Company Reports

We are transferring coverage of US building materials companies Vulcan Materials, Martin Marietta, and Amrize. The companies produce aggregates, cement, ready-mix concrete, and other building materials used across infrastructure, nonresidential, and residential construction.

Vulcan is the largest construction aggregates producer in the US and also operates smaller ready-mix concrete and asphalt businesses. Over the past several years, the company has increasingly focused its portfolio on aggregates while reducing its exposure to downstream products. Vulcan operates across 23 US states, with additional operations in Mexico.

Aggregates producer Vulcan Materials is positioned well to benefit from the ongoing recovery of US 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.

Vulcan Materials reported second-quarter sales growth of 2.5% year over year. Results were driven by 1% volume and 5% pricing growth in aggregates sales offsetting declining asphalt and concrete sales.

Vulcan Materials reported first-quarter sales growth of 7% year over year. Results were driven by 5% volume growth in the firm's aggregates sales.

Vulcan Materials reported fourth-quarter sales growth of 3.2% year over year. Over the full year, sales grew 7% driven by strength in the firm's aggregates segment.

Aggregates producer Vulcan Materials is positioned well to benefit from the ongoing recovery of US 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 positioned well to benefit from the ongoing recovery of US 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.

Net sales for Vulcan increased 14.4% in the third quarter compared with the same period a year ago, mostly due to the acquisition of operations in the concrete business and strong growth in aggregates shipments and selling prices.

Net sales for Vulcan rose 4.4% in the second quarter from a year ago, mainly due to acquired operations in the concrete business. While aggregates shipments were lower in the quarter, this was more than offset by selling price gains.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of US 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 US 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' first quarter came with few surprises as higher selling prices offset some shipment headwinds. Net sales rose almost 6% year over year as all three segments experienced growth in the quarter. Vulcan reported a 25.1% adjusted EBITDA margin in the quarter, up more than 400 basis points from a year ago, driven by gains across much of its portfolio. Price increases were robust across Vulcan’s portfolio as the company continues to flex its pricing power. Demand remains mixed, and private sector construction remains somewhat constrained. While Vulcan’s direct exposure to tariffs is limited, economic disruptions related to tariffs could affect private sector construction spending further. Nevertheless, we are impressed with Vulcan’s pricing gains in the quarter and expect much of the headwind in the private sector to be offset by infrastructure projects. We have increased our fair value estimate to $188 per share from $185 due to the time value of money.

Narrow-moat-rated Vulcan Materials' fourth-quarter results were ahead of our expectations as the firm realized higher selling prices despite mixed end market demand. Net sales rose 1.1% year over year as gains in aggregates and asphalt were offset by a large divestiture in the company’s concrete business. Vulcan reported an impressive 29.7% adjusted EBITDA margin in the quarter, up almost 400 basis points from a year ago, driven by strong results in the aggregates business. While some demand headwinds remain, Vulcan continues to push higher selling prices in its aggregates business despite lower volumes, which we think is a testament to the company’s durable pricing power. As such, we have increased our fair value estimate to $185 per share from $169 due to higher near-term selling prices and profitability in our forecast.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of US 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' third-quarter results fell below our estimates as unfavorable weather conditions exacerbated volume headwinds. Net sales were down 8% year over year, including the impact from the previously divested concrete assets in Texas. Nonetheless, adjusted EBITDA margin expanded 120 basis points to 28.2%, driven by pricing gains in the company’s aggregates business. We are impressed by Vulcan’s ability to expand margin despite lower volume, which we view as a testament to the company’s pricing power. As such, we have increased our fair value estimate to $169 per share from $166.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of US 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 US 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 reported mixed second-quarter results as aggregate volumes remained pressured. Net sales fell almost 5% year over year, mainly due to the sale of some Texas concrete assets last year as Vulcan’s other two segments reported positive revenue growth in the quarter. Higher interest rates continue to constrain construction markets, but there are pockets of growth, such as data centers and single-family housing starts. While some near-term demand pressures will remain, ramping infrastructure spending and robust aggregate price growth should provide relief in the second half of the year. As such, we have increased our fair value estimate to $166 from $164 per share.

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery of US 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.