Vulcan Materials CO Q1 FY2025 earnings call

• The company's two-pronged growth strategy focuses on compounding profitability in the organic business and adding strategic assets. Adjusted EBITDA improved 27% with a 420 basis points expansion in margin. - Aggregates shipments were down 1% YOY but offset by acquisitions and January price increases. Downstream businesses had strong performance. - Public demand remains healthy with IIJ-related spending as a catalyst, while private demand faces challenges. - Capital expenditures in the quarter were $105M, with full-year expected $750M-$800M; SAG expenses in line, full-year $550M-$560M.

In the first quarter, the aggregates business saw a 20% year-over-year improvement in cash gross profit per ton. Aggregates freight-adjusted price improved 7% on a year-over-year basis and 8.5% on a mixed adjusted basis. Downstream businesses performed well: asphalt cash unit profitability expanded by 19%, concrete by 77%, and total cash gross profit improved by over 50% through same-store unit profitability and prior year acquisitions. Aggregates shipments were 1% lower than the prior year, but acquisitions and January price increases helped. Trailing 12 months, aggregates cash gross profit grew to $10.99 per ton, within a penny of the $11 to $12 goal.

• Expect to deliver $2.35 billion to $2.55 billion of adjusted EBITDA in 2025. - Volume is expected back half loaded. Price is anticipated to be consistent at 5%-7% quarter-to-quarter. Cost is lumpy. - Downstream businesses are expected to contribute approximately $360 million of cash gross profit for the year.

• Tariffs may cause inflationary pressures, but not currently material to earnings. - Macro volatility, trade policy uncertainty, and interest rate unclear trajectory pose risks to private demand. - M&A activity may slow due to market volatility.

Q: Trey Grooms from Stephens asked about downstream segments and cadence.

A: Mary Andrews Carlisle said downstream businesses are performing well, expected to contribute ~$360M cash gross profit for the year, a combination of legacy unit profitability and acquisitions.

Q: Garik Shmois from Loop Capital asked about pricing integration of Wake Stone and midyear feedback.

A: Tom Hill said pricing was as expected, midyear discussions ongoing, no big impact from tariffs on customers or M&A currently but M&A may slow in volatility.

Q: Steven Fisher from UBS asked about bidding hesitancy and data centers.

A: Tom Hill said no broad project delays/cancellations, data centers are a bright spot with growth, pauses on big commercial work due to macro volatility.

Q: Timna Tanners from Wolfe Research asked about tariff impact on M&A and customers.

A: Tom Hill said minimal direct impact on Vulcan, M&A may slow in volatility but balance sheet is well positioned, customers not seeing big impact currently.

Q: Jean Veliz from D.A. Davidson asked about private bookings and bright spots.

A: Tom Hill said private bookings up slightly, bright spots include data centers and stabilizing warehouse activity.

Q: Michael Feniger from Bank of America asked about pricing relative to costs and tariffs.

A: Tom Hill said they price on earning with customers, tariffs not moving cost outlook much, market absorbed prior inflation.

Q: Jesse Barone from Jefferies asked about asphalt pricing and oil lags.

A: Tom Hill said asphalt had good performance despite cold weather, cash gross profit up 24%, public demand growth supports asphalt business.

Q: Michael Dudas from Vertical Research asked about cash conversion, CapEx, and M&A.

A: Mary Andrews Carlisle said cash conversion attractive, CapEx expected $750M-$800M, disciplined with M&A opportunities.

Q: Angel Castillo from Morgan Stanley asked about power generation and midyear pricing.

A: Tom Hill said midyear pricing discussions ongoing, power generation to be a late 2026-2027 play, aggregates intensive.

Q: David MacGregor from Longbow Research asked about tariffs on downstream and cost moderation.

A: Tom Hill said cost moderation seen, tariffs not materially impacting downstream, maintenance and repair costs not majorly affected.

Q: Andrew Maser from Stifel asked about plant automation journey.

A: Tom Hill said instrumentation in top plants, early stages of full efficiencies, too early to call specific benefits but expected to help.