• Adjusted EBITDA: $581 million, a modest decline due to 10% lower aggregate shipments and divestment of Texas concrete business.
• Aggregate Shipments: Down 10% year-over-year, impacted by extreme weather and hurricanes.
• Freight-Adjusted Average Selling Prices: Improved 10% year-over-year.
• Asphalt Business Margins: Nearly 16% in the third quarter.
• SAG Expenses: $129 million, 6.4% of revenue, 10% lower than the prior year.
• Operating Cash Flow: Nearly $1 billion generated in the first nine months.
• Free Cash Flow Increase: 36% year-to-date.
• Capital Expenditures: Expected between $625 million and $650 million for the full year.
• Net Debt to Adjusted EBITDA Leverage: 1.5x as of September 30.
• Return on Invested Capital: 16.1%, a 70 basis points improvement over the last 12 months.

• Warning! GuruFocus has detected 9 Warning Signs with VMC.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Vulcan Materials Co (NYSE:VMC) reported an expansion in both gross margin and adjusted EBITDA margin despite weather disruptions.
• The company achieved a double-digit increase in aggregates cash gross profit per ton for the eighth consecutive quarter.
• Freight-adjusted average selling prices improved by 10% year-over-year, indicating a positive pricing environment.
• Vulcan Materials Co (NYSE:VMC) announced the acquisition of Wake Stone Corporation, enhancing its presence in the Carolinas.
• The company generated nearly $1 billion in operating cash flow, with a 36% increase in free cash flow year-to-date.

Negative Points

• Vulcan Materials Co (NYSE:VMC) experienced a 10% decline in aggregate shipments due to extreme weather conditions, including four hurricanes.
• Adjusted EBITDA for the quarter was $581 million, a modest decline compared to the previous year.
• The company's West Coast concrete business faced margin compression due to lower volumes related to weak private demand in North Carolina.
• The private nonresidential construction demand remains varied, with warehouse equity being a headwind.
• The company anticipates continued challenges from volume declines and weather impacts in the fourth quarter.

Q & A Highlights

Q: Can you provide more detail on the high single-digit pricing outlook for next year? How much carryover is there from this year, and are there any mix impacts to consider? A: We don't have any mix impacts factored in. Our midyear price increases were as expected, similar to last year, providing a healthy start for 2025. This, combined with our backlogs, gives us good pricing momentum and visibility into next year. We anticipate high single-digit increases for 2025, and with moderating cost increases, we expect continued double-digit unit margin growth.

Q: Could you parse out the weather impacts versus demand in the third quarter, which saw a 10% volume decline? A: Weather has been a significant factor, with 17 of our 20 largest markets experiencing more rain than the prior year. Underlying demand is down mid-single digits, excluding weather impacts. The fourth quarter started with a hurricane, but daily shipping rates have since rebounded, which is encouraging. However, the number of good weather shipping days will determine how we finish the quarter.

Q: What are your expectations for volume growth in 2025, considering the weather impacts this year? A: We expect low single-digit volume growth in 2025, with no significant impact on market share. There will be some carryover from 2024 due to weather delays. We anticipate growth in residential construction and public demand, with some challenges in non-residential and warehouse construction.

Q: Can you provide more details about the Wake Stone acquisition and its expected impact? A: We've known the Wake Stone team for years, and they operate in the fast-growing Triangle region of Eastern North Carolina. We expect to close the acquisition later this year, with historical tonnage in the 8 to 9 million range. This acquisition aligns with our strategy to expand into attractive aggregate markets.

Q: How do you view the public infrastructure demand for 2025 and beyond? A: We see steady growth in public demand, supported by federal and state funding. Six of our largest states are at record funding levels, which should support public demand for several years. The Infrastructure Investment and Jobs Act (IIJA) and additional state funding will positively impact our business.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.