Vulcan Materials Reports Solid First-Quarter Results as Demand Remains Healthy

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.