Paving-only sales for the Top 50 Contractors saw an explosion of growth, increasing by more than $170 million from 2022, nearly three times the increase between previous years.
The 2023 Paving Top 50 contractors generated $913,190,892 in paving-only sales, which is a seemingly astronomical level of increase over the 2022 total which topped out at $742,226,477. Just to give you an idea of where things are, the last year that the qualifying list was made up of 75 companies, the paving-only sales figure only reached $832 million, more than $100 million shy of this years numbers.
Without more detailed market information it is difficult to put a real button on what the exact driving factor behind this growth really is. The temptation is to assign a lot of the ballooning figures to the rising overall price of having paving work done. The price of asphalt, diesel, labor, and just about everything else, is much higher than in years past. However, more than half of the Paving Top 50 contractors reported greater than 15% profit margins.That makes it slightly difficult to pin it all on that.
In last year's summary of the Top Contractor results, previous editor Jessica Lombardo theorized that the large $60 million jump in that survey could have been due to larger paving project that were put on hold through the post pandemic season, and which were all finally coming through. If we accept that premise, and expand upon it, perhaps, that was just the tip of the iceberg. Delayed projects couldn't be delayed any further. One outlying thought was a boost in government funds, but, as you'll see, the percentage of municipal paving work wasn't particularly high.
Paving-only sales remains undefeated compared to the other industry segments, the closest being pavement repair-only sales at $315,056,146 ($247 million in the previous year), followed by sealcoating-only sales at $186,110,524 ($150 million last year), and striping-only sales coming in at $129,954,003.
The total sales for all the work our 2023 Paving 50 contractors completed was $1.723 billion, a nearly $400 million jump from last year's $1.331 billion (Top 50), but even more significant may be that it is a jump from both the 2021 total of $1.336 billion (Top 75) as well as 2020's previous high of $1.611 billion (Top 75). Devoid of economic context, the numbers themselves appear to show a steady and healthy market place, but we know that the economy remains highly volatile and unpredictable.
This year's paving-only sales represent just 58% of the total list sales, which is a small step down from the 62% reported last year. The remaining 42% of sales comes from a diverse amount of other work the Paving 50 conduct:
45 companies perform sealcoating services
44 companies do striping work, up from 39 in 2022
49, all but one of the Paving top 50 companies do repair work
Contractors who derive a majority of their sales from paving certainly are doing more diverse work than ever before, in fact, only a single company on the list of qualifiers derived all of their sales revenue from paving alone. Keep in mind that a majority of companies on this list still generated the vast majority of their sales form paving specifically.
Profit Margins
As the chart details out, contractors profit margins within the 2023 Paving 50 are stronger than ever before, while the mid-tier profit ranges saw a slight dip across the board. Drops of 9% (10-15% profit range) and a whopping 17% (5-10% profit range) were redistributed at both end of the spectrum, indicating that jobs were much more profitable in general, or, perhaps, a rise in higher volume lower margin work.
The percentage of Paving 50 companies reporting margins greater than 15% exploded to 52%, a radical rate of growth at 19% more than last year's 33%, and higher even than the previous peak year of 2021 at 40% of companies.
Contractors reporting margins of 10-15% tanked down to 20%, down from 29% last year
Contractors within the 5-10% profit margin range dropped from 31% to just 14%, the biggest categorial drop at 17%
On the bottom end of the ranges, 10% of contractors reported 3-5% margins, which continues a trending upwards from 1% in 2021 and 8% in 2022.
4% of contractors reported less than 3% profit margins, which is more than last year's 0%, but less than 2021's 5%
An interesting correlate is that of the 26 companies that reported greater than 15% profit margins, 16 also reported having completed more than 400 jobs in the year. With more than half of qualifiers being top earners, one might draw the conclusion that those who are making the highest gains are also completing the most number of jobs.
Types of Jobs The Paving 50 Completed
All 50 companies report sales from parking lot work (the lowest being just 8% of their sales) which, once again, makes this the largest type of work that the Top 50 do.
All Paving 50 reporting more than 5% of this type of work, equalling 67% of their work
35 companies reported at least some streets and roads work, one greater than last year, but the percentage of work dropped from 64% down to just 23%
34 companies reported working on driveways, up from 21 last year, but only at 17% versus 48% in 2022
9 companies reported doing some form of highway work, same number as last year, but the percentage of total work rose to 8% from 5%
8 companies listed "other" work, averaging 22% of their makeup, the largest single type being that of excavation/site work
Who The Paving 50 Worked For?
All 50 contractors completed at least 5% or more of their work for commercial/industrial customers
44 contractors reported working for multi-family/HAO residential customers
36 contractors worked for municipal clients
22 contractors worked for single-family residential customers
Despite an unpredictable economy and significant changes to costs and completion times, the figures are pretty consistent with trends from previous years.
Replacing the Equipment In The Top 50's Fleet
Perhaps, most unsurprisingly, the number of contractors who's fleet now surpasses our benchmark of $2 million to replace has grown from 33 last year, to 36 this year. This trend will likely only continue apace, due to the increasing expensive nature of the paving industry equipment, its maintenance, as well as new capitol investment. 10 Companies reported it would require between $1 and $2 million, only 2 companies said it would require between $500,000 and $1 million, zero contractors claimed between $250,000 and $500,000, however, 2 final entries reported it would take less than $250,000 to replace their fleets.
