Vulcan Materials Earnings: Strong Price Growth Offsets Volume Declines Amid Weather Disruptions

Narrow-moat-rated Vulcan Materials' third-quarter results fell below our estimates as unfavorable weather conditions exacerbated volume headwinds. Net sales were down 8% year over year, including the impact from the previously divested concrete assets in Texas. Nonetheless, adjusted EBITDA margin expanded 120 basis points to 28.2%, driven by pricing gains in the company’s aggregates business. We are impressed by Vulcan’s ability to expand margin despite lower volume, which we view as a testament to the company’s pricing power. As such, we have increased our fair value estimate to $169 per share from $166.