Vulcan Materials' Cost Inflation Erases Pricing Gains as Margins Slip
Vulcan Materials reported second-quarter Adjusted EBITDA of $654 million, down 1% from a year earlier as freight and diesel costs outpaced pricing gains.
Vulcan Materials Company (VMC) reported second-quarter Adjusted EBITDA of $654 million, roughly flat with the prior year, as Adjusted EBITDA margin compressed to 30.3% from 31.4%. The aggregates producer had posted margin expansion in the first quarter, when Adjusted EBITDA margin rose to 25.5% from 25.1% a year earlier, making the second-quarter reversal a break from the trajectory the company had been building since late 2024.
The pattern traces to a cost side that moved faster than pricing. Aggregates unit cash cost of sales inflation accelerated to 7%, or 72 cents a ton, in the quarter, up from 4% inflation in the first quarter, with the jump attributed to higher diesel fuel costs; stripping out fuel, cost growth ran a more modest 3%. Freight-adjusted pricing growth, meanwhile, decelerated to 5% on a mix-adjusted basis, or 86 cents a ton reported, down from the 6% mix-adjusted pace reported for full-year 2024. Aggregates cash gross profit per ton rose just 1.2% to $12.02, a sharp slowdown from the 2.8% gain in the first quarter and the 7% full-year gain reported for 2024.
Shipment volumes added to the pressure. Aggregates shipments grew 1% year over year in the quarter, down from 5% growth in the first quarter and 2% in the fourth quarter of 2024, with weather disruptions in Texas and the Southeast cited. The combination of slower volumes, moderating pricing and faster cost inflation left aggregates segment gross margin essentially unchanged, with gross profit per ton at $9.47 versus $9.44 a year earlier, compared with a 12% gross-profit increase and 90-basis-point margin expansion in the first quarter.
The non-aggregates businesses weighed further on results. Combined asphalt and concrete gross profit fell to $58 million, with asphalt gross profit dropping to $49.8 million from $57.2 million a year earlier, a reversal from the sharp year-over-year asphalt margin improvement in the first quarter and the 15% full-year gross-profit growth in non-aggregates reported for 2024. The quarter also carried new charges tied to portfolio changes: a $13.2 million gain or loss on the sale of real estate and businesses and $4.5 million of charges associated with divested operations, following the completed sale of the California ready-mixed concrete business in early June. Vulcan also recorded $8.6 million of CEO transition and reorganization charges in the first half of 2025, tied to Ronnie Pruitt's appointment as chief executive effective January 1, a disclosure absent from the 2024 filings.
Beneath the margin pressure, balance-sheet and efficiency metrics held steady. Total debt to trailing-twelve-month Adjusted EBITDA stayed at 1.9 times, below the company's 2.0-to-2.5-times target range and down from 2.2 times a year earlier, while trailing ROIC rose to 16.1% from 16.0% in the first quarter. SAG expense as a share of revenue improved to 6.6% from 6.9% a year earlier, continuing a deleveraging trend seen in each of the prior two quarters.
Vulcan reaffirmed full-year 2025 Adjusted EBITDA guidance of $2.4 billion to $2.6 billion, unchanged from the range it reaffirmed in the first quarter.
The company increased capital returned to shareholders to $318 million in the quarter, comprising $250 million of buybacks and $68 million of dividends, up from $217 million in the first quarter, while capital expenditures nearly doubled to $176 million from $90 million. Vulcan also disclosed new acquisitions of a quarry in southern Colorado and a rail yard in Dallas-Fort Worth, Brannan Sand & Gravel, additions not mentioned in any prior-quarter release.