01—Abstract
Summary
Summary of the 10-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Vulcan Materials Company (VMC) reported 2023 results with total revenues of $7,781.9 milliona, up $466.7 million, or 6%, from 2022, and gross profit of $1,948.5 million, up 25%.
Operating earnings rose 50% to $1,427.4 millionb, and net earnings attributable to Vulcan were $933.2 million, a 62% increase, or $6.98 per diluted share. Adjusted EBITDA was $2,011.3 million, up 24%. Aggregates remains the core business, with segment gross profit of $1,733.6 million, or $7.40 per ton, and freight-adjusted pricing up 15.9% to $19.00 per ton, offset by a 1% decline in shipments to 234.3 million tons.
The company generated $1,536.8 millionc of operating cash flow and ended 2023 with $949.2 million of cash and restricted cash. Total debt was $3,877.8 million, giving total debt to Adjusted EBITDA of 1.9x and net debt to Adjusted EBITDA of 1.5x. Return on invested capital improved 280 basis points to 16.3%.
Management's 2024 outlook calls for freight-adjusted price improvement of 10% to 12%, net earnings attributable to Vulcan of $1,070 million to $1,190 milliond, and Adjusted EBITDA of $2,150 million to $2,300 million. The filing highlights ongoing risk from the Mexican government's May 2022 shutdown of the Calica operations in Quintana Roo, which halted production and sales there. The company has a NAFTA arbitration claim pending, with a decision expected during 2024.
Other material matters include the Hewitt Landfill environmental matter, the Lower Passaic River Superfund matter, and Texas Brine litigation. Auditor Deloitte & Touche LLP issued unqualified opinions on the financial statements and internal control over financial reporting.
02—Key points
Key Highlights
- Total revenues rose $466.7 million, or 6%, to $7,781.9 million, and gross profit increased 25% to $1,948.5 million.
- Net earnings attributable to Vulcan were $933.2 million, up 62%, or $6.98 per diluted share, versus $4.31 in 2022.
- Aggregates gross profit per ton reached $7.40, and cash gross profit per ton reached $9.46, up 21% from the prior year.
- Freight-adjusted aggregates pricing increased 15.9% to $19.00 per ton, while shipments decreased 1% to 234.3 million tons.
- Operating cash flow was $1,536.8 million, and total debt to Adjusted EBITDA was 1.9x at year-end 2023.
- Return on invested capital increased 280 basis points to 16.3%.
- Production and sales at the Calica operations in Mexico remain halted following the May 2022 government shutdown, with a NAFTA arbitration decision expected in 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Vulcan Materials kept $0.12.
- Revenue$7.78B100.0%
- Cost of revenue−$5.83B75.0%
- Gross profit$1.95B25.0%
- Operating costs−$521.1M6.7%
- Operating income$1.43B18.3%
- Interest, other & tax−$494.2M6.4%
- Net income$933.2M12.0%
Where FY2023 revenue went
$7.78B- Cost of revenue: $5.83B, 75% of revenue
- Net income: $933.2M, 12% of revenue
- SG&A: $542.8M, 7.0% of revenue
- Interest, other & tax: $494.2M, 6.4% of revenue
Kept 12% as net incomeNet income $933.2M · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 22, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $7.78B$7.32B | +6.4% |
| Cost of Revenue | $5.83B$5.76B | +1.3% |
| Gross Profit | $1.95B$1.56B | +25.1% |
| SG&A Expenses | $542.80M$515.10M | +5.4% |
| Operating Income | $1.43B$951.40M | +50.0% |
| Interest Expense | $196.10M$169.20M | +15.9% |
| Net Income | $933.20M$575.60M | +62.1% |
| EPS (Basic) | $7.02$4.33 | +62.1% |
| EPS (Diluted) | $6.98$4.31 | +61.9% |
| Shares Outstanding (Basic) | 133.00M133.00M | 0.0% |
| Shares Outstanding (Diluted) | 133.70M133.60M | +0.1% |
05—Questions
Frequently Asked Questions
What drove the increase in Vulcan's 2023 earnings?
Earnings growth was driven mainly by higher aggregates pricing and unit profitability. Aggregates segment gross profit increased $325.1 million, or 23%, to $1,733.6 million, with freight-adjusted pricing up 15.9% to $19.00 per ton. Operating earnings rose 50% to $1,427.4 million.
How strong is Vulcan's balance sheet and liquidity?
At December 31, 2023, total debt was $3,877.8 million and cash and restricted cash totaled $949.2 million. Total debt to Adjusted EBITDA was 1.9x, or 1.5x on a net debt basis. Available liquidity was $2,447.9 million, and the company holds investment-grade ratings from Fitch (BBB), Moody's (Baa2) and S&P (BBB+).
What is the outlook for 2024?
Management expects freight-adjusted price improvement of 10% to 12%, total shipments flat to down 4%, net earnings attributable to Vulcan of $1,070 million to $1,190 million, and Adjusted EBITDA of $2,150 million to $2,300 million. Capital expenditures are expected to be $625 million to $675 million.
What are the main risks to Vulcan's Mexico operations?
Mexican government officials shut down the Calica operations in May 2022, and production and sales there are currently halted. Vulcan has a NAFTA arbitration claim pending, with a decision expected during 2024. The company cannot assure whether it will be successful or how much it may recover.
Did Vulcan repurchase shares or pay dividends in 2023?
Yes. Vulcan repurchased 977,591 shares for $200.0 million at an average price of $204.52 per share, and paid dividends of $228.4 million, or $1.72 per share, up from $1.60 per share in 2022.
06—Continue