Q1 2025 Vulcan Materials Co Earnings Call

Operator: The program is about to begin.

Okay.

Operator: Good morning.

David: Good morning, welcome everyone to the Vulcan materials Company first quarter 2025 earnings call. My name is David and I'll be your conference call coordinator today. Please be reminded that today's call is being recorded and will be available for replay later on the company's website.

David: Welcome everyone to the Vulcan Materials Company first quarter 2025 earnings call. My name is David and I'll be your conference call coordinator today. Please be reminded that today's call is being recorded and will be available for replay later on the company's website. All lines have been placed in a listen-only mode.

Right.

David: All lines have been placed in a listen only mode. After the company's prepared remarks, there will be a question and answer session.

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

Mark Warren: Now I will turn your call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin. Thank you, operator, and good morning, everyone.

Speaker Change: Now I will turn your call over to your host Mr. Mark Warren Vice President of Investor Relations for Vulcan materials. Mr. Warren you may begin.

Speaker Change: 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: With me today are Tom Hill, chairman and CEO, and Mary Andrews Carlisle, senior vice president and chief financial. 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 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. Reconciliations of non-GAAP financial measures are defined and reconciled in our earnings release, supplemental presentation, and other SEC files.

Speaker Change: Today's call is accompanied by a press release and a supplemental presentation posted to our website Vulcan materials Dot 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 supplemental presentation and other SEC filings.

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.

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.

Tom Hill: And with that, I'll turn the call over to Tom. Thank you, Mark, and thank all of you for joining the Vulcan Materials Earnings College. Our first core results showcase the powerful combination of our two-pronged growth. to improve earnings through compounding profitability and organic. and adding strategic assets to our portfolio. Consistently expanding Ireland's cash gross profit per ton is key to successfully growing earnings through varied macroeconomic backgrounds. In the first quarter, our teams delivered an impressive 20% year-over-year improvement. Complimented by the contribution from prior year acquisitions, the strong performance in our legacy business led to a 27% improvement in adjusted EBITDA and 420 basis points of expansion in adjusted EBITDA margins.

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

Tom Hill: Thank you Mark and thank all of you for joining the Vulcan materials earnings call. This morning.

Tom Hill: Our first quarter results showcase the powerful combination of our two pronged growth strategy.

Tom Hill: <unk> earnings through compounding profitability in our organic business.

Tom Hill: Adding strategic assets to our portfolio.

Tom Hill: Consistently expanding argues cash gross profit per ton is key to successfully growing earnings through varied macroeconomic backdrops.

Tom Hill: In the first quarter, our teams delivered an impressive 20% year over year improvement.

Tom Hill: Complemented by the contribution from prior year acquisitions, the strong performance in our legacy business led to a 27% improvement in adjusted EBITDA and 420 basis points of expansion in adjusted EBITDA margin.

Tom Hill: I'm pleased with how our teams are executing on our Vulcan way of selling and Vulcan way of operating disciplines to consistently enhance our performance regardless of the demand back Aggregate shipments in the first quarter were 1% lower than the prior year. Shipments from acquired agri-facilities partially offset the impacts of extremely cold weather across many of our markets and one last shipping day in the quarter. Our commercial execution and commitment to January price increases yielded 290 basis points of sequential price growth from the fourth quarter. and Aggregates Freight Adjusted Price improved 7% on a year-over-year basis.

Speaker Change: I am pleased with how our teams are executing on a broken with selling it.

Speaker Change: Both with operating disciplines to consistently enhance our performance regardless of the demand backdrop.

Speaker Change: Aggregates shipments in the first quarter were 1% lower than the prior year.

Speaker Change: Shipments from acquired aggregates facilities, partially offset the impacts of extremely cold weather across many of our markets and one less shipping day in the quarter.

Speaker Change: Our commercial execution and commitment to January price increases yielded 290 basis points of sequential price growth from the fourth quarter.

Speaker Change: In aggregate freight adjusted price improved 7% on a year over year basis.

Tom Hill: On a mixed-adjusted basis, aggregate freight-adjusted price improved 8.5% over the prior year. Our operational execution and discipline in the quarter were noteworthy. Average freight adjusted, unit cash cost of sales declined 3% compared to the prior year. moderating inflationary pressures. A Relentless Focus on Plant Efficiencies. and some timing benefits of delayed expenditures due to weather conditions. all contributed to the cost performance. Treading 12 months average cash gross profit grew to $10.99 per ton. within a penny of our $11 to $12 goal and a ninth consecutive quarter of double-digit growth.

Speaker Change: On a mix adjusted basis aggregates freight adjusted price improved eight 5% over the prior year.

Speaker Change: Our operational execution and discipline in the quarter were noteworthy.

Speaker Change: Aggregate freight adjusted unit cash cost of sales declined 3% compared to the prior year.

Speaker Change: Moderating inflationary pressures.

Speaker Change: Our relentless focus on plant efficiencies.

Speaker Change: And some timing benefits or delayed expenditures due to weather conditions, all contributed to the cost performance.

Speaker Change: Trailing 12 months aggregates cash gross profit grew to $10.99 per ton within a penny of our 11 to $12 gold and a ninth consecutive quarter of double digit growth.

Tom Hill: Our agri-business is performing well. downstream businesses are also performing. Cash unit profitability in both asphalt and concrete expanded considerably by 19.77% respect . Total cash gross profit improved by over 50% through same-store unit profitability improvement and the benefit of the prior year acquisition.

Speaker Change: Our business is performing well.

Speaker Change: Our downstream businesses are also performing well cash unit profitability in both asphalt and concrete expanded considerably by 19 and 77% respectively.

Speaker Change: Total cash gross profit improved by over 50% through same store unit profitability improvement and the benefit of the prior year acquisitions.

Tom Hill: We delivered a strong start to the year and we're focused on carrying that momentum forward as we navigate increasing macroeconomic volatility driven by the uncertainty in trade policy and unclear trajectory of interest rates. We believe that private demand will continue to face challenges. while public demand remains a healthy offset. affordability issues, and elevated interest rates persist as headwinds in residential construction activity. Single-family starts and permits have been declining recently, and multifamily activity remains weak as anticipated. However, overall, single-family inventory levels, particularly in Vulcan states, are below average historic levels. and Morgan's performance measures do not point to distress in housing market.

Speaker Change: We delivered a strong start to the year and we're focused on carrying that momentum forward as we navigate increasing macroeconomic volatility driven by the uncertainty in trade policy.

Speaker Change: And unclear trajectory of interest rates.

Speaker Change: We believe that private demand will continue to face challenges this year, while public demand remains healthy offset.

Speaker Change: Affordability issues and elevated interest rates persist as headwinds in residential construction activity.

Speaker Change: Single family starts and permits have been declining recently and multifamily activity remains weak as anticipated. However, overall single family inventory levels, particularly in Vulcan States are below average historical levels and mortgage performance measures do not point to distress in house.

Speaker Change: Markets.

Tom Hill: Demographics in Vulcan markets support a consistent need for additional housing. So we continue to believe that the timing of additional interest rate reduction. An overall improvement in affordability will dictate when residential construction activity returns to growth. While the trends in private, non-residential demand vary across categories, The interest rate environment and macroeconomic uncertainty seem to be delaying the timing of a recovery and start. Importantly, warehouse activity, the largest category in private non-residential construction, appears to be stabilizing after multiple years of declines, and data center activity in our markets continues to accelerate.

Speaker Change: Demographics in Vulcan markets support a consistent need for additional housing.

Speaker Change: So we continue to believe that the timing of additional interest rate reductions and overall improvement in affordability will dictate when residential construction activity returns to growth.

Speaker Change: While the trends in private nonresidential demand vary across categories, the interest rate environment and macroeconomic uncertainty seem to be delaying the timing of recovery in stores.

Speaker Change: Importantly warehouse activity the largest category of private nonresidential construction appears to be stabilizing after multiple years of declines and data center activity in our markets continues to accelerate.

Tom Hill: on the public. IJ-related spending remains a catalyst, with two-thirds of the highway dollars yet to be spent. public construction is poised for continued steady demand growth. Trey's 12-month contract awards in Vulcan states continue to outpace other marks. Capital plans in nine of our top ten states are up. And voters passed $45 billion of transportation spending ballot initiatives in the November election cycle in 12 of our key states. And as I said, public demand is healthy and remains an important offset to private demand challenges in 2020. Our teams are closely monitoring the local market conditions and are well positioned to respond to an ever-evolving environment by controlling what we can control, that is, how we perform on the commercial and operational sides of our business.

Speaker Change: On the public side.

Speaker Change: Jay related spending remains a catalyst with two thirds of the highway dollars yet to be spent public.

Speaker Change: Public construction is poised for continued steady demand growth.

Speaker Change: Trailing 12 month contract awards in Vulcan States continue to outpace other markets.

Speaker Change: <unk> plans in nine of our top 10 states are up and.

Speaker Change: And voters passed $45 billion of transportation spending ballot initiatives in the November election cycle in 12 of our key states.

Speaker Change: And as I said public demand is healthy and remains an important offset to private demand challenges in 2025.

Speaker Change: Our teams are closely monitoring the local market conditions and are well positioned to respond to an ever evolving environment by controlling what we can control that is how we perform on the commercial and operational sides of our business.

Tom Hill: By staying focused on our disciplines, I am confident in our ability to We continue to expect to deliver between $2.35 and $2.55 billion of adjusted EBITDA in 2025.

Speaker Change: By staying focused on our disciplines I am confident in our ability to execute.

Speaker Change: We continue to expect to deliver between 2.35 to five $5 billion of adjusted.

Speaker Change: Adjusted EBITDA in 2025.

Mary Andrews Carlisle: Now I'll turn the call over to Mary Andrews for some additional commentary on our first quarter, Mary Andrews. Thanks, Tom, and good morning. Our consistent success and compounding results in our aggregates led business is translating to attractive free cash Over the last 12 months, we have generated $869 million of free cash flow, a 93% conversion of net earnings. We have allocated this capital to grow our business and return cash to shareholders. We have deployed $2.2 billion for strategic acquisitions and returned $336 million to shareholders. while generating a return on invested capital of 16.2% and maintaining debt to adjusted EBITDA leverage within our target range of 2 to 2.5 times.

Speaker Change: Now I'll turn the call over to Mary Andrews for some additional commentary on our first quarter managers. Thanks.

Mary Andrews: Thanks, Tom and good morning.

Mary Andrews: Our consistent success in compounding results in our aggregates led business is translating to attractive free cash flow.

Mary Andrews: Over the last 12 months, we have generated $869 million of free cash flow, a 93% conversion of net earnings.

Mary Andrews: We have allocated this capital to grow our business and return cash to shareholders. We have deployed $2 $2 billion for strategic acquisitions and returned $336 million to shareholders, while generating a return on invested capital of 16, 2% and maintaining debt to adjusted EBITDA.

Mary Andrews: Leverage within our target range of two to two and a half time.

Mary Andrews Carlisle: At the end of the first quarter, and following the March redemption of our 2025 senior notes for $400 million, our net debt to adjusted EBITDA leverage was 2.2 times with over $190 million of cash on hand.

Mary Andrews: At the end of the first quarter and following the March redemption of our 2025 senior notes for $400 million, our net debt to adjusted EBITDA leverage was two two times with over $190 million of cash on hand.

Mary Andrews Carlisle: A disciplined approach to capital allocation and a well-positioned balance sheet are fundamental to our long-term success. Our liquidity position and financial flexibility are competitive strengths as we navigate an uncertain macroeconomy, evaluate strategic growth opportunities, and continue to create value for our shareholders.

Mary Andrews: A disciplined approach to capital allocation and a well positioned balance sheet are fundamental to our long term success.

Mary Andrews: Our liquidity position and financial flexibility, our competitive strength as we navigate an uncertain macro economy evaluate strategic growth opportunity and continue to create value for our shareholders.

Mary Andrews Carlisle: Our first quarter results provided an outstanding start to 2025. Our organic business delivered strong results in all three segments, and the operations acquired in 2024 are performing well. We continue to evaluate the potential direct and indirect impacts of tariffs to our business. While we may experience some tariff-related inflationary pressures in our operating costs, we do not currently anticipate these impacts to have a material effect on earnings. Importantly, we have a proven business model that has successfully navigated a variety of external disruptions in recent history. We remain focused on what we can control and expanding our aggregate cash growth profit per ton regardless of the macro backdrop.

Mary Andrews: Our first quarter results provided an outstanding start to 2025, our organic business delivered strong results in all three segments and the operations acquired in 'twenty 'twenty four are performing well.

Mary Andrews: We continue to evaluate the potential direct and indirect impacts of tariffs to our business.

Mary Andrews: While we may experience some tariff related inflationary pressures in our operating cost we do not currently anticipate these impacts to have a material effect on earnings.

Mary Andrews: Importantly, we have a proven business model that has successfully navigated a variety of external disruptions in recent history.

Mary Andrews: We remain focused on what we can control and expanding our aggregates cash gross profit per ton regardless of the macro backdrop.

Mary Andrews Carlisle: Capital expenditures in the quarter were $105 million, and we continue to expect to spend between $750 and $800 million for the full year. SAG expenses in the quarter were in line with our expectations, and we continue to expect full-year SAG expense of between $550 and $560 million.

Mary Andrews: Capital expenditures in the quarter were $105 million and we continue to expect to spend between 750 and $800 million for the full year.

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

Tom Hill: I'll now turn the call back over to Tom to provide a few closing remarks. Thank you, Mary Andrews. I want to thank the men and women of Vulcan Materials for their hard work in the first quarter that translated to an outstanding safety and financial performance.

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

Tom Hill: Thank you Maryann, Bruce I want to thank the men and women of bulk materials for their hard work in the first quarter. This translated to an outstanding safety and financial performance.

Tom Hill: Most importantly, they stayed focused on keeping each other safe. and their commitment to executing each day is showing up in our bottom. Our focus is on what is ahead, maintaining our solid momentum and continuing to leverage our VulcanWave selling and VulcanWave operating discipline. to compound profitability in our legacy business.

Tom Hill: Most importantly, they stayed focus on keeping each other safe.

Tom Hill: And their commitment to executing each day is showing up in our bottom line.

Tom Hill: Our focus is on what is ahead, maintaining our solid momentum and continuing to leverage our Vulcan with selling evoke who have operating disciplines to compound profitably in our legacy business capture synergies from acquisitions and deliver value for our shareholders.

Tom Hill: Capture Synergies from Acquisition and Deliver Value for our shareholders.

Mark Warren: And now Mayor Andrews and I will be happy to take your questions. At this time, if you'd like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind, you can remove yourself from the question queue at any time by pressing star and 2.

Speaker Change: And now Mary Andrews, and I'll be happy to take your questions.

Tom Hill: Yes.

Speaker Change: At this time, if you'd like to ask a question. Please press the star and one key on your telephone keypad.

Speaker Change: Keep in mind, you can remove yourself from the question queue at any time by pressing star and two.

Jerry Revich: Take our first question from Jerry Revich with Goldman Sachs. Please go ahead. Your line is open. Morning, Jerry. Yes, hi. Good morning, everyone. Hi, Tom, Mary Andrews, Mark.

Speaker Change: We'll take our first question from Jerry Revich with Goldman Sachs. Please go ahead. Your line is open.

Speaker Change: Yes, hi, good morning, everyone, Hi, Tom Andrews Mark.

Tom Hill: Really impressive price cost spread you folks put up in the quarter. Tom, I'm wondering if you just talk about how you're thinking about mid year price increases and cost cadence, given the strong performance and the spread. Yeah, I guess as it goes to price, I would tell you as expected, you know, we carry really good momentum into the year with prices up 7%, mix adjusted up 8.5%. I think it was a combination of two things. January 1 price increases pretty much went as expected. And then we had really good pricing in our backlog, and we continue to have good pricing in our backlog.

Speaker Change: Really impressive price cost spread you folks put up in the quarter. Tom I'm wondering if you could just talk about.

Speaker Change: How youre thinking about mid year price increases and cost cadence given the strong performance in the spread.

Speaker Change: Yeah, I guess as it goes to price I would tell you as expected we carry really good momentum.

Speaker Change: Into the year with prices up 7% mix adjusted up eight and a half I think it was a combination of two things Jim One January one price increases pretty much went as expected and then we had really good pricing on our backlog and we continue to have good pricing in our backlog so I thought that first quarter.

Tom Hill: So I thought the first quarter started the year off really good, keep our guidance at 5 to 7, remembering that we have to turn that price into profit. And you saw the Vulcan Wave selling a couple of Vulcan Operating do that in Q1 with unit margins up some 20%. So, you know, a really good start to the year. And I think what that is, is simply the Vulcan Wave selling and Vulcan Wave operating at work.

Speaker Change: <unk> started the year off really good keep our guidance at $5 seven.

Remembering that we have to turn that price into profit and.

Speaker Change: And you saw the booking with selling coupled with Brookwood operating do that in Q1 with unit margins up some 20%. So you know a really good start to the year and I think what that is is simply the volt with selling a bulk way of operating it works.

Tom Hill: As it goes to mid years, we've started those discussions now. We'll have those those talks about mid year and all of our markets, I would expect a range of outcomes by market and by product line much less much like the last couple of years. And those discussions, as we always say, the mid years will impact 26 more than they will 25. So, you know, a really good start to the year. And pleased with the performance and pleased with execution of the Vulcan Wave selling and Vulcan Wave operating. Congratulations to the team. Thanks. Thank you.

Speaker Change: It just goes to mid years, we've started those discussions now.

Speaker Change: We'll have those those talks about mid year and all of our markets I would expect a range of outcomes by market by product line and much less much like the last couple of years.

Speaker Change: And those discussions as we always say the mid years will impact 'twenty six more than they will 25 so.

Speaker Change: A really good start to the year and pleased with the performance and pleased with the execution of the volt with selling into bulk with operator.

Speaker Change: Congratulations to the team.

Speaker Change: Thank you.

Tyler Brown: We'll take our next question from Tyler Brown with Raymond James. Please go ahead, your line is open. Hi, Tyler. Hey, morning.

Speaker Change: We'll take our next question from Tyler Brown with Raymond James. Please go ahead.

Tyler Brown: Hey, Manny Hey, look Tom there's a lot of hand wringing about the outlook for volumes, maybe more so on the private side you guys kind of mentioned that plant, but obviously, the 10 years and the housing market has been a little bit stubborn, but just in broad strokes can you kind of give us an update on how you would kind of.

Tom Hill: Hey, look, Tom, there's a lot of hand wringing about the outlook for volumes, maybe more so on the private side, you know, you guys kind of mentioned up front, but obviously, the 10 years in the housing market has been a little bit stubborn. But just in broad strokes, can you kind of give us an update on how you would kind of characterize the organic rock volumes in 25 if you kind of parse them between resi, non resi, and public? Just kind of how do you get to that flattish organic volume? Yeah, so I think what we're saying is our guidance, the three to five with the acquisitions, we keep that guidance.

Tyler Brown: Is the organic rock volumes in 25, if you kind of parse them between resi non resi in public just kind of how do you get to that flattish organic volume.

Tyler Brown: Yeah. So I think what we're saying is our guidance of three five with the acquisitions. We do we keep that guidance. We think we said you said, we've got challenges on the private side, but we see continued really healthy growth of the public side both in highway.

Tom Hill: We think, as you said, we've got challenges on the private side, but we see continued really healthy growth on the public side, both in highway and in non-highway infrastructure, and the non-highway infrastructure is really going well. You know, Q1 shipments were down 1%, but it wasn't linear. January and February were down, you know, 7%, really driven by the extremely cold weather that we saw in the winter. And then we got to March, shipments grew by 9%. It was aided by acquisitions and a little bit easier weather comp. So at this point, I think we stick to our guide of three to five percent, challenge private, stronger public.

Tyler Brown: And in non highway infrastructure, the non highway infrastructure is really going well.

Tyler Brown: Q1 shipments were down 1%, but that's it wasn't linear January and February were down 7% really driven by the extremely cold weather that we saw the winter and then we got to March.

Tyler Brown: Shipments grew by 9%.

Tyler Brown: Eight of that was aided by acquisitions and a little bit easier weather cough. So at this point I think we stick to our guide of 35% challenge private stronger public that remember, that's probably going to be back half loaded.

Tom Hill: Now remember, that's probably going to be back half loaded. If you remember last year, we had a really weather challenge back half of the year, so a lot easier comps going into it.

Tyler Brown: And if you remember last year, we had a really weather challenged back half of the year. So a lot easier comps going into it I think if you kind of look at what's going on in the market right now.

Tom Hill: I think if you kind of look at what's going on in the market right now, Project, people ask all the time, are you getting projects canceled or held? Projects that are started or go, they're not held, they're not canceled. Now we're bidding a lot of big projects that, you know, people seem to be on the pause button, kind of waiting for some uncertainty. And you couple that with importantly, I think if you look at our bookings, they're up substantially on the public side, they're up slightly on private works. If you look at total backlogs, they're up year over year, so we're starting to see some water build behind the dam.

Tom Hill: Project people ask so Tom do you are you getting projects canceled or hilde projects that have started or are go they're not held to that canceled that were bidding a lot of big projects that.

Tyler Brown: People seem to be on the pause button kind of waiting for some uncertainty.

Tyler Brown: You couple that with importantly, I think if you look at our bookings were up substantially on the public side, they're up slightly on private work.

Tyler Brown: Total backlogs are up year over year. So we're starting to see some water bill behind the dam the challenges I think will be on probably the fixed concrete plant side driven by challenges in private demand. So.

Tom Hill: The challenges, I think, will be on probably the fixed concrete plant side, driven by challenges and private demand. So, you know, a mixed bag, a decent start to the year, but again, I'd point you to back half loaded for volume. Yeah, great caller. Mixed bag. Got it. Thank you.

Tyler Brown: <unk> bag, a decent start to the year, but again I would point you to back half loaded for volumes.

Speaker Change: Yeah, Great color expect got it thank you.

Tyler Brown: Thank you.

Anthony Pettinari: We'll take our next question from Anthony Pettinari with Citigroup. Please go ahead. Your line is open. Hi, Anthony.

Speaker Change: We'll take our next question from Anthony Pettinari with Citigroup. Please go ahead. Your line is open.

Ashersona: Hi, this is actually Ashersona, not for Anthony. Thanks for taking my question.

Speaker Change: Hi, Anthony Hi, this is.

Speaker Change: Hi, This is actually I ask just on and on for Anthony. Thanks for taking my question I just want I just wanted to ask sort of maybe an update around kind of your thoughts on administrative policy like have you seen any kind of pressure on the pace of rollout project starts maybe IRA related projects from any of the policy attitudes are kind of executive orders, we've seen I think last quarter, there really wasn't.

Ashersona: I just wanted to ask for maybe an update around kind of thoughts on administrative policy. Like, have you seen any kind of pressure on the pace of IAJ rollout? Project starts from maybe IRA related projects from any of the policy attitudes or kind of executive orders we've seen? I think last quarter, there really wasn't much of an impact. So just wanted an update. No, really no impact to us. I think when it comes to the highway work or public demand, there's no uncertainty of highway funding at the federal level. IAJ funds are flowing, I'd say, as expected.

Speaker Change: Much of an impact so just wanted an update.

Speaker Change: No really no impact to us I think when it comes to the highway work or public demand.

Speaker Change: There is no uncertainty of highway funding at the federal level IHA funds are flowing I would say as expected.

Tom Hill: Actually, the states right now are working on their new budgets. It appears that we'll see in our states growth over the next fiscal year, which starts kind of mid-summer. You got to remember, obviously, there was also four local road, excuse me, 40 local road and bridge measures in last year's election, which was an additional $45 billion. So, short story is, no impact from as far as funding for infrastructure. We actually see growth in federal, state, and local funding, probably for the next couple of years in our markets, including 2025. As I said in my opening comments, you still got two-thirds of the IAJ funding yet to be spent.

Speaker Change: Actually the states right now are working on their new budgets. It appears that we will see in our states growth next fiscal year, which starts kind of mid summer.

Speaker Change: You got to remember obviously there was also for local row excuse me 40, local road and bridge measures.

Speaker Change: Last year's election, which was an additional $45 billion. So short story is no impact from <unk>.

Speaker Change: Far as funding.

Speaker Change: Funding for infrastructure, we actually see growth in federal state and local funding probably for the next couple of years in our markets, including 2025 as I said in my opening comments you still got two thirds are GE funding yet to be spent so we feel really good about the public side.

Ashersona: So, we feel really good about the public side. Got it. Thanks. That's good to hear.

Speaker Change: Got it thanks, that's good to hear I'll turn it over.

Ashersona: I'll turn it over. Thank you.

Speaker Change: Thank you.

Keith Hughes: And we'll take our next question from Keith Hughes with Truist. Please go ahead, your line is open. Hey, how you doing? Thanks for letting us question in great quarter here.

Speaker Change: We will take our next question from Keith Hughes with Truest. Please go ahead. Thank you Ethan.

Speaker Change: Hey, John Thanks for the thanks a lot.

Speaker Change: That's question and great quarter here I guess question is on cost on cost per gallon can you just talk about specifically.

Keith Hughes: I guess questions on cost, cost per gallon.

Tom Hill: Can you talk about specifically what happened in the quarter and what your outlook on the cost side is for the rest of the year? Yeah, I would tell you, I would take you back to our original guide on costs. While the quarter was it was a great quarter, look, we're down 3%, excellent performance for operating teams. We got cost down 3% with slightly lower volumes and very, very cold conditions in January, February. I'm proud of our operators. But I attribute the performance to three things. One, as I said, improving operating efficiencies, you know, the Vulcan Operating is starting to kick in.

Speaker Change: What happened in the quarter and what's your outlook on the cost side is for the rest of the year.

Speaker Change: Yeah, I would tell you I would take you back to our original guide on costs, while the quarter was it was a great quarter, but were down 3% excellent performance of our operating teams.

Speaker Change: We've got cost down 3% with slightly lower volumes in very very cold conditions in January and February I'm proud of our operators.

Speaker Change: But I would attribute the performance to three things one.

Speaker Change: As I said, improving operating efficiencies the Vulcan with operating Youre starting to kick in we should see that get better as we progress through the year.

Tom Hill: We should see that get better as we progress through the year and really get that technology to work in those quarries. Second, I thought we I thought our folks did a really good job controlling spending matched to diminished ability to operate in the cold weather. And the third is we simply had some cost pushback. I mean, we had some projects because of the bad weather stripping and other things that we just couldn't do in the quarter. So, you know, in cost, as we always say, it's going to, it's lumpy quarter to quarter by nature. We take the full year, we take you back to our guide, which is kind of that low to mid single digit.

Speaker Change: And really get that technology to work in those quarries.

Speaker Change: I thought we thought our folks did a really good job controlling spending matched to diminished ability to operate in the cold weather and the third is we simply had some cost push back I mean, we had some projects because of the bad weather stripping and other things that we just couldnt do in the quarter.

Speaker Change: So.

Speaker Change: It cost as we always say is it's lumpy quarter to quarter by nature.

Speaker Change: We take the full year would take you back to our guide, which is kind of that low to mid single digit now we'll do our best to beat that and we got the Vulcan way of operating executing and so I think we got a shot at beating it but at this point too early to call. It takes you back to guidance.

Tom Hill: Now, we'll do our best to beat that. And we got the Vulcan way of operating, executing. And so I think we got a shot of beating it. But at this point, too early to call, I take you back to guide. Okay, great.

Speaker Change: Okay, great. Thank you.

Tom Hill: Thank you.

Speaker Change: Thank you.

Kathryn Thompson: We'll take our next question from Kathryn Thompson with Thompson Research Group. Please go ahead. Your line is open.

Speaker Change: We will take our next question from Kathryn Thompson with Thompson Research Group. Please go ahead morning, guys open.

Kathryn Thompson: Good morning, and thank you for taking my question today. I wanted to circle back just on two different things that tie into your Vulcan Wave operating selling and the outlook. So the context that we speak to in the heavy material space, we're finding that there are just have and have nots in the construction industrial value chain, but what strikes us is on the heavy material side, things are maybe not quite as bad as some of the headlines show.

Speaker Change: Good morning, Good morning, and thank you for taking my question today.

Speaker Change: Wanted to just circle back just on.

Speaker Change: Two different things that tie into your Falcon Lake operating selling and the outlook.

Speaker Change: So contact so we stick to and heavy materials space. We're finding that there just happen to have not seen construction industrial value chain, but what strikes us is on the heavy materials side.

Speaker Change: Thanks, or maybe not quite as bad as some of the headlines shadow.

Kathryn Thompson: Could you, Mary, also first, are you seeing any type of significant project, either cancellations or delays? And how does your Vulcan way of operating selling help differentiate yourself as you deal with a more uncertain environment? Thank you. Yeah, so on project delays or cancellations, what what we started seems to be going nothing's canceling. Once it started, nothing's put on hold. As I said a minute ago, we're seeing we're bidding a lot of work, Kathryn. And it's just not going right away. And I think that is that is Good news, a little bit frustrating, but good news because people are assessing projects.

Speaker Change:

Speaker Change: Could you Mary also first are you seeing any type of.

Speaker Change: A significant project cancellations or delays.

Speaker Change: And how does your Vulcan way of operating Sally selling help differentiate yourself.

Speaker Change: As you deal with a more uncertain environment. Thank you.

Speaker Change: Yes, so on project delays or cancellations.

Speaker Change: What we started is seems to be going nothing canceling once it started and doesn't put on whole as I said a minute ago. We are seeing we're bidding a lot of work Katherine.

Speaker Change: And it's just not going right away I think that is that is <unk>.

Speaker Change: Good news a little bit frustrated with good news because people are assessing projects I think they just are not willing to pull the trigger till we get through some of the macro volatility.

Tom Hill: I think they just are not willing to pull the trigger until we get rid of some of the macro volatility. And as I said, you know, if I look at our bookings, both on public and private, they're doing very well backlogs are healthy. So I think there is some there is some you know, two plus years, that's what I tribulate to because it just gives us a lot of clarity and forward looking information to our sales group and operators of how we run our business. We're, you know, a little bit further ahead in the book with selling, and you're seeing that in price, and you're seeing that in execution of how we run our markets and ability to see forward in those markets.

Speaker Change: And as I said, if I look at our bookings both on public and private Theyre doing very well backlogs are healthy so.

Speaker Change: I think there is some there is some.

Speaker Change: Some pent up demand out there that will go over later on once once the world gets a little clearer as it comes to the volt with selling a walkaway of operating.

Speaker Change: Tribute the consistency and improvement in unit margins over the last.

Speaker Change: Two plus years, that's what I attribute that to because it just gives us a lot of clarity and.

Speaker Change: And forward looking information to our sales group of operators of how we run our business.

Speaker Change: We're a little bit further ahead, the bulk with selling and you're seeing that in price and youre seeing that in execution.

Speaker Change: How we run our market's inability to see forward in those markets we are operating.

Tom Hill: The book we have operating...

Tom Hill: Good quarter, but one quarter does not a trend make, so we got, you know, we got to prove that out. I am pleased with the technology that's now being put to work in our 125, 120 largest operations. Very early stages of that, so I think we'll, again, we'll have to, a lot of hard work for operators throughout 2025 and beginning of 2026, but it is paying off and we are seeing improvement. You put all that together and it just gives us a model that is able to take advantage of tailwinds and offset headwinds of how we consistently.

Speaker Change: Good quarter, but one quarter does not a trend make so we got we got to prove that out.

Speaker Change: I am pleased with the technology that is now being put to work in our 100 <unk>.

Speaker Change: 20, 520 largest operations.

Speaker Change: Very early stages of that so I think we'll again, we'll have to a lot of hard work for operators throughout 2025 at the beginning of 2026, but it is paying off and we are seeing improved efficiencies you put all that together and it just gives US a model that is able to take advantage of deal wins.

Speaker Change: And offset headwinds.

Speaker Change: We consistently execute.

Tom Hill: Right.

Tom Hill: Thank you very much. Thank you.

Speaker Change: Great. Thank you very much.

Speaker Change: Thank you.

Trey Grooms: We'll take our next question from Trey Grooms with Stevens. Please go ahead. Thanks, Trey. Hey, good morning, Tom. Morning, Mary Andrews, Mark.

Speaker Change: We will take our next question from Trey Grooms with Stephens. Please go ahead. Thanks Ray.

Trey Grooms: Hey, good morning, Tom.

Speaker Change: Good morning, Andrew Marc.

Trey Grooms: And congrats on the good quarter. So I get, you know, the the profitability has been touched on several times here. But, you know, 20% cash gross profit improvement, that's per unit, that's, that's about as strong as we've seen. And I know there has been some puts and takes. And it sounded like, you know, the moderating inflation, of course, the productivity improvements. But I guess the the one piece that I want to try to get my head around on, as far as kind of thinking about the cadence as we move through the year, would be on, you know, the things you pointed out, Tom, around, you know, some some maybe delayed expenditures, you know, with with stripping and things like that, that I understand are hard to call when that's going to happen, especially when weather is not your friend in a given quarter.

Trey Grooms: And congrats on the good quarter.

Trey Grooms: I think so.

Trey Grooms: Okay.

The profitability has been touched on several times here, but.

Trey Grooms: 20% cash gross profit improvement.

Trey Grooms: <unk> per unit.

Trey Grooms: About as strong as we've seen and I know there has been some puts and takes in it sounded like the moderating inflation.

Of course, the productivity improvements.

Trey Grooms: But I guess, the one piece that I wanted to try to get my head around on us.

Trey Grooms: As far as kind of thinking about the cadence as we move through the year would be on the things you pointed out Tom.

Trey Grooms: Around.

Trey Grooms: Some may be delayed expenditures.

Trey Grooms: Sure.

Trey Grooms: With stripping and things like that that I understand are hard to call when that's going to happen, especially when weather is not your friend in a given quarter, but is there anything that you could give us on how to think about maybe the cadence of that is it going to be lumpy in a quarter here or there how we should think about just the profitability.

Tom Hill: But is there anything that you could give us on how to think about maybe the cadence of that? Is it going to be lumpy in a quarter here or there? How we should think about just the profitability? You know, as we kind of go through the quarters here?

Trey Grooms: As we kind of go through the quarters here.

Tom Hill: Sure, I'll take that kind of in pieces. First of all, volume, as we said, it'll be back half loaded, both from a timing and a comp perspective. I think that's how I'd look at volume. On pricing, I think we'll be pretty consistent. I would guide you to that five to seven quarter to quarter. I think we'll be pretty consistent as we operate through the year with price. Cost, it's a harder call. As I always say, that cost is going to be lumpy. As an investor, you want it that way because we need to spend the money when we need to spend the money, and proactively not try to time it or you'll...

Trey Grooms: Sure I'll take that kind of in pieces first of all volume is we said it'll be back half loaded.

Trey Grooms: But from a timing and a comp perspective, I think that's how I would look at volume on pricing I think will be pretty consistent I would I would guide you to that five to seven quarter to quarter I think will be pretty consistent as we as we operate through the year with price cost.

Trey Grooms: Recall.

Trey Grooms: As I always say that cost is going to be lumpy.

Trey Grooms:

Trey Grooms: As a investor you want it that way because we do spend the money when we need to spend the money and proactively not try to time, it or Yo Yo.

Tom Hill: You'll have unpredicted maintenance and higher maintenance costs. So, again, volume back half loaded, price pretty consistent, five to seven, cost a little bit lumpy. Look, you know, we had a great start to the year on cost. I would love to tell you we're going to beat the guy out of low to mid, but we just need to see a few more quarters before we go there. Obviously, operators, that is their goal. That's what they want to do. But we got to play that out for a little while. Yeah, understood.

Trey Grooms: You have unpredicted maintenance.

Trey Grooms: And higher maintenance costs so.

Trey Grooms: Again volume back half loaded price pretty consistent about seven cost a little bit lumpy look we had a great start to your own cost.

Trey Grooms: I would love to tell you we are going to beat the guide of low to mid but we just need to see a few more quarters before we go there obviously the operators that is their goal thats, what they want to do but we got a we got we got we got to play that out for a little while.

Trey Grooms: Yeah.

Mary Andrews Carlisle: And I guess just with that, if you could maybe touch to the downstream segments, because you're expecting, I think some improvement there as well, which we saw some in the in the quarter, is that kind of still the thought around, you know, downstream? Yeah, Trey, you know, our downstream businesses are performing, you know, really well. We still expect them to contribute cash gross profit of about $360 million for the year. You know, two-thirds asphalt, probably one-third ready mix. And, you know, importantly, like you said, that's really a combination of, you know, strong unit profitability growth and the legacy operations coupled with the contribution from the acquisition.

Trey Grooms: Yeah understood I guess.

Trey Grooms: With that Pete.

Trey Grooms: Maybe touch to the downstream segment, because youre expecting I think some improvement there as well, which we saw some in the <unk>.

Trey Grooms: Quarter or is that kind of still the thought around downstream.

Trey Grooms: Yes, Trey our downstream businesses are performing really well, we still expect them to contribute cash gross profit.

Trey Grooms: About $360 million for the year two.

Trey Grooms: Third asphalt probably one third ready mix and importantly, like you said, that's really a combination of strong unit profitability growth.

Trey Grooms: The legacy.

Trey Grooms: Operations, coupled with the contribution from the from.

Trey Grooms: So both asphalt and ready mix got off to a good start, and, you know, we still expect that level of profitability for the year. Yep, got it. Thank you.

Trey Grooms: From the acquisition so.

Trey Grooms: Both asphalt and ready mix got off to a good start and we still expect that level of profitability for the year.

Speaker Change: Yeah got it thank you I'll pass it on good luck.

Trey Grooms: I'll pass it on. Good luck. Thank you.

Trey Grooms: Thank you.

Garik Shmois: We'll take our next question from Garik Shmois with Loop Capital, please go ahead. Good morning. Oh, hi. Thanks. And hey, good morning and congrats on the quarter.

Operator: We will take our next question from Gary noise with loop capital. Please go ahead.

Gary noise: Morning, Okay. Thanks, Hey, good morning, and congrats on the quarter.

Garik Shmois: I was hoping you could speak to pricing in a little bit more detail. You know, first, if you could maybe help us understand where you are on integrating Wakestone and getting pricing there up to the average. And then secondly, you know, just on the mid-years, I know it's early days and you mentioned traction should be similar to prior years, but just curious if you're getting any pushback or what kind of feedback you're getting considering the private construction slowdown from your ReadyMix customers, or are you seeing perhaps some more understanding given the expectations for inflation moving forward?

Speaker Change: I was hoping you could speak to pricing a little bit more detail first if you could maybe help us understand where you are on integrating.

Gary noise: <unk> and <unk>.

Speaker Change: Getting pricing they are up to.

The average and then secondly.

Speaker Change: Just on the mid years I know, it's early days and you mentioned traction should be similar to prior years, but just curious secured.

Speaker Change: Getting any pushback or what kind of feedback you're getting considering the private construction slowdown from the ready mix customers.

Speaker Change: Or are you seeing perhaps some more understanding given the expectations for inflation moving forward.

Tom Hill: Yeah, so I think that I would call it like I said, I would call pricing as expected, January ones went, went well, mid years, we're just starting this conversation. So to be seen. Pricing is always easier with growing demand. And we're seeing that you where we got challenges on the private side, we're seeing good growth on the public side, which is always helpful. That's also a lot more predictable. So I would, I would, I guess I would call it as expected from a pricing perspective, and to be seen kind of with mid years.

Speaker Change: Yes, so I think that I would call. It like I said I would call pricing as expected January ones, where well mid years, we're just starting those conversations so to be seen.

Speaker Change: Pricing is always easier was growing.

Speaker Change: <unk> demand and we're seeing that we're we've got some some challenges on the private side, we're seeing good growth on the public side, which is always helpful. There's also a lot more predictable.

So I would I would I guess I would call it as expected from a pricing perspective and to be seen kind of a mid years, Yes, and then just overall garik I think as it relates to the acquisitions.

Tom Hill: Yeah, and then just, you know, overall, Garik, I think, as it relates to the acquisitions, you know, same as as expected. Performance was good in the first quarter, we continue to expect, you know, the approximately $150 million of contribution for the full year. And, you know, working hard to capitalize on our Vulcan Wave selling and Vulcan Wave operating disciplines to, you know, capture synergies with the acquisition, as well as improving the legacy business.

Speaker Change: Same as as expected.

Speaker Change: With good in the first quarter, we continue to expect you know the approximate $150 million of contribution.

Speaker Change: For the full year.

Speaker Change: And working hard to capitalize on our welcome my selling involved operating disciplines to capture synergies with the acquisition as.

Speaker Change: As well as improving the legacy business.

Garik Shmois: Okay, next time. Thank you.

Speaker Change: Okay makes sense. Thank you.

Speaker Change: Thank you.

Steven Fisher: We'll take our next question from Steven Fisher with UBS. Please go ahead. Your line is open. Morning. Thanks very much. Morning. Thanks very much.

Steven Fisher: We'll take our next question from Steven Fisher with UBS. Please go ahead. Your line is open.

Steven Fisher: Good morning, Thanks, very much good morning, thanks, very much congrats on the profit performance I just wanted to follow up a question on the bidding which you've addressed a couple of times.

Steven Fisher: Congrats on the profit performance. Just wanted to follow up a question on the bidding, which you've addressed a couple of times, where you said, you know, some things are paused, which sounds like it's really on the private side, but within those pauses, how broad would you say those are? Is that mainly, you know, kind of very interest rate sensitive commercial type projects, or is it also on things that are more perhaps structural in nature, things like the data centers, or semiconductors, or pharma, bio, or whatever, seeing, you know, these bigger projects that seem to have good memento.

Steven Fisher: Where are you said some things are paused, which it sounds like it's really on the private side, but within those pauses.

Steven Fisher: How broad would you say those are is that mainly.

Steven Fisher: Very interest rate sensitive commercial.

Steven Fisher: Commercial type projects or is it also on things that are more perhaps structural in nature things like the data centers are semiconductors are pharma bio ever seeing these.

Steven Fisher: These bigger projects that seem to have good momentum I'm just curious how broad you are seeing that hesitancy on the decision making that move right ahead.

Tom Hill: I just curious how broad you're seeing that hesitancy on the decision making to move right ahead. I'd tell you it's not real broad. You're seeing some big commercial projects that people are taking bids on and pulling the trigger. As far as public work, it's a go and nothing's being paused there. I don't think it's that wide out there. As far as data centers, that is a bright spot for us. We're doing a lot of data center work right now. Six percent of the data centers that are under construction are in our footprint. If you look at what's coming up in data centers, 80 percent of the proposed data centers are within 30 miles of a Vulcan quarry.

Steven Fisher: I'd tell you I'd tell you, it's not real broad youre seeing some big commercial projects that people are taking bids on and not pull the trigger as far as as far as public work. It's it's a go.

Steven Fisher: Nothing is being pause there.

Steven Fisher: Don't think it's that wide out there as far as data centers that is a bright spot for us.

Steven Fisher: We're doing a lot of data center work right now 6% of the data centers that are under construction or footprint. If you look at what's coming up in data centers, 80% of the proposed data centers are within 30 miles of a Vulcan Cory so that'll be a really bright spot for us and one that is ago I think.

Tom Hill: That would be a really bright spot for us and one that is a go. I think it'd be interesting to watch the data center over the next few years because that's going to lead to substantial power generation construction, which will be very aggregate intensive for us over the next three to five years. That, too, will be a bright spot coming on non-residential. So the pause is big commercial work. I don't think it's that widespread. It's just interesting that you see some of those big projects will bid it, and the timing's just pushed back. I think, for me, it's good news, because sooner or later, it's going to happen.

Steven Fisher: Interesting to watch the data center over the next few years, because thats going to lead to substantial power generation construction, which will be very aggregate intensive for us over the next three to five years and so that will too will be a bright spot coming for all nonresidential.

Steven Fisher: No.

Steven Fisher: The pauses as big commercial it was big commercial work.

Steven Fisher: Don't think it's that widespread it's just interesting that you see some of those big projects will bid. It and this is the timing is just pushed back I think for me. It's good news because sooner or later is going to go.

Tom Hill: Terrific. Thank you.

Steven Fisher: Perfect. Thank you.

Steven Fisher: Thank you.

Timna Tanners: We'll take our next question from Timna Tanners with Wolf Research. Please go ahead. Hey, good morning. I wanted to ask about not the direct impact of tariffs. I recognize you said those were limited, but the impact of the tariff-related uncertainty perhaps on your customers and acquisition candidates. Just wondering if there's anything incremental you can... Yeah, so to be clear on tariffs, you know, we're constantly evaluating the possibilities of our impact on our business. I think our model really limits the direct impact for Vulcan. At this point, we don't think tariffs move the needle on our cost outlook.

Speaker Change: Take our next question from Timna Tanners with Wolfe Research. Please go ahead.

Speaker Change: Hey, good morning.

Speaker Change: Please ask about the direct impact of tariffs I recognize you said those were limited.

Speaker Change: Impact of that.

Speaker Change: Yes.

Speaker Change: Perhaps on your customers and acquisition candidates just wondering if theres anything incremental you can touch on the airplane.

Speaker Change: Yes, so to be clear on tariffs.

Speaker Change: We're constantly evaluating the possibilities of our impact on our business I think our model really limits the direct impact for Balkan at this point, we don't think tiers move the needle on cost outlook.

Tom Hill: We got to remember, we own our largest cost, which is cost component, which is the rock and the ground. And then you also got to remember, our model allows us to rapidly offset any cost volatility. And, you know, because you saw that when we had breakneck inflation, which is probably a lot bigger impact than the tariff. You know, a watch, as you said, a watch for us on terrace is the cost impact to private construction. I think that was a little early to call, but it is something that everybody, that I think we need to be thoughtful of.

Speaker Change: You got to remember we own our largest cost which is cost component, which is the rock in the ground and then you also got to remember our model allows us to rapidly offset any cost volatility.

Speaker Change: And because you saw that when we had breakneck inflation, which is probably a lot bigger impact than the tariffs.

Speaker Change: A wash as you said a watch brussel tariffs as the cost impact of private construction I think that was a little early to call, but it is something that everybody I think we need to be thoughtful of.

Tom Hill: Okay, but regarding like M&A candidates, are they acting differently because of the uncertainty or Can you speak to your customers impact that again recognize that the minimal impact direct? Yeah, on the heavy construction business, like ready mix and asphalt, I don't think I'll see a big impact at this point as far as customers are concerned. As far as M&A, you know, we call out some smaller deals that we're talking about right now. I don't think tariffs are having a big impact. What I do think is with M&A, it typically slows in times of volatility. And you're seeing that right now.

Speaker Change: Okay.

Speaker Change: Regarding like M&A candidates are they acting differently because of that uncertainty or can you speak to your customers impact again recognize that minimal impact direct is great.

Speaker Change: Yes.

Speaker Change: On the heavy construction business like ready mix and asphalt I don't they don't.

Speaker Change: See a big impact at this point as far as customers are concerned as far as M&A.

Speaker Change: You called out some smaller deals that we're talking about right now I don't think tariffs are having a big impact what I do think as with M&A.

Speaker Change: Typically slows in times of volatility and you're seeing that right. Now. So we may have to let the we'll spend a little bit for four before you.

Mary Andrews Carlisle: So we may have to let the world spin a little bit for before you see substantial M&A. But, you know, I think that's a temporary pause. Yeah, and I think, you know, Timna, importantly, for us, we have the balance sheet, obviously, very well positioned for future growth, you know, as M&A opportunities, you know, do arise. The key for us, you know, is obviously to continue to be disciplined as we evaluate those so that we can deliver attractive returns on over time and, you know, continue to grow our leading aggregate positions. But we like our position and are well prepared to act in the M&A market if any of this uncertainty does impact that.

Speaker Change: You see substantial M&A, but.

Speaker Change: I think thats, a temporary pause and I think importantly.

Speaker Change: Importantly for US we have the balance sheet, obviously very well positioned for future growth.

Speaker Change: You know as M&A opportunities.

Speaker Change: Do arise.

Speaker Change: Key for US is obviously to continue to be disciplined as we evaluate those so that we can deliver attractive returns on capital over time and continue to grow our leading aggregates positions, but we we like our position and are well prepared to act in the M&A market.

Speaker Change: Any of this uncertainty does does impact that.

Mary Andrews Carlisle: Okay, thanks again.

Speaker Change: Got it okay. Thanks again.

Speaker Change: Thank you.

Jean Valise: We'll take our next question from Jean Valise with D.A. Davidson. Please go ahead. Hi, congrats on the recording. Thank you. Good morning. I was you mentioned that on the private bookings was up slightly.

Speaker Change: We'll take our next question from gene <unk> with D. A Davidson. Please go ahead.

Speaker Change: Alright, Congrats corie and thank you.

Speaker Change: Hi, good morning.

Speaker Change: You mentioned that.

Speaker Change: The private bookings list up slightly.

Jean Valise: Did you do you mind commenting a little bit about what kind of works are you seeing that are picking up slightly through your bookings? Yeah, I think, you know, the the bright spot on the private side is data centers. And it's the majority of those are in our footprints. I think on the public side, it's obviously highway work is up, but a really bright spot for us is infrastructure. The non-highway work, which is water, ports, and airports, those bookings are up substantially. you know, a bright again, a bright spot, but on the on the on the private side, I think it's two things, is that data centers are up and we're starting to see.

Speaker Change: Could you do you mind, commenting a little bit about.

Speaker Change: What kind of works are you seeing that are picking up slightly.

Speaker Change: So your bookings.

Speaker Change: Yes, I think.

Speaker Change: The bright spot on the private side is data centers.

Speaker Change: The majority of those or are in our footprints.

Speaker Change: I think on the public side is obviously.

Speaker Change: We work is up but.

Speaker Change: Really bright spot for us is infrastructure.

Speaker Change: Non highway work, which is water ports and airports.

Speaker Change: Those bookings are up substantially.

Speaker Change: And.

Speaker Change: O'brien bright spots with the owner.

Speaker Change: On the private side.

Speaker Change: I see.

Speaker Change: Two things is that data centers are up and we're starting to see.

Speaker Change: Kind of the bottom of warehouses.

Speaker Change: We think we've hit the bottom of that so it's not as big a drag as it was maybe a year ago.

Tom Hill: And with the comment on warehouses, does that offset some of the residential? Or is this just a nice pickup that you hope to carry on through 26, into 26? I think the offset on single family is really on the public side, is really highways and not. I mean, that's a little bit, but the real offset is the. Great, thank you so much.

Speaker Change: And with the comment on warehouses.

Speaker Change: Does that offset some of the residential or is this just a nice pickup that you hope to carry on.

Speaker Change: 226 into place I think to offset the offset of a single family is really on the public side is really highways and non highway infrastructure.

Speaker Change: Yes, that's helpful. EBIT grew offset as the public demand.

Speaker Change: Okay.

Speaker Change: Great. Thank you so much.

Michael Feniger: We will now take our next question from Michael Feniger with Bank of America. Please go ahead, your line is open. Hey, guys. Morning. Morning, Tom. Thanks for having me.

Speaker Change: We'll take our next question from Michael Feniger with Bank of America. Please go ahead. Your line is open.

Speaker Change: Hey, guys.

Michael Feniger: Good morning, Tom Thanks.

Michael Feniger: And I just wanted to ask Tom with with the conversation around around terrorists, if You know, in terms of just your own price cost, I mean, if contractors out there are bracing for higher input costs for materials, equipment, other areas, you know, does this give you cover to be able to raise pricing, even if your own costs, it looks like are actually trending, trending lower, you know, we see what's happening with oil prices today and diesel. So, I'm just wondering with the amount of aggregates that is in these projects, if all these other items are seeing inflationary and your customers are bracing for that, how do you kind of think about that when it comes to pricing relative to your costs that might not be going up to that degree?

Speaker Change: Thanks for having me and I just wanted to ask Tom with with the conversation around around tariffs.

Michael Feniger: In terms of just your own price cost I mean it.

Michael Feniger: Contractors out there are bracing for higher input costs for materials equipment other areas.

Michael Feniger: Does this give you comfort to be able to raise pricing even if your own cost. It looks like are actually trending trending lower when we see what's happening with oil prices today in diesel so I'm, just wondering with the amount of aggregate debt.

Michael Feniger: Is in these projects at all of these other items or are seeing inflationary and your customers are bracing for that how do you kind of think about that when it comes to pricing relative to your cost it might not be going up to that degree.

Tom Hill: Well, I think first of all, we don't we don't price on cost, you know, we price on earning it with our with our customers. I think when you look at, you know, if you look at tariffs, you've also got to put a little bit of perspective of what we saw with inflation over the last two or three years, which was breakneck And, you know, the market absorbed it. I think the tariff thing will shake out. I think that. I don't think it will have an impact on pricing when it comes to aggregates.

Michael Feniger: Well I think first of all we don't we don't price on cost.

Michael Feniger: We price on already.

Michael Feniger: With our customers I think if you look at if you look at payroll. She's also got a pretty a little bit of perspective of what we saw with inflation over the last two or three years, which was break Nick.

Michael Feniger: And.

Michael Feniger: Market absorbed it I think the tariff thing will shake out I think that.

Michael Feniger: I don't think you will have an impact on pricing when it comes to aggregates.

Thank you.

Philip Ng: We'll take our next question from Philip Ng with Jeffreys, please go ahead. Hey, good morning. It's Jesse Barone on for Phil. Just a question on asphalt. Obviously, we always come down here in the first quarter and then taking another step down in 2Q. Just curious kind of how that kind of translates into your own pricing and then on the cost side, kind of what the lags are there.

Speaker Change: We'll take our next question from Philip <unk> with Jefferies. Please go ahead.

Michael Feniger: Hey, good morning, it's Jesse Barone on for Phil.

Michael Feniger: A question on asphalt obviously oil has come down here in the first quarter and then taken another step down in <unk>, just curious kind of how that kind of translates into your own pricing and then on the cost side kind of what the lags are there. Thank.

Mary Andrews Carlisle: Thank you. So I thought Asphalt had a good performance in the quarter, despite the cold weather. The cash gross profit was up 24%. We did have some savings with liquid, which is about $3 million. But that product line continues to perform extremely well. And I think that with the public demand growth that we're seeing, it's a good story for the asphalt business and a good story for the aggregate component of the asphalt business. So a real support for us.

Michael Feniger: Thank you.

Michael Feniger: So I saw the asphalt had a good performance in the quarter, despite the cold weather.

Michael Feniger: The cash gross profit was up 24%.

Michael Feniger: We did have some some some savings with liquid which is about $3 million, but that that product line continues to perform extremely well and I think that with the public demand growth.

Michael Feniger: That we're seeing it's a good story for the asphalt business and a good story for them for the aggregate component of the asphalt business. So.

Michael Feniger: We'll support for us.

Mary Andrews Carlisle: All right, thanks.

Michael Feniger: Alright, Thanks, I'll turn it over.

Michael Dudas: I'll turn it over.

Michael Dudas: We'll take our next question from Michael Dudas with Vertical Research. Please go ahead. Thank you, operator. Good morning, Tom, Mary Andrews, and Mark. Morning. For Mary Andrews, you highlighted in your remarks your cash conversion, which is a very solid.

We'll take our next question from Michael Dudas with vertical research. Please go ahead.

Michael Dudas: Thank you operator, and good morning, Tom mere inches and Mark.

Speaker Change: Good morning.

Speaker Change: For Marine engines.

Speaker Change: You highlighted in your prepared remarks.

Speaker Change: Cash conversion, which is a pretty solid.

Mary Andrews Carlisle: Maybe you can talk about for the next several quarters how that looks, any meaningful changes from what we've seen in history.

Speaker Change: Maybe you can talk about for the next several quarters, how that looks any meaningful changes from what we've seen in history and as you think about capex growth versus maintenance and deferred or maybe delay in M&A.

Mary Andrews Carlisle: As you think about CapEx, you know, growth versus maintenance and this deferred or maybe delay in M&A, given the volatility that we've seen, maybe you'll see more in stock prices and you did buy back some stock, but you had the debt repayment. Is that something that's certainly on the table maybe in near term if we still get that volatility on the repurchase side? Yeah, so I think first as it relates to, you know, cash conversion, you know, we've that has stayed at an attractive level, we would expect that to continue going forward. From a CapEx perspective for 2025, we still, you know, plan to spend the 750 to 800 million that we had communicated.

Speaker Change: Given the volatility that we've seen maybe you'll see more in stock prices and you did buy back some stock that you have the debt repayment.

Speaker Change: Something that's certainly on the table maybe in near term if.

Speaker Change: We still get that volatility on the repurchase side.

Speaker Change: Thank you.

Speaker Change: Yes, so I think first as it relates to cash conversion.

Speaker Change: That has stayed at an attractive level, we would expect that to.

Speaker Change: <unk> continue going forward.

Speaker Change: From a capex perspective for 2025, we still plan to spend $750 million to $800 million that.

Speaker Change: That we had communicated as you know that.

Mary Andrews Carlisle: As you know, that's, you know, a bit higher than last year, primarily due to some spending on some large plant rebuild projects. But I would tell you, you know, we've been consistently reinvesting at what we believe to be appropriate levels for the needs of the business. So I wouldn't anticipate, you know, any big changes there, we are, you know, always evaluating, you know, lots of different growth CapEx, you know, opportunities, and to the extent that, you know, we believe those can deliver, you know, good growth and attractive returns over time, you know, we'll evaluate those as they come up.

Speaker Change: A bit higher than last year, primarily due to some spending on some large plant rebuild projects, but I would tell you you know we've been consistently reinvesting what we believe to be appropriate level for the needs of the business. So I wouldn't anticipate them.

Speaker Change: Any big changes there we are always evaluating lots of different growth capex.

Speaker Change: <unk> and to the extent that you know we believe those can deliver good growth and attractive returns over time.

Speaker Change: We'll evaluate those as they come up and that could be.

Mary Andrews Carlisle: And it could be, you know, a good use of capital going forward, depending on what the other opportunities are, but, you know, really no changes to our approach to capital allocation at this point.

Speaker Change: You know a good use of capital going forward, depending on what the other opportunities are but.

Speaker Change: Really no changes to our approach to capital allocation at this point.

Angel Castillo: Thank We'll take our next question from Angel Castillo with Morgan Stanley. Please go ahead. Your line is open. Hi, good morning. Thank you for taking my question and congrats on the strong quarter. Just two quick ones for me.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: We will take our next question from Angel Castillo with Morgan Stanley. Please go ahead. Your line is open.

Angel Castillo: Hi, Good morning. Thank you for taking my question and congrats on the strong quarter. Just two quick ones for me just first on the power generation opportunities that you mentioned.

Angel Castillo: Just first on the power generation opportunity Tom that you mentioned, could you just give a sense of kind of the order of magnitude of how much more kind of intensity in terms of aggregates power generation might be? And just to clarify, is that kind of just the nuclear side or is there broader kind of power generation being more aggregates intensive?

Angel Castillo: Can you just give a sense of kind of the order of magnitude of how much more kind of intensity in terms of aggregates power generation might be and just to clarify is that kind of just the nuclear side or is there.

Angel Castillo: What are kind of power generation.

Tom Hill: And then maybe one last one on price would just be you talked a lot about it from the VMC side, but curious if you're seeing anything in terms of competitors, discipline or mom and pops and kind of trends in how they're going about mid-year. I'd take the pricing question first on the mid-years. It's a little early on those as we're just beginning those conversations. I think that when it comes to mid-years, the, you know, we have those we have those conversations every year and have those have had that for probably for the last four years.

Angel Castillo: Being more aggregates intensive.

Angel Castillo: And then maybe one last one on price would just be you talked a lot about it on the BMC side, but curious if youre seeing anything in terms of competitors discipline or mom and pops and kind of trends and how they're going about mid years.

Speaker Change: I'll take the pricing question first.

Speaker Change: Mid years, it's a little early on those as we're just beginning those conversations.

Speaker Change: I think that when it comes to mid years.

Speaker Change: We have those we have those conversations every year and have those have had that for probably for the last four years. So I guess no surprise to be expected and nothing has changed as far as timing or the conversations on mid years as far as power generation I would tell you is probably going to be more of a late 'twenty six.

Tom Hill: So I guess no surprise and to be expected. And nothing's changed as far as timing or the conversations on mid-years.

Tom Hill: As far as power generation, I would tell you it's probably going to be more of a late 26, 27 play and go on for probably about five years. Those will be extremely aggregate intensive. Those are big, big projects. I expect more gas generation power projects than nuclear early on, maybe nuclear later, but too early to call on that one. But those will be, you know, and they'll be in the markets like Texas, Georgia, Virginia, Arizona, Illinois, where the big data center projects are as where I expect a lot of those and even some in other states.

Speaker Change: Seven play and go on for probably about five years those will be extremely accurate tests as those are big big projects I expect more gas generation power projects then nuclear early on maybe nuclear later, but too early to call on that one but those will be.

Speaker Change: There'll be in the markets like Texas, Georgia, Virginia, Arizona, Illinois, where the Big data center projects are.

Speaker Change: As where I expect a lot of those and even some of the other states, but theres just a.

Angel Castillo: But there's just a lack of power generation that we're seeing right now. So, and if you talk to the power generation companies, they're just going to have to expand. We'll see that over the next five. Very helpful, thank you.

Speaker Change: The lack of power generation that we're seeing right now so and if you talk to.

Speaker Change: The.

Speaker Change: Yes.

Speaker Change: So the <unk>.

Speaker Change: Power generation.

Speaker Change: Companies Theyre, just going to have to expand and I think we'll see that over the next five years.

Speaker Change: Very helpful. Thank you.

David Macgregor: We'll take our next question from David MacGregor with Longbow Research. Please go ahead. Yeah, thanks for taking the questions and congrats on a strong quarter. I guess I wanted to just follow up on the discussion around tariffs, and you're noting that it's not going to be very impactful to the business, but I'm just wondering about the downstream and ready mix. And you've got tariffs that are likely to hit Mediterranean, Southeast Asian imports, as well as the port levies on many of these cement carrying vessels. And I'm just wondering, how do you expect that to come into play in terms of the ready mix market and how you manage your margins through that?

We will take our next question from David Macgregor with Longbow Research. Please go ahead.

Yes, thanks for taking the questions and congrats on the strong quarter.

Speaker Change: Thanks, I guess I wanted to just follow up on the discussion around tariffs and you're noting that it's not going to be very impactful to the business, but I'm just wondering if both the downstream and ready mix.

Speaker Change: Tariffs are likely to hit Mediterranean Southeast Asian imports as well as single Port levies on many of these submit carrying vessels.

Speaker Change: Wondering how you expect that to come into play in terms of the ready mix market and how you're managing.

Tom Hill: And just secondly, if I could just ask about the cost performance, which was really impressive, but obviously diesel, petroleum, liquid, asphalt, you're getting a break there, but anything going on in terms of maintenance and repair, subcontracting services or parts, any kind of moderation, inflation in those boxes as well? So on the cost piece first, we have seen some moderation on inflation and it's not coming down. It's just not going up as fast as it was a year or two ago. So that is helpful. I think operating efficiencies has helped that too. And then as I said, we actually just pushed some costs back in the year because it was too cold to do some projects that we wanted to do.

Speaker Change: Margins through that and then just secondly, if I could just ask about the the cost performance, which was really impressive, but obviously diesel petroleum liquid asphalt you're getting a break there but.

Speaker Change: Anything going on in terms of maintenance and repair sub contracting services your parks any any kind of moderation in inflation in those boxes as well.

Speaker Change: So on the cost piece first we have seen some moderation on inflation.

Speaker Change: It's not coming down it's just not going up as fast as it was prior to.

Speaker Change: Two ago. So that is helpful. I think operating efficiencies has helped that too and then as I said, we actually just pushed some costs back in the year, because we used to call to do some some projects that we wanted to do as far as tariffs I don't see a big impact on our business or our ready mix or the asphalt business.

Tom Hill: As far as tariffs, I don't see a big impact on our business or the ReadyMix or the asphalt businesses on tariffs at this point. Obviously, that could change. But at this point, we don't see a big impact on it. Thank you.

Speaker Change: This is on tariffs at this point, obviously that could change but at this point, we don't see a big impact on it.

Okay. Thank you.

Speaker Change: Thank you.

Brian Brophy: We'll take our next question from Brian Brophy with Stiefel.

Speaker Change: We will take our next question from Brian Brophy with Stifel. Please go ahead. Your line is open.

Andrew Mazur: Please go ahead, your line is Hello, this is Andrew Mazur on for Bryan. Thank you for taking my question. I just wanted to ask another on the plant automation journey. I think earlier in the call you said that these tools are now implemented in 125 locations or 75 percent of volumes. I was wondering where you expect these numbers to be by the end of this year or next year, and then is there any way to frame the benefits that you're beginning to see from these initiatives, either from a volume throughput or unit cash cost savings perspective?

Speaker Change: Hello. This is Andrew <unk> on for Brian. Thank you for taking my question I just wanted to ask another on the plant automation journey I think earlier in the call. You said that these tools are now implemented and.

Speaker Change: 125 locations or 75% of volumes I was wondering where you expect these numbers to be by the end of this year or next year and then is there any way to frame. The benefits that you are beginning to see from these initiatives either from a volume throughput or unit cash cost savings perspective. Thank you.

Tom Hill: Thank you.

Tom Hill: Yeah, so what I would maybe clear we put the Instrumentation in those, you know, the top 100, 120 plants, we have not fully implemented that instrumentation. At this point, probably maybe 20, 30% of the plants are we getting the full efficiencies out of. And I think, you know, it'll take this year, a little bit in the next year before we can match the technology to the operating abilities and the production. And what you're trying to do there is maximize throughput, minimize downtime, and maximize throughput of critical sizes, whether it's asphalt rock or concrete rock. And that's where the efficiencies come in.

Speaker Change: Yes, So let me be clear we put the.

Speaker Change: Instrumentation and those.

Speaker Change: The top 100 120 plants, we have not fully implemented that instrumentation at this point, probably maybe 20, 30% of the plants, where we get into full efficiencies out of and I think I will take this year a little bit into next year before we can match the technology to the operating abilities and the production.

Speaker Change: <unk> and what Youre trying to do there is maximized throughput minimize downtime and maximize throughput of critical sizes was asphalt rock with concrete rock and that's where the efficiencies come in.

Tom Hill: Again, early stages of getting the full benefit out of that, too early to call what that means, except for degrees of good. But each plant, you know, when you look at these, you may get 4% out of one plant and 10%, 12% efficiencies out of another plant, way too early to call about what that means from a tons per hour, tons per critical size hour, or dollars per ton benefit. But it sure is going to help. So then that's why we do it.

Speaker Change: Again early stages of getting the full benefit out of that too early to call what that means except for degrees of good.

Speaker Change: But each plant we look at these you may get.

Speaker Change: 4% out of one plant at 10%, 12% efficiencies out of another plant.

Speaker Change: Way too early to call about what that means from a <unk>.

Speaker Change: <unk> per hour tons per critical size hour or dollars per tonne benefit.

Speaker Change: But.

Speaker Change: It sure is going to help so so then that's why we do it.

Operator: And there are no further questions on the line at this time.

Speaker Change: And there are no further questions on the line at this time I'll turn the program back to Tom Hill for any additional or closing remarks.

Tom Hill: I'll turn the program back to Tom Hill for any additional or closing remarks. Thank you for your time this morning. Thank you for your interest in Vulcan Materials Companies. We hope that you and your family stay safe and healthy, and we look forward to talking to you throughout the quarter.

Tom Hill: Thank you for your time. This morning. Thank you for your interest in Vulcan materials companies.

Tom Hill: We hope that you and your families stay safe and healthy and we look forward to talking to you throughout the quarter.

Tom Hill: Good morning.

Operator: And this does conclude today's program.

Tom Hill: And this does conclude today's program. Thank you for your participation and you may now disconnect.

Operator: Thank you for your participation, and you may now disconnect.

Tom Hill: [music].

Operator: Thanks for watching!