Q3 2024 Vulcan Materials Co Earnings Call

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Angela: Good morning. Welcome everyone to the Vulcan Materials Company third quarter 2024 earnings call.

Speaker Change: Good morning, welcome everyone to the Vulcan materials company third quarter 'twenty 'twenty four earnings call.

Angela: My name is Angela 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 at the company's website. All lines have been placed in a listen-only mode.

Angela: My name is Angela and I will be your conference call coordinator today.

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

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

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

Angela: After the Companys prepared remarks, there will be a question and answer session.

Mark Warren: Now I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials.

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: Mr. Warren, you may begin. 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: Thank you operator, and good morning, everyone with me today are Tom Hill, Chairman and CEO, Mary Andrew's 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.net. Please be reminded that today's discussion may include forward-looking statements.

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

Mark Warren: Please be reminded that today's discussion may include forward looking statements, which are subject to risks and uncertainties. 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 Warren: are subject to risks and uncertainties. These risks, along with other legal disclaimers, are described in detail in the Company's Earnings and in other filings with the Securities and Exchange. Reconciliations of non-GAAP financial measures are defined and reconciled in our earnings Supplemental Presentation.

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

Mark Warren: and other SEC files.

Mark 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 our time we have available.

Mark 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 our time we have available.

Tom Hill: And with that, I'll turn the call over to Thank you, Mark, and thank all of you for joining our call this morning. We continue to execute on our two-pronged strategy to deliver attractive, long-term value creation for our shareholders. The results and activities in the third quarter demonstrate our success in consistently expanding our aggregate unit profitability and successfully expanding our reach through strategic acquisition opportunities. Despite the disruption of four hurricanes impacting our industry-leading southeast footpath, Both gross margin and adjusted EBITDA margin expanded in the quarter. And year-over-year aggregates, cash, gross profit per ton, increased double digits for the eighth consecutive quarter.

Speaker Change: And with that I'll turn the call over to Tom.

Tom Hill: Thank you Mark and thank all of you for joining our call. This morning.

Tom Hill: We continue to execute on our two pronged strategy to deliver attractive long term value creation for our shareholders.

Tom Hill: Olson activities in the third quarter demonstrate our success.

Tom Hill: <unk>, expanding our aggregates unit profitability and successfully expanding our reach through strategic acquisition opportunities.

Tom Hill: Despite the disruption of four hurricanes impacting our industry, leading southeast footprint.

Tom Hill: Both gross margin and adjusted EBITDA margin expanded in the quarter.

Tom Hill: And year over year aggregates cash gross profit per ton increased double digits for the eighth consecutive quarter.

Tom Hill: A testament to the benefits of our unwavering focus on our Vulcan way of selling and Vulcan way of operating. In the quarter, we generated $581 million of adjusted A modest decline versus the prior year, given 10% lower average shipments and the prior year earnings contribution from the now-divested Texas concrete. Shipments in the quarter varied widely month to month and across geographies, reflecting the interruption caused by extreme weather events.

Tom Hill: A testament to the benefits of our unwavering focus on our Vulcan with selling and vocally or operating disciplines.

Tom Hill: In the quarter, we generated $581 million of adjusted EBITDA.

Tom Hill: A modest decline versus the prior year, given 10% lower aggregate shipments in the prior year earnings contribution from the now divested Texas concrete business.

Tom Hill: Shipments in the quarter varied widely month to month and across geographies, reflecting the interruption caused by extreme weather events.

Tom Hill: So let me walk you through how the quarter played out. In July, seven of our top 10 markets experienced significant year-over-year increases in rainfall. and the first of four hurricanes, Hurricane Beryl, made landfall in our Average daily shipments were down mid-teens for the month. Shibboleth in August rebounded after a slow start due to Hurricane Debbie tracking up the East Coast. Daily shipments in August, excluding the two shipping days most impacted by the hurricane. were only down 4% consistent with our non-weather impacted demand. As we are all aware, Hurricane Helene, the second of two September hurricanes, Devastated many communities across Florida, Western North Carolina, East Tennessee, and other parts of the South.

Tom Hill: So let me walk you through how the quarter played out.

Tom Hill: And July seven of our top 10 markets experienced significant year over year increases in rainfall.

Tom Hill: And the first of four Hurricanes Hurricanes burrow made landfall in our footprint.

Tom Hill: Average daily shipments were down mid teens for the month.

Shipments in August rebounded after a slow start due to hurricane Debbie tracking up the east Coast Daily.

Tom Hill: Daily shipments in August excluding the two shipping days most impacted by the hurricane were only down 4% consistent with our non weather impacted demand view.

Tom Hill: As we are all aware hurricane Hilli the second of two September Hurricanes.

Tom Hill: Devastated many communities across Florida, Western North Carolina, East, Tennessee, and other parts of the South East.

Tom Hill: I am thankful to report that all of our employees are safe, and I'm proud of their immediate efforts to help our communities and neighbors. Catastrophic destruction in Western North Carolina and East Tennessee is both tragic and historic. Vulcan Materials is well positioned in the affected areas to support the immense rebuilding efforts that will be required. Due to the storm, shipments were down approximately 25% in the final week of September. Resulting in quarterly shipments finishing 10% below the prior year. In spite of the challenges from volume. The pricing environment remains positive. Freight-adjusted average selling prices improved 10% year-over-year.

Tom Hill: I am thankful to report that all of our employees are safe.

Tom Hill: Proud of their immediate efforts to help our communities and neighbors.

Tom Hill: The catastrophic destruction in Western North Carolina, and East, Tennessee as books tragic and historic.

Tom Hill: Vulcan materials is well positioned in the affected areas to support the immense rebuilding efforts that will be required.

Tom Hill: Due to the storm shipments were down approximately 25% in the final week of September.

Resulting in quarterly shipments, finishing 10% below the prior year.

Tom Hill: In spite of the challenges from volume the pricing environment brings positive.

Tom Hill: Adjusted average selling prices improved 10% year over year.

Tom Hill: with increases widespread across the We continue to use our Vulcan way of selling disciplines and process. to deliver value to our customers and earn their daily We also remain focused on our Vulcan Wave Operating Disciplines to drive efficiencies. and lower unit cost. Although weather and lower volumes were an even more significant headwind in the third quarter than the prior quarter, the rate of cost increases moderately.

Tom Hill: With increase is widespread across geographies.

Tom Hill: We continue to use our Vulcan, we're selling disciplines and processes to deliver value to our customers and earn their daily business.

Tom Hill: We also remain focused on our Vulcan with operating discipline to drive efficiencies.

Tom Hill: And lower unit cost.

Tom Hill: Although weather and lower volumes were an even more significant headwind in the third quarter than the prior quarter the rate of cost increases moderated.

Tom Hill: At the end of September, we announced the acquisition of Wakestone. a leading pure plate agri supplier in the Carolinas. This acquisition is consistent with an Argus-led growth strategy. and will be a great addition to the Vulcan family.

Tom Hill: At the end of September we announced the acquisition of Wheatstone Corporation, a leading pure play aggregates supplier in the care of lives.

This acquisition is consistent with the Argus led growth strategy and will be a great addition to the Vulcan family.

Tom Hill: We look forward to welcoming the Wakestone team upon closing later this year.

Tom Hill: We look forward to welcoming the wheatstone team upon closing later this year.

Tom Hill: Now, shifting to demand. The overall demand environment is improving, but with different dynamics impacting each end. Higher single-family starts over the last three and 12 months provide a solid backdrop for growing single-family demand. particularly with potentially lower mortgage rates on the horizon to help address the ongoing affordability. Multifamily starts remain weak, but should also benefit from a lower interest rate environment. Fundamentally, there is a consistent need for additional housing in Vulcan markets, which bodes well for future residential construction. nt to private non-residential construction, demand remains very cross-categorized. Most categories will benefit from improving interest rates since projects in the planning and design pipeline have been accumulating for some time.

Tom Hill: Now shifting to demand the overall demand environment is improving but with different dynamics impacting each given us.

Tom Hill: Higher single family starts over the last three and 12 months provide a solid backdrop for growing single family demand.

Tom Hill: Particularly with particularly lower mortgage rates on the horizon to help address the ongoing affordability issue.

Tom Hill: Multifamily starts remain weak.

Tom Hill: But should also benefit from a lower interest rate environment.

Fundamentally there is a consistent need for additional housing and Vulcan markets, which bodes well for future residential construction activity.

Tom Hill: In private nonresidential construction demand remains very across categories. Most categories will benefit from improving interest rates since projects in the planning and design pipeline had been accumulating for some time now.

Tom Hill: Warehouse activity remains a headwind, but comps are easing and starts seem to be stabilizing near pre-COVID level. Data centers are still. and Manufacturing Remains a Catalyst in Some of Our Marks. Over time, like commercial activity, should follow the positive trends. Single-Family House. We are closely monitoring the macro dynamics and likely timing of private non-residential activity making the turn. On the product side, we continue to expect steady growth for multiple years. Our booking activity points to the conversion of growth in contract awards now flowing into agri-show.

Tom Hill: Warehouse activity remains a headwind, but comps are easing and start seem to be stabilizing near pre COVID-19 levels.

Tom Hill: Data centers are still robust and manufacturing remains a catalyst and some of our markets.

Tom Hill: Overtime like commercial activities should follow depository trends in single family housing.

Tom Hill: We are closely monitoring the macro dynamics and likely timing of private nonresidential activity, making the turn.

Tom Hill: On the public side, we continue to expect steady growth for multiple years are booking activity points to the conversion of growth in contract awards now flowing into aggregates shipments.

Tom Hill: I am confident we are well positioned to finish the year strong and deliver approximately two billion dollars of adjusted EBITDA in 2020.

Tom Hill: I am confident we are well positioned to finish the year strong and deliver approximately $2 billion of adjusted EBITDA in 2024.

Mary Andrews Carlisle: Now I'll turn the call over to Mary Andrews to discuss a few more details about the quarter and 2024 before I share some preliminary views of 2025. Thanks, Tom, and good morning. Tom covered for you some of our important achievements in the aggregates business during the third quarter. I want to highlight a few other items that underpin our confidence and the durability of our business and the solid execution of our team. Our downstream businesses continue to strategically complement our aggregates franchise and select markets. The Asphalt Business maintained healthy margins at nearly 16% in the third quarter, and cash unit profitability improved 11%.

Speaker Change: Now I'll turn the call over to Barry Andrews to discuss a few more details about the quarter and 2024 before I share some preliminary views of 2025 Andrews.

Barry Andrews: Thanks, Tom and good morning, Tom.

Barry Andrews: Tom covered for you some of our important achievements in the aggregates business during the third quarter I want to highlight a few other items that underpin our confidence in the durability of our business and the solid execution of our team.

Barry Andrews: Our downstream businesses continue to strategically complement our aggregates franchise in select markets.

Barry Andrews: Salt business maintained healthy margins at nearly 16% in the third quarter and cash unit profitability improved 11%.

Mary Andrews Carlisle: Our concrete business on the East Coast also delivered unit profitability and While the lower volumes, related to weak private demand in Northern California, compressed margins in our West Coast conclave. Our SAG expenses in the quarter were $129 million or 6.4% of revenues, 10% lower than the prior year, and 20 basis points favorable as a percent of revenue. We remain dedicated to both disciplined cost control and making strategic investments in talent and technology to support our business and drive innovation. Through the first nine months, we have generated nearly $1 billion of operating cash flow through our constant focus on maximizing our cash growth profit on every ton of aggregates we sell.

Our concrete business on the East Coast also delivered unit profitability improvement.

While the lower volumes related to weak private demand in northern California compressed margins in our west coast concrete business.

Barry Andrews: Our <unk> expenses in the quarter were $129 million or six 4% of revenue, 10% lower than the prior year and 20 basis points favorable as a percent of revenues.

Barry Andrews: We remain dedicated to both disciplined cost control and making strategic investments in talent and technology to support our business and drive innovation.

Barry Andrews: Through the first nine months, we have generated nearly $1 billion of operating cash flow through our constant focus on maximizing our cash gross profit on every ton of aggregates we sell.

Mary Andrews Carlisle: After reinvesting over $400 million to sustain and improve our existing operations and grow our business through greenfield development, we have yielded a 36% increase in free cash flow to deploy for expanding our reach through M&A and returning cash to shareholders. Year to date, we have allocated $206 million to strategic bolt-on acquisitions and returned $252 million to shareholders through dividends and common stock repurchase. For the full year, we now expect to spend between $625 and $650 million of capital expenditures. Our balance sheet position provides us the strength and flexibility to grow. At September 30, net debt to trailing 12-months adjusted EBITDA leverage was 1.5 times, giving us ample investment capacity within our target leverage range of 2 to 2.5 times to fund the Wakestone acquisition and other growth opportunities that will drive long-term value creation for shareholders.

Barry Andrews: After reinvesting over $400 million to sustain and improve our existing operations and grow our business through Greenfield development, we have yielded a 36% increase in free cash flow to deploy for expanding our reach through M&A and returning cash to shareholders.

Barry Andrews: Year to date, we have allocated $206 million two strategic bolt on acquisition and returned $252 million to shareholders through dividends and common stock repurchases.

Barry Andrews: For the full year, we now expect to spend between 625 and $650 million of capital expenditures.

Barry Andrews: Our balance sheet position provides us the strength and flexibility to grab.

Barry Andrews: At September 30, net debt to trailing 12 months adjusted EBITDA leverage was one five times, giving us ample investment capacity within our target leverage range of two to two and a half time to fund the wake stone acquisition and other growth opportunities that will drive long term value creation for shareholders.

Mary Andrews Carlisle: We continue to focus on our return on invested capital, which was 16.1%, a 70 basis points improvement over the last 12 months, with higher adjusted EBITDA generated on lower average invested capital.

Barry Andrews: We continue to focus on our return on invested capital, which was 16, 1% a 70 basis points improvement over the last 12 months with higher adjusted EBITDA generated on lower average invested capital.

Tom Hill: I'll now turn the call back over to Tom to provide some preliminary thoughts on 2025 and a few closing remarks. Thank you, Mary Andrews. As I look to 2025 and contemplate the demand back I expect Irish shipments to grow now. public construction activity remains. and The Environment is Improving for the Private Construction Act. I am confident that Vulcan Materials will continue to execute at a high level and compound our industry-leading cash-grossed property per ton at double-digit levels. I expect AgriPrice to continue to outpace historical norms and improve by a high single digit in 2025. I also expect year-over-year cost trends to improve through a combination of execution on our Vulcan web operating disciplines to drive improved efficiencies in our operations.

Speaker Change: I'll now turn the call back over to Tom to provide some preliminary thoughts on 2025 and a few closing remarks.

Tom Hill: Thank you Mary Andrews as I look to 2025 and contemplate the demand backdrop.

Tom Hill: I expect aggregates shipments to grow next year.

Tom Hill: Public construction activity remains robust.

Tom Hill: The environment is improving for the private construction activity.

Tom Hill: I am confident the Vulcan materials will continue to execute at a high.

Tom Hill: High level and compound our industry, leading cash gross profit per ton at double digit levels.

Tom Hill: I expect our price to continue to outpace historical norms and approved by a high single digit in 2025.

Tom Hill: I also expect year over year cost trends to improve through a combination of execution.

Tom Hill: On our Vulcan with operating disciplines to drive improved efficiencies in our operations and moderating inflation.

Tom Hill: and Moderating Inflation. Vulcan Materials has the right products. in the right.

Tom Hill: Both materials has the right products aggregates.

Tom Hill: In the right markets.

Tom Hill: But more importantly, I'm confident we have the right focus and the right people to execute our strategy and deliver earnings growth in 2020.

Tom Hill: But more importantly, I am confident we have the right focus and the right people to execute our strategy and deliver earnings growth in 2025.

Operator: And now Mary Andrews and I will be happy to take your questions. At this time, if you would like to ask a question, please press star one 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.

Speaker Change: And now Mary Andrew's now, we'll be happy to take your questions.

At this time, if you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: You may remove yourself from the queue at any time by pressing star two.

Speaker Change: Once again that is star one to ask a question.

Garik Shmois: We will go first to Garik Shmois with Loop Capital. Please go ahead. Oh, hi, thanks for having me on today.

Speaker Change: We will go first to Gary Garik <unk> with loop capital. Please go ahead.

Speaker Change: Oh, hi, Thanks for having me on today.

Tom Hill: I was hoping to go over. Hey, good morning. I was hoping to go over a little more detail on the high single digit pricing outlook for next year. How much carryover is there from bid years from this year? Any help on the pacing for pricing next year and any mixed impacts we should be thinking about either from a product mix or a geographic mix standpoint? Yeah, first of all, I don't think we have any mix put in there.

Speaker Change: I was hoping just to go over.

Speaker Change: Hey, Good morning, I was hoping you could go over a little more detail on the high single digit pricing outlook for next year, how much carryover or is there some big years.

Speaker Change: From this year.

Speaker Change: Any help on.

The pacing.

Speaker Change: For pricing next year and any mix impacts, we should be thinking about either from a product mix or geographic mix standpoint.

Speaker Change: Yes first of all I don't think we have any mix.

Tom Hill: But let me go back in time a little bit. If you look at our mid year price increases, they were largely as expected, kind of by market and by customer very much similar to last year. And so that's a really healthy start for 2025. And I think that If you take mid-year price increases and couple that with what we see in our backlogs, it allows us to carry very good price momentum and visibility into next year. As we said in the press release, I think our preliminary view is high single-digit increases for 2025. I think I'm confident in that.

Speaker Change: Put in there, but let me go back in time, a little bit if you look at our mid year price increases they were largely as expected kind of by market and by customer very much similar to last year and so that's a really healthy start for 2025 and I think that.

Speaker Change: If you take mid year price increases and couple that with what we see in our backlogs. It allows us to carry very good price momentum and visibility into next year.

Speaker Change: As we said in the press release I think our preliminary view is high single digit increases for 2025, I think I'm confident that if you combine that with.

Tom Hill: If you combine that with cost increases, which continue to moderate, I think it makes me feel really good about the continued double-digit unit margin growth throughout 2025. As you heard us say in the prepared remarks, we've had eight quarters of double-digit cash gross profit per ton growth. And remember, seven of those eight quarters we were dealing with declining volumes. So I think we're confident we continue that streak in 2025.

Speaker Change: Cost increases, which continue to moderate I think it makes me feel really good about the continued double digit unit margin growth throughout 2025 as you heard us say in the prepared remarks, we had we've had eight quarters of double digit cash gross profit per ton growth. It remember.

Speaker Change: Seven of those eight quarters, we were dealing with declining volumes.

Speaker Change: So.

Speaker Change: I think we're confident we continue that streak into 2025 I guess.

Tom Hill: I guess my, I want to thank my teams. That's tough to do given the challenges that we've seen with weather and volume throughout this year, particularly in the third quarter. But I think they continue that success in the next year. And you know, what that tells me is that the Vulcan team is in control of their destiny. They're controlling what they can control.

Speaker Change: I want to thank my teams.

Speaker Change: That's tough to do given the challenges that we've seen with weather and volume.

Speaker Change: Throughout this year, particularly in the third quarter.

Speaker Change: But I think they continue that success into next year and what that tells me is that the Vulcan team is in control of their destiny to controlling what they can control, yes, and remember Garik too you know the reason we are so focused on that unit profitability improvement that Tom was talking about is the math.

Mary Andrews Carlisle: Yeah, and remember, Garik, too, you know, the reason we are so focused on that unit profitability improvement that Tom was talking about is that maximizing cash gross profit on every ton is the key to our free cash flow generation.

Speaker Change: Mouthing cash gross profit on every ton is the key to our free cash flow generation.

Mary Andrews Carlisle: You know, to me, it's notable that on lower ag volumes and lower revenues year to date, EBITDA margin has expanded and free cash flows increased 36%. So as Tom said, our teams have executed very well in a really challenging environment. And frankly, I think they've provided a perfect example of just how durable this business is.

Speaker Change: To me, it's notable that a lower AG volumes and lower revenues year to date EBITDA margin has expanded and free cash flow increased 36%. So as Tom said, our teams have executed very well in a really challenging environment and frankly I think they've provided.

Speaker Change: A perfect example of just how durable this businesses.

Garik Shmois: Yep, makes sense. Thanks for that.

Speaker Change: Yeah makes sense.

Speaker Change: Thanks for that thank you.

Trey Grooms: We'll go next to Trey Grooms with Stevens, please go ahead. Morning, Trey. Morning, Tom. Morning, Mary Andrews. Hope everybody's doing well.

Speaker Change: We will go next to Trey Grooms with Stephens. Please go ahead.

Speaker Change: Good morning, Greg.

Trey Grooms: Hey, Good morning, Tom Good morning, Mary Andrew's Hope everybody is doing well.

Tom Hill: So I know it's not always perfect science here, easy to do. But you know, as you as you look at the quarter, can you try to parse out, you know, kind of what the weather impacts may have been versus demand, and you know, maybe how each played a role in the in the down 10% volume that we saw here in 3Q. Yeah, we tried to parse that a little bit by month in the quarter.

So I don't know, but it's not always perfect science, you're easy to do but as you look at the quarter could you try to parse out kind of what the.

Trey Grooms: Weather impacts may have been versus demand and maybe how each played a role in the down 10% volume.

Trey Grooms: We saw here in <unk>.

Speaker Change: Yeah, we try to parse out a little bit Bob Bob by month in the quarter, but obviously weather has been big story. This year in the third quarter underscored that story.

Tom Hill: But obviously, weather has been big story this year, and the third quarter underscored that story. You know, if you look at the year, we've had 17 out of our 20 largest markets with more rain than prior year, I would call underlying demand, kind of still down mid single digit x, x weather. Looking forward to the fourth quarter, you know, we saw Hurricane Milton gives a tough start. But since then, we've seen we've seen good weather. And we've seen our daily shipping rates bounce back, which is, you know, encouraging. But to get us back down to earth is still q4.

Trey Grooms: If you look at the year, we've had 17 out.

Trey Grooms: Out of our 20 largest markets with more rain than prior year I'll call underlying demand kind of <unk>.

Trey Grooms: Still down mid single digit ex ex weather.

Trey Grooms: Looking forward to the fourth quarter, we saw hurricane Milton gives a tough start but since then we've seen we've seen good weather and we've seen our daily shipping rates bounce back.

Trey Grooms: As encouraging.

Trey Grooms: But to get us back down to Earth is still Q4.

Tom Hill: So how we finish the fourth quarter, I think will just depend on the number of good weather shipping days. So far, so good at this point, but we got to see. I think again, in spite of, you know, extreme weather and volumes Our folks continue expanding unit margins by double digits, so we can't control the weather, but we control how we service our customers and price and cost. But again, I would call underlying demand mid-single digit and the rest weather, and we'll just see how the weather allows us to finish the fourth quarter. Got it.

Trey Grooms: So how we finished the fourth quarter I think we will just depend on the number of good.

Trey Grooms: Whether shipping days so far so good at this point, but we got to see.

Trey Grooms: I think again, it's try to extreme weather and volumes are.

Trey Grooms: Our folks continue to expand your margins by double digits. So.

Trey Grooms: We can't control the weather, but we control, how we service our customers and price and cost.

Trey Grooms: But again.

Trey Grooms: I would call underlying demand mid single digit and the rest weather and we'll just see how the weather allows us to finish the fourth quarter.

Speaker Change: Got it thanks for that and I'm sticking to one question, but I did want to.

Trey Grooms: Thanks for that.

Tom Hill: And I'm sticking to one question. But I did want to congratulate you on the nice improvement there in gross profit per unit cash gross profit per unit, you know, especially despite the volume headwinds that you had. So well, thanks. And I appreciate that. I give all the credit to the people that sell and crush rocks. There you go.

Congratulate you on the nice improvement there in gross profit per unit cash gross profit per unit, especially.

Speaker Change: Despite the volume headwinds that you had so.

Speaker Change: I appreciate that I give all the credit to the people that sell in crush rock.

Speaker Change: Okay I'll pass it on thanks, everybody. Thanks Pam.

Tom Hill: Okay, I'll pass it on.

Tom Hill: Thanks, everybody.

Okay.

Keith Hughes: We will go next to Keith Hughes with Truist. Please go ahead. Thank you.

Speaker Change: We will go next to Keith Hughes with <unk>. Please go ahead.

Keith Hughes: Thank you questions on volume in 2000.

Tom Hill: Questions on volume and 20... I know you said they're going to be up, but we have some pretty easy comps for this weather you've discussed. How much could it be up, and to getting the pricing that you just discussed for $25, do you think you'll have to walk away from some shipments in order to get pricing better? I don't, you know, I don't think that there's any, if we look at the kind of the volume growth at low single digit, I don't think you're looking at any share moving around.

Keith Hughes: I know you said theyre going to be up but.

Speaker Change: We have some pretty easy comps with as well.

Speaker Change: You've discussed.

Keith Hughes: How much could it be up and is to getting the pricing that you just discussed with 25, but you think youll have to walk away from some shipments in order to get quite sure about that.

Speaker Change: I don't I don't think that there is any if we look at the kind of the.

Speaker Change: Volume growth at <unk>.

Speaker Change: Low single digit I don't think Youre looking at any share moving around okay. I'll look at volume of 2025 first of all youre going to have some push from 24 to 25, obviously.

Tom Hill: If I look at volume of 2025, first of all, you're going to have some push from 24 to 25, obviously, that volume doesn't go away, it just pushes back. So that'll that'll be a little bit of a tailwind for us. And you know, we will continue to, I think, experience demand challenges from light non res and warehouse construction. Hopefully that drop is slowing. I do think we'll see overall growth in in res, a dental construction, some challenges on multi, but I think single will is and will bounce. And then we'll see growth on the public side.

Speaker Change: Volume doesn't go away it just pushes back so that'll that'll be a little bit of a tailwind for us and we will continue I think experience demand challenges from like non res and warehouse construction hopefully that drop is slowly I do think we will see overall growth in residential construction some challenges on multi <unk>.

Speaker Change: But I think single well is and will balance and then we will see growth on the public side. So a little bit early to call. It 20, 352, any thoughts would be kind of low single digits.

Keith Hughes: So you know, a little bit early to call 2025. Plenary thoughts would be kind of low single digit. with no impact from product. And that's assuming normal weather. I don't know what normal is anyway, whatever normal is, yes, yes, all right, thank you.

Speaker Change: With no impact from price.

And that's assuming normal weather.

I don't know what normal is anyway, whatever normal is yes.

Speaker Change: Yes.

Speaker Change: Alright, thank you.

Anthony Pettinari: We will go next to Anthony Pettinari with Citigroup. Please go ahead. Good morning.

Speaker Change: We will go next to Anthony Pettinari with Citigroup. Please go ahead.

Hi, good morning.

Tom Hill: Um, Tom, I was wondering if you could talk a little bit more about Wakestone, just kind of, you know, how long you've been looking at that business and maybe Profile, the assets, you know, in terms of kind of the per unit profitability, how it sort that's up against. or your company, just any other details you can share. Yeah, we've known the Braddens for years and you know, they're they run a good company.

Anthony Pettinari: Tom I was wondering if you could talk a little bit more about wheatstone, just kind of how long you've been looking at that business and maybe the.

Profile of the assets in terms of Canada for unit profitability, how it sort of stands up against.

Speaker Change: Larger company interest any any other sure.

Speaker Change: Yes, we've known the brands for years.

Speaker Change: They run a good company.

Tom Hill: We looking at closing that business later this year. So not much of an impact I would say for for for this year. You know, they operate in the triangle region of Eastern North Carolina, the Raleigh Durham Chapel Hill. And that's one of the 10 fastest growing regions in the country. So a great market.

Speaker Change: Looking at closing that business later this year, so not much of an impact I would say for this year.

Speaker Change: They operate in the triangle region of Eastern North Carolina, Raleigh, Durham Chapel Hill, and that's one of the 10 fastest growing regions in the country. So a great market.

Tom Hill: I had the pleasure of meeting with the entire Wakestone team a few weeks ago. They're a talented bunch. And we look forward to them joining the Vulcan family. We are confident that this will have substantial value creation for our shareholders. And I think, you know, we're, like our strategy, we always say this is expanding our reach into some very attractive aggregate markets.

Speaker Change: I had the pleasure of meeting with the entire Whitestone team a few weeks ago. They are a talented bunch.

And we look forward to them joining the Vulcan family.

Speaker Change: We are confident that this will have substantial value creation for our shareholders.

Speaker Change: And I think.

Speaker Change: We like our strategy, we always say this is expanding our reach into some very attractive aggregate markets.

Anthony Pettinari: Okay, that's helpful.

Speaker Change: Okay. That's helpful is there a rough estimate of tonnage or should we wait for that.

Anthony Pettinari: Is there a rough estimate of tonnage or should we wait for that? You know, historically, they've been in the eight to nine million ton range. That's helpful.

Speaker Change: Historically, they've been in the eight to 9 million tonne range.

Speaker Change: Got it got it.

Anthony Pettinari: I'll turn it over. Thank you.

Speaker Change: That's helpful I'll turn it over.

Speaker Change: Thank you.

Kathryn Thompson: We will go next to Kathryn Thompson with Thompson Research Group. Please go ahead. Hi, thank you for taking my question today. You touched on earlier in the Q&A about the volumes down 10% yet you were able to get double digit cash growth profit per ton and a quarter.

Speaker Change: We will go next to Kathryn Thompson with Thompson Research Group. Please go ahead.

Kathryn Thompson: Hi, Thank you for taking my questions today.

Kathryn Thompson: Based on earlier.

Kathryn Thompson: In the Q&A about.

Kathryn Thompson: Volumes down 10%, yet you were able to get done.

Double digit cash gross profit per ton in the quarter.

Tom Hill: And you helped us bridge, you know, how does this achieve Following in on that, compare and contrast what happened this quarter, and in terms of what your outlook is in 25, and are there any particular aspects, including cost, that could be different in 25 versus current quarter? And then maybe also talk about what will be unchanged, and what are the things that allow to put up double-digit cash flows, profit per ton, even in the face of double-digit volume declines? Thank you. Yeah, I think this kind of goes that that is the disciplines of the Vulcan Wave selling of Vulcan Wave operating.

Can you help us bridge how does this cheap.

Kathryn Thompson: Following up on that compare contrast, what happened this quarter and in terms of what your outlook is in 'twenty.

Kathryn Thompson: And are there any.

Kathryn Thompson: Take care aspects, including cost that could be different in 25 first day current quarter and then maybe also talk about what is what will be unchanged.

Kathryn Thompson: The things that allow.

Kathryn Thompson: To put up double digit.

Kathryn Thompson: Cash gross profit per ton, even in the face of double digit like clients. Thank you.

Speaker Change: Yes, I think this kind of goes.

That is the disciplines of the Vulcan with selling of both operating and Thats kind of simply put you saw was continued pricing disciplines throughout this year.

Tom Hill: And that's kind of simply put, you saw us continue pricing disciplines, you know, throughout this year. And I thought the teams did a good job with that. I think that they did a good job with mid years, which which helps us, you know, carry good momentum into 2025 from a pricing perspective. And then the conversations that we've had for the for the, you know, January one pricing, you know, they're not complete, but they're, they're pretty far down the road. And so that gives us some confidence of that high single digit from a pricing perspective on the cost side.

Speaker Change: And I thought the teams did a good job with that I think that they did a good job with mid years, which which helps us.

Speaker Change: Carry good momentum into 2025 from a pricing perspective, and then the conversations that we've had.

Speaker Change: January one pricing.

Speaker Change: Complete, but they are pretty far down the road and so that gives us some confidence of that high single digit from a pricing perspective on the cost side.

Tom Hill: You know, we've been sitting here facing double digit cost unit cost for a number of quarters now, which, quite candidly, is extremely high. A lot of that is inflation driven. Some of that this year is, you know, impacted by weather and by volume. But I think that our operating teams continue to execute on the disciplines from an operating perspective. And that is, you know, plant availability, throughput, tons per hour, tons per man hour, and all the metrics that go into what drives cost. So while we continue, I think, good pricing momentum going into 2025, I think we are starting to see our cost increases moderate.

Speaker Change: We've been sitting here face in double digit.

Speaker Change: Cost unit cost for a number of quarters now, which quite candidly is extremely high and that's a lot of that is inflation driven some of that this year is impacted by weather and by volume, but I think that our operating teams continue to execute on the disciplines.

Speaker Change: From an operating perspective and that as you know.

Plant availability throughput tons per hour tons per man hour.

Speaker Change: All of the metrics that go into what drives costs. So while we continue I think good pricing momentum going into 2025, I think we are starting to see our cost increases moderate.

Tom Hill: And that's a combination, I think, of inflation moderating, but also our operating efficiencies improving.

Speaker Change: And that's a combination I think of inflation.

Speaker Change: Moderating, but also our operating efficiencies improving and as far as those operating efficiencies I think we got a long way to go we were I guess put back a little bit this year because of inclement weather, which gives you wet sticky material. It's harder to operate so I would expect over the next few quarters.

Tom Hill: And as far as those operating efficiencies, I think we got a long way to go. We were, I guess, put back a little bit this year because of inclement weather, which gives you wet, sticky material, it's hard to operate. So I would expect over the next few quarters that to the operating efficiencies to continue.

Speaker Change: To.

Speaker Change: The operating efficiencies to continue to improve.

Kathryn Thompson: Great, thanks so much and best of luck. Thank you.

Speaker Change: Great. Thanks, so much and best of luck.

Speaker Change: Thank you.

Jerry Revich: We will go next to Jerry Revich with Goldman Sachs. Please go ahead. Bye, Jerry.

Speaker Change: We will go next to Jerry Revich with Goldman Sachs. Please go ahead Gerry.

Tom Hill: Good morning, Tom. Mary Andrews, Mark. Congratulations on the strong unit profitability given the volumes this quarter, mine as well. I want to ask the pricing sequentially I thought was quite constructive given the disruption in terms of relative to an attractive part of your footprint here. Can you just talk about how the weaker volumes this year are impacting the pricing cadence? If at all, I'm assuming new spot market business would have come online were it not for the demand decline. And how does that impact the planned pricing cadence in terms of the price increases that you've announced to customers for January 1 for 25 compared to the cadence of pricing actions that you took in the beginning of You know, I look demand.

Jerry Revich: Yes, Hi, good morning, Tom Mary interest Mark Congratulations on the strong unit profitability given the volumes this quarter remind as well.

Jerry Revich: I wanted to ask the pricing sequentially I thought was quite constructive given the disruption in terms of relative to an attractive part of your.

Jerry Revich: Print here can you just talk about how the weaker volumes this year impacting the pricing cadence if at all I'm, assuming new spot market business would've come online were it not for.

Jerry Revich: Is the demand decline and how does that impact.

Jerry Revich: Planned pricing cadence in <unk>.

Speaker Change: So if the price increases that you've announced the customers for January one for 25.

Jerry Revich: Compared to the cadence of.

Jerry Revich: Pricing actions that you took in the beginning of 'twenty four just to calibrate us.

Look demand I mean volumes going now never helps price, but I think that the visibility coming demand both on the public side, particularly on the pump side, but now also we think so.

Tom Hill: I mean, volumes going down never helps price. But I think that the visibility to coming demand both on the public side, particularly on the public side, but now also we think some growth on the private side and residential are helpful for price. I think as far as we talked about mid-year price increases, that's a good sell for 25. It helped a little bit in 24. I think if you look at the cadence in 24, we were probably up a little bit higher from Q1 and Q2 than last year, probably not quite as high from Q2 into Q3.

Jerry Revich: Some growth on the private side in residential or helpful for price I think as far as.

Jerry Revich: We talked about mid year price increases that's a good setup for 25, it helped a little bit in 'twenty four.

Jerry Revich: If you look at the cadence in 'twenty four we were probably up a little bit higher from Q1 into Q2 than last year, probably not quite as high from Q2 into Q3, but thats just timing and.

Tom Hill: But that's just timing. And so I think that you put all that together, where demand has been a drag, I think, is us and our customers look to 2025. I think the future looks much better from a public side and from a residential side, and probably not as bad from a non-residential side. You pull that together, I think we're encouraged by opportunities for price and unit margin as we look out there.

So I think that you put all that together.

Jerry Revich: Demand has been a drag I think is.

Jerry Revich: Bus and our customers look to 2025, I think the future looks much better from a public side and from a residential side and probably not as bad from a nonresidential side you pull that together I think we're encouraged by opportunities for price and unit margin as we look out to 'twenty five.

Tom Hill: And sorry, Tom, can you comment on the timing part of that question? You know, January 1 versus April 1. How does that look in terms of your plans for 2025 compared to what you implemented before? Yeah, the vast majority of our prices will be January 1. I'm trying to think if there's any that'll be April. I'm sure there's a minority out there, but none that I can think of right off the top of my head. So, you know, that's been changed now for two or three years, and I don't, I expect it to continue January.

Speaker Change: Okay, and sorry, Tom can you comment on the.

Speaker Change: Timing part of that question January one versus April one how does that look in terms of your plans for Tullow have comparison.

Speaker Change: Last month.

Tom Hill: Yes, the vast majority of our prices will be January one.

Speaker Change: Trying to think if there is any there'll be April im sure. There is a minority out there, but none that I can think of Ralph top my head so.

Speaker Change: That's changed been changed now for two or three years and I don't I expect to continue January one.

Mary Andrews Carlisle: And just, Jerry, talking about the sequential price, you're right, we thought that, you know, third quarter sequentially played out in line with what we expected, given the execution on the mid-year increases.

And just Jerry you're talking about the sequential price you are right. We thought that third quarter sequentially played out in line with what we expected given the execution on the midyear increases so good momentum moving into the fourth quarter, which obviously, we don't usually see sequential growth that too much mix really to call that.

Mary Andrews Carlisle: So, you know, good momentum moving into the fourth quarter, which obviously we don't usually see sequential growth that too much mix really to call that, but tremendous momentum moving into 2025 and those January 1 increases.

Speaker Change: But.

Speaker Change: Tremendous momentum moving into 2025 and those January one increases.

Speaker Change: Thank you.

Speaker Change: Thank you.

Brent Thielman: We'll go next to Brent Thielman with D.A. Davidson.

Speaker Change: We'll go next to Brent Thielman with D. A Davidson. Please go ahead.

Tom Hill: Please go ahead.

Tom Hill: Morning. Hey, thanks. Hey, good morning. Thanks.

Speaker Change: Good morning, Hey, Thanks, Hey, good morning.

Tom Hill: It's Tom. I know a lot of attention on the private sector for 2025 and what may come, but on infrastructure, I mean, I know some of the leading indicators out there showed some flattening at relatively high level. I guess my question is, do you think your business can still see an acceleration in those volumes next year? I know you've got the weather stuff this year, but also just thinking about a lot of projects that are just still getting going that have been released over the last couple of years. Just wanted to get your sense around that.

Speaker Change: Thanks.

It's Tom I know a lot of attention on the private sector.

Speaker Change: 2025, and what may come but on infrastructure I mean, I know some of the leading indicators out there showed some flattening it.

Speaker Change: Relatively high level I guess my question is do you think your business can still see an acceleration in those volumes next year I know you've got the weather step this year, but also just thinking about a lot of projects that are <unk>.

Speaker Change: Just still getting going Thats been released over the last couple of years, just wanted to get your sense around that.

Tom Hill: Yeah, I think we feel good about the public side. I think we're seeing the IIJA and state and local funds flow into highways now. Overall, we see public demand growth. It's this year, similar to our expectations, steady growth as we look forward. And then if you look over beyond IIJA, you've got substantial state funding. Texas and California are two of our largest states, and they're at record letting levels. And then you've got Georgia, Tennessee, Florida, South Carolina that all approved large additional funding, state funding. You put all that together, it'll impact some lettings in 2025, which will help us, but it'll go past that.

Speaker Change: Yes, I think we feel good about the public side.

Speaker Change: I think we're seeing JA and state and local funds flow into highways now.

Overall, we see public demand growth.

Speaker Change: It's this year similar drives thanks patients steady.

Steady growth as we look forward and then if you look over beyond.

Speaker Change: Hey.

Speaker Change: You've got substantial state funding tech.

Speaker Change: Texas, and California are two of our largest states and their record letting levels.

Speaker Change: And then you've got Georgia, Tennessee, Florida, South Carolina does it all approved large additional funding state funding.

You put all that together.

Speaker Change: It will impact some some lettings in 2025, which will help us but it will go past that so you've got six of our largest states at record funding levels and that should support.

Tom Hill: So you've got six of our largest states at record funding levels, and that should support public demand this year, next year, and obviously the next three or four years. And then you've got the other infrastructure over beyond highways that's supported by IIJA that is a little better than we would have expected at this point. So I feel pretty good about the public.

Speaker Change: Public demand.

Speaker Change: This next this year next year and obviously the next three or four years and then you've got the other infrastructure over beyond highways to support by Jay that is a little better than we would've expected at this point, so feel pretty good about the public side.

Tom Hill: All right, good.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Phil Ng: We'll go next to Phil Ng with Jeffries. Please go ahead. Hey, guys.

We will go next to Phil <unk> with Jefferies. Please go ahead.

Speaker Change: Hey, guys.

Tom Hill: I guess from a cost per ton standpoint, how should we think about the fourth quarter?

Speaker Change: How're you doing.

Speaker Change: I guess from a cost per tonne standpoint, how should we think about the fourth quarter does that start to normalize and when we look out to two.

Tom Hill: Does that start to normalize? And when we look out to, you know, 2025, your gross profit per ton has been pretty stellar, despite weaker volumes. Does that accelerate a little bit more if we get a little more volume growth we think about next year in terms of cost per ton coming down as well? I would expect simply the cost increases to start moderating. But I think if you, you know, despite the volumes and the whale challenges, you know, that we had in the in the quarter, we continue to moderate that cost looking backwards.

Speaker Change: <unk> hundred 25, your gross profit per ton has been pretty stellar despite weaker volumes does that accelerate a little more if we get a little more volume growth. When we think about next year in terms of cost per ton coming down as well.

Speaker Change: I would expect simply cost.

Speaker Change: The cost increases to start moderating.

Speaker Change: But I think if you despite the volumes in the world challenges that we had in the quarter, we continued to moderate that cost looking backwards in.

Tom Hill: And that wet sticky material hurts that efficiency. So You know, volume growth in a more normal weather pattern, coupled with the continued implementation of the Vulcan Wave operating, I think will help our cost issues as we move forward and support that double-digit unit margin growth. So simply put, I would expect our cost pressures to start easing over the next few quarters.

And that what's taking material hurts the efficiency so.

Speaker Change: Volume growth in a more normal weather pattern, coupled with the continued implementation of the Vulcan we are operating.

Speaker Change: We will help our cost issues as we move forward.

And support that double digit margin growth, so simply put I would expect our cost.

Pressures to start easing over the next few quarters.

Tom Hill: Can we get it back to normal, like in that low to mid-single-digit range in the fourth quarter, or is it going to take a little longer, and is that a good basis for a 2020 budget? That's a great target, but that's a target. I'm not claiming victory on that one yet, but yeah, that's our goal is to get it back down to normal.

Can we get it back to normal like in that low to mid single digit range in the fourth quarter or it's going to take a little longer and is that a good basis for 2021 and that's a great target, but that's the target.

Claiming victory on that one yet but yes.

That's our goal is to get it back down to normal.

Tom Hill: Okay, all right, super.

Speaker Change: Okay, Alright Super Thank you.

Speaker Change: Thank you.

Timna Tanners: We'll go next to Timna Tanners with Wolf Research. Please go ahead. Hey Timna. Hey, good morning. I wanted to ask if I could about capital allocations, the shipping gears. So you paused the buyback, wondering why given such a strong free cash of the quarter, you talked about more M&A. Is there still some left? I know you accentuated that on last call.

We'll go next to Timna Tanners with Wolfe Research. Please go ahead.

Timna Tanners: Hey, gentlemen, good morning.

Wanted to ask if I could about capital allocation just shifting gears. So you paused the buyback wondering why given such a strong free cash flow quarter, you talked about more M&A is there still some left I know you accentuate that on last call and.

Mary Andrews Carlisle: And just wondering, in general, if you can talk about, you know, other uses, including debt pay down potentially into next year with a maturity So I'll let Mary Andrews go first with capital, and then I'll talk about acquisitions. Yeah, Tona, you know, I think through the first nine months, you know, our capital allocation decisions have been consistent with what we always communicate, which is, you know, that the biggest gating item for us is always growth opportunities. We've obviously announced the Wakestone opportunity, and the pipeline, you know, remains active. So I think there's, you know, other opportunities ahead of us.

Speaker Change: Just wondering in general if you can talk about.

Other uses including debt pay down and potentially into next year with the maturity in the second quarter.

So I'll, let Mary Andrew's go first with capital and then I'll talk about acquisitions.

Speaker Change: Yes.

Speaker Change: I think through the first nine months.

Speaker Change: Capital allocation decisions.

<unk> been consistent with what we always communicate which as you know the biggest gating item for us is always growth opportunity.

Speaker Change: We announced the wheatstone.

Speaker Change: Opportunity and the pipeline remains active.

So I think there's other opportunities ahead of US, we obviously have the balance sheet well positioned to to fund those growth opportunities and also.

Mary Andrews Carlisle: We obviously have the balance sheet well positioned to fund those growth opportunities, and also, as you mentioned, are taking into account the notes that are coming due in April of next year. On M&A, you know, we saw us close a couple of small bolt-ons in Alabama and Texas early in the year. We're obviously, we're excited about Wake Stone and looking forward to closing that one. That aside, I think the M&A pipeline remains active. We're working on some other opportunities that we hope to get to the finish line and talk about in the next few quarters.

Speaker Change: As you mentioned are.

Taking into account the fee.

Speaker Change: Notes that are coming due in April of.

Speaker Change: Of next year.

Speaker Change: On M&A, we saw US close a couple of small bolt ons in Alabama, Texas early in the year.

Speaker Change: Sure.

Obviously, we're excited about wake stone.

And looking forward to closing that won.

That aside I think the M&A pipeline remains active we're working on some other opportunities that we hope to get to the finish line and talk about in the next few quarters.

Speaker Change: Okay. Thank you.

Michael Dudas: Thank you.

Speaker Change: Thank you.

Michael Dudas: We'll go next to Michael Dudas with Vertical Research. Please go ahead.

We'll go next to Michael Dudas with vertical research. Please go ahead.

Michael Dudas: Good morning Mary Andrews, good morning Andrews, Mark and Tom.

Michael Dudas: Hi, Michael Good morning, Mary Andrews.

Mark Warren: Andrew It's Mark and Tom.

Tom Hill: Tom, back to looking maybe at the private sector, can you maybe share how your manufacturing industrial energy customers, how their plans, their back, how your backlog looks relative to that market? And have you sensed any, maybe generally, maybe definitely on the private side, across the board, any hesitancy because of the election and once that gets through and with maybe rates, you know, hopefully normalizing, biomarkers not cooperating last couple of weeks, of that giving a little bit more better tailwinds to some of the volume numbers that you're sharing with us today? Yeah, I think, you know, obviously, the warehouses and distribution centers and the like side of our challenges.

Michael: Tom back to.

Michael Dudas: Looking maybe at the private sector can you maybe share how your manufacturing industrial energy customers.

Their plans are back how your backlog looks relative to that market and.

And as you sense any maybe generally maybe definitely on a private side across the board any hesitancy because of the election and once that gets through.

And with maybe rates certainly hopefully normalizing to the bond market is not cooperating last couple of weeks.

Speaker Change: Giving you a little more tailwind to some of the volume numbers that you are sharing with us today.

Speaker Change: Yes, I think obviously, the warehouses and distribution centers and lifestyle brand challenges that being said I think the.

Tom Hill: That being said, I think that the drop on that is is easing. As you said, it's offset with heavy and, and heavy manufacturing and data centers. That's been a good tailwind for us that continues to be a good tailwind for us going into 2025. But I think it's insightful about what you said about what's in the pipeline. I think there's a lot of projects on hold. If you talk to a number of our customers and the large general contractors, they're bidding a lot of work, but nobody's pushing the button. I think that with election being over, interest rates easing, hopefully in the second half of next year we'll see some of these come off the sideline.

Speaker Change: The drop on that is easing.

As you said is offset with heavy.

And heavy manufacturing and data centers, that's been a good tailwind for us that continues to be a good tailwind for us going into 2025, but I think it's insightful about what you said about.

Speaker Change: What's in the pipeline.

Speaker Change: I think theres a lot of projects on hold if you talk to a number of our customers and the large general contractors. They are bidding a lot of work, but nobody is pushing the button.

Speaker Change: That with election being over interest rates easing.

Hopefully in the second half of next year with some of the see some of these come off the sideline, but there is a lot of pent up out there.

Tom Hill: But there is a lot of pent up out there that's kind of a wait and see. So we hope that a number of factors helps ease that and we see some of that come off the second half of 25, but probably a bigger impact on Thank you, Tom.

This is kind of a wait and see so we hope that a number of factors helps ease that and we still see some of that come off second half of that will impact second half of 'twenty, five, but probably a bigger impact on 2006.

Thank you Tom.

Tyler Brown: Thank you. We'll go next to Tyler Brown with Raymond James. Please go ahead.

Tom Hill: Thank you.

Speaker Change: We'll go next to Tyler Brown with Raymond James. Please go ahead.

Tom Hill: Hey, Warren. Hey, Tom, I want to kind of come back to some prior comments. But where are you all on the plant technology journey that you talked about at the analyst day? And what do you think that those efficiencies mean from unit cost? Call it disinflation perspective over the next couple of years? I mean, does it shave a point or two off of those unit costs? Is there any way to frame it? I'm just trying to understand just how idiosyncratic it is to Vulcan. It's insightful. Your question is insightful because it's a big deal for us.

Tyler Brown: Hey, good morning.

Tyler Brown: Hey, Tom I wanted to kind of come back to some prior comments, but where are you all on the plant technology journey that you talked about at the analyst day, what do you think that those efficiencies mean from a unit cost call. It just inflation perspective over the next couple of years I mean is it shave a point or two off of those unit costs, just any way to frame.

I'm just trying to understand just how idiosyncratic it is to Bolton.

Speaker Change: It's inside your insight your what's your question is insightful because it's a big deal for US we're still pretty early stages. I think we probably have that fully implemented in 25, 30% of our operations. The capital cost is spent on your own.

Tom Hill: We're still pretty early stages. I think we'll probably have that. fully implemented in 25, 30% of our operations. The capital cost is spent on the remaining operations. And remember, it's about the top 110, 120 plants, which is about 70, 75% of our production. You know, what we're seeing out of that is double digit throughput improvements on the plants where it's fully implemented. You know, long ways to go on that one. I think we make that journey throughout 2025. The weather probably didn't help us with some of that stuff and some of the distractions we have with storms. But I think that, you know, Pruitt and team are making good progress there.

Speaker Change: On the remaining operations you remember it's about the top 110 120 plants.

Which is about 70% to 75% of our production.

Tyler Brown: We're seeing out of that is double digit throughput improvements on the plants, where it's fully implemented.

Long ways to go on that one I think we make that journey throughout 2025.

The weather probably didn't help us with some of that stuff and some of the distractions, we have with storms, but.

I think that.

Tyler Brown: Pruitt and team are making good progress there and I think they'll get that done sometime early 2026.

Tom Hill: And I think they'll get that done sometime early 2026. And it's hard, really hard to call, you know. And we spent some time trying to do it. What is the dollar impact for us? And I think we quit doing that and more concentrate on what's the throughput impact, because we know it's degrees of good. So we'll hopefully finish that journey by first or second quarter of 26. But you're correct. It will have an impact on our cost.

Tyler Brown: And it's hard really hard to call.

And we spent some time trying to do it what is what is the dollar impact for us.

And I think we quit doing that and we will concentrate on what's the throughput impact because we noticed degrees of goods. So.

We will hopefully finish that journey.

First the second quarter of 2006.

But you're correct it will have an impact on our cost.

Tom Hill: Excellent. Yeah, no, that's extremely helpful.

Excellent, yes, no thats extremely helpful. Thanks.

Adam Thalhimer: Thank you. We'll go next to Adam Thalhimer with Thompson Davis. Please go ahead.

Speaker Change: Thank you.

We will go next to Adam Thalheimer with Thompson Davis. Please go ahead.

Adam Thalhimer: Hey, good morning, guys. Morning. I'm still a little fuzzy.

Speaker Change: Hey, good morning, guys.

Speaker Change: Good morning.

Tom Hill: What do you want us to plug in for volumes in Q4?

Adam Thalheimer: I'm still a little fuzzy what do you want us to plug in for volumes in Q4.

Tom Hill: And then, Tom, how much demand variability are you seeing by state? So, on Q4, if you'll give me the weather report for November, December, I'll give you the volume for Q4. It's just, it's a hard one to call because it's so dicey. Like I said, you know, October started off slow but bounced really good. And, you know, it's been dry in October and we've shipped appropriately well, but November, December, we all know what can happen in those, so kind of a hard one to call. I would call you to underlying demand, you know, for the year is at that, you know, probably down mid-single digit.

Tyler Brown: And then Tom how much demand variability are you seeing by state.

So on Q4, if you'll give me the weather report for November December I'll give you the volume for Q4, it's just it's a hard one to call because it's so dicey like I said October started off slow but balance really good.

And it's been dry in October and we shipped appropriately well.

But November December we all know what can happen in those so kind of a hard one to call I would call you to underlying demand.

For the year is that that probably mid down mid single digits. We've seen some balance of that in October but again, it's how many shipping days do we have.

Mary Andrews Carlisle: We've seen some bounce of that in October, but again, it's how many shipping days to go. Yeah, and Brent, I think, you know, overall our volume guidance from second quarter was minus four to minus seven and, you know, that's still, you know, what we expect for the full year on a demand environment like Tom described of down mid-single digits and the rest of that, weather impacted, so where we fall within that will depend on, you know, how fourth quarter plays out.

Yes, Brian I think.

We're all our volume guidance from the second quarter was minus Florida minus oven and that's still.

What we what we expect.

Tyler Brown: For the full year on a demand environment like Tom described are down mid single digits and the rest of that weather impacted so where we fall within that will depend on how fourth quarter plays out.

Tom Hill: I'm sorry, what was your second question? Oh, Demand Variability by State. Um That was a hard call because it's who got washed out what month this year, but I think all of them are okay.

I'm sorry, what was your second question.

Oh demand variability by state.

Tyler Brown: That was a hard to call because it's who's who get washed out who got washed out what month this year, but.

I think all of them are okay.

Tyler Brown: The.

Tom Hill: Illinois has been a challenge with the public side, more of a challenge than most of our states. I think Virginia has had its share of challenges, Northern California has been challenged, and the rest of them, I think kind of in that in that low to mid single digit rate down of what we've seen. So and you know, the southeast is probably book Got it. Thank you.

Illinois has been a challenge with the public side more of a challenge than most of our states.

I think Virginia has had his share challenges northern California has been challenged in the rest of them I think kind of in that low to mid single digit.

Tyler Brown: Right down what we've seen so.

And the southeast is probably.

Tyler Brown: Healthiest and.

Tyler Brown: In Texas.

When you look at Texas, when it quit rate and we should actually shift quite well, but they've got blown out of the first half of the year, but second half has been better.

Tyler Brown: But I think most of them are consistently kind of down that mid single digit except for the challenged ones I would call out would be northern California.

On the way and maybe maybe kind of Virginia area.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Tyler Brown: Yeah.

Mike Dahl: We'll go next to Mike Dahl with RBC Capital Markets.

Speaker Change: We'll go next to Mike Dahl with RBC capital markets. Please go ahead.

Mike Dahl: Please go ahead. Hi. Morning, Mike. Morning.

Speaker Change: Mike.

Mike Dahl: Good morning.

Tom Hill: Thanks for taking my question. All up on Wakestone, so appreciate the volume comment.

Mike Dahl: Thanks for taking my question.

Tyler Brown: Sure.

Oh up on wake stone. So I appreciate the volume comment can you help us understand just how pricing looks.

Tom Hill: Can you help us understand just how pricing looks both in terms of kind of, you know, where you stand, where that business stands relative to your current portfolio and also just how their pricing strategy has looked over the past couple of years relative to the strategy you employ and what you can do with that?

In terms of kind of.

Where do you stand where that business stands relative to your current portfolio and also just how their pricing strategy has worked over.

Last couple of years relative to the strategy.

You employ and what you can do with that.

Tom Hill: And then if I could make one more on Wake in just any sense of kind of the cash out way to close the acquisition. So you probably don't love my answer. But that's a, as you know, that's a new market for us. We've not been in that and the Raleigh-Durham-Chapel Hill market before, so kind of new ground from a commercial perspective. And we've got to get it closed. So a little bit early for me to make any calls on how they operate today or what we would do differently, if anything, in those markets. So let me get it closed.

And then if I could sneak one more on weak.

Just any sense of kind of the cash outlay.

Tyler Brown: Closed the acquisition.

Tyler Brown: So.

You probably know love my answer with that is as you know that's a new market for us we've not been in that.

In the Raleigh, Durham Chapel Hill market before so.

New ground from a commercial perspective, so and we've got to get it closed a little bit early for me to make any calls how we operate how they operate today or what.

Tyler Brown: What.

What we would do differently if anything in those markets. So that was let me get it close let me get a little digested understand the markets.

Tom Hill: Let me get it a little digested, understand the markets, and we can give you a much better answer on that.

We can be give you a much better answer on that as a practice, we don't typically disclose disclosed purchase price of acquisitions that aren't material to the company. So again give us a little time on these things and let's let's get it closed. So we can be a lot clearer awake stone. We are like I said very excited about this.

Tom Hill: As a practice, we don't typically disclose purchase price of acquisitions that aren't material to the company. So again, give us a little time on these things and let's get it closed and we can be a lot clearer on Wakestone. We are, like I said, very excited about this. We're excited about the team, the Wake team, who we think is very talented. We're excited about the assets and we think the markets are a good addition to that southeastern footprint and in markets where we can be a leader in the market. So excited about it and we'll have to get back with you a little more information when we can.

Tyler Brown: We're excited about the team the weight team, who we think is very talented.

We're excited about the assets and we think the markets are.

So a good addition to that southeastern footprint and in markets, where we can we can be a leader in the market. So.

Tyler Brown: Excited about it and we'll have to get back with you a little more information, where we can actually close it.

Tom Hill: Got it. Okay.

Speaker Change: Got it okay. Thanks.

Tom Hill: Thanks. Thank you.

Thank you.

Angel Castillo: We'll go next to Angel Castillo with Morgan Stanley. Please go ahead. Hey, good morning.

Speaker Change: We will go next to Angel Castillo with Morgan Stanley. Please go ahead.

Hey, good morning. Thanks for taking my question, just maybe wanted to expand on that conversation a little bit more as you think about more high level kind of competitive pricing dynamics across your markets. Just what are you seeing from maybe kind of the private side of competition.

Tom Hill: Thanks for taking my question. Just maybe wanted to expand on that conversation a little bit more. As you think about more high level kind of competitor pricing dynamics across your markets, just what are you seeing, you know, from maybe kind of the private side of competition, in terms of being disciplined on price? And what does that kind of tell you about the price disparity of, you know, potential acquisition opportunities, you know, versus versus versus your corporate level?

Speaker Change: In terms of being disciplined on price and what does that kind of tell you about the price disparity of potential acquisition opportunities.

Versus especially versus your corporate level.

Tom Hill: It's hard for me to really comment on competitors' pricing. Obviously, we get information about markets. But I think that as people look at the aggregates business, they understand the value of the rock and the ground and that that's a depleting asset and that you shouldn't give it away because you can't replace those tons. And people understand that they've got to make a return on investment, whether that's the private side or the public side. Pricing in the aggregates business has always been good and will continue to be good, and I think the onset of growing public demand and potentially growing private demand only helps that situation.

It's hard for me to really comment on competitors' pricing, obviously, we get information.

Speaker Change: About markets, but I think that as people look at the aggregates business. They understand the value of the rock in the ground and that Thats, a depleting asset and that you shouldnt give it away because you cant replace those tons.

Speaker Change: And people understand that they got to make a return on investment whether that's the private side or the public side. So.

Think that the pricing in the aggregates business.

<unk> has always been good.

And we will continue to be good and I think.

The onset of growing public demand and potentially growing profit demand only helps.

Speaker Change: That situation.

Angel Castillo: Very helpful, thank you.

Speaker Change: Very helpful. Thank you.

Thank you.

Michael Feniger: We'll go next to Michael Feniger with Bank of America. Please go ahead.

We'll go next to Michael Feniger with Bank of America. Please go ahead.

Michael Feniger: Morning. Yeah, morning.

Good morning, good morning.

Michael Feniger: Thank you for squeezing me in, guys.

Yes. Good morning, Thank you for.

Michael Feniger: For squeezing me in guys just Tom if you could just talk about I mean, two years ago, you guys had a target of 11 to 12 cash gross profit per ton on a much higher.

Tom Hill: Just, Tom, if we could just talk about, I mean, a few years ago, you guys had the target of 11 to 12 cash gross profit per ton on a much higher number of tonnages than you're kind of doing today. So just how should we kind of be thinking about that as we're starting to close in on that figure? How are you guys kind of thinking about that?

Number of tonnage and Youre kind doing today. So just how should we kind of be thinking about that as we're starting to close in.

On that bigger how are you guys kind of thinking about that and now that we're moving into next year. It looks like we might be starting to see some volume volume increase or at least the end of these volume declines.

Tom Hill: And now that we're moving into next year, looks like we're going to be starting to see some volume increase or at least the end of these volume declines. we got to give you new goals. My division presidents and all those division employees who have accelerated that target at a lot lower volumes than I would have expected, particularly in the face of, as I said, seven to eight quarters of falling demand. They just have done a good job and they've executed on the Vulcan Wave selling and Vulcan Wave operating. But the short answer is we owe ourselves and you new goals because we're, you know, facing down that 11 bucks right now and we plan on giving you some of those new goals in the not too distant future.

Well the short answer to that we got to give you a new goals.

We receive a lot faster than what we thought we would have my hat's off to.

My Division Presidents and all of those division employees, who who are accelerated.

Speaker Change: That target.

Speaker Change: Lower.

Volumes that I would've expected, particularly in the face of as I said seven or eight quarters. Following demand. They just have done a good job and they've executed on Vulcan with selling of opioid operating but the short answer is we owe.

Ourselves and you knew goals, because we're pacing down about 11 Bucks right now.

Speaker Change: And we plan on giving you some of those new goals in the not too distant future.

Mary Andrews Carlisle: Great. If I could just maybe squeeze one more in.

Speaker Change: Great and if I could just maybe squeeze one more in I love to get a sense.

Mary Andrews Carlisle: I'd love to get a sense, Andrews, just on for next year, maybe just moving pieces for free cash flow. You know, obviously, CapEx, you guys have done some acquisitions, just kind of how to think about that as we're moving into 2025, some of the buckets there in terms of working capital or CapEx in next year.

Speaker Change: Andrew just on on for next year, maybe just moving pieces for free cash flow.

Obviously capex you get it done some acquisitions just kind of how to think about that as we're moving into into 2025. Some of the buckets. There in terms of working capital or Capex.

Speaker Change: And next year. Thank you everyone.

Mary Andrews Carlisle: Thank you, everyone. Yeah, Mike, obviously, in February, we'll give, you know, full 2025 guidance and include a lot of the things that you just mentioned, but specific to, you know, CapEx, you know, we believe we've been reinvesting at appropriate levels for the current business needs. If you look, you know, over the last five years, that's ranged, you know, eight to 9% of revenues. You know, as Tom said, we don't even have the acquisitions closed yet. So I don't have a specific view on what CapEx will look like. For the acquired operations next year, but as, as you model, I think that our historical level is a reasonable place to be.

Speaker Change: Yeah.

Yes, Mike obviously in February we will give full 2025 guidance and included a lot of the things that you just mentioned, but specific to capex.

We believe we've been reinvesting at appropriate levels for the current business needs.

Over the last five years, that's ranged eight 9% of revenues.

As Tom said, we don't even have the acquisitions closed yet so I don't have a specific view on what Capex will look like for the acquired operations next year, but.

Speaker Change: As you model I think that our historical level is a reasonable.

Speaker Change: Place to be.

Speaker Change: Yes.

Speaker Change: Okay.

Operator: It appears we have no further questions at this time.

Speaker Change: It appears we have no further questions at this time.

Tom Hill: I will now turn the program back over to our presenters for any additional remarks. Thank you for your time. Thank you for your interest in Vulcan Materials. We look forward to talking to you throughout the quarter.

I will now turn the program back over to our presenters for any additional remarks.

Speaker Change: Yeah.

Thank you for your time, Thank you for your interest in Vulcan materials.

We look forward to talking to you throughout the quarter, we hope that you and your families are safe and healthy during the holiday season, and look forward to talking to you soon thank you.

Tom Hill: We hope that you and your families are safe and healthy during the holiday season and look forward to talking to you soon. Thank you.

Speaker Change: Yes.

Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

This does conclude today's program. Thank you for your participation you may disconnect at any time.

Speaker Change:

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Speaker Change: Hello, Matt.

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