Vulcan Materials (VMC) 6 Nov 192019 Q3 Earnings call transcript

Company Profile

Participants

Mark Warren	VP, IR
James Hill	Chairman, President & CEO
Suzanne Wood	SVP, CFO & Company Secretary
Stanley Elliott	Stifel, Nicolaus & Company
Kathryn Thompson	Thompson Research Group
Michael Dahl	RBC Capital Markets
Jerry Revich	Goldman Sachs Group
Trey Grooms	Stephens Inc.
Michael Wood	Nomura Securities
Paul Roger	Exane BNP Paribas
Rohit Seth	SunTrust Robinson Humphrey
Garik Shmois	Longbow Research
Timna Tanners	Bank of America Merrill Lynch
Adam Thalhimer	Thompson, Davis & Company, Inc.
Philip Ng	Jefferies

Call transcript

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Operator

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

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

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

Mark Warren

and for and today third Chairman Wood, everyone, Financial morning, and joining Vice are and President Senior thank Hill, me Good Officer. With you our Chief Suzanne call. quarter Tom CEO; earnings

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

risks subject may reminded with and Securities Additionally, are include company's detail These results website other the later our for replay legal a and at company's which Commission. release recording of statements, the Please forward-looking this that to be uncertainties. call and in risks, disclaimers, in earnings in with regarding Exchange along will projections other filings are be available described comments and the today.

of find of financial information and can other related earnings reconciliation both end at the you and a in presentation. measures our release supplemental non-GAAP our Finally,

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

James Hill

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

third adjusted better compared margins. EBITDA strong This segment, improving performance, and the which shipments, unit quarter pricing with experienced was Aggregates improved as last year. higher to another XX% results Our primarily driven by reflected

on aggregate increased by an the X%, in For by the shipping with But volume same-store we of days, day. a shipments reported normalize basis. X%, If quarter quarter, same-store both extra and include increased remember, did the expectations. number line

mix-adjusted the Shipments markets particularly and in sales favorable. were last California year the fundamentals are a over solid per other Mid-Atlantic X.X%, rose Gross years. demand by were prices population ton the volume Freight-adjusted were in markets. the grew Both product and growth geographic importantly, This prices to in growth Texas due in in strong. mix improved slightly markets by also and California. in reflects certain mix XX Xx $X.XX. next growth were widespread. X%. better the to On X which jobs, increases underlying basis, in X% in by and Shipments The and strength our Central Southern in Southeast, and the the than households to profit quarter of fundamentals, include

with are our unit progression profitability. pleased We of the

fifth single-digit double-digit fact, The at of our this further straight opportunities enhancement. strategic or Investor quarter and to low the initiatives year-over-year four this high offer represented quarter recent improvement. Day margin contributed for In outcome reviewed

in expectations. shipments a basis, On trailing aggregate nine line and our gross by was the same-store line has XX-month our Pricing guidance. offset the months good long-term performance our will have Aggregates flow-through is be lower in exceeded of increased with delivered XX%, partially expectations, aggregate profit. incremental incremental year, the the rate non-Aggregates first Through which with end This upper we of earnings. had improved

be lines. line expected positioned growth another to is earnings all profit in momentum gross expectations, the product XXXX should we carry year. That said, but with to deliver and now good year double-digit into in non-Aggregates Our prior original below are well of

at EBITDA the We $X.XX of year. billion, with expectations beginning of track $X.XX year and expect between on full the our adjusted billion XXXX

large Looking our Therefore, that contributor ahead involved are future earnings With matter is visibility margin projects. multiyear respect and and early number year will local be expansion our it's not used expect continue. our it timing of Most our year, growth. firewalled to of level complexity and led state shipments the continue another to strong significantly increased and given a shipments, on we strategic to to successes we benefit to be the markets initiatives, in confident this local four precise, approved aggregate of of only is will at next but XXXX Vulcan-served State results. of transportation. key growth transportation but agencies funding and a public can of of by The should states, we the demand has when. highways. not anticipate funding transportation if, low- demand there the time. is relative for from mid-single-digit construction Based

side, of our for half accounts aggregate the On the shipments. private other which

shipment We firmly continue remember including best employment It our this construction. nonresidential in we trend. to most geographic underpin over are residential and growth underlying on to to have and position in the medium demand of with growth, place footprint solid long that momentum term, the important is markets. our capitalize the in to long-term population remain And fundamentals, in

turning to Now price.

sales We will XXXX expect position allocation similar drive return improve effect public XXXX. range. should our the of us unit a cash positive priorities, with demand help again visibility and improvement Together compounding grow capital and to to flows our of The mid-single-digit discretionary increases year. margin in profiles price price next environment disciplined

XXXX We will our report in out final guidance February.

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

Suzanne Wood

another Thanks, Clearly, earnings the business, also our but Aggregates progress quarter and of morning everyone. growth non-Aggregates strong made in represented our Tom, good for third quarter we segments. to

as or gross prior profit segment compared $X increase an million, Asphalt year. was the XX% to of $XX million

prices to to Asphalt asphalt last our significant footprint. quarter liquid this year. increase The average for cost across increased to quarter volume year-over-year. XX% period X% the by XX% mix unit compared by favorably when the related shipments compares a was asphalt The costs higher second number same projects liquid our and rose were average selling This of X%. higher

stable throughout expect year. of liquid remainder remain the the to costs We

the asphalt result, gross than volume. As margins improvement by prior lower profit and unit were year, was driven the therefore, slightly material a

prior improved. year volume higher Concrete Both selling segment gross profit than million prices X% was and average quarter. $XX the or

level. profit to be due change in the our for full gross with in This line the now our expect year, we non-Aggregates our Tom outlook XXXX from segment the said, shipments is Asphalt in of the to business. timing As mostly

expense, to and incurred share incentives costs, SAG expense, declined expectations quarter, trailing compensation-related including price. points. to are a last as of higher revenue, tied basis by respect XX-month to the percentage With our XX that Similar we earnings

make continue derived benefits to and We sales from investments initiatives. to operational the accelerate also our

For costs these in remain expectations on our XXXX. further year, on we leveraging the track and full focus with will

sheet. Turning to balance the

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

Our leverage was maturity September our is range. X.Xx, our weighted weighted well average years, debt target XX average our rate and X.X%. XX ratio of within The at interest is

expectation On you'll the discretionary information flow find Page X supplemental of for cash the $XXX slides, full on million our of year.

working discretionary flow capital define maintenance mid-range capital. we reminder, cash a interest, and adjusted change, operating guidance, taxes EBITDA As less and as

in no During the closed repurchases. acquisitions, but quarter, did we million $X invest share to we

operating CapEx and internal year, full approximately projects, maintenance of generate expectation the we spending million million which on and the $XXX our earnings. reiterate For on further growth future strengthen approximately will $XXX and footprint

return positive Our on trajectory. its continued investment on

ROI XX, September basis. compares the an XX to For ended was This XX.X% XX.X% for the trailing adjusted-EBITDA months on year. XXXX our fiscal

be turn to double-digit for those performed Tom served to to make with billion. to a year about within initial tried comment I'll consistently unchanged which guidance. earnings at has deliver therefore, well we the our year quarter midpoint gave we on to Now before track closing over our I on we our and, When some full $X.XX remained one because now growth. have of us we hand approach I'll parameters With guidance, And go, remarks. remain That back Tom, another expect call XXXX expectations, the of thoughtful over annual it.

James Hill

Thanks, Suzanne.

opportunity thank for our to men They of women take go their Q&A, and to we good I disciplines. dedication. have hard Before to the and processes and and taken this our business improved of want customers work Vulcan, care have

and are culture safety strong our promoted metrics. safety industry-leading responsible have they Importantly, delivering our for

strengths, aggregates-focused execution capitalize we move As business, around capabilities, our we and forward, control. our geographic can continue we'll footprint those outstanding our on to things particularly local

unit continued improvement Our will four strategic initiatives ensure in margins.

to take your happy questions. be we'll Now

Operator

Instructions]. [Operator

start Stifel. Elliott Stanley will with with We

Stanley Elliott

seeing basis curious. you cost you you're comment I anything like the any of to opposed one-off as costs Were a quarter-to-quarter. there side? on have on about Just up? Can from know on stripping trailing else that what or incrementals more might popped talk the

James Hill

Yes.

planned, big repairs quarter, that drag major equipment, or crusher One really repair in cost one we were on that of took some Florida did and repairs we the two and lines maintenance our it. down we based increase And the areas. in stationary also, On some particularly did. made third on was rebuilds higher big

ship cost. second The shipping as took older costs our higher and we water dock dry we're much extra into blue was area at ships contract using

the in back is at ship this fleet That point.

higher that's pointed some us. as behind out, in not we highway costs So preparation from year-to-date, much so demand. volumes in you And year-to-date, but also the for higher stripping - we've experienced quarter,

which is the you about to look volumes. if guided improving But we you in guide be. costs at flow-through would long-term - trailing as talked If investments same-store think these had you always anticipation through are XX%, about again, at of was XX-month you we planned you what where all

Suzanne Wood

also trailing XX-month got ranging always up just said, ranging at, picking to a from And that, XXX%. quarters, as basis. if with eight you last guide just XX% I'd specific look pick point, the in And we've flow-throughs he add on quarter quarters on the toward just Tom's XX% we over

XX at particular guide why things the when things Stanley. and we months That's going quarter XXX of So it's always on. a trailing really difficult those smooth out, to got mines to lots look different you've to some of

Stanley Elliott

maybe give I a as Perfect. want XXXX of most know low- too to Understood. you're year? to question, a just on the then color of couple looking don't growth. states looking here, maybe out upcoming volume much the second to at but excited kind And mid-single-digit about that you

James Hill

Parts the with would be the California Mid-Atlantic, strong. be - I be really of footprint, X Southeast kicking across point much will will in, Texas you should but strong. Yes. good. SB to pretty

the you right of said, in actually - XXXX. it's middle for As the we're planning

it's early. So

On they've and still sectors, in side, 'XX. growth nonres and shipments particularly the strong, to we res see been strong in private

of actually watches what we Chicago. Francisco, really our San and you - private continue number Nashville, most and gotten and a on years you XXXX, strong very side. grow, has as Miami of is second shipping there, a come. private. well we but - not quite years to and demand to we said, just going of talked called but shipments, Nashville, will But on talked the think kind Dallas, to is be about Highway which are We've there's win doing got we some out good, If markets about, had to

because And to it's February. be to low a have at this the early obviously that in 'XX process. We tried give we'll really look much better in you mid-single-digit in in thoughtful

Operator

the now [Operator to next move with question, Research Thompson Thompson Instructions]. Kathryn Group. I'll

Kathryn Thompson

that projects. color love what an give know And of have great. of California, to any Shifting progress. had X on construction Would is update has fires on SB been to impact the get

James Hill

to well. 'XX next it. it was year. where to from up be Yes. in year, saw SB billion X Then another We they'll passed add through this double and continues $X it through

we know, a you year now got the first strong out with both rained we start this months. As just asphalt. in shipping got five aggregates slow But because we're and

in So things are up California. picking

On as our have Most a importantly, aggregates people operations. their that, another okay. some We point. the from know, we and fires. homes our fires, this delays but seen no of there. are which to the seen all at as - we've We've we will and recently that away, you outages, those, seen is bit will but part I to far think not go little ready-mix from all operations, be as impact we'll have And power any doesn't okay those, and work our are we've

Kathryn Thompson

more then. broad for this really, a is great And downstream Okay, you. question

that. market color in year-over-year. Maybe gross profit, impacted with but sales, was more off terms had of and of bit percentage little with a great pricing, regional volume the We and little Concrete as asphalt the gross the a a profit. on timing color Just

James Hill

Yes.

in would catch just really were we a anticipated. of there, volume. had by saw gross than were that in part the about better unit would and thought have we would because flow up As the The but slower what the third into with demand on second on quarter, shortfall XX%, We XXXX. was have would that California news virtually have is the a have it rains I done good saw, and little unit year. profit margins that good - we where - up we little think the in of talked actually Asphalt first tell We a you will is flat. the But in we what the quarter volume Asphalt, - bit would margins this we year, the we and driven been

to expect, be forward So price at liquid booking case, backlogs cost worst - look we would has pace, prices mix going up. flat. liquid would XXXX, in we to based costs and we our see hot as And on

So I will Asphalt. think margin that now we'll volumes demand up XXXX, The that for And I improve. has to liquid as stabilized, line. this we drive look really good think in news to unit highway forward start see product

this line to forward look XXXX. in I product So

Operator

Now RBC we'll take a Capital. question from Mike Dahl with

Michael Dahl

internal added First costs you question but may bit aggs. wasn't just It I if sounds not made you that were not your increased if and Blue lower clear additional shipping. I just around those or takes the they that in had, contemplated have have your those margins Tom, heard for and like expectations and around but and than any I properly, cost comments internal increases were or in reasons Water plan you versus your might plans, a the had puts the there maintenance were the contemplated. in quarter planned then, the

James Hill

prior was of but it was over planned, of increase those but that was it Both all planned. an - year, Yes. well,

look if Aggregates be you you at cost point, nature the as business, think to the Suzanne's the I just to It's kind in of it's lumpy going quarter-to-quarter. at, the look beast. profile of

You XXX facilities. have

- you may of all those - hit can't so it times. is timing in really different You or And you did that's things. whether pulling have big in a - the or a at to out on big the each time crusher you right flux the - as at may three And not right that's dragline or of XX whether those you down. once, always thing at in we procrastinate hit may because if those, if stripping repair do the

You do it when you need or cost more. need to you do to they'll it

to lead downtime, it'll failures. lead It'll to

you XX% my and to So basis I regular lot long with it and you pull owned back maintenance put be and needs and talked a do when the business, haul, of quarterly. Tampa it for the or strip it won't about and to I confident for equipment. in needs the fix on it hat step long-term operator's through if stripped. nature very But look inspect that on, it timely am at that be ability We when our in to inspecting you but a it fixed

look our we'll nature I doing of track to you beast the And by nature what you done that's and we've And at months, trailing be if do of in quarterly, individual that. of guide or the mean, going record. mines, nature. just got to. what XX always those long-term because you one But that's it's lumpy the to each

Michael Dahl

Okay, understood.

press Second throughout the question on is Suzanne, And just I around year. of guidance. just have XQ the The I thoughtfulness to would appreciate implied down guide bit. EBITDA. guide you guess, implied the end year-on-year the on a the low

that price, towards may is the anything Or it - out there? outcome, whether guess, be produce seeing just really I you anything didn't end? guide outside up want clarification volume be you're that would tracking better, and doesn't but to just to just from is seem - low of feel had there to So urgency you've that there's midpoint some type the and of it given take the the this how just annual but or

James Hill

before market on let of comment matter XXXX. you're I'll comment the the just I year about we and for feel Suzanne booking and in the to fourth think our works for full then the going on backlogs we quarter, out. how the both financials. a our it's and outlook, days support The shipping there, But pace as our I good think year always, is many have and

we ran out year. last saw you time into quarter that first when pull of work We of the think I XXXX. actually

of demand, are the - just iffy first and and underlying time fourth the quarter feel But in about quarter first fundamentals pricing, always is. it good those - are the very fundamentals, first all of because the year So it's we there, it.

Suzanne Wood

at/or at add of it just guide Yes. We're comfortable would indicated. that in And of all you range, I the that, the place but Hopefully, year. depends that's days. the as - to midpoint shipping the that's on still range, on the within number around been

end results changed. we raise wouldn't on in outlook lower look read produced a has the just the mean, at our anything the I for leave nothing - that decided to to I range. place, didn't have we into So pathway I And are fact but of the it would not the in year that you if year-to-date, we achieve indeed, good that. We

Operator

Now Jerry moving Revich from question to with Sachs. a Goldman

Jerry Revich

for taking, the Or pushing of I'm than it XXXX. those about by significant pricing What's you're in pricing pricing markets areas of there the that in that wondering talk seen pricing announcements digits So 'XX? they actions comparable breadth variability Or And more you've if terms made average actions? in where in you is of or more across board? company less above the more 'XX is we've mid-single a could the for are what market? you're the

James Hill

there'll it As - always, just variability, markets and while. then have push of catch while for up cadences be be different they're and a push going a and to that's you then price let you for you different price because

So those will a different. little be all

dynamics all, I in all is real majority, think I increases pricing that in the markets. markets believe price the - see our good. price of not if vast we'll

our backlog, mid-single. pace support booking that would Our

think, Our our support would customers, conversations fixed-plant with that. I

this year highway dramatically the really think with we'll support We'll XXXX throughout strong, and construction coupled think but end a I and view our you a side, - early the we're good guide still of this the I But best very in momentum. private shipments the strong middle with thoughtful and this, in start We'll pricing February. aggregates, just the we're process. more volume point. have very on as we're - Again, all not into the this of sector, in work, in still at That's visibility construction. of growing the educated give materials we

Jerry Revich

could And comments in on I'm wondering prior Tom, infrastructure you if had remarks prepared project made on you your your expand cadence.

healthy. clearly, in we need re-acceleration California, activity. would you we a - a some in backlog We've about particular, cadence awards over see the time a what and project comes holes lumpy So just schedule, see to talk in to would will? is seen if avoid frame to the Can you have steady mind. lettings

James Hill

really the in It's schedule. holes hard predict to

be bit. which they that - think look at you for which of you a - down look little I if been kind would example, has starts, at starts, if looks is like

You got of to starts two is XX% to years over remember up that ago. the value those

playing number we're level. we're higher at a one, So - much

And big then increases seeing you've also much seen, with funding, you're massive these increases, larger in projects.

So the now of metric big where years. projects, very lumpy, is those ship shipments, over a starts will number

a the changed of that bit. So nature has indicator little leading

Let an give example. me you

at If billion. it the you April dropped is look of in that Virginia, Northern in shipping the we're starts job at I-XX today, XXXX which $X.X into

is it four shipping, So the as that but April, skewed it'll value it of ship and just to compare job starts, the we year-over-year, for years.

that a have So big lumpy. that little made - projects the bit

from will XXXX. overall, going be goes budget And increased $X.X lettings - DoT is XX% up billion I billion be $X.X will and perspective. billion, next lettings from you, in over two at budget to Tennessee goes it run how frame. if just over - And I in Florida. X on X South billion $X billion $X.X the Georgia time said it's of will you regional think to double more billion. it states. Carolina Texas' this up you billion. as the earlier, up lettings for I'll billion authorities X $X.X Highway the a XXXX, from in be we're year The $XX what's look than to at, look California, up since $X from a will and another through XX% up XX%. just year. $XX years and spending value over Virginia

there's lot my to again, if, But not out work what in of remarks, Timing, So a have - said as it's prepared lot see a to it's of we'll it's come. there and when. work I just happens.

Operator

And now Trey Stephens from Inc. with we'll hear Grooms

Trey Grooms

anything looking the comes costs at that occurring - into any or in elevated be cost to looking these there just any occurred is So it of aware planned time? there XQ of we that we're is should be when as cost might for in QX, that

James Hill

dramatic. Not

to what cost fall the - plants, long be actually nothing's of - I it's a the but be quarter. underlying hour and structure. man-hour, lines, forward the going crushers, fundamentals mean, times. pleased instilling things, the happens in operating disciplines timing for of I going by that kind it's individual to to think efficiencies. lumpy of cost think tons downtime, we've lumpy. pushed different I'm at are those come drive I changed in continually fundamental improved you the rebuild our when to the But to But really in you wouldn't and Again, drag per with rebuild that per It's those those on of and - we're got again, it. it's ball of efficiencies going term I tons got

Trey Grooms

the business, it I volume. with margins And but taking margins Okay. the guess, improved, Asphalt was - unit on

on that Just it most your downside like timing - the there. sounded the was volume business to due guide of and and side to of

didn't I - correctly. So that understand

James Hill

Yes.

me a mixed it see in the We in we just five the months. shortfall can in you. the of volume there's with got was shortened the - rain to just bag a I let guidance volume if - and year So The explain California. first

one was of piece it. that So

start cost is, we that's The really other have, price catching than piece hot thought faster improving of of unit of liquid. we margins we it the and would mix

good flat. we caught is the QX it. that was of news we I well, think and in - saw virtually QX what We're

as our We probably we our we liquid are prices backlogs, XXXX, into know based flat. believe worst look that be up. a will that Now around that, case, in on

units. seeing start should you So

to we on we'll be to prices XXXX, we've chasing able side. and mix - raise - hot anymore, into we're expansion. all a see not hot look Because unit don't at think margin on you we the as So continued

a happening what's look asphalt spending, big you We If pretty demand driver and volumes. at into with going highway know that's of lettings and XXXX, simple. it's

doing clear you that right on February. the to plan you guidance, we'll we're in but give talk when be we can't We again, now. So

Trey Grooms

sounds Okay. It improvement like nonetheless.

James Hill

Yes.

Trey Grooms

do next your expectation last I thought any for just update shakes your And FAST What's on and expiring kind button we the for, this at that the what one guess? Act as at then out closer now, right from And is me, point, of hit on you the states response move all expect year. Fed? how I to expiration guess, it to pause And the then of date?

James Hill

take They the will of said, because have part our better. improve I'll their absolutely the have states forward. of voted their second roads, and to roads infrastructure is The move first, substantial voters to amount and that a answer will that political not. on their funding pressure funding, spend and make improve we've this they

sure see. we they'll So make timing, Again, happens. that will

If bill, you to bill, highway which don't - go of extensions. we we'll I will. not the going they'll if the the don't that think simple down is have part is election we funding a year, get look at then In

supported. - so I spending faith If and continue, you and will that, that be and will don't I have infrastructure - look

little you If the a out to look further Highway Bill.

You've House would increase the working reauthorization a as roughly Public The working heard now. funding say right working is XX%. bill are on on the bill, package Policymakers by Works is Environmental actually on we Committee me speak. a which this,

funding down it our year. But a what and see we'll the states let states' is not billion up feds happens. going $XX our go Again, are in to

So - and now into that is flowing shipments.

over now. know to or what continue X grow years, next So X is right going demand the to but I we think

the build there'll up be another I a drive on. Now, to election, right we'll, to federal believe and get

Operator

next Nomura Michael with our come question will And Wood Instinet. from

Michael Wood

in businesses I see with you're here those curious non-aggregates essentially we the start curious quarter. improving fourth appreciate an for I'm at Asphalt XXXX? Q&A session into ability that any the why to to concern Does that grow the year-to-date. flat the - you you wouldn't and in comments all made non-Aggregates. in non-Ag on give But trend And

James Hill

predict tough rising. it in again, on degrees asphalt. And got Well, to you've asphalt, quarter fourth at it's is just remember - to XX lay

markets stop when know we're in, asphalt. when just different you So don't to you got in laying

XXXX. fundamentals the think forward of so I - kind look to why that's I

XXXX think I guidance. and with that are line. product sensitivity for call of fundamentals the just good, because anyway, is don't quarter quarterly temperature asphalt particularly fourth to But the the give the of we hard very

Suzanne Wood

It's some right. the Michael. back have QX said we we just QX because And first the quarter on to asphalt, you same the around go are That's similar had iffy exactly just when this discussions of and if temperatures. in would thing,

Michael Wood

a out aggregates off, And with selling Because think of Curious steady see you didn't not impacts there's any at the the I follow-up, least call as your roll price, Understood. projects upward would price freight-adjusted as a movement there's you a mix geographic. if besides lot quarter-over-quarter. that success prior given increases, would drift.

James Hill

was, half and particularly X.X%, did highway was And demand. by again was So then geographic. mix, I in was but bit sizes, stone was well, Mid-Atlantic asphalt we higher Southeast. $X.XX, product the little think geographic driven went in that it of the mix have about and The up product clean a mix - mix-adjusted sizes, volumes the up It X%.

- our created I guidance is again, it at lot timing are backlogs, - early markets digit. tell. of on equal different. work all would you those that's clearer I think if you give pace, look a think support to the in And that. mid-single February. is not We'll We that got But and to booking again, do

Operator

BNP. Exane to Now Paul Roger moving with

Paul Roger

is to on started you out of [indiscernible]. next want competitors be nice sheet quite I allocation. also just may, little today. Obviously, Is your look for talked move bit that thing and now. the in your position call of from Nice M&A balance seeing deals some and a sort Actually, to have pipeline. capital how increasing on trading, the the I'll over if the the focus a you're type of away

Suzanne Wood

the times, a just mean, least but number product will that at hit those talked most but certain terms the profitable of of to It's policy certainly I'll well of Yes, fit so we prefer our We I - of risky, They very speak those along. very I the to and specific the M&A a capital is are part picky all looked same-store to question. look number move growth. We've we to have set a of specifically them and deals do. we unchanged. we have allocation We've come mean, your They about this look, geography year, like forward. at about criteria. in time. us

we We a finish in the get very we line. number high few to don't hit but so the will to have and there we continue on are characteristics hurdle look, and those returns ones they pass because pipeline, rates, specific see fair a which

Paul Roger

why very clear. Asphalt back XXXX anyway. there to expectations again? reason this any business. business side? I also, XXXX of be on of And can't obviously IMO in for is wondering, mid- deflation That's then you've margin given Okay. just cost I'm a going sort some to do impact the from on you color of terms And expect structural your the mean, any high-teens sort just

James Hill

may a a double-digit think I the little maybe little improvement, have bit margins, liquid. - on be that I as help but as aggressive it Obviously, far from with unit to love I'd that, margin aggressive. you, without agree it

Now different a get you if it's help story. from liquid,

XXXX. IMO as far As

think, early the planning. again, I we're in

But slightly to visibility now, case. right on that liquid. don't that, enough flat is point call clear at mindset the we up be know would liquid, again, worst at XXXX to I we think case, have worst a I this in make at

Operator

with And will hear now Seth from SunTrust. we Rohit

Rohit Seth

from side, rates. lower are lot the Their orders really a strong. have on been benefiting But builders about talked the public. We housing

what a business if side housing quarter. you've you what growth footprint curious for maybe during on was and pickup the your the the like across seen could share Just

James Hill

Yes.

the look carrying markets have into Most if month market up. trailing permits strong For We're recently, three our at the momentum residential and starts you year, been shipments shipment are and single-digit. to really XXXX. high

As still you employment interest population are growth, there's the low markets, low. most drivers low houses. or much mean, there's housing for - of said, good, inventories at on our just rates all-time inventory I an fundamental of very not growth, and houses

momentum into at momentum residential demand, should look we we pretty carry we'll a So this good at if believe you XXXX. good pretty a - point,

Rohit Seth

by was growth quarter what Okay. maybe - talk And can you the about where you this shipment geography.

James Hill

throughout Southeast. good strong. Texas footprint, in particularly our pretty actually It Yes. Coastal strong was was very Mid-Atlantic,

South Texas was strong.

very Tennessee California good. was East was Central were and - strong. Southern Tennessee

Suzanne Wood

that although virtual - of side, year-over-year experienced every the markets ask, didn't key widespread the pricing price one And offer very increases. you I'll well, on

So nice as well. that was to see

Rohit Seth

next can then about one, At us the And profits incrementals profit talked rising that maybe There incremental few to best last mean, for there reminds then gross - suggest Is go intention as years. to you Analyst we margins, unit I is about XX%. mid-Xs. here. like And I over here about was that to in would that be Day, model that Okay. us - better come the the right? saw forward into incrementals if we no

James Hill

that lumpy above And is I will much good it in business quarters back right over be that think the way I haul. on the and XX%, quarter, that XX%. you the of but the will to any would of - for and cost quarters the you're take long-term profitability need we'd a because back business, do the it the and do long you always again, you when but when to of to XX% to need timing I bring you we you we to long have nature talked have you be it going of of you'd need - the have below to do think where about XX,

Operator

Longbow come next now And Garik Shmois from question Research. will our with

Garik Shmois

this A competitor large-scale talked at the shifts cycle. the work of less work the in point towards from away of business yours about and mix highway in moving bridge

just an if and from does from that a And for so, curious standpoint how your volumes moving if that? price/mix standpoint aggregates potentially outlook forward? So you're impact intensity seeing

James Hill

What projects. capacity in good large these so And because within for constrained. us Obviously, that any just the very be is see to used of there, but I including I laying most projects, highway. laying intensive in be demand more. going news have, we're is even they're aggregates think a capacity there'll you'll for is maintenance think in smaller capacity we because see at going to aimed you're lot just

most So is to the most with is as most the of see capacity, improved which forward, maintenance, look but money aggregate-intensive. we importantly, I we think would going laying and be

Garik Shmois

of being end the the was in quarter. and the up one. of might if any that wondering quick Hurricane delay impacting timing Southeast and in concerns work some in a seeing ended quarter. around just fourth There shifting some up volumes you into And that Dorian Okay. I project if the Florida were

James Hill

if didn't We - of is see word W that. once noticed, And this a used the you'd lot we've not this in call.

it I lot didn't brief, it So impact of If we're But radar. really hit know Dorian. was, our a fairly was it don't we but that. with saw from that pleased

Operator

Tanners next Timna the question. America Bank will of with have

Timna Tanners

starters. a in like cost you if for wondering other of trends costs bit freight little was labor any the I just some and discuss particular could other

If you any thinking out could we components discuss major should that about. and other be

James Hill

cost, behind slightly I But Vulcan about Blue is driver we back in the the big far shipping cost big ships. was and far planned was and buckets Minor, of delta, higher besides the - cost as we hour, the the stationary was would that cost Labor repair but per think one in the - change. not as for a I quarter, in us us maintenance one a put the was had service. our That wouldn't not big I primary ships Water, down. that's ship as change. equipment. and in talked as cost our was The on - the fuel

Timna Tanners

Okay.

going repeat I Sorry, make that. mean to didn't was thinking forward. you I more

James Hill

No, No, it's no. okay.

Timna Tanners

you've you while. forward, think Or been do going a labor Like that's been cost about Because your or that that's know talking big for something issue? I contained? a your

James Hill

on I pressures think going labor there's forward. cost

we quarries. I are we and the cost, labor women how how think disciplines who efficiencies mitigate utilize and what those we're run our run men those and focused plants is and best on the to

Timna Tanners

Okay, on And then discussion. capital allocation back super. the circling

and about you had step what M&A organic also You know a think growth may trying organic have in to did nice change dividends. of talked priorities but already, versus you a and just returns terms in repurchases, few, about growth. I your are

James Hill

lot our look as our well, change those for M&A. low where to the improve growth to always, engine, will and organic to double biggest and think strategic those - a process. discipline our of going unit margins trying be are we're and double-digit Obviously, initiatives and I we growth with actively of to four high single-digit

And Suzanne at we're look want. They have to our it. be As lot we said, to what about to going they And disciplined. have disciplined fit is We those. profile. of the to be fit a key there

but here day improving margin - so in day unit again, that And out. key the is and

Suzanne Wood

dividend we one. progressive And the at I I a mean, dividends. mentioned you think as look

board earnings particularly that versus clearly our as cash about discretionary but with it's by $XX dividend the in continue We'll the a plan be is our line we can - our we're it generally we should, note, Our to level the guidance cash a generation, to at to quarter. and million raise would look we maintain cycle. that which, view our absolutely decision, raised certain you'll flow last year growth the for with throughout

Operator

from hear Thalhimer Thompson we'll Davis. Now Adam with

Adam Thalhimer

repay Or from wanted year. $XXX ask you like think on are and It next - fix to looks think of the rescission? actually have do risk that in step federal you I on to them? government what the first I Texas do your you they hearing mean, somebody, happens? group million Washington the might

James Hill

No.

the none. going of I Act is to to effect rescission think slim the threat FAST

Congress way feds is help I funding. the of think to repeal a do will The not find what cut pass going session. this are to a

Adam Thalhimer

couple modeling relates we've below it's Good. XX%. trended XX% purposes higher stick XXXX, stick year XX%? goes on? then years would kind had was you of Or hoping I curious, mean, to model And incremental just in like margins, it for us out to the as would I'm a as to in you is - it a to here it of work I where and say that. better

James Hill

XX%. to you guide would We

volatile. talked to be Obviously, something going to we just going and XX%, quite XX% any it's in over year, number, you. minus, given that's quarter. to I've you're always guide but you're In any or given time be that going back how come about, plus Now around to

Suzanne Wood

example, would back still - year was an full still we'd for guide to it as XX%. you XXXX, Well, the We XX%.

James Hill

before XX%, we're year the you little back XX%. we'll a so Right below now, at that right. was Yes, XX%, to guide

Adam Thalhimer

up margins implies aggs? I it XXXX kind I in to Okay. I year, get of sure XX% why for this on that QX mean, not wanted in go margins up can in - aggs in to I'm just just to So because QX. focus that's

James Hill

that our margin we sure what trying year, not is for doing. focused over so think that quarter control we're I can what aggs on there Well, the we're margins, the thing and that's to ups servicing unit up that's once fundamentally always as the we improvement on drive that a as are well And we're customers, in volume. in we're is

Operator

Phil hear from now Jefferies. with We'll Ng

Philip Ng

increase markets your it's on pricing like It conversations constructive, sounds see know and where like XXXX? have early. been you could Are pockets customers a pretty with there your I midyear any in or

James Hill

of too able and midyear increases. I price just where in not would demand, normally that, will to there the have plan a - and few when we're beginning-of-the-year through that's be you accept XXXX - Phil, can Usually, markets will price way increases, have and - X you're think at last just you early, you whole markets rising majority in it's will increases. X over from not of market midyear even if - the the that so usually kind there'll vast years, be - I depends. look back of where It just aggregates - there's a that what the flow-through. happens But take price there's step time, - few or

day always fixed-plant our we that price those happens But remember, in But - we dozens XX% And price The to bid out. earn you're day to that trying you about is - work markets the is and X% to pricing got commercial day in And those to part of which serve customers and what the excellence we're work increases. earn of forward. earn that's quotes in and things, to out. where hard is pricing on business. talking of and those we're push of day our on, -

Philip Ng

appreciate you That's it. some it's us early, I giving color. really Got and helpful color know for XXXX. I

strong what's curious Your just deceleration. years. outlook any some the healthy pretty few reasonable little also driving are from of to but and some And last deceleration are public, backlogs in perspective? seems reflecting me, markets it's With your there from a reaccelerating housing volume very end that that less modest

James Hill

this would that think I way. describe I

have plans. is we're estimate at our very it's because I our time. This think and don't we to just be trying thoughtful best early, this

deceleration. not all, at any not to trying it's So trying signal, - we're

trying I thoughtful be to yet. think have we're is plan do the don't we what because just

Operator

And ladies and gentlemen, Hill Tom turn to I'll comments. over that the back concludes closing our question-and-answer for call session.

James Hill

you all Vulcan for thank your of interest time Materials. your Thank you. and I in

operate well, we As business continues the quarter. forward Thank you throughout and look see, can to this the you. with discussing to you

Operator

and and do conclude today. We gentlemen, participation, now will for for your this disconnect. you may thank you conference Ladies your

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