024, and our focus is the same – compounding unit margins through all parts of the cycle and creating value for our shareholders through improving returns on capital.” 

Fourth Quarter Segment Results

Aggregates
Fourth quarter segment gross profit increased 30 percent to $424 million ($7.67 per ton), and gross profit margin expanded 400 basis points.  Cash gross profit improved to $9.92 per ton resulting from continued pricing momentum, solid execution and moderating inflationary pressures.  Improvements in unit profitability were widespread across the Company’s footprint and marked the seventh consecutive quarter of year-over-year growth.

As compared to the prior year, fourth quarter aggregates shipments increased 2 percent.  Shipments in the prior year were disrupted by abnormally wet and cold weather across the majority of the Company’s footprint.  Certain markets in the Southeast continued to benefit from industrial-related nonresidential project activity. 

The pricing environment remained positive with all markets realizing year-over-year improvement in the fourth quarter.  Freight-adjusted selling prices increased 14 percent versus the prior year.  Freight-adjusted unit cash cost of sales increased 7 percent, marking the third consecutive quarter of unit cost deceleration on a trailing-twelve months basis.  Unit cost benefited from lower diesel prices and moderating inflationary pressures on certain parts and supplies.

Asphalt, Concrete and Calcium
Fourth quarter Asphalt segment gross profit was $36 million, an increase of $19 million over the prior year, and gross profit margin expanded 550 basis points to 13 percent.  Shipments increased 20 percent, and price improved 2 percent.  Cash gross profit was $45 million in the fourth quarter, an increase of 73 percent versus the prior year.  Fourth quarter Concrete segment gross profit was $11 million versus $5 million in the prior year.  Cash gross profit was $24 million, and unit cash gross profit improved 53 percent despite lower volumes.  Both the current and prior year included results from now divested concrete assets.  Calcium segment gross profit was $0.6 million compared to $1.1 million in the prior year’s fourth quarter.

Financial Position, Liquidity and Capital Allocation
In 2023, cash provided by operating activities was $1.5 billion, a 34 percent increase over the prior year. Capital expenditures for maintenance and growth projects were $243 million in the fourth quarter and $625 million for the full year.  The Company expects to spend $625 to $675 million for maintenance and growth projects in 2024. 

As planned, the Company deployed $204 million of capital for opportunistic purchases of strategic reserves in California, North Carolina and Texas in the second half of the year.  Additionally, we completed the disposition of our concrete operations in Texas during the fourth quarter.  The sale generated cash proceeds of $485 million that is available to redeploy into our aggregates-led franchise.  During the quarter, the Company also sold real estate in Northern Virginia for cash proceeds of $66 million.

During the year, the Company returned $428 million to shareholders through $200 million of common stock repurchases and $228 million of dividends.  At December 31, 2023, the ratio of total debt to Adjusted EBITDA was 1.9 times, or 1.5 times on a net debt basis, reflecting over $900 million of cash on hand.  The Company’s weighted-average debt maturity was 10 years, and the effective weighted average interest rate was 4.9 percent.  On a trailing-twelve months basis, return on average invested capital improved 280 basis points to 16.3 percent through a combination of solid operating earnings and disciplined capital management.

Outlook

Regarding the Company’s outlook, Mr. Hill said, “We are well positioned to deliver another year of earnings growth and strong cash generation in 2024.  The pricing environment remains positive, and we expect pricing momentum and operational execution will lead to attractive expansion in aggregates unit profitability, regardless of the macro demand environment.” 

Management expectations for 2024 include:

Continued improvement in Aggregates segment cash gross profit per ton ($9.46 in 2023)

Total shipments flat to down 4 percent (234.3 million tons in 2023)
Freight-adjusted price improvement of 10 to 12 percent ($19.00 in 2023)
Mid-single digit increase in freight-adjusted cash cost (freight-adjusted price less segment cash gross profit per ton; $9.54 in 2023)

Total Asphalt, Concrete and Calcium segment cash gross profit of approximately $275 million ($323 million in 2023; which included approximately 4 million cubic yards from concrete operations divested in late 2023)

Relative contribution of approximately 70 percent asphalt and 30 percent concrete

Selling, Administrative and General expenses of $550 to $560 million ($543 million in 2023)
Interest expense of approximately $155 million
Depreciation, depletion, accretion and amortization expense of approximately $610 million
An effective tax rate of 22 to 23 percent
Net earnings attributable to Vulcan of $1.07 to $1.19 billion
Adjusted EBITDA between $2.15 and $2.30 billion

Conference Call
Vulcan will host a conference call at 9:00 a.m. CT on February 16, 2024.  A webcast will be available via the Company’s website at www.vulcanmaterials.com.  Investors and other interested parties may access the teleconference live by calling 800-274-8461, or 203-518-9814 if outside the U.S.  The conference ID is 4460325.  The conference call will be recorded and available for replay at the Company’s website approximately two hours after the call.

About Vulcan Materials Company
Vulcan Materials Company, a member of the S&P 500 Index with headquarters in Birmingham, Alabama, is the nation’s largest supplier of construction aggregates – primarily crushed stone, sand and gravel – and a major producer of aggregates-based construction materials, including asphalt and ready-mixed concrete.  For additional information about Vulcan, go to www.vulcanmaterials.com.

Non-GAAP Financial Measures
Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures, other than the reconciliation of Projected Adjusted EBITDA as included in Appendix 2 hereto. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

FORWARD-LOOKING STATEMENT DISCLAIMER
This document contains forward-looking statements.  Statements that are not historical fact, including statements about Vulcan’s beliefs and expectations, are forward-looking statements.  Generally, these statements relate to future financial performance, results of operations, business plans or strategies, projected or anticipated revenues, expenses, earnings (including EBITDA and other measures), dividend policy, shipment volumes, pricing, levels of capital expenditures, intended cost reductions and cost savings, anticipated profit improvements and/or planned divestitures and asset sales.  These forward-looking statements are sometimes identified by the use of terms and phrases such as “believe,” “should,” “would,” “expect,” “project,” “estimate,” “anticipate,” “intend,” “plan,” “will,” “can,” “may” or similar expressions elsewhere in this document.  These statements are subject to numerous risks, uncertainties, and assumptions, including but not limited to general business conditions, competitive factors, pricing, energy costs, and other risks and uncertainties discussed in the reports Vulcan periodically files with the SEC.

Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary significantly from those expressed in or implied by the forward-looking statements.  The following risks related to Vulcan’s business, among others, could cause actual results to differ materially from those described in the forward-looking statements: general economic and business conditions; domestic and global political, economic or diplomatic developments; a pandemic, epidemic or other public health emergency; Vulcan’s dependence on the construction industry, which is subject to economic cycles; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction; changes in Vulcan’s effective tax rate; the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; the impact of the state of the global economy on Vulcan’s businesses and financial condition and access to capital markets; international business operations and relationships, including recent actions taken by the Mexican government with respect to Vulcan’s property and operations in that country; the highly competitive nature of the construction industry; the impact of future regulatory or legislative actions, including those relating to climate change, biodiversity, land use, wetlands, greenhouse gas emissions, the definition of minerals, tax policy and domestic and international trade; the outcome of pending legal proceedings; pricing of Vulcan’s products; weather and other natural phenomena, including the impact of climate change and availability of water; availability and cost of trucks, railcars, barges and ships as well as their licensed operators for transport of Vulcan’s materials; energy costs; costs of hydrocarbon-based raw materials; healthcare costs; labor relations, shortages and constraints; the amount of long-term debt and interest expense incurred by Vulcan; changes in interest rates; volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses; Vulcan’s ability to secure and permit aggregates reserves in strategically located areas; Vulcan’s ability to manage and successfully integrate acquisitions; the effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan’s products are distributed; the risks of open pit and underground mining; expectations relating to environmental, social and governance considerations; claims that our products do not meet regulatory requirements or contractual specifications; and other assumptions, risks and uncertainties detailed from time to time in the reports filed by Vulcan with the SEC.  All forward-looking statements in this communication are qualified in their entirety by this cautionary statement.  Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this document except as required by law.

Investor Contact:  Mark Warren (205) 298-3220
Media Contact:  Jack Bonnikson (205) 298-3220

Table A

Vulcan Materials Company

and Subsidiary Companies

(in millions, except per share data)

Three Months Ended

 Twelve Months Ended

Consolidated Statements of Earnings

December 31

 December 31

(Condensed and unaudited)

2023

2022

2023

2022

Total revenues

$1,834.3

$1,731.9

$7,781.9

$7,315.2

Cost of revenues

(1,362.1)

(1,382.0)

(5,833.4)

(5,757.5)

Gross profit

472.2

349.9

1,948.5

1,557.7

Selling, administrative and general expenses

(142.4)

(126.4)

(542.8)

(515.1)

Gain (loss) on sale of property, plant & equipment

and businesses

53.7

(17.7)

76.4

10.7

Loss on impairments

0.0

(0.1)

(28.3)

(67.9)

Other operating expense, net

(13.4)

(14.2)

(26.4)

(34.0)

Operating earnings

370.1

191.5

1,427.4

951.4

Other nonoperating income (expense), net

2.6

6.9

(2.7)

5.1

Interest expense, net

(37.4)

(47.6)

(179.6)

(168.4)

Earnings from continuing operations

before income taxes

335.3

150.8

1,245.1

788.1

Income tax expense

(105.0)

(28.5)

(299.4)

(193.0)

Earnings from continuing operations

230.3

122.3

945.7

595.1

Loss on discontinued operations, net of tax

(2.2)

(2.5)

(10.8)

(18.6)

Net earnings

228.1

119.8

934.9

576.5

Earnings attributable to noncontrolling interest

(0.6)

(0.4)

(1.7)

(0.9)

Net earnings attributable to Vulcan

$227.5

$119.4

$933.2

$575.6

Basic earnings (loss) per share attributable to Vulcan

Continuing operations

$1.73

$0.92

$7.10

$4.47

Discontinued operations

($0.02)

($0.02)

($0.08)

($0.14)

Net earnings

$1.71

$0.90

$7.02

$4.33

Diluted earnings (loss) per share attributable to Vulcan

Continuing operations

$1.72

$0.91

$7.06

$4.45

Discontinued operations

($0.02)

($0.02)

($0.08)

($0.14)

Net earnings

$1.70

$0.89

$6.98

$4.31

Weighted-average common shares outstanding

Basic

132.7

133.0

133.0

133.0

Assuming dilution

133.5

133.7

133.7

133.6

Effective tax rate from continuing operations

31.3 %

18.9 %

24.0 %

24.5 %

 

Table B

Vulcan Materials Company

and Subsidiary Companies

(in millions)

Consolidated Balance Sheets

December 31

December 31

(Condensed and unaudited)

2023

2022

Assets

Cash and cash equivalents

$931.1

$161.4

Restricted cash

18.1

0.1

Accounts and notes receivable

Accounts and notes receivable, gross

903.3

1,056.2

Allowance for credit losses

(13.6)

(10.9)

Accounts and notes receivable, net

889.7

1,045.3

Inventories

Finished products

494.4

439.3

Raw materials

51.2

63.4

Products in process

6.5

6.0

Operating supplies and other

63.5

70.6

Inventories

615.6

579.3

Other current assets

70.4

115.9

Total current assets

2,524.9

1,902.0

Investments and long-term receivables

31.3

31.8

Property, plant & equipment

Property, plant & equipment, cost

11,835.5

11,306.4

Allowances for depreciation, depletion & amortization

(5,617.8)

(5,255.1)

Property, plant & equipment, net

6,217.7

6,051.3

Operating lease right-of-use assets, net

511.7

572.6

Goodwill

3,531.7

3,689.6

Other intangible assets, net

1,460.7

1,702.1

Other noncurrent assets

267.7

285.2

Total assets

$14,545.7

$14,234.6

Liabilities

Current maturities of long-term debt

0.5

0.5

Short-term debt

0.0

100.0

Trade payables and accruals

390.4

454.5

Other current liabilities

406.7

401.6

Total current liabilities

797.6

956.6

Long-term debt

3,877.3

3,875.2

Deferred income taxes, net

1,028.9

1,072.8

Deferred revenue

145.3

159.8

Noncurrent operating lease liabilities

507.4

548.4

Other noncurrent liabilities

681.3

669.6

Total liabilities

$7,037.8

$7,282.4

Equity

Common stock, $1 par value

132.1

132.9

Capital in excess of par value

2,880.1

2,839.0

Retained earnings

4,615.0

4,111.4

Accumulated other comprehensive loss

(143.8)

(154.7)

Total shareholder’s equity

7,483.4

6,928.6

Noncontrolling interest

24.5

23.6

Total equity

$7,507.9

$6,952.2

Total liabilities and equity

$14,545.7

$14,234.6

 

Table C

Vulcan Materials Company

Full story available on Benzinga.com


Comments

Leave a Reply

Your email address will not be published. Required fields are marked *