Vulcan Materials Co’s (VMC) stock is soaring after the company’s impressive fourth-quarter results for fiscal year 2023. The construction materials provider reported revenues in line with consensus, with gross profit and adjusted EPS beating the market forecast.
Robust Financial Performance
Revenue stood at $1.83 billion, showcasing the company’s resilience amidst market expectations. Gross profit surged to $472 million from $350 million a year ago. Adjusted EPS of $1.46 outperformed the consensus of $1.39, indicating a strong financial performance.
Segment Performance
In the Aggregates segment, gross profit rose by 30% to $424 million, reflecting a margin expansion of 400 basis points. The company’s cash gross profit per ton improved to $9.92, driven by sustained pricing momentum and moderating inflationary pressures.
Meanwhile, in the Asphalt, Concrete, and Calcium segment, gross profit climbed 19% to $36 million. The segment saw a margin expansion of 550 basis points, with cash gross profit rising by 73% to $45 million.
Capital Distribution and Cash Flow
Vulcan distributed $428 million to shareholders in 2023 through share repurchases and dividends. The company’s operating cash flow reached $1.5 billion, marking a 34% year-on-year increase. Additionally, capital expenditures for maintenance and growth projects totaled $243 million.
Positive Outlook and Future Expectations
Looking ahead, Vulcan anticipates net earnings of $1.07 billion to $1.19 billion, with adjusted EBITDA projected to range between $2.15 billion and $2.30 billion. The company also plans to allocate $625 million to $675 million for maintenance and growth projects in 2024.
The company forecasts sustained improvement in Aggregates segment cash gross profit per ton and anticipates Asphalt, Concrete, and Calcium segment cash gross profit to reach approximately $275 million.
Leadership Perspective
Tom Hill, Chairman and Chief Executive Officer of Vulcan, expressed confidence in the company’s future, stating, “We are well positioned to deliver another year of earnings growth and strong cash generation in 2024. The pricing environment remains positive, and we expect pricing momentum and operational execution will lead to attractive expansion in aggregates unit profitability, regardless of the macro demand environment.”
Market Response
Vulcan’s strong financials and optimistic outlook have resonated well with the market, as evidenced by the 6.94% surge in VMC’s share price to $259.29 as of the latest trading session on Friday.
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