Vulcan Materials reports strong second quarter

Vulcan Materials Co. announced that its second quarter revenues increased by $62 million, of 7 percent to $957 million over the second quarter of 2015. Gross profit increased $58 million, or 25 percent, to $292 million.

The company’s second quarter results reflect continued strong earnings growth and margin expansion despite below-trend shipment growth due to extremely wet weather and slower than expected large project starts, the company said in a statement. These factors impacted shipments in several key markets, particularly during May.

Compared with the prior year’s second quarter, aggregates shipments rose 1.3 million tons, or 3 percent, and aggregates pricing increased $0.84 per ton, or 7 percent. For the first half of 2016, aggregates shipments grew 9 percent over the same period in 2015, while aggregates pricing increased 8 percent. Second quarter aggregates gross profit grew 23 percent. Net earnings for the second quarter increased 157 percent and adjusted EBITDA increased 21 percent versus the prior year as gross profit margins improved significantly in the Aggregates, Asphalt and Concrete segments.

For the trailing 12 months, net earnings were $355 million and adjusted EBITDA was $963 million, which represent gains of 213 percent and 38 percent, respectively, over the comparable prior year period. Aggregates shipments for this period grew 9 percent, and pricing increased 8 percent. Incremental aggregates gross profit equaled 75 percent of incremental freight-adjusted revenues. Aggregates gross profit as a percentage of freight-adjusted revenues expanded to 39 percent from 32 percent.

Tom Hill, chairman and chief executive officer, said, "The fundamentals of our aggregates-focused business remain attractive, and we are reaffirming our full-year adjusted EBITDA guidance. Weather patterns and the timing of large project activity have led to higher month-to-month and state-to-state variability in our shipments, somewhat masking the continued recovery in construction materials demand across our footprint. In several markets, higher levels of public funding for transportation and other infrastructure have yet to convert into construction activity, creating a ‘lull’ in materials shipments to these end uses. In addition, some markets may have seen a portion of second quarter shipment activity pulled forward into the first quarter. Taken in total, however, our first half aggregates shipment growth of 9 percent was roughly in line with recent trend. Longer-term project pipelines appear healthy, and the foundations for sustained, multi-year volume and pricing growth remain in place.”

"Importantly, our teams continued to manage costs, pricing and product mix well in the quarter," Hill said. "They improved per-ton gross profit in our Aggregates segment by almost 20 percent despite relatively modest shipment growth and uneven production schedules. These disciplines, and the resulting improvements to our customer service and profitability, reinforce our confidence in both our 2016 and longer-term EBITDA outlooks."