Materials
Building Materials
$34.98B
10.4K
Vulcan Materials Company is the largest U.S. supplier of construction aggregates, including crushed stone, sand, and gravel, and a major producer of asphalt mix and ready-mixed concrete. The company operates primarily in the U.S. and serves both public and private sectors, providing essential materials for infrastructure and construction projects. Vulcan leverages its extensive network of facilities and strategic reserves to maintain a competitive advantage in key markets.
Key insights and themes extracted from this filing
Total revenues increased by $466.7 million, or 6%, to $7,781.9 million, primarily due to a 12% increase in the aggregates segment revenue to $5,909.9 million. This growth was partially offset by a 7% decrease in the combined asphalt, concrete and calcium segments.
Gross profit increased by $390.9 million, or 25%, to $1,948.5 million, driven by a 23% increase in aggregates gross profit to $1,733.6 million. This resulted in a gross profit margin of 25.0%, up from 21.3% in the prior year.
Net earnings attributable to Vulcan increased by $357.6 million, or 62%, to $933.2 million, driven by strong revenue growth and margin expansion. Adjusted EBITDA increased by 24% to $2,011.3 million, reflecting operational efficiencies.
The company's strategy emphasizes its aggregates-focused business, with a disciplined approach to downstream asphalt and concrete businesses in select markets. This is evidenced by the divestiture of concrete operations in Texas and the exit from concrete markets in New Jersey, New York and Pennsylvania.
The company has invested $2,233.1 million in acquisitions from 2021 to 2023, including over 70 aggregates quarries and sales yards in top revenue states. Capital expenditures of $200.8 million in 2023 were directed to securing new reserves, developing new sites, and enhancing distribution capabilities.
The company is actively managing its 300,000-acre land portfolio to create maximum value, including pre-mining agricultural use, post-mining conversion to other valuable uses, and the sale of excess real estate. In 2023, excess real estate sales generated a net pretax gain of $80.9 million.
The company's strategic disciplines, the Vulcan Way of Selling and the Vulcan Way of Operating, have led to a 27% increase in both aggregates gross profit per ton and cash gross profit per ton since 2021. These initiatives focus on commercial excellence, logistics innovation, operational efficiency and strategic sourcing.
The company experienced an overall MSHA safety performance of 1.2 injuries per 200,000 employee hours worked in 2023, which is well below the 2022 industry average of 1.8 injuries. This demonstrates a commitment to safety and health initiatives.
The company's annual Return on Invested Capital (ROIC) increased by 2.8 percentage points in 2023, driven by solid operating earnings growth and disciplined capital management. Adjusted EBITDA increased by 24%, while invested capital only increased by 2%.
The company's business is highly dependent on the construction industry, which is subject to economic cycles. A downturn in construction activities or spending in Vulcan-served markets could have a material adverse effect on the company's financial results.
The company is subject to risks associated with international business operations, including political, economic and diplomatic developments, as well as the requirements of the Foreign Corrupt Practices Act. Recent actions by the Mexican government have adversely affected the company's operations in Mexico.
The company operates in a highly competitive industry with many independent local producers. The expanded use of aggregates substitutes, such as recycled concrete and asphalt, could also cause a significant reduction in demand for aggregates.
The company is the largest aggregates supplier in the U.S. with a coast-to-coast footprint serving 35 of the top 50 highest-growth metropolitan statistical areas. This provides a competitive advantage through economies of scale and proximity to key markets.
The company holds the number one or two aggregates market position in markets accounting for approximately 90% of its revenues. This enables the company to capitalize on growth opportunities and maintain pricing power.
The company selectively invests in downstream asphalt and concrete products that enhance returns in its core aggregates business. This vertical integration allows the company to capture additional value in select markets.
The company strives for continuous and sustainable improvements in operating disciplines and safety performance. Leveraging its size and diversity, the company harnesses technology and innovation to improve customer service, asset utilization, and production efficiencies.
The company focuses on value preservation and creation in its sourcing, leveraging its scale to save money across the organization. This includes deploying best practices and innovation to optimize the total cost of ownership.
The company is implementing various initiatives to improve energy efficiency and reduce fuel consumption, including replacing older motors with new ultra-high efficiency motors, optimizing process equipment flow, and increasing the fuel efficiencies of its off-road fleet vehicles.
The Vulcan Way of Selling uses technology, innovation and analytics to win work and capture value. Custom, proprietary technology provides real-time insights into end markets, while industry-leading logistics systems manage shipments with real-time visibility to orders and deliveries.
The company's Concrete segment has licensed CarbonCure technology that provides capture and sequestration of carbon dioxide within ready-mixed concrete. This technology also reduces the demand for cement and other cement-related materials.
The company has a dedicated information security team that executes a cybersecurity program and routinely tests the security of its applications, networks, and databases. The company also monitors cybersecurity threats and performs simulations and tabletop exercises.
The company's capital allocation strategy balances reinvestment in the business, growth through acquisitions and internal projects, and return of capital to shareholders. This approach is designed to maintain financial strength and flexibility.
The company returned capital to shareholders through dividends of $228.4 million and share repurchases of $200.0 million in 2023. This reflects management's confidence in the company's financial position and future cash flow generation.
The company invested $200.8 million in internal growth projects to secure new aggregates reserves, develop new production sites, enhance distribution capabilities, and support the growth of its asphalt and concrete operations.
The company is committed to environmental stewardship, including efficient use of resources and management of the environmental impacts of its operations. This is evidenced by its partnership with the Wildlife Habitat Council and solar generation efforts at its San Emidio Quarry.
The company is committed to reducing greenhouse gas emissions and has established interim goals and targets related to Scope 1 and 2 emissions. It also enhances its GHG emissions tracking and reporting capabilities.
The company is dedicated to fostering a culture of mutual respect, integrity, teamwork and trust among its workforce. It has implemented diversity, equity and inclusion programs, including Employee Resource Groups and partnerships with Historically Black Colleges and Universities.
Long-term growth in demand for aggregates is driven by population growth, gains in total employment, increases in household income, and increased household formations. These factors are expected to drive demand in both the public and private sectors.
Public sector construction spending is supported by multi-year laws, which provide certainty in funding amounts and program structures. The Infrastructure Investment and Jobs Act (IIJA) provides significant funding for road, bridge and public transportation projects.
Private sector construction, including nonresidential and residential building, is more cyclical than public sector construction and is influenced by factors such as job growth, vacancy rates, interest rates and demographic trends.