Vulcan’s Margins Remained Pressured in Q3 as Rising Operating Costs Offset Price Increases

Narrow-moat Vulcan Materials reported solid third-quarter results that were largely in line with our expectations. Revenue surged 38% year over year on strong volume, pricing, and the addition of acquisitions. Vulcan's average selling prices rose by double-digit percentages across its business as the firm leveraged its pricing power to offset rising operating costs. That said, gross margins declined roughly 240 basis points versus a year ago to 23.6%, but improved sequentially. We expect additional improvement in the fourth quarter as Vulcan works to expand its margins despite inflationary pressures.