Q2 2024 Vulcan Materials Co Earnings Call
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Operator: To all parties on hold, we do appreciate your patience and holding. We ask that you please continue to stand by. Your conference will begin momentarily.
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Unnamed: Ducroff,
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Todd: Good morning. I welcome everyone to the Vulcan Materials Company second quarter 2024 earnings call. My name is Todd, 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.
Todd: Good morning. Welcome everyone to the Vulcan Materials Company second quarter 2024 earnings call. My name is Todd and I will be your conference call coordinator today.
Todd: Please be reminded that today's call is being recorded and will be available for replay later today at the company's website.
Todd: After the company's prepared remarks, there will be a question and answer session. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself by pressing star 2. 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.
Todd: All lines have been placed in a listen-only mode. After the company's prepared remarks, there will be a question and answer session.
Todd: If you would like to ask a question at that time, please press star 1 on your telephone keypad.
Todd: If at any point your question has been answered, you may remove yourself by pressing star 2.
Speaker Change: 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.
Mark 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.
Speaker Change: 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.
Mark Warren: 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 which 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-Gap Financial Measures are defined and reconciled in our earnings release, our supplemental presentation, and other SEC filings. During the Q&A, we ask that you limit your participation to one question.
Speaker Change: Today's call is accompanied by a press release and a supplemental presentation posted to our website VulcanMaterials.com
Speaker Change: Please be reminded that today's discussion may include forward-looking statements which are subject to risks and uncertainties.
Speaker Change: 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.
Speaker Change: 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 our time we have available.
Speaker Change: And with that, I'll turn the call over to Tom.
Tom Hill: Thank you, Mark, and thank all of you for your interest in Vulcan Materials.
Tom Hill: Our results demonstrate how our teams have successfully navigated a challenging first half of the year.
Mark Warren: Unfavorable weather conditions in many key markets impacted our shipments and operating efficiency. Shipments in the quarter were negatively impacted by a significant number of rain days in many markets, and Freight Adjusted Average Solid Prices Improved 12% or $2.29 per ton versus the prior year. On the public side, we continue to expect growth in 2024 as two consecutive years of record growth in contract awards flow into projects and aggregate shipments.
Tom Hill: Unfavorable weather conditions in many key markets impacted our shipments and operating efficiencies.
Tom Hill: Our second core performance reinforces our consistent execution, the durable characteristics of our Irish-led business.
Tom Hill: and the benefits of our continued focus on both enhancing our core and expanding our reach.
Tom Hill: Even in the face of lower aggregate shipments and weather-driven inefficiencies, our teams delivered a seventh consecutive quarter of double-digit year-over-year improvement in aggregate unit profitability.
Tom Hill: In our trailing 12 months, average cash gross profit per ton has reached $9.96 per ton, marking consistent progress towards our $11 to $12 target.
Tom Hill: These achievements exhibit the benefits of our commitment to enhancing our core through our Vulcan Way of Selling and Vulcan Way of Operating Disciplines.
Tom Hill: But our strategy is two-pronged, and we are also focused on expanding our reach. During the second quarter, we closed two strategic bolt-on acquisitions.
Tom Hill: These acquisitions enhance both our aggregate production and distribution capabilities and our downstream asphalt business in Alabama and Texas, two of our top ten states.
Tom Hill: In the quarter, we generated $603 million of adjusted EBITDA and expanded our adjusted EBITDA margin by 170 basis points despite 5% lower area shipments.
Tom Hill: Shipments in the quarter were negatively impacted by a significant number of rain days in many markets.
Tom Hill: Particularly in May, across nearly 70% of our geographies and in select key markets in April and June .
Tom Hill: The pricing environment remained positive, and freight-adjusted average solid prices improved 12% or $2.29 per ton versus the prior year.
Tom Hill: Freight Adjusted Unit Cash Cost of Sales increased 13% or $1.13 per ton.
Tom Hill: Most importantly, cash gross profit per ton improved over a dollar per ton or 12%.
Tom Hill: We remain consistently focused on improving unit profitability on every ton we sell to maximize earnings and cash generation in any demand environment.
Tom Hill: Let me share with you my thoughts on the current demand backdrop by discussing each end use.
Tom Hill: Single-family starts began recovering in the second half of last year, and continue to point to growth in 2024, albeit at a slightly lower level than we initially anticipated.
Tom Hill: The timing of starts converting to shipments, continued affordability issues, and persistent elevated interest rates are impacting both the pace of recovery and the likelihood of single family growth fully offsetting weaker multifamily activity.
Tom Hill: Looking ahead, the underlying fundamentals of population growth and low inventories in Vulcan markets continue to support long-term growth in residential construction.
Tom Hill: In private, non-residential construction, the landscape continues to vary across categories, but is unfolding largely as we anticipated for 2024.
Tom Hill: Warehouse activity is the biggest headwind, with some positive momentum in manufacturing activity in data centers.
Tom Hill: Light commercial activity is still relatively weak, but over time we expect it to follow the positive trends in single family housing and benefit from lower interest rates.
Tom Hill: On the public side, we continue to expect growth in 2024 as two consecutive years of record growth in contract awards flow into projects and aggregate shipments.
Tom Hill: The IIJ funding is benefiting both highways and other public infrastructure activity.
Tom Hill: Given the demand backdrop just discussed, and the weather-impacted first-half shipments being down 6%, we now expect aggregate shipments to decline between 4 and 7% for the full year.
Tom Hill: combined with solid pricing environment and double-digit profitability improvement, we still anticipate same-store adjusted EBITDA growth.
Tom Hill: Margin Expansion, and Attractive Free Cash Flow Generation in 2024.
Tom Hill: Now, I'll turn the call over to Mary Andrews for some additional commentary on our results and revised outlook. Mary Andrews?
Mary Andrews: Thanks, Tom, and good morning.
Mary Andrews: The strong fundamentals of our aggregate-led business and our consistent execution continue to deliver attractive cash generation, which, coupled with disciplined capital allocation, is driving our returns on invested capital higher over time.
Mary Andrews: During the second quarter, we deployed capital to reinvest in and expand our existing franchise, to grow our business through acquisition, and to return cash to shareholders.
Mary Andrews: Capital expenditures for maintenance and growth projects were $195 million in the quarter and $298 million on a year-to-date basis.
Mary Andrews: We continue to expect to spend between $625 and $675 million for the full year.
Mary Andrews: During the quarter, we also allocated $181 million to the strategic bolt-on acquisitions Tom mentioned earlier.
Mary Andrews: and returned $111 million to shareholders through our quarterly dividend and common stock repurchases.
Mary Andrews: At June 30, our return on invested capital had improved 160 basis points over the last 12 months, with a 10% improvement in adjusted EBITDA generated on flat average invested capital.
Mary Andrews: And with net debt to adjusted EBITDA leverage of 1.7 times at quarter end.
Mary Andrews: We have considerable investment capacity within our target leverage range of two to two and a half times to capitalize on attractive acquisition opportunities that will drive long-term value creation for shareholders.
Mary Andrews: SAG expenses in the quarter were 6.7% of revenues, and year-to-date have increased less than 3% over the prior year. We are focused on both disciplined cost control and making strategic investments in talent and technology to support our business initiative.
Mary Andrews: Tom laid out for you our updated volume outlook for the year, so let me conclude with a few additional details on the full year earnings guidance.
Tom Hill: Given the weather-driven inefficiencies in the first six months and lower shipments, we now expect unit freight-adjusted cash cost of sales to increase high single digits compared to the prior year.
Tom Hill: We continue to expect aggregate prices to increase 10-12% for the year, driving another year of double-digit improvement in cash gross profit per ton.
Tom Hill: We anticipate that the strong unit profitability improvement, coupled with the lower volume expectations, will generate adjusted EBITDA between $2 and $2.15 billion for the full year.
Tom Hill: I'll now turn the call back over to Tom to provide a few closing remarks.
Tom Hill: Thank You Mary Andrews. I want to conclude by thanking our talented Vulcan team for their commitments to each other and to excellence.
Tom Hill: As they work each day, rain or shine, to operate safely and deliver value for our customers and our shareholders.
Tom Hill: I am confident that we have the right two-pronged strategy of enhancing our core and expanding our reach.
Tom Hill: And I'm excited about the runway ahead of us on both fronts to drive attractive growth for Vulcan Materials.
Speaker Change: At this time, if you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: If at any point your question has been answered, you may remove yourself by pressing star 2.
Speaker Change: Once again, that's star one to ask a question. Our first question comes from Stanley Elliott with Stiefel. Please go ahead.
Stanley Elliott: Hey, good morning everyone. Thank you all for taking the question.
Speaker Change: Tom, could you talk a little bit more about the overall demand environment? I understand it's been pretty tough.
Speaker Change: Operating conditions kind of on a year-to-day basis and probably even into July a little bit. Any sort of help in how we should think about the balance of the year, kind of where you see momentum and things like that?
Tom Hill: Yeah, good morning, Stanley. I think, Stanley, all of the data and the leading indicators would support demand as we originally expected back in February , with the exception of single-family demand growth.
Speaker Change: The growth in single-families is a little slower than we would have expected maybe four or five months ago.
Speaker Change: and we'll talk about that a little bit later. But as we look at the current volume guidance, as you said, we had a very wet July that influenced those numbers and will definitely have a negative impact on Q3.
Speaker Change: Where we ultimately fall in that volume range of the negative four to negative seven will really come down to the number of dry shipping days We have left in the last five months of the year. So I'd frame it
Speaker Change: Underlying demand as expected, except a little bit slower growth in single family. Weather has not been our friend. We'll see how the second half goes. I think the good news is we continue to expand unit margins by double digit, and I think our folks have taken a difficult hand in the first half and turned it to a winner, and I'm proud of their performance.
Speaker Change: Great guys, thanks so much. Best of luck in the back. Thank you.
Speaker Change: Thank you. Our next question will come from Garik Shmois with Luke Capital. Please go ahead.
Garrett Moise: Oh, hi, thanks. I just wanted to follow up on that point with respect to the second half volume outlook. You know, I was wondering if you could go into maybe a little bit more detail on how to...
Garrett Moise: How to think about the pent-up demand opportunity. I think you did speak to, you know, weather influencing, if you can get all the projects done, but is this a case of projects being delayed and not canceled and
Speaker Change: You know, just maybe a little bit more color on how you expect the second half of the year to play out.
Speaker Change: Sure. I think that, you know, if you kind of look at what's happened and take that into the second half, your point of
Speaker Change: Demand doesn't go away, it's absolutely spot on, and you probably got some pin up there.
Speaker Change: and it comes down to, you know, what the weather does to us. I think it's looking back, it'll explain the future.
Speaker Change: That, you know, we were really impacted by rain in the first half, and I'll give you a couple examples.
Speaker Change: In Q2, Nashville had 30 rain days, and it dramatically impacted shipments. Look, we lost half of our shipping days in that middle Tennessee market. DFW had double the amount of rainfall, so we just never dried out and couldn't ship.
Speaker Change: The flip side of that is you saw Atlanta weather pretty much normal and shipments were as expected. L.A. had weather normal and shipments were right on where we had planned. So, you know, weather has played a role.
Speaker Change: It will impact Q3, as July was very wet, and now we're experiencing...
Speaker Change: A Tropical Storm on the East Coast, so kind of a tough start to the third quarter.
Speaker Change: But, as you said, the demand is still there, it's as we thought it was going to be. So these are temporary events and it doesn't go away, so as we get dry days we're shipping just fine.
Unnamed: Great, thank you.
Speaker Change: Operator, is there another question?
Operator: Yes, I apologize. We'll take our next question from Anthony Pettinari with Citi. Please go ahead. Your line is open.
Unnamed: Good morning. Hey, you raised the guide for cost inflation for mid-single digit to high-single digit. Should we think about that incremental cost inflation as just essentially all volume de-leverage? And are there any other kind of puts or takes, either good or bad, that we should think about for the second half on costs, whether it's diesel or other items?
Anthony Penatari: Good morning.
Anthony Penatari: Good morning.
Anthony Penatari: Hey, you raised the guide for cost inflation from mid-single-digit to high-single-digit. Should we think about that incremental cost inflation as just essentially all, you know, volume de-leverage? And are there any other kind of puts or takes, either good or bad?
Speaker Change: that we should think about for the second half on costs, whether it's diesel or other items. Yeah, I think you're insightful about the volume impact. It definitely has an impact on us.
Speaker Change: You know, you saw our first half up 11%. I'd also tell you that, you know, it has been, inflation was as we expected.
Speaker Change: Weather was a big difference in that and don't underestimate the efficiency impact of trying to run wet sticky material versus dry rock which just flows a lot better.
Speaker Change: We think we can cost some of that cost back in the second half so we can get back to the high single digit for the full year versus the 11 where we are. And I think all of that allows us to continue that double digit unit margin growth.
Speaker Change: Okay, that's helpful. I'll turn it over. Thank you.
Speaker Change: We'll take our next question from Jerry Revich with Goldman Sachs.
Speaker Change: Please go ahead, your line is open.
Jerry Rebich: Hey, Jerry. Morning.
Jerry Rebich: Hi Tom, Mary Andrews, Mark, good morning. Pricing for Agris was really strong in the quarter up nicely sequentially. Can you just talk about the confidence around mid-years that you folks have in place, guidance, did not assume
Speaker Change: Major pricing, and it feels like you've got momentum just from contracts rolling, so I'm wondering if you could just give us an update.
Speaker Change: on how you expect the tailwind just from natural contracts rolling to play out in the third quarter compared to last year, and then...
Speaker Change: the incremental opportunity from mid-years. Yeah, I'll give you some color on price and let Mary Andrews talk about sequential. You know, the pricing momentum continues in all markets and all product lines. We had a successful mid-year pricing campaign.
Mary Andrews: You know, I guess, as Tom said, to me, what's really important is the solid underlying price environment.
Mary Andrews: Thank you. Thank you.
Speaker Change: Good morning, and thank you for taking my question today.
Speaker Change: Perhaps pulling the string a little bit more on the pricing question, you know, because it's a particular focus given lighter volumes, even though those volumes are delayed.
Speaker Change: In part because, you know, our channel tracks are showing that you're starting to see a ramp up of some larger infrastructure projects that were taking a while to build up.
Mark Warren: Yeah, so I think you're correct. With the ramp-up of infrastructure and public works, you'll see more base and fines, which is a little bit less lower prices. That being said, it's also lower cost, and you need that mix to balance your plants. Otherwise, you get out of whack. I think that being said, while it will have some impact on price, I don't expect it to have an impact on unit margins. So while it's maybe not – the base material may not be as high in price as, say, concrete or asphalt rock, it also comes with a cost-benefit. So I would expect us to continue our present pace of elevated unit margins regardless of mix.
Speaker Change: and how that may impact pricing on a go-forward basis. Thank you. Yeah, so I think you're correct. With the ramp-up of infrastructure and public work, you'll see more base and fines.
Speaker Change: That being said, it's also lower cost.
Speaker Change: Price, I don't expect it to have an impact on unit margins.
Speaker Change: So while it's maybe not, base material may not be as high as price as say concrete or asphalt rock, it also comes with a cost benefit. So I would expect us to continue our present pace of elevated unit margins regardless of mix.
Speaker Change: Okay, great. Thank you very much. Thank you.
Speaker Change: Okay.
Speaker Change: We'll take our next question from Angel Castillo with Morgan Stanley . Please go ahead, your line is open.
Angel Castillo: Good morning. Hi, thanks. Good morning. Thanks for taking my question. I hate to belabor the point, but I just wanted to maybe...
Speaker Change: touch base on that price discussion a little bit more to the extent that these meteors that you've gotten give you any kind of insight into you know preliminary views on 2025 can you just talk about what kind of the shape of that is in terms of kind of the magnitude are we still talking about
Speaker Change: Price increases next year in the kind of high single digits, low double digits range. And kind of along with that, just any sense of kind of customer sensitivity and kind of competitive discipline around price increases would be helpful.
Speaker Change: I think, you know, we feel like the price movement continues. We feel good about what we're bidding today. As I said, those mid-years, while they have a little bit of impact,
Speaker Change: on the second half of this year. They're going to have a much bigger impact on the first half of next year. So.
Speaker Change: That leads us to, you know, also helps you when you start having your price increase conversations in October for beginning of the year. I think, you know, it's too early to make a call on the level of pricing for 2025. But as I said, I think the conversations...
Speaker Change: that happen for mid-year price increases are encouraging for 2025.
Speaker Change: And if I may just kind of clarify on the pricing, just a quick one, the 10 to 12 percent, I thought that was kind of the guidance that you had laid out before.
Speaker Change: Mid-years, so what kind of changed so that it now includes mid-years, but it's still 10 to 12? Could you just help us understand that? Well, I think, as I said, you know, the mid-year will help a little bit, but it doesn't get you out of that 10 to 12. What it does is it sets you up for 2025.
Speaker Change: Got it. Thank you. Thank you.
Speaker Change: Thank you. Our next question will come from Mike Dahl with RBC Capital Markets. Please go ahead. Hey, Mike.
Mike Dahl: Hey Tom, Aaron Andrews. Thanks for taking my question.
Mike Dahl: It's just maybe just to help clarify kind of the cadence because it sounds like even with July , understandably, some things are
Speaker Change: It's not like August has probably been fantastic either, but when you're thinking about those puts and takes from a volume and also some of the price-cost dynamics, can you put a finer point on, within your guide, how you'd expect
Speaker Change: 3Q vs. 4Q to play out.
Speaker Change: Yeah, I think that, you know, first of all, the third quarter has already been impacted. July was extremely wet.
Speaker Change: and particularly in our southeastern markets.
Speaker Change: and now you've got, you know, tropical storm blowing up the East Coast, so, you know, it's...
Speaker Change: You're starting off to a little bit of a rough start in Q3.
Speaker Change: I think, as we said, the fundamentals of the underlying demand are still there. You've got some pin-up demand that, when the sun comes out, will ship well. You've got asphalt producers that are telling us, get ready, because when it's dry out, we've got to go. And so we'll be ready for them. I would call it...
Speaker Change: And, you know, the fourth quarter is always tough to call just because it's also weather dependent and the season hopefully will stretch. I do think that when you have a year where
Speaker Change: You have so much moisture, it may push the season a little bit, so you may get a little extra bump out of Q4 that you wouldn't have in a normal weather year, which is because people want to get those projects done.
Speaker Change: It comes down between the negative 4 and the negative 7.
Speaker Change: How many shipping days do you have and when do you have those shipping days? So a little bit of a rocky start with July and kind of, you know, this week with that tropical storm. But again, the demand is there and when the sun comes out, we're shipping fine, as I talked about with L.A. and Atlanta.
Mike Dahl: Yeah, and Mike, one other thing to keep in mind as you think about, you know, third quarter versus fourth quarter and the challenging start Tom just mentioned from a weather perspective is that strictly from a seasonal basis.
Mike Dahl: We have, you know, easier, relatively easier comps in the fourth quarter than we do in the third quarter. So as you think about where those volumes fall, that's something else to keep in mind as to how the back half might play out.
Mike Dahl: Got it. Thank you.
Mike Dahl: Thank you.
Speaker Change: Thank you. Our next question will come from Trey Grooms with Stevens. Please go ahead. Hey, Trey.
Trey Grooms: Hey, Tom. Good morning. So you guys have closed on a few bolt-on acquisitions this year.
Trey Grooms: But if you could maybe talk about the pipeline there, are you seeing any more or less opportunities out there?
Speaker Change: You know, any potential for possible larger transactions out there? Yeah, as you said, you saw us close on two smaller, I'd call, very strategic bolt-on acquisitions.
Speaker Change: kind of one in North Alabama and one in Texas. I would tell you that we'll close on some more meaningful acquisitions in the near future and which we'll share with you when the time's right, but it's a busy season for acquisitions.
Speaker Change: Good to hear. Thank you. Thank you.
Speaker Change: Thank you. Our next question will come from David MacGregor with Longbow Research. Please go ahead.
Speaker Change: Hi, good morning. This is Joe Nolan on for David.
Joe Nolan: I was just hoping you could provide some detail on what you're seeing for 2025 DOT budgets and key states for Vulcan, and maybe just how that's playing into your pricing outlook for 2025 and the ability to sustain double-digit pricing growth.
Speaker Change: Yeah, so I think that as we look at...
Speaker Change: You know, public demand out there, and just in general the highway market. We're seeing the IAJA and state and local funds flow through to highway lettings right now.
Speaker Change: Overall, demand growth is similar to expectations.
Speaker Change: Steady growth in public demand. We've got a lot more funding in critical states.
Speaker Change: You saw Tennessee, Georgia, Florida all raise.
Speaker Change: Funds, Georgia's up a billion five, Tennessee added three and Florida added four.
Speaker Change: We'll see that fun flow in the leadings in 2025, 2026, and 2027.
Speaker Change: So six of our larger states are at record level funding.
Speaker Change: and I'm going to be talking about the the the the the the the the the the the the the the
Speaker Change: Texas, California are also at record levels. And all this supports, I'd say, growth and public demand for the next three or four years. So we should, you know, slow and steady wins the race here.
Speaker Change: Great, thanks.
Speaker Change: Thank you. Our next question comes from Adam Thalhimer with Thompson Davis. Please go ahead.
Adam Fallheimer: I thought it was a nice quarter. Thank you.
Adam Fallheimer: Materials Exposure. Are you seeing increased competition for deals?
Speaker Change: You know, I don't think much changed, same bidders are out there, there's a lot going on. You also got to remember, you had, you got pent up demand from nothing going on last year, everybody was worried about a recession.
Speaker Change: So, you know, we'll get a look at all those opportunities, we passed a lot of them, I think it's...
Speaker Change: It comes down to M&A. It's about discipline, what markets you want to be in, what synergies are unique to you, what are you willing to pay for it, and make sure you can get a return on what you're paying. And then once you buy it, integrate it accurately and rapidly.
Speaker Change: Sounds good. Thanks, Tom. Thank you.
Speaker Change: Thank you. Our next question comes from Phil Ng with Jefferies. Please go ahead.
Phil Ng: Hey guys. I guess, Tom, just a little more perspective on this mid-year increase. How did it kind of shake out relative to perhaps last year, you know, appreciating a lot of this is really $4.25. So help us kind of contextualize perhaps how much of a carryover price lift you could see next year. I think the demand...
Speaker Change: Go ahead. From a macro perspective, I'd say similar. Now, it's always going to be different. When I say different, you get different customers, different product lines, different geographies where you got it last year, maybe you didn't get it this year, or vice versa. So I would call it out very similar.
Speaker Change: Anyway, to kind of help us think about what that could transpire to from a care pricing next year and then from a demand standpoint.
Speaker Change: I heard you loud and clear, underlying demand's still quite good when you don't have weather. So some of this demand seems to be pushed out to 2025, right? So if that does kind of materialize in terms of how you're thinking about end markets, are you in a position to see volumes grow next year just because it's been pretty muted the last few years?
Mark Warren: I think it's early to call. I think you continue to see growth in the public side. I think that we do know, just because the funds are there and they're starting to flow into lettings. On the private side, I feel good that single family will continue to grow.
Speaker Change: I think it's early to call.
Speaker Change: I think you continue to see growth in the public side. I think that we do know, just because the funds are there and they're starting to flow into lettings.
Mark Warren: It's a little slower than what we anticipated, and it has some catch-up to do with leading indicators. Obviously, interest rates will help that, but we just don't have the inventory of houses in these markets to keep up with population growth. I would expect the res to slow and steady growth also. I think the big question will be non-res. We've taken the hit on warehouses and distribution centers. Manufacturing is good, but interest rates will help that sector also.
Speaker Change: On the private side, I feel good that single-family will continue to grow. It's a little slower than what we anticipated, and it has some catch-up to do with league indicators.
Speaker Change: And obviously interest rates will help that, but we just don't have...
Mark Warren: It's a matter of timing.
Speaker Change: The inventory of houses in these markets to keep up with population growth, so I would expect
Speaker Change: The res to kind of slow and steady growth also.
Speaker Change: I think the big question will be non-res. You know, we've taken the hit on warehouses and distribution centers. Manufacturing is good, but, you know, interest rates will help that sector also. It's a matter of timing, I believe.
Speaker Change: Thank you. Appreciate the call. Sure.
Speaker Change: Thank you. Our next question will come from Michael Dudas with Vertical Research. Please go ahead.
Speaker Change: Good morning, gentlemen. Mary Andrews.
Speaker Change: Morning.
Speaker Change: Tom, let me follow up your final remark there to Phil.
Speaker Change: on the large, private, heavy...
Speaker Change: Non-res opportunities, you talk about.
Speaker Change: What your backlog looks like, how it looks on bidding relative to what it's been the last 6 to 12 months.
Speaker Change: Are we seeing an acceleration of some of the larger type projects that are in your areas?
Speaker Change: that you can certainly serve into over the next couple of years. Is that potentially a tailwind as we look through the second half of this year, you know, weather permitting in 2025?
Speaker Change: Yeah, it is definitely a tailwind. It is helping us. We've, you know, backlogged a number of those big projects.
Speaker Change: and big manufacturing projects. We're shipping on them now when the rain quits.
Speaker Change: And I think, you know, they'll help us in 25. And I think there's, you know, there's more behind that. You've got, you know, the CHIPS Act with 12 projects in our footprint. You've got a number of data centers. And then you continue to see growth in the reshoring of manufacturing facilities.
Speaker Change: You know, it is a tailwind for us. I don't think it's a big enough tailwind yet to take on what happened with warehouses and distribution centers, but definitely helpful.
Speaker Change: Thank you. Thank you.
Speaker Change: Operator, do you have another question? We'll take our last question from Michael Feniger with Bank of America. Please go ahead. Your line is open.
Michael Fenninger: Good morning.
Michael Fenninger: Morning. Hey guys, thanks for taking my questions. Just, Tom, on the manufacturing side, it's been a tailwind on the private non-res.
Michael Fenninger: Based on your backlog and pipeline, is your field, does that mean stable in 2025? Because, you know, is there a risk that some of these...
Michael Fenninger: Manufacturing projects that have been a tailwind kind of roll off and and there's not enough to be backfilled just curious you to kind of address that how we head into 25 and just secondly I know there's talks on
Speaker Change: You know, the public infrastructure side. You highlighted the record growth in highway contract awards has really helped infrastructure this year. There's been some mixed data points the last few months around that. Just curious if you feel like that's just more of a pause and we see more of the funding start to flow through to continue that trend into 25, 26.
Speaker Change: Yeah, I'll take the highway one first. I think that's just a matter of timing. The fundings are too big there. You've got a lot more coming, as I talked about. You know, the additional state funding and...
Speaker Change: six of our top ten states plus IJ. On the public side I think that
Speaker Change: I wouldn't get too worked up about a moment in time, as I said, I think slow and steady wins the race there and I think it'll be
Speaker Change: slow and steady for the next three or four years.
Speaker Change: I think that's solid. There'll be some, you know, hotter moments and cooler moments, but overall I think it will continue steady growth. On the manufacturing...
Speaker Change: We've got a healthy backlog, I think, and we're shipping on some of that backlog, but I don't see a big dip in the pipeline there. I think we continue to have other projects come up, and I think that's probably a strong point, particularly for Vulcan, with the footprint we have.
Mark Warren: In closing, I'd like to thank you for your time and your interest in Vulcan Materials Company. Our thoughts go out to our employees and our neighbors who have been or will be in the path of the tropical storm. We hope they stay safe. We look forward to speaking with you throughout the quarter, and thank you again for your time.
Speaker Change: In closing...
Speaker Change: I'd like to thank you for your time and your interest in Vulcan Materials Company.
Speaker Change: This does conclude today's program. Thank you for your participation and you may now disconnect.
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