Vulcan Materials (NYSE:VMC) said third-quarter adjusted EBITDA reached $707 million, with adjusted EBITDA margin expanding 20 basis points year over year to 32.3%, as higher selling prices and cost discipline helped offset substantial energy-related cost pressures.
Chief Executive Officer Ronnie Pruitt said the company’s underlying business adjusted EBITDA grew 5% during the quarter after accounting for roughly $40 million of energy cost headwinds and prior-year divestitures of more cyclical downstream businesses. The company now expects energy headwinds to exceed $100 million for the full year, with Chief Financial Officer Mary Andrews Carlisle later estimating the full-year impact could be about $120 million, including diesel and liquid asphalt costs.
Despite the demand environment remaining mixed, Pruitt said Vulcan expects to deliver approximately $2.4 billion in adjusted EBITDA for the year and another year of earnings growth.
Aggregates Pricing Offsets Higher Diesel Costs
Aggregates shipments declined 3% from a year earlier in the third quarter. Pruitt said the comparison was affected by favorable weather and unusually strong seasonally adjusted shipments in the prior-year period, following difficult winter weather and rainfall earlier that construction season.
On a seasonally adjusted basis, shipment momentum was similar to the second quarter and consistent with current market conditions, according to the company. Aggregates cash gross profit per ton rose modestly year over year as higher freight-adjusted selling prices more than offset sharply higher diesel costs.
Mix-adjusted average selling prices rose 5% from a year earlier, with improvement across geographies. Excluding diesel, aggregates freight-adjusted unit cash cost of sales increased 3%.
Pruitt said pricing remains Vulcan’s largest and fastest lever for managing inflation. The company sells about half of its products through daily bidding and about half through fixed-plant arrangements. Vulcan sent fixed-plant pricing announcements earlier this year to allow customers more time to prepare, he said.
For 2027, Vulcan expects aggregate prices to increase at a mid- to high-single-digit rate, including the effect of mix. The outlook reflects pricing actions taken this year, announced Jan. 1 increases and the company’s expectation that diesel costs will remain elevated. Pruitt said the company also expects to retain its discipline around midyear price increases.
“We will grow our cash gross profit per ton,” Pruitt said, noting that price increases are applied to a higher average selling price than cost increases are applied to on the company’s cost base.
Public Infrastructure, Large Projects Support Demand
Vulcan said public construction activity remains healthy, supported by remaining Infrastructure Investment and Jobs Act funding. Pruitt said approximately 35% of IIJA funds have yet to be spent, while the current extension of federal highway authorization maintains funding at existing levels.
Trailing 12-month contract awards rose 2% in Vulcan markets, compared with a 1% increase for the U.S. overall, according to the company. Pruitt also cited state funding, public-private partnerships and toll-authority projects as additional support for infrastructure activity.
Private non-residential demand continues to benefit from large projects, including data centers, energy development and manufacturing. Vulcan said it is supplying solar, wind, LNG, power plant and refinery projects, as well as projects involving SpaceX and Toyota in South Texas and Scout Motors in South Carolina.
Residential construction remains constrained by housing affordability and interest-rate conditions. While Pruitt said Vulcan’s markets have favorable demographic trends that support long-term housing demand, the timing of a residential recovery remains unclear.
Looking into 2027, Pruitt said the company anticipates a demand backdrop largely similar to 2026, though growth opportunities could vary by market and end use. He said public demand should remain steady, while private-sector project timing could provide upside.
Acquisitions, Capital Returns and Cost Control
Vulcan completed two bolt-on aggregate acquisitions during the third quarter and another earlier in the fourth quarter. The company has added assets in Texas, Tennessee, southeastern Colorado and southern Ohio this year. Pruitt said the acquisitions add long-term aggregate reserves, are relatively easy to integrate and are complementary to Vulcan’s existing network.
The company expects to complete several additional transactions before year-end, with its acquisition strategy focused on aggregate-led bolt-ons rather than transformational deals. Pruitt said individual transactions have generally ranged from about 500,000 to 1 million tons, though they can be smaller or larger.
Through the first nine months of the year, Vulcan generated nearly $1 billion in operating cash flow and received $572 million in proceeds from downstream and non-core divestitures. The company invested about $550 million in maintenance and growth capital expenditures, redeployed approximately $300 million of divestiture proceeds into strategic aggregate acquisitions, and returned roughly $950 million to shareholders through dividends and $750 million in share repurchases.
Net debt to adjusted EBITDA stood at 1.9 times at Sept. 30. Carlisle said the leverage level provides capacity to support the acquisition pipeline.
Vulcan also reported selling, administrative and general expenses of $137 million in the third quarter, down from $145 million a year earlier. For the full year, Carlisle said SAG expense is expected to be about $30 million below the company’s original range, while capital expenditures are expected near the low end of the previously projected $750 million to $800 million range.
About Vulcan Materials (NYSE:VMC)
Vulcan Materials Company (NYSE: VMC) is a producer and distributor of construction materials used in infrastructure, commercial, residential and industrial projects. The company is the largest producer of construction aggregates in the United States, including crushed stone, sand and gravel.
In addition to aggregates, Vulcan Materials produces asphalt mix, ready-mixed concrete and cement. Its materials are used in roads, bridges, airports, commercial buildings, homes and other construction applications.
