Vulcan Materials Q2 2025 Earnings Report

Vulcan Materials EPS Results

• Actual EPS: $2.45
• Consensus EPS: $2.65
• Beat/Miss: Missed by -$0.20
• One Year Ago EPS: $2.35

Vulcan Materials Revenue Results

• Actual Revenue: $2.10 billion
• Expected Revenue: $2.23 billion
• Beat/Miss: Missed by -$127.59 million
• YoY Revenue Growth: +4.40%

Vulcan Materials Announcement Details

• Quarter: Q2 2025
• Date: 7/31/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 11:00AM ET

Vulcan Materials (NYSE:VMC), 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 Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Despite record rainfall and extreme temperatures in the Southeast, Q2 adjusted EBITDA rose 9% to $660 million, margins expanded 260 bps, and aggregates cash gross profit per ton grew 13%.
• Positive Sentiment: Freight-adjusted average selling prices improved 5% (8% on a mix-adjusted basis) while freight-adjusted unit cash cost of sales increased just 1.5%, driving a 9% increase in cash gross profit per ton in Q2.
• Negative Sentiment: Extreme weather in key Southeast markets is estimated to have displaced 2–3 million tons of aggregate shipments, weighing on overall volume in the quarter.
• Positive Sentiment: Bookings and backlogs are accelerating as multifamily residential improves, private non-residential sees data center projects with a $35 billion pipeline, and public highway awards are up 20% year-over-year with over 60% of IIJA funds unspent.
• Positive Sentiment: Trailing twelve-month free cash flow exceeded $1 billion, enabling $207 million of capex reinvestment, $169 million returned to shareholders, $400 million debt retired, and maintenance/growth capex guidance set at ~$700 million for 2025.

Presentation

[Operator]

Good morning. Welcome everyone to the Vulcan Materials Company Second Quarter twenty twenty five Earnings Call. My name is David and I'll be your conference call coordinator today. Please be reminded that today's call is being recorded and will be available for replay later today on 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. 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, bulkmaterials.com. Please be reminded that today's discussion may include forward looking statements, which are subject to risks and uncertainties. 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.

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

Reconciliations of non GAAP financial measures are defined and reconciled in our earnings release, supplemental presentation and other SEC filings. 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.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you, Mark, and thank all of you for your interest in Vulcan Materials Company. I'm very proud of how our talented teams are delivering results. They exhibit their commitment to continuous improvement through consistent execution of our strategic disciplines. Most importantly, they are doing so while keeping one another safe. Both our safety and financial performance through the first half of the year has been outstanding despite a challenging operating environment.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Extreme temperatures early in the year and excessive rainfall in the second quarter have all contributed to lower same store to date shipments across all product lines. Nonetheless, our adjusted EBITDA has improved 16%. Margins have expanded two sixty basis points and aggregates cash gross profit per ton has grown 13%. Our two pronged growth strategy to improve earnings through compounding profitability in our organic business and adding strategic assets to our portfolio is clearly working. In the quarter, we generated $660,000,000 of adjusted EBITDA, a 9% improvement over the prior year despite lower aggregate shipments.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Rainfall in the Southeast notched ten year records in many key bulk of states namely Georgia, Tennessee, Alabama and the Carolinas disrupting both our aggregates and asphalt businesses in these markets. Aggregates shipments were impacted by an estimate 2,000,000 to 3,000,000 tons in our most profitable markets. Still, our reported cash gross profit per ton expanded an impressive 9%. Our teams executed particularly well on our Vulcan web operating disciplines to navigate the challenging operating environment, drive plant efficiencies and tightly control operating costs. Freight adjusted unit cash cost of sales increased only 1.5% while remaining lower on a year to date basis.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Price improvements was geographically widespread and freight adjusted average selling prices improved 5%. On a mix adjusted basis, average selling prices improved 8%. The difference was the anticipated impact of recent acquisitions and unfavorable geographic mix due to weather impacted shipments in our attractive Southeast markets. Consistent pricing discipline coupled with operating execution are yielding attractive unit profitability growth as we move into the back half of the year. Let me share a few other thoughts about the second half.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Residential construction activity which accounts for about 20% of our shipments remains weak with persistent affordability challenges across most of The U. S. Markets. Starts and permits for single family housing continue to accelerate. However, multifamily starts are showing signs of improvement with over half of our markets having turned positive on a trailing three month basis.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

This improvement should begin to help offset the weakness in single family activity. In private non residential construction, higher rates for longer and macro uncertainty have been weighing but we are beginning to see several signs of recovery. With growth in data center activity and moderating declines in warehouse and other private non residential categories trailing three months starts have turned positive. This is an encouraging sign that private non residential demand will soon begin to grow. Data centers remain a bright spot.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

We are currently serving a number of data center projects and actively discussing green lit projects totaling over $35,000,000,000 We're beginning to hear discussions of supporting power generation projects in areas with a heavy exposure to data centers. Nearly 80% of data center activity in the planning stage is within 30 miles of Vulcan operation. On the public side, trailing twelve months highway contract awards in Vulcan markets have accelerated meaningfully. They were modestly down a year ago and were up over 20% at the June. IIJ funding is continuing to benefit both highways and other public infrastructure activity and we still have over 60% of the dollars yet to be spent.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Importantly, the improvements we're beginning to see in both private and public demand environment are translating into accelerating bookings and growing backlogs to support volume growth in the back half of this year and into 2026. Therefore, we continue to expect to deliver between $2,350,000,000 and $2,550,000,000 of adjusted EBITDA. Now I'll turn the call over to Mary Andrews for some additional commentary on our results and revised outlook. Mary Andrews?

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

Thanks, Tom, and good morning. Over the last six months, our year over year trailing twelve months aggregate rate adjusted unit cash cost of sales has improved nearly 600 basis points from 10% to 4%. The focus of our operating teams on utilizing our process intelligence system and other welcome way of operating tools to drive plant efficiencies is contributing to the attractive expansion in our aggregates cash gross profit per ton, even in a lower volume environment. The solid operating performance through the first six months of this year drove a 58 improvement in operating cash flow. And free cash flow on a trailing twelve month basis surpassed $1,000,000,000 This attractive cash generation coupled with our consistent disciplined capital allocation will enable us to continue to drive long term value creation for shareholders.

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

Through the first six months, we reinvested $2.00 $7,000,000 in maintenance and growth capital expenditures, returned $169,000,000 to shareholders through dividends and share repurchases and retired $400,000,000 of debt. Our return on invested capital at June 30 was 15.9%. At quarter end, we reclassified $550,000,000 of commercial paper borrowings from long term to short term debt, reflecting the likelihood that we will use some of the discretionary cash generation in the second half to repay those balances. Doing so will reduce our interest expense while maintaining the flexibility to reissue at any time to opportunistically capitalize on growth opportunities. At June 30, net debt to trailing twelve months adjusted EBITDA leverage was 2.1 times.

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

Given the cold and wet start to the year that slowed spending timelines on some projects, we now expect full year maintenance and growth capital expenditures of approximately $700,000,000 with an acceleration of spending in the second half of the year. Our trailing twelve month SAG expenses of $550,000,000 were flat to the prior year and 10 basis points lower as a percentage of revenue. Year to date expenses of $283,000,000 were in line with our expectations. As Tom said, we are reaffirming our full year adjusted EBITDA guidance of $2,350,000,000 to $2,550,000,000 Double digit year over year shipments thus far in July, the exceptional execution of our teams in the first half of the year and the improving private and public demand backdrop, all give us confidence in an accelerating second half of the year. I'll now turn the call back over to Tom to provide a few closing remarks. Thank you, Mary Andrews, and

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

thank you to my Vulcan teammates who delivered a strong 2025. Our trailing twelve months aggregates cash gross profit of $11.25 per ton is now over 50% higher than just three years ago when we communicated a goal of $11 or $12 per ton. This clearly depicts the durability of our aggregates lead business and our commitment to controlling what we can control to deliver consistent earnings growth for our shareholders regardless of the demand backdrop. And now, Mayor Andrews and I will be happy to take your questions. Q

[Operator]

A. Thank We'll take our first question from Trey Grooms with Stephens. Please go ahead. Your line is open.

[Trey Grooms, Managing Director at Stephens Inc]

Hey, good morning everyone. Thanks for taking my question. So, clearly, you all faced a heavily weather impacted first half of the year, which clearly impacted your volume and I'm sure had to hurt profitability as well to some degree. So, I guess what are you seeing or what gives you the confidence going into the second half to reaffirm your EBITDA guide for the year despite this kind of tough first half that we've been having to deal with especially due to weather?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Well, thanks for the question Trey. I think Trey ex rain I was very pleased with the quarter and the first half of the year. Volumes were down 1% in Q2 and in the first half without acquisitions down five As we've been talking about the quarter saw significant rainfall in the Southeast. And with our outsized performance in the Southeast, we were probably impacted more than most. Now that's a tough news.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

For me, the good news is that even with the wet weather in Q2, cold weather in Q1, volumes down and the most impacted region being at Southeast, which houses probably our highest prices and margins, we still saw first half prices up 6% and unit margins up 13%. And for me that's really quality earnings in some tough conditions and one I think our people should be very proud of their performance in the first half. It gives us a lot of confidence for the second half because a bit of good weather in the Southeast like we saw in July will really help improve what I thought was already a really good performance. When it's dry, we're shipping strong. July had, what I call, normal weather patterns and we saw very strong shipments.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

They were as Mary Drew said, were up double digit in July and that's a little bit of catch up probably in price and easy comps. But importantly, what we know is that our backlogs and our booking pace and our shipping pace are all up and would support our full year guidance of that 3% to 5%, which will have significant catch up in the second half. And we always said this will be second half loaded from perspective. I think the other thing that gives me confidence in it is that the underlying demand is there and it is improving. And so I think that we'll start to build an edge of return for the private side.

[Trey Grooms, Managing Director at Stephens Inc]

Perfect. Okay. Thanks, Tom. That's encouraging. I'll keep it to one question and pass it on. Thank you very much.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thanks, Greg. Talk to you later.

[Operator]

We'll take our next question from Anthony Pettitari with Citigroup. Please go ahead. Your line is open.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Hi, Good morning.

[Anthony Pettinari, Research Analyst at Citigroup]

Last quarter, I think you mentioned maybe delays in bids translating to bookings as something that maybe you were seeing a little bit more and maybe we've seen some of that in national data. I'm just curious if that's accurate. Are you seeing project timelines stretch out or customer confidence improved? Or I'm just kind of curious how that kind of the booking timeline has trended?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes, good question and an important one because it's turned. Are seeing them we are seeing them get greenlit, they're going. That's what's also building our booking pace and our backlog. So I think we've seen the trend in that.

[Anthony Pettinari, Research Analyst at Citigroup]

Okay. Is specific to private commercial or public or are you seeing it across end markets or I

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

think you're seeing it across all end markets. The one I would call out that we're not seeing it across would be single family. But as we talked about the backlogs and booking pace and starts on the public side is very strong and it continues to improve on the private side in all sectors except for single family.

[Anthony Pettinari, Research Analyst at Citigroup]

Okay. That's very helpful. I'll turn it over.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you.

[Operator]

We'll take our next question from Kathryn Thompson with Thompson Research Group. Please go ahead.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Your line open. Good

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

morning and thank you for taking my question this morning. Just tagging on the infrastructure question, you talked about the acceleration of dollars flowing out. How much of this when you look there are certain key states like Florida with the moving Florida initiative, which is $4,000,000,000 and then Tennessee's Modernization Act, which added another $3,300,000,000 to DOT funding. Is it these types of states that have these big initiatives and you're starting to see dollars flow through? Or is it other types of projects that are more related to IJA and just seeing a more delay than those? Or is it a combination of all the above?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes, it's all of the above. And the capital spending to you as you pointed out in all of our Southeastern states, in fact all of our biggest states are up and up considerably. That is coupled with IIJ funding. I think you're seeing both of them come together along with some local funding that's been increasing over the last three or four years. So I think what we're seeing in the highway work is demand is very strong and getting better.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

We're seeing this in lettings. We're seeing bookings. We're seeing backlogs. Remember a year ago, the contract awards were down 2%. Now contract awards are up 22%.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

And so we're also seeing this in our shipments. We saw it in July. We really feel the impact in 2026. And this kind of growth in public demand should be a strong catalyst for 2026 pricing because it's so visible. And so that gives you that visibility of future work, which really helps pricing.

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

Okay. And you said that contract awards are up 22%. Is that for bulk and serve states or is that more a national number?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Just to put it perspective bulk and serves that is highway for bulk and serve states.

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

And Catherine, I think one of the things we're pleased to see is that shift from as Tom commented down a year ago to significantly up is distinctly different in Balkan states versus other states where the awards have actually decelerated some.

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

Great. Thank you so much. Appreciate it.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you.

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

Best of luck.

[Operator]

Thanks. We'll take our next question from Brian Brophy with Stifel. Please go ahead.

[Andrew Maser, AVP at Stifel Financial Corp]

Hello, this is Andrew on for Brian. Thank you for taking my question.

[Andrew Maser, AVP at Stifel Financial Corp]

I just had a question on CapEx. It looks like it took a step down in the quarter. I'm wondering if there's any particular drivers of that? And then are there any changes to how you're thinking about CapEx for the full year? Yes.

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

So the CapEx in the first half being lighter than what we anticipate for the full year was really due to the slow start with the weather, It's harder to get project timelines going. We do expect now that CapEx for the full year will be about seven hundred million dollars which is a bit lower than our original guide of $750,000,000 to $800,000,000

[Operator]

Thank you. We'll take our next question from Steven Fisher with UBS. Please go ahead.

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

Hi. Thanks for taking the question. So obviously, cost performance in the quarter. And I'm just curious what your visibility is to the increases in the second half of the year and maybe what you experienced in July with the real kind of question around do you think you'll be able to be back growing cash gross profit per ton by double digits in Q3?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes. So I look at cost, we would call it towards trending towards or guiding towards the low end of our guidance. The cost in the first half was down 1%, up 1% in Q2. I thought that was a really excellent operating performance. That's really hard to do when you have that kind of rain.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

So great performance by my operators. Their safety record was also record setting. So thanks and congratulations to all of them. Really what they're really doing is to your point is helping us take that price to the bottom line. Our to that point, our gross margins for aggregates was up 200 basis points and it was up to 42.7% in Q2.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

So again, in spite of rain reduced volumes in the Southeast and extremely wet quarter, I thought our folks should be very proud of, but not only the cost performance, but the unit margin performance. What it's telling me is that the Vulcan way of operating is making a difference. We got a long ways to go on that, but we should see that improving. And also to your point, we're just able to take all the price to the bottom line.

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

Yes. I mean, you look at the quarter, with our price being up over $1 per ton, dollars 1.11 and being able to take $0.95 of that to the bottom line and cash gross profit per ton was just a great performance, and we think that we'll carry that momentum into the back half.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes. And remember, this is in reduced volumes. The volume leverage that we're as the volumes go up will really help us with that and really push help push those unit margins up.

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

Terrific. Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you.

[Operator]

We'll take our next question from Keith Hughes with Truist. Please go ahead. Your line is open.

[Keith Hughes, Managing Director at Truist Securities]

Keith. Thank you. Thanks for taking the questions. I guess on the non residential comments, some of the more bullish that I've heard. When do you think that would turn into volumes for you? Is that a 26 story or what's the view?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

We'll feel a little bit of it in the second half. I think it is probably more of a 26 volume just because you got a delay in those projects. But we're I mean, I think we're starting to see that. We are definitely seeing in our backlogs and we're starting to see a little bit of it in shipments, but I think it's more of a 26 play, 27 play. We've been anticipating a recovery in non res.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Now I think we're starting to see signs of return. The data centers are accelerating quickly. We're seeing some green shoots in warehouses and we're seeing some green shoots in traditional like non res, which we think is at the bottom. Our backlogs in non res are up and support that are encouraging comments. So I think we're encouraged about it.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Let's hope that momentum continues, but it sure appears it's going to.

[Keith Hughes, Managing Director at Truist Securities]

And final question in the guide, what are you thinking about second half for aggregate pricing?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

I think that we keep it we keep on with the momentum. I think we'll be impacted some because the highway sector is so strong right now, which has a larger portion of base, which is a cheaper product, but it's also a cheaper product to make. So I would point you to I feel good about the unit margins and I feel good about our momentum in pricing, but that sequential will be a little bit less than prior year because of product mix because of the heavy highway sector.

[Keith Hughes, Managing Director at Truist Securities]

Okay. Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes. One of the things I would tell you I add to that was I thought that when it came to pricing, we were really strong in the acquisitions both on the East Coast and the West Coast. We got all we had planned in January and I think we got all we planned in mid years, which will help us because as you can see the mix has been a drag on us.

[Operator]

Yes. Okay. Thanks very much.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thanks.

[Operator]

We'll take our next question from Ivan Yi with Wolfe Research. Please go ahead.

[Ivan Yi, Director at Wolfe Research, LLC]

Yes. Hi. Good morning. Thanks for taking my question. First, roughly what percent of your aggregates move on the rails?

[Ivan Yi, Director at Wolfe Research, LLC]

And I guess I just want to get your initial thoughts on the proposed Union Pacific, Norfolk Southern merger. What impact would this have? Would you support or oppose the transaction? Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

I don't know that it has any impact on us. We're customers of both those railroads, but with the way aggregate shipments move, you're not going to commingle those. So I see much of an impact for us. In other words, what we ship now, we're not a long hauler. So we're shipping to a market which is within each one of those railroads not changing carriers.

[Ivan Yi, Director at Wolfe Research, LLC]

Great. Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Sure.

[Operator]

We'll take our next question from Angel Castillo with Morgan Stanley. Please go ahead. Your line is open.

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

Angel. Hi, good morning. Hi, how's it going? Thank you for taking my question. Just this is a bit of a multi part one, but just wanted to get a better sense of, you mentioned the bid to bookings conversions starting to improve here and sounds like, some of that is just again an inflection point, but curious what are you seeing change confidence?

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

Is it the tax bill? And then as you kind of respond to that, I guess just curious, it sounds like you're also still seeing some deferrals and delays. So are those also still at maybe a little bit elevated levels or are you seeing inflection there where those are no longer kind of occurring?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

I missed the second half of your question, I'm sorry.

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

Yes, just curious, as we think about that change in the bit kind of bookings, it sounds like you are still seeing some deferrals and delays of projects that maybe make the volume inflection more of a six story. So just curious is that also improving in terms of the number of kind of deferrals or delays and just we think about kind of the speed at which we can see these awards start to turn to real volumes?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes. So I don't think we're seeing I think the deferrals and delays have come to pass. We're seeing those jobs start. And so I think while that will build for 2026 just because our backlogs are building, I think we're going to feel that in the second half. Where is that?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

As a pretty broad spread, the highway and infrastructure work is very good. That is that all that money to IJ and the state funding and local funding going to work. And so that we will definitely feel in the second half of twenty twenty five and into 2026. Data centers are good and growing. We're shipping a number of them right now and have said there's $35,000,000,000 of green lit projects that haven't they're going to go, but we're not feeling them at this point.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Those are heavily in our markets on as I said on non res warehouses are we think are turning. So that will help us like res we think is bottom that will help us. And then we haven't talked about but on multifamily residential we've gone into growth mode in three months starts. I think we're up 17%. So the one we're struggling right now is single family, not overbuilt.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

So at some point in time, it will turn, but we haven't seen signs of that at this point.

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

Yes. I think, Angela, overall, there was just a bit of a post Liberation Day law that we seem to really be passed now and trailing three months contract awards and private non res have turned positive. So that to us is encouraging that we've moved past some of that uncertainty.

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

That's very helpful. Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you.

[Operator]

We'll take our next question from Phil Ng with Jefferies. Please go ahead. Your line is open.

[Philip Ng, Managing Director at Jefferies Financial Group]

Hey, guys. Tom, you sounded pretty bullish on the pace of the infrastructure side of things. I think coming into the year there was probably an expectation for infrastructure to call it be up mid single digits. Now given what you're seeing is the is that still a good way to think about it? And does that rate of growth perhaps even accelerate more in 2026 and beyond?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

I would tell you what as I said, what we're seeing is just that money going to work and the DOT's ability to get more work out, I think is maturing. I do think that, as I said, we see the upswing in 2025. I think we see it grow even more into 2026 and it wouldn't surprise me to see it go more into 27%.

[Philip Ng, Managing Director at Jefferies Financial Group]

Okay. That's helpful. And in your downstream business, appreciating it's a smaller part of your business. It was a little softer than I would have thought. How much of that is weather related dynamic and ready mix I would imagine is more tied to housing perspective.

[Philip Ng, Managing Director at Jefferies Financial Group]

Has your outlook in terms of your profitability in your downstream business changed from the start of the year?

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

Phil, you're right. The first half was impacted really by the weather in our asphalt business in Tennessee and Alabama and the softer private demand did weigh on ready mix. I think overall in asphalt, we saw price improvement and the lower liquid helped offset the lower volume in the quarter. So I think a pretty solid performance there. The good news is we've seen a good recovery already in July shipments where we were weather impacted.

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

And I think the accelerating public demand and a little bit lower liquid level versus what we'd initially anticipated all bode well for the back half in asphalt. And then in ready mix, we certainly have some ground to make up, but we saw price improvement, unit margin improvement even with the lower volumes, some of that in part to the quality of that recent Southern California acquisition. But we're encouraged and ready mix by some of the positive signs on the private side that Tom was just talking about and still think we have a shot at some improvement in the back half.

[Philip Ng, Managing Director at Jefferies Financial Group]

Okay. Helpful color. Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you.

[Operator]

We'll take our next question from Garik Shmois with Loop Capital. Please go ahead. Your line is open.

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

Great. Thanks. I had a question on aggregates pricing. How should we think about mid year increases this year? Tom just spoke a little bit to traction on acquired markets.

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

Just wondering how widespread the mid years were. And then also on the mix side, I appreciate the product mix headwinds with more base, but I'm wondering about geographic mix, especially with the Southeast snap stack here as it has in July. How does that impact pricing in the second half of the year?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes. So on mid years, I'd call it some products in some markets which is not that unusual. Everybody wants it to have an impact on same year as we'll say it have a little bit of impact on '25, but it's really a '26 play and it's really trying to set you up for '26 price increases. So it's more tailwind for '26. As I said, I was very pleased with the pricing we got on both in North Carolina and in California on acquisitions.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

They're behind and we'll quickly get them up to Vulcan standards, but that's going to take a little while. And as you saw in the mix, was a big a part of the difference in reported and mix. The other part to your point was the Southeast, where our volumes were hit hard with record rainfall in a number of our key states. I think that the fact that we performed as well as we did in the first half based on mix and based on challenging conditions gives me a lot of confidence with the second half where I think we'll see better volumes and that we can continue that momentum and we carry a lot of that into 2026. So I think while we've had a challenge from outside forces, I thought our internal performance was quite disciplined and done quite well.

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

Yes. And Gerrick, I think we will see some modest sequential growth, but it really will just come down to geographic mix and product mix and where those land. What's important to us mostly is just the underlying pricing momentum with the 8% mix adjusted in the quarter and how strong that remains?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes. The one thing you brought up base that I would point out while people tend to I guess kind of look down on base. It is a really important product for us and it has great margins and it balances our plants and will help our costs. So while it may be while flexible base is lower price, it's still really good margins and really important. So for me as an operator, think the base volumes look fantastic.

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

That's encouraging. Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you.

[Operator]

We'll take our next question from Michael Dudas with Vertical Research Partners. Please go ahead. Your line is open.

[Michael Dudas, Analyst at Vertical Research Partners]

Good morning, Mary Andrews, Mark, Tom. Hey. Good morning.

[Michael Dudas, Analyst at Vertical Research Partners]

I wanted to share your thoughts on big beautiful bill legislation and how that can maybe from your clients or how you assess it from a Vulcan standpoint. Maybe to follow on to that, what are you hearing your thoughts on IIJ two point zero?

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

Yes. I'll start first maybe with the recent tax legislation. There are certainly some benefits in there for us. Those will mainly come from 100% bonus depreciation and the expensing of domestic research costs. So, you know, we currently estimate a cash tax benefit of over $40,000,000 for June year to date activity, and we would expect the full year benefit could approach $100,000,000 We don't expect any material impacts to our effective tax rate, but definitely a cash tax benefit for 2025 and going forward.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yeah, on a new highway bill, I think the good news, what I'm encouraged about is that Congress is already working on one. They're already trying to pin it. They are aggressively pursuing it. I think to tell you what the magnitude is versus IJ is probably too early to call, it will be bigger. Now whether that's 5% or 20%, I don't we don't know yet.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

We're voting for 20%, but I'd take 5%. I think importantly, remember, IIJ funding is a comment that we've only spent 60% of that funding. So and we're a year and a half away from the bill expiring. So there will be a tail to this and we'll have substantial highway work based on IIJ dollars that will go past the expiration of IIJA. So we got a kind of what I call an insurance policy or a timeline that will protect us on trying to get that new bill, but we'll get one, it will be a higher funding.

[Michael Dudas, Analyst at Vertical Research Partners]

Well, let's settle for 12.5% time we'll call it a day. Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Okay.

[Operator]

We'll take our next question from David MacGregor with Longbow Research. Please go ahead. Your line is open.

[David Macgregor, President at Longbow Research]

Yes. Thanks and good morning everyone. Thanks for taking the questions. Tom, you talked about 2,000,000 to 3,000,000 tons that were lost in the quarter. How much incremental tons do you think you'll ship in 3Q that was of that 2,000,000 to 3,000,000?

[David Macgregor, President at Longbow Research]

How much can you recover? And I guess also on that question, I appreciate all the conversation and discussion around backlogs. And I know normally you don't open that up and get into a lot of detail. But given we seem to be at a fairly important inflection point in terms of what you're seeing there, wonder if you could maybe just dig in a little further on the backlog and share with us a little more detail, maybe growth numbers year over year versus last quarter, if you can say about pricing growth in the backlog, I think anything there would be helpful. Thanks.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes. So on the weather related, it will be spread out in the second half. I mean, you just don't get a big slug of that. We saw probably saw the slug we saw was probably in July that probably helped that double digit number, but it will most of it will be spread out over the quarter. So I think we catch that up and do fine with it and move ahead.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

If I look at our backlogs, the there I would call them up in all sectors except for single family and they kind of what I call flat to maybe down a little bit in single family. But the one that's non res is up and highways is up substantially. So I think that gives us a lot of confidence in continuing our guide to the 3% to 5%, but also gives us confidence that we start we're going to start 26% off on the right foot.

[David Macgregor, President at Longbow Research]

Very much.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you.

[Operator]

And we'll take our last question today from Michael Feniger with Bank of America. Please go ahead.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Hi, Michael. Good morning.

[Michael Feniger, MD - Equity Research at Bank of America Merrill Lynch]

Good morning, guys. Thanks for squeezing me in. Tom, you mentioned with the second half, the product mix with highways kind of weighs on the sequential pricing. It sounds like a mix impact. Is there anything we should keep in mind for 2026 that growth is led more by highways and data centers.

[Michael Feniger, MD - Equity Research at Bank of America Merrill Lynch]

Does that headline pricing number look a little bit more modest, but the price versus cost spread is still the same in terms of 60% incrementals, kind of double digit gross profit per ton? Just kind of wondering as the mix and your end markets kind of evolve, do we have to think about differently if it impacts the pricing or the profitability metrics at all?

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Well, over the last couple of years, we've got a lot of headwinds on the private side and we've been slow getting growth on the on highway outs about where we thought. But what's encouraging me about pricing '20 six is two things. Number one, the highways is so strong and you've got a lot of visibility to coming work in highways. It's not just what we have in our backlogs, but what's the funding and the capital spending levels for our states, coupled that with the IJ money maturing and the DOTs being able to get that work out. All those are really factors.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

But remember, how we work once they say it's going to go, it's going to go. It's not going to get paused, it's not going get pushed back unless you have a permitting issue. So it's a lot of clarity to what's going on that. If you layer on top of that, if we're making the turn on the private side, then that gives us a lot of tailwinds for people who have confidence in more work to come and taking risk on pricing going forward. So that's what's given me a better feeling than maybe what I had six three or four, six months ago when we were in a little bit of a low on the private side and the public side did not kick in as strong.

[Michael Feniger, MD - Equity Research at Bank of America Merrill Lynch]

Great. Thanks, Tom. Just lastly, a second question. You guys are looking we're looking like 1,000,000,000 of free cash flow. Is that the new baseline for you guys going forward, rebasing the free cash flow billion number and moving that higher?

[Michael Feniger, MD - Equity Research at Bank of America Merrill Lynch]

And if that is the case, this is your new baseline, it should be a record for the company. Like does that change at all how you're thinking of capital allocation? I appreciate that I think you're at 2x leverage, but I'm just kind of curious that new baseline, does that kind of change or how aggressive you'll be on the capital allocation side? Thank you.

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

Yes. I would tell you, our capital allocation priorities don't change. But I think the level to which we can allocate capital to each of those priorities does change. And even as you think about the back half of the year, given the current balance sheet profile and the strong cash generation, I think returning cash to shareholders is likely and that level will be dependent upon how the M and A discussions that we've been having continue to develop.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Yes, I thought we were very pleased with the two acquisitions we got. We closed on to 2025. We're pleased with our integration, particularly on the pricing side. M and A was a bit slow in the first months of the year. We're starting to have some conversations now that hopefully will be meaningful to us.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

So I'm more encouraged about the M and A than maybe I was four or five months ago. But also, like I said, once you buy one, better execute and I'm pleased with the execution of what we've done with the two we closed within the last year.

[Michael Feniger, MD - Equity Research at Bank of America Merrill Lynch]

Thank you.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Thank you.

[Operator]

There are no further questions on the line at this time. We'll turn the program back to Tom Hill, Chairman and CEO for any closing or remaining remarks.

[J. Thomas Hill, Chair & CEO at Vulcan Materials Company]

Again, thank you for your interest in Vulcan Materials. We appreciate your time. We look forward to talking to you throughout the quarter and we hope you stay safe and your family stay safe. Thank you.

[Operator]

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

Participants

Executives

• Mark Warren, Vice President, Investor Relations
• J. Thomas Hill, Chair & CEO
• Mary Carlisle, Senior VP & CFO

Analysts

• Trey Grooms, Managing Director at Stephens Inc
• Anthony Pettinari, Research Analyst at Citigroup
• Kathryn Thompson, Founding Partner & CEO at Thompson Research Group
• Andrew Maser, AVP at Stifel Financial Corp
• Steven Fisher, MD & Equity Research Analyst at UBS Group
• Keith Hughes, Managing Director at Truist Securities
• Ivan Yi, Director at Wolfe Research, LLC
• Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley
• Philip Ng, Managing Director at Jefferies Financial Group
• Garik Shmois, Managing Director at Loop Capital Markets LLC
• Michael Dudas, Analyst at Vertical Research Partners
• David Macgregor, President at Longbow Research
• Michael Feniger, MD - Equity Research at Bank of America Merrill Lynch