The paragraph is from the Vulcan Materials Company Fourth Quarter 2024 earnings call. Sheyna, the conference call coordinator, introduces the event and hands it over to Mark Warren, the Vice President of Investor Relations. Mark introduces Tom Hill, the Chairman and CEO, and Mary Andrews Carlisle, the Senior Vice President and CFO. The call includes a discussion of forward-looking statements and legal disclaimers, with a request for participants to limit themselves to one question during the Q&A. Tom Hill then highlights the company's successful execution of its growth strategy in 2024, which improved profits by 12% and included $2 billion in acquisitions.

The paragraph discusses the company's strong performance in the fourth quarter, with a $550 million adjusted EBITDA, marking a 16% improvement from the previous year, and an eighth consecutive quarter of increased adjusted EBITDA margin. The Aggregated segment saw a significant 16% rise in cash gross profit per ton, driven by pricing momentum and reduced unit cash costs. Although shipments were down by 3%, increased public shipments and demand in storm-impacted areas offset this decline. Freight-adjusted unit cash costs rose by 5%, highlighting improved efficiency and execution. Looking forward to 2025, the company expects a healthy pricing environment with a 5% to 7% growth in freight-adjusted AGUS price, factoring in a 100 basis point negative mix impact from recent acquisitions.

The paragraph discusses the expected trends in the construction and aggregates markets for 2025. Inflationary pressures are easing, and operating efficiencies are improving, which should lead to a slight increase in freight-adjusted unit costs and significant growth in profitability. Aggregate shipments are forecasted to rise by 3% to 5%, driven by acquisitions and stable demand in the core business. Public construction growth is expected to offset a downturn in private construction. Highway projects are growing, with substantial funding initiatives boosting transportation investments at the state and local levels. However, high interest rates challenge residential construction, causing a mixed outlook for single-family versus multifamily housing. Demographic needs in the market will drive long-term housing demand, with recovery in private non-residential construction likely beginning in the latter half of 2025 and improving further in 2026.

The paragraph discusses recent trends and projections in warehouse starts and data center activities, noting that warehouse starts have returned to pre-pandemic levels while data center activity remains strong, with 7% of proposed projects near a Vulcan Soli. The company anticipates delivering $2.35 to $2.55 billion in adjusted EBITDA by 2025. Mary Andrews highlights the company's financial strength, detailing strategic acquisitions of $2.3 billion in 2024, investments in greenfield efforts, and distributions to shareholders. The company maintains a net debt to adjusted EBITDA leverage of 2.3, has made recent debt redemptions, and plans further redemptions, positioning itself well for continued growth through disciplined capital allocation and execution.

In 2024, the company successfully expanded its adjusted EBITDA margin by 190 basis points, achieving $2.1 billion in adjusted EBITDA, with aggregates cash gross profit per ton rising by 12% to $10.61. SAG expenses decreased by 2%, making up 7.2% of revenue, while return on invested capital remained steady at 16.2%, despite minimal earnings from late-year acquisitions. Looking forward to 2025, the company anticipates further margin expansion and earnings growth, estimating $150 million in adjusted EBITDA from recent acquisitions and $360 million in cash gross profit from downstream businesses, mainly from the asphalt segment. They project SG expenses between $550 and $560 million, depreciation and related expenses at approximately $800 million, interest expense at about $245 million, and an effective tax rate between 22% and 23%.

The paragraph discusses Vulcan Materials' investment plans for 2025, which include reinvesting $750 million to $800 million in operating, maintenance, and internal growth capital expenditures. This includes $125 million for three major plant rebuild projects. The company anticipates continuing expansion, growth in adjusted EBITDA margin, and strong cash generation in 2025. Tom Hill acknowledges the dedication of Vulcan Materials' employees and highlights their execution skills and commitment, especially during adverse weather conditions. He expresses excitement for future achievements and reaffirms the focus on adding value for customers, communities, and shareholders. The paragraph ends with the operator inviting questions, with Trey Grooms from Stephens initiating the question session, particularly inquiring about changes in aggregates pricing.

In the paragraph, Tom Hill and Mary Andrews Carlisle discuss pricing and growth expectations for their business. Tom Hill explains that last year's 11% increase in prices provides strong momentum for the current year, despite a negative impact on pricing from acquisitions. They aim for a 5% to 7% increase in pricing, with major price hikes already in effect from January 1st. Although quarterly results can be influenced by market mix, they expect consistent pricing improvement. Mary Andrews Carlisle adds that improved pricing and moderated costs should lead to low double-digit growth in cash gross profit per ton each quarter. This strong performance, particularly in the aggregates segment, is expected to drive a 12% organic growth in EBITDA by 2025.

In the paragraph, Steven Fisher from UBS asks Tom Hill about the expectations for organic volumes on the aggregates side, assuming a flat trend and inquiring about the cadence of these trends throughout the year, especially in light of a slowdown in nonresidential activity. Tom Hill responds by acknowledging the situation, noting that growth in the public sector is offsetting challenges in the private sector. He points out that the easiest comparison will be in the third quarter, as January and February were affected by cold and wet weather, but remains confident in their full-year guidance. Hill suggests that the latter half of the year will see improvements with easier comparisons and potential growth in single-family and non-residential construction. Catherine Thompson from Thompson Research then prepares to ask the next question.

In the paragraph, Tom Hill discusses the factors that contributed to record gross margins in Q4, such as favorable weather conditions, better volumes, and improved operational efficiencies due to technology and tools. He anticipates continuing these efficiencies into 2025 with low to mid-single-digit growth, aligning closer with historical performance. Mary Andrews Carlisle notes that gross margins improved year-over-year throughout 2024 and expects this trend to continue in 2025, with the highest margins typically seen in Q2 or Q3. Catherine Thompson and other participants acknowledge these insights, and the discussion moves to the next question in the conference call led by Anthony Pettinari from Citi.

In the paragraph, Ashley Sotto asks about the impact of administrative policies and tariffs on business operations, specifically concerning the pace of ISA rollout and project starts. Tom Hill responds by stating that there is no significant impact on public demand due to policy decisions, as funding for public projects is secured through dedicated long-term funding. He suggests that the government is likely to support public work legislation, which is a positive sign. Regarding tariffs, especially agricultural ones, Hill mentions that they have little impact on the business. He expresses confidence in the company's ability to navigate challenges, such as pandemics and inflation, and maintain growth in unit profitability. The conversation then transitions to Jerry Revich from Goldman Sachs, who is set to ask a question about cost performance.

In the paragraph, a discussion takes place about the company's cost structure and its inflationary pressures. It's noted that while variable costs per ton were stable in the recent quarter, the costs are expected to rise in the mid-single digits throughout the year, with fluctuations from quarter to quarter. The increase is attributed to factors like rising diesel prices, wages, and electricity costs, although improved operating efficiencies are expected to partially offset these increases. Looking ahead to 2025, costs are not expected to be flat and are likely to experience low to mid-single-digit growth. The conversation then shifts to Angel Castillo from Morgan Stanley, who inquires about the outlook for private non-residential construction, suggesting that construction starts may bottom out in the middle of the year and possibly rebound in the second half.

In the paragraph, Tom Hill discusses the state of non-residential construction, noting that shipments are expected to remain down in 2025, although signs of improvement ("green shoots") are emerging. Data centers present a growth opportunity as many are planned within their operational areas. Warehouses, which have been a drawback, are beginning to show positive trends in some markets. However, light traditional non-residential construction continues to lag and is expected to eventually follow the subdivision market recovery over time. Hill indicates a potentially more optimistic outlook for 2026, despite the current challenges. On quoting activity, Hill mentions that there is a significant amount of non-residential work quoted but on hold, largely due to expectations of interest rate decreases, signaling pent-up demand.

In the discussion, Tom Hill addresses questions about pricing strategies and their impact on the company's financial performance. He acknowledges a noticeable decrease in Average Selling Price (ASP) due to recent deals, resulting in a hundred basis point drag on pricing mix. Despite not providing specific numbers, he mentions successful price increases in certain markets starting from January and is optimistic about narrowing the gap over time. Hill also reassures that, even with the pricing adjustments, the company's pricing performance remains strong, albeit slightly softer than the previously projected high single-digit growth. Hill emphasizes that, although costs are not increasing at the same rate, the focus remains on growing unit margins by double digits, a trend expected to continue into 2025.

In the paragraph, a financial discussion takes place during a company earnings call. Mike Dahl from RBC asks about recent acquisitions and their downstream businesses, inquiring whether these will remain in the portfolio. Tom Hill responds that any assets kept must align with their returns criteria, otherwise, they'd divest. Mary Andrews Carlisle provides context, stating the acquisitions contribute $150 million in EBITDA: 60% from the aggregate segment and 40% from downstream businesses. Adam Thalhimer from Thompson Davis congratulates the team on their Q4 performance and seeks details on the downstream portion's year-over-year increase and its impact on cash gross profit.

In this paragraph, Mary Andrews Carlisle discusses the improvement in cash gross profit contribution, noting that 75% of the improvement comes from acquisitions and 25% from improvements in the underlying business. Timna Stanners asks about the merger and acquisition landscape post-recent deal and updates on the Calico quarry restitution in Mexico. Tom Hill responds that the M&A pipeline remains healthy and active, and regarding Mexico, they are awaiting a tribunal decision, feeling confident about their case. Garik Smois inquires about pricing cadence and midyear increases, to which Hill states they are not included in their guidance.

The paragraph involves a discussion between Garik Smois and Tom Hill, with queries about the planned midyear price increases. Tom Hill notes that these increases, to be announced later in the first quarter, are expected to have a more significant effect on 2026 than on 2025, although it's still uncertain how successful they will be. He explains that midyear price adjustments give customers more time to react, impacting both the price and timing positively. The conversation shifts to Keith Hughes from Truist, who raises concerns about short-term weather conditions affecting shipments. Tom acknowledges that January and February have been very cold and notes weather unpredictability is considered in their planning. They hope for more favorable conditions in the future, especially since last year's Q3 was challenging, but they remain cautious about extenuating factors like hurricanes.

In the article's discussed segment, Tom Hill addresses questions regarding Vulcan's Southern California acquisition, explaining that it integrates well with their aggregate and asphalt operations, although they were not previously involved in the Ready Mix business in those markets. He is also questioned about tariffs impacting their business, particularly concerning assets from Canada. Hill responds by saying the impact is negligible, and they will comply with regulations. Additionally, when asked about pricing for 2025 in relation to historical trends, Hill suggests there might still be room for increasing prices beyond current levels despite the potential for flat organic volumes.

The paragraph discusses a company's approach to pricing and selling, highlighting the challenges of not seeing growing demand in recent years, which puts pressure on pricing. Despite this, the company believes it earns its pricing through effective customer service and sales strategies, which are evident in their recent performance. David MacGregor from Longbow Research commends the company for its strong quarterly results and asks about the effectiveness of their pricing strategy, particularly in relation to the cost of limestone for customers compared to cement. Tom Hill responds by clarifying that their pricing is lower than cement pricing, and emphasizes the importance of strategic initiatives that enhance market understanding and equip salespeople with better tools for pricing and customer service.

The paragraph discusses the benefits of a bulk operations approach, which enhances training, equipment inspection, and reduces downtime. This approach, combined with improved technology, increases throughput and critical sizes handling, leading to opportunities for unit margin growth. Despite past volume declines, a double-digit improvement in performance has been achieved over nine quarters. With anticipated flat volumes this year, there’s potential for further margin enhancement when volumes rise. Tom Hill thanks participants for their interest in Vulcan Materials, emphasizes safety amid current weather conditions, and looks forward to ongoing communication. The operator concludes the program.

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