The paragraph introduces the Vulcan Materials Company's First Quarter 2024 Earnings Call and provides information about the call, including the participants and the availability of a recording. The host, Mark Warren, introduces the speakers, Tom Hill (Chairman and CEO) and Mary Andrews Carlisle (Senior Vice President and Chief Financial Officer). The discussion may include forward-looking statements and reconciliations of non-GAAP financial measures. During the Q&A, participants are asked to limit their questions to one. Overall, the company's first quarter results were positive, with a fourth consecutive year of double-digit adjusted EBITDA growth and a 10% improvement in Aggregates cash gross profit per ton, despite challenging weather conditions.

In the second paragraph, the company discusses their commitment to their Vulcan Way of Selling and Vulcan Way of Operating Disciplines, which has resulted in solid financial results. Despite a 7% decline in shipments in the Aggregates segment, the company has shown consistent execution and improvement in key metrics such as cash gross profit per ton and cost of sales. This has been driven by their focus on improving efficiencies and managing costs through their Vulcan Way of Operating Disciplines. The company also mentions their plans to use their free cash flow for acquisitions and strategic development projects, as evidenced by their recent acquisition in Alabama. Overall, the company is pleased with their progress and execution of their two-pronged growth strategy.

The company is focused on expanding their reach and improving their core by controlling what they can in a dynamic macro and demand environment. Single-family construction is expected to grow, but weak multifamily construction will offset it. The company is also seeing signs of stabilization in overall construction starts, but warehouse starts will be a major challenge. Light commercial activity is weak, but the company expects it to follow the positive trend in single-family housing. They are also seeing opportunities in the manufacturing category and their Southeastern footprint gives them an advantage in servicing large aggregate intensive projects. On the public side, the company's footprint in Vulcan states positions them well for federal highway spending and other public infrastructure activity.

Mary Andrews, in addition to discussing the solid first quarter results, highlights four important trends: unit profitability expansion, robust cash generation, disciplined capital allocation, and return on invested capital improvement. These trends have led to consistent growth in unit profitability and gross margin in all three operating segments. The company's focus on execution and its Vulcan Way of Selling and Operating Disciplines have contributed to this growth. The strong free cash flow has allowed for strategic capital allocation, including investments in the franchise and returning cash to shareholders. The company plans to continue investing in capital expenditures and maintaining a strong balance sheet to support its priorities.

The company's net debt to adjusted EBITDA leverage is 1.5x, with $300 million in cash on hand. The company's liquidity and financial flexibility are strong, and they have seen improvements in return on invested capital and adjusted EBITDA margin. They expect to spend between $550 million and $560 million on SAG expenses for the full year and reaffirm their expectations for adjusted EBITDA between $2.15 billion and $2.3 billion. The company's top priority is the safety and well-being of their employees, and they are focused on executing their Vulcan Way of Selling and Operating Disciplines. They will continue to allocate capital strategically and deliver value for shareholders.

Tom and Mary discuss the company's performance in the first quarter, which was as expected despite some weather and comp issues. Tom expects the demand for the rest of the year to remain flat to down 4, with headwinds in non-residential and challenges in multifamily, but a recovering single-family construction and growing public demand. He also mentions the company's strong position in the Southeast and their effective selling strategies. When asked about mid-year pricing, they do not provide a specific outlook but mention that when the weather improves, they are shipping well.

The company has had conversations with customers about mid-year pricing and believes the fundamentals for pricing remain healthy. Mid-year price increases are not included in their guidance, but they will revisit pricing guidance in August. The company's teams are working hard to deliver and they expect margin expansion to continue through the rest of the year. The company achieved a 10% improvement in cash gross profit per ton in the first quarter and expects this to improve further. They also expect margins to continue to expand.

In the first quarter, costs were impacted by volumes and weather, but the company is still comfortable with its cost guidance of mid-single digit for the full year. On a trailing 12-month basis, cost increases have been decelerating and are expected to continue to decline throughout the year. Diesel prices were a slight tailwind in the quarter, but parts and services remain elevated with easier comps in the future. The company is also working to improve operating efficiencies to offset inflated parts and services costs. The company assumes that diesel prices will move higher throughout the rest of the year.

During a recent conference call, Vulcan Materials' executives discussed the unpredictability of diesel prices and how they can both benefit and harm the company's business. They also emphasized that aggregates are their main focus and any divestments or investments will be in that area. They plan to continue optimizing their portfolio and prioritize their aggregates business for M&A and greenfield growth. Additionally, they mentioned the importance of cash gross profit per ton and its impact on the company's financials.

The company's profits were up 10% in the quarter, surpassing initial expectations of mid to high single-digit improvement. The full-year forecast is for mid-teens improvement, which is attributed to the company's Vulcan Way of Selling and operating disciplines. These tools have consistently improved cash gross profit per ton over the past five years. Going forward, the company expects cost increases to decelerate and operating efficiencies to improve, allowing for continued price increases in both project work and fixed plant operations.

The speaker discusses the company's potential for continued unit margin improvement throughout the year, with expectations for sequential growth in the second and third quarters and potentially less in the fourth quarter due to seasonality. The magnitude of mid-year price increases is uncertain at this point, but could significantly impact the third quarter's sequential improvement. The company is not yet ready to confirm the implementation of mid-year price increases, but if they do occur, they could contribute to double-digit pricing growth at the end of the year. The company will only announce mid-year price increases when they have been earned.

The speaker is discussing the midyear price increases for 2025 and states that it is too early to make any concrete decisions. They mention that they feel good about the midyear pricing and are encouraged by the conversations they are having. The timing and process for implementing the price increases is similar to last year, and the speaker does not believe that weather had any impact on the discussions. They clarify that the April comment was not significant and that the process will continue as usual.

The company is expecting positive momentum in their bid work and midyear increases to drive growth for the rest of the year. They recently completed a small but strategic acquisition and anticipate a busy year for M&A. The CEO, who has many years of experience, believes that in an election year, projects may either accelerate or slow down depending on the focus and uncertainty of the political climate.

Thomas Hill discusses the potential impact of the upcoming election on public sector spending, stating that he does not see it affecting demand. He also mentions that there are challenges in the non-residential and multi-family sectors, but single-family housing is recovering. On the government side, they are seeing the flow of infrastructure dollars into projects, with a mid-single-digit growth expected for the year. There are also additional state funding initiatives in place.

The company is seeing steady growth in the construction sector and is focusing on data centers as a potential area for growth. However, data centers only make up a small percentage of total non-residential construction. The company is also implementing technology in their plants to improve productivity, with about 30% of their top 100 plants fully utilizing these tools.

The speaker discusses the current state of demand in the private construction sector, noting that there is weakness in non-residential areas such as warehouses, but that the decline is slowing. However, there is strength in large manufacturing projects. In the housing sector, there is weakness in multifamily projects. It is too early to determine if the overall demand is improving or worsening.

The speaker believes that the housing market will recover by 2025 and that single-family home prices will increase with momentum. They also mention that a competitor has announced price increases in the Southeast, which is a strong pricing market. They expect pricing to improve in the western part of the United States as well. The speaker clarifies that the assumption for pricing is 10-12% and that the election year will not have an impact on their business.

Michael Dudas asks about the impact of interest rates and other dynamics on Vulcan's non-residential sector. Thomas Hill responds that there has been improvement in the single-family and public demand sectors, which is helping pricing dynamics. He also mentions that the strong demand for infrastructure in the Vulcan states is a positive sign for the company. Dudas also asks about any lagging regions or states, to which Hill mentions the big DOTs in California, Texas, Georgia, and Virginia.

In paragraph 19, the speaker discusses the funding of various state departments of transportation, noting that Tennessee and Texas are doing well while Georgia and Illinois have had some struggles. However, all departments are improving and are expected to see growth in the coming years. The speaker also mentions the growth in infrastructure projects, such as ports and airports. The speaker concludes by thanking the listeners and expressing hope for their health and safety.

This summary was generated with AI and may contain some inaccuracies.