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Vulcan (VMC) Q4 Earnings Miss, Adjusted EBITDA Down, Stock Fall
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Vulcan Materials Company (VMC - Free Report) reported lackluster fourth-quarter 2022 results, wherein earnings and revenues missed the respective Zacks Consensus Estimate. On a year-over-year basis, earnings declined despite revenue improvement.
The nation’s largest producer of construction aggregates saw solid growth in aggregates-led business amid a challenging macro-environment. Focus on the operating disciplines and strong pricing actions to overcome inflationary pressures was more than offset by abnormally wet and cold weather that disrupted construction activity and materials shipments, along with soft single-family residential demand.
Share of the company plunged almost 7% in the pre-market trading session on Feb 16, after the earnings release.
VMC’s chairman and CEO, Tom Hill, said, "Despite these disruptions, our industry-leading aggregates cash gross profit per ton increased 11 percent in the fourth quarter. We carry solid pricing momentum into 2023 and are focused on our operating disciplines to manage costs and improve efficiencies. By controlling what we can control, we expect to deliver another year of earnings growth."
Inside the Headlines
Adjusted earnings of $1.08 per share missed the consensus mark of $1.29 by 16.3% and declined 13.6% from the year-ago level of $1.25.
Vulcan Materials Company Price, Consensus and EPS Surprise
Total revenues of $1,732 million lagged the consensus mark of $1,819 million by 4.8% but increased 7.8% year over year.
Segments in Detail
Aggregates
Revenues from the segment increased 9.3% year over year to $1,259.3 million, owing to higher demand across all end-market segments. Aggregate shipments (volumes) declined 6.1% year over year. The lingering effects of Hurricane Ian in early October slowed shipments in certain southeastern markets and significant rainfall and extreme winter temperatures impacted November and December construction activity across many markets. The absence of tons available from the company's Mexico operations, which were unexpectedly and arbitrarily shut down by Mexico government in May 2022 added to the negatives.
Freight-adjusted average sales price rose 14% to $16.96 per ton (15% on a mix-adjusted basis) from the prior-year level of $14.91. Freight-adjusted revenues rose 6.7% from the prior-year quarter to $918.7 million. Challenging weather conditions, continued energy cost headwinds and inflationary pressures for many parts and supplies in the fourth quarter were partially offset by solid operational execution.
Gross profit of $327 million inched up from prior year’s levels despite lower shipments due to unfavorable weather.
Asphalt, Concrete and Calcium
Revenues from the Asphalt segment were $238.1 million, up 20.6% year over year. The segment generated a solid gross profit of $17 million compared with $5 million a year ago on higher pricing. Volumes fell 2% year over year. Asphalt pricing was up 24%, which offset 24% higher pricing for liquid asphalt.
Total revenues from the Concrete segment were $360.5 million, down 2.6% year over year. Gross profit totaled $17 million, down from a year ago due to lower volumes and higher costs for diesel fuel. Shipments fell 15% year over year, but average selling prices increased 14% from the prior-year level.
Total revenues from the Calcium segment were up to $2.4 million from the prior-year figure of $1.4 million. The segment reported a gross profit of $1.1 million, up from $0.3 million a year ago.
Operating Highlights
Selling, administrative and general (SAG) expenses — as a percentage of total revenues — improved 50 basis points to 7.3% from a year ago. Adjusted EBITDA was down 2.1% year over year to $375 million.
2022 Highlights
Adjusted earnings came in at $5.11 per share, reflecting an increase from $5.05 a year ago. Total revenues increased to $7,315 million from $5,552 million reported in 2021. Adjusted EBITDA advanced 12.1% year over year to $1,626 million.
Financials
As of Dec 31, 2022, cash and cash equivalents were $161.4 million, down from $235 million at 2021-end. Long-term debt was $3,875.2 million at 2022-end, compared with $3,874.8 million at 2021-end.
For 2022, capital expenditures were $644 million. On 2022-end, total debt to trailing-12-months adjusted EBITDA was 2.4x, down from 2.7x at the end of 2021. Return on average invested capital was 13.5% on a trailing-twelve-months basis.
2023 Guidance
For 2023, the company anticipates adjusted EBITDA in the range of $1.725-$1.875 billion and net earnings of $715-$835 million. SAG expenses are expected to be $515-$530 million, with interest expenses of approximately $195 million, depreciation, depletion, accretion, and amortization expense of nearly $610 million, and an effective tax rate of 22%.
In the Aggregates segment, cash gross profit per ton is likely to improve from the 2022 level of $7.83. Total shipments is likely to be down 2-6%, freight-adjusted price growth is likely to range within 11-13% and freight-adjusted cash cost is estimated to increase high single digit.
In Asphalt, Concrete and Calcium segment, cash gross profit is expected to be in line with 2022. Asphalt is anticipated to grow on low single-digit growth in volume and price. Also, it is expected to contribute 40-50% of non-aggregates cash gross profit in 2023.
Concrete same-store volumes are expected to decline in the mid-single-digit due to slow residential construction activity. Price growth will likely offset the higher raw material cost and will contribute approximately 50-60% of non-aggregates cash gross profit.
In 2023, the company expects to have capital expenditures of $600-$650 million.
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed results for fourth-quarter 2022. Earnings beat the Zacks Consensus Estimate but revenues (products and services) missed the same.
On a year-over-year basis, MLM’s top and bottom line declined due to inclement weather in a number of key markets and higher operating costs.
Otis Worldwide Corporation (OTIS - Free Report) reported solid fourth-quarter 2022 results. Its earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected strong performance, including mid-single-digit organic sales growth in New Equipment and Service and continued operating profit margin expansion in the Service business.
Otis remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Masco Corporation (MAS - Free Report) reported mixed results for fourth-quarter 2022. The bottom line lagged the Zacks Consensus Estimate and declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.
Net sales surpassed the consensus mark but declined from the prior-year quarter’s level, thanks to demand softness across the product categories in North America, partially offset by selling price increases.
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Vulcan (VMC) Q4 Earnings Miss, Adjusted EBITDA Down, Stock Fall
Vulcan Materials Company (VMC - Free Report) reported lackluster fourth-quarter 2022 results, wherein earnings and revenues missed the respective Zacks Consensus Estimate. On a year-over-year basis, earnings declined despite revenue improvement.
The nation’s largest producer of construction aggregates saw solid growth in aggregates-led business amid a challenging macro-environment. Focus on the operating disciplines and strong pricing actions to overcome inflationary pressures was more than offset by abnormally wet and cold weather that disrupted construction activity and materials shipments, along with soft single-family residential demand.
Share of the company plunged almost 7% in the pre-market trading session on Feb 16, after the earnings release.
VMC’s chairman and CEO, Tom Hill, said, "Despite these disruptions, our industry-leading aggregates cash gross profit per ton increased 11 percent in the fourth quarter. We carry solid pricing momentum into 2023 and are focused on our operating disciplines to manage costs and improve efficiencies. By controlling what we can control, we expect to deliver another year of earnings growth."
Inside the Headlines
Adjusted earnings of $1.08 per share missed the consensus mark of $1.29 by 16.3% and declined 13.6% from the year-ago level of $1.25.
Vulcan Materials Company Price, Consensus and EPS Surprise
Vulcan Materials Company price-consensus-eps-surprise-chart | Vulcan Materials Company Quote
Total revenues of $1,732 million lagged the consensus mark of $1,819 million by 4.8% but increased 7.8% year over year.
Segments in Detail
Aggregates
Revenues from the segment increased 9.3% year over year to $1,259.3 million, owing to higher demand across all end-market segments. Aggregate shipments (volumes) declined 6.1% year over year. The lingering effects of Hurricane Ian in early October slowed shipments in certain southeastern markets and significant rainfall and extreme winter temperatures impacted November and December construction activity across many markets. The absence of tons available from the company's Mexico operations, which were unexpectedly and arbitrarily shut down by Mexico government in May 2022 added to the negatives.
Freight-adjusted average sales price rose 14% to $16.96 per ton (15% on a mix-adjusted basis) from the prior-year level of $14.91. Freight-adjusted revenues rose 6.7% from the prior-year quarter to $918.7 million. Challenging weather conditions, continued energy cost headwinds and inflationary pressures for many parts and supplies in the fourth quarter were partially offset by solid operational execution.
Gross profit of $327 million inched up from prior year’s levels despite lower shipments due to unfavorable weather.
Asphalt, Concrete and Calcium
Revenues from the Asphalt segment were $238.1 million, up 20.6% year over year. The segment generated a solid gross profit of $17 million compared with $5 million a year ago on higher pricing. Volumes fell 2% year over year. Asphalt pricing was up 24%, which offset 24% higher pricing for liquid asphalt.
Total revenues from the Concrete segment were $360.5 million, down 2.6% year over year. Gross profit totaled $17 million, down from a year ago due to lower volumes and higher costs for diesel fuel. Shipments fell 15% year over year, but average selling prices increased 14% from the prior-year level.
Total revenues from the Calcium segment were up to $2.4 million from the prior-year figure of $1.4 million. The segment reported a gross profit of $1.1 million, up from $0.3 million a year ago.
Operating Highlights
Selling, administrative and general (SAG) expenses — as a percentage of total revenues — improved 50 basis points to 7.3% from a year ago. Adjusted EBITDA was down 2.1% year over year to $375 million.
2022 Highlights
Adjusted earnings came in at $5.11 per share, reflecting an increase from $5.05 a year ago. Total revenues increased to $7,315 million from $5,552 million reported in 2021. Adjusted EBITDA advanced 12.1% year over year to $1,626 million.
Financials
As of Dec 31, 2022, cash and cash equivalents were $161.4 million, down from $235 million at 2021-end. Long-term debt was $3,875.2 million at 2022-end, compared with $3,874.8 million at 2021-end.
For 2022, capital expenditures were $644 million. On 2022-end, total debt to trailing-12-months adjusted EBITDA was 2.4x, down from 2.7x at the end of 2021. Return on average invested capital was 13.5% on a trailing-twelve-months basis.
2023 Guidance
For 2023, the company anticipates adjusted EBITDA in the range of $1.725-$1.875 billion and net earnings of $715-$835 million. SAG expenses are expected to be $515-$530 million, with interest expenses of approximately $195 million, depreciation, depletion, accretion, and amortization expense of nearly $610 million, and an effective tax rate of 22%.
In the Aggregates segment, cash gross profit per ton is likely to improve from the 2022 level of $7.83. Total shipments is likely to be down 2-6%, freight-adjusted price growth is likely to range within 11-13% and freight-adjusted cash cost is estimated to increase high single digit.
In Asphalt, Concrete and Calcium segment, cash gross profit is expected to be in line with 2022. Asphalt is anticipated to grow on low single-digit growth in volume and price. Also, it is expected to contribute 40-50% of non-aggregates cash gross profit in 2023.
Concrete same-store volumes are expected to decline in the mid-single-digit due to slow residential construction activity. Price growth will likely offset the higher raw material cost and will contribute approximately 50-60% of non-aggregates cash gross profit.
In 2023, the company expects to have capital expenditures of $600-$650 million.
Zacks Rank & Recent Construction Releases
Owens Corning currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed results for fourth-quarter 2022. Earnings beat the Zacks Consensus Estimate but revenues (products and services) missed the same.
On a year-over-year basis, MLM’s top and bottom line declined due to inclement weather in a number of key markets and higher operating costs.
Otis Worldwide Corporation (OTIS - Free Report) reported solid fourth-quarter 2022 results. Its earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected strong performance, including mid-single-digit organic sales growth in New Equipment and Service and continued operating profit margin expansion in the Service business.
Otis remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Masco Corporation (MAS - Free Report) reported mixed results for fourth-quarter 2022. The bottom line lagged the Zacks Consensus Estimate and declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.
Net sales surpassed the consensus mark but declined from the prior-year quarter’s level, thanks to demand softness across the product categories in North America, partially offset by selling price increases.