VMC - Earnings call transcript Q2 2024 | Vulcan Materials Company

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Operator

Good morning. Welcome, everyone, to the Vulcan Materials Company Second Quarter 2024 Earnings Call. My name is Todd, and I will be your conference call coordinator today. Please be reminded that today's call is being recorded. and will be available for replay later today at the company's website. Instructions]. [Operator

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

Mark Warren

are morning, Andrews Mary Senior Vice Financial With good CEO; Chief Carlisle, and and operator, Chairman and you, me Thank today Officer. Tom President Hill, and everyone.

are risks to and discussion is described reconciled Securities and Please release to filings be SEC vulcanmaterials.com. Instructions]. other accompanied release uncertainties. financial may Today's are in and detail website forward-looking in and the a call defined which and presentation a earnings are along legal that in in filings. [Operator today's our non-GAAP the risks, with our press by of measures and supplemental include statements, presentation company's with posted disclaimers, earnings These reminded Exchange subject release, Reconciliations Commission. supplemental other our other

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

James Hill

of you, in all Thank your and Materials. interest Vulcan Mark, thank you for

have results our shipments of in impacted how markets Our demonstrate weather key operating many successfully our efficiencies. year. navigated Unfavorable the and first conditions half challenging a teams

improvement delivered benefits Our seventh both our the reinforces second execution the consistent durable aggregates continued a of of lower aggregate profitability. reach. in of year-over-year quarter face unit inefficiencies, our and and teams business consecutive focus weather-driven our characteristics on expanding core our enhancing aggregates-led in our the our performance of Even double-digit and shipments, quarter

our is our on our achievements and exhibit expanding way focused ton, disciplines. profit $XX These $XX consistent benefits of our ton also we strategy selling In two-pronged, of progress to our XX our has reached cash trailing are marking Vulcan commitment $X.XX core reach. per average But our per Vulcan months, enhancing and gross target. operating through to the towards

second the X strategic acquisitions. we bolt-on quarter, closed During

states. shipments. In by EBITDA production of and Texas, both $XXX generated of the enhance XX million our aggregate our were in our Alabama, the markets, June. quarter, key and rain quarter points X% adjusted and and May impacted April of margin X adjusted markets XX% in asphalt our days area a lower basis in XXX number downstream despite select by capabilities business Shipments we of across top acquisitions in geographies many particularly significant distribution EBITDA in These in negatively our expanded and

Freight focused remained and profit improved positive The increased of We per cash ton XX% earnings over per in ton to average profitability per sales maximize cost cash per environment aeration prices Most or sell XX%. $X.XX ton XX% pricing year. $X on remain importantly, ton. unit selling adjusted gross freight-adjusted versus on or environment. the or ton unit and man improved consistently prior on every any improving $X.XX we

discussing are to my starts initially impacting thoughts growth continued of the with by elevated the in likelihood issues weaker both albeit affordability lower persistent we backdrop anticipated. rates share of The Let than pace the you end me had activity. and current and half continue converting interest second and offsetting of level use. starts point XXXX, recovery multifamily the of timing fully shipments on growth each Single to family in slightly a at year demand recovering again last single-family

in momentum headwind data Light largely Warehouse anticipated activity is as commercial some the activity the continues the is continue residential markets centers. growth in vary ahead, construction, across support landscape In weak. in positive manufacturing XXXX. in population to is Looking fundamentals Vulcan nonresidential underlying inventories low to private and still with we activity but unfolding of categories, construction. for growth relatively long-term biggest

trends follow benefit lower from interest to it in expect we time, rates. single-family and over the But positive housing

in contract into as XXXX side, The activity. and expect record projects growth infrastructure aggregate to IIJ public funding continue and X benefiting highways years On awards other is we in both flow growth the of public shipments. consecutive

the just weather half improvement, and backdrop solid and full to year. environment discussed being margin still X% shipments demand shipments EBITDA we the between cash attractive XXXX. impacted for Given Combined same-store now free down first flow the decline with X% and adjusted growth, in expect double-digit expansion pricing and X%. aggregate profitability anticipate We generation

Andrews turn over the I'll commentary Andrew? revised call on our additional Now Mary outlook. to for and results some

Mary Carlisle

execution attractive good disciplined capital strong generation, morning. fundamentals which, The cash coupled invested and is continued Tom, capital our consistent higher allocation, driving and deliver business of aggregates-led time. returns over Thanks, on our with to our

quarter, and through business and we return existing on $XXX franchise basis. maintenance Capital second for cash growth projects the expenditures to in to the million $XXX to deployed shareholders. expand and acquisitions quarter million and our our in were reinvest year-to-date a capital During grow to

between full We the . for continue to to million year. expect spend $XXX million $XXX and

During the to stock quarter, we strategic also $XXX common bolt-on repurchases. allocated the acquisition million

we X capitalize improved with capacity acquisition capital invested over months, capital. attractive adjusted has debt-to-adjusted the opportunities on end, invested X.Xx leverage XX% in on leverage average XX within that will to quarter last a have creation flat improvement generated target with considerable shareholders. net on EBITDA EBITDA basis points return long-term to at investment X.Xx XXX And for drive Our our of range value of

X% of less over than SAG the prior revenue were year-to-date expenses and year. X.X% have in increased the quarter

disciplined cost focused both control are and We on

[Audio Gap]

shipments, of year. compared prior now in high months expect digits the freight increase first the single X sales adjusted to to cost unit cash and we lower

aggregates in adjusted year. profit EBITDA improvement, to strong $X between with unit expectations, to XX% lower $X.XX the the We profitability double-digit for ton. We billion generate and will increase continue to billion that anticipate for another coupled full gross the volume driving expect XX% per improvement year, of the prices cash year

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

James Hill

Thank I by team to talented to you, Mary conclude their to commitments and Andrews. each our Vulcan for thanking want other excellence.

both the value am for customers us our right and expanding our strategy fronts and excited Materials. runway core As on safely our reach. two-pronged the Vulcan our attractive about I shareholders. to of deliver enhancing have they each for that drive growth Rainer day, operate ahead And I'm we Schein, work and to of confident

And now your happy be Marry will and to take I questions. Andrew

Operator

[Operator Instructions] from question Stifel. Stanley Elliott comes Our with first

Stanley Elliott

Thank bit a operating the of kind for a more about question. taking all year-to-date I talk you conditions tough you demand little there's just could pretty the environment? overall the Tom, how understand been even you of should help probably Any like and we see kind balance basis where momentum year, of that. bit. and into a about sort July little think of on the things in

James Hill

X February, expected ago, and slower growth support demand talk would maybe all the Stanley, would data leading demand back little indicators of single-family months the with later. [indiscernible] exception is we that than of about in the we'll a X think, bit the in growth I expected and a we as originally have or little

you negative fall the range a But a we definitely number as and will days that to X% very of influenced that wet negative we ultimately QX. a the as we down have left X the really X% will volume months had of look in last in July those negative the year. guidance, come said, of shipping current we Where volume have dry at numbers on impact

as growth has family, demand We'll the underlying in expected, how our friend. weather been bit goes. not except single it second see frame I'd a So little slower half

difficult And we have of by winner, double first half in a it to proud turn I think to a I'm margins news expand is I think continue and performance. folks our taken good digit. the hand and the their unit

Operator

Our Capital. Loop come from Garik next question will Shmois with

Garik Shmois

little half the that follow up about pent-up with on wanted could second more bit how you if the wondering to maybe on point Just a to volume demand into respect opportunity. detail I was to outlook. think go

the But the not projects of and more being case did I all to play this delayed canceled, you can out speak get the year maybe is influencing to just think color little on second half [indiscernible]. you and the you from weather how of a projects bit the expect done.

James Hill

Sure.

I pent And the and of up away. down you half, does happened what's the of doesn't comes what your on. there to think second absolutely at demand it that spot make us. point you if probably into It's kind go weather got some that and to look

looking in of impacted I'll back, really couple think examples. if explain you'll were future rain a we -- first you give and that I half, by the it's the

dramatically Middle Tennessee that had Nashville days, Look, shipments. amount rain doubled market, our in QX, In it we of and impacted DFW the lost XX days had half shipping of rainfall.

as could Atlanta we and had So you The we out flip had right shipments much L.A. dried weather where normal ship. expected. side just on have shipments normal were is, and were weather that of pretty and planned. saw

the very has East [indiscernible] weather wet. role played as QX it Coast. storm a And will impact tropical So on was now we're experiencing a

be. said, you we a the it It's is tough thought to start going kind was quarter. of third still the as But to there. as demand So

these temporary doesn't go and events are So it away.

dry get days [indiscernible]. we So we're shipping

Operator

next Penitari Anthony question with We will from take Citi. our

Anthony Pettinari

the either from that You single any other it's whether or raised costs, second for inflation mid-single of guide half or cost cost we essentially digit incremental about think diesel are on good all for digit there or just that deleverage? should we to items? the kind as inflation And about volume puts high other takes, should bad, think

James Hill

Yes.

in been which get impact. wet of in digit XX%. are. flows expected. XX% I first cost was an allows can some continue you full -- tell to back material year cost the run we and we We that you don't insightful so versus the I'd us. just where definitely big of the Weather dry to of volume I to difference double-digit of margin the all as us think was can It that growth. efficiency we that think And also about on the has second half, high trying has better. half sticky it rock, single our we saw unit that versus think for you're back impact a a the lot impact inflation underestimate that

Operator

Jerry next question Goldman Sachs. We'll take Revich with from our

Jerry Revich

the place momentum feels you've that and aggregates from contracts quarter, guidance did talk for got in about really you you midyear pricing in not up around focus confidence Pricing just the just rolling. assume strong nicely sequentially. the was Can it like major

So wondering quarter the third to you in compared just on out give if how the could to from you from year expect update an I'm then play midyears? and just opportunity last contracts incremental natural us the rolling tailwind

James Hill

let pricing talk momentum pricing Mary on you campaign. give in product all just color a [indiscernible] successful about I'll and We continues had The sequential. all lines. Yes, markets some midyear

thought on bigger I by 'XX. impact be those have prices as we to will it as remember, on by a small I'd was going call a much XX But explained, and impact market, we but midyear both think as customer it anticipated.

for solid pricing already we've foundation So 'XX. begun set for to the

we despite would weather unit always, guide volumes the X%. ultimately As XX% you was which and growth down margin

Look, work. is the tough to [ particularly of kind earn hard operators in difficult that bud you So margin it's of with. I'm mug It's proud when ]. to raining, begin growth got

team. really So to our thanks

Mary Carlisle

environment, we you realizing QX that growth, less off sequential improvement the said And I underlying full expectation point XX% the expected highlighted. due what Tom of some of expect the Jerry, to XX% expected improvement. candidly, have additional to year. paired half Tom bottom in some with And improvement just Tom price in from We I in really sequential the the QX to we would a increases already the price . timing. the course, what's guess, our of like modest realized really just discussed, where bit than take me, sequential important and to captured given sequential line, midyear what ultimately, a impact jumping is can of still range mix in as a back of terms that higher solid continued

Operator

the from Research with Our Katherine Thompson Group. next question Thompson

Kathryn Thompson

part while that but Please not showing just you're backwards, are provide you a not project also and your detail are particular And pointing larger little some projects pricing see starting good seeing work. product that geographic question are double-digit forward, a really more impact focus bit delayed. mix perhaps our in and some on though it's on shrink delayed. and given checks on good a those build to some taking channel volumes the pricing even because continuing as but type pace, It's infrastructure much because . What to mix lighter lost, ramp-up looking it's a to up. of of on you've necessarily looking that from color volumes given were

and mix that impact any in can color So how geographic of go-forward about a talk terms you basis? mix, pricing may that product on

James Hill

Yes.

also lower public bit I to otherwise said, you're need lower less with out fines, ramp-up So cost of you prices. whack. that correct more infrastructure of little a your see get base think the which and of is mix work, being and it's That in balance plants, you'll you

I it have impact to don't on on being impact have some think I said, price, an margins. we'll that . while your expect

not be maybe not rock, also concrete material a price may comes So as he cost why asphalt a outer with it's as as high benefit. as

of So I our present would elevated of expect us unit mix. margins pace to continue regardless

Operator

next our from Morgan Castillo question take We'll with Stanley. Angel

Christopher Kalata

any discussion to talk extent these Just maybe is about that done, point, of to of sensitivity Can And in around To more. we of about the customer of shape of price insight of magnitude? kind preliminary helpful. would kind price just in on any still with sense bit the competitive you've be XXXX. low next the kind of that, digits year kind a but I just increases digits, you range? what the of the give just you kind and kind Are of deliberate single meters views touch terms wanted increases base of high that talking little along kind price in into double that discipline

James Hill

we think good feel what run the today. feel I like we're about continues. We bidding price

As bit impact half little of of in a I a much while bigger going this to they have impact half they're have second first year. year, mid-years, said, the next of those on

leads you the in increase October price when to that saw your us helps having conversations for you of year. beginning So also

are a for pricing level I increases said, think I think for call But for the that XXXX. conversations on early it's happened XXXX. encouraging to price I too the as mid-year make of

Christopher Kalata

if XX%, kind of to And that on of just kind you I laid clarify one. out the thought just quick that may But I a pricing, helpful. XX% was before had the midyear. That's guidance

change it [indiscernible] understand of just [indiscernible] so kind kind that? includes of that you help what now So Can us

James Hill

What doesn't I of as does it sets the is a think, get it said, that bit, help you XX% you mid-year up out but I XX%. Well, XXXX. it little to for

Operator

Capital will Markets. Dahl Mike from RBC with question Our come next

Michael Dahl

and It just around some moved price put expect some with sounds when has clarify it from cost out? point to you're you the and fantastic as probably [indiscernible] the August it's the understandably like about thinking puts your play like July, either. of those how finer because maybe volume kind XQ cadence you'd of dynamics, on also But are just even with been to a XQ guide, takes whether within help can things versus not

James Hill

Yes.

already East that, our got of been markets. the all, up troubling extremely storm wet think particularly first quarter July impacted. has I and third was the southeastern in Coast. you've And now blowing

you're it's So to QX. in to off of going a little bit start -- rough starting a

as of fundamentals are think the there. still the we underlying said, I demand

pent-up some ship comes [indiscernible] that we'll got well. You've out, demand

because producers, ready to asphalt have us we You [indiscernible] try get go. they're out, got telling

and to it ready be quarter for I weather -- also And hopefully, would so it's fourth and call dependent, always we'll is tough them. the stretch. the because call will season,

much done. it negative down normal you year, have to which between because people weather what's get projects is days. negative moisture QX extra you have little so you I out have may wouldn't little -- a that X, how so bit, that in shipping it shipping want get have to And where when bump the season a many a you X a comes days the of those have may and you think year when you do do push those

bit talked L.A. of shipping little of this as trouble July start week and some out, the rocky demand is kind fine, but when a Atlanta. comes And about with a that So again, with with there. I storm, and we're

Mary Carlisle

you just fourth from the the mentioned third challenging we a than in basis, do thing quarter is versus a quarter seasonal have perspective to relatively from Yes. quarter that strictly in in quarter. Tom fourth the mind And about other keep start, easier weather third think easier, and as Mike, one we comps

out. half if . volumes might something So back to that's where about play how as you mind fall, the those to think in else keep

Operator

Our Grooms next from with question Trey come Stephens. will

Trey Grooms

Tom.

few any maybe And larger you opportunities? talk the year. guys more you you acquisitions a for any pain less potential bolt-on seeing But closed out if there? there. this transactions So could or have Are about

James Hill

Yes.

I close bolt-on acquisitions, for acquisitions some would you that on X share Alabama you in when smaller, and I is said, North very season X tell you time the acquisitions. the near we'll saw you future more But . it in call As a us on of X in strategic busy kind close meaningful and we'll which Texas. with it's right.

Operator

with MacGregor from Research. question will come Our next David Longbow

Unknown Analyst

This Jon could and Allen that's outlook for pricing on states playing seeing you're Vulcan key the your XXXX maybe in to detail for for just double-digit hoping is provide I on ability for into what David. growth. DOT was XXXX some sustain pricing and [indiscernible] budgets you

James Hill

Yes.

I and now. general, Steady We're just in as We've IJAA through So think seeing that demand expectations. growth local got similar at critical to demand right in public to there, flow demand. Overall, funding a states. and the growth out highway look the public market. lettings highway is more we state lot and funds in

Tennessee, saw funds. $X.X a is Tennessee billion. a X, George raise Florida had X. Georgia, You all Florida, up had

and All in in lettings see that -- flow fund of which 'XX, we'll 'XX 'XX. the

the are states all And So I'd say, also Texas, of record this X level public years. our are at record supports X next of and growth levels. X at demand larger for or California funding.

steady the we race wins So should slow here. and

Operator

Adam Our Davis. next thalhimer with question from Thompson, comes

Adam Thalhimer

like companies exposure. it Trey, grow I increased seeing And I quarter. also deals? competition materials Are nice it to was M&A. gosh, like for U.S. on -- every you materials feels trying Are thought was a curious you international

James Hill

on. going lot there. are much I don't a think changed. bidders Same out There's

nothing year to everybody also as a got on worried was about demand recession. last remember, pent-up You you from going got

lot a lot pass all a of get those them. opportunities. a look at we'll We on So

it it's sure do make accurately to to in are and you're return rapidly. be get can comes integrate M&A, and a buy what to synergies I once are you paying it what down you you discipline, think what about . then for you it willing you, it, markets pay want what on and

Operator

from with next Jefferies. question Phil Ng comes Our

Philip Ng

of I guess, A of Tom, kind perhaps year, really this just [ midyear a to did perspective little is last relative How it lot shake appreciating out more on XXX]. increase. this

us conceptualize price much could you perhaps year? the So carrier how kind lift or the help of see next of And a demand...

James Hill

I'd to lines, perspective, geographies product different say you get a going you say year, you vice from different, or got maybe -- I different didn't different ahead macro similar different customers, it get always that's when year versa. Go where it be this last

I call would So it very out similar.

Philip Ng

does Any Okay. lower to don't from a from of you way that a to pushed quite year? XXXX, still seems in transpire good what be volumes so to of about materialize in thinking just demand underlying could because if carrier in us right? to when markets, weather last are end year -- been the years. about out it's of pretty terms kind you next have see help to standpoint, you think pricing next I few demand kind of how So position heard new that you're And grow this demand some a

James Hill

early to it's think I call.

I public see growth continue side. think in to the you

they're that there lettings. starting the do I funds know because flow think to and into we just are

that. population catch-up And markets do side, feel continue rates houses have little On indicators. lead it will with I up the don't It's . And inventory what the single-family we with But just slower obviously, we to these anticipated. to that to some than grow. growth. good private keep has in help of will a interest

distribution a taken kind interest expect that is but We've growth of warehouses the think would I I of res big believe. good, slow will I sector rates to So hit It's and also The help centers. timing, also. the matter the on will manufacturing and question nonres. be steady

Operator

Vertical Our with next will come question from Research. Michael Dudas

Michael Dudas

Tom, let your there remark final up me follow to Phil.

on couple that can a months? Are of like, opportunities, areas permitting the look that . been year, relative acceleration about in it projects tailwind what of XX over to it's heavy years? through that serve can some ] your what of backlog of half On you nonres talk X the bidding an this as in your into in looks large certainly Is private you the are XXXX? we how the to type last seeing the larger [ potentially second next weather looks we

James Hill

tailwind. the projects. 'XX. those shipping number think definitely of It a big big rain is with now Yes. manufacturing help projects a will is when I It think on I us that. and in more them helping that We're fits. there's And us behind And backlog

You've to XX of see projects continue reshoring footprint, growth you our number in then a got and centers got manufacturing data in of the you've facilities. with

So for it tailwind is a us.

take distribution a enough I on warehouses with and tailwind helpful. yet don't big what to but think happened definitely it's centers,

Operator

of question We'll last America. take Feniger our from Michael Bank with

Michael Feniger

means manufacturing it's there's the on roll been 'XX? these manufacturing to some based on is projects backfilled. pipeline, a private you -- that, there Because the of had Tom, in on off risk kind your and did that feel not that a backlog stable Just, enough of be been side, non-res a tailwind that tail is

been if points address infrastructure public in in And has that. know curious year. really some side, around we how head highway XX? the you talks last helped record was awards this highlighted There's infrastructure the that of mixed contract secondly, into the growth on months data kind just few Just there I you

a into like more sort if of curious the flow that more Just to just see pause, 'XX, through and feel 'XX. of we that's you trend funding of continue

James Hill

on highway first. Yes. the I'll take

timing. a that's sort just there. fund is think I big of matter of The too

lot You state got as IIJA. the top additional plus states coming, of XX funding about, our X talked and more a I

think I side, I in public the moment wouldn't a about that time. too worked get On up

wins steady steady X will next or slow X there, the and the I think and I for I it be race think As and said, slow years.

some will but will hotter moments growth. I moments, and continue solid. think that's steady There think overall, I So cooler be it

see on pipeline shipping in but a manufacturing, the there. healthy On got big that the and we've some a backlog, think, don't dip of I I we're backlog,

other Company. probably footprint I strong a come in the think Vulcan that's with up. closing, Materials I'd you I like and projects have for time Vulcan your point, continue we In thank for particularly think to to And have. interest we

out our the thoughts We quarter, safe. you path thank Our again your speaking hope neighbors for in with be top will have to look to been to forward and go time this who they our or through morning. stay employees, the storm. you We

Operator

This does for Thank you conclude today's program. you and disconnect. now may your participation,

Vulcan Materials (VMC) 6 Aug 242024 Q2 Earnings call transcript