Vulcan(US:VMC)2024-02-22 19:36Company Overview - Vulcan Materials Company is the largest supplier of construction aggregates in the U.S., with 397 active aggregates facilities as of December 31, 2023[19]. - The company has 15.6 billion tons of proven and probable aggregates reserves, strategically located to serve high-growth areas in the U.S.[25]. - The company has completed nearly 40 acquisitions in the last 10 years, investing $2,233.1 million in acquisitions from 2021 to 2023[34]. - The company has over 26,000 customers across 23 states and several international locations, enhancing its market reach[49]. - The company operates a total of 391 active aggregates facilities, including 235 production stage mining properties and 156 sales and recycled plants[164]. Financial Performance - Adjusted EBITDA increased by 24% in 2023, while net earnings attributable to Vulcan rose by 62%[35]. - In 2023, the company generated $933.2 million in net earnings, a 62% increase from the previous year, and produced $2,011.3 million in Adjusted EBITDA, a 24% increase[191]. - Total revenues increased by $466.7 million, or 6%, to $7,781.9 million, while gross profit rose by $390.9 million, or 25%, to $1,948.5 million[192]. - The aggregates segment sales increased by $637.1 million, or 12%, to $5,909.9 million, with freight-adjusted revenues rising by $577.1 million, or 15%, to $4,452.3 million[192]. - The company returned $228.4 million to shareholders via dividends at $1.72 per share, compared to $212.6 million at $1.60 per share in the previous year[192]. - The total debt to Adjusted EBITDA ratio improved to 1.9x, with a net debt to Adjusted EBITDA of 1.5x, reflecting $949.2 million in cash on hand[192]. - The effective tax rate from continuing operations was 24.0% in 2023, slightly down from 24.5% in 2022[219]. Market Dynamics - The top ten revenue-producing states accounted for 88% of total revenues in 2023, with Texas and California being the top two states[20][21]. - In 2023, publicly funded construction accounted for approximately 40% of total aggregates shipments, with 20% of aggregates sales by volume used in highway construction projects[53]. - In 2023, privately funded construction accounted for approximately 60% of total aggregates shipments[61]. - The U.S. aggregates industry is highly fragmented, with over 5,000 companies operating approximately 10,000 facilities in 2023, presenting opportunities for consolidation[50]. - The U.S. aggregates industry is highly fragmented, with the ten largest producers accounting for approximately 33% of total production in 2023, while Vulcan holds a market share of about 10%[76]. Sustainability and Environmental Efforts - The company reused 2.0 million tons of recycled asphalt pavement and recycled 1.9 million tons of concrete in 2023, contributing to sustainability efforts[44]. - Vulcan has established interim goals for Scope 1 and 2 GHG emissions reductions and reported on 5 of 11 Scope 3 categories in 2023[80]. - The company has committed to producing low-embodied emissions products, including the use of CarbonCure technology in its Concrete segment[83]. - The company operated 39 certified wildlife habitat sites in 2023, the fifth largest number in the nation[214]. Operational Efficiency - From 2021 to 2023, aggregates gross profit per ton increased from $5.81 to $7.40, representing a 27% increase[30]. - Vulcan's annual Return on Invested Capital (ROIC) increased by 2.8 percentage points in 2023 due to solid operating earnings growth[35]. - The aggregates gross profit per ton was $7.40 for the full year, a 24% improvement, with a target to achieve $11 to $12 cash gross profit per ton at higher volumes[191][199]. - The company operates considerably below full capacity, positioning it well to benefit from economies of scale with additional growth[50]. Risks and Challenges - The company faces risks from international operations, including adverse actions from foreign governments, such as recent shutdown orders in Mexico affecting operations[111]. - The production and distribution of products are affected by weather and climate change, which can disrupt operations and increase costs[131]. - The company is involved in environmental investigations and legal proceedings, which may lead to significant liabilities and costs[124]. - The company’s future success depends on securing and permitting aggregates reserves in strategically located areas, which is increasingly challenging due to community resistance[114]. Future Outlook - The company expects to spend $625 million to $675 million on capital expenditures in 2024, including growth projects[197]. - The net earnings attributable to the company are projected to be between $1,070 million and $1,190 million for 2024[197]. - The federal Infrastructure Investment and Jobs Act (IIJA) is expected to support demand for Vulcan's products for several years due to increased funding for public infrastructure projects[110].