Vulcan Materials (NYSE:VMC) Posts Better-Than-Expected Sales In Q4
Construction materials company Vulcan Materials (NYSE:VMC) reported Q4 CY2024 results beating Wall Street’s revenue expectations , with sales up 1.1% year on year to $1.85 billion. Its non-GAAP profit of $2.17 per share was 23.4% above analysts’ consensus estimates.
Revenue: $1.85 billion vs analyst estimates of $1.82 billion (1.1% year-on-year growth, 2% beat)
Adjusted EPS: $2.17 vs analyst estimates of $1.76 (23.4% beat)
Adjusted EBITDA: $550 million vs analyst estimates of $498 million (29.7% margin, 10.4% beat)
EBITDA guidance for the upcoming financial year 2025 is $2.45 billion at the midpoint, above analyst estimates of $2.35 billion
Operating Margin: 21.6%, up from 20.2% in the same quarter last year
Free Cash Flow Margin: 15%, similar to the same quarter last year
Tons Shipped: 53.9 million, down 1.4 million year on year
Market Capitalization: $34.84 billion
Tom Hill, Vulcan Materials' Chairman and Chief Executive Officer, said, "Our aggregates-led business delivered a strong finish to the year. Adjusted EBITDA in the fourth quarter improved 16 percent, and Adjusted EBITDA margin expanded 370 basis points. The favorable pricing environment coupled with strong operational execution led to consistent double-digit year-over-year improvement in aggregates cash gross profit per ton each quarter – exiting 2024 with aggregates cash gross profit per ton at $11.50. As we look to 2025, the pricing environment remains favorable, and we are focused on our operating disciplines to manage costs and improve efficiencies. By controlling what we can control, we expect to deliver 19 percent growth in Adjusted EBITDA."
Company Overview
Founded in 1909, Vulcan Materials (NYSE:VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Building Materials
Traditionally, building materials companies have built competitive advantages with economies of scale, brand recognition, and strong relationships with builders and contractors. More recently, advances to address labor availability and job site productivity have spurred innovation. Additionally, companies in the space that can produce more energy-efficient materials have opportunities to take share. However, these companies are at the whim of construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of building materials companies.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Vulcan Materials’s sales grew at a decent 8.5% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.
Vulcan Materials Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Vulcan Materials’s recent history shows its demand slowed as its revenue was flat over the last two years. We also note many other Building Materials businesses have faced declining sales because of cyclical headwinds. While Vulcan Materials’s growth wasn’t the best, it did perform better than its peers.
Vulcan Materials Year-On-Year Revenue Growth
We can dig further into the company’s revenue dynamics by analyzing its number of tons shipped, which reached 53.9 million in the latest quarter. Over the last two years, Vulcan Materials’s tons shipped averaged 3.5% year-on-year declines. Because this number is lower than its revenue growth during the same period, we can see the company’s monetization has risen.
Vulcan Materials Tons Shipped
This quarter, Vulcan Materials reported modest year-on-year revenue growth of 1.1% but beat Wall Street’s estimates by 2%.
Looking ahead, sell-side analysts expect revenue to grow 9.9% over the next 12 months, an improvement versus the last two years. This projection is commendable and indicates its newer products and services will spur better top-line performance.
Vulcan Materials has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.2%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.
Analyzing the trend in its profitability, Vulcan Materials’s operating margin might have seen some fluctuations but has generally stayed the same over the last five years , highlighting the long-term consistency of its business.
In Q4, Vulcan Materials generated an operating profit margin of 21.6%, up 1.5 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Vulcan Materials’s EPS grew at a solid 9.9% compounded annual growth rate over the last five years, higher than its 8.5% annualized revenue growth. However, we take this with a grain of salt because its operating margin didn’t expand and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.
Vulcan Materials Trailing 12-Month EPS (Non-GAAP)
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
Vulcan Materials’s two-year annual EPS growth of 21.4% was fantastic and topped its flat revenue.
In Q4, Vulcan Materials reported EPS at $2.17, up from $1.46 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Vulcan Materials’s full-year EPS of $7.54 to grow 19.3%.
Key Takeaways from Vulcan Materials’s Q4 Results
We were impressed by how significantly Vulcan Materials blew past analysts’ EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance was much higher than Wall Street’s estimates. Zooming out, we think this was a good quarter with some key areas of upside. The stock traded up 2.9% to $278 immediately following the results.
Vulcan Materials had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
