Exchange: LSE | Sector: Basic Materials | Industry: Construction Materials
Q3 2024
Published: Oct 30, 2024
Earnings Highlights
Revenue of $2.00B down 8.3% year-over-year
EPS of $1.56 decreased by 24.5% from previous year
Gross margin of 28.2%
Net income of 207.60M
"N/A" - Management
Vulcan Materials Company (0LRK.L) QQ3 2024 Results — Resilient US Construction Materials Leader Delivers Strong Cash Flow Amid Modest Revenue Decline
Executive Summary
Vulcan Materials reported QQ3 2024 revenue of $2.0039 billion, down 8.32% year-over-year and 0.52% quarter-on-quarter, reflecting a cyclical industry backdrop with volume pressure versus the prior year. Despite the topline softness, the company posted a solid gross margin of 28.2% and an operating margin of 21.8%, underpinned by a lean operating cost structure and selective price/mix gains. EBITDA reached $494.0 million, and net income was $207.6 million (EPS $1.57), highlighting meaningful profitability even as volumes softened.
The company generated robust operating cash flow of $595.0 million and delivered free cash flow of $498.2 million for QQ3 2024, supporting deleveraging and meaningful capital returns. Balance sheet metrics show total assets of approximately $14.35 billion versus total liabilities of about $6.46 billion and shareholders’ equity of roughly $7.87 billion. Net debt stood at ~$3.40 billion, with a debt-to-EBITDA framework that signals leverage at the higher end for a materials cyclicals company, underscoring the importance of cash flow generation for balance sheet resilience.
Looking ahead, management did not issue explicit quarterly guidance in the QQ3 2024 release. Nevertheless, the near-term path for Vulcan hinges on US infrastructure spending momentum, commodity input costs, and productivity gains across its four-segment platform (Aggregates, Asphalt, Concrete, and Calcium). Given the resilient FCF profile and the ongoing capital allocation that prioritizes debt reduction and shareholder returns, the stock presents a constructive long-duration exposure to a recovering US construction cycle, contingent on macro demand and the pace of deleveraging.
Key Performance Indicators
Revenue
2.00B
QoQ: -0.52% | YoY:-8.32%
Gross Profit
565.20M
28.21% margin
QoQ: -4.56% | YoY:-4.37%
Operating Income
337.10M
QoQ: -25.68% | YoY:-19.53%
Net Income
207.60M
QoQ: -32.60% | YoY:-24.92%
EPS
1.57
QoQ: -32.62% | YoY:-24.52%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $2,003.9; YoY -8.32%; QoQ -0.52% (Q3 2024 vs prior year and prior quarter).
Net Income: $207.6; Net Margin 10.36% (0.1036). YoY -24.92%; QoQ -32.60%.
Financial Highlights
Summary of key QQ3 2024 metrics and trend analysis (USD, millions unless noted):
- Revenue: $2,003.9; YoY -8.32%; QoQ -0.52% (Q3 2024 vs prior year and prior quarter).
- Gross Profit: $565.2; Gross Margin 28.20% (0.2820). YoY -4.37%; QoQ -4.56%.
- Operating Income: $337.1; Operating Margin 21.82% (0.2182). YoY -19.53%; QoQ -25.68%.
- EBITDA: $494.0; EBITDA Margin 24.65% (0.2465).
- Net Income: $207.6; Net Margin 10.36% (0.1036). YoY -24.92%; QoQ -32.60%.
- EPS: $1.57 (diluted $1.56). YoY -24.52%; QoQ -32.62%.
- Cash flow and liquidity: Net cash provided by operating activities $595.0; Capex $96.8; Free Cash Flow $498.2; Cash at period end $434.3; Net debt $3,400.0; Cash/operating cash flow efficiency ratio and FCF per share are favorable for deleveraging.
- Balance sheet highlights: Total assets $14,351.9; Total liabilities $6,458.8; Total stockholders’ equity $7,869.0; Cash and cash equivalents $433.2; PP&E (net) $6,921.8; Goodwill and intangibles $4,898.3; Long-term debt $3,832.7; Total debt $3,833.2; Current ratio 2.86; Quick ratio 2.02; DSO 45.69 days; DIO 40.52 days; CCC 86.21 days.
- Valuation context (selected ratios): P/E ~39.5x; P/B ~4.17x; P/S ~16.36x; D/e (debt/equity) ~0.42x; Debt to capitalization ~29.7%; Cash yield and free cash flow yield favorable given cyclicality.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.00B
-8.32%
-0.52%
Gross Profit
565.20M
-4.37%
-4.56%
Operating Income
337.10M
-19.53%
-25.68%
Net Income
207.60M
-24.92%
-32.60%
EPS
1.57
-24.52%
-32.62%
Key Financial Ratios
currentRatio
2.86
grossProfitMargin
28.2%
operatingProfitMargin
21.8%
netProfitMargin
10.4%
returnOnAssets
1.45%
returnOnEquity
2.64%
debtEquityRatio
0.42
operatingCashFlowPerShare
$4.5
freeCashFlowPerShare
$3.77
dividendPayoutRatio
29.3%
priceToBookRatio
4.17
priceEarningsRatio
39.48
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript-based insights are not available for QQ3 2024 in the provided data set. No earnings call transcript was supplied, so thematic highlights and quotes from management on strategy, operations, or market conditions could not be extracted. Note: If and when the transcript is provided, we will extract quotes by theme (strategy, operations, market conditions) and annotate significance with context.
N/A
— Management
N/A
— Management
Forward Guidance
Guidance absence: There is no explicit management guidance disclosed for QQ4 2024 or beyond in the QQ3 2024 materials. Outlook is therefore contingent on macro infrastructure funding, commodity price volatility, and the pace of volume recovery in the US construction materials market. Analytical view: if US infrastructure spending remains supportive and cost discipline persists, Vulcan’s cash flow generation should support continued deleveraging and potential modest dividend growth or buybacks, subject to capital plan constraints and debt levels. Key factors to monitor: (1) trajectory of US infrastructure appropriation and state/local projects, (2) input cost trends (diesel, freight, and energy costs), (3) pricing realization and product mix across Aggregates, Asphalt, Concrete, and Calcium, (4) debt reduction progress and liquidity resilience, (5) capacity utilization and maintenance Capex efficiency.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0LRK.L Focus
28.21%
21.80%
2.64%
39.48%
0KCI.L
24.10%
22.70%
4.10%
19.12%
0KEJ.L
25.40%
21.00%
1.51%
28.65%
0K91.L
1.00%
15.30%
3.62%
9.73%
0J3H.L
1.00%
14.80%
4.51%
11.13%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Vulcan Materials remains a cash-generative, defense-ready play on the US construction cycle. The QQ3 2024 results show meaningful profitability and a strong free cash flow profile, supporting deleveraging and potential shareholder returns. However, the elevated net debt-to-EBITDA ratio and cyclicality of the business warrant a cautious stance until deleveraging progresses and debt metrics normalize. Relative to peers, Vulcan’s margin structure and cash generation appear solid for a materials company, but the valuation metrics imply a premium multiple, likely reflecting its quality and scale in aggregates. Investors should monitor the trajectory of US infrastructure funding, cost inflation, and the rate of deleveraging, which will determine the sustainability of the current earnings power and the ability to expand multiples in a cyclical recovery.
Key Investment Factors
Growth Potential
Sustained free cash flow generation supports deleveraging while leaving room for disciplined capital returns; infrastructure policy in the US could support volume growth in aggregates and related products. The diversified product mix (Aggregates, Asphalt, Concrete, Calcium) provides some resilience against cyclicality in any single end-market and potential upside if concrete and asphalt demand stabilizes post-pandemic normalization.
Profitability Risk
Cyclicality of the construction materials cycle remains a core risk; elevated net debt (~$3.40B) relative to EBITDA (~$494M) implies leverage that could constrain optionality in downturns. Input cost volatility, seasonal beat-downs, and potential regulatory or environmental constraints could pressure margins. Additionally, weak QoQ revenue momentum suggests sensitivity to demand fluctuations and price competition in regional markets.
Financial Position
Balance sheet shows solid asset base and cash generation capability, with total equity of ~$7.87B and cash of $433.2M. Net debt to EBITDA at approximately 6.9x indicates leverage is a concern in the near term, requiring ongoing cash flow for deleveraging. The company produced $595.0M of operating cash flow and $498.2M of free cash flow in QQ3 2024, supporting debt reduction and potential shareholder returns.
SWOT Analysis
Strengths
Large, diversified US-facing construction materials platform with four segments (Aggregates, Asphalt, Concrete, Calcium).
Robust cash flow generation and solid gross margins (~28.2%) support resilience in a cyclical market.
Strong liquidity with substantial equity base and consistent operating cash flow.
Weaknesses
High leverage (net debt ~$3.40B) relative to EBITDA (~$494M) increases sensitivity to downturns.
Cyclicality of end-markets implies earnings volatility and potential margin compression in downturns.
Limited geographic diversification beyond the United States may heighten exposure to domestic macro swings.
Opportunities
Potential upside from US infrastructure stimulus if enacted and funded, boosting aggregate demand.
Ongoing capital discipline and deleveraging could enhance returns and reduce financing costs over time.
Product mix optimization and operational efficiency improvements to sustain margins.
Threats
Macro slowdown or housing market weakness could dampen volume growth.
Raw material and energy price volatility impacting input costs and transport expenses.
Regulatory, environmental, or environmental permitting constraints affecting production volumes.
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