Company Reports

Narrow-moat-rated Vulcan Materials reported strong fourth-quarter results that wrapped up an impressive year for the company. While end market demand was largely flat for most of the year, robust price growth across Vulcan’s entire portfolio drove solid financial results. Net sales in the fourth quarter rose almost 6% year over year, while full-year 2023 sales were up 6.5% from the year before. Consolidated gross margins in the fourth quarter expanded more than 500 basis points to 25.7%, largely due to contributions from Vulcan’s aggregates and asphalt businesses. Vulcan continues to wield its pricing power, especially in its competitively advantaged aggregates business. While we expect overall end market demand will remain roughly flat for 2024, additional pricing gains across its portfolio should drive solid growth for Vulcan. As such, we have increased our fair value estimate to $162 from $154 per share.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty but did not solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.

Vulcan Materials reported third-quarter results that were largely in line with our expectations. Net sales rose almost 5% year over year, led by the strength in Vulcan’s aggregates and asphalt businesses. Consolidated gross margins continued to improve, expanding 340 basis points to 27%, largely due to robust aggregate pricing gains. Despite these gains, weak residential construction continues to weigh on Vulcan’s shipments and has shown little sign of improvement throughout the year. While infrastructure and nonresidential projects have buoyed volumes, softening nonresidential demand could create additional volume pressure. Nevertheless, we maintain our $154 fair value estimate.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty but did not solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.

Narrow-moat-rated Vulcan Materials reported strong second-quarter results, with net sales increasing 8% year over year amid steady end-market demand. Consolidated gross margins expanded almost 500 basis points versus a year ago to 27.6% because of strong pricing gains in its aggregates business. Despite a slowdown in residential housing starts, nonresidential construction has remained strong, while Vulcan has been able to raise prices for its materials at an impressive pace. We expect Vulcan’s robust pricing will offset potential volume headwinds in the second half of the year. As such, we've increased our fair value estimate to $154 per share from $146 due to higher near-term revenue and profitability in our forecast.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty but didn't solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.

Narrow-moat-rated Vulcan Materials reported strong first-quarter results that included robust pricing gains and a moderate pullback in shipments. Revenue increased 7% year over year, largely driven by robust growth in the aggregates business. Gross margin expanded 90 basis points year over year to 18.3% as higher raw material costs were offset by higher selling prices. End-market demand remained mixed as pullbacks in residential construction were met with somewhat stable nonresidential demand while public spending made sequential improvements. We've increased our fair value estimate to $146 per share from $145 due to the time value of money.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty but did not solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.

Vulcan reported solid fourth-quarter results as lower volumes and rising costs were largely offset with strong price growth. Consolidated sales increased 8% year over year with strong gains in its aggregates and asphalt businesses. Gross margins were pressured in the quarter, decreasing 170 basis points year over year to 20.2%, largely driven by weather-related disruptions and sequential increases in operating costs. While demand appears to be flattening, pricing remains strong across Vulcan’s portfolio as all product lines saw double-digit price growth in 2022.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty, but did not solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.

Narrow-moat Vulcan Materials reported solid third-quarter results that were largely in line with our expectations. Revenue surged 38% year over year on strong volume, pricing, and the addition of acquisitions. Vulcan's average selling prices rose by double-digit percentages across its business as the firm leveraged its pricing power to offset rising operating costs. That said, gross margins declined roughly 240 basis points versus a year ago to 23.6%, but improved sequentially. We expect additional improvement in the fourth quarter as Vulcan works to expand its margins despite inflationary pressures.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty, but did not solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.

Narrow-moat Vulcan Materials held its investor day on Sept. 29, during which it provided updates on its segment operations and end-market outlook. Following the event, our $141 fair value estimate is unchanged, as our long-term thesis remains intact. Vulcan’s end-market demand was strong through the first half of 2022 thanks to an increase in aggregate-intensive construction projects. Top-line growth has been robust as aggregate volume growth was met with higher selling prices. While inflationary pressure is likely to persist in the near term, we think Vulcan’s pricing power will enable the firm to offset rising operating costs.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty, but didn't solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.

Narrow-moat-rated Vulcan reported second-quarter results that were largely in line with our expectations. Revenue increased 43% year-over year on strong volume, pricing, and the acquisition of U.S. Concrete in late 2021. While top-line growth was robust, Vulcan faced continued operating cost pressure that weighed on margins during the quarter. Gross margins declined roughly 650 basis points to 22.8% versus a year ago due to higher operating costs. That said, second-quarter gross margin was up over 500 basis points sequentially as the firm realized selling price increases from earlier in the year. We expect additional pricing action in the second half of 2022 that should benefit margins in 2023.

After taking a fresh look at our thesis for Vulcan Materials, we have lowered our fair value estimate 5% to $138 per share due to our lower near-term forecast amid heightened economic uncertainty. We are maintaining our narrow economic moat and stable trend ratings as we believe the company benefits from strong intangible assets and a cost advantage driven by its quarry permits and high transportation costs.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty, but didn't solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector.

Narrow-moat-rated Vulcan Materials' first-quarter results were in line with our expectations. Rising cost inflation continues to be the story, as the company’s gross margins (excluding delivery) declined over 510 basis points to 21.2% in the quarter compared with the same period a year ago. That said, we think Vulcan Materials will be able to increase prices in the near term to offset cost pressure (higher energy costs) in the second half of 2022. This leads us to forecast 30.3% gross margins for the full year, roughly 40 basis points above 2021 levels. Vulcan Materials’ sales surged 45% year on year to $1.2 billion (excluding delivery), largely due to strong pricing. In 2022, we project Vulcan Materials’ top line to grow by 26% year on year to $7 billion.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of U.S. construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector.