Vulcan (VMC) Down 4.9% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Vulcan Materials (VMC). Shares have lost about 4.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Vulcan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Vulcan Materials Q1 Earnings, Revenue Beat

Vulcan Materials Company reported first-quarter 2022 results, with earnings and revenues beating the Zacks Consensus Estimate and increasing year over year. Strong residential construction, recovering private non-residential construction, solid infrastructure investment and favorable pricing dynamics drove the quarter’s growth.

Looking ahead, chairman and CEO Tom Hill said, "We remain confident in our full-year outlook and our ability to deliver strong earnings growth in 2022. Through robust growth in aggregates pricing and a relentless focus on operational excellence, we can continue to expand unit profitability, despite the macro challenges.”

Inside the Headlines

Adjusted earnings of 73 cents per share beat the consensus mark of 62 cents by 17.7%. The company’s bottom line also advanced 5.8% from the year-ago level.

Total revenues of $1,540.7 million surpassed the consensus mark of $1,421 million by 8.4% and increased 44.2% year over year. This upside was led by the acquisition of U.S. Concrete operations and strong growth in the aggregates business.

Segments in Detail

Aggregates

Revenues from the segment increased 25.3% year over year to $1,121.2 million, owing to higher demand across all end-market segments. Aggregate shipments (volumes) increased 14.2% year over year (up 7% on a same-store basis). Strong demand and a positive pricing environment across the globe supported growth. This depicts growth in both private and public construction activity.

For the quarter, freight-adjusted average sales price inched up 6% (7% on a mix-adjusted basis) from the prior-year level. Freight-adjusted revenues also rose 20.8% from the prior-year quarter to $822.7 million.

Gross profit of $243 million was up 9% year over year, backed by strong volume and price as well as effective cost-control measures.

Asphalt, Concrete and Calcium

Revenues from the Asphalt segment were $167.1 million, up 13.5% year over year. The segment generated a gross loss of $2.9 million compared with a gross loss of $3 million a year ago. This was mainly due to higher costs for liquid asphalt (high by 33%). Asphalt mix pricing grew 13% year over year. Volumes grew 5% driven by growth in Arizona, California and Tennessee.

Total revenues from the Concrete segment were $360.5 million, up 343.4% year over year. Further, gross profit totaled $28 million, up 250% year over year. The upside was attributable to higher shipments and price growth in its legacy operations as well as the contribution from USCR operations. Shipments grew 307.8% year over year and average selling prices increased 9.3% from the prior-year level.

Total revenues from the Calcium segment were down from the prior-year figure of $2.1 million to $1.9 million. The segment reported a gross profit of $0.7 million, down from $0.9 million a year ago.

Operating Highlights

Selling, administrative and general expenses — as a percentage of total revenues — declined 60 basis points to 7.7% for the quarter. Adjusted EBITDA was up 20.3% year over year to $293.9 million.

Financials

As of Mar 31, 2022, cash and cash equivalents were $123.1 million, down from $235 million at 2021-end. Long-term debt was $3,874.5 million at March-end, in line with $3,874.8 million at 2021-end.

2022 Guidance

For 2022, the company still anticipates adjusted EBITDA in the range of $1.720-$1.820 billion. Net earnings are expected within $800-$890 million and aggregates shipment growth is anticipated to be 5-7%. The company expects double-digit earnings growth for 2022.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Vulcan has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Vulcan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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