Vulcan Materials' 1Q23 volumes hampered by poor weather

Vulcan Materials has reported revenue of US$1649m in the opening quarter of 2023, up from US$1541m in the same quarter a year earlier. Adjusted EBITDA over the same period has advanced from US$294m to US$338m, while gross profit has improved from US$269m to US$302m. 

Although shipments of aggregates over the 1Q23 fell to 51.7Mt, compared to 53Mt in the 1Q22, the freight-adjusted sales price per ton increased from US$15.52 in the 1Q22 to US$18.67 in the same period a year later, raising gross profit per ton from US$4.58 to US$5.85. According to the company, shipments across the Southeast and East coast benefitted from more favourable weather, while shipments in California and Texas were impacted by significant rainfall throughout most of the quarter. First-quarter volumes also benefited from some shipments delayed by poor weather in the fourth quarter of 2022.

In the asphalt segment, gross profit came in at US$1m in the first quarter of 2023, driven by a 15 per cent YoY increase in pricing. Shipments fell 11 per cent compared to the 1Q22, primarily due to lower demand in California and Arizona, the company's largest asphalt markets, hampered by significant rainfall over the three-month period.

The concrete segment’s gross profit in the 1Q23 was a loss of US$2m, as shipments fell 30 per cent YoY. According to Vulcan, current year results were impacted by the divestiture of the company's operations in New York, New Jersey and Pennsylvania. Poor weather in California and Texas, and a slowdown in residential construction activity, also affected segment earnings.  

Looking ahead to full-year 2023, the company expects to see adjusted EBITDA of US$1850-1950m with net earnings attributable to Vulcan of US$815-895m. “We are increasing our full-year earnings expectations to incorporate the success of our pricing efforts during the first quarter. Leading indicators of demand remain mixed, and full-year shipments for 2023 will still ultimately depend upon the depth of the decline in residential construction activity and the timing of highway starts converting to shipments. Despite a challenging macro-environment, our uniquely positioned aggregates business and our best-in-class execution position us to successfully navigate shifts in demand,” said Tom Hill, Vulcan Materials’ chairman and chief executive officer.