01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
Vulcan Materials Company (VMC), the nation's largest supplier of construction aggregates (crushed stone, sand and gravel), reported 2022 total revenues of $7,315.2 milliona, up $1,763.0 million, or 32%, from 2021.
Gross profit rose $184.3 millionb, or 13%, to $1,557.7 million, but operating earnings decreased $59.4 million, or 6%, to $951.4 million. Net earnings attributable to Vulcan fell $95.2 million, or 14%, to $575.6 million ($4.31 per diluted share), while Adjusted EBITDA rose $174.3 million, or 12%, to $1,625.6 million. Aggregates freight-adjusted sales price increased 10.3% to $16.40 per ton, and aggregates gross profit per ton improved to $5.96.
Management cited a $104.4 millionc unfavorable impact from higher diesel fuel costs and the May 2022 Mexican government shutdown of the Calica operations, which removed shipments from Mexico. Balance sheet metrics remained within the stated target: total debt to Adjusted EBITDA was 2.4x (2.3x net), against a long-term target range of 2.0x to 2.5x, and return on invested capital was 13.5%, down from 14.2% in 2021. The company made no share repurchases in 2022, paid dividends of $1.60 per share ($212.6 million), and invested $612.6 million in operating and growth capital.
For 2023, management guided to freight-adjusted price growth of 11% to 13%, total shipments down 2% to 6%, Adjusted EBITDA of $1,725 million to $1,875 milliond, and capital expenditures of $600 million to $650 million. The filing also highlights ongoing legal and political exposure.
The NAFTA arbitration over the Calica shutdown is expected to produce a tribunal decision no earlier than 2024, and the Texas Brine and Hewitt Landfill matters remain unresolved. The company also recorded a $50.9 million goodwill impairment and a $16.9 million long-lived asset impairment tied to the sale of its New Jersey, New York and Pennsylvania concrete operations.
02—Key points
Key Highlights
- Total revenues rose 32% to $7,315.2 million, while net earnings attributable to Vulcan fell 14% to $575.6 million ($4.31 per diluted share).
- Adjusted EBITDA increased 12% to $1,625.6 million, and aggregates gross profit per ton rose to $5.96 from $5.81 in 2021.
- Freight-adjusted aggregates sales price increased 10.3% to $16.40 per ton, with shipments up 6% to 236.3 million tons.
- Mexican government shut down the Calica operations in May 2022, removing shipments from Mexico; the NAFTA arbitration decision is expected no earlier than 2024.
- Total debt to Adjusted EBITDA was 2.4x (2.3x net), within the stated 2.0x to 2.5x target; ROIC declined to 13.5% from 14.2%.
- No share repurchases were made in 2022; dividends paid were $1.60 per share, totaling $212.6 million.
- 2023 guidance calls for freight-adjusted price growth of 11% to 13%, Adjusted EBITDA of $1,725 million to $1,875 million, and capital expenditures of $600 million to $650 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Vulcan Materials kept $0.08.
- Revenue$7.32B100.0%
- Cost of revenue−$5.76B78.7%
- Gross profit$1.56B21.3%
- Operating costs−$606.3M8.3%
- Operating income$951.4M13.0%
- Interest, other & tax−$375.8M5.1%
- Net income$575.6M7.9%
Where FY2022 revenue went
$7.32B- Cost of revenue: $5.76B, 79% of revenue
- Net income: $575.6M, 7.9% of revenue
- SG&A: $515.1M, 7.0% of revenue
- Other operating costs: $91.2M, 1.2% of revenue
- Interest, other & tax: $375.8M, 5.1% of revenue
Kept 7.9% as net incomeNet income $575.6M · 7.9%Other operating costs $91.2M · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $7.32B$5.55B | +31.8% |
| Cost of Revenue | $5.76B$4.18B | +37.8% |
| Gross Profit | $1.56B$1.37B | +13.4% |
| SG&A Expenses | $515.10M$417.60M | +23.3% |
| Operating Income | $951.40M$1.01B | −5.9% |
| Interest Expense | $169.20M$149.30M | +13.3% |
| Net Income | $575.60M$670.80M | −14.2% |
| EPS (Basic) | $4.33$5.05 | −14.3% |
| EPS (Diluted) | $4.31$5.02 | −14.1% |
| Shares Outstanding (Basic) | 133.00M132.80M | +0.2% |
| Shares Outstanding (Diluted) | 133.60M133.50M | +0.1% |
05—Questions
Frequently Asked Questions
How did Vulcan's profitability change in 2022?
Total revenues increased 32% to $7,315.2 million and gross profit rose 13% to $1,557.7 million. Operating earnings fell 6% to $951.4 million, and net earnings attributable to Vulcan declined 14% to $575.6 million, mainly due to higher SAG expenses, impairments, and a higher effective tax rate of 24.5%. Adjusted EBITDA still rose 12% to $1,625.6 million.
What is the status of the Mexico operations?
In May 2022, Mexican government officials shut down the Calica operations in Quintana Roo and suspended a customs permit. Vulcan has filed a NAFTA arbitration claim, and the tribunal granted its ancillary claim application in July 2022. A decision is expected no earlier than 2024, and the filing states that Vulcan cannot assure a successful outcome.
How is Vulcan's balance sheet and leverage positioned?
At year-end 2022, total debt was $3,975.7 million and cash was $161.5 million. Total debt to Adjusted EBITDA was 2.4x, within the stated 2.0x to 2.5x target, and the company reported investment-grade ratings from Fitch (BBB), Moody's (Baa2) and S&P (BBB+). Available liquidity was $1,582.8 million.
What does management expect for 2023?
Management expects total shipments to decline 2% to 6%, freight-adjusted price growth of 11% to 13%, and Adjusted EBITDA between $1,725 million and $1,875 million. Net earnings attributable to Vulcan are projected at $715 million to $835 million, and capital expenditures at $600 million to $650 million.
What legal and environmental risks are disclosed?
The filing discloses several unresolved matters, including the Texas Brine sinkhole litigation, the Hewitt Landfill environmental matter and the New York water district cases. Vulcan states it cannot reasonably estimate a range of loss for several of these matters, and it accrued $36.9 million for environmental remediation as of year-end 2022.
06—Continue