Q1 2024 Vulcan Materials Co Earnings Call

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Operator: Please stand by; we're about to begin. Good morning and welcome everyone to the Vulcan Materials Company first quarter 2024 earnings call. My name is Jamie, and I will be your conference call coordinator today. Please be reminded that today's call is being recorded and will be available for replay later today on the company's website. All lines have been placed in a listen-only mode.

Operator: Please standby we're about to begin.

Operator: Good morning, and welcome everyone to the Vulcan materials Company first quarter 2024 earnings call. My name is Jamie and I will be your conference call coordinator today.

Operator: Please be reminded that today's call is being recorded and will be available for replay later today at the company's website.

Operator: All lines have been placed in a listen only mode.

Operator: After the company's prepared remarks, there will be a question and answer session.

Operator: After the company's prepared remarks, there will be a question and answer session. Now, I will turn the call over to your host, Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Operator: Now I will turn the call over to your host Mark <unk>, Vice President of Investor Relations for Vulcan materials. Mr. Warren you may begin.

Mark D. Warren: Thank you, Operator, and good morning, everyone. With me today are Tom Hill, Chairman and CEO, and Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer. Today's call is accompanied by a press release and a supplemental presentation posted to our website VulcanMaterials.com. Please be reminded that today's discussion may include forward-looking statements that are subject to risks and uncertainty. 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 non-GAAP financial measures are defined and reconciled in our earnings release, our supplemental presentation, and other SEC filings.

Mark D. Warren: Thank you operator, and good morning, everyone.

Mark D. Warren: With me today are Tom Hill, Chairman and CEO, Mary Andrew's, Carlisle, Senior Vice President and Chief Financial Officer.

Mark D. Warren: Today's call is accompanied by a press release and a supplemental presentation posted to our website Vulcan materials Dot com.

Mark D. Warren: Please be reminded that today's discussion may include forward looking statements, which are subject to risks and uncertainties.

Mark D. Warren: 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.

Mark D. Warren: Reconciliations of non-GAAP financial measures are defined and reconciled in our earnings release, our supplemental presentation and other SEC filings.

Speaker Change: During the Q&A, we ask that you limit your participation to one question. This will allow us to accommodate as many as possible during that time, we have available.

Mark D. Warren: During the Q&A, we ask that you limit your participation to one question. This will allow us to accommodate as many as possible during the time we have available. And with that, I'll turn the call over to Tom.

James Thomas Hill: And with that I'll turn the call over to Tom.

James Thomas Hill: Thank you, Mark, and thank all of you for joining our Vulcan Materials Earnings College. Our first quarter results... moved us towards delivering on a fourth consecutive year of double-digit adjusted ibidagra. Although the weather was unusually cold and wet across many geographies for much of the quarter, our teams executed well and improved our aggregate cash gross profit per ton by 10 percent. Their commitment to our Vulcan way of selling and Vulcan way of operating disciplines is driving solid results. In the quarter, we generated $323 million of adjusted EBITDA and expanded our adjusted EBITDA margin.

James Thomas Hill: Thank you Mark and thank all of you for joining a Vulcan materials earnings call. This morning.

James Thomas Hill: Our first quarter results moved.

James Thomas Hill: Moved us towards delivering only fourth consecutive year of double digit adjusted EBITDA growth.

James Thomas Hill: Although the weather was unusually cold or wet across many geographies for much of the quarter, our teams executed well and improved our aggregates cash gross profit per ton by 10%.

James Thomas Hill: Their commitment to our Vulcan with Sterling and Vulcan with operating disciplines is driving solid results.

James Thomas Hill: In the quarter, we generated $323 million of adjusted EBITDA.

James Thomas Hill: And expanded our adjusted EBITDA margin.

James Thomas Hill: Importantly, several key trends continue. Pricing and Momentum. Cost Deceleration.

James Thomas Hill: Importantly, several key trends continue.

James Thomas Hill: Pricing momentum.

James Thomas Hill: <unk> deceleration.

James Thomas Hill: Unit Profitability Expansion, Robust Cast Generation Discipline Capital Allocation, and Return on Invested Capital Improvement. In the agri-segment, year-over-year shipments declined by 7%, but the durability of our agribusiness and the consistency of our execution stood out in a weather-impacted quarter. We again improved our trailing 12 months average cash gross profit per ton, pushing it to $9.66 per ton and making further progress toward our current $11 or $12 target. The pricing environment remains positive, and year-over-year average cash cost of sales continues to moderate. The aggregate freight adjusted price improved 10% in the quarter and increased $1.25 per ton sequentially from the fourth quarter.

James Thomas Hill: Profitability expansion.

James Thomas Hill: Robust cash generation.

James Thomas Hill: Disciplined capital allocation.

James Thomas Hill: And return on invested capital improvement.

James Thomas Hill: Yeah.

James Thomas Hill: In the aggregate segment year over year shipments declined by 7%, but the durability of our aggregates business and the consistency of our execution stood out in a weather impact a quarter.

James Thomas Hill: We again improved our trailing 12 months aggregates cash gross profit per ton.

James Thomas Hill: Pushing it to $9.66 per ton.

James Thomas Hill: And making further progress toward our current 11 or 12 dollar target.

James Thomas Hill: The pricing environment remains positive and year over year average cash cost of sales continues to moderate.

James Thomas Hill: Aggregate freight adjusted price improved 10% in the quarter, an increase of $1 25 per ton sequentially from the fourth quarter.

James Thomas Hill: A clear illustration of the success of January increases and the continuous execution of our Vulcan way of selling disincentives, our first quarter cash cost of sales performance resulted in a fourth consecutive quarter of trading 12 months cost deceleration and improving sequentially by another 230 bases. Our relentless focus on improving efficiencies in our plants through our Vulcan way of operating disciplines remains a key driver of managing costs, expanding unit profitability, and ultimately generating attractive free cash flow.

James Thomas Hill: A clear illustration of the success of January increases and the continued execution of our vocal way of selling disciplines.

James Thomas Hill: Our first quarter cash cost of sales performance resulted in a fourth consecutive quarter of trailing 12 months cost deceleration.

James Thomas Hill: And improving sequentially by another 230 basis points.

James Thomas Hill: Our relentless focus on improving efficiencies in our plants through our Vulcan way up operating disciplines remains a key driver of.

James Thomas Hill: Amazing cost expand unit profitability, and ultimately generating attractive free cash flow.

James Thomas Hill: There is a healthy pipeline of opportunities to deploy this free cash flow for both attractive acquisitions and complementary strategic greenfield development. These targeted opportunities are at varying stages, but as an example, earlier this week, we closed on a bolt-on aggregate and asphalt acquisition in Alabama, a top ten state. I'm proud of how our teams continue to execute our two-pronged growth strategy. They are focused on expanding our reach, in addition to enhancing our core, with consistent expansion of unit profitability by controlling what we can control, even in a dynamic macro environment and demand environment.

James Thomas Hill: There is a healthy pipeline of opportunities to deploy this free cash flow for both attractive acquisitions and complementary strategic Greenfield development.

James Thomas Hill: These targeted opportunities are at varying stages, but as an example earlier this week, we closed on a bolt on aggregate and asphalt acquisition, Alabama atop our top 10 state.

James Thomas Hill: I'm proud of how our teams continue to execute our two pronged growth strategy.

James Thomas Hill: They are focused on expanding our reach in addition to enhancing our core with consistent expansion of unit profitability by controlling what we can control even in a dynamic macro environment and demand environment.

James Thomas Hill: On the demand side, I want to provide a few comments about each end use, starting with private demand and then moving to public. Momentum and Single Family continue to accelerate across our footprint and points to growth in 2024.

James Thomas Hill: On the demand side I want to provide a few comments about each end use starting with private demand and then moving to public.

James Thomas Hill: Momentum in single family continues to accelerate across our footprint and points to growth in 'twenty 'twenty four however.

James Thomas Hill: However, we continue to expect weaker multifamily residential construction to largely offset the single-family improvement issue, overall affordability, and Elevated Interest Rates remain a challenge. But the underlying fundamentals of population growth and low inventories in Vulcan markets support the recovery in residential construction, and the Improving Residential Backdrop is also a positive sign for future activity in certain categories of non-residential construction. And recent data has shown some signs of stabilization in overall starts. However, the landscape continues to vary across categories.

James Thomas Hill: We continue to expect weaker multifamily residential construction to largely offset the single family improvement this year.

James Thomas Hill: Overall affordability.

James Thomas Hill: An elevated interest rates remains a challenge, but the underlying fundamentals of population growth and low inventories in Vulcan markets support the recovery in residential construction.

James Thomas Hill: And improving residential backdrop is also a positive sign for future activity as certain categories of nonresidential construction.

James Thomas Hill: And recent data has shown some signs of stabilization in overall starch. However, the landscape continues to vary across categories as expected.

James Thomas Hill: As expected, continued moderation and warehouse starts will be the biggest headwind to private and run residential demand this year. Currently, light commercial activity remains weak, but over time, we expect it to follow the positive trends in single-family housing.

James Thomas Hill: Continued moderation in warehouse stores will be the biggest headwind to private and Ron residential demand this year.

James Thomas Hill: Currently.

James Thomas Hill: Commercial activity remains weak, but over time, we expect it to follow the positive trends in single family housing.

James Thomas Hill: We continue to see and capitalize on opportunities in the manufacturing category. Our unmatched southeastern footprint and unique logistics capabilities position us well to service these large, agri-intensive projects. Our footprint is also an advantage on the public side, with over two-thirds of federal highway spending allocated to Vulcan State. Additionally, other public infrastructure activity, which benefits from IIJ funding, is growing faster in Vulcan States than the country as a whole, a sustained elevated-level highway start of over $100 billion.

James Thomas Hill: We continue to see and capitalize on opportunities in the manufacturing category.

James Thomas Hill: Our unmatched southeastern footprint and unique logistics capabilities positions us well to service these large aggregate intensive projects.

James Thomas Hill: Our footprint is also an advantage on the public side with over two thirds of federal highway spending allocated to Vulcan States.

James Thomas Hill: Additionally, other public infrastructure activity, which benefits from high J funding is growing faster in Vulcan states than the country as a whole.

James Thomas Hill: A sustained elevated level highway starts of over $100 billion, coupled with record 'twenty 'twenty four state budgets support healthy growth in highway and infrastructure man both in 'twenty 'twenty four and for the next several years now.

James Thomas Hill: This, coupled with record 2024 state budgets, supports healthy growth in highway and infrastructure demand both in 2024 and for the next several years. Now I'll turn the call over to Mary Andrews for some additional commentary on our first quarter. Mary Andrews?

James Thomas Hill: Now I'll turn the call over to Mary Andrews for for some additional commentary on our first quarter.

Mary Andrews Carlisle: Thanks, Tom, and good morning. Tom discussed our solid aggregate results for the quarter and shared some important ongoing trends. In addition to providing a few more details about our first quarter results, I'd like to first expound upon four of the trends Tom highlighted early in his remarks, unit profitability expansion, robust cash generation, disciplined capital allocation, and return on invested capital improvement. For the last four quarters, we have consistently expanded our trailing 12-month unit profitability in all three of our operating segments.

James Thomas Hill: Bruce.

Mary Andrews Carlisle: Thanks, Tom and good morning, Tom discussed our solid aggregates results in the quarter and shared some important ongoing trend.

Mary Andrews Carlisle: In addition to providing a few more details about our first quarter results I'd like to first expound upon four of the trends Tom highlighted early in his remarks.

Mary Andrews Carlisle: Unit profitability expansion robust cash generation disciplined capital allocation and return on invested capital in prison that.

Mary Andrews Carlisle: For the last four quarters, we have consistently expanded our trailing 12 month unit profitability and all three of our operating segments.

Mary Andrews Carlisle: Increasing cash unit profitability by nearly $1.50 per ton in aggregates, almost $6 per ton in asphalt, and nearly $5 per cubic yard in concrete. Our trailing 12-month growth margin has also steadily improved in each product line. This organic growth is underpinned by our daily focus on execution and driving results through our Vulcan way of selling and Vulcan way of operating discipline.

Mary Andrews Carlisle: Increasing cash unit profitability by nearly $1.50 per ton in aggregate almost $6 per ton in asphalt and nearly $5 per cubic yard in concrete.

Mary Andrews Carlisle: Our trailing 12 months gross margin has also steadily improved in each product line.

Mary Andrews Carlisle: Organic growth is underpinned by our daily focus on execution and driving results through our Vulcan way of selling and Vulcan way of operating discipline.

Mary Andrews Carlisle: Better unit profitability yields better free cash flow. Our free cash flow conversion over the last five years has averaged over 90%, enabling us to strategically allocate capital to reinvest in our franchise, grow our business, and return cash to shareholders. During the quarter, we invested $103 million in capital expenditures and returned $81 million to shareholders through dividends and share repurchase. We continue to expect to spend between $625 and $675 million on capital expenditures for the full year.

Mary Andrews Carlisle: Better unit profitability yield better free cash flow.

Mary Andrews Carlisle: Our free cash flow conversion over the last five years has averaged over 90%, enabling us to strategically allocated capital to reinvest in our franchise grow our business and return cash to shareholders.

Mary Andrews Carlisle: During the quarter, we invested $103 million in capital expenditures and returned $81 million to shareholders through dividends and share repurchases.

Mary Andrews Carlisle: We continue to expect to spend between 625 and $675 million on capital expenditures for the full year.

Mary Andrews Carlisle: Our current balance sheet positions us well to continue to deploy capital to each of our priorities. At the end of the first quarter, our net debt to adjusted EBITDA leverage was 1.5 times, with $300 million of cash on hand following the March 1 redemption of our 2026 senior notes at par for $550 million. Our liquidity position and financial flexibility are competitive strengths as we look to continue to grow and create value for our shareholders.

Mary Andrews Carlisle: Our current balance sheet positions us well to continue to deploy capital to each of our priorities.

Mary Andrews Carlisle: At the end of the first quarter, our net debt to adjusted EBITDA leverage was one five times with $300 million of cash on hand, following the March 1st redemption of our 2026 senior notes at par for $550 million.

Mary Andrews Carlisle: Our liquidity position and financial flexibility, our competitive strengths as we look to continue to grow and create value for our shareholders.

Mary Andrews Carlisle: Over the last 12 months, we've achieved a 260 basis points improvement in return on invested capital. Invested capital has increased less than 1% while adjusted EBITDA has improved 20%. Adjusted EBITDA margin has also improved by 350 basis points through consistent operational execution and disciplined SAG cost management. SAG expenses in the quarter were in line with our expectations, and we continue to expect to spend between $550 and $560 million for the full year.

Mary Andrews Carlisle: Over the last 12 months, we've achieved a 260 basis points improvement in return on invested capital.

Mary Andrews Carlisle: That's the capital has increased less than 1%, while adjusted EBITDA has improved 20% adjust.

Mary Andrews Carlisle: Adjusted EBITDA margin has also improved by 350 basis points through consistent operational execution.

Mary Andrews Carlisle: And disciplined cost management.

Mary Andrews Carlisle: <unk> expenses in the quarter were in line with our expectations and we continue to expect to spend between 550 and $560 million for the full year.

Mary Andrews Carlisle: Most importantly, we reaffirm our expectations of delivering adjusted EBITDA between $2.15 billion and $2.3 billion for the full year, which at the midpoint represents a double-digit year-over-year improvement for a fourth consecutive year. I'll now turn the call back over to Tom to provide a few closing remarks.

Mary Andrews Carlisle: Most importantly, we reaffirm our expectations of delivering adjusted EBITDA between 2.15 billion and $2 3 billion for the full year.

Mary Andrews Carlisle: At the midpoint, a double digit year over year improvements for a fourth consecutive year.

Mary Andrews Carlisle: I'll now turn the call back over to Tom to provide a few closing remarks.

James Thomas Hill: Thank you, Mary Andrews. At Vulcan, our number one priority will always be our people, keeping them safe, and fostering our Vulcan Culture. They are the foundation of our great country. As a team, we are focused on the daily execution of our Vulcan way of selling and Vulcan way of operating disciplines to ensure attractive cash generation in any macro environment. We will be strategic and disciplined in allocating capital to continue to grow our business and deliver value for our show. And now, Mary Andrews and I will be happy to take your questions.

Tom: Doug and Maryann Bruce at Vulcan, our number one priority will always be our people keeping them safe and.

Mary Andrews Carlisle: And fostering a Vulcan culture.

Mary Andrews Carlisle: They are the foundation of a great company.

Mary Andrews Carlisle: As a team we are focused on the daily execution of provoking with selling and Vulcan way of operating disciplines to ensure attractive cash generation in any macro backdrop.

Mary Andrews Carlisle: We will be strategic and disciplined in allocating capital to continue to grow our business and deliver value for our shareholders.

Mary Andrews Carlisle: I know maryann, Bruce and I will be happy to take your questions.

James Thomas Hill: Okay.

Operator: Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star one to ask a question and star two to remove yourself. We'll take our first question from Stanley Elliott on Stiefel.

Mary Andrews Carlisle: Thank you at this time, if you would like to ask a question. Please press star one on your telephone keypad.

Operator: You may remove yourself from the queue at any time by pressing star killed.

Operator: Once again that is star one to ask a question and star two to remove yourself.

Operator: We'll take our first question from Stanley Elliott with Stifel.

Operator: Yes.

Stanley Stoker Elliott: Hey, good morning, Tom. Good morning, Mayor Andrews. Thank you for the question. Tom, nice start to the year, a very clean quarter despite kind of some of the weather issues I think a lot of people had and some of the comp issues. Can you talk about how the rest of the year plays out, thinking about this more from a demand standpoint, and then, you know, to any extent, any commentary you could share on April would be great.

Stanley Stoker Elliott: Hey, good morning, Tom Good morning, <unk>. Thank you for the question.

Stanley Stoker Elliott: Tell him I started the year very clean quarter, despite kind of some of the weather issues I think a lot of people had and it's in the comp issues.

Stanley Stoker Elliott: Can you talk about how the rest of the year plays out.

Stanley Stoker Elliott: Thinking about this more on like maybe from a demand standpoint, and then to any extent commentary you could share on April would be great.

James Thomas Hill: Sure. You know, looking at the quarter itself, I'd call the quarter, volumes in the quarter, as expected, with a margin of error. We had fewer shipping days in March but about the same number of shipping days in the quarter overall. January was a slow start, really due to wet weather and cold weather. February and March were, I'd call, a bit better on a daily shipping basis.

Stanley Stoker Elliott: Sure.

James Thomas Hill: You know looking at the quarter itself I'd call the quarter volumes in the quarter as expected with a margin of error, but we had less shipping days in March but about.

James Thomas Hill: The same amount of shipping days in the quarter overall.

James Thomas Hill: January was a slow start really due to wet wet wet weather and cold weather.

James Thomas Hill: February and March I call, a bit better better on a daily shipping basis. So Q1, it'll all things considered as expected as we look forward to the rest of the year I don't see any real change in our thinking on demand, we'd still guide to the flat to down four and the dynamics are very similar to what we said last quarter headwind.

James Thomas Hill: So Q1, all things considered, as expected. As we look forward to the rest of the year, Stanley, I don't see any real change in our thinking on demand. We'd still guide to the flat to down four.

James Thomas Hill: And the dynamics are very similar to what we said last quarter, headwinds in non-residential, some challenges in multifamily. We've got recovering single-family construction and growing public demand. I think that our position, our superior position in the Southeast really helps. The footprint makes a difference. And that Southeastern market's probably the healthiest market in the country.

James Thomas Hill: And nonresidential some challenges in multifamily we got recovering single family construction.

James Thomas Hill: Construction and growing public demand.

James Thomas Hill: I think that our position our superior position in South East really helps that footprint makes a difference in that southeastern markets, probably the healthiest market in the country I think our Vulcan with selling disciplines and tools are very helpful. With this so at this point I'd call it confident from a volume outlook.

James Thomas Hill: I think our Vulcan way of selling disciplines and tools is very helpful with this. So at this point, I'd call it confident from a volume standpoint. You know, as far as going into the second quarter, I'd call it this way. When the sun comes out, we're shipping very well.

James Thomas Hill: As far as going into the second quarter I'd call. It this way when the Sun comes out we're shipping very well.

Stanley Stoker Elliott: Great guys, that's nice to hear. Thanks so much and best of luck. Thank you. We'll go next to Jonathan Bettenhausen with Truist Securities.

Speaker Change: Great guys nice to hear thanks, so much and best of luck.

Jonathan Bettenhausen: Thanks, Tim.

Stanley Stoker Elliott: We'll go next to Jonathan Bettenhausen with <unk> Securities.

Jonathan Bettenhausen: Hey, guys. Thanks for taking my question I'm on for Keith Keith. This morning, I am curious about your outlook on mid year pricing have you had conversations with your customers about mid years and I'm also wondering how much of that is baked into your guide.

Jonathan Bettenhausen: Yeah, I'd start off by saying that I think the fundamentals in pricing remain very good and very healthy. As you saw, we had a solid start in Q1 with prices a little north of 10%, and that was really across every market.

Jonathan Bettenhausen: Yeah, I'll start off with saying that I think the fundamentals and pricing remains very good and very healthy as you saw we had a solid start in Q1 with prices little north of 10% that was really across every market and so it's a really good start and supports our full year guidance.

Jonathan Bettenhausen: Hmm.

Jonathan Bettenhausen: Mid year price increases are not in our guidance at this point, we're having those midyear price discussions right now so it's a little too early to call.

James Thomas Hill: And so it's a really good start and supports our full unit guidance. However, mid-year price increases are not in our guidance at this point. We're having those mid-year price discussions right now, so it's a little too early to call. Remember that mid-years will be good for 2024, but they're going to be even better for 2025. So our teams are working really hard on this, and I think I'm sure they'll deliver. The most important thing, though, I think, is that the fundamentals for pricing remain very healthy. And so I think when it comes to mid-years, we'll revisit pricing guidance in August and have one more thought on price.

James Thomas Hill: Remember the mid years it'll be good for 2024, but they're going to be even better for 25. So our teams are working really hard on this and I think I'm sure. They will deliver the most important thing, though I think is that.

James Thomas Hill: The fundamentals for pricing remained very healthy.

James Thomas Hill: And so I think when it comes to mid years, we'll revisit pricing guidance in August and give you an update.

James Thomas Hill: And one more thought on price. You know, we always like to point out how important it is to remember that regardless of what the level of pricing is, the key is really how much price we're able to take to the bottom line.

James Thomas Hill: One one more thought on price.

James Thomas Hill: We always like to point out how important it is to remember that regardless of what the level of pricing is the.

James Thomas Hill: The key is really how much price, we're able to take to the bottom line in the first quarter, we achieved 10% improvement in cash gross profit per ton and some aggregate margin expansion, even given the lower volume quarter due to the weather overall gross margin also improved by 140 basis point.

James Thomas Hill: In the first quarter, we achieved a 10% improvement in cash gross profit per ton and some aggregate margin expansion, even given the lower volume quarter due to the weather. Overall, gross margin also improved by 140 basis points, and adjusted EBITDA margin expanded as well. So importantly, you know, we expect this margin expansion to continue and to improve further through the balance of the year.

James Thomas Hill: And adjusted EBITDA margin expanded as well. So importantly, you know we expect this margin expansion to continue and to improve further through the balance of the year.

Speaker Change: Perfect. Thanks for the color. Thank you.

James Thomas Hill: Yeah.

Anthony James Pettinari: We'll go now to Anthony Pettinari with Citi.

James Thomas Hill: We'll go now to Anthony Pettinari with Citi.

Anthony James Pettinari: Hi, good morning.

James Thomas Hill: Good morning. I'm wondering if you could talk a little bit more about how costs have kind of been trending among your major cost categories, you know, if you can touch on maybe some of the non-energy categories, and then also just with higher diesel, you know, how that's impacted, you know, conversations around price increases or just how you think about the full year from that context.

James Thomas Hill: Hey, I'm wondering if you could talk a little bit more about how costs have kind of been trending among your major cost categories.

James Thomas Hill: If you can touch on maybe some of the non energy categories. And then also just with higher diesel you know how that's impacted conversations around price increases or just how you think about.

James Thomas Hill: The full year from that context, yeah, I think the first quarter for cost is always tricky as volumes and weather definitely had an impact on costs in the first quarter.

James Thomas Hill: Yeah, I think the first quarter for cost is always tricky as volumes and weather definitely had an impact on cost in the first quarter. That said, I think we're still comfortable with the cost guidance of up mid-single digit for the full year. As always, we would get you to look at costs on a trailing 12-month basis because it's just going to be choppy quarter to quarter. And if you look back on a trailing 12-month basis over the last year, cost increases have fallen from, I'd say, mid-teens to single-digit.

James Thomas Hill: That said I think we're still comfortable with the cost guidance of up mid single digits for the full year as always we would get you to look at cost from a trailing 12 month basis, because you seem to be choppy on a quarter to quarter. If you look back on a trailing 12 month basis over the last year.

James Thomas Hill: Cost increases have fallen from I'd say mid teens to single digit.

James Thomas Hill: So, as we said in the prepared remarks, we've seen four quarters of decelerating costs, and as we march through this year, we should see those increases decline. Next quarter better, next quarter better, next quarter better, as we saw over the last four quarters. So I think we're on a good path to that mid-single-digit cost for the full year. As far as the different pieces of this, diesel was probably a slight tailwind in the quarter.

James Thomas Hill: So as we said in the prepared remarks, we've seen four quarters of decelerating cost.

James Thomas Hill: And as we March through this year, we will we should see that those increases decline as we March through the year next quarter better next quarter better next quarter, but as we saw over the last four quarters. So I think we're on a good path to that mid single digit cost for the full year.

James Thomas Hill: As far as you know different pieces of this diesel was probably a slight.

James Thomas Hill: Tailwind in the quarter.

James Thomas Hill: What stays up is that parts and services remain elevated, but our comps are getting easier. And I think that, you know, through the Vulcan way of operating, we're improving our operating efficiencies, and we'll continue to do that over the next two years to offset those inflated parts and services. So I think we're in a good place, and I think the teams are working through this, and I'm pleased with us.

James Thomas Hill: What stays up as parts and services remain elevated but our comps are getting easier.

James Thomas Hill: And I think that you know we also do Vulcan, we've operating we're improving our operating efficiencies and we will continue over the next two years, where that to offset those and those inflated parts and services. So I think we're in a good place and I think where the teams are working through this and I'm pleased with what I see yeah and in terms of diesel Anthony.

James Thomas Hill: Yeah, and in terms of diesel, Anthony, we do assume in our plan that it'll move somewhat higher through the rest of the year. And you're, you know, you're right, while diesel prices for us... They're always hard to predict, but they can really be a good thing in this business since we have the ability to catch them with pricing as it goes up and also take advantage of it when it goes down.

James Thomas Hill: You know, we do assume in our plan that it'll move somewhat higher through the rest of the year.

James Thomas Hill: And you're you know you're right while diesel prices for us.

James Thomas Hill: Well, they're always hard to predict and but they can really be a good thing in this business since we have the.

James Thomas Hill: The ability to catch up with with pricing as it goes up and also take advantage of it when it goes down.

Anthony James Pettinari: Got it, got it. That's very helpful. I'll turn it over.

Speaker Change: Got it got it that's very helpful I'll turn it over.

Speaker Change: Thank you.

Kathryn Ingram Thompson: We'll go now to Kathryn Thompson with the Thompson Research Group. Good morning, Kathryn.

Anthony James Pettinari: We'll go now to Kathryn Thompson with Thompson Research group. Good morning, Kathryn Good morning. Good morning. Thank you for taking my question today.

Kathryn Ingram Thompson: Good morning. Thank you for taking my question today. Stepping back, just looking at the bigger picture, last year you divested mainly downstream operations, just in terms of optimizing your portfolio. As you look into 2024 and beyond, what are your priorities in terms of overall Vulcan materials and product mix, and how does this mix strategy, how do you think about that against the backdrop of a broad reindustrialization of the U.S. and putting Vulcan in the best position possible? Thank you.

Kathryn Ingram Thompson: Stepping back just looking at the bigger picture in last year, you divested mainly downstream ops just in terms of optimizing portfolios as you look into 'twenty 'twenty four and beyond what are your priorities in terms of overall Vulcan materials and product mix and how does this next strat.

Kathryn Ingram Thompson: G.

Kathryn Ingram Thompson: How do you think about that.

Kathryn Ingram Thompson: Against the backdrop of a broad reindustrialization of the U S and putting Vulcan and are the best position possible. Thank you.

James Thomas Hill: Well, as always, we would tell you that it's aggregates, and we are an aggregates company. We, you know, we have the highest percentage of EBITDA in aggregates of probably anybody in the sector, and that's what we do. Now, we have strategic downstream, and, you know, as we always say, it's a portfolio. We look at it as a portfolio, and if one of those sectors or geographies doesn't earn an appropriate return or is worth more to somebody else, we'll divest of it and plow that money back into our aggregates business. So, you know, I think that nothing's changed as far as how we look at the world. And, you know, as we look at the growth part of M&A and greenfields, it will be aggregates focused.

Kathryn Ingram Thompson: Well as always we would tell you that its aggregates and we are in aggregates company.

Kathryn Ingram Thompson: Perfect. Thank you so much. Thank you.

James Thomas Hill: We have the highest percentage of EBITDA and aggregates of probably anybody in the sector.

Kathryn Ingram Thompson: And that's what we do now we have strategic downstream and you know as we always say, it's a portfolio we look at it as a portfolio and if one of those.

Kathryn Ingram Thompson: One of those sectors.

Kathryn Ingram Thompson: Our geographies does it.

Kathryn Ingram Thompson: Doesn't earn appropriate return or is worth more to somebody else, we'll divest of it and plow that money back into our aggregates business. So you know I think that it's nothing has changed as far as how we look at the world and you know as we look at the.

Kathryn Ingram Thompson: The growth part of the M&A and Greenfield it will be aggregates focused.

Kathryn Ingram Thompson: Okay. Thank you so much thank you.

Trey Grooms: We'll turn now to Trey Grooms with Stephens.

Trey Grooms: We'll turn now to Trey grooms with Stephens.

Trey Grooms: Hi, good morning.

Trey Grooms: Hey, good morning. I kind of want to follow up on the comment, Mary Andrews, you had earlier about cash gross profit per ton. Clearly, it was up 10% in the quarter. I think you were maybe initially looking for mid to high single-digit improvements, so maybe a little better there. And then full years, I think looking for the mid-teens type of improvement. So I guess the first one is kind of how we see that progress.

Trey Grooms: Hey, good morning.

Trey Grooms: I kind of want to follow up on the.

Trey Grooms: Comment Mary Andrews, you had earlier about cash gross profit per ton clearly it was up 10% in the quarter. I think you were maybe initially looking for mid to high single digit improvement, so maybe a little better there.

Speaker Change: And then Mitch.

Trey Grooms: Full year's mid I think looking for mid teens type of improvement. So I guess the first one is kind of how we see that progress I think it's going to accelerate somewhat as we go through the year, but any way to help us kind of think about.

Trey Grooms: I think it's going to accelerate somewhat as we go through the year, but anyway, to help us kind of think about that as we progress through the year to get to that mid-teens for the full year and then maybe stepping back a little bit longer term. These are clearly better numbers of better performance than the historical kind of average of profitability improvement. How are you thinking about that longer term? Do you think it has the opportunity to kind of see a long-term better kind of consistent improvement versus kind of historical? Yeah, let me try it.

Trey Grooms: As we progress through the year to get to that mid teens for the full year, and then maybe stepping back a little bit longer term.

Trey Grooms: These are clearly better numbers of better performance than than the hits the historical kind of average of.

Trey Grooms: Profitability improvement how are you thinking about that longer term do you think it has the opportunity to kind of see.

Trey Grooms: Long term better kind of consistent improvement versus kind of historical.

James Thomas Hill: Yeah, let me take your last question first about the long term. This is why we have developed the Vulcan Web Selling and Vulcan Web Operating Disciplines.

Speaker Change: Yeah, Let me let me take your last question first about about long term. This is why we have developed a vulcan with selling a walkway operating disciplines are I think they secure our ability to improve cash gross profit per ton, which we've done.

James Thomas Hill: I think they secure our ability to improve cash growth and profit per ton, which we've done, you know, on a trillion-month basis every quarter, except for one flat for five years. That's pretty good consistency, even with some of the dynamics that are out there. So I think that, overall, compared to history, we're in a better – versus history, we're in a better place for higher improvements in cash growth and profit per ton. And that's not by accident. That's by design.

James Thomas Hill: Every quarter, except for one flat for five years, that's a pretty good consistency even with some of the dynamics that are out there. So I think that overall in history. We're in a better versus history. We are in a better place for higher improvements in cash gross profit per ton and that's not by accident. That's by design and we've been working on that now for years.

James Thomas Hill: And we've been working on that now for years, and it is working. And those tools are only getting better, or we're getting better at implementing them. I think as far as this year is concerned, as we talked about, as we progress through the year, you've got costs, increases decelerating, and as inflation comps get easier and our operating efficiencies get better, so that's one piece of that. And then I think as we march through the year, we have the ability to continue to raise prices, both in what we do on project work but also fixed plant. So you put all that together, I think as we progress through the year, we have the opportunity to continue to improve our unit margins.

James Thomas Hill: <unk> and it is working.

James Thomas Hill: Those tools are only getting better or are we getting better implementing them I think as far as this year is concerned as we talked about as we progress through the year, you've got costs increase is decelerating and is inflation.

James Thomas Hill: The comps get easier and our operating efficiencies get better. So that's one piece of that and then I think as we March through the year. We have the we have the ability to continue to raise prices both in both in what we do on project work, but also a fixed plant. So you put all that together I think as we progressed through the year we have.

James Thomas Hill: The opportunity to continue to March our unit margins.

James Thomas Hill: <unk> through the year.

Trey Grooms: Okay. Got it. All right. Thank you very much. I'll pass it on.

Speaker Change: Okay got it alright, thank you very much I'll pass it on.

Trey Grooms: Sure.

Jerry David Revich: We'll go next to Jerry Revich with Goldman Sachs.

Trey Grooms: Well go next to Jerry Revich with Goldman Sachs.

Jerry David Revich: Hi Jerry. Hey, hi, Tom, Mary Andrews, Mark, good morning, everyone. I'm wondering if you could just talk about how you expect the pricing cadence to play out this year. Over the past couple of years, you know, third quarter versus second quarter, we saw a big, you know, 60 cents type step up in pricing. Does that feel like that's what you're assuming this year to get to the guidance? But maybe, Mary Andrews, you could expand on how you expect the cadence to Thank you.

Jerry David Revich: Hi, Jared Good morning, Hey, Hi, Tom Andrews, Mark Good morning, everyone.

Jerry David Revich: I'm wondering if you could just talk about how you expect the pricing cadence to play out this year over the past couple of years third quarter versus second quarter, we saw big.

Mary Andrews Carlisle: <unk> type step up in pricing.

Jerry David Revich: That feels like Thats, what you are assuming this year to get to the guidance, but maybe.

Jerry David Revich: Andrew if you could expand on how you expect the cadence to play out.

Jerry David Revich: How much higher could that be if we do implement midyear price increases. Thank you.

Mary Andrews Carlisle: Yeah, sure. I would expect a cadence of, Jerry, likely some sequential growth in the second quarter, more in the third quarter, as you referenced, and then, you know, we would typically see less in the fourth quarter due mostly to seasonality. And, you know, the magnitude of the mid-years, which, you know, as Tom referenced earlier, it's just too early to call at this point, but that's, you know, what would influence that third-quarter sequential improvement and to what level that gets and where we fall out overall.

Mary Andrews Carlisle: Yeah sure I would expect a cadence of Jerry likely some sequential growth in the second quarter are more in the third quarter as you referenced and then you know we would typically see.

Mary Andrews Carlisle: See less in the fourth quarter due mostly to seasonality and you know the magnitude of the mid years, which you know as Tom referenced earlier, it's just too early to call at this point, but that's you know what would influence them you know that third quarter sequential improvement and to what level that gets in and where we fall out I'm overall.

Mary Andrews Carlisle: <unk>.

Jerry David Revich: Okay. And then in terms of just the exit rate with double-digit pricing growth, exiting the year and potential mid-years on top of it, I guess that suggests the starting point for 25 should be in the high single-digit pricing range just from a carryover effect. And I just want to make sure that that's consistent with how you folks are thinking about it. Yeah, I think when it comes to mid-years,

Speaker Change: Okay, and then in terms of just the exit rate with double digit pricing growth exiting the year and potential mid years on top of it I guess that suggests the starting point for 25 should be in the high single digit pricing range just from a carryover effect.

Jerry David Revich: I just want to make sure that that's.

Jerry David Revich: Consistent with how you folks are thinking about it yes, I think when it comes to mid years.

James Thomas Hill: Yeah, I think when it comes to mid-years, we're going to call that when we earn it. And I think we feel good about mid-years, and I think those conversations are going fine.

James Thomas Hill: We're going to we're going to call that when we earn it and I think we feel good about mid years and I think those conversations are going fine as.

James Thomas Hill: As far as you know, as I said, they mean a lot for 25. I do think it's a bit early to call what 25 is going to start out at. We got to get mid-years under our belts and take a look at what we're going to do in the first part of 25. But I do think it's a good idea. I do think that I feel good about the mid-years, and I think it is a good omen for 2025.

James Thomas Hill: As far as I said.

James Thomas Hill: A lot $4 25, I do think it's a bit early to call.

James Thomas Hill: What 25 is going to start out at we got to get mid years under our belt and take a look at what we're going to do first part 25, but I do think I do think that.

James Thomas Hill: I feel good about the mid years and I think it is it is it is a good omen for 2025 pricing.

Speaker Change: Okay. Thank you sure.

James Thomas Hill: Yeah.

Michael Glaser Dahl: Next, we'll hear from Mike Dahl with RBC Capital Markets.

James Thomas Hill: Next we'll hear from Mike Dahl with RBC capital markets.

Michael Glaser Dahl: Hey, Mike.

James Thomas Hill: Tom, Mary, and just thanks for taking the question. I'm going to follow up again on kind of mid-years, I think last quarter, you talked about how those conversations would be April conversations, so maybe it's just semantics and you want to have those really finalized before you communicate to us, but I'm wondering if just, you know, given some of the wet weather to start the year, if some of those conversations perhaps got pushed out a little bit relative to your expectations or how you characterize that and any other regional differences in pricing that you may be experiencing relative to what you thought coming into the year.

Michael Glaser Dahl: Alright. Thanks.

Speaker Change: Thanks for taking my question.

James Thomas Hill: Yeah.

James Thomas Hill: I'm going to follow up again on kind of mid year, So I think last quarter.

James Thomas Hill: You talked about how those conversations would be April conversation. So maybe it's just semantics in July.

James Thomas Hill: It is really finalized before you communicate to us, but I'm wondering if just given some of the wet weather.

James Thomas Hill: Weather to start the year, if some of those conversations perhaps got pushed out a little bit.

James Thomas Hill: Have your expectations or how you characterize that.

James Thomas Hill: Any other.

James Thomas Hill: Regional differences in pricing that you may be experiencing relative to what you thought coming into the year.

James Thomas Hill: You know, I don't think weather had anything to do with it. I think you may have read a little bit too much into the April month comment. You send the letters out in April. You spend May having those conversations, and you finalize them at the end of May, kind of at the beginning of June. So I don't see anything different in timing or sequencing versus, you know, what we did last year. Like I said, I think I'm encouraged by the conversations that we're having, and I think that we will implement solid midyear price increases.

Speaker Change: I don't think I don't think weather had anything to do with I think you may have read a little bit too much into into the April month comment.

James Thomas Hill: You send the letters out in April you spend may having those conversations and you finalize them into maybe you've kind of beginning of June. So I don't I don't see anything different in timing or sequencing versus what we did last year like I said I.

James Thomas Hill: I'm encouraged by the conversations that we're having and I think that we will implement a solid mid year price increases, but I wouldn't read anything into the comment on weather versus.

James Thomas Hill: But I wouldn't read anything into the comment on the weather versus, excuse me, the comment on April versus how this goes. It's really kind of a process. We introduce it in April, have a conversation in May, and again, finalize it in June.

James Thomas Hill: I shouldn't comment on April versus how this goes it's really kind of a process. We introduced it in April have a conversations in may and again finalize it in June.

James Thomas Hill: And one other thought on pricing for the rest of the year is that, you know, we've had positive momentum over the last 12 months in our bid work, and that should also be a good catalyst for us from where we ended Q1 to where we expect to be for the full year in addition to whatever's realized on midyear increases.

James Thomas Hill: And one other.

James Thomas Hill: One other thought on pricing for the for the rest of the year is that you know we've had positive momentum over the last 12 months and our bid work and that should also be you know a good catalyst for us from where we ended Q1 to where we expect to be for the full year. In addition to whatever is realized on major increases.

Michael Glaser Dahl: Okay, great. Thanks for that. Sure.

Speaker Change: Okay, great. Thanks for that sure.

Garik Simha Shmois: We'll go now to Garik Shmois with Loop Capital.

Michael Glaser Dahl: Well go now to Gary Smith with loop capital.

Garik Simha Shmois: Oh, hi, thanks for taking my question. I wanted to ask about the M&A environment, if you could provide a little bit more color on the bolt-on that you just completed, and is it possible, in all the possible sizes, how much you anticipate spending on acquisitions this year and the types of deals you're looking at? Yeah.

Garik Simha Shmois: Alright, Thanks for taking my question I wanted to ask.

Garik Simha Shmois: On the M&A environment.

Garik Simha Shmois: Probably a little bit more color on the bolt on.

Speaker Change: Got you.

Garik Simha Shmois: Just completed and is it possible at all the maybe size how much you anticipate spending on acquisitions this year and the types of deals Youre looking at.

James Thomas Hill: Yeah, as you saw, we had a small but strategic bolt-on kind of northeast of Birmingham, up towards Guntersville. It was about 2 million tons of aggregates and just under a half million tons of asphalt.

Garik Simha Shmois: As you saw we had a small but strategic bolt on kind of north east of Birmingham, Oxford Gunners Bill. It was about 2 million tonnes of aggregates and just under half a million tons of asphalt fits us well.

James Thomas Hill: It fits us well. I think as you look at the full year or the next 12 months, the M&A outlook is quite good, so more to come. And I'm, you know, having a lot of those conversations and am very encouraged by them. I think, as always, M&A will be aggregated and conducted with discipline, but I think we feel very confident that this will be a busy M&A year for us.

James Thomas Hill: I think as you look at the full year over the next 12 months M&A outlook is quite good so more to come.

James Thomas Hill: And I'm, having a lot of those conversations and very encouraged but I think as always M&A will be aggregate slid and conducted with discipline, but we I think we feel very confident this will be a busy M&A year for us.

Garik Simha Shmois: Okay, very good. Thank you. Thank you.

Speaker Change: Okay very good. Thank you. Thank you.

David Sutherland MacGregor: And now we'll go to David MacGregor with Longbow Research.

Garik Simha Shmois: And now we'll go to David Macgregor with Longbow Research.

David Sutherland MacGregor: Good morning, everyone. Thanks for taking the questions.

David Sutherland MacGregor: Hey, good morning, everyone and thanks for taking the questions I guess I wanted to I wanted to kind of tap your many years of experience in this business with respect to the second half of this year in election years and in the.

James Thomas Hill: Tom, I guess I wanted to kind of tap your many years of experience in this business with respect to the second half of this year in election years. And in an election year, do you find that projects kind of accelerate as people kind of focus on pork? Or do you think things might slow down a little bit as people get a little more tentative and wait to see how the election plays out? I'm just trying to get a sense of how you're thinking about the risk around second half volumes in public. I don't, I don't see; I'm going to take it in pieces.

James Thomas Hill: Election year do you find it projects kind of accelerate as people kind of focus on.

James Thomas Hill: Pork or.

James Thomas Hill: Do you think things, maybe slow down a little bit as people get a little more Canada and wait to see how the election plays out I'm just trying to get a sense of how youre thinking about the risk around second half volumes in public sector spending.

James Thomas Hill: I don't see, and we'll take it in pieces; overall, I don't see any impact of the election year on our demand. I think that our guidance is taking these factors into account. I don't think election year will move the needle on that. I think on the public side, it is really the DOTs trying to get highway dollars into leading and into projects, and I think that's happening. And I think we call that, as you know, mid-single digit.

James Thomas Hill: I don't I don't see and we will take it in pieces overall I don't see any impact with election year on our demand I think that our guidance is taken he's taken the factors into into account I don't think election year moves the needle on that I think on the on the public side. It is really the dot's.

James Thomas Hill: Trying to get highways, how we dollars into lettings and into projects and I think thats happening and I think we call that as you know mid single digit on the on the private side I think as we said you've got some challenges on.

James Thomas Hill: On the private side, I think, as we said, you've got some challenges on non-res and multi-unit, and I think that the single family is recovering with health. So that's how I look at it with not much impact from the election.

James Thomas Hill: Our non res and multi and I think that single family is is recovering.

James Thomas Hill: Withheld so.

James Thomas Hill: That's how I look at it with not much impact from an election year.

Speaker Change: Alright, thanks very much thank you.

Timna Beth Tanners: And next, we have Timna Tanners with Wolf Research. Morning, Timna.

Timna Beth Tanners: And next we have Timna tanners with Wolfe research good morning, gentlemen, good.

Timna Beth Tanners: Good morning. Hey, good morning. Thanks a lot.

Timna Beth Tanners: Hey, good morning, Thanks, a lot I wanted to ask about a little bit more on the demand side as well how is the government infrastructure dollars how are they flowing through how how are you seeing the pace of that activity any evidence of some of those larger eire project spend.

Timna Beth Tanners: E sign that data centers could make much of a dent against a decline in warehouse demand. Thanks.

Timna Beth Tanners: I wanted to ask you a little bit more on the demand side as well. How are the government infrastructure dollars flowing in? How are you seeing the pace of that activity? Any evidence of some of those larger IRA projects and any sign that data centers could make much of a dent against the decline in warehouses?

Timna Beth Tanners: I'll start with highways were seeing J money and the local funds flow into Lettings at this point, we'd stick with that mid single digit growth.

James Thomas Hill: Yeah, we'll start with highways. We're seeing the IIJ money and the local funds flow into lettings.

James Thomas Hill: At this point, we'd stick with that mid-single-digit growth on the public side this year, which is both, you know, non-highway infrastructure and highways. And we see that kind of steady growth for years to come. We're also seeing additional state funding come into play. We have three states with some big, big dollars. Tennessee added $3 billion. Florida, I think, added $4 billion. And Georgia just added $1.5 billion to their funding. I think when it comes to public demand, slow and steady wins the race on this, particularly when you're compounding your margins like we are. So I think, you know, a good, healthy sector with steady growth for years to come, and I think the DOTs will continue to work hard to get those dollars into letting.

James Thomas Hill: On the public side this year, which is both non highway infrastructure and highways and we'd see that kind of steady growth for years to come. We're also are seeing additional state funding come into play we've got three states with some big Big dollars, Tennessee.

James Thomas Hill: We added 3 billion, Florida, I think added $4 billion in Georgia, just added $1 5 billion.

James Thomas Hill: Their funding.

James Thomas Hill: I think when it comes to public demand.

James Thomas Hill:

James Thomas Hill: Low and steady wins the race on this and particularly when you're compounding your margins like we are so I think a good healthy sector with steady growth for years to come and I think the Dot's will continue to work hard to get those dollars into lettings.

James Thomas Hill: And, Timna, you also mentioned data centers, which have, you know, really provided some good opportunities for us in some markets. I can think of some projects we've booked recently in Virginia, Alabama, and Georgia, and it's obviously a subject that's getting a lot of press, but I do think it's important to remember that the square footage, according to DODGE, for data centers is only a low single-digit percentage of So, you know, as you know, there are a lot of different categories and dynamics in private non-res, so data centers may not move the needle overall, but overall, for us in non-res, right, you know, so far, it's playing out as we expected with kind of all those different dynamics. Okay.

James Thomas Hill: And Timna you also mentioned data center switch have you never really provided some good opportunities for us and in some markets I can think of some projects we booked recently in Virginia, Alabama.

James Thomas Hill: GA and it's obviously a subject that's getting a lot of press, but I do think it's important to remember that the square footage. According to Dodge for data centers, there's only a low single digit percentage of total non res start. So you know as as you know there are a lot of different categories and dynamics and private non res so data centers.

James Thomas Hill: Not move the needle overall, but overall for us in non res right now so far it is playing out as we expect that with kind of all those different dynamics.

Timna Beth Tanners: Okay, it was helpful. I'll leave it there. Thanks again.

Timna: Okay helpful. I'll leave it there thanks again.

Speaker Change: Thank you.

Patrick Tyler Brown: We'll go now to Tyler Brown with Raymond James.

Timna Beth Tanners: We will go now to Tyler Brown with Raymond James.

Patrick Tyler Brown: Hi, Tyler.

Patrick Tyler Brown: Hey, so y'all are doing a great job on unit margins, but I am curious what you're seeing on the plant productivity side, because if I go back, Tom, to the Vulcan way of operating and some of the technology rollouts in the plants that you talked about at the analyst day, I'm just kind of curious how those are tracking, if you're seeing improved plant utilization, and is that kind of a continued good guy into 25?

Patrick Tyler Brown: Hey, So you all are doing a great job on the unit margins, but I am curious what you're seeing on the productivity side, because if I go back Tom to the Vulcan way of operating on some of the technology Rollouts and the claims that you talked about at the analyst day I'm just kind of curious how those are tracking if youre seeing improved plant utilization.

Patrick Tyler Brown: And is that kind of a continued good guidance to 25.

James Thomas Hill: Yeah, I think that where we are on that is with the process intelligence in those plants. As we said, we did that in our top 100 plants, which is about roughly 7% of our production. The tools are all there. About 25%, 30% of those plants are actually fully utilizing those tools, and there's a lot of work that has to go into that to get the screens right and everybody trained.

Speaker Change: Yeah, I think that where we all are that youre talking about the process intelligence on those on those players as we said the we did that in our top 100 plants, which is about 7% of our roughly 7% of our production.

James Thomas Hill: The tools are all there.

James Thomas Hill: 25%, 30% are actually of those plants are actually fully utilizing those tools and theres a lot of work that has to go into that to get the screens right and everybody trained and those we're seeing marked progress.

James Thomas Hill: In those, we're seeing marked progress. As we march through kind of this year, maybe the first part of next year, we'll get up to 100% of those, and as we do, we'll see improvement. So where it's working, I think it's working well, maybe a little slower than I would have wanted it to go through as far as full implementation, but we're getting there, and I think we'll see that. As you said, we'll see progress of that show up in our numbers in 24 and in 25, and into 26, to be honest with you. So far, so good, and we'll keep plugging away at it.

James Thomas Hill: As we March through kind of this year, maybe the first part of next year, we will get up to a 100% of those but and as we do we will see improvement so where it's working I think is working well maybe a little slower than I would have wanted it to go through as far as full implementation, but we're getting there and I think we'll see that as you say we will.

James Thomas Hill: We will see progress of that show up in our numbers in 'twenty four 'twenty five and then into 'twenty six to be honest with you. So you know so far so good and we'll keep looking at it.

Speaker Change: Okay perfect. Thank you. Thank you.

Patrick Tyler Brown: Thank you. Thank you.

Patrick Tyler Brown: Okay.

Adam Robert Thalhimer: And now we'll hear from Adam Thalhimer with Thomas Davis. Hey Adam. Morning. Morning guys, great quarter.

Adam Robert Thalhimer: And now we'll hear from Adam Thalhimer with Thomas Davis. Morning. Morning, guys. Great quarter.

Patrick Tyler Brown: And now we'll hear from Adam <unk> with Thomas Davis.

Adam Robert Thalhimer: Good morning, good morning, guys great quarter.

Adam Robert Thalhimer: Thank you.

Adam Robert Thalhimer: Hey.

Adam Robert Thalhimer: On the demand side, I guess I wanted to hit that as well, there's a lot of angst out there about just private construction demand in general are you guys seen any incremental.

Adam Robert Thalhimer: Weakness or strengths there.

James Thomas Hill: Well, I think it kind of depends on which part of it you're talking about. I'll take them one piece at a time.

Adam Robert Thalhimer: Well, I think pitsaw, which part of it you're talking about and I'll take them a piece at a time, we're seeing you know.

James Thomas Hill: We're seeing, you know, on the non-res side, you've got weakness in in, you know, warehouses and kind of traditional light non-res. That being said, the warehouses we look at start. They are, the fall is decelerating.

James Thomas Hill: On the non res side.

James Thomas Hill: Got weakness in and warehouses and kind of traditional light non res.

James Thomas Hill: That being said the warehouses, we if you look at starts they are the <unk>.

James Thomas Hill: Paul is decelerating as getting better as you look at starts on a short term basis, so hopefully that will get better.

James Thomas Hill: It's getting better as you look at starts on a short-term basis, so hopefully that will get better. You've got strength and large manufacturing projects, which we have. We have 11 of those big projects, and we're shipping all of them now, and I think more are to come. So, you know, it's too early to call whether it's getting better or getting worse, but we'll, you know, that's kind of how we call it on the non-res side.

James Thomas Hill: You've got strength in large manufacturing projects, which we've got.

James Thomas Hill: 11 of those big projects that were shipping all of them now and I think more to come so you know.

James Thomas Hill: It's too early to call, whether it's getting better or getting worse, but.

James Thomas Hill: That's kind of how we call it for on the non res side on highways excuse me on on housing.

James Thomas Hill: On the highways, excuse me, on housing, I would tell you the weakness is in multifamily and continues that. I think that won't last too long. We'll be past that, I think, in 25. And then, you know, single-family res is recovering and, I think, recovering with some momentum.

James Thomas Hill: I would tell you the weakness is in multifamily and continues that I think that doesn't last too long, we'll be past that I think it's 25, and then you know single family.

James Thomas Hill: As is.

James Thomas Hill: Is is recovering and I think recovering with some momentum.

Speaker Change: That's pretty good thanks, Tom Thank you.

Philip H. Ng: We'll go now to Phil Ng with Jeffreys.

Speaker Change: Well go now to fill in with Jefferies.

Philip H. Ng: They feel guys huh.

Philip H. Ng: Congratulations on a really strong quarter. I have a question.

Philip H. Ng: Congrats on a really strong quarter.

Philip H. Ng: I had a question I mean.

James Thomas Hill: I mean, a competitor of yours just closed on a deal in the Southeast, and they've already announced price increases for mid-years in those markets and called out how pricing there is perhaps below their corporate average. I've always thought of the Southeast as actually a pretty good price market. Do you see that dynamic, you know, improving the backdrop on pricing, anything on the structure side of things? And then, similarly, in California, I think pricing is still kind of below what that market probably should warrant, just given the cost of demand profile. Any thoughts on the momentum on pricing around California as well? Yeah, I think we've got to be thoughtful when we call out prices.

Philip H. Ng: <unk> just closed on a deal in the South east and they've already announced price increases for mid years in those markets and called out how pricing Darius <unk> below their corporate average I've always thought of the southeast is actually pretty good pricing market do you see that dynamic.

James Thomas Hill: Improving the backdrop on pricing anything on the structure side of things and then similarly, California, I think pricing still kind of below.

James Thomas Hill: What that market, probably should warrant just given the cost of demand profile and any thoughts on the momentum on pricing around California as well, yes, I think we've got to be thoughtful when we called out pricing on individual markets, but that being said the southeast is very good pricing. Some of the best we have and I think that if you look at the western part of the United States.

James Thomas Hill: Yeah, I think we've got to be thoughtful when we call out pricing on individual markets. But that being said, the Southeast is very good pricing, some of the best we have. And I think that if you look at the western part of the United States, I think we're seeing a marked improvement in pricing, and we will continue, that momentum will continue.

James Thomas Hill: We're seeing a marked improvement in pricing and we will continue that momentum will continue.

Speaker Change: I appreciate the color.

Angel Castillo: And now we'll go to Angelo Castillo with Morgan Stanley.

James Thomas Hill: And now we'll go to Angelo Castillo with Morgan Stanley.

Angel Castillo: Morning. Hi. Good morning.

Angel Castillo: Morning.

Angel Castillo: Morning, Thanks for taking my question just wanted to maybe expand a little bit on some of the dynamics first just a quick clarifier.

Angel Castillo: Thanks for taking my question. I just wanted to maybe expand a little bit on some of the dynamics. First, just a quick clarification.

Angel Castillo: For pricing is there assumption still 10% to 12% given the kind of unchanged top line and then you mentioned kind of no impact from election year could you maybe talk about some of the other dynamics that are at play here in terms of.

James Thomas Hill: For pricing, is the assumption still 10 to 12 percent given the kind of unchanged top line? And then you mentioned, you know, kind of no impact from the election year. Could you maybe talk about some of the other dynamics that are at play here in terms of, you know, the weakness you're seeing in non-resi and the just interest rate environment and kind of, you know, some of those challenges? Is that having any kind of impact on your mid-years? It sounds like the discussions there have been quite constructive. So just... Any kind of color that would be helpful. Yeah, I think, you know, you're seeing improvement.

James Thomas Hill: The weakness you're seeing in non resi and that.

James Thomas Hill: Just interest rate environment, and kind of some of those challenges.

James Thomas Hill: That having any kind of impact on your mid years. It sounds like the discussions there have been.

James Thomas Hill: Quite constructive.

James Thomas Hill: Any kind of color there would be helpful. Yes, I think you know.

James Thomas Hill: Yeah, I think, you know, you're seeing improvement. We're seeing improvement in single family homes, which is always helpful. I think the most important thing is that you see growth in public demand, which is so visible, and it is a very good foundation for pricing. I don't know whether interest rates have had a big impact on pricing. Obviously, they'll have, they've had, impacts on demand and volumes. But I think So I think that, and I don't think that the election year has had any impact on pricing dynamics.

James Thomas Hill: Youre seeing improvement so we're seeing improvement in single family, which is always helpful. With the most important thing is that you see growth in public demand, which is so visible and is it is a very good foundation for pricing.

James Thomas Hill: I don't know that interest rates have had a big impact on pricing, obviously they'll have they've had they've had impacts on on on demand and volumes, but I think.

James Thomas Hill: So I think that and I don't think that the election year has had any impact on pricing dynamics. So I think that the.

James Thomas Hill: So I think that the fact that we've got strong, very visible public demand for a long time is good. I think you've got some improvement in res, all that is helping the pricing dynamics. And I think we feel pretty good about our mid-year.

James Thomas Hill: Fact that.

James Thomas Hill: We've got strong very visible public demand for for a long time is good I think you've got some improvement and raise all of that is helping.

James Thomas Hill: The pricing dynamics and I think we feel pretty good about our mid year at this point.

James Thomas Hill: Okay.

James Thomas Hill: Okay.

Speaker Change: Okay helpful. Thank you.

James Thomas Hill: <unk>.

James Thomas Hill: Yeah.

Michael Stephan Dudas: We'll go now to Michael Dudas with Vertical Research.

James Thomas Hill: We will go now to Michael Dudas with vertical research.

Michael Stephan Dudas: Good morning. Good morning, Mary Andrews, Mark, and Tom. So, you know, that's an interesting highlight on 67% of your IIGA dollars are going to the Vulcan states. So you can talk a little bit about what states, is that matching up with some of the DOT budgets in some of your important states, and what it may be throughout the business, what regions or states maybe are lagging a bit that may have some opportunity to catch up as we move into the next several quarters?

Michael Stephan Dudas: Good morning, Mark good.

Speaker Change: Good morning, Matt Andrews, Mark Tom Good morning.

Michael Stephan Dudas: So.

Michael Stephan Dudas: Yeah, that's an interesting highlight on 67% of your of the Iga dollars are going to the Vulcan States. So you can talk a little bit about what states does that matching up with some of the DLT budgets with some of your point in states and what it may be throughout the business what regions or states, maybe you're lagging a bit that may have some opportunity to catch up.

Michael Stephan Dudas: As we move into the next several quarters.

James Thomas Hill: Well, I think, you know, a big part of that is you've got the big DOTs, Caltrans and TxDOT and Georgia DOT and Virginia. Obviously, in Tennessee, we have excellent funding, both state and local. I think that, you know, probably the most, the best, the DOT is best at getting money through at this point because they started earlier with their own funding in Texas. You know, Georgia had some struggles, but I think it's catching up with that. So, I think Caltrans is doing a good job getting their money in. Illinois, I think, has struggled to get some of their funding out. So that's how I call it.

Speaker Change: Well I think a big.

James Thomas Hill: A big part of that is you got the big Dot's Cal trends and Txdot in Georgia.

James Thomas Hill: In Virginia, obviously in Tennessee, obviously have excellent funding most state and local.

James Thomas Hill: I think that.

James Thomas Hill: Probably the most the best the Dot's best at getting money through at this point because they started earlier with their own funding is Texas.

James Thomas Hill: Georgia has some struggles but I think as catcher is catching up with that.

James Thomas Hill: So and I think Caltrans is doing a good job getting their money in Illinois has struggled getting some of their funding out. So that's how I would call it but I think they're all plugging at it and I think they're all getting better at it.

James Thomas Hill: But I think they're all plugging in, and I think they're all getting better at it. And it shows in improvement and lettings. I think that, you know, all of them are going through their 25 budgeting right now, a little too early to call. But I don't see them going down. I would expect most of them to go up.

James Thomas Hill: It is coming through with improvement in Lettings I think that all of them are going through their <unk>.

James Thomas Hill: Five budgeting right now and a little too early to call, but I don't see them going down I would expect most of them to go up so.

Michael Stephan Dudas: So, as we said, I think that it's a long road. I think it's steady growth for the public. And it's not just highways. It's also the infrastructure, which is ports and airports and water and sewage. And that will be substantial growth, I think, this year and for years to come. Thank you.

Michael Stephan Dudas: As we said I think that it's a long road I think it's steady growth in public and and it's not just highways is also the infrastructure, which is ports and airports and water and sewage and that'll be substantial growth I think this year and for years to come.

James Thomas Hill: Thank you, Tom. Thank you.

Speaker Change: Thank you Tom Thank you.

James Thomas Hill: And at this time, that will conclude our question and answer session. I'd like to turn the call back over to Tom Hill, Chief Executive Officer, for any additional or closing comments. I thank you all.

James Thomas Hill: And at this time that will conclude our question and answer session I would like to turn the call back over to Tom Hill, Chief Executive Officer for any additional or closing comments.

James Thomas Hill: Thank you all for your time this morning and for your interest and support of Vulcan Materials Company. We hope you and your families are healthy and safe and stay that way through the quarter, and we look forward to talking to you over the next few months.

James Thomas Hill: Thank all of you for your time this morning, and your interest and support of Vulcan materials company we.

James Thomas Hill: We hope you and your families are healthy and safe and stay that way through the quarter and we look forward to talking to you over the next few months.

James Thomas Hill: Yeah.

Operator: Once again, ladies and gentlemen, that will conclude today's call. Thank you for your participation. You may disconnect at this time.

Speaker Change: Once again, ladies and gentlemen that will conclude today's call. Thank you for your participation you may disconnect at this time.

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