6. Vulcan Materials Company (NYSE:VMC)
Number of Hedge Fund Holders as of Q4: 57
XN Exponent Advisors LLC’s Equity Stake: $156.50 Million
Vulcan Materials Company (NYSE:VMC), a leading supplier of construction aggregates in the U.S., has strengthened its market presence through strategic acquisitions. The recent purchases of Superior and Wake Stone provide significant opportunities for growth by expanding its geographical reach and improving pricing power. These acquisitions also enhance Vulcan’s supply chain efficiency by increasing its network of facilities, which in turn helps lower transportation costs and improve delivery times. By consolidating its market position, the company is well-positioned to drive long-term value creation.
In its fourth-quarter 2024 earnings report, Vulcan Materials Company (NYSE:VMC) delivered strong results, surpassing analyst expectations. Adjusted earnings per share (EPS) reached $2.17, significantly exceeding the projected $1.76 and marking a notable increase from the previous year’s EPS of $1.46. Revenue for the quarter came in at $1.85 billion, a 1.1% year-over-year increase and slightly above consensus estimates. However, for the full year, total revenue declined to $7.42 billion from $7.78 billion in 2023, reflecting a drop in aggregate shipments from 234.6 million tons to 219.9 million tons. Despite this, Vulcan Materials Company (NYSE:VMC) managed to expand its adjusted EBITDA margin to 27.7% from 25.8%, demonstrating improved operational efficiency.
Vulcan Materials Company (NYSE:VMC)’s profitability showed resilience, with gross profit increasing by 2.6% to $2 billion, and full-year adjusted EPS rising to $7.53 from $7.00 in 2023. However, the company’s financial position saw some shifts, with cash and cash equivalents declining from $931.1 million at the end of 2023 to $559.7 million by December 2024. Long-term debt also rose from $3.88 billion to $4.91 billion. Net cash provided by operating activities decreased to $1.41 billion from $1.54 billion in the previous year. While financial pressures exist, Vulcan’s focus on strategic acquisitions and operational efficiency positions it well for sustained growth in the construction materials industry.
Baron Real Estate Fund stated the following regarding Vulcan Materials Company (NYSE:VMC) in its first quarter 2024 investor letter:
“We added to our position in Vulcan Materials Company (NYSE:VMC) during the most recent quarter. Vulcan is a real estate-related company that is the largest construction aggregates producer in the U.S. Vulcan generates approximately 90% of its gross profit from mining, processing, and transporting crushed stone, sand, and gravel (collectively, “aggregates”) from its quarries. The balance of its gross profit is derived from strategically located ready-mix concrete and asphalt. The company’s products are sold and utilized in infrastructure projects such as highways, as well as residential and non-residential construction. Vulcan has local leadership positions across its footprint.
We believe aggregates are an attractive business for two main reasons: • High barriers to entry limit new competition: Permits to open new quarries are difficult to obtain, and the approval process typically takes 5 to 10 years • Consistent pricing power through cycles: Aggregates producers have historically enjoyed great pricing power owing to the difficulty in opening competing new quarries, the limited substitutes for quality aggregates, and a high weight-to-price ratio that makes transportation expensive relative to the cost of the material. In the last 30 years, pricing of aggregates has increased, on average, 4% per year…” (Click here to read the full text)
