Q4 2023 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$39.55Last close (Feb 15, 2024)
Post-Earnings Price$39.99Open (Feb 16, 2024)
Price Change
$0.44(+1.11%)
- Strong asphalt volume growth and robust backlogs indicate continued demand in the asphalt segment. In Q4, asphalt volumes were up 27.5%, with full-year organic growth of 10%. The company has "a ton of backlogs" in asphalt, suggesting sustained future growth.
- Operational excellence initiatives and value pricing are driving aggregates margin expansion, with expectations to add percentage points to aggregates margin profile in 2024. The company plans to double its continuous improvement events and expects higher aggregates margins this year.
- Moderating cost inflation and favorable hedging are expected to expand margins, with 50% of diesel fuel hedged at $2.79 per gallon versus last year's $3.20, leading to expected savings of $6 million to $8 million. Combined with operational excellence efforts, this provides an opportunity for margin expansion.
- Unusually high asphalt volumes in Q4 were largely due to favorable weather conditions, which may not be sustainable going forward. The company acknowledges that the 27.5% increase in asphalt volumes in Q4 was driven by exceptionally favorable weather, implying future growth rates may normalize or face tougher comparisons.
- Management is taking a guarded approach to 2024 volume guidance due to concerns over dormant nonresidential construction and weather impacts, potentially indicating volume headwinds. They project flat volumes in aggregates and ready-mix, and flat to down volumes in cement, noting that nonresidential construction, a significant part of their portfolio, is "pretty much dormant." Additionally, they faced weather-related challenges in January, starting the year "in a bit of a hole."
- Weather disruptions in Q1 may negatively impact earnings despite management's expectations. January was "rough" due to weather, which affected operations. While management plans to recover and maintain their 10% EBITDA target for Q1, there may be risks if adverse weather impacts continue or recovery efforts fall short.