Vulcan Makes Third-Quarter Gains Despite Weather Issues.
Compared with the prior year's third quarter, the company is reporting:
* Total revenues increased $87 million, or 9 percent, to $1.09 billion.
* Gross profit was $306 million versus $304 million in the prior year.
* Aggregates segment sales increased $37 million to $859 million and freight-adjusted revenues increased $27 million, or 4 percent, to $669 million.
* Shipments increased 0.7 million tons, or 1 percent, to 50.9 million tons.
* Freight-adjusted sales price increased $0.37 per ton, or 3 percent.
* Segment gross profit was $259 million versus $262 million in the prior year.
* Asphalt, Concrete and Calcium segment gross profit improved $4 million, collectively.
For the prior 12-month period the company is reporting:
* Total revenues were $3.79 billion, an increase of $209 million, or 6 percent.
* Gross profit was $997 million, a decrease of $18 million, or 2 percent.
* Aggregates segment sales increased $82 million to $3.04 billion and freight-adjusted revenues increased $60 million, or 3 percent, to $2.35 billion.
* Shipments decreased 2.7 million tons, or 1 percent, to 180.3 million tons.
* Freight-adjusted sales price increased $0.52 per ton, or 4 percent.
* Segment gross profit decreased $33 million, or 4 percent, to $861 million.
* Asphalt, Concrete and Calcium segment gross profit improved $15 million, collectively.
Aggregates shipments increased 1 percent versus the prior-year's quarter.
Overall, both gross profit and operating earnings improved slightly compared to the prior year. Shipment trends in aggregates were disrupted by hurricanes across the company's Florida, Georgia, Gulf Coast, North Carolina, South Carolina and coastal Texas markets. Markets outside of these areas, combined to grow mid-single digit versus the prior year's third quarter--more in line with trends and expectations.
Third-quarter aggregates segment gross profit was $259 million, or $5.09 per ton. These results were slightly lower than the prior year as a result of weather events in the current year's third quarter. Weather-related disruptions impaired shipments and drove inefficiencies that limited revenue growth and earnings improvement. Product mix, partly due to aggregates needs immediately after the hurricanes, negatively impacted price growth by approximately 100 basis points. An 18 percent increase in the unit cost of diesel fuel and costs related to the transition to two new, more efficient ships to transport aggregates from its quarry in Mexico negatively impacted segment gross profit by $7 million in comparison to the prior year.
Tom Hill, chairman and chief executive officer of Vulcan Materials, said, "Storms disrupted the third-quarter shipment pattern in a number of our stronger growth markets. Absent the impact of these storms, our daily shipping pace would have been at least 7 percent higher than the prior year during August and September, and in line with expectations. We are still experiencing some lingering effects from these storms on plant efficiency and shipment levels, which will take some time to work through. Underlying demand, however, remains solid, the pricing environment remains positive and our unit profitability in aggregates continues to strengthen. On a same-store basis, our third-quarter gross profit per ton was essentially flat while our cash gross profit per ton set a third quarter record despite the severe weather. I am very encouraged by these trends, which should provide good momentum into 2018.
"Our business remains on track with our longer-term goals and expectations," Hill continued. "Growth in new construction starts in our markets continues to outpace the rest of the United States. Recent acquisitions are performing well and should make meaningful contributions to our earnings growth in 2018 and beyond. We remain confident in the sustained, multi-year recovery in materials demand across our markets and in the further compounding improvements to our unit profitability. However, given the shortfall in shipments to date and due to certain lingering effects of third quarter weather events on fourth-quarter shipments, pricing and costs, we now expect full year aggregates shipments to approximate the prior year, with full year Adjusted EBITDA of approximately $1 billion."
Broad pricing momentum continued across the company's footprint with most markets realizing price growth in the third quarter of 2017. For the third quarter, same-store freight-adjusted average sales price for aggregates increased 3 percent versus the prior year, or $0.42 per ton, despite a negative geographic and product mix impact. Excluding mix impact, aggregates price increased 4 percent. The overall pricing climate remains favorable as visibility to a sustained recovery improves and as construction materials producers stay focused on earning adequate returns on capital.
Non-aggregates segments' third-quarter gross profit was $46 million, a 9 percent increase over the prior year period.
Asphalt segment gross profit decreased $2 million to $31 million. Shipments were 3.1 million tons in total and 2.8 million tons on a same-store basis. Shipments in the prior year were 2.9 million tons. An 18 percent increase in liquid asphalt unit cost negatively affected materials margins.
Concrete segment gross profit was $14 million in the quarter compared to $9 million in the prior-year period. Shipments increased 20 percent versus the prior year. On a same-store basis, volumes increased 8 percent, as volumes in Virginia (the company's largest concrete market) drove most of the year-over-year increase. Materials margins and unit gross profit in concrete also improved versus the prior year.
On a trailing 12-month basis, total gross profit in the company's non-aggregates segments was $136 million, a 12 percent increase from the prior year's comparable period.
According to the company, Hurricanes Harvey and Irma negatively affected more than half of the company's operational footprint in the third quarter.
Caption: Vulcan's Tom Hill
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