Vulcan Materials (VMC) Q2 Earnings Miss On Weather Woes

Vulcan Materials Company’s (NYSE:VMC) second-quarter 2016 adjusted earnings of 90 cents per share missed the Zacks Consensus Estimate of $1.01 by about 11%. However, the bottom line increased 38.5% from the prior-year quarter on the back of robust margins.

Total revenue of $957 million also missed the Zacks Consensus Estimate of $1.013 billion by 5.5%. Sales however jumped 7% from the prior-year quarter driven by higher demand for construction activities across the markets served by the company and increased pricing momentum in the Aggregates segment.

Second-quarter 2016 results were hurt due to soft volumes resulting from extreme wet weather and slower-than-expected start to large projects.

Adjusted gross margin of 35.9% increased 500 basis points (bps). Adjusted EBITDA soared 21.2% year over year to $279.8 million driven by strong growth across all the segments.

Segment Details

Aggregates

Revenues rose 8% year over year to $791.5 million owing to higher shipments. Freight-adjusted revenues jumped 10% year over year to $615 million.

Aggregates shipments (volumes) rose 3% driven by gradual recovery in private and public demand across end-markets.

Freight-adjusted average sales price climbed 7%.

Adjusted gross profit margin of 41.3% increased 420 bps during the quarter.

Non-Aggregates

Adjusted total revenue in the Concrete segment was $81.3 million, up 3.4% year over year, driven by an increase in volumes and price.

Revenues in the Asphalt Mix segment were $142.1 million, up 10.2% owing to an increase in volume, partially offset by a decline in price.

Total revenue at the Calcium segment (formerly Cement) was $2.5 million, compared with $2.4 million in the prior-year quarter, as benefits from an increase in volume was mostly offset by a decline in price.

Vulcan Materials exited the Cement business with the sale of the Florida facilities in Mar 2014. The company has, however, retained its calcium operation at the Brooksville, FL facility and renamed the segment to Calcium. The facility mines, produces and sells calcium products.

2016 Outlook

Vulcan maintained its adjusted EBITDA guidance for 2016. The company expects adjusted EBITDA at or near the upper end of the previously estimated range of $1.0 billion to $1.1 billion, which will be driven by an improvement in gross profit per ton at the Aggregates segment, higher earnings at the Non-Aggregates segments, and lower costs.

Vulcan Materials carries a Zacks Rank #3 (Hold).

Key Picks from the Sector

Some stocks worth considering in the construction sector include Eagle Materials Inc. (NYSE:EXP) , Masco Corporation (NYSE:MAS) , and Owens Corning (NYSE:OC) . All the three companies carry a Zacks Rank #2 (Buy).