Vulcan Materials CO Q1 FY2026 earnings call

• Safety is a fundamental expectation, with industry-leading safety performance carried into first quarter. • Teams executed well on commercial and operational plans, generating solid adjusted EBITDA growth. • Aggregate shipments increased due to improving demand and fewer extreme weather days. • Discussions underway for midyear price increases. • Focused on expanding reach through acquisitions and greenfield projects, with several bolt-on acquisitions expected to finalize. • Demand expectations: strong public activity, improving private non-residential opportunities, with trailing 12-month highway and public infrastructure awards up. • Legislators working on highway funding reauthorization, expected to provide higher funding. • Private non-res benefits from data center activity and energy build-out. • Residential construction impacted by affordability but long-term need for housing exists. • Carrying good momentum into the year, expecting to deliver $2.4 - $2.6 billion of adjusted EBITDA for full year. • Earnings from aggregates-led business driving attractive cash generation, deployed for various purposes including capital expenditures, capital returns to shareholders, and debt repayments. • Focused on investing in technology and talent to drive business performance and improve return on invested capital.

Aggregate-led business: Generated $447 million of adjusted EBITDA, a 9% increase over prior year. Gross profit margin expanded in each segment. Aggregate shipments increased 5% compared to prior year. On a mix-adjusted basis, aggregate freight adjusted price improved 4% over prior year's first quarter. Aggregate freight adjusted unit cash cost of sales increased 4% compared to prior year. Trailing 12 months cash gross profit per ton was $11.38 per ton, aiming for $20 per ton. Earnings from aggregates-led business continue to compound, generating $1.8 billion of cash from operations over last 12 months. Capital expenditures: ~70% for fixed plant, mobile equipment, and land projects at existing facility; ~30% for greenfield and other growth projects. Capital returns to shareholders totaled over $800 million over last 12 months. Total debt at quarter end was $4.6 billion, ~$350 million lower than a year ago, resulting in net debt to adjusted EBITDA leverage of 1.9 times. SAG expenses in first quarter were 2% lower than prior year, trailing 12 months expenses 7% of revenue, 20 basis points lower than prior year period. Trailing 12 months return on invested capital improved 30 basis points to 16% at quarter end.

• Expect to deliver between $2.4 and $2.6 billion of adjusted EBITDA for the full year. • Second quarter expected to feel the squeeze of higher diesel most acutely before mid-year price increases flow through. • Full-year cost expectations with diesel impact considered, but still believe can deliver low single-digit cost growth, with cost expected to be higher in first half and lower in second half. • Confident in 2026 returning to growth based on public and private side opportunities, with visibility into backlog and bookings. • Mid-year price increases sent out in all markets, with expectation of pricing accelerating through remainder of year. • Anticipate smooth transition between highway funding programs given unspent IIJ funds.

• Geopolitical uncertainty and incremental near-term headwinds in terms of energy input cost. • Diesel price volatility and its impact on operational costs such as stripping, loading, hauling, and loadout processes. • Potential project cancellations or delays due to geopolitical events like the Iran war (though not seen as of yet).

Q: Ronnie, could you walk us through key puts and takes in the quarter across price, volume, and cost, and how you're thinking about these drivers ahead?

A: Volume and price had healthy acceleration, with pricing at lower end of full-year guidance but expected to accelerate. Cost growth kept to 4% due to team execution.

Q: Confidence in reiterating four-year guidance given diesel cost impacts?

A: Diesel price impact on usage, with ability to fluctuate stripping, loading, hauling processes, and mid-year price increases to capture headwinds.

Q: Detail on mid-year increases, magnitude, percentage of markets, and other cost impacts?

A: Mid-year increases sent out in all markets, asphalt side less resistance, concrete side more spirited conversations but long track record of recovering cost.

Q: Near-term pricing expectation, say Q2, and cost side?

A: Pricing trajectory backward half more accelerated than first half, cost expected to be higher in first half, lower in second half, still confident in full-year low single-digit cost guidance.

Q: Data centers and volumes, other heavy or public markets?

A: Data centers driving volume acceleration, public markets with strong contract awards, advantage footprint in right markets.

Q: Federal Highway Bill reauthorization, funding sizes and cadence?

A: Sources indicate funding sizes $600 - $700 billion, with negotiations between R's and D's, expecting bill to be higher than current, with smooth transition expected.

Q: Choppiness in M&A sellers, markets targeted?

A: Active M&A, targeting high growth areas, greenfield and downstream investments, several bolt-on acquisitions expected to finalize.

Q: Four-year guide and second quarter expectation with diesel?

A: Four-year guide accounts for diesel impact, second quarter expected to continue as planned with normal weather and project speed.

Q: Non-res business backlogs and demand in other verticals?

A: Data centers leading private non-res, some green shoots in warehousing and other manufacturing/commercial projects.

Q: CR impact on 2027 and pricing response to inflation?

A: CR not expected to change 2027 view due to multi-year projects and state creative funding, pricing expected to continue building momentum as in 2022 but with different demand environment.

Q: Transportation costs and rail usage?

A: Delivery surcharges in place to capture costs, rail yards in high-growth markets to capture value, delivery is pass-through.

Q: Quarter cadence, April outlook, project cancellations due to Iran war?

A: Quarter cadence played out as expected, April going as expected, no project cancellations or delays seen due to Iran war as of yet