An economy dogged by coronavirus and a construction industry plagued by wet weather have cut into third quarter earnings for construction aggregates firm Vulcan Materials.
Net earnings were at $200 million, down $16 million from last year’s third quarter for the Birmingham-based firm, which is Alabama’s largest public company by sales.
“Third quarter Adjusted EBITDA was $403 million versus $407 million in the prior year,” the firm reported in its quarterly announcement. “Adjusted EBITDA margins expanded by 210 basis points despite an 8 percent decline in total revenues. This margin expansion was driven by effective cost control throughout the organization and price growth in each major product line.”
“Building on strong performance from the first half of the year, our operational execution produced another quarter of unit margin expansion in the third quarter,” said Tom Hill, chairman and chief executive officer. “Unit profitability gains were widespread across our footprint, and our team remained focused on driving those improvements. The continued impact of the COVID-19 pandemic on construction activity, along with severe wet weather, led to lower shipment levels in the quarter. However, our resilient and best-in-class aggregates business overcame these disruptive conditions, which enabled us to expand cash gross profit per ton, drive higher cash flows, and improve returns on invested capital.”
“Year-to-date, cash gross profit per ton has increased 7 percent, despite a 4 percent decline in shipments,” Hill added, noting that residential construction and highway construction are both rebounding from pandemic slowdowns.