Why Construction Materials Provider Vulcan Shares Are Surging Today

Vulcan Materials Co VMC shares are trading higher after the company reported fourth-quarter FY23 results.

Revenue of $1.83 billion was in line with the consensus. Gross profit rose to $472 million from $350 million a year ago. Adjusted EPS of $1.46 beat the consensus of $1.39.

In Aggregates segment, segment gross profit increased 30% to $424 million ($7.67 per ton), margin expanded 400 basis points, and cash gross profit improved to $9.92 per ton, led by continued pricing momentum and moderating inflationary pressures. 

In the Asphalt, Concrete, and Calcium segment, gross profit rose 19% to $36 million, with margin expanding 550 basis points and cash gross profit rising 73% to $45 million.

During the year, Vulcan returned $428 million to shareholders through $200 million of share repurchases and $228 million of dividends.

In 2023, operating cash flow stood at $1.5 billion, up 34% Y/Y, and capital expenditures for maintenance and growth projects came in at $243 million. 

Outlook: The company expects net earnings of $1.07 billion-$1.19 billion and adjusted EBITDA of $2.15 billion-$2.30 billion. The company expects to spend $625 million-$675 million for maintenance and growth projects in 2024.  

Vulcan expects continued improvement in Aggregates segment cash gross profit per ton and sees Asphalt, Concrete and Calcium segment cash gross profit of about $275 million.

Tom Hill, Chairman and Chief Executive Officer, 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.” 

Price Action: VMC shares are up 6.94% at $259.29 on the last check Friday.

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