Q1 2022 Vulcan Materials Co Earnings Call
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[music].
Good morning, ladies and gentlemen, and welcome to the Vulcan materials company's first quarter earnings call.
My name is Chelsea and I will be your conference call coordinator today.
During the Q&A portion of this call we ask that you limit your participation to one question.
This will allow everyone who wishes the opportunity to participate.
You May register to ask a question at any time by pressing the star and one on your Touchtone phone.
Now I will turn the call over to your host Mr. Mark Warren Vice President of Investor Relations for Vulcan materials. Mr. Warren you may begin.
Good morning, and thank you for your interest in Vulcan materials with me today are Tom Hill, Chairman and CEO , and Suzanne Wood, Senior Vice President and Chief Financial Officer.
Today's call is accompanied by a press release and a supplemental presentation posted to our website bulk materials dot com.
A recording of this call will be available for replay later today at our website.
Please be reminded that today's discussion may include forward looking statements, which are subject to risks and uncertainties. These.
These risks along with other legal disclaimers are described in detail in the company's earnings release and in other filings with the Securities and Exchange Commission.
Reconciliations of any non-GAAP financial measures are defined and reconciled in our earnings release, our supplemental presentation and other SEC filings.
As the operator indicated please limit your Q&A participation to one question.
With that I'll now turn the call over to Tom.
Thank you Mark and thanks to everyone for joining the call. This morning as always we appreciate your interest in Vulcan materials and I hope that you and your families have had a safe and healthy start to the year.
Our teams executed well in the first quarter. They remain focused on capitalizing on pricing opportunities and mitigating cost pressures their efforts have and will continue to result in the expansion of our unit margins.
Our strategic discipline are helping us to both take advantage of tail winds and dampen headwinds in a very dynamic environment.
We delivered solid results in the first quarter, we generated $294 million of adjusted EBITDA, a 20% increase over the prior year.
Right.
Accelerating inflation continuing volatility in the energy markets and ongoing disruptions in supply chains.
This quarter again demonstrates the resiliency of our aggregates business and our team's strong execution of our strategic disciplines.
Over the trailing 12 months, we have delivered 10% adjusted EBITDA growth in spite of $131 billion of higher energy related cost.
On a trailing 12 months aggregates cash gross profit per ton has improved for 15 consecutive quarters.
Absent the impact of selling acquired inventory.
In all business segments, the pricing environment is strong due to growing demand and ongoing inflation.
Momentum continued with year over year growth in aggregates mixed adjusted price increases sequentially for the fifth straight quarter.
Our combined commercial and operational execution contributed to higher cash gross profit in both aggregates and total non air segments.
In the downstream businesses volume price and material margins improved in both product lines.
Turning now to the segments.
Aggregates gross profit improved 9% to $243 million or $4.58 per ton.
Demand is healthy across our footprint and volume improved 14% or 7% on a same store basis.
Shipments were in line.
With expectations since the prior year's quarter was negatively impacted by the Big February freeze.
As anticipated August pricing showed strong momentum in the first quarter with freight adjusted pricing increasing 6% over the prior year's first quarter.
Mix adjusted pricing improved 7%.
We expect to see continued strength in pricing throughout the year and are confident about mid year price increases that will be particularly impactful to 2020 three.
As expected our costs were elevated in the quarter on a year over year basis since the inflationary impacts did not begin until the second quarter last year.
Over the trailing 12 months of continuously rising diesel and other replacement impacts are freight adjusted unit cash cost of sales has increased by 5%.
In a challenging macro environment. This is a job well done and I commend our operators for their hard work and for keeping keeping each other safe and for delivering these results.
In the first quarter cash gross profit was $6 53 per ton, excluding the impacts of selling of acquired inventory and higher diesel cost cash gross profit was $6 96 per ton a 5% improvement over the prior year.
Asphalt.
Cash gross profit of $6 million was in line with the prior year.
Pricing actions initiated last year to offset rising liquid asphalt input cost positively impacted the first quarter results.
Average selling prices increased 13% versus last year and helped to improve unit materials margins.
The average price of liquid asphalt was over 30% higher than the prior year, a 14 million dollar headwind to our first quarter results.
While we expect liquid asphalt prices to continue to rise we are encouraged by the significant sequential improvement that we've seen in pricing over the last couple of quarters and we remain focused on improving our gross profit margin in asphalt.
Country cash gross profit grew from $12 million to $49 million in the first quarter driven primarily by the addition of U S concrete.
Volume price and material margins, all improved as higher selling prices offset higher material costs, including internally supplied aggregates.
Now, let's shift to the demand environment, which remains positive.
Demand is expected to grow in 2022 across all major categories, both single and multifamily housing and both heavy and more traditional nonresidential.
Public demand is improving.
And as funding has put in place from the infrastructure investment and jobs that future growth is expected in both highways and other infrastructure.
After double digit growth in 2020 one the residential end use is expect to grow but any more modest rate in 2020 two.
Demand remains strong and starts were still positive. However, we are mindful of factors such as supply chain issues rising interest rates and labor constraints.
With the continued demand for additional housing multifamily demand is accelerating.
Private nonresidential demand has returned to growth in 2022, while demand will continue to be influenced by aggregates intensive warehouse and distribution distribution projects other private segments like office manufacturing and industrial are now contributing to the sustainable growth in this in March.
Yeah.
On a trailing month on a trailing 12 month basis square footage for total nonresidential starts has grown for the last seven months and it's now back to pre COVID-19 levels.
Other external leading indicators like Abi and the Dodge momentum index also point toward growth for 2022.
On the public side.
Demand growth is expected in both highways and other infrastructure the timing of the impact of the infrastructure investment and jobs Act will depend upon the pace at which states allocate additional funds and the time horizon needed to move from design to leading to construction.
As we previously communicated we anticipate the majority of the impact to be realized in 2023 and beyond.
We are well positioned in attractive markets and are poised to benefit greatly from the legislation for years to come.
With the solid demand backdrop and positive pricing environment, we remain confident in delivering significant earnings improvement in 2020 two.
We are focused on leveraging our strategic discipline to control, what we can control and to diminish the impacts of things outside of our control.
I will now turn the call over to Suzanne for further comments Suzanne.
Thanks, Tom and good morning to everyone. The macro challenges of the last 24 months have been well documented and discussed we continue to confront these challenges from a position of strength led by our resilient aggregates business, our commercial and operational execution are sound and supported by our strategic decision.
Our balance sheet is strong these factors combined to form our positive 2022 outlook.
As Tom already highlighted our strategic disciplines help us to take advantage of tailwind and dampen the impact of headwinds we've done that over the last eight quarters, delivering a 4% compound annual growth rate in our trailing 12 months cash unit margins in the face of a number of challenges.
The current pricing environment provides tremendous support for both our near term and longer term results and we will continue to leverage best practices and the collective knowledge of our talented teams to manage our overall costs.
This is evident in our S. A G cost, which as a percentage of total revenues declined 60 basis points versus the prior year's quarter. We continue to make progress on the integration of U S concrete to further leverage our costs.
Now with respect to the balance sheet, we took steps in the quarter to improve its structure, we extended the maturity of our $1.1 billion term loan to August 2026, the loan can be repaid in full or in part at any time with no penalty.
Simultaneously, we also extended the maturity of our revolving credit facility to September 2026.
Our net leverage is two six times, that's just above the top end of our target range of two to two and a half times.
Given our ability to generate strong cash flows there is capacity to invest in other opportunities whether organic or inorganic having said that we do expect to move back within the target range by year end.
As always we'll remain disciplined as we allocate capital with a view to improving shareholder returns and maintaining financial flexibility and our investment grade ratings. We also remain focused on improving our return on investment.
On a trailing 12 months basis, our rois see at quarter end was 14%.
And our adjusted EBITDA over the same time horizon has improved by 10% and we expect continued growth in 2022.
In February we communicated expectations for 2022 of delivering adjusted EBITDA of between 1.72 and $1.82 billion. We reiterate this guidance, we expect the favorable pricing dynamics in our strong execution to lead to attach.
Our active growth in aggregates unit profitability as well as improvement in our downstream businesses.
Our expectation of investing between $600 million and $650 million in capital expenditures remains unchanged.
I'll now turn the call back over to Tom for closing remarks.
Thank you Suzanne and closing.
I would like to remind you of three things our teams remain clearly focused on in order to deliver value for all of our stakeholders.
John .
Executing at the local level.
Two driving unit margin expansion by focusing on our strategic disciplines and three maximizing synergies from recent acquisitions.
Our people are what makes Vulcan better every day and I appreciate the hard work of our entire Vulcan T.
I am excited about what we will accomplish in 2022 and for years to come.
And now Suzanne I'll be happy to take your questions.
Okay.
Yeah.
Great. Thank you.
At this time, if you would like to ask a question. Please press the star and one on your Touchtone phone.
Remove yourself from the queue at any time by pressing the pound key.
Once again that is star and wanted to ask a question.
And our first question will come from Trey Grooms with Stephens. Your line is now open.
Hey, good morning, Tom and Suzanne are you good morning.
Right.
Well, Tom first off I know you talked a little bit about the pricing environment and then it clearly is strong.
And do you have an expectation for price momentum to step up in 'twenty two.
And I guess, if you kind of go back to what you said in February I think the guidance called for 6% to 8% increase this year in price versus last year.
Excuse me.
Which came in I think closer to 3% so.
And you put 6% you put up 6% in the quarter. So clearly some nice acceleration there, but can you talk about the price momentum youre seeing today expecting through the year.
And how youre thinking about.
Midyear increases relative to maybe where you were a few months ago.
Sure.
The performance in the first quarter was a really good start to the year and as you said, we reported six mix. Adjusted we were seven if you remember in February we predicted it to start off hire than the low end of the low end of the range, but higher than the fourth quarter of last year.
And then we grow it sequentially as we March through the through the year.
The.
Combination of visibility to demand and coming demand you couple that with inflation. It's just a good catalyst for price growth all of our January and April increases are now in place at this point I feel very confident about mid year price increases across the vast majority of our work now remember.
Midyear price increases will have some positive impact on 2022.
Cause of the delay in our work and our jobs, it's really more of a 'twenty three play and it sets us up really good for next year. So off to a really good start I think we progress and continue to accelerate price as we as we go through the year and we're already starting to set ourselves up for 2023. So you know as you said a really good pricing.
And Trey I'll just add one thing just just to remind everyone. When we're talking about pricing and guidance. Yeah. We we all price in the industry, a little bit differently and talk about it a little bit differently. So as a reminder, our pricing that we quote to you is freight adjusted meaning that it's F O b the core.
And therefore, it excludes transportation to long haul market. So in times of inflation and volatility you know that can make a big difference in the top line price. That's that's quoted them, but what's really important here and I'm sure. We'll come on to talk about unit margins. Later is how much of that price, you're really able to take two.
The bottom line.
Perfect.
Thank you for that and I'm going to stick with the one question, but I've got to take my hats off to you on the profit per tonne as well that good work on that side as well. Thank you.
Thanks, Rob.
Thank you.
Our next question will come from Stanley Elliott with Stifel.
Hey, good morning, everyone. Thank you for the question and good morning. Thanks, So much a nice a nice segue for me Hey, Tom I was curious if you could talk a little bit more about the execution controlling costs I mean trade adjusted costs up 11% doing a really nice job on the unit margins well wed love to hear you guys talk a little bit more about what's out what's happening behind the scenes.
Sure.
As we've talked about our aggregates business, we believe will beat inflation, while we continue to do a good job on price.
Our operators have really improved efficiencies to help offset inflation and offset the huge $59 million 12 months Spike we've experienced in diesel and aggregates and I think they're doing all the time.
Sure they service their customers keep each other safe.
So if you kind of look back over the last 12 months, we've held cost to two 5%.
Pace of inflation and massive spikes in fuel and energy.
I would tell you I think that has been an excellent job for our from our operators and I appreciate the job, they're doing and as always they do at keeping our folks healthy and safe and to me. It what this demonstrates throughout the whole aggregates business is that we're executing on our four strategic disciplines and they're making a difference.
<unk> of you know, obviously controlling wound controle, but also offset in oh outside pressures that maybe we had not expected. When we started this started this journey.
Thanks, everybody best of luck. Thank.
Thank you.
Thank you.
Our next question will come from Jerry Revich with Goldman Sachs.
Yes, hi, good morning, everyone.
Jaret here.
I'm wondering if you could just talk about the magnitude of inflation that you folks are seeing on labor.
Other inputs and what do you expect the cadence of that to look like.
Other words, when do we hit easier comps.
From that standpoint, and I'm, assuming the price realizations.
Dovetailed nicely with that cadence, but maybe I can get you to expand on price cost. If you don't mind sure I'd be glad to.
It's like everybody else. It's it's it's it's it's everywhere to fallout labor probably mid single digits.
You know parts are up a hard to get parts steels up rubbers up everything's there.
The headline has to be in few and in energy.
Just look at diesel we predicted it would absolutely look at diesel and asphalt what we said last quarter was probably a 50 million dollar headwind in the first half of the year, that's probably going to be 50% higher at this point, we said it probably gets easier comps in Q3 and four.
And we'd probably just comp over that at this point, we still predict those now it would be up in Q3 and four so you know it's it's it's tough.
It's there and it's real but as you pointed out I think we offset that with price and we continue.
To improve our unit margins, which is our job and.
I think that if you looked at our guidance I think.
Suzanne and I have confidence that we.
We hit that guidance and I think the first quarter was there was evidence of that.
Okay. Thank you. Thank you.
Okay.
Thank you.
Our next question will come from Kathryn Thompson with Thompson Research group.
Alright, Thank you for taking my question today.
Hi.
So you have a good.
Volume outlook and are seeing some areas that have not seen signs of life, including office.
And you've yet to see the real momentum.
On a state level from public spending.
And against this backdrop, there continue to be some supply chain snafus and tightened.
Titan nuts across the U S.
We're even hearing.
Some concerns about availability.
Types of rock heading into the peak construction season.
Our first is from your perspective.
<unk> is the supply chain journey for you as you manage that just now.
And then how are how do you see it going forward for the remainder of 'twenty, two and really into 'twenty three two thank you.
So for us.
I mean, it's been back there's a little bit maybe a little on efficiencies with parts for mobile equipment, hopefully thats, improving but we saw that for the first time in the first quarter for our customers I think it's a it's a little bit different story I thought that you know obviously the first quarter was strong but remember we're comping over you know a pretty easy comp with the big freeze in February .
Last year. So again, it's just Q1 easy comp.
The minerals and demand I think a really good place in probably as good as we've seen in a long time with all four end uses should have shipments up in 2022.
That said as you pointed out we've got labor and supply chain issues labor will affect our customers just getting you know getting catching up on work more than getting it done but it also hurts us in transportation. It hurts the rail transportation and any you know peak day with excellent weather you just don't have enough trucks to deliver it peaked.
Demand and so it kind of is it it spreads it out so.
As you point out the supply chain is just slowing some work.
Well, that's being said I think the good news is that works not cancelling we're not seeing any jobs go away and so its well demand is there it's not going away. It's just that it's pushing it to the right and extending the cycle and that's not all bad. So you know if we see some of these pressures ease I think there's potential for more sooner, but we haven't seen.
That easing yet as we go into the season.
Thank you very much thank you.
Thank you.
Our next question will come from Keith Hughes with <unk> Securities.
Thank you several impressive things as voice, but particularly asphalt given some of the.
Licensing in that sector with a flat and your performance I guess my question next quarter or two is there some leasing in place and you're going to lag that's going to put some pressure or do you think you're on the right side of the cost now.
I think Q2, we'll see some pressures as we've pointed out because it's still it's still a a harder comp we hadn't seen the big jump in you start to see the inflation last year in Q2, but not the big jump in diesel and liquid. So Q2 has tougher comps kind of in all product lines driven by energy.
From a specific asphalt perspective I was very pleased.
With the jump we saw in prices up 13%.
And remember that we said in our guidance the asphalt that we'd see gross profit grow driven by the second half volumes in second half more than growth I think that you know in the in the quarter. We saw liquid go up 130 Bucks a $14 million and the fact that we were able to offset it with <unk>.
Rice is is a really good omen looking forward to the rest of the year I think we've caught it and I think as we progress through the year, we start group's stock back growing those unit margins in asphalt.
Okay. Thank you thank.
Thank you.
Thank you.
Our next question will come from Garik <unk> with loop capital.
Oh, hi, Thanks, and congrats on the quarter I was just wondering if you can go into a little bit more detail just on the volume growth expectations for the rest of the year you know clearly Q1 Europe .
Up against a fairly easy comparison, but anything that we should consider as it is.
Demand environment continues to improve for you.
Yeah again, you know I would stick to our guidance, which was five to seven I'm kind of.
On volume growth, that's two to four same store again, Greg start again easy easy copies no small quarter.
I would I would call out this I would stick to that guidance at this point until I see so many as you know.
As we heard earlier, you've got labor issues, you've got supply chain issues, you could have some it issues being tied I don't think that I don't think it dampens volume that much but you know I don't see that easing at this point, so I would stick with mob with the with our with our volume original growth until we see more.
And I think like like we said last quarter I mean, if if there is you know an easing then you know, we we stand ready to benefit from that.
Understood. Thank you. Thank you.
Thank you.
Our next question will come from David Macgregor with Longbow Research.
Yes, good morning, everyone and congratulations on a great quarter good morning Russell.
Thanks for the results.
I guess I wanted to ask you about your EBITDA guidance range to $1 72 to 182, and that's not changing but obviously a lot within that is changing.
Just responding to <unk> question, you just talked about volume holding.
Where you were in terms of the beginning of your assumptions like clearly pricing is going to be a lot better can you just talk about how youre thinking about that cash cost inflation, but that mid single digit number you gave us back in February .
So I think that I think as I look at the year and just puts and takes to the year after one quarter.
And it's just the first quarter I would say, that's probably upside maybe to the high end of our pricing guidance.
Maybe upside on volume, although we haven't seen it yet I think we will have challenges we knew we're going to have challenges on diesel we got bigger challenges there than we had anticipated. We knew we were going to have challenges on liquid asphalt again, that's that cause climbed more than we thought it would and we will continue to climb so we put all that together I would.
Tell you that I have good confidence in our guidance it would need to see a little bit more before I would be willing to adjust it.
Okay. Thank you very much sure.
Thank you. Our next question comes from Phil <unk> with Jefferies.
Hey, guys congrats on a really strong quarter. Thanks.
Thanks to Tom Tom.
Tom and Suzanne is there a good way to think about the midyear increase from a contribution standpoint, and if demand remains pretty good you see this being more of the norm.
And appreciating that you know the full impact is really more of a 2023 event.
Can you get closer to like double digit price pricing from our increase standpoint in the back half of this year, sorry, a lot to unpack there.
No. That's okay, I think that if you step back and just look at the aggregates business one of the really attractive.
Attributes of aggregates is its pricing and elasticity and from Vulcan's perspective, it's the ability to compound unit margins overtime.
That's.
While we are in the aggregates business. That's why we're leading in that business. That's why you know 90% of our of our gross profit is an aggregates today the environment for price growth is excellent and it's really driven by the intersection of inflation current demand and visibility to growing demand.
<unk> seen a sequentially grow price over the last five quarters and I am confident we will continue that trend. So we started off it.
Six or seven depending on how you call the price in the quarter and I think each quarter, we will continue to grow that as we as we as we progress forward I would at this point I would hope we would be at the higher end of that guidance at this point now.
If you really want to be good at this business you got to take that price to the bottom line.
Which is why we work so hard on most strategic disciplines and why it's not just about price. It's also about cost control and operating efficiencies and so the combination of those two at this point you know even in the face of what we faced with inflation I think our troops are doing an excellent job both in servicing our customers are earning.
Price, but also operating in the most efficient manner possible under tough circumstances, yeah, Phil and I think you see that you know when you look at the guidance, we we called out at the beginning of the year. If you look at that cash gross profit per ton and the guidance ranges that we've given call for that to go up.
You know high single digits year over year, and I, you know I'd say it at any time, that's a good performance to be able to drive that to that level, but taking into consideration you know all of the energy headwinds, we've talked about and the and the inflation. Despite the opportunity for some price increases yeah. That's.
That's a performance I'd I'd really be proud of.
For sure I mean, given all the inflation you saw.
Improvement in <unk> was a pretty promising I appreciate the color. Thank you.
Yeah.
Thank you.
Our next question will come from Michael Dudas with vertical research.
Yeah.
Good morning, Mark Tom.
Good morning, good morning.
Tom you could share your thoughts on.
How the U S concrete integration is going relative to plan and what are the puts and takes you've seen over the first several months of having a number of the Vulcan family and is.
The New York kind of like the northeast market.
We hear about a lot of civil a lot a lot of work coming through.
Through various agencies in New York State.
Seeing some of that for this year and go out until the next call.
Yes, we are on New York I think two things are out in New York the public demand is growing and there's some very big projects that are coming that are there in the works and now we're starting to see non res up they're starting to starting to pop. So good news is that market.
You step back and look at U S concrete at this point, we're function as one business or the combined field teams operating as one team I think as we you heard me say last quarter. The timing is turning out to be excellent for two reasons.
We talked about nonresidential man, which is so important to concrete is in growth mode and there's a lot of work coming in non across our footprint and then pricing in all product lines as we as we've talked about is really jumping in 'twenty 'twenty. Two so it sets us it sets us up really well for that acquisition to Cree.
Even more value for our shareholders.
Sure.
Thank you. Our next question will come from Courtney <unk> with Morgan Stanley .
Hi, Good morning, guys good morning.
One clarification on a on the pricing comments I know you've been talking a lot about the mid years, but is you reiterated guidance include the upside from mid year. It's at the high end or I think last quarter, you characterized it as not including mid years. So just wanted to understand if that changed given the elevator.
Good diesel and liquid asphalt headwind that you're now baking in and then secondly on the on the downstream side, you've given us some guidance for gross profit.
Last quarter any change to how we should be thinking about those business lines.
Yes, so the pricing I would point out we would still be in that in that six to eight but probably on the high end of it and you've got to remember that midyear price increases will hit some of it in may some of June some of July but because of the lag in our business you will get some benefit in 'twenty two but it really sets you up that works.
Most of that work is going to hit in 'twenty three so its well you'll see some benefit and push as well I would play to the high end of that range. The big benefit is going to hit in 'twenty three and that's that's great.
I think from a downstream.
Perspective, we would tell you its the same no change in guidance again, what we said was 300 to 325 cash gross profit in the downstream.
While we've seen inflationary pressures and in both product both concrete and asphalt. We're also seeing price and I would stick with our guidance and continue to grow our unit margins and volume, particularly second half loaded.
Okay, great. Thank you. Thank you.
Thank you. Our next question comes from Michael Feniger with Bank of America.
Hey, guys. Thanks for taking my question just following up I mean with the pricing now at the high end or you started so where you exit I mean, you know what.
What kind of Incrementals should we be thinking about for next year, if you're looking at a 10.
10 to.
12% pricing and 2023.
Basically the cash gross profit per ton, which is growing high single digit.
How much is that accelerating should we be thinking about in 2023.
And really think about those incrementals around that business.
Yep.
Too early to call pricing in 2023 again, its nice set up with mid year price increases and I would always point you in aggregates too you know, 6% incremental same store and I Wouldnt under 60, 60, yes, 60% same store and inflation.
It puts pressure on that particularly spikes in diesel, but if you look at it over the long term, that's what I would I would guide you that 60%.
And Ken gross margin in asphalt and ready mix can that get back to 2020 levels next year. I know you are assuming that there is improvement in second half of this year with next year, if we get some moderation or stabilization on these price increases can we see those margins come back or do you think there's something.
Structural that that keeps those margins in the downstream businesses from getting back to those levels I would remind you that 2020 with special for asphalt because of the sharp fall in liquid prices and so it was probably an outlier.
Whereas 21 was also an outlier or the other way with the spike in liquid is somewhere in between those two and I think we get back to normal more normalize I don't think there's anything structurally changed in asphalt I think you saw huge swings in liquid which is abnormal but we'll get back to a more normalized margins in asphalt and I think we were on our path.
There with what you saw in the first quarter.
Yeah, Yeah, I I want to just add here I mean, it's look we we we had a.
A really good first quarter and we're really excited about that our people worked very hard to deliver that and we're very appreciative to them for their efforts and I think you know we certainly saw a good performance in price you know we said we're confident in mid year price increases and so while those are our or are great to talk about.
I just want to caution people you know, let's not forget that there's there's a bit of another side to that equation. We've seen you know.
Cost pressures, Tom Tom talked about those in terms of energy and and other inflation. So you know when we reiterated our EBITDA guidance, we're really trying to take into effect that both of those items.
Thank you.
Thank you.
Our next question will come from Adam Thalheimer with Thompson Davis.
Hey, Good morning, guys, just a quick one on residential.
Tom You said I think you said residential decelerating growth. This year what are you hearing from some of your major homebuilding clients. Then maybe you can even kind of do a geographic work force.
Yeah, the geographic walks pretty easy is widespread.
Everywhere from a from a residential and the housing market is tight I mean in every market. We operate in maybe the exceptional of Illinois, but every play and even even that was not still got some tightness to it but you can't find houses I think residential demand continues to operate at a very high level you still have supply chain.
Issues.
Again demand is very good obviously, we will see growth in 2022 I just don't think it's the white hot level that we saw in 'twenty, one and single family multifamily permits and starts are up double digit. So it's really heating up overall raws continues both both single family and.
Multifamily operates at a very high level and continues to be good and I don't see it slowing down I think the growth rate, maybe it slowed a little bit but it would have been tough to keep up with that the rate. We saw in 'twenty one still at high levels. Yeah. So growth just not maybe not as is not at the level.
Of growth that we saw in 'twenty, one, but really good news.
Understood. Thanks.
Thank you.
Our next question will come from Brent Thielman with D. A davidson.
Yeah.
Hey, Thank you good luck.
Hey.
There's been some discussion about delays and certain infrastructure projects, just because the costs sort of advance beyond the original estimate to having to go back and kind of read it is that something you've seen become more pervasive across your markets in any sense. If that had any effect at all in terms of swelling and some of the good momentum.
That piece of your business should otherwise be doing.
No I don't think I don't know that I've experienced delays for from from inflation I think when it comes to non highway infrastructure, we should see growth in 2022 starts in the last three months were up 16% New subdivision work helps this segment and I think you know, which.
We're well positioned we are well positioned for some really big jobs that are coming in that sector.
And some you know everything's from lot repairs to airports to wind farm work and rail and intermodal I think it continues to grow in 'twenty, two and 'twenty three.
Okay. Thank you. Thank you.
Thank you.
Last question will come from Mike Dahl with RBC capital markets.
Hi, This is actually Chris kalata on for Mike. Thanks for taking my question.
I understand that you guys still feel comfortable with your with your <unk>.
Fire volume outlook, but I, just want to get a sense of the flexibility around that again in terms of our supply.
Supply chain pressures limiting factor that is on your outlook.
Have supply chain improved at all this quarter and what's your outlook there for the remainder of the year.
I would tell you is supply chain is still tight I haven't seen any improvement labor is still tried it doesn't impact you as much in Q1, because the volumes are at a high level. They are in Q2 and Q3 in the construction season. So you just you don't you're not you're not operating at a high enough level to to dampen it which is what we're going to see in Q2 Q3.
And it's you know it is supply chain from everything from Windows to the doors to door knobs to switch gear to plumbing to pipe. It's just it's just everywhere and then the labor piece not only dampens. The construction companies, but also dampens as I talked about transportation.
Both rail.
The railroads are operating below <unk>.
Struggling as everybody knows to meet peak demand because they can't get crews and then you know as I said, Hey, they were short on trucks and a peak in a peak shipping time.
Again, I don't think it it it does away with demand I, just think it pushes it out and probably extends the cycle. So you know not all bad news, although we'd like to ship as much as we can every day.
It's if we don't get to it in the next quarter. The next quarter, we'll get to it next year. So not all bad news hopefully that'll ease up some as we progressed a year and again.
If that happens we will take advantage of it and we'll we'll adjust and we'll communicate to you but right now we just don't see it.
Understood I appreciate the color.
Sure.
Great. Thank you.
Ladies and gentlemen, this does conclude today's question and answer portion. It is now my pleasure to turn the call back over to Mr. Tom Hill for any closing remarks.
Listen thank all of you for your interest in Vulcan materials, and your time today, and we hope that you and your families stay safe and we look forward to talking to you throughout the quarter Bye bye thanks, everyone.
Ladies and gentlemen, this does conclude today's program and we thank you for your participation you may disconnect at any time.
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