Vulcan Materials (VMC) 3 May 192019 Q1 Earnings call transcript

Company Profile

Participants

Mark Warren	Vice President of Investor Relations
Thomas Hill	Chairman, President and Chief Executive Officer
Suzanne Wood	Senior Vice President and Chief Financial Officer
Scott Schrier	Citigroup
Nishu Sood	Deutsche Bank
Kathryn Thompson	Thompson Research Group
Benjamin Burud	Goldman Sachs
Phil Ng	Jefferies
Adam Thalhimer	Thompson Davis
Mike Dahl	RBC Capital Markets
Trey Grooms	Stephens Inc.
Jeffrey Stevenson	Longbow Research
Adrian Huerta	JPMorgan
Lee Nalley	SunTrust Robinson Humphrey Inc

Call transcript

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Operator

Good morning, ladies and gentlemen, and welcome to the Vulcan Materials Company’s First Quarter Earnings Conference Call. My name is Justin, and I will be your conference call coordinator today.

As a reminder, today’s call is being recorded. [Operator Instructions] Now I’d like to turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. begin. may you Warren,

Mark Warren

Financial thank me joining Chairman today Wood, and and and follow session earnings prepared their and first call. Suzanne remarks. Chief President Vice With are Senior A you morning, question-and-answer our will for quarter CEO; Officer. Good Tom Hill,

to website begin, vulcanmaterials.com. I attention to materials supplemental call like we quarterly posted Before your would our at our

for the replay from website. this our You presentation the will Investor be homepage call can today. available recording A later of at of website this access Relations

These the Additionally, comments news disclaimers, you earnings homepage. can releases the other risks, along are results which filings under sign-up the links in Commission. may to statements with the regarding receive e-mail future are the company’s alerts in uncertainties. legal detail release in on projections found and quick reminded, and Exchange forward-looking with other subject and to Relations Investor the company’s Securities Please and described be include in our risks

Additionally, management measures. certain to will financial non-GAAP refer

reconciliation find release earnings related other in information end can measures and of our You at the supplemental both the of presentation. and these a

the turn to Tom. call over I’ll Now,

Thomas Hill

Aggregates’ of margins. and combined focus interest profit start a the footprint and call joining everyone business, to We appreciate gross sharp per in adjusted a highlight today. improvement XX% our ton. aggregates-focused on results improving strength XX% your Thank for in to a our Mark, in you, improvement had unit thanks We year, These Vulcan. the solid our the geographic and EBITDA

efficiencies, are so profitability our these operational the I’ll and in As principal of you know, of price turn. Aggregates’ drivers address each volume,

a in XX%, increased by or shipments XX% same-store on Aggregates’ quarter the First, basis.

across broad-based was our footprint. improvement the Importantly,

markets West obvious more core record with was growth California the the and in offset said, that course, East Of reduced Texas. in Southeast than by shipments our in in volume and exception, but double-digit were the with rainfall,

was February, demand Shipments markets our Overall, significantly the demand that last in clearly in some January. year-over-year with more from the evidenced expected, were the of due As healthy. year. of in to This March improvement quarter shows guidance. these first pace in is shipments in we by shipments full-year line was pent-up higher

The second pricing our mix-adjusted increased a quarter. the continued as a is compound On pricing pricing X.X% price. year. And freight-adjusted driver X.X%. profitability predicted, from by fourth to basis, improved by On last basis, from

As improvements, gains our with volume widespread. pricing were

sometimes an here, efficiencies influence The third time Much of area, driver, represents is that cost attention operational we because and is it can where focused overlooked, and control. to one outcome. strongly our relates and the

of our XX% key our XX% the it trailing One was flow-through. long-term basis, at same-store financial is March, in line XX-month of a end with On guidance. metrics

remains of markets As on forward our of with rest to expectations. we look view this our year, track earlier the

growth We’re across Vulcan-served shipments. the in and the to in state seen continues footprint into still private we’ve demand local grow and markets. increases funding, which seeing In highway turning demand public are our sector, in

of environment, healthy backlog we gas Vulcan going also also states infrastructure most by shipments As our strengthen a pricing We see continues join Alabama, raised public see supports have The the almost very in accelerate. and in and booking passed pace, in XX% state the generate highway have to big tax conversion which in was stream the quarter which March. experienced a lettings revenue and can XX last These that years. funding pace of and of in forward. this this the pointed funding stages we XX% passed growth XXXX we’re this demand. to approximately over levels. previously, four our of The over laws early out legislation recent

Suzanne? results. over turn Now additional some call to color the for on the Suzanne I’ll

Suzanne Wood

and our part sales then planned The increased items Tom, Thanks, resulted XXXX quarter, same-store few cost In in costs. first guidance. and X%. morning. comment increase good by from our of a repair on year-over-year higher additional I’ll unit maintenance cover and

We to our stronger throughput upcoming and plants quarters. efficiencies order are improve on downtime in the reducing in operational in keenly our seasonally focused

production addition, In experienced due record costs California to higher than expected rainfall.

were last of Our year result as certain SAG of a the costs expenses. higher than timing

a by were liquid Shipments these in part partially For and asphalt $X gains the offset profit down by Asphalt increases. shipments in these gross segment, of a also With Unfortunately, the slightly guidance. provided enough gross Concrete offset to weren’t cost focused to respect price and will line full-year, to XX-month weather than to of our same-store was percentage year, increased last or line with remain Lower be pricing with trend basis but we’ll increase in costs. million in our base. expectations. leveraging last revenue a basis, continue on trailing declined as Virginia X% On on to year. previously this compared profit lower anticipated due the than increased by our X%. modest XX%, costs

For on the for the full-year, seldom the the and our sheet balance asphalt. now quarter particularly flows. unchanged, to remains is first like segment I’d cash as for outlook our indicative, non-aggregates to move

Our business suits our debt structure well.

the X.X On slides, flow guidance expect expectation of retain this midpoint point. weighted to you’ll times, year. to We on to reflects range is within the our discretionary accordingly, and average XX cash long-term the investment-grade average debt Page ratio for Our our intend for range the rating, interest our X.X full-year, X debt maturity the X.X%. years are weighted be Currently, the rate our the leverage EBITDA target credit of supplemental X the times. as and but starting of information using we find of at

discretionary change, dividends, we share for basis, flow to define interest, debt determine EBITDA working XXXX M&A, the million. projects, taxes maintenance operating repurchases cash, $XXX reduction. allocation for most flow as projected priorities, capital. capital internal of we our returns-enhancing that capital then or approximate growth reminder, Using can it’s and whether and a use is our cash less As cash this discretionary On

consider $XXX and operating So models, guidance. estimate. share $XXX internal calls as maintenance XXXX, to respect line $XX numbers for spend and million down investment is capital, of XXXX million, which from projects, I’ll in with prior on a In couple line you. plan million earlier With your spend with about to growth our we expect you our approximately with in

pace year. Turning in XXXX now outlook remains our February customer earnings view outlook. project on with work, update our this remainder positive continues The Simply for to an to our put, our support booking guidance. our confidence of trends consistent and backlog the

results that, which year. quarter is solid first and in affect the thus, year our are of generally due it quarter, the be was the for is adjusted first We expected a to takeaway that least end The reaffirm As quarter start, full-year. the our the should keep XXXX our our at where guidance of smallest March, Tom therefore were having earlier definitely for said, to to but to mind seasonality approach we likely we overall full-year thoughtful this employed outcome EBITDA. a expectations we

to supplemental I’ll that remarks. a on guidance turn range $X.XX As are the back between detailed over And billion. now, of closing in guidance X more reminder, is shown Tom All the slides. aspects $X.XX Page and other call the some for billion

Thomas Hill

of our in pleased people’s excellence high and each to for first I’m proud promised. on improvement delivering operators in very taking quarter. our also not that’s care customers, of want record-setting financial a Aggregates’ a of other take our XXXX as to salespeople this improvement our profit I quarter. easy XX% on And the gross and and A to to results improve performance our standard Aggregates’ winter a XXXX continue I’m performance. safety holding advance Suzanne. thank in that in XX% Thanks, in opportunity and operational unit culture profitability, we

year, was worked. injury XXX,XXX employee X.XX this our far rate So for accidents hours

Our our remain number safe, one our to to operating going part is is a this job disciplines. of central people and keep

on we our elements efficiencies. keep that forward, key to and we’ll at our operate plants allow and focus deliver value As customers people our we will shareholders, for safe move and maximum our the

at We the will level margin expansion. unit drive execute will and local

market industry, our the model best – overcome footprint market the enough advantage care and to of business take and enough have our and to to opportunities take are people We geographic flexible challenges. in resilient

a right achieving XXXX towards quarter direction goals. Our was our the first in step good

be questions. your take to we’d happy Now

Operator

[Operator from with you. comes Schrier Citi. Instructions] Our Scott first question Thank

Thomas Hill

Good morning, Scott.

Scott Schrier

Tom, Hey, good morning and quarter. nice

Suzanne Wood

Good morning.

Scott Schrier

the out EBITDA? one right the How does laid have happen? picture What prepared this one the mean, your towards comes visibility the past I which know last is projects, But about and end you’ve a mid-cycle trillion do the type multiple larger from from mid-cycle higher now discussed century day, have long how really I off bigger with structure So What’s to last? business, I aggregates, question. a now does a aware. remarks. the about due cycle – multiples $X assuming, can Obviously, I the on EBITDAs. plan the to things aggregates I hold visibility well-run year, this know the come right we in to trajectory? businesses it, thing extension we want like that that other you When Can and talked with the and concerns in of of in the quarter speak cycle? an the you’re start into particularly think, higher of peers. of you cycle, elongated took much Tom, visibility supports course, growth the

Thomas Hill

we’d mid-cycle, All million the about And let’s right. in cycle said XXX tons. pieces. you at was now, look it What take we if right

we side, public would have ago. stronger years five than the On we’re predicted

states. You’ve got from funding substantial

some states XX% In fact, our XXXX up that funding level. is in over

through of that and much is yet. – flowed not So and

So in demand. you’ve got big highway years of four, five growth

Turning side. to private the

in continued the we’ve residential, to our – we see residential the markets. growth in see On

feel single-family about customers good Our growth.

and markets California, a Nashville the put San Florida, Jacksonville, housing that exciting see Southern Southeast. be Houston, the would a watch watching. with lot we be I’d and list out, of on would Chicago. What Exciting growth of markets Francisco, we’re all Looking Tampa, few

in of very population houses. So still place, low the in fundamentals growth employment inventories of are growth, residential growth

in still non-res we similar. res. very footprint, call growth our in So would out I see

positive customers are non-res. our booking backlogs, strong, outlook we’re shipping on Our pace strong – our is

see still private the we strength on and the side public So, side. both

Scott Schrier

And couple absorption Thanks. follow-up, fixed things on of in my a got front. to some for California. cost ask wanted cost I Obviously, you’ve the

Looks repair maintenance. had had we like inventory and also build. You the some

of potentially some items? we about of that bridge. through sometimes profit you if the could ton So quarter? also wondering the know thinking cadence I’m can that per a I the if the in cash And us us you’ve those given how I’m walk year, gross think past, about for

Thomas Hill

Yes.

as The So, headwinds. in California was I’d a California. I majority typical also was of maintenance tough did an it wet ready get up to would And our – the our that of – for describe about severe typical to X% costs add quarter. X%. really rest cold, was job weather were their that a About the excellent it was managing very of wet – quarter. impact team planned season, cost in for our the for rest the that’s and cold, first that,

wet. in and just You’re to when rock going crush cold inefficient trying be it’s to

weather when fix So is is it weather run you and good. while the the it bad

did was we which inventory, of actually bit a We a for lot headwind in a So the R&M had quarter. season. in planned wet us. that’s in not of a And preparation again, unusual little R&M, for a cold, reduction

think you’re not good going planned running. efficient people a to And the have shutdown inventories. done I R&M, with because be job You our

will inventories back, that the returning cash. of we’ve actually, that’s lowered we’re based actually to look in our all be five last fines, inventory taken years, which and over you If long and it sizes, four, really we’ve

turns over last have years. inventory the four, up move Our continued to five

Suzanne Wood

that, got being just inventory about I the add to would question And higher. you’ve Scott. see I where Yes. can

done If balance of you a but that basis it be reasonably the look acquisitions at on the year-over-year and paving to – as year-over-year asphalt one that’s the a in sized side of we’ve does one the business. it appear on higher, sheet, result

look to cost actually at standpoint the your from I at in probably quarter, it inventory is the think in to quarter. the the look way did what production the better –

sheet, balance decline the product can So in see if a there. you at actually you look finished

Scott Schrier

I luck. good and Great. it appreciate lot. a Thanks

Thomas Hill

Thank you.

Operator

And Sood next Deutsche Bank. Nishu will be with

Thomas Hill

Good morning.

Suzanne Wood

morning. Good

Nishu Sood

that about Thank in are to projects would and wanted with mid the I’m mentioned low you. anticipate wanted sorry, February January whereas I the you your for more Yes, deferred start and good the morning. stronger. benefited kind dig backlogs XQ. of off be volume smaller that guidance into February digging line your – was I to – I bit. much much March long into growth, January, commentary particularly just year March. little single-digit volume-wise to a and would

some correctly? what quarter? to So And out carrying does really that then momentum was implies just terms in of strong volume strong understanding that So growth it I of speak Am in January? January. how the

Thomas Hill

Yes.

volume the overall is very So, a California, exception which shipments obvious just very robust quarter. is a of was the that with first quarter was growth, And in washout. widespread the encouraging which

private quarter this signals customers as will we as to willing And is, XX% in four, happened shipments as highway in our they customers urgency real the work February next there and And again, what was were get said, where It years. As is shipments when the remember, that and out to the And of the increase January. flow-through get up we up, in in came said – to said, That’s in third guidance. quarter, as that was on increase first and got on made completed, in of get seeing demand we’re a continues the that a we really seeing more next with growing the may XXXX. time some over high their of said, and move comments lot the those work funding. double-digit. what January. actually if big they’re you on The weekend to jump sense were had get in is the I What that spend And predicted, was five It the project. we we’re from flow-through big we March year-over-year. backlogs. flow-through to funding into continue of line for can done we to to our evidenced pent-up so

rest remember, February, it’s far predicted, like first think shipments I just of expect as quarter. be March, as still that the as year, would the more the I but to

Nishu Sood

aggregates impressive is the there. growth, the largest second numbers despite Got the And volume about the of double I question, digits. double-digit market details California it. it, got one then appreciate down your thing low being

– did the footprint, you’re the particular was the which in regions? to have just it you would that? of mentioned with much you dig impact been could your if broad-based. So affected, your rest footprint? able the how You declines less drivers largest weather double-digit market How strength Aggregates What into or of were USA offset perhaps how were

Thomas Hill

I market. Well, for everywhere very saw particularly important Southeast California that strength, think except in our

just that demand states. we fourth projects Southeastern largest benefited the big from you quarter producer flowed across really, widespread. first had this really in and again, And what you the We’re scattered out some really those saw quarter into Southeast, in that year big in was It was and from last year January.

Nishu Sood

Got you. Thank it.

Thomas Hill

Sure. you. Thank

Operator

And next Thompson Kathryn Thompson Research with from come question will Group. our

Thomas Hill

Kathryn. morning, Good

Kathryn Thompson

Thank Thank for Good Hi, taking… morning. you. you

Suzanne Wood

Good morning.

Kathryn Thompson

my questions you taking …thank today. for

what out returns? color on spend on projects Could first growth building this? to CapEx. some bit so for – follow-up targeting more type – million a But and new sites. Just you give on get color more on us wanted of little the $XX you’re for the internal just there’s expected looking growth projects So

Suzanne Wood

that one, I’ll Kathryn. Sure. address

in we growth of what network we what distribution largely – are as help spent parts to the and of country, projects quarter, opening on and sort certain some was we’ve on Charleston the are there. into additional of the in the outlined largely expand Coast networks along spend Gulf terms the they the well sales before In

of California. one this greenfield opening to the and And a also from expending sites, on two having one late year. We expect which hopefully of that that shipments is money few begin in are or would three we

and go a to are don’t of what that those the the terms main we accretive definitely to other company on overall. return the doing generates what of that’s they than returns – returns have of In projects higher And than the for we say projects. the into individual company specifics returns, reason those the

blue a project versus want, causes lot it you a internally, pay As what you this it to when you it of able And sky. way to do return look the at to you get an growth to investment without internal rise. having exactly is potentially on are where M&A, want

Thomas Hill

just you add adjacent that. so in going But something additive time when to ramp-up to footprint, you ramp-up. There’s it’s and would but not – have or buy they’re the these they’re of to when also are this for and the to because flip a I the our blue painting returns franchise already protect franchise takes to you highest that some there the as it time sky, you’re little side ramp-up. a our

Kathryn Thompson

quarter. Nice in then you ASPs. And on the also perfect. confirming Okay, for job a that. follow-up Thank

spoken. standpoint, we’ve has an QX You same didn’t inventory it folks there year as with to in that not general the the build degree we’ve least, this inventory from from and build whom year. In industry look an does – been at last

be on that how the it project how second, it follow-up now? pricing could very much. type and to quantification confirmation out in of a should impacted to then you mix just the this look that, And forward? as certainly think give positive will quarter? a Just this you importantly, more XX on pricing for how impacts quarter going the months you we color commentary And really it – more Thank for from further XX or

Thomas Hill

quarter improve. Yes, was in The thank about the last fourth mix continues basis quarter to This momentum XX was, we predicted, year. you. markets The pricing quarter, third our as points. –

pricing higher of unusual. new It’s a All is of momentum our we’re also our refines majority markets. across cold wet overall, weather that But construction. widespread was of in indicative base highway vast base, which a not seeing

that the continued private shipping to that and the growth they’re one growth one – the reinstall is the highway growth the on increases, foundation think side. I and of was The fact, we In demand market for flat. all market this visibility price and – one every

all throughout up plants it’s push we’ll work bid you in April not over see And one-time work time, price price as increases bid the a know, January Our to place. and year. And were campaign is fixed increase. a

increases the is, strong. of start But important it gate to our out really XXXX I the price improve So came unit margins. here provides a think what’s good

simply margins And some row look and you the And of quarter. margins kind those this circumstances under face disciplines quarter As time, that that’s difficult us. XX% our were usual And conditions. is we if tough people. sound remember, said, in the up unit you a we’ve pretty for if in this over a by back execution the of unit is grown second in

six roughly $X from almost back years, in to gone $X the compounded $X look under basis the quarter. rate trailing first XX-month just from that’s we’ve growth unit – you saw XX% annual to XX% and we $X If margins, on

to we’ll off we ops at keep And and thank is our it. hats and sales our my So folks job for that. and them this looking

Suzanne Wood

of just I unfavorable back product – the produced a one thing Kathryn, that the points. of basis XX Yes. about commentary add going sales around mix to bit base there, our and fact that

in sales increase they first constituted about base XX%. year-over-year. substantially pretty did Our quarter about year, year, XX%, the this Last

about that’s XXX bps up. So

that is product think basis XX given increase good. pretty of points, – I to mix have about only So effect significant to a

Kathryn Thompson

Yes, perfect. Thank you so much.

Thomas Hill

Thank you.

Suzanne Wood

Sure.

Operator

And our Sachs. comes with Revich next question Jerry Goldman from

Benjamin Burud

Hi, good is Jerry. for on Burud morning, Ben everyone. This

Thomas Hill

Ben. morning, Good

Suzanne Wood

Hi, Ben.

Benjamin Burud

Good morning.

Just wanted on pricing. to touch

last of improved if year, look back XXXX. we the over So course to pricing

facing be second-half. result, So comps probably as in a the you’ll tougher

meaningful the over or obviously had year-over-year, comp think As comp that the present you Should – kind a pricing does headwind? about the of excluding steady strong year, of pricing mix. very result, course a X.X% we second-half

Thomas Hill

nailed you I it. think

we would in the went as plants, increases expect and effect our we – think, to said, price And I the guidance. our fixed so remember, into in April. with throughout have you line January to be I steady year

XXXX. our the support year. the some that bid some smoother pace, we’ll ramp-up and you is were that X% it and I of push we’ve it price of our up said, You’ll was which got continue see in to and guidance our And our kind a pricing, as X% our time, those of see – you’ll work, to But that we backlogs pace I majority that whereas will looking mid-year at the over booking work, a in campaign and is given, to would and see increases. throughout XXXX, book remember,

Benjamin Burud

strong a that Got kind year. it. XXXX XXXX? you’re mid-cycle away. And about thinking appreciate question But addressed few keep and you an idea this mid-cycle strong it’s give can that the level It’s but this quarters into Can I pricing feeds into how to in kind of path of we a continue us momentum obviously that you performance? earlier, very of

Thomas Hill

– you to that going turn obviously, XXXX, would early. for guidance I too to think it’s not we’re I give

in they price And what and visibility I drives I It’s still is give the knows growing is there coming. there look XXXX. – the out that’s in way in can marketplace. everybody would first what price that We’re people think work stages demand. But of important They coming, what prices take and out advance and so at that secure very in so It it’s visible. what’s is highway about know its there.

they’re And helpful a private saying XYZ going a but there, less jobs. sure is do a little work little state less so to visibility it’s whereas and than in

So I to again predict momentum to increase demand. – visibility to continue the over continue underpins to highway by time the pricing would

Benjamin Burud

risk there project There’s XXXX see like or would delays we quick the what to looking Obviously, I engineering Is downside where squeeze it. And time guys very, you current Got out kind could very note. positive. one follow-up demand a that that the that the represent of infrastructure saw on demand, nothing that constraints. this in if is just case infrastructure not around? were in

Thomas Hill

enough to a would be expect flowing There’s through, I smoother. it little

to remember, couple that XXXX, were we back to bills. states highway just of new had that You was got a

year over billion states, $XX a the passed that Now XX increases is we’ve where federal $XX have versus XX bill a year states of funding, got XX over our that all funding increased billion states.

would to the or years, be to And It’s it always going air be up it I over five think or four go of be will up. a expect grows next It’s smooth how substantial. by big. is pockets this So it though. there expect be, wouldn’t it I widespread. will fast I

Benjamin Burud

Awesome. the color. I appreciate

Thomas Hill

You you. bet. Thank

Operator

Jefferies. be with will Phil Next Ng

Phil Ng

quarter. great guys, Hey,

Suzanne Wood

Hi, Phil.

Thomas Hill

Thank you.

Phil Ng

had like play held bit. growth in ease It seemed a that to And continue of Curious, given to pent-up this to bottlenecks ability double-digit some back, of demand. may some if the you had you of that’s But if the catch-up, trajectory, kind year. have did type you you see started of your you of rest enough kind quarter, we’re that bandwidth the case meet in like to growth for the saying do demand? not the have that of inventory

Thomas Hill

we that, I at production sure. bandwidth of us, I I’m hours. whatever worried not mean, the XXX capacity. have the handle about do to But do in is power to comes and Oh, capacity mean, matter million I’ve had loved to have built just in a that. plants these that all it’s in at problem. we’ll fact, tons, the we

Phil Ng

great. gears you how terms this takes. like year? of California, much to There’s expecting what then market Okay, that are shifting some And grows puts sounds in certainly and

are the SBX. public We between with you splits can XQ private start, signs public California? softer and us robust a already for what quite some sounds slowdown showing the And of the remind have and

Thomas Hill

Yes. obviously, in the first the The are – fundamentals very but California washout, California in a was quarter strong.

on into getting good a asphalt year. remember, aggregate got we’re We the steadily backlogged We’ve takes it much funding largest going But always you, of a only pretty Remember, of that X Caltrans to probably aggregates a in tell got with job You’ve million increasing SBX and coming doing and of actually years. tons the to producer asphalt. is in work two ship out SBX. X.X of year-and-a-half a we’re this you Remember, there. is already implementation. California. million And tons

our year. So booking right this and in pace is support the for The our would wheelhouse. plan backlogs

will earlier. catch-up with on works projected with good tough actually we can side, in team in a well down extremely concerned level boils side the a Time California year. We the our performed coming very to, will our not have team’s about public on Management private I’m XXXX if in if on big demand and this volumes about said excited the quarter I performance for cost California demand tell, anything It California, the performance. there. actually both California,

So we’ll have California. year good a in

would are are – across Central California, far As the on we California, Northern versus private I public we’re the Southern XX-XX, the side you, than in in – private we country split, of Northern public. like are California, the we we as about are on tell side. more probably In heavier with

Phil Ng

how if one right? April are just for And about Just work reach Got your are mentioned May? talk one your in and last you out it. seeing a how one backlogs? of competitors XXXX, for tracking well? trends in customers me. lot. started Thanks contractors Can know, and And some that some extended I you��re to have of their curious of as

Thomas Hill

couldn’t sorry, the first I’m hear I your question. of

Phil Ng

– trends about May? talk tracking May in you Can and are April how your early

Thomas Hill

the our April me Yes. Wood would Well Ms. But volume smoothly expect would about price our to talk just about out kick as what guidance. track I we under call I full-year. the to and in table May. pretty what I’ll be and have trying

Phil Ng

that XXXX customers kind Got you conversations having into it. shaking the out? And then already, how’s with are backlogs, or of

Thomas Hill

– But most in of we’re XXXX. But escalators it’s out shipped years of big come, some into bidding flow it. in we work we XXXX. work be to going to when goes that will Well, we’ll today put the that bid

Phil Ng

Got it. right, All a thanks lot.

Thomas Hill

Thank you.

Operator

And Thompson Davis. Adam will be Thalhimer next with

Thomas Hill

Good Adam. morning,

Suzanne Wood

morning. Good

Adam Thalhimer

morning. Great Good quarter.

Thomas Hill

Thank you.

Suzanne Wood

you. Thank

Adam Thalhimer

know the guidance start to volume conservatism harp each the would just quarter there? be to for sorry guidance of, I – guidance X% curious a your baked year. of part year. the don’t X% there again, on such the I’m rest but any the strong some kind Is volume on Tom, on this with in

Thomas Hill

have ship more behind. the a to on some batting remember, be going year. – you ahead quarter. I’d see the February itself, like saw so rather repeats I’d it’s to this And than the start. this first March history what. first it’s rather you guidance, still you if headwinds tell I’ll And Well, on and we’re got be But solid

we I see but what’s we it’s there, think start. to still again, happen this we’re we some and a I our see. think were who knows hurricanes and storms – thoughtful in in fires it’s don’t year, not, thoughtful and in – years, – hopefully our guidance. guidance going great and most But I we’ll

Suzanne Wood

early, to Yes. was add little would bit I a start I think it to it’s yes, just mean, that. the I a year. great

or of after that all quarter pace we so, into said, of a revising in the a to year. are Tom initial beyond of time it’s XX where the go did probably guidance. the the basis of have for to pent-up the the down XX this coming with the We effect, so some taking As or gave from feel about think year. rest the on of backlogs booking thinking only days through and the that we at bit seasonally these But days numbers path we lot we January I propelled comfortable guidance perspective spent slowest factors point of a that premature demand

Adam Thalhimer

Okay, color understood. more a Tom, particularly little on And then can the you non-res, bidding? give

Thomas Hill

Sure.

strong. As we look have been out, non-res our shipments

is markets the customers’ and In or your time line rarely in positive at very Our non-res, all up backlogs outlook strong. non-res. you good. The as see same booking pace of

Nashville, go just But in feel I as XXXX. be North they’re are – and them we shipments watch – watching and throughout non-res very about, watch include So would are in California, would some not Baltimore, strength out the excited would to excited we’re good mean doesn’t Southern from see about quite going we list Atlanta, non-res I’d side to this we’ll others call about the as out think – markets watch we’re like down. about Virginia. continue our places where that be They list a we Phoenix markets Dallas non-res

Adam Thalhimer

Great. Thank you.

Thomas Hill

you. Thank

Operator

be with will Mike And Dahl RBC Capital Markets. next

Thomas Hill

morning. Good

Mike Dahl

back first Thanks questions. of comments on questions cost. unit question and circle the quantification X% – around I sounded one X% weather cost kind was wanted on just my the earlier morning. of Good taking to for like It impact.

So terms bulk if then, to of some repair the of million translate look think, at we would the XX-ish roughly remaining, of and from maintenance that headwinds costs. the I in

should about on year through we back you as that is first, thinking periods? how And get track? So balance be then the seasonally into the cost unit of stronger second,

Thomas Hill

question. that’s So a good

this that at even go X%, our went that way. did so much think, about had tough California rain. and just said, was folks – they up a California call of now look the with a job, had will it On percent cost we happened of that. – I good I a that And

R&M, it that R&M. maintenance we what about this that efficiencies. and doing good other we don’t plants repair out, have comes that’s can and need was I would have X.X% took The and down, should – then a because a season build said run. sun And then was be run and X.X%, efficiency. by to And to about trying at you to – the is when be operating and we been time when that the again not X% inventories design you was maximum inventories will

So that’s at how I look it.

wouldn’t As expect the inventories. big sign would expect – in quarter, I see – sunshine I California the shifts running. in California to look I through back I wouldn’t back the

R&M job will I that. do with think along is And and very the running. our goes very year that we operating they and as start level a team good will talented

Mike Dahl

Okay.

flattish XX% of the back of how that’s unit for get is the in kind you incrementals, year, So to the and of that balance costs terms fair?

Thomas Hill

probably bit little a up you’re correct. little yes, said, all better, That’s in flat, but a than

Suzanne Wood

Generally flat, yes.

Mike Dahl

on question, last from product just impact the my the standpoint. mix then of And commentary, base the a understand Okay.

mix the mix lower bit pricing? thinking to you year. move a So and rebound within potentially potential about impact California the be a relates your if of full-year the for through we should base it guide think How the the about overall as in

Thomas Hill

not a expect big of anything to would geographically, base impact strong, positive to on if mix continue mix a mix, I be pretty expect would product QX. as maybe the I a from say you’ve in – is, this construction that new lot reason with was the out there I with got not But of funding. it as maybe highway strong little the

So guidance, right and and then, thing. good go This – this point the to is you a is is mix back to X I’d but not to we’d adjusted. which X by – way, back

Mike Dahl

Great.

Okay, thank you.

Operator

Stephens. with be And Grooms next will Trey

Thomas Hill

Trey. morning, Good

Suzanne Wood

morning. Good

Trey Grooms

and morning, Suzanne. good Hey, Tom

guess, kind here we actually you accelerated as lettings this? in I first shipments. seeing lag you’re or in start out the you off, the Tom, backlog to what opinion, we accelerating the into So is it sustainable busier moving seeing you from And your an what’s kind transition And the as look of have, and funding? time kind a that of aggregate – driving do stretching or the guys that you states shorter lettings? Is is see as increase when we look that between you’re at that at of guess, I work, in sustainable, this, see again? mentioned

Thomas Hill

what is sustainable. is, this I think, see I

a growth compound In as online. state state each and I as funding then matures to funding comes within that fact, over rate it is between time, think going

stronger expect would be I So it over to time.

the seeing of in is backlogs, it in their takes it and it said, it the DOTs is, it up you’re into ramps seeing it as years And highways It lettings, state’s time. is in the our it – line You’re maturing the the over we the – funding. of highway bottom budgets. seeing two highway in you’re then

Suzanne Wood

Yes.

years. I just Tom this mean It on natural a about think right progression. exactly I is is two that. takes

see we through come come it through but ramp And are last to projects now up. beginning just the hoped which takes would so to year, had you’re beginning initially some longer of have when

Trey Grooms

normal? that right. it. of you’re just or then kind that that here, into kind you back pushed it All more now year pent-up that period was of January a last And from that was mentioned talking we’re – Is didn’t demand. weather-related about catch-up benefiting was January Got and things happen to the some catch-up

Thomas Hill

The flowed talking is that I think, about. from bubble, in growth XXXX. work to what we’re was January through the well, so speak, overall

Trey Grooms

Okay.

some that weather created Did shipments ready-mix. weather as there? you any should guess, impacting of about pent-up, impact also And mentioned there aggregate flow-through? we then pent-up I And is likely level demand. well? shipments And Virginia so California How that think

Thomas Hill

weather than first. rocks, to ready-mix I’ll we tell we you worse cold so lot Virginia is Aggregate a spite in cold Virginia stone And and weather. quarter. it in is again was up very that clean wet typical a but actually were of based more it concrete is The – going impact base. the for of shipped in wet shipped actually – shipments

vertical We more weather-sensitive. this is we also ready-mix is work – It than also flat in last more flat more work did the work have year year.

good price Again, year about a we’ll will done. On it great the a year yet. I a the backlogs in perspective are and can’t good and So from very Hopefully, and ready-mix it with and but have backlogs excellent. was I there volume get is start will had Virginia, California. not in California, Same both a with booking California, asphalt in worried but will a aggregates, think this. a perform. all such going it’s The pace have this predict timing thing quarter, with prices of our asphalt, very Virginia

to those again, busy. and a Our want to really and timing. happen the going a you it’s in But year it’s it matter years, whether matter do days enough be have customers or with we’ll that if it a But XXXX, they’re do of a of good matter in of have They’re And don’t we California’s it’s good there. sunshine do solid. great will year, a of projects. in but XXXX. shipping that’s timing

Trey Grooms

a and and questions my on good taking quarter. the you for to congrats Thanks team it. Got

Thomas Hill

Thank you.

Suzanne Wood

Thank you.

Operator

with next Longbow be will Research. Shmois And Garik

Thomas Hill

Good morning, Garik.

Jeffrey Stevenson

Hey, Stevenson this Garik. is Jeff on

Thomas Hill

Jeff. hi, Oh,

Suzanne Wood

Jeff. Hi,

Jeffrey Stevenson

are you? how Hey,

Thomas Hill

Good.

Jeffrey Stevenson

on from getting might through capacity if and was follow-up provide more you work demand wondering could year? color issues My other a on first just any that just labor was California. impact contractor question this I

Thomas Hill

really it on we can so an California, just us. in for Yes. is get issue, Well, But we done. our but labor and much everywhere, not It’s not labor, have customers. pressures

that’s highway growing everybody I I customers so actually backing that this of mark – to a work again, labor done and have help a shift of more coming. think job, our past, really all get we it think. will good – affects. but the issue. in has is question is it will piece highway, the XXXX, visibility done forces And on think so But with But up the we’ll the faster can a that labor pressures contracted issue, labor-efficient, the of work of to an timing be highway just it’s But piece labor, a building us. I but demand constrained

Jeffrey Stevenson

liquid And the your business. asphalt expectations, asphalt given up of Okay, make if this of just improvement And you’d expected. that expect gross downstream with most tracking more the to product in great. profit is than cost line then in wondering

Thomas Hill

line our were Yes. but were liquid. ton mix Prices with for was $XXX up X%, expectations. The liquid actually a costs quarter hot right in and up

us So million. the in liquid quarter $X about cost

Now first quarter. that’s

hot and escalate. level fourth continues much it look to If booking back backlog quarter, predicted, mix, as the on liquid is, and you out to our for is pretty our pricing work future

And the So very, accomplishing because I ramp-up we’re the is with up. that the demand throughout important But our very is. a good what in line, that’s ramp we’ll painting plan. up catch this most product our for year. of It’ll big be think plan, highway asphalt

Suzanne Wood

I add And just would that. to

asphalt, our majority profit increased the In when we in we about with respect February, said, back as point us paces, asphalt And doubt. California, you terms to for and And And would so, now. that, feel in for of right the a think guidance backlogs from based make no on is pretty with is that gross an that booking the comfortable improvement remember, would said year big of gave the come particularly extremely Tom we volume. the that I in other first business quarter, that

an with from pretty what track been virtually have quarter would we much been certainly While there first single California, in as if on perspective, raining helpful it day, hadn’t out we every well. expected were asphalt that

can we look begins bit forward to sun the So to shine a as that more.

Jeffrey Stevenson

you. great. Thank Okay,

Thomas Hill

welcome. You’re

Operator

with next And will Adrian be JPMorgan.

Thomas Hill

Good morning.

Suzanne Wood

Hi, good Adrian. morning,

Adrian Huerta

Tom Hi, and taking good my you Suzanne. question. for morning, Thank

we in is, quarter. than did not two on M&A was activity And questions. Just of in what percentage April? last Should territories lower expect in the January second question is, Thanks. the price higher One you what this much we percentage M&A had probably increases the activity have year? what and year, you valuations your had

Thomas Hill

and consistent as quarter out it the As – predicted fourth was pretty poor in we the pricing fourth the for turned was through call. is that concerned, quarter quarter how far as as the

– and that So was the I expect year. throughout it would

a M&A lot seller a have as M&A, sell to what’s over that’s few always these always control It’s we’re of want on far that. As – don’t working and we the predict going to as happening side, they when hard of it’s to today. happen

those, I I discipline disciplined to was what – about a you’re I it, not sure pay us there’s try to M&A in And be to look it’s you then – for be disciplined make you forward the accurately. unique I’ve about overpay you going are those it and don’t get once quickly think, make sure that synergies and pressure test what is, integrate what said buy lot, us, for project.

Adrian Huerta

Okay.

Suzanne Wood

that to right. perspective. the I That’s from add would And also M&A

past to us. back If we’ve been you to over XX months, pretty of look the for XX spend M&A has in had sizable the amount it

very so and relatively or think, having sure, make I out Tom a the deal done important those stay I to quarter off said, to on whether a quiet we aggregates to there is most have done focused embedded the start get probably making to as in good for a be thing not, are business first in sure we think in is really And there quarter. the us

Adrian Huerta

and one opening three, think, what I California. Understood, you Tom year? more could and are quarries mentioned three And the that opened at even Suzanne. the And you this chances being quarries see said in we

Thomas Hill

is lot hard work and It of took a open local is to folks. It much about XX California. years it quarry took in or a – extremely less quarry think XX our anywhere I for that development.

Adrian Huerta

be big how And quarry is this going California? to in

Thomas Hill

think don’t public point. I about mid-range this to but we It’s that quarry, a at want be

Adrian Huerta

Thank you, Tom.

Thomas Hill

you. Thank

Operator

SunTrust. Nalley with Next Lee will be

Lee Nalley

Hi, taking thanks for my question.

Thomas Hill

morning. Good

Suzanne Wood

morning. Good

Thomas Hill

Sure.

Lee Nalley

good morning. morning, Good

just the quarter. X.X are past to target also you discussed leverage this confirmed the target can In out is updated that still to the X.X peak. how And manage quick. there’s your also that, times prior have there? X plan last So there leverage – times, you just you manage guys X.X wondering cycle? real times But of thoughts you target of a think, I to on cycle I’m give through at kind that –

Suzanne Wood

Yes.

comfortable well. that’s we range. leverage appropriate we an Our the remember, X a even We cycle, may cycle, our downturn, will side pretty be have the from then that. from because we through nothing to fewer the virtually we’ll into EBITDA an on spending fall target we we with bit shipments, are very not be basically if – times flexibility very think And to on spend the – all and maintenance plan gives much cycle though as to in the we’ll with as cash-generative, range young, us fleet at stability is need It CapEx. X.X through to and because go we and will be manage operating the growth

to cash to profile that what a do. as cushion countercyclical well. some that’s profit we in gives you flexible little So We like be

model, about But our the think you’re like to X times. with we if further, lower-end the to leverage to comfortable remit reduce range, We’re the appropriate we’re business to do. X.X when times. you that in to range certainly, pretty We’d was as the X were downturn. with and the be the or felt middle comfortable But X.X that the is certainly cycle entering of of the certainly toward lower-end it at within our

Lee Nalley

a sense. the of makes that All Thanks Thanks. lot for clarification.

Suzanne Wood

Sure.

Operator

turn that over to Mr. Hill I’ll any conclude or the remarks. conference back for the Tom closing now And question-and-answer additional does session.

Thomas Hill

today to forward you thank you We time and good Materials. a in the day. throughout talking to interest Have quarter. for your look Again, for your thank you Vulcan

Suzanne Wood

you. Thank

Operator

thank you We conference. do for Thank participation. your a wonderful today’s you. That Have conclude day. does

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