The operator introduces the participants of the earnings call for Vulcan Materials Company's second quarter of 2024. The call will be recorded and available for replay later. The host, Mark Warren, introduces the CEO, Tom Hill, and the CFO, Mary Andrews Carlisle. The discussion may include forward-looking statements and non-GAAP financial measures. Tom Hill thanks the participants for their interest and highlights the company's successful navigation of a challenging first half of the year. He also mentions the impact of unfavorable weather conditions on shipments and operating efficiencies, but the second quarter results demonstrate consistent execution and the benefits of the company's focus on enhancing their core and expanding their reach.

Despite lower aggregate shipments and weather-related challenges, the company has achieved double-digit improvement in unit profitability. This is a result of their commitment to enhancing their core and expanding their reach through strategic acquisitions. Despite lower shipments, they were able to generate $603 million in adjusted EBITDA and improve their adjusted EBITDA margin. The pricing environment remained positive and cash gross profit per ton improved by $1. The company remains focused on improving unit profitability and expects growth in the single-family housing market to continue in the coming years.

The article discusses the impact of affordability issues and interest rates on the pace of recovery in the residential construction industry. However, the underlying fundamentals of population growth and low inventories are expected to support long-term growth. Nonresidential construction is also varying across categories, with warehouse activity being a major headwind. Public infrastructure projects are expected to see growth in 2024, thanks to funding from the IIJ. Despite a decline in aggregate shipments, the company still expects solid profitability and cash flow in 2024. The company's strong fundamentals and disciplined capital allocation have resulted in higher returns on invested capital.

During the second quarter, the company reinvested in its existing franchise, made acquisitions, and returned cash to shareholders. They also spent money on capital expenditures and made a strategic acquisition. Their return on invested capital has improved and they have room for more investments. SAG expenses have increased slightly and they expect unit freight costs to increase. They anticipate an increase in aggregate prices and strong profitability. The CEO thanks the company's team for their dedication and commitment to excellence.

Rainer Schein and the team at Vulcan Materials are focused on operating safely and delivering value for customers and shareholders. They have a two-pronged strategy to enhance their core business and expand their reach, which they believe will drive growth. Despite tough operating conditions and a slower growth in single-family demand, the company is confident in their original volume guidance for the year. However, a wet July and uncertain weather conditions for the rest of the year may impact their volume range of -4% to -7%. Despite these challenges, Vulcan Materials has been able to increase unit margins by double-digits.

The speaker, Thomas Hill, is proud of the company's performance in the first half and welcomes a new member to the team. They address a question about the second half volume outlook and mention that the demand for their products is still strong, but weather has impacted their ability to ship. They give examples of how rain has affected certain markets and mention that the demand is still there and temporary events will not make it go away.

In the seventh paragraph of the article, Thomas Hill and Garik Shmois discuss the company's shipping and take a question from Anthony Pettinari about cost inflation. Hill mentions that volume impact and weather were factors in the first half, but they expect to cost some of that back in the second half and maintain double-digit unit margin growth. The next question comes from Jerry Revich, who asks about strong pricing in the agri sector and the confidence around midyear guidance.

In the paragraph, Thomas Hill and Mary Andrews Carlisle discuss the tailwind from natural contracts rolling over in the third quarter and the incremental opportunity from midyear pricing. Hill mentions that the pricing momentum continues in all markets and product lines, and the midyear prices will have a bigger impact on 2025. He also praises the team for achieving 12% unit margin growth despite weather and volume challenges. Carlisle adds that they expect modest sequential improvement in the back half of the year and a solid underlying price environment with expected price increases of 10-12%. Kathryn Thompson then asks a question.

Kathryn Thompson asks Thomas Hill about the impact of project delays and pricing on their work. Hill mentions that while there may be some impact on pricing due to changes in product and geographic mix, he expects their margins to remain steady. Thompson thanks him and another analyst asks about the pricing discussion.

The company believes that the price run will continue and they feel good about their current bids. The mid-year price increases will have a bigger impact in the first half of next year, which will help with pricing conversations in October for the beginning of the year. It is too early to make a call on pricing for 2025, but the conversations for mid-year increases are encouraging. The mid-year increases will not change the 10% to 12% guidance, but it will set the company up for 2025. There is some uncertainty around the cadence due to factors like weather, but overall the company is performing well.

In this paragraph, Thomas Hill and Mary Andrews Carlisle discuss the expected impact of weather on the third and fourth quarters of the company's business. They mention that July was extremely wet and a troubling storm on the East Coast may also affect business. However, they believe that underlying demand is still strong and there may be a bump in the fourth quarter due to pent-up demand from the wet weather. They also mention that the fourth quarter has easier comps compared to the third quarter.

The speaker discusses the potential impact of public demand and state budgets on the company's outlook for the back half of the year. They mention recent acquisitions and the possibility of more in the future. They also mention increased funding in key states, which could lead to steady growth in demand for their products.

The paragraph discusses the record levels of demand for materials in Texas and California, which is expected to continue for the next few years. The company's CEO mentions that their approach to M&A is based on discipline and integration, and there is not much change in terms of competition for deals. The midyear increase in prices is similar to last year, but there may be differences in specific customers, product lines, and geographies.

During a conference call, Phil Ng asked Thomas Hill about the potential impact on carrier pricing and demand in the coming year. Hill responded that it is too early to make predictions, but public sector growth is expected to continue due to available funds. The private sector, particularly in single-family homes, is also expected to grow, but at a slower pace. Hill also mentioned that the timing of non-residential projects, such as warehouses and distribution centers, will be a determining factor in overall growth. Michael Dudas then asked about the backlog and bidding for large private heavy non-residential projects, to which Hill responded that there is potential for acceleration in this sector in the next few years.

Tom Hill, the CEO of a construction company, was asked about the potential impact of weather on their business in the second half of 2021 and in 2025. He stated that weather has been a tailwind for their backlog and is helping them with big projects and manufacturing. He believes this will continue to be a tailwind in 2025 due to the growth in data centers and reshoring of manufacturing facilities. However, he does not think it will be enough to make up for the decline in warehouses and distribution centers. In response to a question about the manufacturing sector, Hill stated that he believes the tailwind will remain stable in 2025, but there is a risk that some projects may roll off and not be replaced. Regarding public infrastructure, Hill believes the recent mixed data points are just a temporary pause and expects the trend of record growth in highway contract awards to continue into 2025 and 2026 due to increased state funding and the IIJA.

The speaker believes that the public side of the company will experience steady growth in the next few years, with some fluctuations. They also believe that the manufacturing side will remain strong due to a healthy backlog and potential for new projects. The speaker thanks the audience for their time and expresses concern for employees and neighbors affected by a storm. The call has now ended.

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