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Vulcan reports fourth quarter and full year 2023 results

Published by , Editorial Assistant
World Cement,

Vulcan Materials Company, a large producer of construction aggregates in the US, announced results for the quarter and year ended 31 December 2023.

Tom Hill, Vulcan Materials' Chairman and Chief Executive Officer, said, "2023 was an exceptional year for Vulcan Materials. We generated over US$2 billion in Adjusted EBITDA, a 24% increase over the prior year, expanded EBITDA margin by 360 basis points and generated US$1.5 billion of operating cash flow that can be deployed to grow our business. Our industry leading aggregates cash gross profit per ton increased each quarter on a y/y basis and was US$9.46/t for the full year, a 21% improvement over the prior year. Six consecutive years of unit profitability improvement during a continuously shifting macro backdrop demonstrates the durability of our uniquely positioned aggregates-led business. We carry momentum into 2024, and our focus is the same – compounding unit margins through all parts of the cycle and creating value for our shareholders through improving returns on capital."

Fourth Quarter Segment Results


Fourth quarter segment gross profit increased 30% to US$424 million (US$7.67/t), and gross profit margin expanded 400 basis points. Cash gross profit improved to US$9.92/t resulting from continued pricing momentum, solid execution and moderating inflationary pressures. Improvements in unit profitability were widespread across the Company's footprint and marked the seventh consecutive quarter of y/y growth.

As compared to the prior year, fourth quarter aggregates shipments increased 2%. Shipments in the prior year were disrupted by abnormally wet and cold weather across the majority of the Company's footprint. Certain markets in the Southeast continued to benefit from industrial-related nonresidential project activity.

The pricing environment remained positive with all markets realising y/y improvement in the fourth quarter. Freight-adjusted selling prices increased 14% versus the prior year. Freight-adjusted unit cash cost of sales increased 7%, marking the third consecutive quarter of unit cost deceleration on a trailing-twelve months basis. Unit cost benefited from lower diesel prices and moderating inflationary pressures on certain parts and supplies.

Asphalt, Concrete and Calcium

Fourth quarter Asphalt segment gross profit was US$36 million, an increase of US$19 million over the prior year, and gross profit margin expanded 550 basis points to 13%. Shipments increased 20%, and price improved 2%. Cash gross profit was US$45 million in the fourth quarter, an increase of 73% versus the prior year. Fourth quarter Concrete segment gross profit was US$11 million versus US$5 million in the prior year. Cash gross profit was US$24 million, and unit cash gross profit improved 53% despite lower volumes. Both the current and prior year included results from now divested concrete assets. Calcium segment gross profit was US$0.6 million compared to US$1.1 million in the prior year's fourth quarter.

Financial Position, Liquidity and Capital Allocation

In 2023, cash provided by operating activities was US$1.5 billion, a 34% increase over the prior year. Capital expenditures for maintenance and growth projects were US$243 million in the fourth quarter and US$625 million for the full year. The Company expects to spend US$625 to US$675 million for maintenance and growth projects in 2024.

As planned, the Company deployed US$204 million of capital for opportunistic purchases of strategic reserves in California, North Carolina and Texas in the second half of the year. Additionally, it completed the disposition of its concrete operations in Texas during the fourth quarter. The sale generated cash proceeds of US$485 million that is available to redeploy into our aggregates-led franchise. During the quarter, the Company also sold real estate in Northern Virginia for cash proceeds of US$66 million.

During the year, the Company returned US$428 million to shareholders through US$200 million of common stock repurchases and US$228 million of dividends. At 31 December 2023, the ratio of total debt to Adjusted EBITDA was 1.9 times, or 1.5 times on a net debt basis, reflecting over US$900 million of cash on hand. The Company's weighted-average debt maturity was 10 years, and the effective weighted average interest rate was 4.9%. On a trailing-twelve months basis, return on average invested capital improved 280 basis points to 16.3% through a combination of solid operating earnings and disciplined capital management.


Regarding the Company's outlook, Mr. Hill said, "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."

Management expectations for 2024 include:

  • Continued improvement in Aggregates segment cash gross profit per ton (US$9.46 in 2023)
  • Total shipments flat to down 4% (234.3 million tons in 2023)
  • Freight-adjusted price improvement of 10 to 12% (US$19.00 in 2023)
  • Mid-single digit increase in freight-adjusted cash cost (freight-adjusted price less segment cash gross profit per ton; US$9.54 in 2023)
  • Total Asphalt, Concrete and Calcium segment cash gross profit of approximately US$275 million (US$323 million in 2023; which included approximately 4 million y3 from concrete operations divested in late 2023)
  • Relative contribution of approximately 70% asphalt and 30% concrete
  • Selling, Administrative and General expenses of US$550 to US$560 million (US$543 million in 2023)
  • Interest expense of approximately US$155 million
  • Depreciation, depletion, accretion and amortisation expense of approximately US$610 million
  • An effective tax rate of 22 to 23%
  • Net earnings attributable to Vulcan of US$1.07 to US$1.19 billion
  • Adjusted EBITDA between US$2.15 and US$2.30 billion

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