Title

Presentation

Vulcan Materials Company beats earnings expectations. Reported EPS is $1, expectations were $0.764.

Operator: Good morning. Welcome, everyone, to the Vulcan Materials Company First Quarter 2025 Earnings Call. My name is David, 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 on the company’s website. All lines have been placed in a listen-only mode. After the company’s prepared remarks, there will be a question-and-answer session. Now, I will turn your 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, and good morning, everyone. 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 vulcanmaterials.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. Reconciliations of non-GAAP financial measures are defined and reconciled in our earnings release, supplemental presentation, and other SEC filings. During the Q&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.

Tom Hill: Thank you, Mark, and thank all of you for joining the Vulcan Materials earnings call this morning. Our first quarter results showcase the powerful combination of our two-pronged growth strategy to improve earnings through compounding profitability in our organic business and adding strategic assets to our portfolio. Consistently expanding our cash gross profit per ton is key to successfully growing earnings through varied macroeconomic backdrops. In the first quarter, our teams delivered an impressive 20% year-over-year improvement. Complemented by the contribution from prior year acquisitions, the strong performance in our legacy business led to a 27% improvement in adjusted EBITDA and 420 basis points of expansion in adjusted EBITDA margin.

I’m pleased with how our teams are executing on our Vulcan Way of Selling and Vulcan Way of Operating disciplines to consistently enhance our performance regardless of the demand backdrop. Aggregates shipments in the first quarter were 1% lower than the prior year. Shipments from acquired aggregates facilities partially offset the impacts of extremely cold weather across many of our markets and one last shipping day in the quarter. Our commercial execution and commitment to January price increases yielded 290 basis points of sequential price growth from the fourth quarter. And Aggregates freight-adjusted price improved 7% on a year-over-year basis. On a mixed adjusted basis, aggregates freight-adjusted price improved 8.5% over the prior year.

Our operational execution and discipline in the quarter were noteworthy. Aggregates freight-adjusted unit cash cost of sales declined 3% compared to the prior year. Moderating inflationary pressures, a relentless focus on plant efficiencies, and some timing benefits of delayed expenditures due to weather conditions all contributed to the cost performance. Trailing 12 months, aggregates cash gross profit grew to $10.99 per ton, within a penny of our $11 to $12 goal and a ninth consecutive quarter of double-digit growth. Our aggregates business is performing well. Our downstream businesses are also performing well. Cash unit profitability in both asphalt and concrete expanded considerably by 19% and 77%, respectively. Total cash gross profit improved by over 50% through same-store unit profitability improvement and the benefit of the prior year acquisitions.

We delivered a strong start to the year and we’re focused on carrying that momentum forward as we navigate increasing macroeconomic volatility driven by the uncertainty in trade policy and unclear trajectory of interest rates. We believe that private demand will continue to face challenges this year, while public demand remains a healthy offset. Affordability issues and elevated interest rates persist as headwinds in residential construction activity. Single-family starts and permits have been declining recently and multifamily activity remains weak as anticipated. However, overall single-family inventory levels, particularly in Vulcan states, are below average historic levels and mortgage performance measures do not point to distress in housing markets.

Demographics in Vulcan markets support a consistent need for additional housing. So we continue to believe that the timing of additional interest rate reductions and overall improvement in affordability will dictate when residential construction activity returns to growth. While the trends in private nonresidential demand vary across categories, the interest rate environment and macroeconomic uncertainty seem to be delaying the timing of recovery and starts. Importantly, warehouse activity, the largest category in private nonresidential construction, appears to be stabilizing after multiple years of declines and data center activity in our markets continues to accelerate. On the public side, IIJ-related spending remains a catalyst, with two-thirds of the highway dollars yet to be spent.

Continued steady demand growth. Trailing 12-month contract awards in Vulcan states continue to outpace other markets. Capital plans in 9 of our top 10 states are up, and voters passed $45 billion of transportation spending ballot initiatives in the November election cycle in 12 of our key states. And as I said, public demand is healthy. It remains an important offset to private demand challenges in 2025. Our teams are closely monitoring the local market conditions and are well-positioned to respond to an ever evolving environment by controlling what we can control, that is, how we perform on the commercial and operational sides of our business. By staying focused on our disciplines, I am confident in our ability to execute. We continue to expect to deliver between $2.35 billion and $2.55 billion of adjusted EBITDA in 2025.

Now I’ll turn the call over to Mary Andrews for some additional commentary on our first quarter. Mary Andrews?

Mary Andrews Carlisle: Thanks, Tom, and good morning. Our consistent success and compounding results in our aggregates-led business is translating to attractive free cash flow. Over the last 12 months, we have generated $869 million of free cash flow, a 93% conversion of net earnings. We have allocated this capital to grow our business and return cash to shareholders. We have deployed $2.2 billion for strategic acquisition and returned $336 million to shareholders, while generating a return on invested capital of 16.2% and maintaining debt-to-adjusted EBITDA leverage within our target range of 2x to 2.5x. At the end of the first quarter and following the March redemption of our 2025 senior notes for $400 million, our net debt to adjusted EBITDA leverage was 2.2x, with over $190 million of cash on hand.

A disciplined approach to capital allocation and a well-positioned balance sheet are fundamental to our long-term success. Our liquidity position and financial flexibility are competitive strengths as we navigate an uncertain macro economy, evaluate strategic growth opportunities, and continue to create value for our shareholders. Our first quarter results provided an outstanding start to 2025. Our organic business delivered strong results in all three segments, and the operations acquired in 2024 are performing well. We continue to evaluate the potential direct and indirect impacts of tariffs to our business. While we may experience some tariff-related inflationary pressures in our operating costs, we do not currently anticipate these impacts to have a material effect on earnings.

Importantly, we have a proven business model that has successfully navigated a variety of external disruptions in recent history. We remain focused on what we can control and expanding our aggregate cash growth profit per ton regardless of the macro backdrop. Capital expenditures in the quarter were $105 million, and we continue to expect to spend between $750 million and $800 million for the full year. SAG expenses in the quarter were in line with our expectations, and we continue to expect full year SAG expense of between $550 million and $560 million. I’ll now turn the call back over to Tom to provide a few closing remarks.

Tom Hill: Thank you, Mary Andrews. I want to thank the men and women of Vulcan Materials for their hard work in the first quarter that translated to an outstanding safety and financial performance. Most importantly, they stayed focused on keeping each other safe, and their commitment to executing each day is showing up in our bottom line. Our focus is on what is ahead, maintaining our solid momentum and continue to leverage our Vulcan Way of Selling and Vulcan Way of Operating disciplines to compound profitability in our legacy business, capture synergies from acquisitions, and deliver value for our shareholders. And now, Mary Andrews and I will be happy to take your questions.

Operator: [Operator Instructions] Take our first question from Jerry Revich with Goldman Sachs. Please go ahead. Your line is open.

Tom Hill: Good morning, Jerry.

Jerry Revich: Yes, hi, good morning, everyone.

Mary Andrews Carlisle: Good morning.

Jerry Revich: Hi, Tom, Mary Andrews, Mark. Really impressive price cost spread you folks put up in the quarter. Tom, I’m wondering if you could just talk about how you’re thinking about midyear price increases and cost cadence given the strong performance and the spread.

Tom Hill: Yes, I guess as it goes to price, I would tell you as expected, we carry really good momentum into the year with prices up 7%, mix adjusted up 8.5%. I think it was a combination of two things. January 1 price increases pretty much went as expected and then we had really good pricing in our backlog and we continue to have good pricing in our backlog. So I thought the first quarter started a year off really good, keep our guidance at 5 to 7, remembering that we have to turn that price into profit. And you saw Vulcan Way of Selling, a couple of Vulcan Way of Operating do that in Q1 with unit margins up some 20%. So a really good start to the year. And I think what that is, is simply the Vulcan Way of Selling and Vulcan Way of Operating at work.

As it goes to mid-years, we’ve started those discussions now. We’ll have those talks about midyear in all of our markets. I would expect a range of outcomes by market and by product line, much like the last couple of years. In those discussions, as we always say, the midyears will impact ’26 more than they will ’25. So, a really good start to the year, and pleased with the performance and pleased with the execution of the Vulcan Way of Selling and Vulcan Way of Operating.

Jerry Revich: Congratulations to the team. Thanks.

Tom Hill: Thank you.

Operator: We’ll take our next question from Tyler Brown with Raymond James. Please go ahead. Your line is open.

Tom Hill: Hi, Tyler.

Jerry Revich: Hey, good morning. Hey, look, Tom, there’s a lot of hand-wringing about the outlook for volumes, maybe more so on the private side. You guys kind of mentioned it up front, but obviously the 10 years in the housing market has been a little bit stubborn. But just in broad strokes, can you kind of give us an update on how you would kind of characterize the organic rock volumes in ’25, if you kind of parse them between resi, non-resi, and public? Just kind of how do you get to that slightest organic volume?

Tom Hill: Yes, so I think what we’re saying is our guidance of 3% to 5% with the acquisitions, we keep that guidance. We think, as you said, we’ve got challenges on the private side, but we see continued really healthy growth on the public side, both in the highway and in non-highway infrastructure. The non-highway infrastructure is really going well. Q1 shipments were down 1%, but it wasn’t linear. January and February were down 7%, really driven by the extremely cold weather that we saw in the winter. And then we got to March, shipments grew by 9%. It was aided by acquisitions and a little bit easier weather comp. So at this point, I think we stick to our guide of 3% to 5%, challenge private, stronger public. Now remember, that’s probably going to be back half loaded.

If you remember last year, we had a really weather challenge back half of the year, so a lot easier comps going into it. I think if you kind of look at what’s going on in the market right now, project — people ask all the time, are you getting projects canceled or held? Projects that are started or go, they’re not held or not canceled. Now we’re bidding a lot of big projects that people seem to be on the pause button kind of waiting for some uncertainty. You couple that with importantly, I think if you look at our bookings, they’re up substantially on the public side. They’re up slightly on private work. If you look at total backlogs, they’re up year-over-year. So we’re starting to see some water build behind the dam. The challenges, I think, will be on probably the fixed concrete plant side driven by challenges and private demand.

So, a mix bag, a decent start to the year, but again, I’d point you to back half loaded for volumes.

Jerry Revich: Yes, great color, mix bag. Got it. Thank you.

Tom Hill: Thank you.

Operator: We’ll take our next question from Anthony Pettinari with Citigroup. Please go ahead. Your line is open.

Tom Hill: Hi, Anthony.

Asher Sohnen: Hi. This is — hi, this is actually Asher Sohnen on for Anthony. Thanks for taking my question.

Tom Hill: Okay.

Asher Sohnen: I just wanted to ask for maybe an update around kind of your thoughts on administrative policy. Like, have you seen any kind of pressure on the pace of IJA [ph] rollout, project starts, maybe IRA-related projects, from any of the policy attitudes or kind of executive orders we’ve seen. I think last quarter there really wasn’t much of an impact, so just wanted an update.

Tom Hill: No, really no impact to us. I think when it comes to the highway work or public demand, there’s no uncertainty of highway funding at the federal level. IIJ funds are flowing, I’d say, as expected. Actually, the states right now are working on their new budgets. It appears that we’ll see in our states growth over the next fiscal year, which starts kind of mid-summer. You’ve got to remember, obviously, there was also four local road, excuse me, 40 local road and bridge measures in last year’s election, which was an additional $45 billion. So short story is, no impact from as far as funding for infrastructure. We actually see growth in federal, state, and local funding probably for the next couple of years in our markets, including 2025. As I said in my opening comments, you still got two-thirds of the IIJ funding yet to be spent. So, we feel really good about the public side.

Asher Sohnen: Got it. Thanks. That’s good to hear. I’ll turn it over.

Tom Hill: Thank you.

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

Tom Hill: Hi, Keith.

Mary Andrews Carlisle: Good morning.

Keith Hughes: Hey, how you doing? Thanks for the question and great quarter here. I guess the question is on costs and costs were down. Could you just talk about specifically what happened in the quarter and what your outlook on the cost side is for the rest of the year?

Tom Hill: Yes, I would tell you, I would take you back to our original guide on costs. While the quarter was, it was a great quarter. Look, we’re down 3%, excellent performance for our operating teams. We got costs down 3% with slightly lower volumes and very, very cold conditions in January, February. I’m proud of my operators. But I attributed the performance to three things. One, as I said, improving operating efficiencies, the Vulcan Way Of Operating is starting to kick in. We should see that get better as we progress through the year and really get that technology to work in those quarries. Second, I thought we are — I thought our folks did a really good job controlling spending match to diminished ability to operate in the cold weather.

And the third is we simply had some cost pushback. I mean we had some projects because of the bad weather stripping and other things that we just couldn’t do in the quarter So, cost as we always say, it’s going to — it’s lumpy quarter-to-quarter by nature We take the full year we take you back to our guide which is kind of that low to mid-single-digit. Now we’ll do our best to beat that and we got the Vulcan Way of Operating executing and so I think we got a shot at beating it, but at this point, too early to call. I take it back to you guys.

Keith Hughes: Okay, great. Thank you.

Tom Hill: Thank you.

Operator: We’ll take our next question from Kathryn Thompson with Thompson Research Group. Please go ahead. Your line is open.

Tom Hill: Good morning, Kathryn.

Mary Andrews Carlisle: Good morning.

Kathryn Thompson: Good morning and thank you for taking my question today. I wanted to circle back just on two different things that tie into your Vulcan Way of Operating and Selling and the outlook. So the contacts that we speak to in the heavy materials space, we’re finding that there are just have and have not in the construction industrial value chain, but what strikes us is on the heavy material side things are maybe not quite as bad as some of the headlines show. Could you marry also first are you seeing any type of significant project either cancellations or delays? And how does your Vulcan Way of Operating and Selling help differentiate yourself as you deal with a more uncertain environment? Thank you.

Tom Hill: Yes, so on project delays or cancellations, what we started seems to be going. Nothing is canceling once it started. Nothing is put on hold. As I said a minute ago, we are seeing, we are bidding a lot of work, Kathryn, and it’s just not going right away. I think that is good news, a little bit frustrating, but good news because people are assessing projects. I think they just are not willing to pull the trigger until we get rid of some of the macro volatility. And as I said, if I look at our bookings, both on public and private, they’re doing very well. Backlogs are healthy. So I think there is some pent-up demand out there that will go later on once the world gets a little clearer. As it comes to the Vulcan Way of Selling and Vulcan Way of Operating, I attribute the consistency and improvement in unit margins over the last 2-plus years.

That’s what I attribute it to, because it just gives us a lot of clarity and forward-looking information to our sales group and operators of how we run our business. We’re a little bit further ahead in the Vulcan Way of Selling and you’re seeing that in price and you’re seeing that in execution of how we run our markets and ability to see forward in those markets. Both we have operating good quarter, but one quarter does not a trend make. So we got to prove that out. I am pleased with the technology that is now being put to work in our 125, 120 largest operations, very early stages of that. So I think we’ll — again we will have to — a lot of hard work for operators throughout 2025 and beginning of 2026. But it is paying off and we are seeing improved efficiencies.

You put all that together and it just gives us a model that is able to take advantage of tailwinds and offset headwinds of how we consistently execute.

Kathryn Thompson: Right. Thank you very much.

Tom Hill: Thank you.

Operator: We’ll take our next question from Trey Grooms with Stephens. Please go ahead.

Tom Hill: Hi, Trey.

Trey Grooms: Hey, good morning, Tom. Good morning, Mary Andrews, Mark.

Mary Andrews Carlisle: Good morning.

Trey Grooms: And congrats on the good quarter.

Tom Hill: Thank you.

Trey Grooms: So, the profitability has been touched on several times here, but 20% cash gross profit improvement, that’s per unit. That’s about as strong as we’ve seen. And I know there has been some puts and takes. And it sounded like the moderating inflation of course the productivity improvements. But I guess the one piece that I want to try to get my head around on as far as kind of thinking about the cadence as we move through the year would be on the things you pointed out, Tom, around some maybe delayed expenditures with stripping and things like that, that I understand are hard to call when that’s going to happen, especially when weather is not your friend in a given quarter. But is there anything that you could give us on how to think about maybe the cadence of that? Is it going to be lumpy in a quarter here or there? How we should think about just the profitability as we kind of go through the quarters here?

Tom Hill: Sure, I’ll take that kind of in pieces. First of all, volume, as we said, it’ll be back half loaded, both from a timing and a comp perspective. I think that’s how I’d look at volume. On pricing, I think we’ll be pretty consistent. I would guide you to 5% to 7% quarter-to-quarter. I think we’ll be pretty consistent as we operate through the year with price. Cost, it’s a harder call. As I always say, that cost is going to be lumpy. But as an investor, you want it that way because we need to spend the money when we need to spend the money and proactively not try to time it, or you’ll have unpredicted maintenance and higher maintenance costs. So again, volume back half loaded, price pretty consistent, 5% to 7%, cost a little bit lumpy.

Look, we had a great start to the year on cost. I would love to tell you we’re going to beat the guide of low to mid, but we just need to see a few more quarters before we go there. Obviously, operators, that is their goal. That’s what they want to do. But we got to play that out for a little while.

Trey Grooms: Yes, understood. And I guess just with that, if you could maybe touch to the downstream segments, because you’re expecting, I think, some improvement there as well, which we saw some in the corridor. Is that kind of still the thought around downstream?

Mary Andrews Carlisle: Yes, Trey, our downstream businesses are performing really well. We still expect them to contribute cash gross profit of about $360 million for the year. Two-thirds asphalt, probably one-third ready mix. And, importantly, like you said, that’s really a combination of strong unit profitability growth in the legacy operations coupled with the contribution from the acquisition. So both asphalt and ready mix got off to a good start and we still expect that level of profitability for the year.

Trey Grooms: Yes, got it. Thank you. I’ll pass it on. Good luck.

Tom Hill: Thank you.

Operator: We’ll take our next question from Garik Shmois with Loop Capital. Please go ahead.

Tom Hill: Good morning.

Garik Shmois: Oh, hi. Thanks. Hey, good morning and congrats on the quarter. I was hoping you could speak to pricing in a little bit more detail. First, if you could maybe help us understand where you are on integrating Wake Stone and getting pricing there up to the average. And then secondly, just on the midyears, I know it’s early days and you mentioned traction should be similar to prior years, but just curious if you’re getting any pushback or what kind of feedback you’re getting considering the private construction slowdown from your ready mix customers, or are you seeing perhaps some more understanding given the expectations for inflation moving forward?

Tom Hill: Yes, so I think that I would call like I said, I would call pricing as expected, January 1s went well, midyears, we’re just starting those conversation, so to be seen. Pricing is always easier with growing demand. And we’re seeing that you well, we got some challenges on the private side. We’re seeing good growth on the public side, which is always helpful. That’s also a lot more predictable. So I would — I guess I would call it as expected from a pricing perspective and to be seen kind of with midyears.

Mary Andrews Carlisle: Yes, and then just overall, Garik, I think as it relates to the acquisitions, same as expected. Performance was good in the first quarter. We continue to expect the approximately $150 million of contribution for the full year and working hard to capitalize on our Vulcan Way of Selling and Vulcan Way of Operating disciplines to capture synergies with the acquisition as well as improving the legacy business.

Garik Shmois: Okay, makes sense. Thank you.

Tom Hill: Thank you.

Operator: We’ll take our next question from Steven Fisher with UBS. Please go ahead. Your line is open.

Tom Hill: Good morning.

Steven Fisher: Thanks very — good morning. Thanks very much. Congrats on the profit performance. Just wanted to follow-up a question on the bidding, which you’ve addressed a couple of times, where you said some things are paused, which sounds like it’s really on the private side. But within those pauses, how broad would you say those are? Is that mainly very interest rate sensitive, commercial type projects? Or is it also on things that are more perhaps structural in nature, things like the data centers or semiconductors or pharma, bio or whatever seeing these bigger projects that seem to have good memento. I’m just curious how broad you’re seeing that hesitancy on the decision making that move right ahead.

Tom Hill: I’d tell you it’s not real broad. You’re seeing some big commercial projects that people are taking bids on and pull the trigger. As far as public work, it’s a go. Nothing’s being paused there. I don’t think it’s that wide out there. As far as data centers, that is a bright spot for us. We’re doing a lot of data center work right now. 6% of the data centers that are under construction are in our footprint. If you look at what’s coming up in data centers, 80% of the proposed data centers are within 30 miles of a Vulcan quarry. So that’ll be a really bright spot for us and one that is a go. I think it would be interesting to watch the data center over the next few years, because that’s going to lead to substantial power generation construction, which will be very aggregate intensive for us over the next 3 to 5 years.

And so that will too, will be a bright spot coming on nonresidential. So it’s — the pauses is big commercial. It was big commercial work. I don’t think it’s that widespread. It’s just interesting that you see some of those big projects will bid it and this doesn’t — it’s the timings just push back. I think for me it’s good news because sooner or later. It’s going to go.

Steven Fisher: Terrific. Thank you.

Tom Hill: Thank you.

Operator: We’ll take our next question from Timna Tanners with Wolfe Research. Please go ahead.

Timna Tanners: Hey, good morning.

Mary Andrews Carlisle: Hi, Timna.

Timna Tanners: I wanted to ask about not the direct impact of tariffs. I recognize you said those were limited, but the impact of the tariff-related uncertainty perhaps on your customers and acquisition candidates. Just wondering if there’s anything incremental you can touch on there, please. Thanks.

Tom Hill: Yes, so to be clear on tariffs, we’re constantly evaluating the possibilities of our impact on our business. I think our model really limits the direct impact for Vulcan. At this point we don’t think tariffs move the needle on our cost outlook. We got — remember, we own our largest cost which is cost component which is the rock in the ground. And then you also got to remember our model allows us to rapidly offset any cost volatility. And because you saw that when we had breakneck inflation which is probably a lot bigger impact than the tariffs. A watch as you said, a watch for us on tariffs is the cost impact of private construction. I think that was a little early to call, but it is something that everybody that I think we need to be thoughtful of.

Timna Tanners: Okay. But regarding like M&A candidates, are they acting differently because of the uncertainty? Or can you speak to your customers’ impact? Again, recognize that the minimal impact direct is great.

Tom Hill: Yes. On the heavy construction business like ready mix and asphalt, I don’t see a big impact at this point as far as customers are concerned. As far as M&A, we call out some smaller deals that we are talking about right now. I don’t think tariffs are having a big impact. What I do think is with M&A, it typically slows in times of volatility, and you’re seeing that right now. So we may have to let the wool spin a little bit before you see substantial M&A, but I think that’s a temporary pause.

Mary Andrews Carlisle: Yes. And I think, Timna, importantly for us, we have the balance sheet obviously very well positioned for future growth as M&A opportunities do arise. The key for us is obviously to continue to be disciplined as we evaluate those so that we can deliver attractive returns on capital over time and continue to grow our leading aggregates positions. But we like our position and are well prepared to act in the M&A market if any of this uncertainty does impact that.

Timna Tanners: Got it. Okay. Thanks again.

Tom Hill: Thank you.

Operator: We’ll take our next question from Jean Veliz with D.A. Davidson. Please go ahead.

Tom Hill: Hi.

Jean Veliz: Congrats on the quarter and thank you.

Tom Hill: Thank you.

Mary Andrews Carlisle: Good morning.

Jean Veliz: Yes, good morning. I was — you mentioned that on the private bookings was up slightly. Could you do you mind commenting a little bit about what kind of works are you seeing that are picking up slightly through your bookings?

Tom Hill: Yes. I think the bright spot on the private side is data centers. And it’s — majority of those are in our footprints. I think on the public side, it’s obviously highway work is up. But a really bright spot for us is infrastructure. The non-highway work, which is water ports and airports. Those bookings are up substantially and again a bright spot. But on the private side, I think two things is that data centers are up and we’re starting to see kind of the bottom of warehouses. We think we hit the bottom of that. So it’s not as big a drag as it was maybe a year ago.

Jean Veliz: And with the common owned warehouses, does that offset some of the residential? Or is this just a nice pickup that you hope to carry on through ’26 into ’26?

Tom Hill: I think the offset of — the offset of single-family is really on the public side, is really highways and non-highway infrastructure. I mean that has helped a little bit, but the real offset is the public demand.

Jean Veliz: All right. Great. Thank you so much.

Operator: We’ll take our next question from Michael Feniger with Bank of America. Please go ahead. Your line is open.

Michael Feniger: Hey, guys.

Tom Hill: Good morning.

Michael Feniger: Good morning, Tom. Good morning, everyone. Thanks for having me in. I just wanted to ask Tom with the conversation around tariffs, if in terms of just your own price cost. I mean, if contractors out there are bracing for higher input costs for materials, equipment, other areas, does this give you cover to be able to raise pricing even if your own costs, it looks like are actually trending lower when we see what’s happening with oil prices today and diesel. So I’m just wondering with the amount of aggregates that is in these projects, if all these other items are seeing inflationary and your customers are bracing for that, how do you kind of think about that when it comes to pricing relative to your costs that might not be going up to that degree?

Tom Hill: Well, I think, first of all, we don’t price on cost. We price on earning it with our customers. I think when you look at — if you look at tariffs, you’ve also got to put a little bit in perspective of what we saw with inflation over the last 2 or 3 years, which was breakneck. And the market absorbed it. I think the tariff thing will shake out. I think that — I don’t think it will have an impact on pricing when it comes to aggregates.

Michael Feniger: Thank you.

Operator: We’ll take our next question from Philip Ng with Jefferies. Please go ahead.

Jesse Barone: Hey, good morning. It’s Jesse Barron on for Phil. Just a question on asphalt. Obviously, oil has come down here in the first quarter and then taken another step down in 2Q. Just curious kind of how that kind of translates into your own pricing and then on the cost side, kind of what the lags are there? Thank you.

Tom Hill: So I thought asphalt had a good performance in the quarter despite the cold weather. The cash gross profit was up 24%. We did have some savings with liquid, which is about $3 million, but that product line continues to perform extremely well. And I think that with the public demand growth that we are seeing, it’s a good story for the asphalt business and a good story for aggregate component of the asphalt business, so a real support for us.

Jesse Barone: All right. Thanks. I will turn it over.

Operator: We’ll take our next question from Michael Dudas with Vertical Research. Please go ahead.

Michael Dudas: Thank you, operator. Good morning, Tom, Mary Andrews and Mark.

Tom Hill: Good morning.

Mary Andrews Carlisle: Good morning.

Michael Dudas: For Mary Andrews, you highlighted in your prepared remarks your cash conversion, which is very solid. Maybe you can talk about for the next several quarters how that looks, any meaningful changes from what we’ve seen in history. And as you think about CapEx, growth versus maintenance and this deferred or maybe delay in M&A, given the volatility that we’ve seen, maybe we’ll see more in stock prices, and you did buyback some stock, but you had the debt repayment. Is that something that’s certainly on the table maybe in near-term if we still get that volatility on the repurchase side? Thank you.

Mary Andrews Carlisle: Yes. So I think first, as it relates to cash conversion, we’ve — that has stayed at an attractive level. We would expect that to continue going forward. From a CapEx perspective, for 2025, we still plan to spend the $750 million to $800 million that we had communicated. As you know, that’s a bit higher than last year, primarily due to some spending on some large plant rebuild projects. But I would tell you, we’ve been consistently reinvesting at what we believe to be appropriate levels for the needs of the business. So I wouldn’t anticipate any big changes there. We are always evaluating lots of different growth CapEx opportunities. And to the extent that we believe those can deliver good growth and attractive returns over time, we will evaluate those as they come up. And it could be a good use of capital going forward depending on what the other opportunities are, but really no changes to our approach to capital allocation at this point.

Michael Dudas: Thank you.

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

Angel Castillo: Hi, good morning. Thank you for taking my question and congrats on the strong quarter. Just two …

Tom Hill: Thank you.

Angel Castillo: … quick ones for me. Just first on the power generation opportunity, Tom, that you mentioned, can you just give a sense of kind of the order of magnitude of how much more kind of intensity in terms of aggregates power generation might be? And just to clarify, is that kind of just the nuclear side? Or is there broader kind of power generation being more aggregates intensive? And then maybe one last one on price would just be you talked a lot about it from the VMC side, but curious if you’re seeing anything in terms of competitors’ discipline or mom and pops and kind of trends in how they’re going about mid years?

Tom Hill: I’d take the pricing question first. On the midyears, it’s a little early on those as we are just beginning those conversations. I think that when it comes to midyears, we have those conversations every year and have those have had that probably for the last 4 years. So I guess no surprise and to be expected and nothing has changed as far as timing or the conversations on midyears. As far as power generation, I would tell you it’s probably going to be more of a late ’26, ’27 play and go on for probably about 5 years. Those will be extremely aggregate tenses [ph]. Those are big, big projects. I expect more gas generation power projects than nuclear early on, maybe nuclear later, but too early to call on that one.

But those will be and they’ll be in the markets like Texas, Georgia, Virginia, Arizona, Illinois where the big data center projects are, as where I expect a lot of those and even some in other states. But there’s just a lack of power generation that we’re seeing right now. So and if you talk to the power generation companies, they’re just going to have to expand. And I think we’ll see that over the next 5 years.

Angel Castillo: Very helpful. Thank you.

Operator: We’ll take our next question from David MacGregor with Longbow Research. Please go ahead.

David MacGregor: Yes. Thanks for taking the questions and congrats on the strong quarter.

Tom Hill: Thank you.

David MacGregor: I guess I wanted to just follow-up on the discussion around tariffs and you are noting that it’s not going to be very impactful to the business, but I’m just wondering about the downstream and ready mix. And you’ve got tariffs that are likely to hit Mediterranean, Southeast Asian imports as well as port levies on many of these cement carrying vessels. I’m just wondering how you expect that to come into play in terms of the ready mix market and how you manage your margins through that? And then just secondly, if I could just ask about the cost performance, which was really impressive. But obviously, petroleum, liquid asphalt, you’re getting a break there. But anything going on in terms of maintenance and repair, subcontracting services or parts? Any kind of moderation inflation in those boxes as well?

Tom Hill: So on the cost piece first, we’ve seen some moderation on inflation and it’s not coming down. It’s just not going up as fast as it was a year or two ago. So that is helpful. I think operating efficiencies has helped that too. And then as I said, we actually just pushed some costs back in the year because we was too cold to do some projects that we wanted to do. As far as tariffs, I don’t see a big impact on our business or our the ready mix or the asphalt business on tariffs at this point. Obviously, that could change, but at this point, we don’t see a big impact on it.

David MacGregor: Thank you.

Tom Hill: Thank you.

Operator: We’ll take our next question from Brian Brophy with Stifel. Please go ahead. Your line is open.

Andrew Maser: Hello. This is Andrew Maser on for Brian. Thank you for taking my question. I just wanted to ask another on the plant automation journey. I think earlier in the call you said that these tools are now implemented in 125 locations or 75% of volumes. I was wondering where you expect these numbers to be by the end of this year or next year? And then is there any way to frame the benefits that you’re beginning to see from these initiatives either from a volume throughput or unit cash cost savings perspective? Thank you.

Tom Hill: Yes. So what I would — let me be clear, we put the instrumentation in those the top 100, 120 plants. We have not fully implemented that instrumentation at this point, probably maybe 20%, 30% of the plants are we getting the full efficiencies out of. And I think it will take this year a little bit into next year before we can match the technology to the operating abilities and the production. And what you’re trying to do there is maximize throughput, minimize downtime and maximize throughput of critical sizes, whether it’s asphalt rock or concrete rock. And that’s where the efficiencies come in. Again, early stages of getting the full benefit out of that. Too early to call what that means except for degrees of good.

But each plant, when you look at these, you may get 4% out of one plant, 10%, 12% efficiencies out of another plant, way too early to call about what that means from a tons per hour, tons per critical size hour or dollars per ton benefit. But it — it’s sure it’s going to help. So that then that’s why we do it.

Operator: And there are no further questions on the line at this time. I will turn the program back to Tom Hill for any additional or closing remarks.

Tom Hill: Thank you for your time this morning. Thank you for your interest in Vulcan Materials Company. We hope that you and your families stay safe and healthy, and we look forward to talking to you throughout the quarter. Good morning.

Operator: And this does conclude today’s program. Thank you for your participation and you may now disconnect.