Title

Presentation

Vulcan Materials Company beats earnings expectations. Reported EPS is $1.35, expectations were $1.1.

Operator: Good morning, everyone, and welcome to the Vulcan Materials Company First Quarter 2026 Earnings Call. My name is Jamie, 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. [Operator Instructions]. 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: Thank you, operator. I’m joined today by Ronnie Pruitt, Chief Executive Officer; and Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer. Before we begin our prepared remarks, please note that a press release and a supplemental presentation related to this call are available on our website, vulcanmaterials.com. Today’s discussion may include forward-looking statements, which are subject to risks and uncertainties. Details on these risks, other legal disclaimers and reconciliations of any non-GAAP financial measures are defined and described in our earnings release, supplemental presentation and other filings with the Securities and Exchange Commission. For the question-and-answer session, we kindly ask that you limit your participation to one question, and this will allow us to address as many questions as possible. during the time we have available. And with that, I’ll turn the call over to Ronnie.

Ronnie Pruitt: Thanks, Mark. We appreciate you all joining us for our call this morning. At Vulcan Materials, safety is a fundamental expectation of our employees each and every day. And I am proud of our industry-leading safety performance that we carried on from last year into our first quarter of this year. Another key expectation is driving continuous improvement in our underlying business. Our teams delivered a solid start to 2026 by executing well on the commercial and operational plans that we laid out for the year. We generated $447 million of adjusted EBITDA, a 9% increase over the prior year. Gross profit margin expanded in each segment. SAG expenses were lower than the prior year adjusted EBITDA margin grew. Trailing 12 months aggregate cash gross profit per ton continues to move higher with strong realization of our January 1 price increases and our disciplined approach to operational execution.

Currently sitting at $11.38 per ton, we are aligned across the company to drive this highly important metric to $20 per ton and win the future in aggregates. Aggregate shipments in the first quarter support the anticipated return to growth for 2026. Shipments increased 5% compared to the prior year due to both improving demand and fewer extreme weather days than in the prior year. On a mix adjusted basis, aggregates freight-adjusted price improved 4% over the prior year’s first quarter, in line with our expectations. The sequential growth from the prior quarter demonstrates the success of our January 1 price increases and discussions are already underway for midyear increases. Pricing continues to compound across our footprint. Aggregates freight-adjusted unit cash cost of sales increased 4% compared to the prior year, also in line with our expectation.

I am very pleased with our operator’s ability to execute on the [ bulk wave ] operating to drive efficiency in our plants and help mitigate inflationary increases in our input costs. Better weather this year allowed us to make more progress on our annual plans for stripping and project work than we did last year’s first quarter, impacting the total unit cash cost of sales year-over-year comparison. I am confident our teams are focused on the right things to continue to enhance our core and drive compounding improvements in our durable aggregates business, even as the macro environment continues to be very dynamic. We remain equally focused on opportunities to continue to expand our reach through acquisitions and greenfield projects, including several bolt-on acquisitions we expect to finalize in the coming months.

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From a demand perspective, we still expect strong public activity and improving private nonresidential opportunities to drive year-over-year shipments growth in 2026 and mitigate the ongoing challenges facing residential construction. Trailing 12-month highway awards in our markets are up 12% from a year ago, and public infrastructure awards are up 17% over the same time frame. These levels far outpaced the U.S. as a whole. Our footprint is advantaged. And this public demand provides a solid foundation for shipments and supports a healthy pricing environment. Legislators in D.C. are actively working on a reauthorization bill for future highway funding upon the expiration of the Infrastructure Investment and Jobs Act later this year. We expect the new build to provide higher levels of funding for highways and bridges than the current build.

We also anticipate a smooth transition between funding programs given the significant amount of IIJA funds that are yet to be spent. On the private side, non-res continues to benefit from accelerating data center activity. With approximately 650 million square feet under construction or announced, we anticipate data centers and other related investments to be a positive catalyst for future aggregates demand. We are especially encouraged to also now have active projects related to the energy build-out, necessary to support rising data center power needs. Currently, 60% of all large projects, both public and private, are within 50 miles of a Vulcan facility, highlighting the advantage of our footprint. Our scale, quality and customer service makes us a supplier of choice on these large complex projects.

Residential construction continues to be impacted by affordability. Longer term, there remains a fundamental need for additional housing and we are well positioned to benefit from an eventual recovery. As I said earlier, we continue to expect overall growth in aggregate shipments in 2026. The pricing environment remains healthy. And while we are currently facing geopolitical uncertainty, and incremental near-term headwinds in terms of energy input cost, I am confident in our ability to remain focused on the things we can control and to drive durable growth in our aggregates-led business momentum from our solid start to the year and continue to expect to deliver between $2.4 billion and $2.6 billion of adjusted EBITDA for the full year. Now I’ll turn the call over to Mary Andrews to provide some additional commentary on our first quarter performance before we take your questions.

Mary Carlisle: Thanks, Ronnie, and good morning. The earnings from our aggregates-led business continue to compound and drive attractive cash generation. Over the last 12 months, we generated $1.8 billion of cash from operations, which we have deployed for capital expenditures to maintain and improve our existing asset base, for greenfield and other growth projects to enhance our franchise, for capital returns to shareholders, and for debt repayment to further strengthen our balance sheet. Approximately 70% of our trailing 12 months capital expenditures of $686 million were utilized for fixed plant mobile equipment and land projects at our existing facilities. The remaining 30% was invested in greenfield and other growth projects, including a new quarry site in South Texas, several rail distribution properties in key markets and new production facilities in Arizona and South Carolina.

Capital returns to shareholders totaled over $800 million over the last 12 months, with $262 million of dividend accompanied by $550 million of share repurchases. This includes $149 million of share repurchases during the first quarter. Total debt of $4.6 billion at quarter end was approximately $350 million lower than a year ago and resulted in net debt to adjusted EBITDA leverage of 1.9x. The balance sheet is well positioned to support an active acquisition pipeline. Additionally, we expect that the announced divestiture of our California concrete assets will close during the second quarter, providing even more capacity for continuing to strategically grow our aggregates business. SAG expenses in the first quarter were 2% lower than the prior year.

Trailing 12 months expenses of $562 million were 7% of revenue, 20 basis points lower than the prior year period. We remain focused on investing in technology and talent to drive our business performance while also leveraging our overall expenses. We are also focused on continuing to improve our return on invested capital through compounding improvements in our business and disciplined capital allocation. Our trailing 12-month return on invested capital improved 30 basis points from year-end 2025 and to 16% at quarter end. We are confident we have the right strategy to continue to deliver value for our shareholders. And now Ronnie and I would be happy to take your questions.

Operator: [Operator Instructions]. We’ll hear first from Trey Grooms with Stephens.

Trey Grooms: So clearly, you guys are off to a very strong start to the year. Ronnie, could you maybe walk us through some of the key puts and takes in the quarter across price, volume and cost? And then also as we look ahead to the balance of the year, how are you thinking about these drivers in light of the recent moves we’ve seen in diesel and the broader macro backdrop?

Ronnie Pruitt: Yes. Thanks, Trey. Look, I agree with you. It was a solid start. And I think it reinforces the trajectory for another year of earnings growth. Our performance in the quarter was really a direct result of strong operational and commercial execution, and it definitely positions us well to deliver the earnings expectations that we laid out in February. On the volume and price side, we saw a healthy acceleration of our backlog tons converting into shipments, particularly within the data center space, which was supported by more normalized weather within our footprint. With regards to pricing, we said coming into the quarter, the year-over-year comparisons were going to be difficult as we continue to lap the hurricane relief efforts from 2 of our higher-priced markets in Tennessee and North Carolina.

But that alongside with some pricing mix, which was a shift towards base products and our current backlog driven primarily by data centers as well as more public work, but these things were known variables. And so they played out as anticipated, but pricing at the lower end of our full year guidance, but we expect that continue to accelerate throughout the remainder of the year. On the cost side, I was very pleased with our team’s execution. Keeping a total cash cost growth only to 4%. The run-up in diesel price really began in February, and the impact is really reflected in some of our March [ calls ]. But we have a proven track record of offsetting these types of fluctuations through our bulk way of operating also our Vulcan web selling and our commercial disciplines.

So the more normal weather also meant we were able to keep pace with plant projects like stripping and painting and some other efficiency investments that we did during the quarter. And as you recall, last year, those types of investments were delayed with more inclement weather in the first quarter of last year. So overall, I think the fundamentals of the business are performing as expected and really in a good position as we head into the heart of our shipping season. But let me turn it over to Mary just to give you a couple more points of context.

Mary Carlisle: Trey, one thing I would add that I think further underscores the solid fundamentals that Ronnie talked about and really highlight the compounding results versus noisy year-over-year quarters, and he referenced some of the hurricane relief work last year and obviously inclement weather. So I think if you step back, and look at 2024 and see that aggregate cash gross profit per ton is up 23%, and our total cash cost of sales and aggregates has increased only 1%. To me, these metrics clearly show the solid execution of our teams and the compounding margin growth that they’re delivering. And that gives us a lot of confidence in our ability to execute for the rest of the year.

Operator: We’ll turn next to Garik Shmois with Loop Capital.

Garik Shmois: Just wanted to follow up on that a little bit. Just given a lot of the moving pieces here as you look forward and some of the diesel cost impacts that are starting to hit. Just wondering if you can go in a little more detail just the confidence that you have in reiterating the full year guidance today.

Ronnie Pruitt: Good question. And so let me start with — I’m going to dig deep into kind of how diesel impacts our business. And so if you think about the 2 parts of diesel to us or the price of the diesel, but the more important part is the usage of diesel. And so as I look at our business, our downstream as well as our delivery costs are really covered through surcharges that kicked in immediately. And so have really had no impact on the cost of our doing business downstream and delivery. But when I look at the operational side, I’ll start with what we do in the plants. And so from a stripping aspect is the first step of what we do stripping is just really equipment, labor and fuel. And stripping is also something that isn’t necessary to uncover future reserves, but it’s not something we’re doing just in time.

Stripping is something we can push forward or pull back depending on what macro environment we’re in. And so those are things that we have the ability to fluctuate on. And then when I look at loading and hauling within the pit. And so you start with that [ hall ] to the primary, again, this is something that uses diesel equipment and labor. But this is where our [ VWO ] processes kick in because when we talked about process intelligence and investment we’ve made with [ VWO ], a lot of that is focused on our critical product size production and impacting yield. And so when we’re doing that, for every ton we get to the primary, we’re more efficient in how we produce products. And so that definitely impacts the use of fuel. And then when you get into the plant itself, there’s not much fuel used within the production process.

So from the primary all the way through the secondary. But again, the process intelligence and [ BWO ] is very impactful on the front end and the back end. And so again, it’s an opportunity for us to really focus on the efficiencies and how we’re earning fuel. And then the actual load out process. And so when you’re loading trucks or rail, a lot of our larger plants, we have been systems. And so there’s not much mechanical process there from a diesel consumption side. But we do — at a lot of plants we load with loaders. And some of the things we’re doing, our operators are doing there, instead of idling loaders, you’re turning off engines. And so we’ve got a lot of things we’re doing to make sure that we’re focused on the usage of fuel in this time of uncertainty with the volatility that we’ve seen.

So all of that being part of the variability of our production process, which is the beauty of aggregates. On the selling side, remember, half of our sales is really to fixed plants and half of our sales is to more of the real-time quoted stuff. And so we’re moving those things fast. We’ve already announced midyear price increases. And so again, I think as you look at what we’ve been able to accomplish through the history of aggregates is our ability to take headwinds and turn them into a positive story on the back end. And so is this a short-term headwind? Yes. Is this something that we’re going to be able to control on the back end? Absolutely. And I’ll let Mary Andrews just give you a little more insight into the numbers behind the fuel headwind.

Mary Carlisle: Yes. The only thing Garik, I would probably add is, I think Ronnie gave some great examples of levers that we’re using to — as we navigate this current fuel situation. The second quarter is where we expect to feel the squeeze of the higher diesel most acutely before some of these pricing actions that we’ve already taken begin to flow through. So the way I would probably think about it is we would have initially expected aggregate cash cost of sales on a year-over-year basis to look very similar in the second quarter as the first quarter. And that’s still the case, excluding diesel. So I think with diesel, now your cash cost of sales on a year-over-year basis could approach maybe double of what it was in the first quarter, so closer in that high single-digit range. And again, with the full expectation that the margin impact will moderate as we move into the second half of the year.

Operator: We’ll turn now to Anthony Pettinari with Citi.

Anthony Pettinari: Ronnie, Mary Andrews, you mentioned midyear increases. And I’m just wondering if you can give us any more detail in terms of magnitude, percentage of your markets that might cover timing? And then I’m just curious, you’re obviously seeing a lot of inflation in diesel. Are there any other costs outside of fuel, metal, parts equipment where you’re seeing maybe knock-on impacts from the Middle East conflict in terms of costs that may be a little less obvious to us?

Ronnie Pruitt: Yes, good question. We have not seen any other impacts as of yet. We are monitoring that. And again, as the — if we go back to 2022 with the inflationary things that happened back then, and our discipline around being able to move pricing quickly when those inflationary environments hit us. So I would tell you from a process side, we went out with midyears several weeks ago, a little earlier than we did last year. We went out with all of our markets. We’re very disciplined in that. We will always be very opportunistic when it comes to using inflationary pressures or any other headwinds. I mean we’re going to capture that. And so — we sent that out in all markets. And remember, like I said earlier, about half of our shipments really are represented by that fixed plant.

And then within that fixed plant side, if I break that down to the concrete side and the asphalt side, and I would tell you, the asphalt side of our business is really more heavily tied to public and the larger private nonres piece of where that’s at. So they have a very active market. There’s situations within each of the DOTs that they have indexes on longer-term projects, and so the asphalt producers are covered on that. And so I don’t think we see a lot of resistance on the asphalt side. Within the concrete side, look, the concrete guys are still facing the headwinds of residential. And so those conversations will be probably a little more healthy and spirited. But again, it’s not something that is unexpected. I mean we have a long track record of recovering cost.

And my hope is that our concrete customers use that as a reason why they’re going to have to go out because they’re already — they feel diesel costs immediately. And it hit them on their delivery costs immediately and hopefully, they have the same surcharges in place. But over time, I think we’ve proven that these headwinds, we will be able to over time and we will be able to pass that along. And the beauty of aggregate is — we also — we keep that in our pocket. We don’t give that back.

Operator: We’ll hear next from Steven Fisher with UBS.

Steven Fisher: Congratulations on the good execution. Just a follow-up again on clarifying some of these points here, particularly on the near-term expectations. I guess what’s the expectation we should have for pricing in the near term, say, Q2, and I guess that would be inclusive of the diesel? Do those surcharges get recorded in the pricing you’re going to report? And then on the cost side, it sounds like you’re expecting, Mary Andrews, upper single-digit growth in costs. So how do we think about that in light of, let’s say, the low single-digit guidance you still have for the full year with the first quarter? It sounded like it’s going to be in at least mid-single digits.

Ronnie Pruitt: Yes, I’ll take the first part, and I’ll let Mary Andrews talk again about the second part. Our delivery is not. So we report freight-adjusted. And so when we talk about price, that’s freight adjusted. So all the stuff that we’re talking about with surcharges does not get reported on our pricing because we don’t think it’s the right way to look at that. But when it comes to kind of cadence of pricing, we said going into the year, because of the comps of last year first was that our pricing would have started out at the lower end and accelerate through the year. And I think this opportunity that we have with midyears just confirms that our pricing trajectory will be backward half more accelerated than the first half of the year, but we anticipated that.

We also said that in the first part of the year, as these data centers continue to grow, the mix impact, which we called out, we continue to see a lot of shipments from our backlog converting the shipments faster because of the size of these projects, but also the speed of these data centers, meaning once they’re announced, they’re going really quick, which is a good thing and it will play out on the cost side of our business as well because when we’re continuing to improve the yield of our plants with the amount of base shipments, that’s a really good thing on our cost. But I’ll let Mary Andrews walk you through kind of the puts and takes on the model.

Mary Carlisle: Yes. So Steve, from a cost standpoint, at this point, we do still believe that we can deliver that low single-digit cost for the full year, where we fall within that range, the diesel situation and how it continues to develop, I think will a big role in that. But Ronnie highlighted some opportunities that we have to — even on the cost side, focus on efficiencies, pull some levers to make sure that we’re making good decisions given the macro environment. So I feel good about the full year guidance and just wanted to give you insight into what that could look like for second quarter from a cost standpoint. And that was always our expectation that costs would be higher in the first half of the year, moving lower in the second half of the year. So as we said today, 2026 is playing out like we expected.

Operator: Great. Thank you very much. We’ll hear next from Michael Dudas with Vertical Research.

Michael Dudas: Ronnie, following up on interesting comments on the data centers and the time to market and speed. Is that — could that be contributory on like volumes, given the acceleration of some of these projects. And there are other heavy markets or even public markets that are trying to move quicker to try to get the funding or try to get the projects through, given some of the funding uncertainties? And can that be helpful to have maybe a quicker conversion on your total backlog and get some efficiencies and volumes through the system?

Ronnie Pruitt: Yes. I would — I mean I’ll go back to my prepared remarks and I look at our advantaged footprint. And as I stated in my prepared remarks, in our specific markets on a trailing 12 months, public contract awards are up 12% and we’re seeing in the rest of the country, double-digit declines in places. And so it amplifies that we’re in the right markets and the public side continues to be strong. When I look at starts and kind of the flow of — before the expiration of the bill, I think the states are doing a really good job. I think all the money will be targeted towards the job they want, which is really where they have to get as the money has to be allocated, and that allocation is going well. Across our footprint, I’m seeing how we start up in Arizona, New Mexico, North Carolina, South Carolina, all really, really good spots for us.

Coastal Texas, North Texas, Georgia on the infrastructure side. So we’re seeing good momentum there. On the private side, and again, as I stated, 60% of our large projects that started last year are within 50 miles of a Vulcan facility. And so that just shows you again, we’re in the right markets. And where we’re seeing momentum in construction growth is really because of our advantaged footprint. I mean that’s not the same stats you’re going to see across the rest of the country. And so again, our business model is proven. And over a long period of time, we’ve been able to say that any headwind that faces us, we’re going to be able to capture that over the long term. But I think as we look forward in saying that our confidence in 2026 returning to growth, it’s because of these things I’m talking about on the public and private side.

We’re not seeing it on residential. We are seeing some green shoots on multifamily but it’s really being driven by — that’s the necessity of jobs that have been created in some of those markets and people are moving there, and there’s nowhere to move. And so the multifamily side, we’re seeing a little bit of green shoot and — but the majority of our confidence right now is really going to be based on the public and private side. And remember, only 45% of the dollars are actually spent. And so even with the expiration in the middle of reauthorization now, we have confidence that the transition between those funding bills will be very smooth.

Operator: We’ll turn now to Kathryn Thompson with Thompson Research Group.

Kathryn Thompson: I just want to focus a little bit on the federal highway bill reauthorization coming up in September. And as is typical each year, this happens, there’s a lot of noise leading into the debate. What we are hearing from a wide variety of contacts is that early discussions or funding sizes of $600 billion to $700 billion. But the health bill now is closer to $500 billion to $550 billion, both of which are still increases from where we are currently. Could you give your perspective in terms of what you’re hearing and what you’re seeing and how you think about the cadence? And as one contact said, we don’t see the bill going backwards in funding. It should be going forward? And how much credence does that statement have?

Ronnie Pruitt: Yes. Thank you, Kathryn. And I think your sources are pretty good. And consistent with what we’re hearing. I mean, if you think about the kind of the process, I mean, I think where we’re at today, the Transportation Committee is in the middle market. So we think we’ll get a first reading sometime mid-May. And so as it comes out, as you know, I mean, this is a negotiated process between [ dollars and the Ds ]. The [ Ds ] are — we’re hearing being a little more aggressive towards wanting to spend more. But I think there’ll be a lot of negotiations. And as you know, there’s bits and pieces of that throughout the country that people are going to want to get their piece of them. But I think, overall, directionally, your numbers are very consistent with what we’re hearing.

Obviously, as it gets to the senate, it’s a little more complicated with a number of committees that has to go through. But look, I think we’re in a good position of — could it get done by midterms? It could. But historically, we’ve seen continuing resolutions are probably going to be the path. But again, with the dollars that are left to be spent, the momentum we see in starts, the backlog visibility that we have within the public jobs that we’ve booked gives us a lot of confidence that there’s just not going to be a disruption and even under a continuing resolution, the dollars keep spent at the same level. And so I think we’re in a really good position. I think it’s good momentum. I think the bipartisan part of this is it’s good for the economy, it’s good for job creation.

And I think both sides of the — I’ll like to take that as a win. And so the funding side, I think they’re making progress, what they’re going to do with electric vehicles, with registrations, all that’s being considered. But I think your sources are correct. And I think we walk away today thinking we’re in a really good position and confident the bill will get done and pretty confident it will be at a higher level than the previous bill.

Operator: Now we’ll hear from Keith Hughes with Truist.

Keith Hughes: So we get a lot of questions on specifically the second quarter, the drag from what we know today on diesel prices. Can you give any kind of dollar figure of what that’s going to do in the quarter, understanding you’re going to be going for us good selling prices to offset that?

Ronnie Pruitt: Yes. I’ll let Mary Andrews get into the numbers. But I think, Keith, if you look at it kind of as we step back overall and say, on a typical year, and I would tell you, over the last 2 years, we burned about 57 million gallons of diesel a year. And so trajectory and if you look at that, it’s really variable with the tons we’re shipping is the tonnes we’re producing and you got to play where your inventories. But all that, if you just step back and said that’s kind of the range of the diesel we’re going to burn. And obviously, that’s going to fluctuate pull stripping and delay some of that with diesel costs because we think this is a temporary situation, and we’re not planning long term for diesel to be that. But if it is, we’re more than prepared to fight that headwind through our commercial efforts. And so I think that’s kind of the context of it. But Mary Andrews, why don’t you give him a little more data on —

Mary Carlisle: Yes. I mean I think given those pieces Ronnie described, you’re looking at probably $25 million in the second quarter. If you think about the amount of diesel where we would burn and retail diesel today is a couple of dollars higher than it was coming into the year. So that’s probably a good round number to think about on the diesel side. The other place that we’ll feel the energy impact is on liquid asphalt. But some of our — about 1/3 of our work is indexed, so the impact will be a little bit less there. And that’s one, same thing. Over time, we’ll use pricing to catch up and maintain our margins at the healthy levels that we’ve seen over the last couple of years. And one other thing to keep in mind just as it relates to the downstream is in our original guidance.

We did not have the California ready-mix business. That contributed about $10 million of cash gross profit in the first quarter. we still own it today. We do expect that to close soon in the second quarter. But I would think about the downstream at this point with the contribution from the ready mix being a helpful offset to the near-term energy headwinds that we could see.

Keith Hughes: Okay. Okay. Great. Let me ask one other real quick back on Kathryn’s question. There was a political article a couple of weeks ago talking about this $500 million to $550 billion from the Republican headed Transportation Committee. Some of the Democrat comments are actually for a higher bill than the, call it, $550 billion. I guess my question is based on from your lobbying groups. Is there actually close to bipartisan support around these numbers we’re talking about? What is your sense on that?

Ronnie Pruitt: I think the — I mean I think they both see the need for it. And I think the dollar amount is really both of them doing their work on a lot of different information that comes to them on what are the real needs from both a growth of the infrastructure system as well as the maintenance of the infrastructure system. So I think when you talk to — and Sam has announced his retirement, and so he’s still leading it as of today, but — he’s also been involved in 7 reauthorization bills. And so it may be something that he wants to get done before his retirement. But they’re also — they want to know where we’re going to get the funding from. And so a lot of it is how is it going to be funded and where all those mechanisms going to hit — but I think the beauty of the $550 million to $700 million, whatever that leads out is when you think about this bill versus the last bill, it’s going to be a more pure highway and infrastructure bill with a lot less other stuff that was in the last bill.

And so we look at it as all signs of positive what degrees that is. The politicians will have to figure that out. But again, I mean, you know this gives us long-term visibility into a very meaningful portion of the supply side and the demand side of our markets. And so we think we’re in a good place.

Operator: We’ll go next to Phil Ng with Jefferies.

Philip Ng: Congrats on a solid quarter. Ronnie, Mary Andrews, I think you guys both kind of highlighted M&A as the avenues to deploy capital, balance sheet is in a great spot. Are you seeing any choppiness in terms of sellers in this current backdrop? Or it’s been — Ronnie, any color in terms of markets that you’re targeting, size of these deals? Is it pure play aggregates, virtual in grid? Just give us a little more perspective what you’re seeing out there and what’s compelling to you?

Ronnie Pruitt: Yes. Good question. When we talk about one of our cores is expanding our reach. And we said at Investor Day that we were willing to look outside of our footprint as we continue to focus on aggregate led. So number one, I would tell you the things we’re going to focus on are going to be aggregate that business. If they happen to come with downstream, as we’ve proven in the past, we’ll address that and decide whether we want to be in that business or not. And we’ve proven in the businesses that we didn’t want to be in, that we would exit those businesses. But I would tell you, it’s — the footprint of where we’re looking is really the high-growth areas and how things have changed both with demographics as well as public funding as well as some of the private non-res side and the data center is driving a lot of that.

But as we look forward, we also see the energy that is needed to support these data centers is going to be another tailwind to us as we have begun really booking some energy projects. We’re quoting a lot, and we’ve actually started booking some. And so I think the energy backdrop in a lot of these states is going to be critical as they try to fulfill the needs of this data center construction. But — but so I would tell you very active. From the seller side, I think headwinds with energy or anything, obviously, they have to look at that. Does that accelerate them? In some cases, it could because they weren’t expecting this cost to be like this, and it may accelerate their desire. But I would tell you, over time, these are generational changes.

These are families that have to make that decision. And so there’s a lot of complexity to that. And I think a lot of the macro stuff obviously plays into their family conversations. But I don’t know that it moves the needle on faster or slower. I think it’s just another something we deal with. But I would remind you also, part of our growth efforts is our greenfield and the investments we continue to make in our downstream. And as I look forward to this year, I mean, we’ve got 3 new plants coming online, 1 in Arizona, 1 in Texas and 1 in South Carolina that we’ve talked about is our greenfield strategy. From a distribution side, we have 7 yards that we’ll be bringing online this year. Several of them, a couple in Texas, 1 in Florida, 1 in California, 1 in South Carolina.

And so we continue to invest in the business to protect our franchise to enhance where the growth of our core market is. And that’s why we said, as we continue to expand our reach, we can control things we do internally to protect the franchise that we have externally as we look at growth opportunities, we wanted to expand that. And so some of those newer markets is where we’ll be looking. And again, as I said in my prepared remarks, we got several of them that we think will be coming to close before the end of the year. So I think we’re in a good position.

Operator: We’ll hear next from Angel Castillo with Morgan Stanley.

Angel Castillo Malpica: Just 2 parts, one on the full year and then one on 2Q. I guess on the full year running, I think you mentioned that you don’t expect the big prices to be kind of longer lasting and you kind of [ be that ] as a little bit more temporary. Just wanted to clarify, I guess, the full year guide at this point, just want to guess clarify, it does assume diesel prices remain at current levels? Or are you anticipating that to come off in the second half? And then kind of related to that, I guess, depending on what your assumptions are, midyears you typically talk about as being beneficial to kind of the following fiscal year. So should we think about it as being any offsets in the second half of this year being more woken wave operations driven?

And then on the second quarter, apologies if I missed it, but I just wanted to clarify, I guess, what is kind of your expectation on price volume and gross profit per ton when you kind of put all the pieces together?

Ronnie Pruitt: Let me unpack all that. So first, I would start with kind of where our assumptions are. And I would tell you, I mean, the assumptions that we’re making in reinforcing our earnings for the full year is really a combination of the history of our business. And so if fuel stays up for the remainder of the year, then our pricing will reflect that. If fuel comes back down, then our margins will reflect that. And so we’re very flexible in our ability to go out and capture whatever those headwinds are. And I think our business model has proven that time over time over time. And so I’m confident in that as we build out and look at what we anticipate for the remainder of the year. I mean, we would love to say that this thing is temporary, but we’re planning for it to be longer, and we have that accounted for in our guidance.

And so I’m not worried about that headwind. As far as growth in the second quarter, again, as we looked at the cadence of our quarters, we said our pricing was going to start out at the lower end because of the comps over year-over-year on some of the hurricane recovery work and it was going to accelerate through the year. And I think that’s going to play out exactly like we’ve laid it out. On the demand side and our shipment side, I mean I think we experienced more normal weather in the first quarter, and I think that contributed to the growth in our shipments that we saw I think also the size of these projects and the speed of which these projects are shipping is also something that is — weather impacts those. And so as we see more normal weather, I mean our contractors aren’t out there going, okay, we’re going to ship this much during the first quarter, and then we’ll stop and then we’ll start the second quarter.

I mean they’re building these projects — they don’t care about a calendar. They care about what’s happening today, what’s happening with the weather they’re experiencing. And if they can go forward faster, they’re going to do that. And especially with this data center work, I mean, these companies are looking for return on these large investments, and they don’t get a return that thing being under construction. They get a return when it’s finished. So the speed of those things are obviously critical to the process of the job. And so I think we see second quarter continue to play out that we would expect, again, based on normal weather, that our shipping levels would continue to be as expected as we planned out in the year, and as we laid that out, they’re going as expected.

And so I don’t see a lot of noise right now within the shipping side or the demand side. I think those are some visibility that we have through our backlog and our bookings.

Mary Carlisle: Yes. And Angel, one thing we highlighted coming into the year in terms of how to think about earnings overall was to think about more normal seasonal spreads than to think purely about year-over-year comps. And so as we sit here today, I think one might think is look at historically what our business kind of looks like first half, second half and given the strong start that we got and the contribution that we got in the first quarter, and what our expectations are for the second quarter. I think we’ll still land in that probably [ 45-55 ] type split. And as I highlighted earlier, the diesel headwind in the second quarter, we’ll squeeze us a bit there.

Operator: We’ll hear next from David MacGregor with Longbow Research.

Joseph Nolan: This is Joe Nolan on for David. I just wanted to I just wanted to touch on the nonres business. You’ve obviously talked about the strength in data centers, but just in some of the other verticals, like warehouses, manufacturing and commercial, if you could just talk about backlogs and demand within those businesses?

Ronnie Pruitt: Yes. We’re — as we went into the year, we said we were data centers were leading private nonres. We said we thought we would see some of the green shoots in warehousing. And we’ve seen some of our markets turn positive, but from a very low starts very low rate. So I think those are opportunities for the future as those markets play out. But when I look at kind of buildings and non-res side, I mean, we’ve got good momentum going and in Texas with some fuel energy-related projects, some LNG projects that started back, we’re shipping on some manufacturing type projects that we started back shipping on in Illinois, we’ve seen both data centers as were some warehouse stuff that has really kicked in. And so I think it’s a combination.

I mean, data centers is obviously growing at the fastest pace within our private non-res category. But I mean, the energy side is very encouraging. And we’re in a lot of active conversations around energy projects. And I think the energy companies are in the middle of planning a lot of those projects. I think that — those type of projects, obviously, we’ll have more permitting and things that they have to do from a timing perspective. I’m not sure they’ll move as fast as what some of the data centers have. But in the end, it’s all really forms of good forward-looking demand on the private nonres side. And so it’s a mix of different types of projects. But again, data centers has been kind of the lead of that.

Operator: We’ll turn now to Michael Feniger with Bank of America.

Michael Feniger: Ronnie, just if we do get a CR, does that change your view at all on 2027? And how that looks up? Does that shift us from a growth market to maybe flattish or we’re still maybe in growth [ go ] because of the dollars left spend?

Ronnie Pruitt: Yes. I don’t think it changes it. And I’ll give you a couple of reasons why. One, the point you make is we still have dollars that are going to carry over. I mean when we look at our bookings and backlog is a lot of those projects from a federal side are multiyear projects. And so not only are they booked and we’re shipping on them, but also the dollars that are carrying forward will project well into ’27. But I’ll also remind you that only third of highway and funding is really the federal side. And so when we look at the state side and then we look at other measures that the states have put in, we look at these public-private partnerships, we look at toll authorities, there are a lot of growth projects out there right now that are very small in federal dollars and larger and other funding that gives us a lot of confidence that, again, I’ve said it in the past, and I’ll continue to say public is probably the least of my worries.

I mean I just think we’re in a really good position to get the funding in place, and there’s other ways the states have gotten creative around funding their own programs. And so I think — as I look forward, I don’t see ’27 being a problem when it comes to public.

Michael Feniger: Great. And Ronnie, just on the pricing side, I know we started Q1 at the low end that was something you guys always talked about with that plus 4%. Just with the miners, are we exiting above that 4% to 6% range on the full year growth? And you referenced 2022, how you guys respond to inflationary pressure. You guys are very quick to get that price increases in there and we saw that in the numbers. Is there anything different that we should think about 2026 and versus 2022? Just in terms of the demand environment coming out of COVID versus maybe where we are now, are there differences or similarities and how we should kind of look at that 2022 period where you guys are quick to respond to inflation versus where we are now today?

Ronnie Pruitt: Yes, I think there are. I mean, there’s lots of differences, and there’s always differences on the demand side. And so as I look at the difference between 2022 and 2026, 2022 coming out of COVID, residential really took off. And so a lot of that midyear and first of the year pricing, again, we reference that back to the customer base was a lot of our fixed plant stuff, which the concrete guys back then, we’re experiencing some really good tailwinds when it came to the majority of their market being tied to single family, that’s a different — I mean that’s not happening today. If that accelerates, and we’ve said if the third leg of our stool, public private nonres and single-family or resi, if that’s our [indiscernible] tool kicks in, obviously, it’s going to give us a lot of tailwinds when it comes to both the demand side of our products as well as the pricing side and that momentum.

But I think originally, what you said, I mean, I think it’s absolutely right that our confidence is that our pricing throughout the year will continue to build momentum. So exiting that, obviously, we’ll be — we’ll need to be at the higher end of our range because that’s just the math. And so we have confidence in our ability to do that. And I think it’s too early to call what’s the success of midyear is going to be because it’s choppy. I mean it’s every individual market. I mean these are local markets that we have active conversations going on with our customers, and we want to be their supplier of choice. And so in the end, we’re going to be disciplined around that. But I would tell you we have good momentum. The quarter played out exactly what we expected.

And I think the rest of the year, we have all the mechanisms in place to continue to reinforce the earnings of the business.

Operator: We’ll turn next to Ivan Yi with Wolfe Research.

Ivan Yi: Can you comment on transportation cost, truck rates are currently about 20% to 30% year-over-year. Are you able to fully pass through these higher costs to your end customers? And on that, you hire truckload rates incentivized moving more volumes to rail where you can?

Ronnie Pruitt: Yes. So I guess I’ll answer the back half of it. When it comes to rail, I mean, you can move more to rail, but you also have to have the rail yard to be able to do that. And so our rail yards are a really extension of the operating plants that those markets support. And really the significance of that is our ability to capture the value of those products at the yards in distribution costs, which would include rail distribution, we’re able to capture that. And a lot of those yards are really in high-growth markets. That’s why we put yards there because that’s where the growth is, and it helps us supply that market and it limits the amount of distribution cost to get there. On the overall delivery side, as I said early on, we have surcharges in place to capture that.

Delivery to us is really a pass-through, we don’t try to make money on delivery. That’s a third party. We have owner operators that do that. And so we do provide that service to our customers, but it’s not something that we see as a headwind or a tailwind. It’s just the cost of doing business. You got to get the rock to the job. And so delivery to us is a pass-through, and we have surcharges in place to make sure we’re not paying the penalty on any fuel cost increases.

Mary Carlisle: Yes. And one other thing, Ronnie talked a lot earlier about the — our advantaged footprint in terms of where we are an advantage we also have is not just geographically where we are, but what our positions are in those markets. And so I think over the longer term, if you think about those positions in an environment of rising transportation costs, it can serve to widen our logistical mode advantages.

Operator: And we’ll hear next from Rohit Seth with B. Riley Securities.

Rohit Seth: Just back on the volumes, [indiscernible] up 5%. So you booked a little bit of cushion here on into the rest of the year. Can you provide a sense of how the quarter played out, the cadence from January to March? And then if you have any comments on April?

Ronnie Pruitt: Yes. I would say when we talked about more normal weather, really the more normal weather we experienced was really more in the smile of the U.S., it’s really more California-based and then in the South and Texas and then across the Southeast. I mean we saw a lot of very cold start to the year in Illinois and in our Northeast markets. And I would tell you, our shipments reflected that. I would tell you, we started off slower in January, and we built momentum through February and into March. And so really, weather for us, it’s 2 parts. I mean, precipitation rain is one thing, and rain obviously affects the day that we’re shipping, but the cold start to the year in the Northeast and the cold start to the year in the middle of the country, it definitely had an impact on, one, you’re not laying mix and one you’re not for in concrete, but 2, you’re not operating.

I mean, so — we really got off to a slower start in January in some of our northern markets, but that’s typical. I mean, that’s not something that caught us off guard. I mean, we knew that was going to — that’s what we planned for it to be cold in Chicago in January. So I would tell you the quarter from a cadence side, I think it played out exactly like we said. And I would tell you, as we got into March, I mean with drier weather and with warmer temperatures, again, the size of these projects matter and where our footprint is matters. And when I say literally 60% of these large projects are within 50 miles of a Vulcan facility, that matters and their ability — and we highlighted this in our Investor Day when we talked about the complexity of these jobs and how much they want a supplier that can have redundancy, they want suppliers that can meet their production schedule.

And some of these schedules literally can drift up 30% or 40% in their schedule as far as the demand perspective, and so that matters. I mean I think our size and location is very critical when it comes to where these projects are going. And so I would anticipate, again, I mean, as we get into the second quarter, I think that cadence will be. But we also said we started off 5% up. We said we still believe we’re going to be in growth, but we didn’t say we raise our expectations on the overall demand of our products. We think it’s still going to play out through the remainder of the year in that low single-digit carry-on.

Mary Carlisle: Yes. And that’s really based on a seasonally adjusted basis, we feel like we’re right on track for our full year guidance. I think as you think about the rest of the year, one thing to keep in mind is that seasonally adjusted last year’s second quarter was weaker than where we finished the year. So we’ll have easier year-over-year comps in the second quarter than we will in the back half. But in terms of the — again, a lot of noise in the quarters, but in the — for the full year guidance, we think we’re on track to deliver that modest growth for the year.

Rohit Seth: Any thoughts on April?

Ronnie Pruitt: I think April is going as expected.

Rohit Seth: Okay. And then just a last follow-up. Are you seeing any project cancellations or anything getting pushed out to the [indiscernible] maybe just delaying waiting for it to normalize?

Ronnie Pruitt: We have not. We’re paying very close attention to that because I mean that’s a possibility, obviously. But we have not seen anything as of the date with either public or private side, we’ve seen any projects that have been canceled or delayed.

Operator: Thank you, everyone. With no further questions in queue, I would like to turn the floor over to CEO, Ronnie Pruitt for closing comments.

Ronnie Pruitt: Thank you, and thank you all for your interest in Vulcan Materials. I’m proud of what our teams have accomplished in the first quarter, but we’re never satisfied, and we’re always looking ahead. We’re committed to continuous improvement and long-term value creation for all of our stakeholders, and we look forward to speaking with you at our next quarter. Thank you.

Operator: Ladies and gentlemen, that will conclude today’s event. Thank you for your participation. You may disconnect at this time, and have a wonderful rest of your day.

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