Vulcan Materials Company (NYSE:VMC) stock fell 0.76% (As on January 17, 11:29:45 AM UTC-4, Source: Google Finance) after the company upgraded by RBC Capital Markets from “sector perform” to “outperform”, Boosts PT to $191 From $170, Expects ‘Ramping Infrastructure Tailwinds’. In the third quarter, the company had generated $507 million of adjusted EBITDA, which is a 21% increase over the prior year. Accelerating pricing growth and higher year-over-year shipments drove earnings improvement in each product line. In aggregates, gross profit improved 17% to $436 million. Volume improved 9% or 3% on a same-store basis, and it was geographically widespread. Pricing momentum continued growing from mid single-digit in the first quarter to high single-digit in the second quarter to double digits in the third quarter. Average selling prices on both a reported and mix-adjusted basis increased over 12% from the prior year’s third quarter.
In the third quarter, aggregates cash gross profit per ton improved 9% to $8.41 per ton. The Asphalt segment also achieved significant improvement in the third quarter with a $22 million year-over-year increase in cash gross profit. The average price of liquid asphalt increased by over $200 per ton compared to the prior year’s third quarter.
Asphalt volumes increased 13% and asphalt pricing improved 26%. Both volume and pricing improvements were widespread with particular strength in Arizona and California, our two largest asphalt markets. Concrete cash gross profit in the third quarter improved $25 million due to the contribution from acquired operations as well as strong volume and price growth in the legacy operations. At the end of the quarter, the net leverage was 2.5x adjusted EBITDA and within the stated target range of 2x to 2.5x.
For 2023, the company expects that the current strength in private non-residential construction activity and increased public funding will help to offset contracting residential demand.
During the quarter, the company had added another source of flexible and cost-effective capital by initiating a commercial paper program. We issued $550 million of commercial paper and used the proceeds to repay half of the outstanding $1.1 billion term loan. In conjunction with initiating the commercial paper program, the company has also upsized the revolving credit facility to $1.6 billion and extended its maturity to August of 2027.