Vulcan Materials (VMC) 25 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Mark Warren	Vice President of Investor Relations
Tom Hill	Chairman & Chief Executive Officer
Suzanne Wood	Senior Vice President & Chief Financial Officer
Stanley Elliott	Stifel
Jerry Revich	Goldman Sachs
Scott Schrier	Citi
Kathryn Thompson	Thompson Research Group
Rohit Seth	SunTrust
Trey Grooms	Stephens
Garik Shmois	Longbow Research
Phil Ng	Jefferies
Michael Wood	Nomura
Mike Dahl	RBC Capital Markets
Daniel Wang	Berenberg Capital

Call transcript

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Operator

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

As a reminder, today’s call is being recorded. [Operator Instructions]

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

Mark Warren

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

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

You this of from the Investor the homepage can Relations access presentation website.

call this website of recording be available our a Additionally, at replay will later for today.

include and and company's described Please are statements, be in other Commission. regarding risks along comments subject Exchange reminded, risks, the and release disclaimers, legal in are filings the with detail results with the and uncertainties. other These in projections may the Securities which to earnings forward-looking Company's

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

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

like call I'd turn the Tom. over to Now, to

Tom Hill

Thank you, your Materials. thanks Vulcan our joining in interest truly for today. everyone We call appreciate Mark, to and

reflected quarter a profit XX% ton. Our gross XX% in results adjusted EBITDA, second strong and continued improvement improvement per Aggregates' our in performance,

one focused quarter increased We margins. are and $X.XX $X.XX of on our per metrics It to in relentlessly important is by most second unit it the ton.

quarter increased On our a second trailing We track XX% XXXX. a at has annual year profit our compounded rate full Aggregates' ton XX-month expectations. to the of basis, remain per EBITDA growth from gross achieve on

cost giving our some of business, few and principal of I'll with first for trajectory the these of volume, were profitability performance you the minutes our line our drivers areas. a results expectations. in overall of year, in spend Aggregates highlights in half price and Our the the

by markets particularly our reflects markets. or and strong. increased fundamentals Mid-Atlantic basis. growth same-store This solid year-over-year on shipments were the Southeast our Shipments in X% quarter in volume X% a the underlying in Aggregates' in

affected Illinois, California experienced same this, and in shipments Texas. last despite compared another weather year. to shipments wet increased Tennessee, quarter. But the also period Wet

is driver The compared price second we price same year. last improved here also. and average of our performed sales by quarter X.X%, profitability to Freight-adjusted the well

X.X%. difference to basis, mix. line basis footprint mix-adjusted with key the was increases XX expectation pricing widespread. The pricing. due were point These market favorable gains our increase Every a was our across geographic and the posted improved were On in

Our third and key driver efficiencies. our profitability disciplines cost zone, center our operational

good our teams keenly company leaders Our on progress. the management are we're focused And across making and this.

number XX% key of a our measure basis, the Aggregates of a one XX-month it efficiencies profit for ways, at financial gross operational but in June. end On We metric same-store was is trailing flow-through.

improving, Our at men of keeps incremental is into operational women at rewarding strong hard it's translating execution and level and the our the work that earnings. see to plant Vulcan

We a contributor to the disciplines, earnings unit on to margins. our will to ability continue focus quality significant these because compound and they our are our of

are As markets in of good. private construction overall duly to is second we the markets the the unchanged. Shipments year, our end view look the half of

in public healthy local is the with the funding On highway continues side, converted shipments. backlogs increases state demand strengthen and to into and being and

legislation a Vulcan the in stages Since longer-term passed state, which for and of we demand, our revenues investment highway increased early infrastructure. in that to believe last a Illinois in is roads. state another increase has We are growth of local function call,

advantage and backlogs footprint highways. In of revenue in position summary, of make-up to other for our ongoing strong us increased states This Since or and outlook our taxes of geographic positive improving XXXX, XX take fuel put highway a that demand good, are market underpins our supports improved pricing. opportunities. sources revenue our visibility and have increased capabilities the XX%

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

Suzanne Wood

good and everyone. morning Thanks to

Tom As impact certainly on of good, is important of rate while XX-month cost operating this was driver quite flow-through of trailing our same-store price touch aggregates want an the to XX% performance. incremental metric, mentioned, our I also

and quarter. this significantly Operating management benefited our cost results accountability disciplines, again

less anticipated unit this as cost of sales related cost costs. higher same-store compared for single largest was stripping of information, quarter. the about greater quarter. This in is prior diesel the effect to Our of fuel shipments. accounted a minor which year's increased the component than function by X% the The of XX% for to increase And activity, of future

and tied cost quarter are share due SAG second earnings price. including expectations the that incentives to Our increased mainly expense, to compensation-related

to Our both are of experienced. good which have we earnings, people execution, for our reward designed plans incentive and improved

derived also made initiatives. benefits from We operational our people the accelerate processes sales and and to investments in

XX-month percentage this Our as our declined and will year further continue a we focus trailing of expense, to SAG SAG revenues, leveraging costs. on

non-aggregates on I'll our segments. briefly touch

by profit million, gross $XX year. due projects in on basis, to Arizona same-store increased $X market. as was Asphalt compared X% prior X% or of the an Shipments million, to a the large increase

good, the on year-over-year effects due was California the weather growth While shipment adverse Texas to was and expected we less than of it volumes.

rose partially quarter offset unit Asphalt higher by asphalt XX% X%. which costs, pricing This to in last quarter liquid this second was compared the were year. by quarter

higher with volumes. in with reduced was profit last gross offsetting concrete line prices QX Our year,

times X.X%. XX average has debt-to-EBITDA changed to is ratio Turning interest except our that average from debt target is rate leverage of our first years, maturity net the and our balance little to our weighted range. now within X.X declined sheet, quarter, The

Our structure leverage position provide with significant us as grow we to debt flexibility, continue business. and our

cash year, information the guidance as full our of EBITDA on slides, the midpoint supplemental using the X starting point. flow page On the our discretionary find of for expectation you'll

capital capital. we our change, discretionary XXXX flow cash reminder, for and $XXX and million. working basis, interest, flow to as As less EBITDA define cash discretionary a is this maintenance projected taxes be operating On

and priorities. were there important repurchases our the no M&A these While remain share no capital during of parts allocation quarter,

million expectation projects. growth approximately of spending and maintenance our $XXX reiterate on million approximately internal and we operating year, full the on For $XXX CapEx

before $X.XX billion. $X.XX over back gave I annual have of Tom, now, We XXXX be first the initial guidance opportunity And try this in to half to to and we turn our through take reaffirm expectations we the consistent billion performed our I'll it thoughtful of guidance with year. XXXX when adjusted EBITDA those And February. between

We believe the we are well positioned half of this year. to continue in second the execution

are the with in the with We challenges related can range. and the the that comfortable we year mindful, middle range, remain quarter of and, however, finishing initial of therefore, guidance storm third our that characterize

some I'll turn now, back remarks. And closing over to Tom for the call

Tom Hill

And to take of the each results have want high and this to people proud as sales our very our this excellence to women our taking thank performed delivering financial holding other and opportunity of I'm standard Suzanne. for promised. Thanks, how care year. and on customers, Vulcan, men of teams, a operational especially so at our far I operations

important. Our one is our always financial number But is performance priority. safety

safety metrics to Our our home our and safely culture every remains day. strong employees are is number is one It industry-leading. priority safety and critically send our important

opportunities As geographic the continue capitalize growing forward, will local market unit at our we we Aggregates' advantage outstanding move of margin. to take on continue footprint, level, and our execute

take Now, questions. your we'd happy to be

Operator

Instructions] Thank you. [Operator

of Elliott We from will Stanley ahead. take our Please Stifel. question first go

Your open. line is

Tom Hill

Good morning, Stanley.

Stanley Elliott

doing? all morning. Hey, you How are good

Tom Hill

Good.

Suzanne Wood

Good, thanks.

Stanley Elliott

guys quarter. issues? particularly here Could high with on quarter of you kind Congratulations nice seeing you're the what level regionally weather certainly talk the --

Tom Hill

level, area each performing, states slow high the you just from the start good. East. how I'll public is private and if described demand is in a look demand very steady, geographic Stan, Mid-Atlantic at highway

Mid-Atlantic in Importantly, in growth XXXX. we're the seeing robust states pricing in margin

Southeast states States, of United the to the are Southeast Moving the majority vast strong in markets. really those

states but just growth bit from tooth. see watch a private highways. we're a of private growing, Miami, in in the areas, good very I the private, shrinkage Nashville Nashville, demand little are we seeing -- think the Miami. bit a couple the long rest The little healthy of private on side. a side, the of of is sides it's Southeast

good So volume.

We're good are this United also is the management. we expansion really this by operations, States, cost the largest And largest responsible pricing -- far seeing Southeastern in by remember producer. good and area, driven margin in

actually We we're we're by saw pass market This the a We're starting with. Illinois. thrilled which demand see bill, work. highway is private and in pickup just to An driven encouraging Illinois seeing turn. it it's area, airport tollway now --

So, on side. public more the demand coming

improving. last these a leverage five the growing. is improving, really is also is It this or which performance. that on, for able really Res now with to are good we're is good prices This six is business, because news Non-res and coming volumes struggled years. for has Illinois, news well-run

in price Texas, to on res private the slower over very and bit little side, and North concerns growth, slower DFW/North Texas. Moving public non-res, healthy on pricing Texas,

slower, bit I'd side, actually bag, South a hot. mixed Texas, little is Non-res healthy. private okay. public we really res see demand a Prices very okay. say The but

we've private, is XXXX, very on Coastal the strong substantial seen margin in exciting market very Texas. out be will both and good and of sector. pricing a It And for anything not XXXX. expansion really energy Texas, this public Coastal

California. us. to over despite -- This exciting Moving weather, market is for

-- Southern Solid The private growth, Central -- in side. me in and California. the pricey Central gotten excuse solid particularly public has growth, and particularly Bay on private

growing has watch side lettings. been a growing, focus big got our fast is and maybe for there, Public and So backlogs We've but highways. accelerating. there us highway growing

spite weather California. see cost is this California in single-digit bad in good year. very very good, And Pricing been very high We seen good. in has we've control of

California. I I'm substantial -- So is growth, about not. particularly, margin concerned everybody

In spite fact, I'm really performance thrilled in wet of our with weather.

Suzanne Wood

Yeah. to And one just add I'd that. thing

terms first in with were very the us will pricing the quarter, widespread in remember of across you saying markets. country gains think all the that I pricing

pricing year-over-year time was and Our was save Illinois at key which one, in up winter. markets it the

So particular concern that wasn't us. a to of

quarter, that of rest Illinois those each the markets our of key and had quarter second key In second pricing the joined year. markets exceeded last has

a thought as that was well. very we sign positive So

Stanley Elliott

last year, of be it from half would cost on anything the it second me, be would of pricing the that Are for environment? seeing concern what's the terms whatever And going in Perfect. the labor, in pause then you environment. happen on to be

a you've CapEx corollary quarry about at the structure forward? in And level that lot level. how nice to us terms the of done we and and reduction cost putting cost with going Help a of that, job managing then distribution kind at of think that a of growth as

Tom Hill

very saw cost I the in you good quarter. performance Yeah, think in a second

of operating our through number eats which spite Our total X% states, really wet of up cost was efficiencies. weather sales in up a of

we is, stripping quarter that. of growth. in sales So the say increase of The volume you anticipation the Suzanne heard overcame biggest second was driver

the time. take all I'll problem So that

We saw our things good the on efficiencies improvements cost. and operating that drive

Our more tell I the to operating their operators you can't how cost. really improving folks that very efficiencies come. focus on on drive our are are focused this,

take to are because of to as able important those big But so line. that based is margins the revenue This know, on our incremental driver you performance bottom a in winning. and unit QX, they it's being

So and as of describe year, us would rest to the to keep more improving operating the I come expect would I efficiencies. our

Stanley Elliott

much. luck. very Congratulations of you thank best Perfect, and

Tom Hill

Thank you.

Suzanne Wood

you. Thank

Operator

of our Sachs. will from is We Please Goldman next take go Jerry ahead, question your open. Revich line

Tom Hill

Good morning, Jerry.

Suzanne Wood

Hi, Jerry.

Jerry Revich

Mark, Hi, are how Suzanne, Tom, you?

Tom Hill

Good.

Jerry Revich

spot half is of Or back Good. in mind cadence so Can pricing heading the year? should six end in book, mixed we there about your you on if have guidance the the high factors market months well? talk we the pricing as keep if the I'm are still that achievable? into wondering of the initial Now

Tom Hill

we lot price. know You a about talk

number Alabama, that priced successes of in a plant We to increases most Gulf see mid-year Arizona. fixed price was January remember some fixed plants Virginia, and to of did of some fixed Coast, the that goes think -- in it the February. markets I in

that's XX% not work that's -- as our work over we bidding a tell spot We campaign and we time. is increase, that's a you in market bid of always The price a other speak.

we And those balance feel see our year our we visible what of confidence we the prices about market bid. highways. visibility and and will all up good market the into driven pace, of through by and that's growing a growing public as backlogs And think particularly, fast and move very in we booking the very

with going, pricing backlogs, back very as at, the our and at we back think Suzanne that price I look is the we will be pace. are look that line pricing in increases year and booking the And how as our as you comfortable our in balances guidance. So of step

Jerry Revich

probably to that… of guidance? of gravitating have in is put is to any north the And high we're end of up So which you'd of potential the guidance pricing in -- It compared sounds back to to X%. high implies midpoint get there it, the half call terms closer to, the the end, it to the X.X% get pricing to toward like

Tom Hill

of range I middle of -- toward would you say say the guidance. the I'd more

I think goal. realistic that's a and very achievable

Jerry Revich

And And a gotten gross be the structurally SG&A asphalt, is have the gross X% then for at to we're X% mid-to-high to different to from gears in when cycle because wondering, that past business margin business standpoint. Okay. about a this in to teens the folks compared shift anything margins in that in you there looking I'm has sales. past,

even That's contribution that not a through with profit you're getting aggregates. flow a fantastic great in

wondering, mix Or can this get I'm in past? we margins? when asphalt there structurally different teens So the versus those back is something to type gross cycle

Tom Hill

improving Well, I is no, volume Overall, a think in answer cost. line profitability is the both unit And we and and there's a in change are pricing the I in seeing think profitability. you're This function structural simple liquid turn nothing product seeing Asphalt. Asphalt there.

of was volumes weather X%. where some -- And up spite You were states. Tennessee, California, in saw biggest and Texas that asphalt in volumes in of wet QX that up with both our

were Liquid million. $XX up costs

However, shrinking in to quarter due flat spiking. levelled liquids was the flat. quarter, This pretty to and six -- first been off run margin through a That it's remember prices half. unit ton first per stopped gross fourth profit quarter much as asphalt, you of

rise would margins I to stabilized. ahead, be and rising liquid as has unit asphalt prices are on prices the Looking expect

If on at guidance maybe I the you the step expect little us full back a of in end to end and asphalt. up lower year, look would

we'll in in shipping don't function the and have we end wet And the Texas just that of days of the that's before that much so had enough first really half to volume, we We of year. a the know California get year. weather the expected rain Tennessee,

our Now backlogs said, being good. that are very

margins Our growing. growing and lettings are the are unit

we're in lettings states, So in between and rising product line future. has increase how dramatic very Vulcan unit margins, big bright backlogs, a a funding this

Suzanne Wood

for the shipping days we're I that very a to a guidance know we Tom's the add have right, cautious and of left all the just with year, to timeframe. ability would being that in remainder evaluating in of to compressed bit of of contractors our respect And the you the number perform work

said to If you that. of as Calcium, think of of which bit little go probably gross non-aggregates for gave as year-over-year that, by about be beginning segment, and think toward XX% growth consensus, most lower now to the the the back we being at that Concrete And XX%. well year-over-year that XX%. to the profit at I that year guidance we that is that terms we grow the consensus the of asphalt, We the gross Again, profit will at a end about in cautious on is XX% anyway. expected

Jerry Revich

Okay. I Thank you. appreciate the discussion.

Tom Hill

you. Thank

Operator

our from Please Scott of Schrier go Citi. will question We take ahead. next

open. is line Your

Tom Hill

Good morning, Scott.

Suzanne Wood

morning. Good

Scott Schrier

everyone. Hi, Good morning

this characteristics have good absorption, of the rate margins. run So possible range, support your and taking I'm you target you're XX% last digit mid-single are it It a maintain XX on over of levels. cost course, asking stripping not control, company given to sustain They your of quarter. like be had you in you've to norms level out would account of way And incremental XX% the possible you months, what have I'm comments is to all you looks but cost fixed elevated got volumes your guidance, the to the to it an commit profitability? Aggregates? curious Is into compounding needed? it pricing profitability

Tom Hill

with on misspoke mean of stripping, through out -- coming the continue demand. first That of -- we and if stripping way. highway because to with is the not the what of I we all, me particularly year demand I think, will let I didn't see the

the six up, and big by it's to So a growth up expect good between will stay while, Again, up at stay demand. they stripping next for volume I know that's months. anticipating because costs thing stay least them would a I driven public for

have this a always out tailwinds. point I think, going played just a offset can back is the of a we is of in But above lot This row happen there not sound things is tailwinds. a you good like XX, the outside, and we're record, you can't you XX. to we things but to broken well while hate lineup sport lot get to to take a for -- that

have not are to with that stuff. -- some you're going to you're get going the them, good going things get along to challenge You're to you going

have period period from experience, I a have bring just you above Can So you XX. of Yes. can XX? a at to you back Yes. But we'd always XX? below think,

Scott Schrier

road through Got moderation or side that, been if more And you're seeing wondering your curious, cost and your I it. and and markets, hearing takes efficiencies rail things and Understood. then to there. in a containment. I'm also vessels of cost another the one on ask we've of either And the in And little to you if could some I'm of profitability some container wanted costs. on some the about there's the puts long-haul networks speak some transportation of

you One Aggregates moat enhance heard could of in more up is we've about is open generally competition potentially the spoken but cost that the the in transportation the potential things business, moderating higher actually the past there pricing? some of pressure that economic costs you. Thank have or

Tom Hill

the not of actual think and that. referring I'm I logistics taking sell to out the most our first taking cost -- the It's rock operating to all, logistics costs, cost transportation. produce actually of is

of So sales I'm to our really referring to ex-transportation. produce cost total stone,

by Going for to costs long-haul transportation rail. we your rising transportation, question, are particularly seeing

Mississippi know, higher been is the have flooding. real spike, transportation and you delayed and a costs this it's River but year. The As this river to due

good path. to particularly you up long-haul it actually we continue see is transportation, it at pretty go not I level down, no escalate So, tell would going a that

Scott Schrier

Great, it. thank Got you.

Operator

Group. from of We our next will Thompson question Please now ahead. Research Thompson go Kathryn take

open. is line Your

Tom Hill

Kathryn. morning, Good

Suzanne Wood

morning. Good

Kathryn Thompson

primarily Illinois funding more thank press policy terms and in -- more looked Thank my And color actual continue Or funding up But the give also markets and related the you lettings for just of Hi, following And believe has SB-X serve on of the for give to increased and SB-X was Prop historically, in today. impact with today? questions do there you. Illinois, that X, you back you X. release, you infrastructure? taking what end Illinois those Prop shifting and -- for On on will initiatives? you could grow? when it with two seeing full thanks funding, given what are

Tom Hill

private, Illinois, the we focused and really the service service and the on the highways. not or res, public, private we full it's particularly we're and -- market non-res, public

the It's to turn -- as how will every funding work take it to does state. flow see Illinois nice how -- in that that through we a the while

However, close get But there of think up to doubled very largest Illinois, particularly bridged our and in substantial which there. Illinois funding, tollway because quarries their is we we'll airport is one capital gas is -- tax for $X.XX firewalled. that over in expenditures from frame. to $X.XX, will It actually now Illinois will the over a six-year take highways double ship time -- it

we're said, I to see turn. as starting res non-res And and

slowing well very this is we're business think us. the managed a for res, I

So and earlier, this -- that. volume improving margins the will that of are margins unit some, despite volume. Illinois This so challenges we growth we'll put because exciting, enjoy to we've as been I for really turbos regardless said is put in improving unit

highway Florida highway concerned, through across in those fiscal XXXX me. you lettings double As spending allow year excuse in XXXX. eight and nine or Georgia be far if as up highway of lettings run XX%. We're the will country. highways, will about excited it is I'll me,

We Act Texas up gone since doubled have excuse XX%. expect Improve up XX%, have and to VDOT Tennessee up -- authorities me, passed. revenues Carolina up South in XX%, be should regional the highway XX% be lettings

through $X seen be very fiscal XXXX, seen double. XXXX-XXXX, will just We've in year, They is which California have lettings another billion started. we year up SBX fiscal exciting. since

over point, improving to very highway your lettings good So XX the are next months. and dramatically

Kathryn Thompson

the Okay, seeing markets? of your market. of And you. weakness residential seeing growth you're your cadence -- major Thank for very helpful. areas on end and then you to shifting strength, are what's the Where

Tom Hill

which Thank you. would be it's is a gotten in pricey. Starting has the us in good San California west, Francisco, for res watch

residential, for and across the vast Arizona, The Houston res res market watch to of contraction growth. and Miami. DFW, slow to high, due we're Moving in in and in watching quite time growing good has our Southeast, in side probably a is very long the markets. the as Texas, are non-res the the Southeast, some majority In private bit really residential in side a there the quite is I us would long Mid-Atlantic, private side strong, private been it's because describe Nashville, shipments our the would story, strong. watch the it a which be different it -- In is little time. steady where been private Miami is probably

Suzanne Wood

mean the we just be geography, would I and close to direction. we looking that interest houses. anywhere the the speaking, population mention environment relatively then bit. certainly a of it markets we you've watch growth still moving to mean, again, I times. a place positive employment low can those growth, -- I are a fundamentals that us continue we're generally Good mean with level a Kathryn, have peak starts that it's footprint fed next in rate in mean is our I relatively in are the Yeah. time respect to that add the of with heard res, to fundamentals and are those not going serve, change, things at while little our unlikely in all back always I to rise number signaling rate good and the

Kathryn Thompson

very much. you Thank

Operator

We Rohit of will Seth ahead. question next go now take our Please from SunTrust.

open. line Your is

Suzanne Wood

Hey, Rohit.

Rohit Seth

you how Hey, doing?

Tom Hill

Good.

Rohit Seth

question My projects. the energy on

seeing You the there? but you bit set you bit just prepared touched opportunity little the little can and in a remarks, about are talk what a on that

Tom Hill

Yeah.

dozen ton of Most, will that a are between multi-million And the in majority stages about are at vast XXXX. in and different the XXXX work projects pipeline. that this projects following are ship stages. different multi-year, are We all

the around we're those. bit So there not few little yet. fringes, of a shipping a There is

and get folks, projects get So, ready to started. and get those them numbers we're help trying those

with an it Bluewater these with that, exciting. us our gives They will here Remember projects. edge be capacity,

would impacting sometime I they working on But until are them. We XXXX. them would expect to us mid-year -- start

Rohit Seth

then wanted your just I backlog. And Okay. to about talk

together in stable? deck, you or just guys showed your down Would put a characterize that as moving kind highway the of You backlog. up, slide

Tom Hill

describe up, to seven moving five will work years. over would that highway dramatically I to next continue and escalate the

Rohit Seth

all That's got. you. I Thank Okay.

Tom Hill

Thank you.

Suzanne Wood

you. Thank

Operator

take Trey We from our go Stephens. next Grooms of will question Please ahead.

Your is line open.

Tom Hill

morning, Trey. Good

Suzanne Wood

Good morning.

Trey Grooms

Hey. Good morning, everyone.

First should on, a just guess the benefit mix here there? impacted some in be that guys product third the benefit in benefit of quarter? price. mix quarter housekeeping Was a more expected related realized mix I that on on you any there then geographic or And the was

Suzanne Wood

basis mix. geographic XX The Yeah. was points

Trey Grooms

Okay.

Tom Hill

of as half As but second geography expect, mix, far mix of the wouldn't the and dramatic some I second of be bit always the be half expect to it kind I in year. a wouldn't little with there product,

Trey Grooms

half we at similar be when X%, back the kind in these increase should that that think on said rate as thinking enough. is costs, also think in -- And that costs, to it quarter, can and freight COGS to haul with look you at quarter said and for I Fair going next. guys be you you mentioned Okay. one it's going ongoing, happen And the Thank But in of the still you as you. we're stripping the was looking stuff. you then of costs? the that then, we longer the we I up a about the that saw from also we course look it's

Tom Hill

the short your I yes. you answer question is to tell would that

doing folks those a disciplines said that job, that think operating good on that. and are as our earlier, cost with drive the efficiency I I executing

with now margins. quarter in margins XX% really second solid to that this the double-digit that the important very costs. row a together money. is disciplines and unit good take unit And saw you quarters of about the that three spending operating it's a take it's think to operating execution I combination about not up We cost of that drive We've margin improvement, It's in execution. and $X.XX. unit pricing, it but put

now at in and per our that profit unit thank they like me improvements that those in heard Vulcan double-digit you men the I'd drive turning again, women ton. gross are to So, because margins, do folks, consistently

operating us expect continue to disciplines our cost to would the I follow. So, and

Trey Grooms

to operating on the know been but Congrats Last there. guys. you Texas really good -- you point results earlier execution you for the has Illinois that mentioned on Suzanne me market on. I and is focus Yeah. just Tennessee one a saw of for in course, delays,

talking in we think a were in and is a hours so there only ready-mix. many quarter a many year. But about I so day in and days

may So, the underlying looking the we know there, on this kind to of of in some kind -- guys, as that's But, we're delays of for that you or these saw be I is that at opportunity about clear. some markets how think these we of pent-up the demand be execute pretty demand realize do might there?

Tom Hill

Yeah.

So, I think you're right.

now. the than half less year the You're There left left year half only is exactly or right.

also for transportation. some have bottlenecks We

is not away. underlying think the that demand is there, going I demand

would XXXX, year saw we will example January. this January of shipped in the in work whatever when perfect that and to XXXX in ship ship is pin-up be So we you in don't that that

weather timing and on really to of degree will a some projects. large it function some So, be

-- of we don't how step look stop let the you think at and and back mind, the if I you I'll kind know year. second of half

As you with heard very Suzanne our we say, are guidance. comfortable

upper I jobs gave time. you would to tried said guidance would the increment on The end in end February. weather be be and thoughtful when jobs be weather lower good delayed. think We starting we we and

strong really for guidance had guidance through a the extremely giving of start with of the XXXX pushing us be year, the jobs. in what range balance timing to do January that good -- at staying from back. look you to is on with We year prudent we want As that about work flow and weather

is It all the is that We've But too luckily The experienced shipments, January. the quarter storm high remember to construction the season, storm been of it most flip heart we quarter. rest guidance, the same months bad. actually of one volatile time; the third at has and our the the also end now peak next didn't five other of our the season. of is at the year us need

middle So, realistic about we're storm the to be transparent trying threats and just of construction in peak season. of

move consistently line year through guidance. in our the to you If been pricing pricing, with has

We expect that of that guidance. I our to continue is the in solid for at and the rest look our believe year,

As executed disciplines, created well we we operating cost about our have talk savings. and

has of All margin double-digit that continue the of We unit half the year. growth year. that for expect for driven first the would to balance of the

guidance. high So, the I be would on side Aggregates' volume of think we'd

in Asphalt of was California, Asphalt, Asphalt work the rain states. are those biggest Texas, as because to first half Moving of was in -- delayed talked we Tennessee, three about our

in lettings big So, just growing margins, growing what number of and very talked of of unit work backlogs get of back that times. may about pushed and we some the spite because

Suzanne extra in As margin incentives SAG. and unit investment a cost on in mentioned, bit

So, I bit a A this the expect play out year lower would earnings, on Asphalt stronger earnings. way. Aggregates' to bit on

all put and together, year tell You range. that I Suzanne are the the of you confident that guidance would our I middle in in

Trey Grooms

Thanks a lot.

Tom Hill

bet. You

Operator

take Garik Longbow Research. of We Shmois our will question now from next

Garik Shmois

all for the thanks on detail the guidance, Sue. And thanks. Hi,

we're about stronger and outlook your of my XXXX. I kind a formerly backlogs questions strong, are But geographies your wanted very I You know across of a there. answered you've not lot talking got to ask

it be gotten to as But visibility next the would look you XX just your over here what months, volume sounds -- better. XX out factor weather outside say see growth if you to like limiting the of has drive

else constraints volume I grow to it out it, to mid-single-digit your clip capacity would you? call could be the anything certain for ability there that it that is in inhibiting market to this guess low continue So, there limit factor or

Tom Hill

factors I don't would volume limit that to think low inhibiting growth. -- mid-single mid-single see I

think that's achievable. I

it gets tougher customers, for get you for labor like because us but our above customers. of transportation and when think that, for not things our I

even shipping excuse and guidance. a You and this also place. are of we're a highway dollars seeing jobs, over are bigger maturity We've jobs well of that within on year end more had mixed some few our it of can big with still lot in me, range the -- and timing highway of complex all work our delayed which the be the bigger top

it the see you for numbers don't answer say. to that So, question, your I

transportation get Now, start single-digit, to if yeah, you want our capacity. you customers' with compressed and just to to get and labor high

Garik Shmois

Thanks. compensation the costs through the I bump quarter, the about due balance we how ask year? wanted Okay. on just just given the the performance think to to just of in And G&A G&A should

Suzanne Wood

start Yeah, to -- year somewhere The had guided at be back $XXX that around million. a good expect we the $XXX million, number to it's initially question. $XXX-ish million. now of We between the

as that percentage to continue will of put last or to a put SG&A, look with we tick will expenses. that. say, expenses maybe I revenues, our in But were line leverage basically year, ways they SAG Obviously, our where should a year-over-year us below. just for

unit did again, to our And that here improve of it's are margins. we we important course on I we investments the made because very some -- a serious

initiatives We under have a number of operational way.

And so, results I those think further are there making bit to investments a investments good help to and initiatives deliver quicker make. hopefully

yeah, So hopefully is helpful. updated guide that

million. $XXX the year for the is full think about consensus on SAG I expenses

pretty in with So, much that. line

Garik Shmois

ask just one Okay, thanks. to wanted more I question. just

you because on a evaluating job-by-job Just pricing, continuously about increases you're we know are talked any markets, on don't, pricing, basis. like I mid-year you before, price seeing

guidance, of But environment? the pricing are better more structurally, that terms just maybe are your end given potentially there of in supply in seeing higher strength in any demand fundamentally on supply tighter turn and attractive toward the coming that markets are demand environment

Thomas Hill

is the the confidence demand markets coming. pricing opportunity. profitability. pricing And there risk sizes have and is, are think can certain form the on to I And they visibility on people's and pricing tight. driver worked is take that is few big But I they on there where think

followed about that's broad as and And majority it's local in in we all funding, states drive of of that increases -- and pretty the a it's the talked think the spread our state followed revenues. lot I vast

So, ingrained, fundamental good while is more that's a it's the means big out it is more thing. more I which long-term. driver there, think and Because

Garik Shmois

thanks Great, for help. the

Thomas Hill

Thank you.

Operator

take Jefferies. We your is open. question Please from our go will now Ng next Phil line of ahead,

Thomas Hill

morning. Good

Phil Ng

Hi.

Suzanne Wood

morning. Good

Phil Ng

side. the acceleration pricing in strong, bottlenecks on on next the this few years? level year see for you the pushing to in of growth Nice momentum pricing on and quite Is Aggregates, are morning. Good shipment sustainable this backlogs some

Thomas Hill

think the Short I answer yes. answer is is

Phil Ng

Okay.

Thomas Hill

is because that the on funding. that the reason substantially confidence and and growing of I growth is have long-term sure how And and the that visible And highways side public in how is.

growing, very And that take confidence that that throughout so is there can people and construction those, -- protected. they shared you that sector picked visible you is Gives is that and price. put on the risk

Phil Ng

wind it the Fund next just Trust expected highway for at Highway that level, year. to state funding on driven and more with Got funding the has note, most appreciating that down the but of been

before are the are done. timing at, a if from that you some nothing of What looking you think, perspective gets milepost

projects some a stall little these push see You out bit? could or of

Thomas Hill

demand -- Well, first don't of I funding. see all, the how of because the stalling Federal the

total we'll step demand. back funding, at first then Federal If take, into and let's highway you go look and

The House are Senate working a on and highway the bill.

and policymakers on working are package now. key committees reauthorization Our the

Phil Ng

Yeah.

Thomas Hill

Environmental a XX%. is on that. the We'll funding which what of with Recently, increase big the funding part working would a Senate see now happens Public right conversation. by is bill, Works Committee ongoing And

if highway said But Feds really it the are just remember funding got are important our not to well one, two, the they'll to funding highway facts Number two – our They'll that going governments states FAST you extremely keep make extremely Act regardless. highway to go down Number the funded. down are – reauthorization, well and states being and expires. let there even extensions demand. about comes local bill when

of billion over states XX is $XX states. increase an in So that's XX%, funding Vulcan year up per in

flow really a bill, one, the through to $XX put remember, seeing is that $XX funding and which starting ship over XX states in Federal starting billion to perspective, states. that's lettings Now those – we're you in grow. are billion that is And versus XX

next grow, years. to absolutely will demand grow highway over So seven the five

Phil Ng

Got it.

Suzanne Wood

historically, past, just to when in bill And renewed, the extension I times bill would – in add that Federal have time Federal this mode. states also at that a for operated to be was it

I you a to would about So, other comfortable a it's is that, make point do I a that local and third, state if among are Federal, the that, think they with and how doing third. and understand divide third, the levels, spending highway

So importance that we of about because the a about lot the and this funding represents of talking that's spending. funding why and it, keep local two-thirds state

Phil Ng

the a outlook color helpful from question strong, really That's you, for And just Suzanne. sounds guys. one was and last these capital M&A, me, about big curious it. in next growth Based just directionally, deployment how obviously the of a years few for sizing target? definitely think some one There you of years directionally, and ago, pipeline Got -- how the standpoint on about few priorities? but just few potential the for market should a thinking we CapEx deals

Suzanne Wood

I It's mean, absolutely. loyalty in typically the deals opposed Yeah, to the and the been as big arise, have mean take variety at I our bolt-on We good if the market. done look past. a practice more would and – deals we've at come go in M&A. we you of that's looked just because M&A, But the when continue to M&A, do to they be disciplined very so. we approach been with that. to

they that of deals have us. so They have at to to synergies they the value hurdle significantly be we return be are rates that have deals and from we can to to quickly efficient They be strategic something franchise, to something derive – extends the least to to have and able to be big accretive have our We the profile. the integrate them. They get that over. investment very on pretty to have be have

in about million continue growth those. right we blue It if going remember paying really is the EBITDA disciplined, have crazy generate CapEx, that multiples If without we we're that projects, we're but to about event. to growth without uses – are be excited goodwill other pay, not thing. perspective, were internal of on you to that mean, enhance our we're this year sky we bit wait a be to from a to is we think not about going and to way of – M&A. spending we're about helpful would a lot capital going to you that look, not And and any again, of might for So a growth is risk $XXX some do I

very projects on that I'm $XXX and some those a are that to Carolina, growth this part. addition million reminder, are beneficial And we excited that to California, Greenfield this year working in us, embedded are projected South are of in areas about geographic as in personally, quarries that some Texas, that which and just are spend and

that the reach to extend our in of ability come and they franchise We also have online U.S. a number when sales strategically yards located would our customers.

value I projects. those of one pretty is on these EBITDA a M&A some the me, low investment but the So enhancing, put return through And growth pathway, like we franchise review and as well. are extend accretive risk internal for quite of they strenuous again,

Phil Ng

Got it. the Thank for you color.

Suzanne Wood

Sure.

Operator

next our of Please question We'll Michael Wood Nomura. ahead. take from go

Your line is open.

Tom Hill

Good morning, Mike.

Suzanne Wood

morning. Good

Michael Wood

taking for in [Technical that on my Hi. and your negative concrete? in at two large the to positive had impact all state merger pricing impacted of wanted Difficulty] the markets in ask or Hi. Thanks China question. I cement owned does by a are

Tom Hill

I I a impact wouldn't see of see it for in negative, don't that. affecting our or positive lot markets concrete

said, being that we… Now

Michael Wood

And… Okay.

Tom Hill

sorry. I'm ahead. Go

Michael Wood

since year-over-year. that in saw XQ, you you versus XQ but well And segment profit curious, lower then improved I'm as gross

back end the your and pricing you So you're also if the half can in talk just seeing confidence about how market?

Tom Hill

what by were The our actually driven really Yeah. was gross volumes down down. is and actually -- being volumes was profit we -- slightly X%, that

was of in Texas, Some of timing that in Virginia. work rain that was some of

Our and were prices were X%. X% margins up actually unit up

can get concrete. for assuming get think So sunshine a going our be in little of and we fine we rest the projects I will year

Michael Wood

can lost shipping in us quarter? [Technical some days impact the Aggregates, on the Difficulty] you weather And in the give

Tom Hill

I'll six in bag. We're examples saw, days a dramatically increase that's days, a we rain, Houston quarter, of of days San got you XX Yeah, hurt. I markets California that's an five mixed in LA big days. where had big San in nine mean had of we XX of give Antonio -- a few another an of Francisco of rain, increase had the days, Dallas

the don't Knoxville. So I guess of in kind was and that you of dramatically, what feel was up exactly that gives remember for Knoxville but a number days like, I

month, we full lost a XX look days in lost Chicago. Illinois, if we you then and So, at

Suzanne Wood

which weather. us of end that the of back X% called there look volume put been what And things shipment delay was remember the us And two the you'll outside range put sometimes the the have talked we that's and gave put and about of to would the what the some unavoidable, at the us lower X%. we range projects also would would we at X%, it's out at control if of the you beginning go year, and the top at end just would range big guidance

California we And to so have forget wet growth called have XX% Tom volume two mean, our don't and and because we've the out wet or described, of frankly, about of were give that the as as take as given markets quarter I markets at out in come X% Texas just quite pleased was our Those QX comprise others. we being were two the fact volume.

So we were pretty pleased.

Michael Wood

Thanks Okay. for the all color.

Tom Hill

Sure.

Operator

ahead. question Mike take We next Capital. RBC go our from Please of will Dahl

open. is line Your

Tom Hill

Good Mike. morning,

Suzanne Wood

Morning. Good

Mike Dahl

morning. my Thanks Good for taking questions.

Tom Hill

Sure.

Mike Dahl

seem there last actually a of versus X% you just made as you're pick you up of at thinking just it's out volume then I in about as high-end and but -- more quarter-to-date, And and above the to it to to the the volume Tom end the heavy you've specifically that lift volume but wanted know range, performance comment, about bit for of XQ magnitude seen if is what despite the that for much get that comment that cadence? of expect growth so and anything kind quarter, point of headwinds, year top far guide, XQ? maybe Suzanne, has maybe the you'd what a think last not of doesn't I like that on some in the the the guide

Tom Hill

prudent, the is there also the third of storm be quarter really let's just peak season, concentrate for we're season. the think into think, and the what quarter on third underscore me say and peak but I but I third of trying the quarter the Yeah, to going heard year, construction the the it's the you balance of is the was,

bag. So that really, or can mixed that really a it really, tough well or be really can go go can

that is to us And some so our California. that in take to half guidance into saw in to trying what of some you think account. I telling end for is is volume into trying the example take we perfect The first of the high of that

what give trying to to and we be on and our based on a it's And is trying thoughtful really expectation based best educated you what we history and on booking expect based of see so backlogs our pace.

Suzanne Wood

I half be got not numbers But last last the not were terribly quarter, let's third the consider That's as who fourth right. just here for I've I second And the well. add to in would, comparisons. those forget, I I year in this, would really year don't have the quarter -- -- to and them third easy

would our If That's flow-through per some about combined, but pretty about second Price talking you quarters per we a ton pretty a for ton strong gross and grew and two look our X%, upside at XX%, year, X%, XX%. it the volume that is second profit the at performance grew was there profit over-achieving there, was good perhaps our be volume half. here. gross half last was

Mike Dahl

end sounds actually it -- upper you the and appreciate that I which it's good some like But around it is does hear guess I great. corporate that Great. that. to conservatism the weather,

these of than I a initiatives internal to Where you the are second to posts kind some any had in unit of And us big of but initiatives? flavor few terms bigger the about can are alluded the stage thinking us you're a and time of that to The internal the on couple different some can be you question picture, is impact? goal quantify some margins of some next others, give you initiatives of for now we on of over drive earlier using at years?

Tom Hill

the that efficiencies four gross the earnings three around areas profit a those focus, fourth, very operating quality and excellence, our a logistics disciplines efficiencies, what our high commercial services drives would disciplines level, goods high of our and our From Again, and number drives is we that what include level, at procure how ton. per drive cost.

at in and processes improve few on over working invested last to systems been different people disciplines. metrics stages in years. we've our these our the Now We've and

ton. what seeing of we every those earlier, go. unit and And put results, had start you But to nearly an that margins, gross bragged And people you about one our has our business, pointed we've goalposts. as profit on this important done, improvements we've our far as Again, work. from double-digit their markets local not But per three this ways so we submarkets is as is level. improvement what out, this in ultra-local on to is putting happens being where you now goalposts, talking are a long solid quarters got as remember when you're together in together -- and got

more exciting. We've to hard is hard lot work. do. a this lot So We work of done a got

for I being on this, and but come with more but diligent folks our efforts. being these So to congratulate disciplined

Mike Dahl

Okay. Thank you.

Tom Hill

Sure.

Operator

Capital. We will go Berenberg question take Please our final Muir from of ahead. Robert

open. is line Your

Tom Hill

Good morning, Robert.

Suzanne Wood

morning. Good

Daniel Wang

Hi, this is actually Dan on for Rob.

Tom Hill

Oh, great.

Daniel Wang

Thank you my for taking question.

geographic split with wondering was like of the the any Just just a markets. around footprint? non-res. continued quick question has your In three across particular, particularly quarter I way infrastructure regards res and that strong. Thanks. whether Is and between the quantify I performance there last to you've to was remember what seen non-res Southeast end the

Tom Hill

Suzanne footprint lowering growing and public houses and steady faster call and a faster. than places employment fundamentals grow inventories think to for low The growth. growing absolutely private the continue the is the harder across interest would growth, see is growing little I I we as in now most of rates. would of describe population public that and which said, A very we are we side, growth. growth, the side our side private market few our expect others. side will Again,

demand a dramatically a is That shipments growth. maturing for is public and highways that good growing demand and growth. from formula the into now with for into that funding lettings that formula private Put great

solid footprint. across call would exciting, and it our solid and call I will So I it exciting and

Daniel Wang

you much. very Okay. Thank

Tom Hill

results Thank really forward the your forward performance and our Look discussing this throughout morning. you. interest us Well, the our thank time seeing Vulcan Company quarter. look you. joining We to to in today. your you and for And and we appreciate

Suzanne Wood

Thank you.

Operator

your today's participation. Thank you for call. concludes This

disconnect. may now You

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