Aggregates drive growth for Vulcan Materials in second quarter

Cumulative sales from the second quarter to Vulcan Materials totaled $1.4 billion, up 24.5% from the second quarter of 2021.

Gross profit for the company’s overall segment in the quarter reached $402 million, an increase of 8% ($28.6 million) from the second quarter of last year. Cash gross margin per ton increased 2% to $7.99.

Overall shipments increased 9% in the second quarter compared to April, May and June 2021. Vulcan says the increase reflects the contribution of shipments from acquisitions and construction activities, in line with its expectations.

“Our teams continued to perform well and delivered another quarter of solid earnings growth in a challenging environment,” said Tom Hill, President and CEO of Vulcan. “We are on track to deliver another year of double-digit earnings growth.”

Total second-quarter revenue rose 43.6% to $1.95 billion from a year earlier, according to Vulcan. Average selling prices rose in every product line, helping to offset inflationary pressures.

“We have increased our overall gross profit by 11% over the past 12 months despite continued inflation and other external headwinds,” Hill said. “Strong growth in aggregate prices and a relentless focus on operational disciplines will help us maintain this momentum.

“Our asphalt pricing actions, which began late last year, are increasingly offsetting sharply higher liquid asphalt costs, and we remain focused on growing our gross profit in our asphalt segment,” adds Hill. “Concretely, the leading indicators of private non-residential construction activity and a favorable pricing environment will support earnings growth in 2022.”

Complementary analysis

Vulcan says its overall second-quarter results included the impacts of what it called an unexpected and arbitrary shutdown by the Mexican government of its operations in Mexico in early May.

The Mexican government argued that Vulcan caused environmental damage due to mining below the water table. In a statement released following the decision, Vulcan called the action illegal, saying the company had been mining limestone legally in Mexico — on its own land — for more than 30 years.

Due to the shutdown, Vulcan says it faces a possible impact to EBITDA (earnings before interest, taxes, depreciation and amortization) of $80 million to $100 million if it is unable to operate in Mexico for the rest of the year.

“We are updating our full-year Adjusted EBITDA guidance range to reflect considerable pricing momentum in our aggregates business, as well as higher-than-expected energy-related cost inflation. forecast that currently affects each of our segments,” Hill said. “In addition, our outlook now reflects the previously disclosed impact of closing our operations in Mexico for the remainder of 2022.”

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