Vulcan Materials Q4 2024 Earnings Report

Vulcan Materials EPS Results

• Actual EPS: $2.17
• Consensus EPS: $1.76
• Beat/Miss: Beat by +$0.41
• One Year Ago EPS: $1.46

Vulcan Materials Revenue Results

• Actual Revenue: $1.85 billion
• Expected Revenue: $1.81 billion
• Beat/Miss: Beat by +$44.48 million
• YoY Revenue Growth: N/A

Vulcan Materials Announcement Details

• Quarter: Q4 2024
• Date: 2/18/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, February 18, 2025
• Conference Call Time: 11:00AM ET

Vulcan Materials (NYSE:VMC) Company, together with its subsidiaries, produces and supplies construction aggregates primarily in the United States. It operates through four segments: Aggregates, Asphalt, Concrete, and Calcium. The company provides crushed stones, sand and gravel, sand, and other aggregates; and related products and services that are applied in construction and maintenance of highways, streets, and other public works, as well as in the construction of housing and commercial, industrial, and other nonresidential facilities. It also offers asphalt mix and asphalt construction paving services; ready-mixed concrete; and calcium products for the animal feed, plastics, and water treatment industries. The company was formerly known as Virginia Holdco, Inc. and changed its name to Vulcan Materials Company. Vulcan Materials Company was founded in 1909 and is headquartered in Birmingham, Alabama.

Vulcan Materials Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning. Welcome everyone to the Vulcan Materials Company's Fourth Quarter twenty twenty four Earnings Call. My name is Shana, 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. All lines have been placed in a listen only mode.

[Operator]

After the company's prepared remarks, there will be a question and answer session. Now, I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

[Mark Warren, Vice President, Investor Relations at Vulcan Materials Company]

Thank you, operator, and good morning, everyone. With me today are Tom Hill, Chairman and CEO and Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer. Today's call is accompanied by a press release and a supplemental presentation posted to our website, volcanmaterials.com. Please be reminded that today's discussion may include forward looking statements, which are subject to risks and These risks, along with other legal disclaimers, are described in detail in the company's earnings release and in other filings with the Securities and Exchange Commission. Reconciliations of non GAAP financial measures are defined and reconciled in our earnings release, supplemental presentation and other SEC filings.

[Mark Warren, Vice President, Investor Relations at Vulcan Materials Company]

During the Q and A, we ask that you limit your participation to one question. This will allow us to accommodate as many as possible during our time we have available. And with that, I'll turn the call over to Tom.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you, Mark, and thank all of you for your interest in Vulcan Materials today. 2024 was another year of successful execution. Our two pronged growth strategy of enhancing our core and expanding our reach is working. We improved our industry leading aggregate cash gross profit per ton by 12% and strengthened our existing franchise in three of our top 10 revenue states. We finished the year strong.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

We plan to capitalize on our solid momentum and deliver attractive earnings growth again in 2025. Before discussing our outlook in more detail, I will provide you some key highlights from our fourth quarter performance. Our teams delivered $550,000,000 of adjusted EBITDA in the fourth quarter, a 16% improvement over the prior year. Importantly, adjusted EBITDA margin improved on a year over year basis for an eighth consecutive quarter. In the aggregate segment, cash gross profit per ton expanded 16% to $11.5 in the quarter through a combination of continued pricing momentum and moderating year over year unit cash cost of sales.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Aggregate sprayed adjusted price improved 11% in the quarter, consistent with full year results. Price improvement remained geographically widespread. Our shipments were more mixed in the quarter across geographies and end uses. Shipments were 3% lower than the prior year. Growing public shipments and strong demand in the storm impacted areas of Western North Carolina and East Tennessee helped to particularly offset headwinds in private construction activity.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

With less disruption from weather and our consistent focus on maximizing efficiencies through our Vulcan Wave operating efforts, Freight adjusted unit cash cost of sales increased 5% compared to the prior year. This was a meaningful improvement compared to previous quarters and a testament to the execution of our operating teams. This continued execution will be a focus for us in 2025. The pricing environment remains healthy and we expect freight adjusted Aggies price to grow between 57% in 2025. Now this includes an over 100 basis point negative mix impact from recent acquisitions.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Inflationary cost pressures continue to moderate and we're making progress on our evolving operating process intelligence adoption. We expect freight adjusted aggregate unit cash costs to increase low to mid single digits in 2025, leading to another year of double digit year over year expansion in our aggregate unit profitability. We expect 2025 average shipments to increase between 35% compared to last year. This growth outlook is driven by recent acquisitions coupled with expectation of stable demand for our legacy business. I expect that continued growth in public construction activity will offset ongoing more modest contraction in private activity.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Over the last year trailing twelve months highway starts have increased by another $7,000,000,000 to $122,000,000,000 Blowing highway input cost inflation and continued IIJA related spending support ongoing growth in highway shipments in 2025 and beyond. Additionally $45,000,000,000 of funding initiatives were passed at the state and local level in the recent election cycle to spur additional transportation investment in Vulcan states. Affordability and elevated interest rates remain headwinds for residential construction activity. Increasing single family starts over the past twelve months support modest growth in single family housing in 2025. But multifamily storage data and elevated vacancy rates point to another year of declining demand in multifamily housing.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Because the demographics in Vulcan market support a consistent need for additional housing, the timing of additional interest rates reductions and overall improvement in affordability will dictate when residential construction activity returns to growth. Likewise, a return to growth in private non residential construction will also be a matter of timing. While we expect lower private non residential demand in 2025, we currently anticipate the starts will bottom by mid-twenty twenty five and may begin to recover by the second half of the year boding well for 2026 activity. Recent trends in both warehouse starts and data centers have been encouraging. Trailing twelve month warehouse starts, the largest category in private non residential construction have continued to flatten out mid pre pandemic levels after a precipitous drop from historic highs throughout 2023.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Current planned data centers activity in our markets remains robust. And according to CoStar data, approximately 7% of proposed data center activity is within 20 miles of a Vulcan facility. As I said earlier, the focus of our teams is execution, controlling what we control. Against the demand backdrop, I just described, we expect to deliver between 2,350,000,000 and $2,550,000,000 of adjusted EBITDA in 2025. Now I'll turn the call over to Mary Andrews to provide some additional commentary on our 2024 performance and more details around our 2025 outlook.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Mary Andrews?

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

Thanks, Tom, and good morning. I commented a year ago that our balance sheet was a source of strength and provided us considerable financial flexibility to continue to grow. In 2024, we deployed approximately $2,300,000,000 towards strategic acquisition. We also reinvested in our existing franchise and furthered our greenfield efforts with $638,000,000 of operating and maintenance and internal growth capital. And we returned $313,000,000 to shareholders through dividends and share purchases.

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

At year end, our net debt to adjusted EBITDA leverage was 2.3 times. In March, we redeemed our 2026 notes at par for $550,000,000 and in the fourth quarter, we issued $2,000,000,000 of notes across five, ten and thirty year tenors to fund our 2024 acquisition activity. Recently, we provided notice of our intent to redeem the 400,000,000 of 2025 notes with cash on hand, effective 03/28/2025. Given another year of solid cash generation in 2024, we remain well positioned to continue our long track record of growth through disciplined capital allocation and consistent execution. In 2024, our teams executed well in a challenging volume environment to expand adjusted EBITDA margin by 190 basis points and deliver $2,100,000,000 of adjusted EBITDA for the full year.

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

Aggregates cash gross profit per ton grew by 12% to 10.61 demonstrating the durable compounding nature of the aggregates business and our continued progress toward our $11 to $12 per ton goal. SAG expenses for the full year were 2% lower than the prior year. We remain focused on continuing to drive value for the business through disciplined investments in SAG expenses to support our organic growth initiatives and innovation through technology. SAG expenses as a percentage of revenue were 7.2% in 2024. Our return on invested capital at year end was 16.2%, largely consistent with the prior year.

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

The increase in invested capital was driven by fourth quarter acquisitions, which provided very little earnings contribution given the closing date. Absent that timing impact, return on invested capital improved 40 basis points. Carrying strong momentum into 2025, we anticipate another year of attractive margin expansion and earnings growth. Tom highlighted our views around demand, pricing and aggregates unit profitability. So let me provide a few additional details around the 2025 guidance.

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

We estimate that recent acquisition will contribute approximately $150,000,000 of adjusted EBITDA in 2025. We expect our downstream businesses to contribute approximately $360,000,000 in cash gross profit with an estimated two thirds of the contribution from the asphalt segment and one third from the concrete segment. These expectations reflect expansion and cash unit profitability in both segments and the contribution of recent acquisitions. We forecast SAG expenses of between $550,000,000 and $560,000,000 We project depreciation, depletion, amortization and accretion expenses of approximately $800,000,000 interest expense of approximately $245,000,000 and an effective tax rate between 2223%. In 2025, we plan to reinvest in our franchise through operating and maintenance and internal growth capital expenditures between $750,000,000 and $800,000,000 Included in this plan is approximately $125,000,000 of spending on three sizable plant rebuild projects that are underway, in addition to capital for recently acquired businesses.

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

Overall, we expect 2025 to mark another year of expansion in adjusted EBITDA margin, attractive growth in adjusted EBITDA and strong cash generation. I'll now turn the call back over to Tom to provide a few closing remarks.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you, Mary Andrews. I want to take a moment to thank the men and women of Vulcan Materials for your consistent and enduring commitment to excellence. Most importantly, you kept one another safe and looked out for your brothers and sisters across the company and the communities in which we live and work, particularly in the face of persistent increment and sometimes severe weather. And I am so proud of your consistent execution of the Volcan way of operating and the Volcan way of selling strategic disciplines. You proved your metal and increased cash gross profit per ton every quarter for the second year in a row.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

I'm excited about what we will achieve in 2025. Together, we remain focused on controlling what we can control and delivering value for our customers, our communities and our shareholders. And now, Mary Andrews and I will be happy to take your questions.

[Operator]

Your We will take our first question from Trey Grooms with Stephens. Mr. Grooms, you might be on mute. Your line is open.

[Trey Grooms, Managing Director at Stephens Inc]

Hey, I'm sorry. Sorry about that. Good morning, Tom. Good morning, Tom, Mary Andrews and Mark. Yes, well done on the strong finish to the year.

[Trey Grooms, Managing Director at Stephens Inc]

Thank you. I wanted to ask on aggregate pricing. It seems like some markets have seen a shift from January to April as far as just the timing. Can you talk about a little bit about that and maybe it's the success of January increases that you've seen and how we should be thinking about maybe the cadence of pricing this year?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Sure, Trey. So Q4 in the year in the total year last year, we ended with pricing up 11%. So that allows us to carry really good pricing momentum into this year. As you saw our guide is 5% to 7%, but that's also negatively impacted over 100 basis points by the acquisitions. I'm not worried about those.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

We'll get those back up to our average quickly. But our January 1 price increases, you couple that with our booking and backlogs, I think it supports our guide, as did our I thought our January results, our '25 results. The timing of price increases, I think will be very similar to last year, whether it was in bid work or asphalt or ready mix price increases. The vast majority of our price increases took effect January 1. I think we should we would guide you to I think we'll be in the range quarter to quarter throughout the year.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Now remember, mix can impact a single quarter, it can impact it up or down, but mix adjusted, I think we should be consistently in that 5% to 7% range.

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

Yes. And Trey, I would add that most importantly, we expect that the consistent pricing improvement coupled with moderating costs that we talked about in the prepared remarks will yield low double digit improvement in cash gross profit per tonne consistently each quarter as well, extending what we've now strung together a nine quarter run on double digit improvement. And really the underlying So really expecting a strong performance from the ag segment. So really expecting a strong performance from the Ag segment.

[Trey Grooms, Managing Director at Stephens Inc]

Yes. Well, thank you for all the color and that's impressive and encouraging. So keep up the good work and I'll pass it on. Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thanks, Trey.

[Operator]

We will take our next question from Steven Fisher with UBS.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Thanks. Good morning. I think you mentioned on the aggregates volume side sort of organic steady pace. So I'm assuming that means about sort of flat organic volumes expectation. If that's correct, then feel free to correct me on that.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

But maybe just curious about the cadence of how that plays out during the year. And we've been observing this slowdown in overall non res construction and you mentioned the private side kind of being a little weak to start off. So just curious what you've assumed for the cadence of that organic trend in the first half of the year versus the second half? Do you have actual declines maybe in the first half before maybe easier comps and then growth in the second half? Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Yes, I think you completely understand it. It is growing public, offsetting some challenge private. If you look back at 2024, we really never got out of the weather problem. The easiest comp to your point is Q3. If you look at January, February, we got a slow start.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Some of that is cold and wet weather. But remember, it's just January and February, so not too worried about that. I think regardless of the challenges, our Vulcan teams will perform. I think I have complete confidence in our full year guide, but as you said, back half loaded probably with some easier comps coupled with probably some help from single family and non res construction in the second

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

half.

[Operator]

We will take our next question from Catherine Thompson with Thompson Research Group.

[Kathryn Thompson, Founding Partner & CEO at Thompson Research Group]

Hi, thank you for taking my question today. So your volume guidance in the quarter was very close to ours pricing exactly in line. But what jumps out at me is, and correct me if I'm wrong with this, but your gross margins came in at a record Q4 level. Could you you've articulated in the past the bulk of way of operations, but if you could parse out a little bit more for this quarter and project how we should think about next year in terms of that margin of kind of the why behind that record for Q4, the components and how that plays into the longer term strategy including for this year? Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Sure. Our cost increase in the fourth quarter was much improved over the prior three quarters, three reasons why. One was weather was not a negative. Two, volumes were not as negative. And three, our volume of operating technology and tools and disciplines are improving our efficiencies.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

And as we look to 2025, we believe we'll continue to mature the bulk we have operating, which will continue to enhance our operating efficiencies. We would guide you to the kind of low to mid single digit increases in 2025. That is a substantial improvement over the past couple of years, but really kind of back closer to what we've seen in history. So I think what you're seeing is the bulk way of operating at work and offsetting some of the headwinds we would see.

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

And Catherine on gross margin, we saw improvement on a year over year basis each quarter in 2024. That's what I would expect for you to see in 2025. I think in terms of kind of the cadence of gross margin, I would think about it, it's typically lowest obviously in Q1, highest in Q2 or Q3. We did have an outstanding fourth quarter and plan to carry that momentum into 2025.

[Kathryn Thompson, Founding Partner & CEO at Thompson Research Group]

Great. Thank you very much.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

Thank you. Our next question is coming from Anthony Pettinari with Citi.

[Asher Sohnen, Analyst at Citigroup]

Hi. This is Hi, this is Ashish Soder on to Anthony. Thanks for taking my question. I just wanted to ask around administrative policy. Have you seen any kind of pressure on the pace of IGA rollout or project starts any of the policy decisions or executive orders we've seen?

[Asher Sohnen, Analyst at Citigroup]

And then on tariffs, what kind of impact your business we could expect potentially?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So I don't think we see any impact from policy on the public demand. It's IJ, which we're seeing is the growth in public going to work. And remember that money is protected through dedicated long term funding. So nothing is going to happen to it. Looking forward, we would think this government will support traditional aggregate intensive public work legislature.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So probably a positive from that perspective on tariffs. On aggregate tariffs directly, we see very little impact on everything else and we've looked at steel and rubber. I'm not sure anyone can tell you what's going to happen, but I don't think it's a big impact to us. And on the flip side of that, I'm confident that Bulk Materials teams will navigate whatever comes at us. Look, we've seen a pandemic, we've seen volumes down, we've seen retro inflation and our teams consistently grow unit margins and earnings and that's exactly why we developed Vulcan with selling, Vulcan with operating, so that we can consistently grow our unit profitability regardless of any outside challenges.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So the government I think supports infrastructure and I don't think we'll handle whatever comes out of some of the tariffs.

[Asher Sohnen, Analyst at Citigroup]

Great. Thanks, Bob. I'll turn it over.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

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

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Hey, Jerry.

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Yes. Hi. Good morning, everyone. Hi, Tom. Mary Andrews, it's Mark.

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Hi. Mary Andrews, I just wanted to pull the thread on the cost performance. If we back out the period cost absorption, your variable cost per ton were essentially flat in the quarter. So I'm wondering if you could just expand on what part of your cost structure is actually deflationary now. And if we just straight line the performance into the first quarter with normal seasonality, that would imply cost per ton are about flat year over year in the first quarter, which I just want to make sure that's right considering the pricing outlook relative to that is pretty attractive.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

I think I'll take that one. I think I would not call cost flat. I would call them up mid to single digit and I think pretty consistently through the year. Now remember, quarter to quarter cost is going to be choppy, it's just the nature of the beast. So really kind of need to look at it on a trailing twelve month basis.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Fourth quarter was encouraging, but we got to string that together. If you look at inflation, I don't think there's any deflation on anything out there that I could think of. As we guide to '25, I would tell you diesel up slightly, wages mid single digit, electricity up high single digit and all of that partially offset by improved operating efficiency. So, but I would not guide you to flat. I think you would stay in that longer term that low to mid single digit cost

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

performance.

[Operator]

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

[Angel Castillo, Executive Director at Morgan Stanley]

Just wanted to go back to the comments on private non resi. You talked about potential for kind of starts to maybe bottom in the middle of the year and maybe even rebound in the second half. Can you just maybe help us understand, I guess, what you're seeing or hearing, whether it's from your customers or in terms of quoting activity and maybe just kind of what gives you confidence on that kind of cadence?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Yes. So I think let me be clear, I think we do see non residential construction shipments are still down in 2025. I think the good news is we're starting to see some term in that performance. Data centers will be a bright spot and most of the planned data centers are in our footprint. And while warehouses has been a big drag, and will be still a drag in the near future, I think that's changing.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

And if you looked at a number of our markets on a trailing three month basis, we've seen that turn positive, not everywhere, but it's starting to turn. And then, so I think you're starting to see some green shoots. I think you're starting to see some things turn. There's a lot of money sitting on the sidelines. Like traditional non res, it's still a drag, but that's going to follow a subdivision.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So it's going to take a while. So while non residential construction will be negative in 2025, we think it should gradually get better as we progress through the year, which kind of sets us up for a more positive outlook at this point, very preliminary for 2026.

[Angel Castillo, Executive Director at Morgan Stanley]

That's helpful. And anything in the quoting activity that you're seeing?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Yes. So we're there's that's interesting. I'm glad you asked that. For the last six months, we've quoted a lot of non res work that is still sitting on the sidelines. So we think there's pent up demand there, but I think people want to see more, they're hoping interest rates go down and, but that's good news because some point in time that money will go to work.

[Angel Castillo, Executive Director at Morgan Stanley]

Very helpful. Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

We will take our next question from Phil Naim with Jefferies.

[Philip Ng, Managing Director at Jefferies Financial Group]

Hey guys. Tom, congrats on another strong quarter. I had a few questions around the pricing commentary. You talked about 100 basis points drag on price mix from these recent deals. Can you give us a sense how much lower is ASP for some of these deals versus the corporate average?

[Philip Ng, Managing Director at Jefferies Financial Group]

And how quickly you think you can narrow that over time?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So it's substantially lower. I mean and I'm not going to quote numbers on that, but if it had over 100 basis points on the whole company, it is lower. We've already started that work. I think we were successful with January price increases in those markets and we'll continue that as progressed through the next few quarters and years. I don't think it takes us long to get it back up to where a more reasonable Vulcan market would look like.

[Philip Ng, Managing Director at Jefferies Financial Group]

Okay. And then separately from a pricing standpoint, if I account for the 100 basis points, you're still talking about really good pricing, but perhaps a little softer than the high single digit framework you gave us last quarter. Any puts and takes you want to give us a little more color because it doesn't sound like timing is a real issue for you, Jan versus April, like your competitors. So just give us some puts and take on perhaps what you're seeing in the marketplace on pricing.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

I think we were pretty consistent throughout our geographies on price increases, same thing with end users. The I think you got to remember, while you're a little lower than double digit, maybe on same store high single digit, you also are not looking at double digit cost increases. You're looking at mid to low. So we continue that trend of taking money to the bottom line, which is the most important thing we can do is grow our unit margins by double digits. You've seen us do that over the last couple of years and I think you'll see us do that.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So that's what our guide is for 2025 and I think we feel pretty good about it.

[Philip Ng, Managing Director at Jefferies Financial Group]

Okay. Appreciate the color. Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

We will take our next question from Mike Dahl with RBC.

[Mike Dahl, Managing Director - Equity Research at RBC Capital Markets]

Hi. Thanks for taking my question. Tom, Suzanne, you obviously put a lot of capital to work with the acquisitions. They did come with some mix of downstream businesses. Can you help us understand kind of how you view the downstream portion, whether those are businesses that are likely to stay within the portfolio and what is or is not incorporated into the guide with respect to that?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So the acquisitions are pretty new. They were very successfully run with good management team, good assets. Like anything else, we're going to look at this as a set of assets and if it fits us, we'll run it. If it earns appropriate return that suits us, we'll run it. If it is more valuable to someone else, then we'll divest of that and we'll take those proceeds and put them back in the aggregates business.

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

And in terms of the guide, Mike, the guide assumes we own the businesses like we do, maybe for a little helpful context for you. We commented in the prepared remarks that there's 150,000,000 of EBITDA contribution from the acquisitions. That's about 60% in the aggregate segment and about 40% of that be contributing to the downstream businesses.

[Mike Dahl, Managing Director - Equity Research at RBC Capital Markets]

Okay, great. Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

We will take our next question from Adam Thalhanger with Thompson Davis.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

Hey, good morning guys. Congrats on the Q4 beat. Mary Andrews, do you have the well, I was also curious about the downstream portion because that was

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

a pretty big increase year over year.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

So that looks like it's from acquisitions. I was curious if you have the 360s cash gross profit, do you have that on a reported basis?

[Mary Carlisle, Senior VP & CFO at Vulcan Materials Company]

We're I'm going to let's stick with the $3.60 for now and we can talk offline about some more specifics. But maybe what would be helpful to you is the improvement in the cash gross profit contribution from the downstream businesses. About 75% of that overall improvement is from the acquisitions. We also see improvement in the underlying business in both segments and that's about 25% of the improvement year over year.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

That helps. Okay. Thank you.

[Operator]

We will take our next question from Timnaeus Tanners with Wolfe Research.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Yes. Hey, good morning. I wanted to ask you a little bit about the M and A landscape after the deal you just finished. How you're looking at '20 '20 '5 that that could build from what you just accomplished?

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

And then, if I could sneak in a question on Mexico, any update on the Calico Quarry precipitation efforts with the USMCA panel? Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Yes. So on I think there's still a very healthy pipeline of M and A. There's a number of projects we're working on. It will take some time, but I think we'll continue to be successful that as we go through 2025. On Mexico, I think the short answer there is no real news there.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

We're still waiting on the tribunal to make a decision. We feel very good about our case and think we will win that and we'll when they make a decision, we'll let you guys know. We are anticipating that sometime this year.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Okay. Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

We will take our next question from Garik Smeis with Loop Capital.

[Garik Shmois, Managing Director at Loop Capital Markets LLC]

Great. Thanks for taking my hey, good morning. Thanks for taking my question. You spoke to the pricing cadence being similar this year as opposed to last. So I would love to hear your thoughts on midyear increases, what opportunities you see there potentially and what the timeframe could be?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Yes. So they are not included in our guide, but we will absolutely announce midyear price increases. We will announce those probably towards the end of the first quarter, so we have time to have those conversations. Again, as I always remind you mid years will have a bigger impact on 2026 than they will in 2025, but you will still not it's too early to call, how conversations with customers and we'll see where we go from there.

[Garik Shmois, Managing Director at Loop Capital Markets LLC]

Great. Do you have by chance how much 2024 mid years are impacting 2025?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Well, that's a really hard to parse out. They definitely had an impact. I think we're pleased with part of the things that they do is help you give notice to your customers, so they have more time to react, which allows us to be more successful for January 1. So some of it is amplitude of the price and some of it is timing, but it definitely helps both.

[Garik Shmois, Managing Director at Loop Capital Markets LLC]

Understood. Thanks for that and best of luck.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

We will take our next question from Keith Hughes with Truist.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Hi, Keith. Good morning.

[Keith Hughes, Managing Director at Truist Securities]

Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

I think I asked the So short term in January, February has been very cold. We're going to see that this week with cold and snow. So not a great start, but when we put a plan together, we expect weather impact at some point in time in the year and we expect to get lucky in some quarters, but we're trying to look at more normalized weather as we make a prediction in our guidance. I think as we pointed out, Q3 was particularly challenged last year. Hopefully, that will be easy comp in the middle of the season.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So hopefully, that will help us, ex hurricanes.

[Keith Hughes, Managing Director at Truist Securities]

And one other question on the Southern California acquisition. Is that particularly the downstream, does that mix in well with current operations that bolt in or is that operating more as a standalone entity?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So if you look at the overall, it fits us very well, particularly on aggregate perspective. We don't have a lot of downstream ready mix in those markets, but it also has some asphalt that fits.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

So part of it fits in aggregate and asphalt as far as us being there. And then the ready mix they have an excellent position in those markets, but we were not in the ready mix business in those markets.

[Keith Hughes, Managing Director at Truist Securities]

Okay. Thank you.

[Operator]

We will take our next question from Brent Thalmann with D. A. Davidson.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Hey, Brent.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Hey, thanks. Hey,

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Tom, I had

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

a question more on maybe the direct impact to tariffs on your business. I know Mexico is not really in the conversation, but we're thinking more along the West Coast and what Vulcan's response is going to be to the extent that tariffs are implemented on some of your assets shipping down from Canada?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Well, I think our we'll follow the letter of the law. We've looked at that. It is a pretty negligible impact for us. And whatever it is, we'll handle in the business, but I wouldn't it doesn't move the needle.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Okay. Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

We will take our next question from Michael Dudas with Vertical Research.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Good morning, Tom, Amar, Mary Andrews.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Good morning.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Good morning. Yes. Tom, it was a very solid pricing, it looks like for 2025, even though it's distillery up in 2024, do you sense this is even like say your organic volumes are flat and they're kind of flattish on the overall market. Does this look like maybe a more normalized level pricing relative to the history spend or is there still room for upside on that going forward? Thank you.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Yes, I think that there's always upside on price. You got to earn that with your customers. Obviously, growing demand always helps that and we haven't seen growing demand now for a few years, which puts some pressure on price. But I think if you look at the bulk of selling and the way we service our customers, I think we earn price and I think we're doing that and I can see that in our performance in 2024 and I got in 2025.

[Operator]

We will take our next question from David MacGregor with Longbow Research.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Good morning, David.

[David Macgregor, President at Longbow Research]

Yes, good morning, everyone. Thanks. Yes, good morning, Tom. Congratulations on a really strong quarter. Great performance.

[David Macgregor, President at Longbow Research]

Thank you. I wanted to ask you about pricing and the Vulcan way you're selling. And clearly, this process has been very successful and delivered some very visible results. But if your market's evolved, and I'm thinking, for example, of your ready mix and fixed plant customers who in many instances are now paying more for their limestone than they are for the cement. And then I guess secondly, your Vulcan wave operating process is giving you better incremental unit costs.

[David Macgregor, President at Longbow Research]

Does the profitability algorithm sort of adjust at some point to rely on slightly smaller price increases in favor of larger unit shipment gains that are achieved maybe in the way of market share gains from competitors who are continuing to push hard on price increases?

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Yes. Let me be clear. I wish we had cement pricing. We don't. Aggregate is much lower than cement pricing, but also that cost is much lower.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

I think that as you look forward, I think I would go back to the strategic initiatives of bulk of selling and bulk of operating. Bulk of selling allows you a much in-depth, much better in-depth look into what's going on in the market and gives your salespeople the tools to price better and also gives them logistics and other tools to better service your customers. I think on the bulk of operating, it allows for better training and better operators and how we inspect our equipment and reduce downtime and also the technology allows for better put and through put of critical sizes. You put those two together and I think both of them have a lot better chance of beating history both the sales piece and the operating piece which leads you to better opportunities on unit margin growth that again will be history and you've seen us do that over the last nine quarters a double digit improvement. So that's not happening by accident and it doesn't happen by accident going forward.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Again, if you that's over time frames when volumes have actually gone down. This year we're calling flat, but when volumes come back, you have even better opportunity to improve your unit margins both on the price side and on the cost side.

[David Macgregor, President at Longbow Research]

Okay. All right. Thanks, Tom.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Thank you.

[Operator]

Thank you. It appears we have no further questions in the queue. I will turn the program back over to our presenters for any additional or closing remarks.

[Thomas Hill, CEO & Chair of the Board at Vulcan Materials Company]

Yes. Thank you for your time and your interest in Vulcan Materials today. We appreciate the relationship. We hope that you and your families stay safe, particularly with all the weather we're having, and we look forward to talking to you throughout the quarter. Thank you.

[Operator]

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Participants

Executives

• Mark Warren, Vice President, Investor Relations
• Thomas Hill, CEO & Chair of the Board
• Mary Carlisle, Senior VP & CFO

Analysts

• Trey Grooms, Managing Director at Stephens Inc
• Steven Fisher, Managing Director & Equity Research Analyst at UBS Group
• Kathryn Thompson, Founding Partner & CEO at Thompson Research Group
• Asher Sohnen, Analyst at Citigroup
• Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs
• Angel Castillo, Executive Director at Morgan Stanley
• Philip Ng, Managing Director at Jefferies Financial Group
• Mike Dahl, Managing Director - Equity Research at RBC Capital Markets
• Adam Thalhimer, Director of Research at Thompson Davis & Co
• Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC
• Garik Shmois, Managing Director at Loop Capital Markets LLC
• Keith Hughes, Managing Director at Truist Securities
• Brent Thielman, MD & Senior Research Analyst at D.A. Davidson
• Michael Dudas, Equity Research Analyst at Vertical Research Partners
• David Macgregor, President at Longbow Research