Vulcan Materials Stock

Good morning, everyone. Welcome to the Vulcan Materials Company Second Quarter 2026 Earnings Call. My name is Bo 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 today at the company's website. [Operator Instructions]

Now I would like to turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Please go ahead, sir.

Thank you, operator. I'm joined today by Ronnie Pruitt, Chief Executive Officer; and Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer.

Before we begin our prepared remarks, please note that a press release and a supplemental presentation related to this call are available at our website, vulcanmaterials.com. Today's discussion may include forward-looking statements, which are subject to risks and uncertainties. Details on these risks, other legal disclaimers and reconciliations of any non-GAAP financial measures are defined and described in our earnings release, supplemental presentation and other filings with the Securities and Exchange Commission.

For the question-and-answer session, we kindly ask that you limit your participation to 1 question. This will help us address as many questions as possible during the time we have available. And with that, I'll turn the call over to Ronnie.

Thanks, Mark, and thank you all for your interest in Vulcan Materials. The resiliency of our aggregates-led business and the importance of our strategic disciplines are evident in periods of inflationary pressure. I am proud of how our commercial and operating teams have navigated the first half of the year to deliver adjusted EBITDA growth and aggregate cash gross profit per ton expansion. And most importantly, they did so while keeping each other safe.

In the quarter, we generated $654 million of adjusted EBITDA, approximating the prior year despite energy headwinds of almost $40 million. Our teams executed well, earning higher prices for our products in each segment and driving operational efficiencies to help offset inflationary increases in our input costs. Second quarter aggregates cash gross profit per ton topped $12 and was $0.14 higher than the prior year. Shipments increased 1% compared to the prior year and varied widely across geographies depending upon weather conditions.

Aggregates freight-adjusted selling prices moved higher both sequentially and year-over-year. On a mix-adjusted basis, average selling prices in the quarter improved 5% compared to the prior year, with improvement widespread across geographies. Our commercial teams continue to execute our Vulcan Way of Selling disciplines to capture value for our products and deliver solutions for our customers. Excluding diesel, Aggregates freight-adjusted unit cash cost of sales increased 3% compared to the prior year.

Our Vulcan Way of Operating disciplines were executed well to drive efficiencies and control spending even with lower-than-expected volumes in many areas due to wet weather. From coast to coast, our teams are aligned with a relentless focus to drive compounding improvements in the profitability of our existing portfolio and to win the future in Aggregates.

Winning in the future will also mean continuing to strategically add to our portfolio through acquisitions and greenfield projects. Both of these growth pipelines remain active, including numerous acquisition opportunities likely to be finalized this year. The strength of our balance sheet gives us the financial flexibility to pursue those opportunities that will drive the most value for our shareholders.

During the second quarter, we completed several strategic portfolio actions. We finalized the divestitures of our concrete operations in California and our noncore operations in the U.S. Virgin Islands generating cash proceeds that can be redeployed to strategically grow our Aggregates business. A clear example was our acquisition of an aggregate operation from Brannan Sand & Gravel in early June. This acquisition expanded our reach into Southern Colorado and strengthen our distribution network in Dallas-Fort Worth. Our team is already hard at work capturing synergies and driving value from this strategic acquisition.

In terms of the demand environment, what I see ahead of us is similar to what the views that I shared on the last call. We still expect strong public activity in our markets and improving private large project opportunities to drive year-over-year shipments growth in 2026.

Trailing 12 months highway awards in Vulcan markets remain up double digits from a year ago, far outpacing non-Vulcan markets. The same is true for public infrastructure awards, which are up 20% year-over-year in Vulcan markets, yet down in other markets. The amount of work in the pipeline bodes well for public shipments for the next several years, providing good demand visibility, which is important for a healthy pricing environment.

With the August recess upon us, as expected, there will likely be a continuing resolution to fund federal highway spending while Congress completes this work. The House Transportation and Infrastructure Committee passed its Build America 250 Act with overwhelming bipartisan support in late May. The bill enhanced the focus on aggregate intensive construction and shifted to our formula first distribution approach compared to the infrastructure investment and Jobs Act, both changes benefiting Vulcan. While the final text and timing remain uncertain, we anticipate a smooth transition between funding programs, given the significant amount of IIJ funds that are yet to be spent.

On the private side, large project opportunities continue to drive nonresidential activity, particularly data centers. Our footprint is well aligned with data center activity in addition to power infrastructure expansion, recently announced LNG projects and other manufacturing opportunities. Our scale, quality and customer service make us a supplier of choice for these large complex projects.

Residential construction continues to struggle due to the ongoing lack of affordability. Longer term, there remains a fundamental need for additional housing and our footprint is well positioned to benefit from an eventual recovery.

With a continued expectation of modest growth in aggregate shipments in 2026, a healthy pricing environment and a solid year-to-date execution from our operating teams, we reiterate our full year adjusted EBITDA guidance range of $2.4 billion to $2.6 billion.

Now I'll turn the call over to Mary Andrews to provide some additional commentary on our second quarter performance before we take your questions.

Thanks, Ronnie, and good morning. The strong cash generation of our business, coupled with the recent proceeds from divestitures Ronnie commented on earlier, have the balance sheet extremely well positioned for us to continue to pursue our disciplined and balanced capital allocation strategy, reinvesting in our business, growing our franchise through strategic acquisitions and returning capital to shareholders through both dividends and share repurchases.

Through the first 6 months of this year, we have invested $370 million in maintenance and growth capital projects, $75 million in a strategic aggregates acquisition and returned over $0.5 billion to shareholders, including $400 million of share repurchases. We continue to expect between $750 million and $800 million of capital expenditures for the full year.

During the second quarter, we used cash on hand to pay down our outstanding commercial paper balances of approximately $200 million and maintained approximately $300 million of cash at quarter end. At June 30, net debt to adjusted EBITDA leverage stood at 1.7x, providing plenty of capacity to support an active acquisition pipeline.

We are focused on improving our return on invested capital as we continue to compound profitability in our existing business and make disciplined capital allocation decisions. Our trailing 12-month return on invested capital improved 20 basis points from a year ago to 16.1% at quarter end.

SAG expenses in the first 6 months were 2% lower than the prior year. Trailing 12 months expenses of $558 million or 6.9% of revenues, 30 basis points lower than the prior year period. We continue to closely manage our overhead costs.

As Ronnie said, we are pleased with the first half execution and results that our teams delivered and are reaffirming our full year adjusted EBITDA outlook.

Now before we take your questions, I'll pass back to Ronnie to provide an update on Vulcan's arbitration against Mexico.

Thanks, Mary Andrews. As previously disclosed, Vulcan pursued an arbitration against Mexico under the North American Free Trade Agreement, commonly referred to as NAFTA. We received the order on Monday. All 3 members of the tribunal found that Mexico's actions were arbitrary, grossly unfair and unjust. All 3 members of the Tribunal also found that numerous actions taken by Mexico clearly violated NAFTA, including those related to the claims associated with a large majority of damages. However, the 2 members of the Tribunal who wrote the majority opinion awarded us only immaterial damages. The third member decent, a disagreeing with the low damages award.

As we look ahead, we remain focused on driving improved profitability in our business, and I would like to thank the men and women of Vulcan Materials for a great performance during the quarter, controlling our costs and expanding our cash gross profit per ton while keeping each other safe. Now Mary Andrews and I will be happy to take your questions.

[Operator Instructions] We'll go first this morning to Anthony Pettinari with Citi.

Ronnie, can you talk a little bit more about the puts and takes on demand? And maybe specifically, what gives you confidence in the second half of the year to meet the full year volume guidance?

Yes. Anthony. I would say, first of all, demand is tracking as we expected. And we're in outdoor sports. So we're always going to have some weather disruptions. But I would say, overall, tracking as expected. As we entered the year, we had healthy backlogs. And as we sit here today, we have healthy backlogs, and our quoting activity continues to remain very robust.

On the positive side, trends across public infrastructure, public highways, data centers and other forms of manufacturing are all good. And we've also seen a pickup in LNG projects, along with energy generation and power infrastructure expansion, which is really being driven by the data centers. Conversely, we continue to see single-family and residential growth remain weak. But other parts of light non-res, they're going to follow rooftops. And so that's another area that as we see single-family start to recover, I think like nonres will follow. But I will also remind you of our advantaged footprint. I mean, where we're at and that matters. And when we start seeing single-family recovery, I like our footprint, and I think we're in a really good position to capture that.

We go next now to Tyler Brown with Raymond James.

So I've got a couple of questions on cost. But cost performance was pretty solid here in Q2. It maybe came in slightly better than the guidance despite fuel and let's call it, some weather friction. But Mary Andrews, if we look at the full year guide, it seems to imply that, that cost inflation is maybe a bit better in the second half than the first half. Can you just give us any color on what's kind of driving that and your just your confidence in hitting those trends?

Yes, Tyler. Thank you. I'll address the first part, and then I'll give it to Mary Andrews to talk about some of the numbers. But as I look at our Q2 performance, it was really good. And I would say it was better than a lot of expectations. And we dampened the impact of a $26 million diesel headwind. And we really did that through our Vulcan Way of Operating disciplines. I mean when I look at our production efficiencies that we continue to focus on VWO as well as our labor scheduling and how we continue to focus on how we're going to get the most out of that and really in the backdrop of wet weather that does impact our cost as well.

So I'm very pleased with where we're at. And I think VWO continues to be something that is evident in our results and the productivity is that. For the rest of the year, I think there's other levers that we'll continue to look at as far as oil continues to be inflated. So we're going to continue to really think about our operating efficiencies and how we drive that through our process intelligence and labor efficiencies. But also there's things, levers we can pull with our stripping. And so we're focused on things that are heavily consuming of diesel. So stripping is one of those. We'll continue to focus on that. Also leverage our liquid asphalt storage that we've had. We've got one in Southern California. We recently closed on another one in Northern California. And that's another way for us on the downstream business to fight some of those headwinds of volatility in cost.

Yes. And Tyler, just to add to what Ronnie covered on some of the levers that we have in the second half, another dynamic in the second half is how unusual the second half of last year was from a cost standpoint, particularly the fourth quarter. We faced unusually concentrated repair costs and higher insurance costs last year that we don't expect to repeat this year. So those anomalies and some benefit of seasonally higher tonnage in the second half compared to the first are also things that should drive both a much improved year-over-year performance and an improved absolute cost performance in the back half, even as Ronnie said, even as those diesel prices remain sticky quite likely and right now at levels still similar to the second quarter.

And one other thing I'd mention is since we're talking about cost is our year-to-date SAG expense, which we've maintained at levels lower than last year. In fact, I would expect full year SAG expenses to probably be $10 million to $15 million lower now than the initial range we provided of $580 million to $590 million back in February. So overall, we are pleased with the cost execution in the first half and confident in a solid performance in the second half as well.

We'll go next now to Trey Grooms with Stephens.

Ronnie, you guys talked about some midyears out there in some market, maybe your price increases in some markets and given the diesel backdrop. But any update you can give us on midyear increases. And then if I could sneak just one more in, just given the Mexico situation. I really appreciate your prepared comments there. But any additional color you could give us at this time around the tribunal's decision there. I think they said unfair and unjust, which is I think, an understatement here. But at any rate, any additional color there?

Yes, Trey, thanks. I'll take the second part first, and then I'll talk about midyear's second. So with regards to Mexico, really what I said in my prepared remarks, I'll reiterate from a standpoint of the decision was disconcerting to us. All 3 arbitrators agreed that Mexico had clearly violated NAFTA, yet they awarded immaterial damages. And so that's really all I'm going to say about that. What I will also say, though, is that, look, we've continued to move forward with running our business. And even since the illegal taking of Calico back in 2022. We've successfully continued to supply the Gulf Coast and really meet the needs of our customers in a very dynamic market.

And I would say overall, our EBITDA has grown more than 50% over those 4 years. And so we've done things to continue to grow the company. I'm very pleased with the efforts that our people have given for that. When I look at the Gulf Coast today, it's very -- it's still a very dynamic area, and it's still going to be challenged on how material gets to the Gulf Coast. And so we've still got the best distribution network along the Gulf Coast, and we're going to continue to serve that through different forms of fashions. And so we remain very well positioned to supply our customers there. And remember, we still own the land, and we still own the land around the port, which are 2 very valuable things when it comes to Mexico.

With regards to your second part -- or your first part, really your pricing question. When I look at midyear, I would say they went as expected. And when I really compare them year-over-year, and so that's -- we do a lot of comparisons. Sequentially, I mean we're almost 2x better than we were last year. And so we intentionally pulled midyears forward. We pulled those forward to June. And I think we've had success in that, that shows in our mix adjusted as we sit today of 5% on our pricing.

I would tell you, our biggest lever to overcome fuel continues to be price. And so what you will continue to see from us is disciplined around that. And I'm confident in our commercial team, our execution on Vulcan Way of Selling that we will continue to use price as our biggest lever. So if we continue to see fuel being as sticky as it is, I think you'll see us continue to be very aggressive in moving price throughout the remainder of the year.

Great. And I did want to say hats off on the costs. You guys did a great job.

We'll go next now to Philip Ng with Jefferies.

Ronnie, great color. Any more color in terms of how demand is shaping up in July? I know certainly, you had some weather-related issues, color on that front. And you talked about orders and backlog is quite good right now, good momentum. Can you kind of quantify how things were to start the year? And I guess, how orders and backlogs, perhaps from a growth standpoint, you're shaping up today?

Yes. I would tell you that as we sit today, backlogs look very similar as they did as we entered the year. And a lot of that is the puts and takes of where weather happens, geography matters and so where those weather patterns, we had probably abnormal weather in Texas and a little bit of abnormal weather in the Southeast. As we sit here in July, I would tell you, we've continued to see strange weather patterns, but shipments are continuing kind of as expected. But there's a lot of puts and takes around that. And where it's raining at maybe drive somewhere else. And so that's why we continue to look at the mix adjustment of the geography impact because all markets are not the same.

As I look forward and thinking about the dynamics of where we're at with the end users, I mean I look at some of our starts momentum and referring to Dodge awards. On the highway side, I mean, North Georgia, on a trailing 12 is up 189%. I mean those are -- now these are large dollar projects, and we can give you some specifics of those projects. But a lot of this is the 400 toll roads and some of this public-private partnership and other ways of looking at things that are funding mechanisms outside of the federal program. Total infrastructure in the Gulf Coast is up 360% over the last 12 months. So a lot of public -- that's where we get our confidence in public.

On the private side continues to be really driven by data centers, but we are seeing some other manufacturing things. And I would tell you that I think the power side of power generation and power infrastructure is going to continue to be a tailwind as we move throughout the data center buildout. And those are projects that are being reflected both in our quoting activity as well as some booking activity. We also talked about some LNG projects. We've seen that along the coast as well. And so those are different types of projects that we've seen in the past. Those have been relifted. And really, the only part that we see continue to be on the negative side is single-family.

And so I believe that with the 2 legs of our stool, we continue to be confident in a year of growth. And if the other leg of the stool would kick in, I think, again, our footprint is a really dynamic footprint, very advantaged and we would get the benefit of that.

Ronnie, any color on warehouses? You really haven't talked much about that.

Yes. I mean I would tell you, we're seeing a couple of green shoots in very specific markets, but overall, warehousing continues to be overall flat. I mean, we're not seeing any green shoots and warehouses from an overall perspective. But I do think it's one that as we see that kind of recovery as well, again, our footprint is very advantaged on that as well.

We'll go next now to Steven Fisher with UBS.

Congrats again on the cost management. Just to follow up on the discussion about the large project activity. We too are hearing a lot about the momentum there. Just curious what that might look like from a timing perspective for aggregates. And based on kind of what you're seeing in hearing, is there a particular time frame when you think those will start to be more visible in your shipments? Is that sort of just on a rolling basis? Or is it more that these things are going to take a little time to ramp up. So maybe like first half of '27 or second half of '27? Just curious when we could really start to see these big projects really kind of show up in the shipments.

Yes. Thank you. Great question. I would tell you, we see them ever tell you, I mean -- and it is going to be more of that consistent approach, even though you think about the way these bookings come into us and the influence they can have on our backlog, when you actually go to put the work in place, it's still a customer out there that's taking the material, putting it down on a public job or on a private job, and it still takes their scheduling and their tools to do that. And so in the end, you're not going to see these big massive swings because a bigger job starts 1 place. And you're always wrapping 1 up, and you're starting another one.

And so we love slow and steady. I mean, especially with the compounding interest of the nature of our business and how we're focused on growing our cash gross profit per ton. And so I would tell you, our backlog shapes up as we see it today. It's very predictable. And I would tell you it's slow and steady for us as what we would want to continue to see.

We'll go next now to Keith Hughes with Truist.

What kind of mix-adjusted price are you anticipating in the guide in the second -- second half of the year given the new year have been rolling in all second quarter?

Yes. So Keith, for pricing cadence, I think, is playing out exactly like we saw at the beginning of the year, which would mean the lower end of the range in the first half, and we'll be exiting at the upper end in the back half. And that is really reported and mix adjusted, it will just depend on what those comps look like. But I would tell you that compared to our pricing plans coming into the year, we are executing just as we expected. It's playing out like we thought.

And on volume, would it be similar to where you're at the higher end of the range in the second half versus the first half, same trend?

I think the volume was the opposite. We were at the higher end of the first half, and I think it will continue to be consistent in the second half. And obviously, weather is always a factor in the fourth quarter. But I would say that we look at it today and we think to hit our range that we said. I mean, it really is kind of continuing the shipping paces that we've seen throughout the second quarter and the second half would be similar to that.

We'll go next now to Kathryn Thompson with Thompson Research Group.

You gave a lot of great color on end markets and what's driving demand. And we'd like to step back and look at the forest for the trees. And just conceptually, more things are going to be made in the U.S. -- built in the U.S. for a variety of different parts. And granted, as you said earlier, there's been a lot of focus on data centers, but it's a bit more than that. You did touch on comments on power. It'd be helpful if you could pull the string a little bit more on that on the comparable dividend levels. First, where are you seeing the power expansion? And then what type because there's now a variety of different power type structure. So it's not just in Texas, but it's also in other parts of the U.S. And maybe just give a broader more fleshed out view of what you're seeing in power and how Vulcan is supporting that growth?

Yes, you're absolutely right, Kathryn. Thank you. I would tell you, it's a lot of different forms. And so we've still got a combination of renewables, so we're still seeing solar work. We've bid several solar manufacturing ones. And then we're seeing -- I think the first phase of this, we're seeing like we have 4 projects that are converting coal-fired power plants back to natural gas. We're seeing Georgia -- Georgia Power, Alabama Power, be very active in those kind of projects. Obviously, in Texas, we're seeing a lot of growth there, but we're also seeing this combination of some of the dollars you see tied up with these data centers is because they include power.

And so it's hard when you look at the data center numbers when you talk about dollars and then you start kind of stripping that out? Or what is that is the real data center itself and what part of that is power. But I would tell you, a lot of these are now to get them approved. They're coming with full power supply to the data center. So we're seeing a mix of that.

I would say, overall, when we look at our quoting activity in the category of power generation, we're just seeing a lot more quoting activity. Now I'm not going to tell you it's going to go as fast as data centers because you and I both know data approval process is going to look a little different. And so we just see it as another form of healthy forward-looking demand of our products. And again, I mean, we like slow and steady, and we like our ability to continue to compound our cash gross profit in over the future. So I just see this as another area of future aggregate demand that's going to be needed and it's very aggregate-intensive.

We'll go next now to Angel Castillo at Morgan Stanley.

Ronnie, just wanted to go back to price a little bit. You noted, I guess, a little bit of a pull forward here on price. And if I heard correctly, I think you mentioned that you might still pull the price lever throughout the remainder of the year. So just wanted to make sure or clarify, I guess, does that mean that you might still be announcing additional price increases in the second half? And if that's right, I guess how should we think about the likelihood of that? Is it just energy price dependent? And to the extent that you do move forward with any additional price, I guess. How should we think about the implications on Gen 1 increases and the ability to do those?

Yes. I think we'll be giving you a lot more color on that by our next call. I mean, look, as we went into the midyear, we pulled them forward anticipating what hole was doing to us at the time. At that time, we were also anticipating that this was going to be short lived. As we see it continue to drag on, I mean, that's where we've told you in the past, and we'll continue to be very disciplined around price is our biggest lever when it comes to overcoming headwinds like this and inflationary pressures. And so what I'm saying is that continues to be our strongest lever, and we're evaluating that as we speak. And we will continue to protect our margins, and we have to. I mean that's what these inflationary things are hitting us, they're hitting our customers, they're hitting everyone. So it's not like there's one side of the supply chain that's isolated in that.

And so our expectations would be that we continue to be very disciplined around our pricing approach. And so I would tell you more color on that as we work through the year. But it's a very fluid situation with what we see oil prices doing and they just became more sticky than 3 months ago. We thought it would be a little less sticky than this, and they haven't been. And so we're going to continue to look at that. But again, that's our biggest lever. So we'll continue to exercise our ability to protect the margins that we have.

That's very helpful. And then maybe just on the M&A pipeline. I guess some of your closest peers have done some larger, more kind of transformative deals. So I was hoping you could just talk about your, I guess, your pipeline of potential M&A, just whether that includes anything more transformative? Or just remind us how we should be thinking about the evolution of your strategy, just key areas of interest and potential size of that pipeline and what you have coming forward?

Yes, I would say, in my prepared remarks, I said we have a healthy pipeline, and we will most likely see some of those transition -- our transactions closed in the second half of the year. But those transactions for us are going to continue to be very, very aggregate discipline. I mean, look, we're good at what we do. We're good at aggregates. We're going to be the most pure-play aggregate company when all these other deals that are announced in the market gets done. And so we like what we do.

And so what you will see out of us is very much disciplined approach to continuing to do what we're good at. And that's producing and driving value for our shareholders based on the Aggregate business. And so nothing we do or nothing we have in the pipeline or anything you see us announce in the future will be of any surprise.

We'll take our next question now from Rohit Seth at B. Riley.

Just on your prepared remarks, you had touched on the Bill 250 Act and you prepare to contrast to the IJA. You mentioned something about more new construction in the Bill 250. I just wonder if you can elaborate on that?

Yes, Rohit. I would tell you, as we look at the BuildAmerica250. And 2 things there. Really, when we look at the aggregate intensity of the projects that we believe will happen because of going back to matching program instead of the grant program. And that's one that we believe when you go back to the old formulas that we've experienced in the past, you're really going to rely on getting money to states where the miles are, which is where Vulcan's footprint is. And so that's why we continue to say that's going to be better aggregate intensive for us as well as the bridge program.

And so as you unwind kind of the headline number, and remember with IIJA, there was a lot of other stuff in it. There was a lot of green projects, a lot of buses and other things that had no aggregate consumption whatsoever. It was a great headline number. But when you unpack it all, we really focused on what was moving the needle with aggregates, you really talk about how way those infrastructure projects and then you layer on the bridge side.

And so as we look at it today with what came out of the house version of it, we're pleased with that. And I think the Senate will take that on. And as I said, we're most likely going to get a continued resolution. We're fine with that. We think we're in a good place with the house version of it, we're pleased with. And we think the Senate has the ability to add more to that. But it's going to be more aggregate intense, which is good for us.

So ultimately, the takeaway for you guys is the Bill 250 is better for the business than the IIJA was?

I think when you wind back to what was truly focused on how infrastructure and bridges, yes.

We'll go next now to Ivan Yi with Wolfe Research.

Sticking with pricing, just a quick clarification. Are any of the midyear price increases included in your unchanged guidance? Or the midyear is incremental to that? And then also costs exceeded pricing by about 200 basis points. When do you expect this price cost spread to inflect positive. Can we see pricing exceed costs in 3Q and 4Q?

Yes. I would say as we exit the year -- we talked about that on our last call. Look, when we came into the year, we said costs were going to be higher on the front end and price was going to be slower to develop, and we would exit the year with price being higher and costs being lower, which is what's in our guidance, and you can see that.

I would tell you that when we look at our guidance, I mean, all of it's in -- I mean when we think about what's happening in the midyear, we think about where we're at in all the markets, I mean, that's what our best view of it is today. And again, what's not in it is if we decide to pull things forward and try to move the price again for the remainder of the year. That's not in there. But as we sit today with the success we had in midyear and where we see things as we sit today, that is in our numbers. I mean that's where we're saying that 4% to 6%, and we say we'll exit the year at the higher end of that range of the 4% to 6%. And so the pricing will continue to accelerate throughout the year and costs will continue to decelerate.

Yes. And in terms of margin, Ivan obviously, the second quarter was pressured with the higher energy, and we do expect those inflationary energy headwinds to continue in the second half. But I think for the second half, we should see some expansion in gross margin year-over-year, driven largely by the fourth quarter. The margins likely will still on a gross margin basis are likely to still be down in the third quarter, growing in the fourth quarter and up a little bit overall in the back half.

We'll go next now to Michael Dudas with Vertical Research.

maybe you can Ronnie share some thoughts on over the last 18, 24 months, some of the acquisitions -- acquisitions you've made. Certainly think about the one in North Carolina. How progress has been on a pricing marketing front, product mix front, getting to the targets where you'd anticipate? And just quickly on the Colorado or the -- it seems like it was opportunistic, but is there any -- is that a focus area part of the country that you are taking a look at?

Yes. I'll -- let me talk about the kind of the past first and then we'll talk about the present. When I think about the acquisitions that we did over the last 2 years and really referring to Superior as well as Wake. In Superior, look, we've executed exactly what we said. We said we're going to go buy this business. We're going to evaluate the downstream. We wanted it for aggregates. We were able to execute that. We were able to spin off and redeploy the downstream assets to a very good company in California, Portland, will be a very good customer of ours long term. But in the end, we were able to do exactly what we said. We're going to buy the business for the aggregates we wanted.

I would tell you in the market there, and that market, there wasn't as many separation between where a bulk and price market would have been and where Superior was. But there was some, and we've been able to focus on getting those operations up to more like a Vulcan standard market when it comes to pricing. And I'm very pleased with the execution of our California team. And it's not easy when you buy these companies to integrate them and then spin things off and our California team really stepped up and performed well through all of this time and uncertainty of getting that thing done.

When it comes to Wake, I'm extremely pleased with where we're at. I would tell you, we said going into -- when we closed on Wake that it was significantly below the Vulcan standard when it came to what we felt like the value of those products should be. And that team and instituting our Vulcan Way of Selling and the disciplines around that and really the ownership of that local team as well has really performed well. And I would tell you, we said it was going to take a couple of years. And I would tell you, we're right on schedule. I mean, it's -- I'm very pleased with where we're at. The acquisition is doing exactly what we thought it would.

And so as we look forward, I mean, that's the thing that we're going to be really good at. We're going to continue to focus on those kind of businesses that are Aggregate led to things we can institute Vulcan Way of Selling, institute Vulcan Way of Operating and continue to drive margin improvement.

Brannan was an opportunity for us. When you look at Brannan, it's a small one. It's an entrant into Colorado, yes. About half of the volume out of that, let's roughly say about 1 million to 1.5 million tonnes of annual production out of Brannan. About half of that stays locally. It's on the south side of Denver, so it does reach into the Southern Denver market. But the other half comes to DFW and Dallas-Fort Worth and the rail facility that we acquired there, if you were leaving forward, driving West, the rail facility is just on the West side of Fort Worth and then you would hit our Weatherford quarry.

And so very complementary to our market strategy there. Again, dealing with selling to the same customers that we're already familiar with that are familiar with Vulcan and our strategy and what we're going to do. So I'd say Brannan is a small -- it's pretty much a bolt-on, but it also gives us some access to a new market. And I would say the things that I talked about in the future. Those are the things that we're going to continue to focus on. The ones that we can do, the ones that are very aggregate-intensive for the ones that are easier for us to integrate and the ones that we can continue to institute locally of operating and Vulcan Way of Selling disciplines in and drive margin improvement. So I'm very pleased with where we're at.

We'll go next now to Brent Thielman of Oppenheimer.

Ronnie, when you look across the footprint, I wanted to get your reaction just to how competitors have responded with price increases? Are you seeing any higher frequency of attempts to capture share by competitors just by holding price. Maybe there was a view energy cost inflation would be temporary. They're in a holding pattern? Or has the response been pretty rational, just to higher costs? And I guess also just wondering if any of that is implicit in your volume outlook as well?

Yes. I would tell you, look, I mean, at the end of the day, inflationary pressures, whether they're diesel or whether there are other factors involved in it, no one is immune to that. And so everybody feels it. And that includes our downstream customers feel it. And so everyone feels it. And I would tell you the reactions and the disciplines and all those things have been as expected. I mean, I would -- everyone's in this for the long term, even though we're measured in very short-term increments of quarter-to-quarter, I mean, we still have to focus on this business long term. And I would tell you, we're in a great position to continue to execute on what we do with Vulcan Way of Selling and Vulcan Way of Operating.

And I think our competitors feel the same pressures that we do. And so in the end, no one is immune to diesel. Everyone has to use it. And it's just part of the production process and everything we touch. And so I would tell you when things like that happen, everybody feels that. Will everybody react the same? I don't know. But in the end, I think we're in a very disciplined market, and I like the position we're in.

We'll go next now to David MacGregor at Longbow Research.

Ronnie, I guess I wanted -- you talked about the continued resolution and it's pretty clear that's where we're heading. I wonder if I could get you to just talk a little bit about how you grow shipments in that kind of environment. And I guess sort of I guess the quick and dirty is nothing changes in a continuing resolution. We just kind [indiscernible] course. But I wonder if I could get you to just maybe give us a little more of a new launch look? And what changes in terms of the competitive position? Does it trigger change and how you may win in non-res business? How -- how do people respond on to that condition?

Yes. I mean, look, this is not abnormal for us to go through a continuing resolution. We've had lots of them in the past, and we'll have probably a lot of them in the future, and that's just kind of the way that the DC model and getting things through the House and the Senate work.

I would say we don't see it as any change. Look, the continuing resolution continues to spend at current levels, you got a lot of carryover with IIJA. And I think that's going to be the unique thing about the transition of this bill. Historically, we haven't had that much carryover between bill-to-bill. And so we still -- when we talk about the 60% of funds that are still going to be spent as the carryover. So you got that, you've got really healthy state budgets as well. And so remember, federal spending is only 1/3 of the way we look at public funding. And so I think we're in a good position.

But I mean, look, we want slow and steady growth. And we've said through all of IIJA, everyone was waiting on, well, when is that big step change coming? It wasn't going to happen? I mean it's going to be slow and steady because that's the way work gets performed. That's the way the states led it. That's the way the contractors look at it, and that's the way they actually perform the work. And so I look at it, I don't see any disruption as far as the public side. I think we're going to continue to be slow and steady. I think public will continue to be in growth mode. I think we got healthy states. I think we've got healthy local measures. I think we've got other ways of funding projects as well.

And so I don't see any disruption of is it going to change the way you look at private nonres and large projects and all that. No, I don't believe so. We've got good visibility, and we continue to on public being very steady.

Does it change how you think about CapEx when you get to that state?

No, it does not.

We'll go next now to Brian Brophy at Stifel.

Just kind of continuing the conversation on the public side, realize it's a moving target. But what are your latest thoughts on when we may see a new federal infrastructure bill?

I would tell you, we're definitely headed straight towards the continuing resolution and then time will tell whether that's before midterms or not. I wouldn't get caught up in it because at the end. I think to continue -- we've had them where they've lasted a year. We've got them where they've lasted longer than a year. In the end, we've got a healthy level of spending. And remember, a continuing resolution continues that healthy level of spending.

And so I don't want to try to predict that. I mean, if you can predict anything in D.C. today, good luck. So in the end, let's just focus on we've got methods in place to continue public funding at a very healthy spot, and we're pleased with that.

We'll go next now to Garrett Greenblatt at JPMorgan.

On the demand side, power generation has come off a few times earlier in the call. I'm curious if you could help us size out the impact of that to demand volumes. I think when you think about data centers, something like 3% to 5% of your overall volumes. I wonder if you could put some numbers around power generation and where that could go over the next couple of years into 2027, 2028?

Yes. I mean it's hard to predict today. It represents a very low percentage because if you think about power generation in the country, it's been a very slow growth area because of the way that they have to plan capital, the way they have to get their approvals. We haven't seen power generation being a tailwind for a long time. And so I think you look at it in terms of the next 4 to 5 years and not the next year because it's not going to be a short-term blip. I mean these are things that take a lot of planning, a lot of regulatory, each individual state has its own ways if they're going to have to address that.

And so I would look at it as another form of aggregate consumption long term that's going to build and consistency in aggregate supply. But I wouldn't get ahead of it, saying it's going to look similar to data centers because it just can't move that fast.

Mr. Pruitt, it appears we have no further questions. Sir, I'd like to turn the conference back to you for any closing comments.

Thank you, Bo, and thank you all for joining our call today. Our first half results demonstrate the resiliency of our uniquely advantaged pure-play aggregates business. I am confident that we have the right strategy and the right people to execute that strategy to create long-term value for our shareholders. We look forward to speaking with you next quarter. Thank you.

Thank you, Mr. Pruitt, and thank you, Ms. Carlisle. Again, ladies and gentlemen, this will conclude the Vulcan Materials Company Second Quarter Earnings Call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.

Good morning, everyone, and welcome to the Vulcan Materials Company First Quarter 2026 Earnings Call. My name is Jamie, 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 today at the company's website. [Operator Instructions]. Now I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Thank you, operator. I'm joined today by Ronnie Pruitt, Chief Executive Officer; and Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer.

Before we begin our prepared remarks, please note that a press release and a supplemental presentation related to this call are available on our website, vulcanmaterials.com. Today's discussion may include forward-looking statements, which are subject to risks and uncertainties. Details on these risks, other legal disclaimers and reconciliations of any non-GAAP financial measures are defined and described in our earnings release, supplemental presentation and other filings with the Securities and Exchange Commission.

For the question-and-answer session, we kindly ask that you limit your participation to one question, and this will allow us to address as many questions as possible. during the time we have available. And with that, I'll turn the call over to Ronnie.

Thanks, Mark. We appreciate you all joining us for our call this morning. At Vulcan Materials, safety is a fundamental expectation of our employees each and every day. And I am proud of our industry-leading safety performance that we carried on from last year into our first quarter of this year.

Another key expectation is driving continuous improvement in our underlying business. Our teams delivered a solid start to 2026 by executing well on the commercial and operational plans that we laid out for the year. We generated $447 million of adjusted EBITDA, a 9% increase over the prior year. Gross profit margin expanded in each segment. SAG expenses were lower than the prior year adjusted EBITDA margin grew.

Trailing 12 months aggregate cash gross profit per ton continues to move higher with strong realization of our January 1 price increases and our disciplined approach to operational execution. Currently sitting at $11.38 per ton, we are aligned across the company to drive this highly important metric to $20 per ton and win the future in aggregates. Aggregate shipments in the first quarter support the anticipated return to growth for 2026.

Shipments increased 5% compared to the prior year due to both improving demand and fewer extreme weather days than in the prior year. On a mix adjusted basis, aggregates freight-adjusted price improved 4% over the prior year's first quarter, in line with our expectations. The sequential growth from the prior quarter demonstrates the success of our January 1 price increases and discussions are already underway for midyear increases.

Pricing continues to compound across our footprint. Aggregates freight-adjusted unit cash cost of sales increased 4% compared to the prior year, also in line with our expectation. I am very pleased with our operator's ability to execute on the [ bulk wave ] operating to drive efficiency in our plants and help mitigate inflationary increases in our input costs. Better weather this year allowed us to make more progress on our annual plans for stripping and project work than we did last year's first quarter, impacting the total unit cash cost of sales year-over-year comparison.

I am confident our teams are focused on the right things to continue to enhance our core and drive compounding improvements in our durable aggregates business, even as the macro environment continues to be very dynamic. We remain equally focused on opportunities to continue to expand our reach through acquisitions and greenfield projects, including several bolt-on acquisitions we expect to finalize in the coming months.

From a demand perspective, we still expect strong public activity and improving private nonresidential opportunities to drive year-over-year shipments growth in 2026 and mitigate the ongoing challenges facing residential construction. Trailing 12-month highway awards in our markets are up 12% from a year ago, and public infrastructure awards are up 17% over the same time frame. These levels far outpaced the U.S. as a whole.

Our footprint is advantaged. And this public demand provides a solid foundation for shipments and supports a healthy pricing environment. Legislators in D.C. are actively working on a reauthorization bill for future highway funding upon the expiration of the Infrastructure Investment and Jobs Act later this year. We expect the new build to provide higher levels of funding for highways and bridges than the current build. We also anticipate a smooth transition between funding programs given the significant amount of IIJA funds that are yet to be spent.

On the private side, non-res continues to benefit from accelerating data center activity. With approximately 650 million square feet under construction or announced, we anticipate data centers and other related investments to be a positive catalyst for future aggregates demand. We are especially encouraged to also now have active projects related to the energy build-out, necessary to support rising data center power needs.

Currently, 60% of all large projects, both public and private, are within 50 miles of a Vulcan facility, highlighting the advantage of our footprint. Our scale, quality and customer service makes us a supplier of choice on these large complex projects. Residential construction continues to be impacted by affordability. Longer term, there remains a fundamental need for additional housing and we are well positioned to benefit from an eventual recovery.

As I said earlier, we continue to expect overall growth in aggregate shipments in 2026. The pricing environment remains healthy. And while we are currently facing geopolitical uncertainty, and incremental near-term headwinds in terms of energy input cost, I am confident in our ability to remain focused on the things we can control and to drive durable growth in our aggregates-led business momentum from our solid start to the year and continue to expect to deliver between $2.4 billion and $2.6 billion of adjusted EBITDA for the full year.

Now I'll turn the call over to Mary Andrews to provide some additional commentary on our first quarter performance before we take your questions.

Thanks, Ronnie, and good morning. The earnings from our aggregates-led business continue to compound and drive attractive cash generation.

Over the last 12 months, we generated $1.8 billion of cash from operations, which we have deployed for capital expenditures to maintain and improve our existing asset base, for greenfield and other growth projects to enhance our franchise, for capital returns to shareholders, and for debt repayment to further strengthen our balance sheet.

Approximately 70% of our trailing 12 months capital expenditures of $686 million were utilized for fixed plant mobile equipment and land projects at our existing facilities. The remaining 30% was invested in greenfield and other growth projects, including a new quarry site in South Texas, several rail distribution properties in key markets and new production facilities in Arizona and South Carolina.

Capital returns to shareholders totaled over $800 million over the last 12 months, with $262 million of dividend accompanied by $550 million of share repurchases. This includes $149 million of share repurchases during the first quarter. Total debt of $4.6 billion at quarter end was approximately $350 million lower than a year ago and resulted in net debt to adjusted EBITDA leverage of 1.9x. The balance sheet is well positioned to support an active acquisition pipeline.

Additionally, we expect that the announced divestiture of our California concrete assets will close during the second quarter, providing even more capacity for continuing to strategically grow our aggregates business. SAG expenses in the first quarter were 2% lower than the prior year. Trailing 12 months expenses of $562 million were 7% of revenue, 20 basis points lower than the prior year period.

We remain focused on investing in technology and talent to drive our business performance while also leveraging our overall expenses. We are also focused on continuing to improve our return on invested capital through compounding improvements in our business and disciplined capital allocation. Our trailing 12-month return on invested capital improved 30 basis points from year-end 2025 and to 16% at quarter end. We are confident we have the right strategy to continue to deliver value for our shareholders. And now Ronnie and I would be happy to take your questions.

[Operator Instructions]. We'll hear first from Trey Grooms with Stephens.

So clearly, you guys are off to a very strong start to the year. Ronnie, could you maybe walk us through some of the key puts and takes in the quarter across price, volume and cost? And then also as we look ahead to the balance of the year, how are you thinking about these drivers in light of the recent moves we've seen in diesel and the broader macro backdrop?

Yes. Thanks, Trey. Look, I agree with you. It was a solid start. And I think it reinforces the trajectory for another year of earnings growth. Our performance in the quarter was really a direct result of strong operational and commercial execution, and it definitely positions us well to deliver the earnings expectations that we laid out in February.

On the volume and price side, we saw a healthy acceleration of our backlog tons converting into shipments, particularly within the data center space, which was supported by more normalized weather within our footprint. With regards to pricing, we said coming into the quarter, the year-over-year comparisons were going to be difficult as we continue to lap the hurricane relief efforts from 2 of our higher-priced markets in Tennessee and North Carolina.

But that alongside with some pricing mix, which was a shift towards base products and our current backlog driven primarily by data centers as well as more public work, but these things were known variables. And so they played out as anticipated, but pricing at the lower end of our full year guidance, but we expect that continue to accelerate throughout the remainder of the year.

On the cost side, I was very pleased with our team's execution. Keeping a total cash cost growth only to 4%. The run-up in diesel price really began in February, and the impact is really reflected in some of our March [ calls ]. But we have a proven track record of offsetting these types of fluctuations through our bulk way of operating also our Vulcan web selling and our commercial disciplines. So the more normal weather also meant we were able to keep pace with plant projects like stripping and painting and some other efficiency investments that we did during the quarter.

And as you recall, last year, those types of investments were delayed with more inclement weather in the first quarter of last year. So overall, I think the fundamentals of the business are performing as expected and really in a good position as we head into the heart of our shipping season. But let me turn it over to Mary just to give you a couple more points of context.

Trey, one thing I would add that I think further underscores the solid fundamentals that Ronnie talked about and really highlight the compounding results versus noisy year-over-year quarters, and he referenced some of the hurricane relief work last year and obviously inclement weather.

So I think if you step back, and look at 2024 and see that aggregate cash gross profit per ton is up 23%, and our total cash cost of sales and aggregates has increased only 1%. To me, these metrics clearly show the solid execution of our teams and the compounding margin growth that they're delivering. And that gives us a lot of confidence in our ability to execute for the rest of the year.

We'll turn next to Garik Shmois with Loop Capital.

Just wanted to follow up on that a little bit. Just given a lot of the moving pieces here as you look forward and some of the diesel cost impacts that are starting to hit. Just wondering if you can go in a little more detail just the confidence that you have in reiterating the full year guidance today.

Good question. And so let me start with -- I'm going to dig deep into kind of how diesel impacts our business. And so if you think about the 2 parts of diesel to us or the price of the diesel, but the more important part is the usage of diesel. And so as I look at our business, our downstream as well as our delivery costs are really covered through surcharges that kicked in immediately. And so have really had no impact on the cost of our doing business downstream and delivery.

But when I look at the operational side, I'll start with what we do in the plants. And so from a stripping aspect is the first step of what we do stripping is just really equipment, labor and fuel. And stripping is also something that isn't necessary to uncover future reserves, but it's not something we're doing just in time.

Stripping is something we can push forward or pull back depending on what macro environment we're in. And so those are things that we have the ability to fluctuate on. And then when I look at loading and hauling within the pit. And so you start with that [ hall ] to the primary, again, this is something that uses diesel equipment and labor.

But this is where our [ VWO ] processes kick in because when we talked about process intelligence and investment we've made with [ VWO ], a lot of that is focused on our critical product size production and impacting yield. And so when we're doing that, for every ton we get to the primary, we're more efficient in how we produce products. And so that definitely impacts the use of fuel.

And then when you get into the plant itself, there's not much fuel used within the production process. So from the primary all the way through the secondary. But again, the process intelligence and [ BWO ] is very impactful on the front end and the back end. And so again, it's an opportunity for us to really focus on the efficiencies and how we're earning fuel. And then the actual load out process. And so when you're loading trucks or rail, a lot of our larger plants, we have been systems.

And so there's not much mechanical process there from a diesel consumption side. But we do -- at a lot of plants we load with loaders. And some of the things we're doing, our operators are doing there, instead of idling loaders, you're turning off engines. And so we've got a lot of things we're doing to make sure that we're focused on the usage of fuel in this time of uncertainty with the volatility that we've seen. So all of that being part of the variability of our production process, which is the beauty of aggregates.

On the selling side, remember, half of our sales is really to fixed plants and half of our sales is to more of the real-time quoted stuff. And so we're moving those things fast. We've already announced midyear price increases. And so again, I think as you look at what we've been able to accomplish through the history of aggregates is our ability to take headwinds and turn them into a positive story on the back end.

And so is this a short-term headwind? Yes. Is this something that we're going to be able to control on the back end? Absolutely. And I'll let Mary Andrews just give you a little more insight into the numbers behind the fuel headwind.

Yes. The only thing Garik, I would probably add is, I think Ronnie gave some great examples of levers that we're using to -- as we navigate this current fuel situation. The second quarter is where we expect to feel the squeeze of the higher diesel most acutely before some of these pricing actions that we've already taken begin to flow through.

So the way I would probably think about it is we would have initially expected aggregate cash cost of sales on a year-over-year basis to look very similar in the second quarter as the first quarter. And that's still the case, excluding diesel. So I think with diesel, now your cash cost of sales on a year-over-year basis could approach maybe double of what it was in the first quarter, so closer in that high single-digit range. And again, with the full expectation that the margin impact will moderate as we move into the second half of the year.

We'll turn now to Anthony Pettinari with Citi.

Ronnie, Mary Andrews, you mentioned midyear increases. And I'm just wondering if you can give us any more detail in terms of magnitude, percentage of your markets that might cover timing? And then I'm just curious, you're obviously seeing a lot of inflation in diesel. Are there any other costs outside of fuel, metal, parts equipment where you're seeing maybe knock-on impacts from the Middle East conflict in terms of costs that may be a little less obvious to us?

Yes, good question. We have not seen any other impacts as of yet. We are monitoring that. And again, as the -- if we go back to 2022 with the inflationary things that happened back then, and our discipline around being able to move pricing quickly when those inflationary environments hit us.

So I would tell you from a process side, we went out with midyears several weeks ago, a little earlier than we did last year. We went out with all of our markets. We're very disciplined in that. We will always be very opportunistic when it comes to using inflationary pressures or any other headwinds. I mean we're going to capture that. And so -- we sent that out in all markets.

And remember, like I said earlier, about half of our shipments really are represented by that fixed plant. And then within that fixed plant side, if I break that down to the concrete side and the asphalt side, and I would tell you, the asphalt side of our business is really more heavily tied to public and the larger private nonres piece of where that's at. So they have a very active market.

There's situations within each of the DOTs that they have indexes on longer-term projects, and so the asphalt producers are covered on that. And so I don't think we see a lot of resistance on the asphalt side. Within the concrete side, look, the concrete guys are still facing the headwinds of residential. And so those conversations will be probably a little more healthy and spirited.

But again, it's not something that is unexpected. I mean we have a long track record of recovering cost. And my hope is that our concrete customers use that as a reason why they're going to have to go out because they're already -- they feel diesel costs immediately. And it hit them on their delivery costs immediately and hopefully, they have the same surcharges in place. But over time, I think we've proven that these headwinds, we will be able to over time and we will be able to pass that along. And the beauty of aggregate is -- we also -- we keep that in our pocket. We don't give that back.

We'll hear next from Steven Fisher with UBS.

Congratulations on the good execution. Just a follow-up again on clarifying some of these points here, particularly on the near-term expectations. I guess what's the expectation we should have for pricing in the near term, say, Q2, and I guess that would be inclusive of the diesel? Do those surcharges get recorded in the pricing you're going to report?

And then on the cost side, it sounds like you're expecting, Mary Andrews, upper single-digit growth in costs. So how do we think about that in light of, let's say, the low single-digit guidance you still have for the full year with the first quarter? It sounded like it's going to be in at least mid-single digits.

Yes, I'll take the first part, and I'll let Mary Andrews talk again about the second part. Our delivery is not. So we report freight-adjusted. And so when we talk about price, that's freight adjusted. So all the stuff that we're talking about with surcharges does not get reported on our pricing because we don't think it's the right way to look at that.

But when it comes to kind of cadence of pricing, we said going into the year, because of the comps of last year first was that our pricing would have started out at the lower end and accelerate through the year. And I think this opportunity that we have with midyears just confirms that our pricing trajectory will be backward half more accelerated than the first half of the year, but we anticipated that.

We also said that in the first part of the year, as these data centers continue to grow, the mix impact, which we called out, we continue to see a lot of shipments from our backlog converting the shipments faster because of the size of these projects, but also the speed of these data centers, meaning once they're announced, they're going really quick, which is a good thing and it will play out on the cost side of our business as well because when we're continuing to improve the yield of our plants with the amount of base shipments, that's a really good thing on our cost. But I'll let Mary Andrews walk you through kind of the puts and takes on the model.

Yes. So Steve, from a cost standpoint, at this point, we do still believe that we can deliver that low single-digit cost for the full year, where we fall within that range, the diesel situation and how it continues to develop, I think will a big role in that. But Ronnie highlighted some opportunities that we have to -- even on the cost side, focus on efficiencies, pull some levers to make sure that we're making good decisions given the macro environment.

So I feel good about the full year guidance and just wanted to give you insight into what that could look like for second quarter from a cost standpoint. And that was always our expectation that costs would be higher in the first half of the year, moving lower in the second half of the year. So as we said today, 2026 is playing out like we expected.

Great. Thank you very much. We'll hear next from Michael Dudas with Vertical Research.

Ronnie, following up on interesting comments on the data centers and the time to market and speed. Is that -- could that be contributory on like volumes, given the acceleration of some of these projects. And there are other heavy markets or even public markets that are trying to move quicker to try to get the funding or try to get the projects through, given some of the funding uncertainties? And can that be helpful to have maybe a quicker conversion on your total backlog and get some efficiencies and volumes through the system?

Yes. I would -- I mean I'll go back to my prepared remarks and I look at our advantaged footprint. And as I stated in my prepared remarks, in our specific markets on a trailing 12 months, public contract awards are up 12% and we're seeing in the rest of the country, double-digit declines in places. And so it amplifies that we're in the right markets and the public side continues to be strong.

When I look at starts and kind of the flow of -- before the expiration of the bill, I think the states are doing a really good job. I think all the money will be targeted towards the job they want, which is really where they have to get as the money has to be allocated, and that allocation is going well. Across our footprint, I'm seeing how we start up in Arizona, New Mexico, North Carolina, South Carolina, all really, really good spots for us. Coastal Texas, North Texas, Georgia on the infrastructure side. So we're seeing good momentum there.

On the private side, and again, as I stated, 60% of our large projects that started last year are within 50 miles of a Vulcan facility. And so that just shows you again, we're in the right markets. And where we're seeing momentum in construction growth is really because of our advantaged footprint. I mean that's not the same stats you're going to see across the rest of the country.

And so again, our business model is proven. And over a long period of time, we've been able to say that any headwind that faces us, we're going to be able to capture that over the long term. But I think as we look forward in saying that our confidence in 2026 returning to growth, it's because of these things I'm talking about on the public and private side. We're not seeing it on residential. We are seeing some green shoots on multifamily but it's really being driven by -- that's the necessity of jobs that have been created in some of those markets and people are moving there, and there's nowhere to move. And so the multifamily side, we're seeing a little bit of green shoot and -- but the majority of our confidence right now is really going to be based on the public and private side.

And remember, only 45% of the dollars are actually spent. And so even with the expiration in the middle of reauthorization now, we have confidence that the transition between those funding bills will be very smooth.

We'll turn now to Kathryn Thompson with Thompson Research Group.

I just want to focus a little bit on the federal highway bill reauthorization coming up in September. And as is typical each year, this happens, there's a lot of noise leading into the debate. What we are hearing from a wide variety of contacts is that early discussions or funding sizes of $600 billion to $700 billion. But the health bill now is closer to $500 billion to $550 billion, both of which are still increases from where we are currently.

Could you give your perspective in terms of what you're hearing and what you're seeing and how you think about the cadence? And as one contact said, we don't see the bill going backwards in funding. It should be going forward? And how much credence does that statement have?

Yes. Thank you, Kathryn. And I think your sources are pretty good. And consistent with what we're hearing. I mean, if you think about the kind of the process, I mean, I think where we're at today, the Transportation Committee is in the middle market. So we think we'll get a first reading sometime mid-May. And so as it comes out, as you know, I mean, this is a negotiated process between [ dollars and the Ds ]. The [ Ds ] are -- we're hearing being a little more aggressive towards wanting to spend more. But I think there'll be a lot of negotiations. And as you know, there's bits and pieces of that throughout the country that people are going to want to get their piece of them. But I think, overall, directionally, your numbers are very consistent with what we're hearing.

Obviously, as it gets to the senate, it's a little more complicated with a number of committees that has to go through. But look, I think we're in a good position of -- could it get done by midterms? It could. But historically, we've seen continuing resolutions are probably going to be the path. But again, with the dollars that are left to be spent, the momentum we see in starts, the backlog visibility that we have within the public jobs that we've booked gives us a lot of confidence that there's just not going to be a disruption and even under a continuing resolution, the dollars keep spent at the same level.

And so I think we're in a really good position. I think it's good momentum. I think the bipartisan part of this is it's good for the economy, it's good for job creation. And I think both sides of the -- I'll like to take that as a win. And so the funding side, I think they're making progress, what they're going to do with electric vehicles, with registrations, all that's being considered.

But I think your sources are correct. And I think we walk away today thinking we're in a really good position and confident the bill will get done and pretty confident it will be at a higher level than the previous bill.

Now we'll hear from Keith Hughes with Truist.

So we get a lot of questions on specifically the second quarter, the drag from what we know today on diesel prices. Can you give any kind of dollar figure of what that's going to do in the quarter, understanding you're going to be going for us good selling prices to offset that?

Yes. I'll let Mary Andrews get into the numbers. But I think, Keith, if you look at it kind of as we step back overall and say, on a typical year, and I would tell you, over the last 2 years, we burned about 57 million gallons of diesel a year. And so trajectory and if you look at that, it's really variable with the tons we're shipping is the tonnes we're producing and you got to play where your inventories.

But all that, if you just step back and said that's kind of the range of the diesel we're going to burn. And obviously, that's going to fluctuate pull stripping and delay some of that with diesel costs because we think this is a temporary situation, and we're not planning long term for diesel to be that. But if it is, we're more than prepared to fight that headwind through our commercial efforts. And so I think that's kind of the context of it. But Mary Andrews, why don't you give him a little more data on --

Yes. I mean I think given those pieces Ronnie described, you're looking at probably $25 million in the second quarter. If you think about the amount of diesel where we would burn and retail diesel today is a couple of dollars higher than it was coming into the year. So that's probably a good round number to think about on the diesel side.

The other place that we'll feel the energy impact is on liquid asphalt. But some of our -- about 1/3 of our work is indexed, so the impact will be a little bit less there. And that's one, same thing. Over time, we'll use pricing to catch up and maintain our margins at the healthy levels that we've seen over the last couple of years.

And one other thing to keep in mind just as it relates to the downstream is in our original guidance. We did not have the California ready-mix business. That contributed about $10 million of cash gross profit in the first quarter. we still own it today. We do expect that to close soon in the second quarter. But I would think about the downstream at this point with the contribution from the ready mix being a helpful offset to the near-term energy headwinds that we could see.

Okay. Okay. Great. Let me ask one other real quick back on Kathryn's question. There was a political article a couple of weeks ago talking about this $500 million to $550 billion from the Republican headed Transportation Committee. Some of the Democrat comments are actually for a higher bill than the, call it, $550 billion. I guess my question is based on from your lobbying groups. Is there actually close to bipartisan support around these numbers we're talking about? What is your sense on that?

I think the -- I mean I think they both see the need for it. And I think the dollar amount is really both of them doing their work on a lot of different information that comes to them on what are the real needs from both a growth of the infrastructure system as well as the maintenance of the infrastructure system.

So I think when you talk to -- and Sam has announced his retirement, and so he's still leading it as of today, but -- he's also been involved in 7 reauthorization bills. And so it may be something that he wants to get done before his retirement. But they're also -- they want to know where we're going to get the funding from. And so a lot of it is how is it going to be funded and where all those mechanisms going to hit -- but I think the beauty of the $550 million to $700 million, whatever that leads out is when you think about this bill versus the last bill, it's going to be a more pure highway and infrastructure bill with a lot less other stuff that was in the last bill.

And so we look at it as all signs of positive what degrees that is. The politicians will have to figure that out. But again, I mean, you know this gives us long-term visibility into a very meaningful portion of the supply side and the demand side of our markets. And so we think we're in a good place.

We'll go next to Phil Ng with Jefferies.

Congrats on a solid quarter. Ronnie, Mary Andrews, I think you guys both kind of highlighted M&A as the avenues to deploy capital, balance sheet is in a great spot. Are you seeing any choppiness in terms of sellers in this current backdrop? Or it's been -- Ronnie, any color in terms of markets that you're targeting, size of these deals? Is it pure play aggregates, virtual in grid? Just give us a little more perspective what you're seeing out there and what's compelling to you?

Yes. Good question. When we talk about one of our cores is expanding our reach. And we said at Investor Day that we were willing to look outside of our footprint as we continue to focus on aggregate led. So number one, I would tell you the things we're going to focus on are going to be aggregate that business. If they happen to come with downstream, as we've proven in the past, we'll address that and decide whether we want to be in that business or not. And we've proven in the businesses that we didn't want to be in, that we would exit those businesses.

But I would tell you, it's -- the footprint of where we're looking is really the high-growth areas and how things have changed both with demographics as well as public funding as well as some of the private non-res side and the data center is driving a lot of that. But as we look forward, we also see the energy that is needed to support these data centers is going to be another tailwind to us as we have begun really booking some energy projects.

We're quoting a lot, and we've actually started booking some. And so I think the energy backdrop in a lot of these states is going to be critical as they try to fulfill the needs of this data center construction. But -- but so I would tell you very active.

From the seller side, I think headwinds with energy or anything, obviously, they have to look at that. Does that accelerate them? In some cases, it could because they weren't expecting this cost to be like this, and it may accelerate their desire. But I would tell you, over time, these are generational changes. These are families that have to make that decision. And so there's a lot of complexity to that. And I think a lot of the macro stuff obviously plays into their family conversations.

But I don't know that it moves the needle on faster or slower. I think it's just another something we deal with. But I would remind you also, part of our growth efforts is our greenfield and the investments we continue to make in our downstream. And as I look forward to this year, I mean, we've got 3 new plants coming online, 1 in Arizona, 1 in Texas and 1 in South Carolina that we've talked about is our greenfield strategy.

From a distribution side, we have 7 yards that we'll be bringing online this year. Several of them, a couple in Texas, 1 in Florida, 1 in California, 1 in South Carolina. And so we continue to invest in the business to protect our franchise to enhance where the growth of our core market is. And that's why we said, as we continue to expand our reach, we can control things we do internally to protect the franchise that we have externally as we look at growth opportunities, we wanted to expand that. And so some of those newer markets is where we'll be looking. And again, as I said in my prepared remarks, we got several of them that we think will be coming to close before the end of the year. So I think we're in a good position.

We'll hear next from Angel Castillo with Morgan Stanley.

Just 2 parts, one on the full year and then one on 2Q. I guess on the full year running, I think you mentioned that you don't expect the big prices to be kind of longer lasting and you kind of [ be that ] as a little bit more temporary. Just wanted to clarify, I guess, the full year guide at this point, just want to guess clarify, it does assume diesel prices remain at current levels? Or are you anticipating that to come off in the second half?

And then kind of related to that, I guess, depending on what your assumptions are, midyears you typically talk about as being beneficial to kind of the following fiscal year. So should we think about it as being any offsets in the second half of this year being more woken wave operations driven? And then on the second quarter, apologies if I missed it, but I just wanted to clarify, I guess, what is kind of your expectation on price volume and gross profit per ton when you kind of put all the pieces together?

Let me unpack all that. So first, I would start with kind of where our assumptions are. And I would tell you, I mean, the assumptions that we're making in reinforcing our earnings for the full year is really a combination of the history of our business. And so if fuel stays up for the remainder of the year, then our pricing will reflect that. If fuel comes back down, then our margins will reflect that. And so we're very flexible in our ability to go out and capture whatever those headwinds are.

And I think our business model has proven that time over time over time. And so I'm confident in that as we build out and look at what we anticipate for the remainder of the year. I mean, we would love to say that this thing is temporary, but we're planning for it to be longer, and we have that accounted for in our guidance. And so I'm not worried about that headwind. As far as growth in the second quarter, again, as we looked at the cadence of our quarters, we said our pricing was going to start out at the lower end because of the comps over year-over-year on some of the hurricane recovery work and it was going to accelerate through the year. And I think that's going to play out exactly like we've laid it out.

On the demand side and our shipment side, I mean I think we experienced more normal weather in the first quarter, and I think that contributed to the growth in our shipments that we saw I think also the size of these projects and the speed of which these projects are shipping is also something that is -- weather impacts those. And so as we see more normal weather, I mean our contractors aren't out there going, okay, we're going to ship this much during the first quarter, and then we'll stop and then we'll start the second quarter.

I mean they're building these projects -- they don't care about a calendar. They care about what's happening today, what's happening with the weather they're experiencing. And if they can go forward faster, they're going to do that. And especially with this data center work, I mean, these companies are looking for return on these large investments, and they don't get a return that thing being under construction. They get a return when it's finished.

So the speed of those things are obviously critical to the process of the job. And so I think we see second quarter continue to play out that we would expect, again, based on normal weather, that our shipping levels would continue to be as expected as we planned out in the year, and as we laid that out, they're going as expected. And so I don't see a lot of noise right now within the shipping side or the demand side. I think those are some visibility that we have through our backlog and our bookings.

Yes. And Angel, one thing we highlighted coming into the year in terms of how to think about earnings overall was to think about more normal seasonal spreads than to think purely about year-over-year comps. And so as we sit here today, I think one might think is look at historically what our business kind of looks like first half, second half and given the strong start that we got and the contribution that we got in the first quarter, and what our expectations are for the second quarter. I think we'll still land in that probably [ 45-55 ] type split. And as I highlighted earlier, the diesel headwind in the second quarter, we'll squeeze us a bit there.

We'll hear next from David MacGregor with Longbow Research.

This is Joe Nolan on for David. I just wanted to I just wanted to touch on the nonres business. You've obviously talked about the strength in data centers, but just in some of the other verticals, like warehouses, manufacturing and commercial, if you could just talk about backlogs and demand within those businesses?

Yes. We're -- as we went into the year, we said we were data centers were leading private nonres. We said we thought we would see some of the green shoots in warehousing. And we've seen some of our markets turn positive, but from a very low starts very low rate. So I think those are opportunities for the future as those markets play out.

But when I look at kind of buildings and non-res side, I mean, we've got good momentum going and in Texas with some fuel energy-related projects, some LNG projects that started back, we're shipping on some manufacturing type projects that we started back shipping on in Illinois, we've seen both data centers as were some warehouse stuff that has really kicked in. And so I think it's a combination.

I mean, data centers is obviously growing at the fastest pace within our private non-res category. But I mean, the energy side is very encouraging. And we're in a lot of active conversations around energy projects. And I think the energy companies are in the middle of planning a lot of those projects. I think that -- those type of projects, obviously, we'll have more permitting and things that they have to do from a timing perspective.

I'm not sure they'll move as fast as what some of the data centers have. But in the end, it's all really forms of good forward-looking demand on the private nonres side. And so it's a mix of different types of projects. But again, data centers has been kind of the lead of that.

We'll turn now to Michael Feniger with Bank of America.

Ronnie, just if we do get a CR, does that change your view at all on 2027? And how that looks up? Does that shift us from a growth market to maybe flattish or we're still maybe in growth [ go ] because of the dollars left spend?

Yes. I don't think it changes it. And I'll give you a couple of reasons why. One, the point you make is we still have dollars that are going to carry over. I mean when we look at our bookings and backlog is a lot of those projects from a federal side are multiyear projects. And so not only are they booked and we're shipping on them, but also the dollars that are carrying forward will project well into '27.

But I'll also remind you that only third of highway and funding is really the federal side. And so when we look at the state side and then we look at other measures that the states have put in, we look at these public-private partnerships, we look at toll authorities, there are a lot of growth projects out there right now that are very small in federal dollars and larger and other funding that gives us a lot of confidence that, again, I've said it in the past, and I'll continue to say public is probably the least of my worries. I mean I just think we're in a really good position to get the funding in place, and there's other ways the states have gotten creative around funding their own programs. And so I think -- as I look forward, I don't see '27 being a problem when it comes to public.

Great. And Ronnie, just on the pricing side, I know we started Q1 at the low end that was something you guys always talked about with that plus 4%. Just with the miners, are we exiting above that 4% to 6% range on the full year growth? And you referenced 2022, how you guys respond to inflationary pressure.

You guys are very quick to get that price increases in there and we saw that in the numbers. Is there anything different that we should think about 2026 and versus 2022? Just in terms of the demand environment coming out of COVID versus maybe where we are now, are there differences or similarities and how we should kind of look at that 2022 period where you guys are quick to respond to inflation versus where we are now today?

Yes, I think there are. I mean, there's lots of differences, and there's always differences on the demand side. And so as I look at the difference between 2022 and 2026, 2022 coming out of COVID, residential really took off. And so a lot of that midyear and first of the year pricing, again, we reference that back to the customer base was a lot of our fixed plant stuff, which the concrete guys back then, we're experiencing some really good tailwinds when it came to the majority of their market being tied to single family, that's a different -- I mean that's not happening today.

If that accelerates, and we've said if the third leg of our stool, public private nonres and single-family or resi, if that's our [indiscernible] tool kicks in, obviously, it's going to give us a lot of tailwinds when it comes to both the demand side of our products as well as the pricing side and that momentum. But I think originally, what you said, I mean, I think it's absolutely right that our confidence is that our pricing throughout the year will continue to build momentum.

So exiting that, obviously, we'll be -- we'll need to be at the higher end of our range because that's just the math. And so we have confidence in our ability to do that. And I think it's too early to call what's the success of midyear is going to be because it's choppy. I mean it's every individual market. I mean these are local markets that we have active conversations going on with our customers, and we want to be their supplier of choice. And so in the end, we're going to be disciplined around that. But I would tell you we have good momentum. The quarter played out exactly what we expected. And I think the rest of the year, we have all the mechanisms in place to continue to reinforce the earnings of the business.

We'll turn next to Ivan Yi with Wolfe Research.

Can you comment on transportation cost, truck rates are currently about 20% to 30% year-over-year. Are you able to fully pass through these higher costs to your end customers? And on that, you hire truckload rates incentivized moving more volumes to rail where you can?

Yes. So I guess I'll answer the back half of it. When it comes to rail, I mean, you can move more to rail, but you also have to have the rail yard to be able to do that. And so our rail yards are a really extension of the operating plants that those markets support. And really the significance of that is our ability to capture the value of those products at the yards in distribution costs, which would include rail distribution, we're able to capture that. And a lot of those yards are really in high-growth markets.

That's why we put yards there because that's where the growth is, and it helps us supply that market and it limits the amount of distribution cost to get there. On the overall delivery side, as I said early on, we have surcharges in place to capture that. Delivery to us is really a pass-through, we don't try to make money on delivery. That's a third party. We have owner operators that do that. And so we do provide that service to our customers, but it's not something that we see as a headwind or a tailwind. It's just the cost of doing business. You got to get the rock to the job. And so delivery to us is a pass-through, and we have surcharges in place to make sure we're not paying the penalty on any fuel cost increases.

Yes. And one other thing, Ronnie talked a lot earlier about the -- our advantaged footprint in terms of where we are an advantage we also have is not just geographically where we are, but what our positions are in those markets. And so I think over the longer term, if you think about those positions in an environment of rising transportation costs, it can serve to widen our logistical mode advantages.

And we'll hear next from Rohit Seth with B. Riley Securities.

Just back on the volumes, [indiscernible] up 5%. So you booked a little bit of cushion here on into the rest of the year. Can you provide a sense of how the quarter played out, the cadence from January to March? And then if you have any comments on April?

Yes. I would say when we talked about more normal weather, really the more normal weather we experienced was really more in the smile of the U.S., it's really more California-based and then in the South and Texas and then across the Southeast. I mean we saw a lot of very cold start to the year in Illinois and in our Northeast markets. And I would tell you, our shipments reflected that.

I would tell you, we started off slower in January, and we built momentum through February and into March. And so really, weather for us, it's 2 parts. I mean, precipitation rain is one thing, and rain obviously affects the day that we're shipping, but the cold start to the year in the Northeast and the cold start to the year in the middle of the country, it definitely had an impact on, one, you're not laying mix and one you're not for in concrete, but 2, you're not operating.

I mean, so -- we really got off to a slower start in January in some of our northern markets, but that's typical. I mean, that's not something that caught us off guard. I mean, we knew that was going to -- that's what we planned for it to be cold in Chicago in January. So I would tell you the quarter from a cadence side, I think it played out exactly like we said.

And I would tell you, as we got into March, I mean with drier weather and with warmer temperatures, again, the size of these projects matter and where our footprint is matters. And when I say literally 60% of these large projects are within 50 miles of a Vulcan facility, that matters and their ability -- and we highlighted this in our Investor Day when we talked about the complexity of these jobs and how much they want a supplier that can have redundancy, they want suppliers that can meet their production schedule. And some of these schedules literally can drift up 30% or 40% in their schedule as far as the demand perspective, and so that matters. I mean I think our size and location is very critical when it comes to where these projects are going.

And so I would anticipate, again, I mean, as we get into the second quarter, I think that cadence will be. But we also said we started off 5% up. We said we still believe we're going to be in growth, but we didn't say we raise our expectations on the overall demand of our products. We think it's still going to play out through the remainder of the year in that low single-digit carry-on.

Yes. And that's really based on a seasonally adjusted basis, we feel like we're right on track for our full year guidance. I think as you think about the rest of the year, one thing to keep in mind is that seasonally adjusted last year's second quarter was weaker than where we finished the year.

So we'll have easier year-over-year comps in the second quarter than we will in the back half. But in terms of the -- again, a lot of noise in the quarters, but in the -- for the full year guidance, we think we're on track to deliver that modest growth for the year.

Any thoughts on April?

I think April is going as expected.

Okay. And then just a last follow-up. Are you seeing any project cancellations or anything getting pushed out to the [indiscernible] maybe just delaying waiting for it to normalize?

We have not. We're paying very close attention to that because I mean that's a possibility, obviously. But we have not seen anything as of the date with either public or private side, we've seen any projects that have been canceled or delayed.

Thank you, everyone. With no further questions in queue, I would like to turn the floor over to CEO, Ronnie Pruitt for closing comments.

Thank you, and thank you all for your interest in Vulcan Materials. I'm proud of what our teams have accomplished in the first quarter, but we're never satisfied, and we're always looking ahead. We're committed to continuous improvement and long-term value creation for all of our stakeholders, and we look forward to speaking with you at our next quarter. Thank you.

Ladies and gentlemen, that will conclude today's event. Thank you for your participation. You may disconnect at this time, and have a wonderful rest of your day.

Welcome, everyone, to the Vulcan Materials Company 2026 Investor Day. My name is Mark Warren, Vice President of Investor Relations. We appreciate your interest in Vulcan and your participation in today's event. Vulcan is entering its 70th year as a public company, and we've been winning in aggregates since the beginning. And today, we're going to share with you how we are positioned to win the future in aggregates.

But before we get started, a few housekeeping notes. First, please be reminded that today's presentation may include forward-looking statements, which are subject to risks and uncertainties. These risks, along with other legal disclaimers, are described in detail here and in other filings with the Securities and Exchange Commission. Reconciliations of non-GAAP financial measures are defined and reconciled in this presentation and other SEC filings. Additionally, on your table, there's a QR code that you can use to submit a question for the Q&A portion we'll have at the end of the presentation. So take a look at that and go ahead and get your questions submitted. And with those 2 housekeeping things out of the way, let's get started.

[Presentation]

Good morning. Wow. Good morning. All right. There we go. I'm Ronnie Pruitt, CEO. I recently celebrated 31 years in the industry and the past 4 years with Vulcan Materials. I am proud and privileged to be leading the men and women of Vulcan Materials into the future. I am confident you will leave later this morning with a better understanding of the talented team, the innovative approach and the financial strength that will drive Vulcan Materials to win the future in aggregates.

What you will also hear is why we are the industry leader, why we're going to continue to pursue our proven strategy and how we will strategically grow our business. The roots of Vulcan Materials date back to the early 1900s, a family business called Birmingham Slag. A public company since 1956, we have now begun our 70th year of trading on the New York Stock Exchange, and we're glad to be here at the exchange today to share with you more about our future. Just like a Vulcan management presentation said from the 1980s, we decided what we wanted to do, and we concentrated on doing it better than anyone else.

We have long been the premier producer of in the aggregates business, and we're now focused on winning the future. So Vulcan Materials is the most aggregates-focused U.S. public company. We operate over 420 aggregate facilities and shipped over 227 million tons last year to 23 states. On average, we generated $11.33 of cash gross profit per ton, which drove adjusted EBITDA of over $2.3 billion. With over 16.5 billion tons of permitted aggregate reserves and a very strong balance sheet, we are well positioned for continued growth. So why aggregates? Why rocks?

Aggregates enjoys the strongest fundamentals and lower risk through the cycle compared to other construction materials. That is because aggregates have durable pricing, and we are the pricing leader. Aggregates pricing has been consistently growing over the last 40 years despite demand cyclicality. So let's talk about why. Just think aggregates are used in all forms of construction, both public and private. There are limited substitutes and the barriers to entry are high. Crushing aggregates is a mechanical process, so it can easily be scaled no matter what demand is doing. And rocks are heavy. So this creates wide logistical moats, which means location is key.

And Vulcan has built a unique and irreplaceable asset base over the last 70 years. We have a diversified revenue mix from 23 states and 35 of the top 50 fastest-growing MSAs. Vulcan is in the right markets. And even more importantly, in those markets, our position is advantaged. Approximately 90% of our revenue comes from markets where we hold a #1 or #2 position, which is key in our pricing leadership. So quality assets offer a very strong foundation, but maximizing the value of those assets means having the right people to manage them. Our leadership team is experienced and aligned, entrepreneurial and agile and deeply committed to driving continued growth and value creation for all of our stakeholders, our customers, our employees, our communities and you, our shareholders.

I'm looking forward to you hearing later from some of this team today. So the collective leadership of Vulcan that I just presented, our predecessors and our Board of Directors have fostered a safety culture at Vulcan that is profoundly dedicated to a proactive engagement. We strongly believe that using forward-looking metrics to proactively engage, influence behaviors and reduce job risk is key to keeping our employees safe. So when it comes to safety, no backwards-looking metric is ever good enough, unless it's 0. So safety will always be and has always been fundamental at Vulcan Materials.

Our employees and their safety will always be our #1 focus.

So our two-pronged approach to growth is key to driving sustainable value creation. The men and women of Vulcan Materials are dedicated each and every day to growing our underlying business through improved profitability. We call this enhancing our core. We also have entrepreneurial division leaders that partner with dedicated business development teams to continue to grow and optimize our portfolio. We call this expanding our reach. So I want to quickly share with you what we've been able to accomplish on both sides of our strategy since the last time we stood here in 2022.

We've remained dedicated to our strategic disciplines that drive how we run and continuously improve our underlying business. The Vulcan Way of selling and the Vulcan Way of operating are ingrained in our culture and are fundamental to our organic growth. Since 2022, we've made numerous enhancements to our strategic disciplines on both the operational and commercial sides of our business.

Process intelligence and daily labor scheduling have been key focus areas for Vulcan Way of operating. A new CRM platform with robust project leads as well as a full implementation of our proprietary pricing tool have been big wins for Vulcan Way of Selling. The innovative mindset of our employees, the strategic deployment of our technology have underpinned these achievements and helped drive a 45% improvement in our aggregates cash gross profit per ton. We've supplemented that organic growth with meaningful expansion of our franchise over the past 3.5 years. Through strategic acquisitions and complementary greenfield investments, we've added over 36 aggregate operations in 7 of our top 10 revenue states.

We've also optimized our portfolio by divesting of some downstream assets that were more strategic for the buyer than they were for us. So before we move on to what lies ahead, let me quickly recap you what we've delivered since our last Investor Day in 2022. Most importantly, we've already achieved our aggregates cash gross profit per ton that we established of $11 to $12 and on far fewer tons than the 260 million to 270 million tons that we framed with that target. This achievement is a perfect example of our commitment to controlling what we can control.

Look, we cannot control demand. But what we can control is how we execute to maximize the value of our products and minimize the cost it takes us to produce them by leveraging our talent, our technology and our strategic disciplines to expand unit profitability on every ton we sell. And I am proud of what our team has accomplished with the $11.33 per ton that we delivered in 2025. And so why should you care about aggregates cash gross profit per ton? Because it is fundamental to our best-in-class earnings growth.

Look, over the last 3 years, we have outpaced our industry peers. Our overall revenue, EBITDA and cash generation depict the powerful combination of our two-pronged growth strategy. And you can expect continued compounding unit profitability improvements and earnings growth as we go into the future. So I see several catalysts that are going to influence how we win the future in aggregates. First is a focus on innovation and technology. Second is an improving demand environment. And third is an advantaged footprint.

So technology to date has played a key role in enhancing our strategic advantages. In 2022, we began to reimagine what IT should look like at Vulcan. We hired a new CIO. You're going to get to meet Krzysztof after a while. And we made organizational changes to support the vision of our IT group, a vision focused on optimizing our business by leveraging digital technology to build and sustain competitive advantages and to win with our strategy. Our advances since 2022 have been noteworthy. Some of them I've already talked about with Vulcan Way of Selling and Vulcan Way of Operating, and you're going to hear a lot more about that today.

We have built a scalable foundation of people, process and technologies that enables us to quickly evaluate and adapt new capabilities that can further accelerate our margin improvement. Innovation and technology are core to how we strategically run our business and the first catalyst I mentioned on how we will win the future. The second catalyst is an improving demand environment. So although still weak today, fundamentals support an eventual recovery in residential construction. For 3 of the last 5 years, actual housing starts have not even kept pace with household formations. And in our footprint, especially, demographic trends support the need for additional housing.

And the good news is when residential growth does occur, it's going to also spur other nonresidential investments like traditional commercial and institutional projects. While those traditional nonresidential categories have lagged recently, industrial categories have shown some strength. Data centers has been a tailwind. Warehouses have bottomed and are poised to grow again, reshoring efforts support growth in manufacturing and energy investments are going to be critical to feed data centers and support the age of artificial intelligence.

Our footprint positions us well to benefit from growth in private nonresidential construction. And our scale within that footprint gives us an advantage to serve large complex projects. And you're going to see a couple of videos today and hear directly from our customers how that advantage plays out every day. The same is true on the public side. As a result of IIJA, contract awards in the U.S. are at record levels for both highway construction and public infrastructure investment. Our Vulcan states as represented in blue, have significant momentum advantage over other states. And the good news is, we expect public activity to continue to grow in the future.

Look, with only 50% of the IIJA dollars spent to date, we are already well positioned for healthy highway construction into 2027 and even into 2028. And we fully expect a reauthorization of highway funding, which if history tells us anything, will be at greater levels than the prior commitments. So I'll remind you again, for both public and private demand opportunities, our footprint is advantaged, and it's the third catalyst of our future growth. Growing demographics equate to the need for new construction. And Vulcan states are projected to far outpace the rest of the country in terms of population, employment and household growth.

This backdrop aligns with 2/3 of public spending and 70% of private dollars being awarded in Vulcan states. We are in the right markets for superior growth as demand improves. And of course, regardless of the demand environment, what we are most focused on is controlling what we can control and delivering superior unit profitability growth. So now I want you to hear from some of my colleagues on how we're going to do that through Vulcan Way of Selling, Vulcan Way of Operating and Vulcan Way of Talent. We're going to start with Jamie. He's going to talk on the commercial side, and then Brent Goodsell is going to come up and speak on the operations side.

And then Mitesh is going to come up and talk about our approach to talent. And then after the break -- sorry, before the break, we're going to have a fireside chat. So I'm going to bring the 3 of them up along with Krzysztof, our CIO, and we'll dig into how we're enhancing our core. And then after that, you're going to hear from Jerry on how we're going to grow this business. And then Mary Andrews will be the grand finale on our new financial targets that I'm sure all of you are waiting on.

So with that, Jamie, the stage is all yours.

Thank you, Ronnie, and good morning. My name is Jamie Polomsky, and I'm the Senior Vice President of the West. I've been at Vulcan for nearly 20 years in a variety of roles, ranging from sales, logistics and general management. I also was on the original team that defined the concept and the vision for the Vulcan Way of Selling. The Vulcan Way of Selling is our sales culture. The Vulcan Way of Selling ensures we are the supplier of choice. Today, I'll provide a high-level overview. I'll showcase Vulcan Way of Selling in action, highlighting our customer experience, followed by a discussion on recent technology enhancements.

Again, the Vulcan Way of Selling ensures we are the supplier of choice. It integrates our people, our customer-focused sales organization with a foundational process, a defined sales playbook that guides our approach to the market, combined with a technology platform that enhances efficiencies for our internal teams and provides customer engagement. The ultimate goal is to position Vulcan as a supplier of choice and to secure long-term customer loyalty. Let's take a look at a video that showcases Vulcan Way of Selling in action.

[Presentation]

So you just heard the quote from one of our largest customers. Of all the competitors, they can't do it. They don't have the capabilities you all do. Becoming the supplier of choice starts with the Vulcan Way of Selling. Vulcan Way of Selling is a more strategic approach, and it ensures we have the right people in the right seats to win. The sales service center is where analysts use a data-driven approach to determine the project strategy and overall pricing. So in the video that you just saw, our analysts are looking at our network of plants and proposing the combination of supply points based on logistics, inventories and profitability.

Our sales reps then take this recommendation and convert it into a project win based on their knowledge of the market and their customer relationships. This model is scalable and repeatable, and we know that it is delivering superior execution across our entire footprint. Vulcan Way of Selling is a cultural transformation that differentiates us from the industry and provides us with a competitive advantage. This journey began in 2017. And as I told you in my opening, I was on the original team that defined the concept, and I was one of the first sales analysts in our very first sales service center in Chicago.

Over the years, we have developed key components, including a sales playbook, performance metrics that focus on key sales activities. We've established and scaled the sales service centers across our entire footprint, and we've adopted internal and external sales technology. The Vulcan Way of Selling is no longer an initiative for us. The Vulcan Way of Selling is our sales culture. We are committed to the continuous investment in the Vulcan Way of Selling. With a strong foundation in people and process, our focus is squarely on technology enhancements. These technology investments accelerate our internal team's efficiencies and solidify an industry-leading customer experience.

Since 2022, we've developed a pricing tool and a mobile platform for our sales organization. We continue to invest in our customer portal and the development of job site productivity tools that directly improve our customers' efficiencies. Let's take a look at another video that will demonstrate these tools in action.

[Presentation]

This video illustrates how the seamless integration of people, process and technology is a core mechanism that delivers the exceptional customer experience that is expected. We have over 28,000 users on our customer portal who submitted over $2 billion in payments, and we expect this number to grow as more customers become familiar with the portal. Our commercial teams in 2025 followed up on over 14,000 jobs and converted 38,000 quotes to orders. Most importantly, though, the Vulcan Way of Selling is delivering results. We've had superior performance. Our aggregates price growth has outpaced our peers and the overall industry. The Vulcan Way of Selling is working. It's not just a concept. It's a proven commercial model that is delivering financial results.

Now I'll turn it over to my colleague, Brent Goodsell, who will discuss Vulcan Way of Operating.

Good morning. It's great to be here today. My name is Brent Goodsell, and I joined Vulcan Materials 5 years ago as a Division President. Now my career and background has been leadership and operational focused in a similar industry. Today, I'm responsible for Vulcan's Eastern operations. That's Illinois, down to Alabama and east to the East Coast. And I'm excited to talk to you today about the Vulcan Way of Operating. It's our operating strategy, discipline and model. And it's how Vulcan Materials differentiates itself from its competitors.

Now shortly, I'll walk you through a few examples of that differentiation. And I'm also going to discuss the journey of what we've accomplished, where we're at today and what's next. The Vulcan Way of Operating, VWO consists of 3 important pillars: our assets, our people and our customers. What underpins our success in the Vulcan Way of Operating is the Vulcan culture. Now Ronnie talked about the strength and success of our safety program, which is driven by our safety culture. That same culture is the cornerstone of our operations, which is built by our people. Now our operations in our industry is focused on 2 things: assets and people, those first 2 pillars.

And as Vulcan focuses on those first 2 pillars, it helps us create pillar #3, winning our customers. That's how VWO ties to what Jamie just talked about with VWS. So where have we been and what have we accomplished? Our journey has been machine focused. Our assets, the first pillar on that last slide. More specifically, our implementation of process intelligence within our assets. Process Intelligence, we refer to it as PI, is Vulcan's digital technology platform that produces 75% of our aggregates. It's dynamic. Now others in our industry utilize automation technology, and it's dated and it's static. Now I'll walk you through the differences in greater detail in a minute, and I'll talk about why that's important.

Now as you can see, our journey from 2019 to 2024, we scaled and accomplished the installation of process intelligence within 125 of our top plants. And we created 11 operations support centers. Now this was not an easy plug-and-play process. As you can see, this took some time. It took about 5 years. So why did it take us 5 years? That's 125 outdoor site installations. And we're not in buildings, warehouses. We're not in climate-controlled environments. This is outside. And it's technology in tough environments, all weather conditions, dusty and dirty conditions. Now the point here is this is not an easy plug-and-play process. This is not technology that you're just going to pull off the shelf and easily replicate.

Vulcan Materials is ahead of the industry with plant technology. And you can see today, we're making great strides, and we're well ahead in utilizing this dynamic technology with process intelligence. And like I said earlier, 75% of our aggregate is produced with process intelligence. That's over 7,000 plant assets connected to PI. And today, 90% of our plants installed with process intelligence operate with what we call high utilization. The high utilization means our plant operators are proficient in using this technology. So what are we focused on today? Our people. Pillar #2 on that first slide, developing our plant operators, the employees directly engaged and utilizing this technology. To effectively maximize the benefits of process intelligence to drive the results, it's about developing our plant operators, having the right behaviors, developing the right skill sets, plant operators demonstrating critical thinking capabilities and then being comfortable interacting with this technology and being self-driven because we're always looking for that next opportunity to drive efficiencies.

It's about the right person in the right seat driving the results. And as I just talked about, it's been a lot of work. It's been a lot of work. So why is it so important? Results through differentiation. I'll describe how Vulcan's process intelligence platform is superior to automation technology. Now automation technology, that's what the industry and our competitors utilize today. Now what you see here, this is automation. It's the same technology that's been utilized for over 25 years. Just think about that. Think about the cell phones that we all have today. What if those are the same cell phones that we used 25 years ago.

Now like I said in our journey, Vulcan moved away from this technology and started moving away from it in 2019. So why did we do that? Because automation is static and you can't interact with it. Now looking at the screen here, what this tells you is which components in your plant are running the green lights, which components of your plant are not, the red lights. Automation is a digital on-off switch, and it has limitations. Now sure, digital is replacing paper and it's a guide, but it leaves plant operators guessing at what the plant can really do.

With the limited ability to interact, operators are going to operate at their own comfort levels. They're going to be hesitant to push the plant. Why? Because they want to keep the plant -- they want to keep the lights green. They want to keep the plant running. They don't want to shut the plant down. They're not focusing on what that plant can actually do. The problem is we found this created inconsistencies among our plant operators. But more importantly, it creates inconsistency among your plant's performance. Maximum throughput within the plant is going to remain unknown because you can't see it.

Now you can see this screen looks very different than the last. This is Vulcan's process intelligence. The heartbeats that you see on the screen show real-time performance. And any deviations in those heartbeats, that allows the operators to troubleshoot on the fly, make instantaneous adjustments, minimizing those inefficiencies. Now green isn't always good because those deviations, they show you where you have opportunity. And process intelligence allows for target-setting capabilities, set stretch goals to maximize your plant's performance. Again, focus on those deviations to find opportunities to increase your throughput. It also connects the plant operator, managers and those operations support centers, all in real time.

And those 11 operations support centers that I referenced earlier, they can monitor multiple sites at the same time from a remote location. They're coaching, offering feedback and supporting those plant managers in real time all day long. I'd like to think of those operation support centers as kind of like an offensive coordinator, sitting up in the Plyo Boxe, looking down, surveying the plants, communicating directly with that plant operator. Now they both can look at the screen, see what's going on, relying on each other for help to make us better.

The whole team is now connected on the same page. Everyone knows the play, everyone is executing that play. Process intelligence is dynamic. Now I'm going to show a short video. This is actual footage shot in real time. You're going to meet Roger. Roger is a 10-year Vulcan employee and a plant operator out in San Antonio, Texas. Notice how he is interacting with the technology and making immediate adjustments. Here's Roger.

[Presentation]

So having seen our technology in action, now we get to talk about the good stuff. Let me share some of the results that we're seeing due to our differentiation through process intelligence. We produce more of the products that our customers demand. We saw an increase in yield. More production tons in less hours. We experienced a decrease in overtime hours. And by the way, that's our most expensive labor. And we produced more tons. We saw an increase in throughput. This allows us to put more tons through the plant at a faster pace. You put all these together, we produce the right tons in less hours. And personally, I think that's a great slide. But where is the cash?

This graph shows the difference in production costs in 2025. Sites utilizing process intelligence experienced less than a 1% increase in year-over-year production cost. Guys, they are beating inflation. Sites without process intelligence and those utilizing the automation system that I referenced, they experienced a 2.6% increase in year-over-year production cost. And like I said, 75% of our production tons are produced with process intelligence. Now we're not done with plant operator development or our technology. We continue -- we expect to continue to further drive results with our digital platform. So what's next? What's the future of Vulcan way of operating?

As we continue to refine process intelligence to drive efficiency, we're focusing on pit development. This is the beginning of our production process, creating the most efficient size material before it even enters the plant. So on the screen, the picture on your left, we're utilizing 3D imaging to achieve the most efficient mine plan sequencing. It allows us to better understand our geology to lay out more efficient shots, helps us create more efficient blasts, minimizing that oversized material that requires secondary breakage, which is an additional cost.

Second picture from your left, you'll see we're utilizing autonomous drills within our fleet. It gets the operator out of the cab into a better work environment. Operators now have more access to technology. They're operating these drills with tablets instead of joysticks. And we're geocoding drill hole locations to be more accurate and precise with our blast patterns. And drones are assisting us in the setup and the preparation process. Now I have one more video to show you. This is going to show how we're utilizing all the technology I just talked about with pit optimization.

[Presentation]

I assume most of you that's the first time you've seen a shot go like that. I was just watching your faces and it was pretty cool. The only thing more exhilarating than that is being able to push the button. So if you ever tour a quarry sometimes, make sure you ask to do that. When I look at that video, the first thing you think about is all the technology I talked about, we're using it there. And because of the size of the blast, and it was one of the unique ones in our company history, right afterwards, I called their operations leadership, just asked a simple question. How the blast go? And I was expecting to hear about the technology and all that. This isn't what they talked about.

What they talked about is how efficient that blast was, the size of the material. The quote that came back from one of the operations leader was that shot pulverized that stone. It is the perfect size, and it's going to run efficiently through our plant. That's what we want to see with pit optimization. So now if I can take you back to that first slide, the 3 pillars of the Vulcan Way of Operating, assets. We're utilizing our assets with process intelligence. People. We're developing our people to be optimal users of this technology and make products at the lowest possible cost and winning our customers, making the right products at the right time, ensuring availability of quality material.

This is how process intelligence allows us to cater more effectively and efficiently to our customers. And this is how process intelligence differentiates Vulcan Materials. I appreciate your time today talking about the Vulcan Way of Operating and really talking about our journey of where we've been, our assets and our PI. Where we're at, plant operator, people development and where we're heading next, our relentless drive to increase efficiencies.

Now I'll turn it over to Mitesh Shah to talk about our people.

Good morning. Still kind of sleep, I got it. My name is Mitesh Shah. I'm privileged to serve as Chief Human Resources Officer of this great company. I got a chance to meet with a lot of you all last night. It was great to see you there and excited to talk to you today about our people. And I've been with Vulcan for almost a decade. I've gotten to take my experience out of many roles, both as Division President and as Deputy General Counsel and now with CHRO, lead the Vulcan Way of Talent as we drive the growth and development of our people.

I'm thrilled about the opportunities ahead of us, and I'd love to talk to you all about what Vulcan is doing better than anyone else and why this is a competitive advantage. Look, at the end of the day, the Vulcan Way of Talent is the connection between the Vulcan Way of Operations and the Vulcan Way of Sales. It is the behaviors that are ingrained in our culture that make these disciplines work. We've had years of success executing on these behaviors, and we're getting better every single day. The Vulcan Way of Talent is what drives these outcomes, and it's based on 3 pillars. First, exceptional talent. We hire the very best in the industry. We're the brand of choice, and we hire based on our core values.

Second, we offer world-class training through our proprietary Vulcan University platform. And third, we have a culture of performance that drives ownership and accountability. Look, we have high expectations of ourselves and of each other. Talent at the very beginning is how we hire, and it's focused on who we bring into the Vulcan family. At Vulcan, we hire for character and we train for skill. We seek folks who are driven, curious, team players, driven because they're more likely to be self-starters, -- curious because they're more eager to learn and team players because they focus on lifting up others.

Look, these aren't some ambitious goals or fancy buzzwords we used at Investor Day in New York. This is an intentional process at Vulcan. It's a specific system in how we pull these qualities out of each of our applicants. And folks, I'll tell you, if we have somebody who's got skill and experience but does not meet this standard, we'll take a pass, and we're better for it. If you look at the challenges in the market that you hear about across many industries around challenges in finding skilled labor, recruiting and retaining labor. Vulcan has solved this problem by building our own.

With our operations trainee program, apprenticeship program, supervisor development program, we have partnered with the best trade schools, the best universities and taken solid talent from within, and we put thousands of people through our programs for supervisors, electricians, mechanics and much, much more. These graduates are now on a path to a long and prosperous career at Vulcan. And finally, we stretch capabilities early. Look, we don't believe in this mantra that you've got to wait your turn. If you're a high performer and you produce exceptional results, you will have early opportunities at Vulcan because we know that the best way talent learns is through early experience.

Now look, we -- now that we've hired the very best people, we train them using our Vulcan University platform. While other companies struggle with brain drain, retirements or experience leaving their ranks, we have captured decades of knowledge and made it instantly available on an application right on your phone. The training is an archive of our very best practices in all of our disciplines with VWO and VWS. These classes are meant to expedite the learning curve, and it is proprietary to Vulcan.

Now we marry these exceptional tools on the Vulcan platform with field-based training. We have on-site trainers that focus on critical skills across every division. These critical skills are the skills that have an outsized impact on the P&L because they drive plant availability and throughput. This training allows us and continues to allow us to be the most profitable operators in the industry. Now we've taken the very best. We've given them elite training. We ingrain our culture of performance.

We all know that leadership is paramount to the success of any organization. Vulcan takes this and puts it in 3 programs. The first, before you can lead your others, you've got to lead yourself. Our leadership journey starts with personal accountability, ownership and discipline. Now as you grow in your career, as you start to have direct reports, -- you're going to start looking at more of the performance coach model, not the boss model. We're trying to help our team that has now got people that they have to lead to develop new talent, develop young talent and help them excel.

And finally, as you continue to grow in your careers, you continue to grow in your rank and your expertise, the focus now turns to strategy, entrepreneurship, innovation. It helps us excel faster, move with speed and have a greater impact across our enterprise. All of this is focused on a service-based model of leadership where we focus on lifting up and building others. The process of growing and developing our talent at Vulcan is what makes the BWO and the VWS model work, because no matter where you go, we have enterprise-wide consistency.

We have one language, one culture. You can -- whether you're a plant operator in California, a sales rep in Texas or a mechanic in Florida, you know the expectations and the behaviors that are demanded in your discipline. It's why we can stretch folks early, and it's why we can move them seamlessly. And it's why we can integrate an acquisition faster than anybody in the market because we bring our culture of performance immediately, and we see results faster. They say the employee experience is a leading indicator of the customer experience. These awards show how our people feel about what they have built.

We did not ask for this recognition, but it's proof that the market is paying attention. We know that when our employees win, our customers win. When our customers win, our shareholders win. Now I'd love for you to see a video and hear from the very best in the business.

[Presentation]

Vulcan employees here with us today and many more watching live. Folks, this is how we all feel about this great company. It's an honor to work here. This is the team that will win the future. Thank you for your interest in Vulcan, and I'm going to ask my colleagues to come up here. We're going to do a Q&A -- excuse me, a fireside chat with Ronnie.

All right. Thank you, guys. So we're approaching the halfway mark. And the first part of our two-pronged strategy is how we're enhancing our core. And I hope you got some good insight from this team that's leading on how we are enhancing our core. So we're going to have a little fireside chat here. But first, I want to welcome a new guy to the stage. He hasn't got to introduce himself yet. So Krzysztof, why don't you tell our group here a little bit about yourself?

Sure. Thanks, Ronnie. Good morning, everybody. My name is Krzysztof Soltan. I'm the Chief Information Officer for Vulcan Materials. I've been with the company for 4 years now. And I had the privilege of leading a dedicated and extremely talented technology team. A little bit about myself. My career started in the United States Marine Corps. I've had the privilege of working in lots of different industries, starting with life sciences, aerospace, capital markets, transportation, health care, to name a few, and now construction aggregates.

I've had an opportunity to deliver digital experiences for customers and employees, drive digital transformations, support acquisitions, dispositions as well as utilizing asset data to drive and deliver business outcomes. I've had an opportunity to do that at companies such as General Electric, ABB, Johnson Controls and now Vulcan Materials. Thank you.

Well, we're lucky to have you. Thank you. So let's start with -- look, we talked about the journey, the journey with Vulcan Way of Selling and the Vulcan Way of Operating. And we are beginning to open up more and more around what that journey look like, what it means to us and how we're going to continue to lead this industry. And we get often asked like, okay, well, when you start opening this up, I mean, there's lots of technology out there. People can just copy this and how are you going to sustain those advantages? So Jamie, why don't you start with how important this culture side is and how this journey has been our people-driven just as much as the technology we've invested in.

Yes. Thanks, Ronnie. Great question. As I mentioned in my remarks, we've been at Vulcan Way of Selling since 2017. And it's not about the technology. It's about the people and the process. And it's really trying to get the right behaviors in your organization, and that takes time. As much as we want to believe that a new process, a new technology will be adopted over day 1, it just doesn't happen. So from 2017 to now, it is ingrained in our culture. We have the right behaviors. And with the right behaviors, now we can really focus on the technology.

Yes, outstanding. And Brent, how about Vulcan Way of Operating?

Yes. So you talked about those first 2 pillars, assets and people. And I talked about the difficulty of the assets, and it took us time to get that technology installed. But when you talk about the people and the culture, I mean, there's another hurdle there. I mean you can plug the technology in, but how do you get people to utilize it the right way and to be efficient with it. And I think the advantage Vulcan has is we started this 5 years ago. So we're ahead of the industry. And we've already seen the challenges and we put the processes in place, especially on the training and people side. So as we continue to further expand our technology platform, I think we're set up really good for it. And I think we're years ahead of the competition doing this?

Yes, it's great. So if you remember back to the video with Roger, our plant operator, I mean, you saw on the screen our process intelligence, but you also saw in the background plant [ atomization ], all the things that we said to own an office, which we call it cutting the cord. And so we're out there every day training our operators to rely on process intelligence, and it's hard. And so when people say, yes, we've got the same atomization, they don't. It's hard to train these folks. But when they grasp it, they're pushing us.

I mean the great thing is once they buy into it, they're really pushing the plants. And to Brent's point, it's not how much of a comfort zone you can run in. It's how do we integrate these and really optimize our plants. And so Mitesh, talk about the culture side of it. How important is that? I mean people talk about culture a lot. But I mean, this has been a journey.

It's been a journey. And listen, big picture, you've got to have buy it, right? I mean you've got to have your folks that are buying into the very value premise of VWO and VWS. And that's where we are. And it has been a journey. But if you look and see what they've gotten out of it, I think the entire team sees the value and what this offers. And it's not just what they see, it's the fact the entire enterprise speaks the same language. I mean that one enterprise, one language, one culture is necessary.

So when you look at the sales team and the operators, yes, they speak that language, but so do the support teams. So your QC techs and everyone else across the line from environmental to safety, we all speak the same language. You don't get there overnight. It is a journey. And you marry that with both the training that we offer as well as the on-field expertise that's there on site, that's hard to replicate, and we're years ahead of anybody else.

Yes, that's outstanding. And so as we talk about the journey, Krzysztof, you started in 2022, kind of right in the middle of it. I mean you inherited a lot of installations going on and connectivity. We talk about all these things and Brent described the difficult conditions. So talk about how hard it was. It's not easy to get these plants connected.

So it's very difficult. And first and foremost, I'd say everything that we do as a technology team always aligns to the company's strategy of enhancing our core and expanding our reach. That's fundamental first and foremost. Second, process intelligence, whether it's process intelligence or Vulcan Way of Sales tools or you've noticed capabilities like telematics that we're working through and piloting or other capabilities, they all rely on lots of data and connectivity.

So one of the first things we needed to address is the connectivity, making sure that we have the bandwidth, technology and scalability to enable capabilities like my colleagues have mentioned throughout the presentation so far. So that was very difficult, but very fundamental to everything that we're doing today. The other thing I'll mention is, as my colleagues have talked about Vulcan Way of Sales, Vulcan Way of Operating, Vulcan Way of People, all those things are all related to people, process and how we enable technology.

And what I mean by that is we have to simplify processes. We have to standardize processes and putting the foundational pieces like that in place from a culture perspective, from a people side of the house is fundamental to enabling capabilities for the future and which I'll mention also, all those components that I just talked about set us up perfectly in the use of AI for the future, which, by the way, we're already using.

Yes. No, that's great. And I would tell you, I mean, I'll give Krzysztof some kudos. So when Krzysztof first came to the company, we would have meetings about what we wanted to do and how we were going to get there. Krzysztof will start the meeting with what does it mean to the business? Not what was the investment and what new systems do we need to buy or cloud or this or that. It was like what does it mean to the business and what can we do with it? And so it's been very refreshing. And Krzysztof looks at it, like he said, this two-pronged approach, enhancing our core and expanding our reach and how this technology strategy supports that.

So thank you. So let's talk about -- look, one of the things I talked about earlier on how we're going to win the future. And I said an improving demand environment. But I followed it up with we're also focused on controlling what we can control. And so the last 3 years, demand has been muted. But we've done a really good job of continuing to accelerate our price and also controlling our cost. And so as we look at these process, procedures, the evidence that it shows with our cell service centers and our technology hubs and what we're doing with our control centers, talk about the assurance that it gives you, this team on our ability to control what we can control.

Yes. So I'll start. As you mentioned, we can't control demand. So what we can control on the commercial side of our business is staying disciplined to the Vulcan Way of Selling. And this is the point of Vulcan Way of Selling is ensuring that we are selling to the entire market, small customers and large customers. We don't rely on the big home run mega projects.

What we rely on is the day in and day out customers. And the framework of Vulcan Way of Selling allows us to have the right rigor and the right discipline on a weekly and monthly basis to ensure that our sales reps are following those procedures. And it's the same throughout the entire company. So if we're doing it in California, we know that we're doing in Tennessee. And that repeatable and scalable process is really ensuring that we are engaging with the entire -- all segments and all disciplines on every project.

Yes. Remember, 36,000 quotes transformer orders last year, impressive. Yes. Thank you. Brent, how about you? How we control we can control?

Yes. When we talk about what we can control, and we always talk about what you can't control, which is demand and weather, and that plays into operations, too. But what we can control is our production and our hours, right? Two big important inputs for us. And with the use of process intelligence and the technology, it helps us solve that equation faster. So we can start scaling, whether demand is up or down, we can scale at a much faster pace our production, which then goes with your hours. And we have the tools already and processes already in place. So not only can we set those plans up, but we can go back and monitor them and see how successful we were.

Yes. That's outstanding. So Mitesh, when we talk about controlling what we can control, how important is that one language? How important is that consistency? How important is it the way we train? When we train all our people the same. So how important is that?

I mean when you look at that stat we put up there, we've had 43,000 classes completed since 2022. The ability to get people to buy into that, use those learnings across our enterprise and drive consistency, it's mission-critical, right? It's our ability to roll out new products, new systems enterprise-wide and get buy-in and impact immediately. And we've got those 2 mechanisms to do that. This digitized platform for us, this Vulcan University is pretty exceptional. I mean we've taken a lot of knowledge, lots of historical knowledge, and we take this new information, and we're able to push it out immediately. Our folks can get in front of hundreds of classes and take those learnings and immediately apply them to the business. And you marry that with these on-site trainers across our enterprises that help them just -- we move with velocity. I mean we're able to move the business quicker.

So real quick, I mean, we're going to -- we'll take a break here in a minute and we're going to come back and we're going to talk about how we're going to grow this -- and growth for us is -- it comes in a lot of different forms, but a lot of that is through acquisitions. So how important is it with these tools when we acquire someone? How we integrate? I mean that's a big piece of this is how do we Vulcanize them. I mean that's what we call it Vulcanize. It's a good word. So Jamie, how do you talk about when we -- I mean, you've been through a lot of acquisitions. How quick is it?

Yes. I mean it's -- so we've done a lot of acquisitions in California over the last couple of years. And these Vulcan Way of Selling and Vulcan Way of Operations are essential for us to bring on the new employees, and it's a great framework. So having that framework knows that we're having the same conversations with our new employees that we are having with our legacy employees. So starting with that, getting the people right, having the same language, having them have a framework of how they join the company, they're appreciative of that. They know what to do. And it just accelerates the way that we can integrate our new -- and that's really all it's about the speed. We can integrate faster than anyone.

Good. How about on the operations side, Brent?

Yes. I think the same thing. I mean, we have the road map. We've done this. We've successfully installed technology in 125 plants. We have the framework with our plant operator development. So when we look at acquisitions and acquisitions may come with maybe one quarry, maybe a handful of quarries. That's a lot different than 125. So since that framework is already there, we can quickly replicate what we did in the past.

Yes.

If I may add, a lot of effort that goes into an acquisition is integrating technology and realizing synergies as a result of it. Somebody mentioned earlier on the presentation, the point that we do it better than anybody else. And that's because we've built a consistent, repeatable playbook and how do we integrate technology very quickly and get live on day 1. And that's key.

Yes. No, it is, definitely. So we'll wrap up with winning the future. I mean that's one of the themes today, and I talked about our investment and continued investment. And so we get asked a long time like what inning are you in? We're not in an inning. And we're going to continue to invest in these tools. And so as we talk about the future, Krzysztof, why don't you start with -- we've said data centers have been a big tailwind to us from a consumption standpoint and demand. But everyone wants to hear about AI, what's AI going to do? And how is AI going to affect our industry. So what is your thoughts on how AI is going to change the way Vulcan does the business?

Well, first and foremost, I'd say AI is here to stay. And as I mentioned earlier, we're already using AI to drive efficiencies and productivity within our company and providing tools and capabilities to make our employees better, more efficient in the tasks that they do on a daily basis. And that's fundamental. Second, I would say, we have to prioritize. We can dabble with a lot of different things. But if we focus on 2 or 3 big rocks, no pun intended for Vulcan and really just focus on what are the ones -- what are the use cases that are going to drive growth and EBITDA, that's where we're going to go after, and that's where we're going to pilot and scale where we see success.

The other thing I would just mention, and as some of my colleagues have mentioned earlier is AI is only as good as the data that we have. Every company has lots of data these days, but we have good data with the platforms with Vulcan Way of Selling, process intelligence and all the capabilities that have been put in place over the past few years, that is fundamental. And that will set us apart for the future, and it will be a competitive advantage for us, and we will continue to be a market leader in the industry.

Outstanding. See, I understood all that. That's good. So Mitesh, you and I talk about AR, it's not accounts receivable. It's attract and retain. So we talk about our people. How are we going to continue to do that? How are we going to put Vulcan and continue to be the leader when it comes to people?

Yes, it's something we talk about every week. And look, we look at it from 2 perspectives. One, our employee value proposition. We have a very strong brand and a lot to offer anyone looking for a career. We continue to offer opportunity, prosperity, stability. You can get a career and a long path at Vulcan and join a family. The second piece of it is engagement. We got division presidents here with us today. They do an exceptional job, them and their teams across the enterprise, engaging with our people.

Their focus every day is getting the truck and go. And they go see folks, engage with them, focus on ways that they can help them grow in their own careers and the relationships that you build just through those interactions show that you've got a path at Vulcan and you've got an opportunity and there are people invested in your success. And we look at success as both personal and professional success, right?

I mean we all work for the loved ones at home. Our folks do as well. We want to make sure that they find satisfaction, not only professionally, but what we provide them gives them an opportunity to be successful at home as well. So we've got a strong employee value proposition. We've got a strong brand, a lot of opportunity, and we engage with our people, and I think that really sets us apart.

Yes. No, outstanding. So Jamie, what about Vulcan Way of Selling? Are we done?

No, we're not done. First, though, we need to stick to the fundamentals and maintain the culture that we've built over the several years. I think the opportunity is really how we utilize the data that we have to accelerate the decision-making of our teams. And that's both just within Vulcan Way of Selling and Vulcan Way of Operating. I also think the real opportunity, too, is where those 2 come together. How do we use the data to drive the business, not just sales, not just operations, but when we come together, what are those business units, how are they using the data to improve the speed and make the right decisions.

Yes. Outstanding. Brent, are we done?

No, we're not done. I think there's going to be a lot of technology, a lot of new technology coming at us. So there's going to be technology coming as we know about today. So I think the really important piece is how we've demonstrated how we can scale and implement that technology, train people, but more importantly, it's that Vulcan culture, being able to enable with all that new equipment and technology. And I think that's going to be the strength of our operations going forward as we sit down with Krzysztof and his team and really decide which technology is going to benefit us. From there, we can scale it because we've already done it.

Yes. Outstanding. So I hope this has been helpful. Let me give you a little more deeper dive into Vulcan Way of Selling, Vulcan Way of Operating and our Vulcan Way of Talent. And so we got another short video to show here before break. After the video is complete, we're going to take a 15-minute break. I'll remind you that your QR codes are on your tables. And so if you have questions to submit, please do that so that we'll wrap up. After break, Jerry is going to come up and talk about how we're going to grow the company and what that growth looks like. And then as I said, Mary Andrews will come up and give us our new financial targets. So we'll watch this quick video, and then we'll take a break, and then we'll come back and wrap up the day. Thank you. Appreciate it.

[Presentation]

[Break]

All right. Good morning. I'm Jerry Perkins, Chief Administrative Officer at Vulcan Materials, and it's a pleasure to be with you today. Over my 25-year career at Vulcan, I've had the opportunity to work on a range of acquisitions and growth projects. First in corporate as an M&A attorney and General Counsel and then later out in the field as a Division President and a Senior Vice President.

And recently, I led the acquisitions of Wake Stone in North Carolina and Superior in California. And I'm privileged and I'm honored and I'm excited to lead the future growth efforts of Vulcan with this new management team.

Earlier today, you heard Ronnie lay out our two-pronged strategy. And Jamie, Mitesh and Brent talked about the Vulcan Way of Selling, Vulcan Way of Operating and the Vulcan Way of Talent. Those are the engines that enhance our core and make us a superior performing company today. My focus is on the future. The second prong of our strategy, how we expand our reach and grow our operations and our asset base. Our growth strategy is built on 5 guiding principles. First, we are focused on acquiring aggregates. It's who we are. It's what we do. It's our expertise.

Second, we target acquisitions where we can win, where the market structure is favorable for bolt-on acquisitions in existing markets, that means expanding our footprint and our presence to drive more opportunities and to drive synergies. And for new markets, we focus on a path to being #1 or #2. That's the kind of structure that drives profitability.

Third, we don't passively wait on opportunities to come to us. We are proactive in our approach, and we build trust to get deals done. Fourth, our acquisitions come with synergies and not just the easy cost-cutting time. We leverage our scale in the Vulcan Way of Selling and the Vulcan way of operating to enhance margins and operating performance. And lastly, we constantly evaluate our portfolio. If an asset is in the hand -- is better in the hands of someone else, we're not afraid to sell it or swap it. And these 5 guiding principles support a powerful 2-part approach to expansion, M&A and greenfields.

Look, our priority in Birmingham right now and across all of our divisions is simple. It's to grow our footprint. It's an expectation and it's a priority. And we are focused on having high-touch interactions with acquisition targets to build strong and lasting relationships. Our goal is to have the head seat at the table when an owner is ready to sell. And if you look at the past 4 years back to 2022, over 80% of our acquisitions have been the result of a privately negotiated exclusive transaction. That's unique. That's special. Why? Because our industry reputation means we are a buyer of choice. We don't depend on competitive auctions. When family companies choose to sell, they often choose Vulcan because they know their legacy, their operations and most importantly, their people will be in good hands.

Look, M&A is in our DNA. It's how this company has been built. Let's go back 70 years to 1957, Vulcan had just gone public right here on the New York Stock Exchange. We had 51 aggregates locations and a modest $91 million in revenues. Don't we all wish we could go back and buy the stock? Halfway through that 70-year journey, we reached the monumental $1 billion in revenue mark. We had 179 aggregates locations, mostly in the South, the Midwest and Texas. And here we are today. We're the largest producer of construction aggregates in the United States with 425 aggregates locations, $8 billion in revenue and an unmatched coast-to-coast footprint.

This is the direct outcome of a strategic commitment to growth that started 70 years ago and continues today. When you look at that time line, you see a rhythm, you see a discipline, you see the construction of a best-in-class network and footprint that simply cannot be replicated. So let's zoom in on our growth activities from the last 4 years. We've been busy. We've acquired 36 aggregate operations, all in key markets for us. We've also complemented that growth with the completion of greenfields, 7. And even more so, we have continued to optimize our portfolio. We will have divested 149 ready-mix plants after we close on the sale of our California ready-mix business.

As a result, we will have reduced our ready-mix footprint by almost 80% from where it was just 5 years ago. Now our strategy in action, beginning with our entry into a new market, the high-growth Raleigh-Durham market. When we acquired Wake Stone, we became the #1 producer of construction aggregates in Raleigh on day 1. Look, Wake was a top pure-play aggregates producer on the East Coast. It was a true gem in a high-growth market. But the Bratton family chose to sell to us because we had developed a decades-long relationship with them. And Vulcan's culture, rich history and strong reputation were key with the Bratton family entrusting us with their operations and their employees.

In the 16 months since we closed this transaction, we have fully integrated the operations, and we are leveraging the Vulcan Way of Selling and the Vulcan Way of Operating to enhance margins and drive long-term profitability. Next, a classic example of a high-value bolt-on acquisition in an existing market. Southern California, specifically San Diego. We already had a nice presence in San Diego. But with the acquisition of Superior, we solidified our presence as the #1 producer of both aggregates and asphalt in San Diego, and we will be for a mighty long time given our reserve base, the locations and the barriers to entry.

And like Wake, this was a privately negotiated transaction built on our lasting relationship with the Brouwer family. We have also fully integrated these operations, and we are reaping the benefits of our expanded scale and market presence in San Diego. The aggregates industry remains highly fragmented. Vulcan is the largest producer, but we represent less than 10% of the total market. And over 2/3 of the U.S. market is controlled by private companies. That leaves us with ample opportunity to grow. Looking at all the opportunities on this map, we've identified priority targets totaling 350 million annual sales tons.

More than half of that is outside our footprint. Look, the last 20 years, we've been focused on acquisitions and growing inside our footprint. And that's been critical. We have irreplaceable positions in key growth markets. But as we move forward, expect us to grow not only in our footprint, but seek attractive opportunities out of it. We will remain disciplined and selective, but the opportunities are vast. What lies ahead is truly exciting. It's a unique time in our industry. Many family-owned companies are going -- undergoing generational transitions, creating many opportunities for us.

At Vulcan, our growth engine is not just powered by M&A. It's powered by greenfields, too. Why? Because where the growth is occurring, there may not be an acquisition candidate or target. And we go where the growth is, not just where the sellers are. This map of greenfield activity shows you that it's significant and widespread. We currently have 17 projects in flight, and many of those will be operational in the next several years, generating incremental margin at very attractive returns. To be clear, greenfields are difficult. They take time, they take discipline. They take local market savvy, and that's why many of our competitors avoid them.

We believe our commitment to greenfields is a strategic lever that sets us apart. The South Carolina Coast is a powerful illustration of our greenfield strategy at work. A decade ago, our presence in Charleston and Myrtle Beach was limited to just 3 distribution yards. Given the projected growth in this coastal area and the limited acquisition targets, we prioritized greenfield efforts to build our own network.

The results have been impressive. By the end of this year, we will have added 3 sites in Charleston, 2 in Myrtle Beach. And in 2024, Wake Stone's quarry was added. That's 6 sites, 6 sites, 3 to 9, and this solidifies our position as the #1 producer and seller of aggregates on the South Carolina Coast. In closing, this company was built on growth. It's in our DNA. And this management team has a relentless focus on growth.

And with that, I'll turn it over to Mary Andrews.

Thanks, Jerry. Good morning, everyone. I'm Mary Andrews Carlisle, Chief Financial Officer. I'm approaching my 20th anniversary at Vulcan later this spring, having served in numerous finance and business development roles before stepping into the CFO seat back in 2022. And as Ronnie alluded to earlier, now that you see me standing on this stage, you know we're making our way to the punchline. I stood before many of you 3.5 years ago at our 2022 Investor Day, and I kicked off my comments by sharing that our adjusted EBITDA had grown at a compound annual growth rate of 11% over the preceding 5 years.

I'm proud to stand here today and tell you that our consistent strategic focus and solid execution delivered average adjusted EBITDA growth of 13% and average operating cash flow growth of 16% over the last 3 years. As you've heard from my colleagues this morning, our teams have been very busy, continuously leveraging our strategic disciplines and thoughtfully optimizing our portfolio. Over the last 3 years, our adjusted EBITDA margin has expanded over 700 basis points, and our return on invested capital has improved over 200 basis points. And delivering on our aggregates cash gross profit per ton target of $11 to $12 has been the key to our success, and it's the foundation of our attractive cash generation.

At $11.33, our aggregates cash gross profit per ton has increased 45% since 2022. And coupling that profitability improvement with a stable cash conversion cycle, operating cash flow, as you saw on the previous slide, grew to over $1.8 billion in 2025. We prioritize reinvesting in our business and consistently spend about 6% to 6.5% of revenues on operating and maintenance capital expenditures. And to complement our M&A growth, as Jerry just described, we also invest in greenfield and other growth projects, which have varied between 1% and 4% of revenues over time.

And net of those total capital expenditures, free cash flow surpassed $1.1 billion in 2025. That is more than double just 3 years ago and positions us well to continue to pursue our disciplined and balanced capital allocation strategy. Over the last 3 years, we've invested -- we've deployed almost $6 billion of capital or approximately $2 billion annually on average. Our capital allocation strategy has not changed, but the level of cash generation supporting capital deployment certainly has.

The average capital deployed over the last 3 years was 38% higher than the preceding 5. But over that entire time frame, we balanced reinvestment in our franchise, growth through M&A and capital returns to shareholders. And given the growing free cash flow, we have been able to increase average M&A spend by 29% over the last 3 years and to accelerate capital returns to shareholders. Jerry already shared with you about our acquisition focus and execution. So I want to spend a couple of minutes elaborating on our CapEx investments and shareholder returns.

Operating and maintenance capital projects come in all shapes and sizes, from new mobile equipment to screen replacements to partial plant upgrades to full plant rebuilds. Regardless of the project size and scope, our goal is to deliver incremental value on every dollar we reinvest, improving customer service, productivity and sustainability.

In Tennessee, at one of our Nashville area plants, we recently made an investment to change our wastewater handling. And this project allowed us to avoid costly settling pond cleanup to recover additional sellable product, to recycle 90% of the water used in the plant, which enabled us to limit our dependence and the cost of a municipal water supply and to reduce electricity consumption from pit pumping. This investment ensured that a key location with long-term reserves in a growing market could sustainably operate and more efficiently meet our customers' demands.

Another example in Georgia, at one of our busiest and most profitable Atlanta area quarries, we're currently making a much larger investment to relocate and rebuild the processing plant. This will allow us to expose additional long-term reserves and extend the mine life by over 20 years. This facility is ideally located to reach multiple high-growth counties to service our key fixed plant customers and to participate in mega infrastructure projects. The new plant will have an increased production rate and improved water management system and an enhanced customer load-out facility.

These are just 2 quick examples of operating capital in action, delivering tremendous business value and attractive returns on investment. Now we have long said that after reinvesting in our franchise that our priority use of capital is for growth through acquisitions. That remains true today and with an attractive pipeline of opportunities. But even so, given the level of cash generation, there's also an opportunity to more consistently return excess capital to shareholders. We've returned more capital to shareholders in the last 3 years than we did in the preceding 5.

And we are committed to continue to steadily grow our dividend and to return excess cash to shareholders through share repurchases. Our investment-grade balance sheet is well positioned to support these capital allocation priorities. We have worked hard over time to craft and maintain a debt structure that is appropriate to the asset base and through the cycle. Our target leverage range of 2 to 2.5x keeps us importantly investment grade, which ensures that we have access to capital at every stage of the cycle, that we have a reasonable cost of capital and that we have the opportunity to place longer-dated debt that matches our long-lived asset base.

And with net leverage currently at 1.8x, our balance sheet gives us the financial strength and flexibility to pursue the growth opportunities that Jerry just defined for you earlier and to consistently return capital to shareholders. So now I want to go back for a minute to one of my earlier comments, which was this, that growth in aggregates unit profitability is the key to our success and is the foundation of our attractive cash generation. So what is that going to look like going forward?

Let's first look back at the compounding improvements the business has delivered over the last 8 years. Aggregates cash gross profit per ton has grown from $6 in 2017 to $11.33 in 2025. And for the last 3 years and what has been a muted demand environment, this highly important metric has grown at a compound annual growth rate of 13%, considerably higher than the preceding 5 years, and we believe structurally higher.

Vulcan Materials execution has reached new heights as our teams continue to improve our underlying business through their shared commitment to our strategic disciplines. We thought it would take us 260 million to 270 million tons to achieve our previous $11 to $12 target. But as you know, we reached that target on just 227 million tons. And we now believe we have a line of sight to deliver $20 per ton of cash gross profit on those same 260 million to 270 million tons to 0, $20 per ton.

So let me tell you how we're going to get there and what that could mean for overall earnings. Ronnie described for you earlier the key dynamics that we see surrounding each of the end-use markets. So our expectation is that overall, demand will grow at low single digits in the medium term. And against that backdrop, we expect to deliver high single to low double-digit improvement in aggregates cash gross profit per ton. Our Vulcan Way of Selling and Vulcan Way of Operating execution will allow us to grow revenue faster than the market and deliver operating efficiencies to help offset inflationary cost increases.

This expected aggregates performance equates to $4.5 billion to $5 billion of adjusted EBITDA, double where we are today. And that's our organic growth opportunity, which leaves acquisitions, which we are well positioned to execute on as upside. Vulcan Materials has a stellar track record of compounding profitability improvements, attractive earnings growth and value creation for our shareholders. And we have the assets, the team and the strategy to continue to deliver and to achieve an exciting $20 per ton of aggregates cash gross profit.

And so now with that target set and what you all came to hear today, I'm going to pass back to Ronnie for a few additional remarks before we move to Q&A.

Thank you. So $20. Wow, it's pretty impressive. Look, just 2.5 years ago, our average selling price was less than $20. Think about that. That's what we sold aggregates for. Now we see a path for $20 of adjusted -- of aggregates cash gross profit per ton. And look, what Mary Andrews described, and I hope you've got from our discussion today was a better understanding how Vulcan Materials is positioned to win the future. I referred to an earlier quote from a presentation back in the 1980s. I'm going to change that quote up a little bit.

We know what we want to do, and we're going to concentrate on doing it better than anyone else. That focus is going to be on aggregates, and that focus is going to be on us being the industry leader. So look, I'm proud of the team you got to see today. We may not be Wall Street presenters, but we're rock crushers, and we're damn good at it. So thank you. Thank you for your time and interest.

I'm going to turn it to Mark and Mary Andrews and I will get to answer your questions. So Mark? Fire away.

Fire away. Okay. We got a list of questions here. I try to group them together. I think maybe a place to start is to talk about demand, demand environment. So maybe we try to talk about demand environment and how that supports the targets that we just presented. Maybe just give them a flavor for that.

So the targets we laid out were, I mean, I think a pretty conservative look at demand. As we went into 2026, -- we had insight into seeing that we were going to be in a state of recovery after 3 years of muted demand. And we said, look, public was probably our clearest line of sight. We still got good funding going on. IIJA dollars are still being spent, still some left to be awarded before the expiration of the bill. So public is good. And then we talked about private nonres, and we talked about data centers being a tailwind.

We also talked about some reshoring efforts happening. And I think we're in a good spot as we see 2026 playing out that we are starting to see the signs of recovery, and it's going to be slow. But as we look at these numbers that we presented and what Mary Andrew just talked about, I mean we're not talking about double-digit growth that we need to get there. And so I talked about earlier about residential. And the statistics around 3 of the last 5 years and housing starts not even keeping up with household formations.

And so if you think about where our footprint is, is where demographics are going to be. And so I think we see a path of improving demand environments, which we've said will be a tailwind to both our pricing and our cost. And so as we continue along this two-pronged approach and focusing on enhancing our core, that demand environment, it really plays well into the things we talked about today with Vulcan Way of Selling and and Vulcan Way of Operating.

Mary Andrew, do you want to add anything?

No, I think you hit the demand.

Good.

So on demand, a little more narrow near-term focus. If you -- the guidance and the volume we expect to return to growth this year in '26, what would be the things that would put us more towards the higher end of that range? Like what has to happen? Is it a recovery in private construction is really the swing factor?

Yes. I mean again, I think we track a lot and we talk about all the data that we get in with our Vulcan Way of Selling. And I said on our last call that our -- going into '26, our bookings and backlogs were in really good position. And a lot of that's tied to both public and private nonres. A lot of that is the data centers we've talked about. So I think we've got really good insight into what that piece of the market looks like. I mean the unique thing about the data centers, typically, when we talk about quote to booking, it's about a 6-month lag. And so when we talk about public work and really typically private nonres work has been about a 6-month lag.

What we've seen lately with some of these data centers is a lot faster conversion rate. So from time of quoting to time of shipping, we're seeing that 6 months shrink down to 2 or 3 months. And so you all are tracking the same stuff we are with all the data centers that are announced and all what that's coming with. I would tell you what we're starting to see is now the talk of where energy is going to have to be invested in to meet the demand of these data centers. And when we start talking about energy projects, you really start ramping up the aggregate intensity of those projects. And so I think that's a potential tailwind, Mark.

I mean, look, residential, we don't have it in our the guidance we gave, we don't have -- we got residential going back to flat, maybe stopping the decline, but not really growth. Is there a potential there? I mean we all could guess on what interest rates are going to do and other things that are going to happen to address affordability. I think residential for us is more of a longer-term play. We need it. I mean the industry needs it. But again, we're focused on controlling what we can control. So I think with the public backdrop, private nonres, some of the other projects we've talked about, I think we're in a good position to start seeing demand recovery starting this year and then moving into the future.

Very good. So just to put a finer point and kind of wrap up the data center discussion, there's a couple of questions here about -- we showed a video that talked about the meta project in Montgomery, said we'd ship 600,000 tons. Is that kind of a way to think about data centers? Are they all shapes and sizes? How would you address that?

Yes. I mean I think it was a good illustration of what that footprint can look like. I mean it really does vary from geography to geography. And it really starts with where are they building it at and what was there to begin with. I mean some of these projects are literally a farm field with nothing. And so when they start those kind of projects, they're scraping the ground and they may go down a couple of feet to build a foundation for what they're going to construct on top of that.

Obviously, in Virginia, that's a very mature -- I mean, if there's a mature definition of data centers, but Virginia is a very mature market. So when we see construction in Virginia, they're not the same as the construction in Monroe, Louisiana or in Huntsville, Alabama or in Abilene, Texas. And so it really is based on what is the -- what are they starting with? How much ground are they going to cover I mean some of these things have been gone now to Phase 5, Phase 6, Phase 7. But it's also what we're starting to see is energy tied to the data centers, which is creating another opportunity for aggregate intensity with some of those projects because when they have to start literally building 100% redundancy for these power plants or for these AI plants to get approved, that's going to be -- it's going to be another tailwind to our demand environment.

Okay. Maybe one more on the demand side.

I thought you said that was it.

No, that was a data center. So a couple of questions on renewal of the highway bill. So we talked about continued growth, maybe kind of set the table for volume growth continuing on the highway side of things and the prospects for getting a new highway bill.

Yes. I told a couple last night that we were talking about that. So I worry about a lot of things and, and our Board and our shareholders pay us to worry. That's what we get to do. Public is not something that I worry. It's at the middle to the bottom end of my worries. And I say that because, look, we've got a -- we've got a good tail to IIJA. So we're going to still be spending well into '27 and even into '28. And remember, 1/3 comes from the federal side, 1/3 comes from states and 1/3 comes from local measures. The states and the local measures are very healthy. And so we see that continuing on. And I would tell you, we've been in a lot of meetings with representatives on the transportation committees.

I think both the Rs and the Ds are very supportive of getting a bill. Will it be before midterm? I don't know. Will it be before expiration? I don't know. I can't call that. But what I would tell you is no matter what that looks like, whether that's in the form of a continuing resolution that continues to spend at the same rates that we're spending at today. And so we've done that a lot. But what I said earlier in my presentation was what history will tell us is that the next bill will be higher than the previous one. And the conversations we've had with both Republicans and Democrats, those numbers are higher than the previous bill when it comes to highway and infrastructure spend.

And so focus on that, what's going to be highways and what's going to be infrastructure. I think some of the other stuff may not make it through a bill, but some of the other stuff didn't include aggregates. So I really didn't care about that. But in the end, I think I got -- we have a lot of confidence in where we're at on reauthorization. And again, I think public is one that, that leg of our stool is going to continue to be very strong going into the future.

Very good. Maybe one for Mary Andrews to kick off. This is kind of moving to more on the price cost side. Just talk about the price cost assumptions that support the targets. We talked about cash gross profit per ton growth. Maybe just give everyone a little bit of color on that.

Yes. So you know well why we talk about cash gross profit per ton growth because fundamentally, what we take to the bottom line is what is most important. We've said we expect that to grow at high single to low double-digit rate in the targets. There are obviously a number of different price/cost combinations that would get you that kind of earnings growth. What I'd tell you is our assumption there is that if we think about historically, what we've been able to achieve from a real price growth standpoint and from a real cost increase standpoint, we believe that we'll be able to deliver more real price improvement and that our cost increases will be lower than our historical real cost increases.

So obviously, both volume and inflation will have some bearing on what the top line number looks like and what those 2 key components look like -- but overall, what our targets imply is our ability to outperform history on both price and cost and to deliver that high single to low double-digit unit profitability improvement.

Very good. Maybe this is a good place to insert the oil question.

Oil, what's up?

So -- and I say that more from the way it might impact with prices of oil, recent rise in price of oils, talk about how it may impact on the cost side, but also the opportunity on the price side.

Yes. So obviously, we're paying attention to what oil is doing, and it's a very short history right now on what it's doing. So we're not panicking about that. 10% of our cost on the aggregate operations side really is what diesel represents. And then we obviously have asphalt operations in several key markets as well. We have different ways. We have an asphalt terminal in California. Jamie and his team are here. So we have ways of controlling the fluctuations in asphalt pricing on the asphalt side. But look, in the end, I mean, I'll take you back to 2022, we came out of COVID, and we had record inflation.

And it came from all shapes. It was fuel, it was parts and supplies, it was labor. And what do we do? And we raised our price. And what are we going to do next time? We're going to raise our price. And so our ability to react to this -- and again, we got midyears that we're going to be announcing here soon, and we're going to evaluate that. Again, I still think it's really early in saying where is this going to settle out at. But if we haven't proven anything to you at all, I hope the one thing we've proven to you is that we can take care of cost increases.

And we've been very diligent at that for a long time. I said 40 years of history that aggregate pricing has been accelerating. 40 years. So I don't know, Monday morning quarterback, hindsight's 2020, whatever you want to say, that's a pretty good track record. And so of all the things I worry about, I mean, if cost increases are something that's going to be a headwind for us, then we'll turn it into a tailwind.

I mean I think we always say, right, most fundamentally, 2 things create a good environment for aggregates pricing, visibility to demand and inflation. And so if what oil is doing now is something that causes inflation, like Ronnie says, to us, a near-term challenge on the cost side within the walls of our plants, but ultimately, a bigger opportunity and one that we can catch pretty quickly. I think it took us a quarter back in 2022.

So maybe along those lines and kind of tying it into VWO and VWS, kind of how do we think about the benefits of VWO and VWS and their impact on price and cost kind of what's going on with inflation?

It's definitely tools. And as Krzysztof and Jamie and Brent talked about it's tools that we have that give us more insight and more analytical ability to make better decisions. And what we do with that, and Krzysztof made the point, I mean, first, you got to have really good data. And I think our teams have done an excellent job of making sure that the data we have coming in, both on the commercial and operational side is really good data. And then it's up to us to make those decisions. But I would tell you, the analysts that we have in each market and the sales service centers and those controls, I mean, we're looking at all that.

I mean we look at our costs, we look at that opportunity. We look at our inventories. I mean, we're analyzing so many different things and really trying to drive the profitability of every ton that we ship. And so I look at those tools as these are the times when the tools are going to pay great benefits because we're going to beat our competition on cost, and we're going to beat our competition on price.

And beating our competition on price means we're going to sell it at a higher price which some people would say, well beat your competition means you cut no, we're going to sell it at a higher price and at less cost. And so that's the beauty of what we're doing with these tools. And I'd say we're not done. We're going to continue to invest. And I said technology is a big piece of where we're going in the future, but we're going to get smarter. And we got a lot of room. We're just rock crushers, remember.

So speaking of a lot of room, so we gave some color on some of those KPIs, yield, throughput, less overtime, those kinds of things, right, for that time period. Kind of where could you see those metrics going over the next few and how that impacts cost?

Yes. I mean the yield, the throughput actually making the products that we -- that are high-value products. So when we talk about the targets that we set targets on our products that we're making. And so each plant has a specific target on the sellable products. I mean, so if you're just running a plant and you're just going to run it wide open, in the end, you're going to make maybe 75%, 80% sellable products and you might make 10% or something over here. We have our plants defined that we know exactly what products we want to do and what do we have to do to maximize that plant to get the throughput of our most valuable products. And so that's the way it's set up.

And so then we start talking about plant uptime. And when you talk about plant uptime is really our ability to predict and plan for maintenance events. And so I would tell you the better we are at predicting and planning what's going to happen to us in our plants, the less it's going to cost us. I mean, I think that goes for anything in our lives. If you plan for something, your hope is that I was able to control that because I planned for it versus react to something, and so our plant uptime is a big focus for all of our operators on what are we planning, how are we doing our preventative maintenance, where are we spending our capital? Mary Andrew just talked about capital.

Her and I are like every day, we wake up and go, how do we spend our capital wisely? How does every dollar we spend, no matter if it's termed to maintenance CapEx or not replacement, how do we drive those dollars to say we're going to get a return on every dollar we spend. I want to do it better. And the beauty of this is with the analytical tools that we have and the data that we're getting, our operators are now like, hey, if I can just do this different, if I can replace this screen with this, if I can rebuild this hopper and make it this size, here's a pinch point. I mean we are literally driving efficiencies with our maintenance CapEx, which historically, that's not some -- in big industrial companies, they just -- they said it's like-for-like, to spend maintenance CapEx. We don't want to do that. We want to drive better efficiencies in every dollar we spend.

And I think one thing, too, that's important to remember is a lot of the -- we talked a lot today about the journey of VWO and VWS and the investments that we've made, particularly on the operating side when the demand environment has been going the other way, I think, gives us a huge tailwind as we actually have volume opportunities. That's when you really get the benefits of those efficiencies in the plant throughput, more tons through the plant quicker is great. But if we don't need more tons, right, we're holding the plants back. And so as we get more volume, I think that we have a great opportunity to continue to see benefits in our production cost. Brent showed today what 2025 looks like from a production cost standpoint, and there's a good runway ahead of us to continue to execute on that front.

So here's -- on PI, there's a question here about how you're thinking about the risk that peers or competitors could duplicate, right? We talked about this long journey and very difficult replicate competitive advantage. And then on the flip side of that, with AI and the data we're collecting, is there an opportunity to widen that gap from a competitive advantage standpoint? Just maybe talk about the future of that.

Yes. I mean I think during the fireside chat, what we were trying to come across with was the difficulty of not just installing the equipment, not just getting -- which has been a very long process. As Brent talked about, 125 plants and all kinds of different outdoor activities going on at those plants. And so trying to install equipment, trying to get them connected, trying to keep that stuff running. I mean it changes your maintenance practice. It changes what we do in the plants. I mean it changes our daily habits of when we're going out there and now you got to keep these sensors.

You got to keep them clean. You got to do that stuff. So the investment side of it is one thing. But to me, it gets down to the culture. And so when we talk about our confidence in continuing to lead the industry and people are going to be -- you're going to hear from our peers about optimization. And you're going to hear about them talking about their way. They're going to use the word way because that's a popular thing to say. And I would tell you, again, I mean, look at our performance and look at -- I mean, just judge our numbers because our numbers are -- speak for themselves.

I think we continue to do that. And when we talk about AI, I mean, the beauty of what Krzysztof and his team have allowed us to do is we look at these opportunities. And Krzysztof said, we've got to be very disciplined. We can't go chase 10 different things at once. But we'll spend a lot of time chasing and we'll spend very little time executing, and so we limit that down. And we have all kinds of industry folks coming to us today with the latest and greatest ideas. And we've probably seen the majority of them and some -- there'll be some new ones to come. I mean that's great. I'm excited about what those things are.

But the beauty of what Krzysztof has done is like, okay, well, let's just go try this at one plant. Let's go test it. Let's put it in. Let's run it for a couple of months. Let's see if it works. And our ability to scale, we've got the ability to scale, but we don't want to do is go out and say, "Hey, let's bet the farm on some new technology. Let's go out and put it in 400 plants and then go. Oh, c***, it didn't work. So we're just not going to do that. We're going to be very disciplined. And again, lots of opportunities on the mobile side as well as the fixed plant side.

But Mark, I would just tell you, I think the culture that we've built and what our teams have already been through and their willingness to change and think about the way they operate our plants gives us that leg up that when we bring something new -- well, quite frankly, they're bringing stuff new to us. I mean our operators are calling me and Krzysztof and saying, "Hey, what about this? What about this? Not great." And so I think we're going to continue to extend that lead. I mean I'm in a great position of confidence in our team.

Very good. One more quick one on that, and we'll switch to growth. So we've got in 75% of our production. Why not go to 100%? What's the...

Yes. That's what I saw. Why not go to 100%. I mean, look, I think you saw both sides of that. You saw less than 1% on the PI plants, 2.6% on the non-PI plants, total average of well less than 2%, about 1.1% on our variable production side. I mean if you think about that, 2.6% on non-PI plants, that would be best-in-class all by itself that would beat the majority of our peers in our industry. Without PI, we would have beat that. And so what's happening out there on a daily basis, and our division presidents are back there in the back of the room being as quiet as possible and wondering what we've committed them to next.

Jeff has his head in his hand nervous. But what our division presidents have done is they control all the plants. So we don't look at our plants and go, okay, we're going to go host a meeting over here. It's a PI plant. We're going to change our language. We're going to go over here to this plant. It's a non-PI plant. Let's change -- we have the same language. Mitesh talked about one language, one common. And so what we're seeing is behaviors that our PI plants are driving because of data that we've captured and the way we operate those plants, we're beginning to operate non-PI plants in a very similar fashion.

We have the same focus on labor. Labor scheduling, it doesn't require PI to schedule labor. So we have the same labor scheduling efforts at all of our plants. And so I look at it and I say, it's really hard to go out there and spend the amount of money we had to spend on the PI side for a 200,000-ton plant a year. But what I can do is change the behaviors of those people. And the plant operators are all speaking the same language. Our maintenance people all speak the same language. Our supervisors all speak the same language.

And so I think you're going to see all kinds of degrees of good when you combine all those together. And look, when we acquire, we talked about it. The Wake operations that we acquired, we already put PI in. And so when we acquire plants, if they're of that size of nature, it's plug and play now. I mean we're in a good spot to continue to adapt to PI where it's needed.

Okay. Very good. Let's switch over to growth. We talked about targeted growth opportunities from an M&A standpoint. Maybe characterize what that looks like, smaller, medium, new geographies. What does the new geography look like? What makes it attractive, existing...

It's interesting. Jerry framed it up really well. One, we're going to be aggregate focused. And so I think we've proven that strategy through both the acquisitions that we've done, but also the optimizing the portfolio. I mean you saw what we did on the ready-mix assets. We decided that wasn't the best -- we weren't the best owner of those assets, we choose to sell them. And so you're going to continue to see -- overarching, you're going to see that. We're going to be very aggregate led. We're going to be very disciplined around that.

Second, I want to go north, I want to go south and I want to go the West. And so outside of that, if there's another direction, let me know. But what's important to us is, and Jerry pointed this out, is we want to be in a position of leadership. You will not see us go to a market and enter a market and then 5 years from now, be #4 or #5 in a market and just sit there and operate. We cannot be in a position of influence from a #4 or #5 position. And so if you see us go to a new market, just know that there's probably going to be another one. And there's probably going to be just what we did in San Diego, just what we did in Northern California, just what we did in Tennessee, just what we did in Georgia. I mean that's the footprint.

And so for us to remain disciplined in being aggregate-led, aggregate focused and picking those markets, we're going to have to expand outside of our outside of our everyday footprint. And I would tell you, you follow data centers, you see where data centers are going, follow public spending. Public spending has been healthy in a lot of the middle parts of the country, a lot of the Northwest. I mean there's opportunities there, but it's also our ability to go and be in the right position. And so that's going to be aggregate focus, the right markets and the right position within those markets.

Very good. Maybe one for Mary Andrews in terms of how we think about returns for acquisitions and how we think about returns on that capital spending that we reinvest in ourselves to get better. Maybe just kind of frame kind of how we think about those types of things and the benefits.

Yes. So I mean, I think the 2 projects I talked about earlier are a great example of operating and maintenance CapEx that the returns on those are far in excess of our cost of capital. And even the smaller investment in Tennessee, a $5 million project, there's close to $1 million of annual benefit right out of the gate, right? So accretive to our returns on invested capital to. And Ronnie mentioned something important earlier, which is one of the added benefits of Process Intelligence is the visibility that it's giving us into how to most optimally deploy capital in our plants, where the data is telling us what the opportunities are.

So I think that's giving us even more confidence in what the returns are on some of the operating and maintenance capital projects -- and then from an acquisition standpoint, obviously, we're looking at each and every acquisition, as Ronnie said, being disciplined about why it makes sense for Vulcan, what are the unique synergies that Vulcan brings to the deal. We look at them on a 20-year DCF model. And I think if you look over time, we're showing that we've been able to continually improve our returns on invested capital. And my view is that maintaining this balanced, enhancing our core and expanding our reach strategy, I think you'll see us be able to continue to move our returns higher over time.

And maybe a follow-up to that. I guess we talked about cash generation resetting higher. Like does that change anything about the way you or we think about capital allocation.

Yes. Well, as I said earlier, I don't think it changes. Our capital allocation strategy is no different. But because the cash generation has reset higher, I think we have an opportunity to more consistently deploy capital to each of the priorities that we've long talked to you about, right? So historically, whereas share repurchases have been more episodic for us and dependent upon those growth opportunities, growth is still our #1 priority. But given the level of cash generation, I think that you'll see a more consistent opportunity to also return excess capital to shareholders.

All right. While you're on a roll, I'll give you another one. So there's a couple of questions here about timing on the target. So could you kind of talk about time versus tons and kind of how you think about that?

Yes. So in a compounding business like ours, profitability improvements, earnings growth, they're a function of a combination of tons and time, right? So we've laid out what our expectation is about demand growth kind of in the medium term. You know where we are today. You know the tons that we gave with the target. So -- so you can think about kind of what that horizon looks like. But what I would say, too, is if demand is better than we expect, great. We'll take every ton that we can get. And I could play you a scenario where we'd have an opportunity to get to the overall earnings before we got to the unit profitability number, right?

Conversely, I could play you a scenario depending on what demand looks like, where -- and consistent with what you've seen before when demand was as muted as it has been, where we'll get to that unit profitability target on fewer tons. So I think we give you the targets with the tons because volume is an important part of it, but it is fundamentally in a compounding business, it's really the interplay and the combination of tons and time.

But in that target mark that we did set, and we had a lot of discussions. This wasn't -- $20 sounds like a nice round number and like, okay, you just pulled that out. We did not. I can assure you, we had a lot of conversations around this. But the framework we laid is a very conservative demand scenario. I mean we're not talking about we need double-digit growth in demand. And so it's very conservative. I think it's very factual based on where we think we are with residential, where we think we are with private nonres and where we think we're going to be with public.

And so I think the numbers, like Mary Andrew said, we're going to miss. We're going to miss either the volume. We're going to miss time. We'll miss one or the other, but we have proven is no matter what that looks like, whether demand doesn't make it or the price is not as fast as what we said, we're going to get there. And everyone on our team is dedicated to that. And so, that alignment is critical on this. But I think it will be a combination of the both, like you said. And I think we've got really good forward-looking sight into an improved and not something on steroid, an improved demand environment.

That's a good place to wrap it up. The rest of these are, I think, around demand and some of the other things that we've talked about. So...

All right. Well, thank you all. Thank you all for your interest in Vulcan Materials. Look, I hope today, you've got a better understanding that we have the right strategy. We have the right focus. But most importantly, we have the right team, and that's going to be critical into our achieving these new targets that we set. So thank you for your interest in Vulcan Materials, and we look forward to seeing you whenever Mark tells us we got to do this again.

Thank you.

Good morning. Welcome, everyone, to the Vulcan Materials Company Fourth Quarter 2025 Earnings Call. My name is Angela, 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 today at the company's website. [Operator Instructions]

Now I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Thank you, operator. With me today are Ronnie Pruitt, Chief Executive Officer; 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. [Operator Instructions]

And with that, I'll turn the call over to Ronnie.

Thanks, Mark, and thank you all for joining our call this morning. I am honored to be leading this great company and representing the men and women of Vulcan Materials. We had an outstanding safety year and delivered another year of robust growth in earnings and cash generation. I am proud of the way our teams executed in 2025. Their accomplishments position us well to take advantage of the growth opportunities ahead of us.

We are committed to continue to improve our underlying business and expand our industry-leading Aggregates franchise, both in our current footprint and new geographies. In 2025, we delivered $2.3 billion of adjusted EBITDA, a 13% increase over the prior year. Adjusted EBITDA margin expanded 160 basis points to 29.3%. Importantly, our Aggregate cash gross profit per ton grew to $11.33, achieving our previously established target of $11 to $12 and driving operating cash flow of over $1.8 billion, a 29% increase over the prior year.

As expected, Aggregates unit's profitability continued to expand and public demand continue to grow. However, single-family residential activity was weaker than we initially anticipated, yielding a full year volume and price at the lower end of our initial expectations. I was pleased with how our operating and sales teams adjusted to a dynamic environment by carefully managing inventories and tightly controlling costs, even with several fourth quarter timing impacts outside of their control.

Our Aggregates unit cash cost of sales increased less than 2% for the full year. This performance is a great example of the Vulcan Way of Operating at work. allowing us to use our tools and disciplines to remain focused on what we can control. With implementation ongoing and incremental opportunities ahead of us, I am certain VWO will continue to enhance our results.

Aggregates shipments approximately -- of approximately 227 million tons increased 3% for the full year, with growth driven by prior year acquisitions. Same-store Aggregate shipments for the full year were slightly lower than the prior year. In the fourth quarter, Aggregates shipments increased 2% compared to the prior year, despite nearly 30% lower shipments in East Tennessee and North Carolina that had outside shipments in the prior year's fourth quarter as we support the rebuilding efforts after Hurricane Helene.

Aggregates mix-adjusted price improved 6% for the full year and 5% in the fourth quarter. Geographic mix from the acquisitions the prior year elevated shipments in 2 of our higher-priced markets and a shift in product mix all impacted year-over-year reported pricing in the quarter. While an acceleration in bookings for large projects, with the wide complement of products and a quick conversion to shipments impacted sequential pricing in the fourth quarter, these activity levels bode well for 2026 demand and highlight our position as a supplier of choice on large projects that need to move quickly.

Through the combination of our commercial and operational execution throughout 2025, Aggregates cash gross profit per ton improved 7% for the year. This performance gives me confidence in our operating and sales team's abilities to continue compounding our industry-leading unit profitability.

Now I'll turn the call over to Mary Andrews to provide some additional commentary on our 2025 performance.

Thanks, Ronnie, and good morning. Our 2025 results are a clear depiction of the powerful combination of our two-pronged approach to growth through the continued expansion of our Aggregates cash gross profit per ton across the franchise, and the contribution of prior year strategic acquisition, we increased our free cash flow by over 40% after reinvesting $678 million of total capital expenditures for operating and maintenance needs and internal growth projects.

The strong cash generation allowed us to quickly delever the balance sheet after issuing $2 billion of new long-term notes in the fourth quarter of last year, positioning us well to capitalize on future growth opportunities. We also returned $260 million to shareholders through our steadily growing dividend and $438 million through share repurchases.

At year-end, our net debt-to-adjusted EBITDA leverage was 1.8x. In March, we redeemed our 2025 notes at par for $400 million, and throughout the second half of the year, we paid down $550 million of commercial paper balances to reduce interest expense while maintaining the flexibility to reissue at any time.

SAG expenses for the full year were $564 million and 10 basis points lower than the prior year as a percentage of revenue at 7.1%. We remain pleased with the results our investments in technology and talent are yielding in the business.

Through compounding improvements in our business and strategic portfolio optimization, over the last 3 years, we have improved our adjusted EBITDA margin by over 700 basis points and our return on invested capital by over 200 basis points. We anticipate further expansion in both metrics with the closing of the pending [ ready-mix ] divestiture and attractive profitability improvements in our underlying businesses in 2026 that I'll now pass back to Ronnie to highlight.

Thanks, Mary Andrews. In 2026, we plan to continue our track record of compounding growth in what we expect to be an improving demand environment. We expect continued growth in public demand will now be complemented by improving private demand, resulting in modest overall growth in 2026. Growing demand is a beneficial backdrop for both the pricing and operating environments.

Trailing 12-month highway starts continue to grow and at 3x the rate in Vulcan markets compared to the U.S. overall. IIJA dollars continued to drive increased spending in addition to funding from state DOTs and local initiatives. While the current highway funding programs authorized by IIJA continued through September of this year, over 50% of the funding is yet to be spent and will continue to flow through over the next several years. Efforts are already underway in Washington for a reauthorization bill.

Public non-highway infrastructure investments also continued to grow. Starts in Vulcan markets for water, sewer and other infrastructure projects increased double digits in 2025, supporting shipments growth in 2026. On the private side, the affordability issue in single-family housing have yet to be resolved, but appear to be a priority of the administration. We expect that residential activity will be limited in 2026, but we will be monitoring closely for any improving opportunities in the second half of the year.

While private nonresidential activity continues to vary across categories, we are encouraged by the prospects of a return to modest growth in Vulcan-served markets in 2026, led by industrial and nonresidential categories. Data centers remain the biggest catalyst with over 150 million square feet under construction and another nearly 450 million square feet announced. Over 70% of this activity is occurring within 30 miles of the Vulcan Aggregates facility. Our footprint, scale, reliability and logistics capabilities make us particularly well suited to partner with our customers and serve these fast-moving projects.

Based on the demand expectations I just described, we expect Aggregates shipments to grow between 1% and 3% in 2026. We expect Aggregates freight-adjusted average selling prices to increase between 4% and 6% and Aggregates unit cash cost of sales to increase by a low single-digit percentage. These expectations equate to another year of at least high single-digit expansion of our Aggregates cash gross profit per ton, which will drive attractive earnings growth and cash generation. We expect to deliver between $2.4 billion and $2.6 billion of adjusted EBITDA in 2026.

I'll now pass to Mary Andrews again to provide a few more details around the 2026 guidance before we take your questions.

Thanks, Ronnie. To complement the solid Aggregates outlook Ronnie just shared with you, we expect our downstream businesses to contribute approximately $290 million in cash gross profit. Roughly 85% of the earnings are expected to be derived from the Asphalt segment given our pruned ready-mix footprint.

We forecast SAG expenses of between $580 million and $590 million. We project depreciation, depletion, amortization and accretion expenses of approximately $700 million, interest expense of approximately $225 million and an effective tax rate between 22% and 23%.

Consistent with our initial plans for 2025, we plan to reinvest in our franchise through operating and maintenance and internal growth capital expenditures of $750 million to $800 million in 2026. This year's CapEx includes approximately $50 million of planned spending that shifted from the prior year into 2026 on the large plant rebuild projects underway. Overall, we expect to deliver another year of expansion in adjusted EBITDA margin, growth in adjusted EBITDA and attractive cash generation in 2026.

Now Ronnie and I will be happy to take your questions.

[Operator Instructions] Our first question comes from Trey Grooms with Stephens.

So Ronnie, given the 4Q, kind of where it landed and then looking into the guide for this year, it clearly suggests that 4Q '25 is not the trend. So could you talk about your confidence levels there and the puts and takes around the end market demand as well as your expectations around pricing and profitability and your outlook there for '26, please?

Thanks for the question. Let me start with saying the business is executing well, and we're in a position to leverage demand growth and I think a very healthy pricing environment for 2026.

So first, on the demand side, public starts remain solid. It's also reflected in the strength of our backlog. And then the other public infrastructure outside of highways is also a really good story for us as we continue to see that in our backlog as well. So overall, we expect really steady public -- growth in the public side.

On the private side, let's start with private non-res. We're seeing most of this activity in the industrial categories. Data centers continues to be a bright spot, and we're seeing increasing levels of activities reflected in our bookings as well. Importantly, these data center projects are quickly converting into shipments, which we also anticipate growth in the power generation side of these data centers continue to get built out. Warehouses, we think they're finding the bottom, and we're seeing some potential green shoots in a number of our markets.

On the residential side, we're expecting the currently soft demand environment to improve somewhat in 2026. But this assumes that we get some help from interest rates and affordability. So we'll see how that plays out through the remainder of the year. So after really 3 years of [indiscernible] growth, I mean we expect 2026 to really return to a year of some modest growth. And so an improving demand backdrop could provide both help on our cost side as well as even more upside on our pricing.

With our Vulcan [indiscernible] selling disciplines, they're helping us really efficiently manage project leads and maximize pricing is we expect those efforts to continue to be a catalyst for pricing and profitability realization. And on the fixed plant price increases have largely been accepted and improved visibility in the private side will help that, and it also will be helpful for -- as we think about midyears throughout the year.

On the cost side, we're seeing really good traction on the [indiscernible] operating disciplines focused on plant production. And these efforts will, along with some volume growth can also be a tailwind to our cost in 2026. So as we look at 2026 as a year of potential growth, I think we're in a really strong position to capture more profitability and really drive that to our cash gross profit.

Yes. And Trey, maybe I can just give you a little extra context on the fourth quarter that may be helpful. We obviously had a very solid performance for 2025 overall and knew the fourth quarter would have some unusual year-over-year comparisons. But where we ultimately landed, which I would think about it as kind of essentially flat year-over-year on EBITDA, absent the geographic headwinds that we had from the prior year hurricane relief activity.

And so where we landed was really impacted by 3 main factors that affected both revenue and cost and accounted for really most of the difference between that flat EBITDA and the growth that we anticipated. So primarily, first and foremost, residential activity, which was a challenge for the year, continued to weaken. We also secondly had weather, winter came early in some of our seasonal markets. And Southern California was just extremely, extremely wet, which is unusual. And then we also had some incremental costs related to timing on those repairs and insurance costs.

So I think you'll see in our 2026 guidance that, as you mentioned, clearly reflects a continuation of the compounding improvements that we expect for our business moving forward.

Our next question comes from Tyler Brown with Raymond James.

I want to come back to the pricing, maybe a little bit different angle. So I appreciate you guys gave the 5% mix adjusted number. But could you kind of help bridge the 3-point difference between what you reported in mix? Because it seems like conceptually you guys really benefited from storm work in high ASP markets last year that didn't reoccur. So geography was definitely working against you. It sounds like at the same time, you did a lot of quick, call it, book and burn basin fill work that comes in at a lot lower ASP. So product was a headwind, and then M&A was also a drag. So it felt like kind of maybe a triple whammy, if you will. But first is all that right? And how much did each of those buckets have on the 3-point difference?

And then secondly, Mary Andrews, just from a shaping perspective, I appreciate the 4% to 6% pricing, but should we expect to be on the low end early in the year and maybe higher later? Just I assume some of these mix headwinds will persist. Sorry for the long question there.

Yes. No worries. First, you do have the triple whammy as you called it right as it relates to the mix impact on pricing in the fourth quarter. The 300 basis points was about 2/3 of the geographic mix from the strong shipments last year in those profitable markets. And then I'd say the other 1/3 was about 50-50, continued impact from the acquisitions, which was actually lower in the fourth quarter than the full year 100 basis points that we called out and did happen in 2025.

And then the other half of that 1/3 was the product mix that was really based on those projects. And I think you're right to be thinking about pricing in 2026 as probably sort of the lower end in the first half of the year, moving toward that the higher end as the year moves on. And I think that is reflective of the improving demand that we expect to see and just comps from last year. And Ronnie may want to comment more on the kind of the types of projects that we're shipping on.

Yes, Tyler. I think as we look at going into '26 at a much better spot than it was year-over-year. And so remember, our backlog doesn't account for 100% of our shipments, but it is typically around 40% to 45% of our forward-looking backlog is what our shipments are going to look like. And so that's a good healthy spot for us to be as we think about demand.

And also remember, the trends on these -- a lot of these large projects, which we categorize as 25,000 tons and above. Historically, that makes up about 30% of our bookings. Today, we sit there, it's about 45% of our bookings in large projects, which is really reflective of that data center work. And remember, we talked about these data centers. The first part of them are going to be basin fill. So that's where we're seeing the mix impact on. But as those projects continue to mature, then we'll see the clean stone and the clean size stones be shipped through the remainder of the project.

So in our 4% to 6% guide, we anticipate these shipments of these projects being more weighted heavily on the front end for base, but as those projects mature out and so to Mary Andrews' point, that's why I think the pricing will play out through the year at the lower end of the first of the year and then it will play up at the higher end.

Second, when we talk about our fixed plant, we sent out our fixed plant price increases at the second half of 2025 for January. And the implementation of those and acceptance of those have gone as expected. And so I think we're in a healthy position as far as what those increases were accepted and announced in the first part of the year.

And then third is I continue to think about the steady growth in public, the continued positive improvements on the private non-res side and then the potential recovery on single-family. And I've talked about this in the past is these improving demand and the backdrop of that is going to be a tailwind for us as we move forward. And so again, we don't have mid-years baked into these increases, our guidance, but we would anticipate definitely going forward with midyear, and I think that momentum in demand will help us.

Our next question comes from Anthony Pettinari with Citigroup.

This is [ Ashik Senan ] on for Anthony. I just wanted to what kind of gives you the confidence that you can kind of keep cost down in '26 to low single-digit inflation. You said sort of what you're seeing in underlying inflation or maybe Vulcan Way of Operating and cost takeout. And then just to [indiscernible] some earlier mix questions, is there a mix impact baked into that low single digit from the kind of base stone?

Yes. So on the cost side, what gives us confidence on cost is definitely Vulcan Way of Operating. So as I look at where we finish the year down or up less than 2% for 2025. Overall, I think 2025 was a really good year on cost and we anticipate that to continue. When I look at the maturity of Vulcan Way of Operating, we said we're focused on our 120-plus plants that represents about 75% of our production. So we're very mature on the process intelligence, on our labor scheduling tools and really on the focus on our critical size production. And where we're going to continue to focus on is the development of our people. So our plant operators are really adapting to using these screens and really driving more efficient production in our plants.

But when I look overall, I mean, I'm very pleased with where we're at. I think labor is going to continue to be one that as labor increases will happen in markets our ability to control that and our ability to outperform the market with our labor control is going to be critical as -- and that's a big part of Vulcan Way of Operating. And so I'm very pleased with that.

And to your point, what we talk about on the mix side was with their drag on pricing, the mix is a benefit to us in the way we operate our plants. And so our plants are in a really good safe on yield, the amount of fines that we have and the way we mine in our pits, we're in a really good position. We've gone through 3 years of muted demand, and we really haven't built any inventory. And so we've really managed through 3 years of this of this muted demand in a way that it puts us in a very good position when demand starts to recover, that our costs are going to be just as much of a tailwind as it will be on price.

Our next question comes from Kathryn Thompson with Thompson Research Group.

Focusing on the policy side with IIJA expiring in September, but states also taking greater control of their own financing destiny. How is the dynamic of kind of the messiness that inevitably happens with reauthorization bill? How is that baked into your guidance?

And then also perhaps clarify a little bit more how states are taking control for the ones that matter for you? And how are you thinking about that with your public end market?

And then one cleanup question. Just we're assuming that the divested assets in the Bay Area are not included in the guide?

Yes, I'll let Mary Andrews talk about the guide on the divested assets, you can give you some color on that.

On the public side, I mean I think we're going into the year with a couple of assumptions. One that a bill will get done, will it be on time or will it be in the form of a continuing resolution? Who knows. But historically, we're going to get a bill done. And two, based on historic measures, the bill will always be higher than the previous bill. And so we're expecting that -- but the good thing for us is, Kathryn, is that 50% of the money has yet to be spent. And so we will see the tail of IIJA continue through '26 and well into '27.

When I look at our markets and I look at Vulcan and served markets, on a trailing 12, starts dollars in Vulcan-served markets are up 24% year-over-year, '25 versus '24. And so those dollars are going to be put into work in '26 as far as the demand for our products. And if you go back to the start of IIJA, our markets are up 80% and starts dollars. And so it's a really good tailwind. But we've said the entire time that IIJA would be slow and steady, and we continue to see that.

In California, one of our standout markets, I mean, highway starts are up 47% in '25 versus '24. And so that's another market that we will see '26 continue to see strong demand from highway dollars being put in place. In the Southeast, we've seen significant jumps in bookings in Alabama, in Georgia and South Carolina and Tennessee. And so again, right in the heart of our Southeast group, and I think those dollars are going to continue to be put to work.

We've also seen other public works, beach restorations, port renovations, airport projects. Those kind of starts in Vulcan-served markets, 2/3 of our GM areas, which we have 19 GM areas. So 14 of our 19 GM areas, we're seeing double-digit increases in starts in those other public works. And so I would say public -- for all things considered, public is probably the most clarity we have, and I think we're very confident in that. And I'll let Mary Andrews just talk about the modeling on the divested assets.

Yes, Kathryn, you're right. The ready-mix assets we have excluded from the guidance. So I think the best way to think about that as the guide at the midpoint on a same-store basis is really over 10% growth in 2026.

We'll go next to Angel Castillo with Morgan Stanley.

So you outlined the big opportunity from data centers on the slide. And I just wanted to unpack a little bit more, particularly the comments around the base versus clean stone timing. I think the timing of mix drag versus maybe the uplift as you start to shift more clean stone in the latter stages makes a lot of sense. But can you just maybe talk about this more holistically as to whether data center project all-in is higher or lower margin than a traditional manufacturing project when you kind of ignore the timing of some of these things?

And then just as we think about data centers being such a big growth factor in the next few years, is the right way to think about the DC opportunity here perhaps a bit of a drag here for price margins until the number of projects really starts to -- the number of projects being completed starts to really exceed those starting up? And so can you just quantify that? I don't know if I missed this, but just how much of a drag that is in your 2026 guide? I'm just trying to think about how to model this and how to understand this just given so much growth in this vertical.

Yes. I think you summed it up, right? I mean as we look at the continued demand for data centers, we're going to continue to see the mix issues. And so if I would look at base pricing across multiple geographies and geographies can have a big impact on that as well. But on average, base can sell for $8 to $10 below what our clean stone products are. But on a margin basis, it's not that big of an impact. And so I think we will continue to see tailwinds on the cost side as we continue to ship that.

And so a lot of the base shipments that we've had will start to turn into clean project -- clean stone as we ship those projects as far as what we're shipping in '25. But I would tell you the opportunities in '26 will continue to be a lot of base opportunities, which we want to take advantage of. I mean those are great projects. They, again, play really well into the shape of our pits, our plants, the productivity of our plants. And so I think it's going to continue to play out. But I do think it will be more of a uniform mix as we start to see clean products ship to those same projects because they are going vertical. And once they start going vertical, that's where the concrete shipments kick in.

Our next question comes from Michael Dudas with Vertical Research.

Ronnie, you guys have done [indiscernible] done a great job on the balance sheet, it's below your targets. Maybe you could share your thoughts on as you come out of the box here, the pipeline for M&A, what your early indications of opportunities. And you did mention in your first couple of statements of current and new geographies. Just maybe a little bit more thought on that. I'm sure you'll be discussing more of that with your Investor Day next month.

Yes. Thank you. If you look back over what we experienced in 2025. I mean if you remember, we closed 2 really big deals at the end of '24. And so '25 for us was a year of integrating those deals and executing on that. And we also said during times of uncertainty, which we saw at the first half of '25 with tariffs and interest rates and those headwinds that -- but both sides, the seller side as well as the buyer side, there was just a pause in a lot of the markets, and we didn't see a lot of activity in 2025.

As I look at 2026, I do think it's going to be a very active year on the strategy side and the M&A front. And I would tell you, for us, and we'll see out of Vulcan will be one. It's going to continue to be Aggregate led. We're going to be very disciplined around that. We're going to continue to look at things within our geography. But when I say new geographies, I mean we have to be able to expand that footprint because at the end, if we're going to be that particular on what we want, we have to be able to expand that look and open that market up for some new looks and geographies.

And so I would say our pipeline is very healthy. We're in some really good conversations with some potential sellers. But again, it's something we have to be very disciplined in. We don't want to force that. We don't want to end up overpaying for things that we don't have to. And so it takes 2 sides. But I would anticipate '26 being a very active year.

And you're right, Mike. We absolutely have the balance sheet well positioned and the cash generation of this business just position us very well for the long term to be able to continue to pursue the M&A activity opportunities that make sense for us.

Our next question comes from Timna Tanners with Wells Fargo.

I wanted to dive in a little bit more on your positive private demand view and ask how much of your mix is data centers what's embedded in your volume forecast for the housing recovery that you mentioned in the second half?

So we don't -- we are anticipating recovery on the single-family side to be really flat. So it will be very slow and even with some help from interest rates, we're -- we will be lagging that. And so as we start to see starts increase on the residential side, I would say we will be several months behind that. So that will be -- if we get some help on affordability through interest rate cuts, that will be definitely a second half opportunity for us. And I think that opportunity would come in the form of very geographically driven by where jobs are being created.

So markets matter. And that's why I love our footprint because I think our markets will outperform the rest of the country when it comes to recovery in residential. And then with data centers on the private side, they're a very, very large piece of the private side and what we're seeing on the private non-res recovery, and I would expect that to continue. I think, Timna, what we will start to see as we play this out, though, is the energy demand that these data centers are creating. So I think we will start to see some energy projects. We're in some talks on on those now. Some of those are included in the data centers as we look at those.

So there are some energy pieces of that, that these data centers are being required to build out some of their own energy infrastructure. But there's also some other things as far as some LNG projects that are going back. And when those things kick in, they're very heavily aggregate-intensive. But we also have some $6 billion Eli Lilly project here in Alabama that's kicking off.

And so we've got some other things on the private non-res side that are going to be kicking in. But I would say at the start of the year, they're still very heavily weighted towards data centers. And I think other types of manufacturing will kick in as we go throughout the year. But that's what gives us confidence and really returning to growth is our bookings pace is really strong and those forward-looking indicators are starting to improve.

Okay. Did you have the percentage of your mix at data centers for us, please?

Yes. We -- I mean, we don't break that out in our backlog just because it gets too wonky when it comes to the differences in those mixes. But I would just tell you, it's heavily influenced by data centers as of today.

Our next question comes from Garik Shmois with Loop Capital.

Ronnie, you mentioned a couple of times about midyear price increases, recognizing it's not in your guidance, but what kind of demand do you need to see, whether it's big picture in a local market to start thinking about implementing mid-year price increases.

Yes. I think it's twofold there. I think it's some visibility into demand improving. But when we talk about midyear, I mean it's really talking about 2 sides of our business on the fixed plant side, just talking about the Concrete side of our business as well as the Asphalt side of our business. I would single out the Concrete side of our business, we need to see some recovery on single-family. Our Concrete customers have had a lot of pressure on them around the muted demand on single-family. And so that side of it, that visibility into some help on affordability, some help with the relief on the interest rates would give us some tailwinds on midyear with the Concrete side of our business.

On the Asphalt side, it really is more of the public and private nonres continuing. So we've seen great momentum there. And so I'd say as we go into the year, I think we're in a good position. I would say we're in a better position in '26 for the success of those midyears than we were as we looked at how '25 developed. And so I think it's a combination of both single-family and public, but single-family will be weighted more towards the Concrete side of our business and the public will be weighted more towards the Asphalt side of our business.

Our next question comes from Adam Thalhimer with Thompson Davis.

I was hoping you could comment on the cadence of EBITDA this year. And I'm curious if we should bake in another EBITDA decline in Q1 followed by strengthening as the year goes on? Or if you actually see the year starting off faster than that?

Yes, Adam, I'll start on that one. I think the best way to think about 2026 EBITDA would be to think about seasonality and not year-over-year comparisons. And so if you think about normal seasonality to spread EBITDA in 2026, the year-over-year comps, as you referenced, will look different in the first half versus the second half, but I think that's the best way to go about it. .

Our next question comes from David MacGregor with Longbow Research.

I guess my question is on price/cost. And in the guide, you're very specific about your price assumptions, but characterized cost is up low single digits. So it seems like maybe there's still some uncertainty there with respect to your perspective on costs. And so I guess I was just going to get you to walk through what are the biggest sources of uncertainty for you within your cost structure as you look forward into 2026?

Yes. I mean I think we're confident in that low single digit, which -- that's kind of how '25 played out. And so I think the things we can control when we talk about our labor, our energy, our fuel. I mean, I think we've got a lot of visibility into that. And so I think we have a lot of confidence in that. And I think the piece -- the rest of the pieces are really tied to continued performance on the demand side of our business.

And so again, when you think about 3 years of downward or muted demand in our markets and our ability to control even with the variability of our cost structure, falling volumes is a tough headwind to continue to drive lower cost in an inflationary environment. So I look at it overall, and I think we're in a really good position as far as Vulcan Way of Operating and the things we're focused on and our men and women out there every day show up dedicated to continue to drive efficiencies, continuous improvement in all of our operations. And so I'm excited about that. And I think we have a good runway ahead of us as markets continue to improve and demand, again, will give us as much tailwind on costs as it will on price. And so I think we're in a good position, and I'm confident in our ability to deliver that.

Yes. And importantly, that price/cost spread that we expect to deliver another year of cash gross profit per ton growth at the high single-digit percentage level. So just another demonstration of the way the business continues to compound.

We'll go next to Steven Fisher with UBS.

It sounds like you have a bigger mix of larger projects in backlog this year. Just curious what you're seeing in terms of project delays. Has anything been delayed in, say, the second half of '25 relative to the start timing that you were expecting? And have you baked those further -- or any further delays into your guidance in 2026? I know we're hearing that labor is a real issue. And I just want to make sure we're not going to be surprised by any sort of further delays on projects?

No, I think it's a mix. I would tell you on the -- as we look at our bookings in those large projects. One, there's a mix between private side as far as the data center work and then the public side with highways. And I'd really tell you it's the tale of kind of 2 different stories. On the private side, the data center stuff is actually moving faster. And so our times from bookings actually shipments has accelerated on that side. On the public side, it's been a mix. I mean it really is very geographic depending on weather impacts and other things as far as playing with the DOTs and throughout the evolution of IIJA, we saw it very slow to kick off. I do think as it's become more mature, those dollars are being put to work, the time from booking to actually shipping has become more of a normal pace, back to about a 6-month time frame from the time we booked to the time we ship. Public sometimes can drag out a little longer than that. But as we go into 2026, we don't anticipate the timing of those to be impacted by anything we think they'll be back to kind of a normal flow.

Our next question comes from Ivan Yi with Wolfe Research.

You guided to 2% aggregate volume growth this year, and that's the same as [ Martin. ] But looking at the contract award data, you seem to have a more favorable geography with greater exposure to California, Georgia, Tennessee and some other states. So I guess I'm just wondering why your volume guidance isn't a little bit higher than that 2%.

Yes. I mean I think coming off of 3 years of down volume and what we've seen as far as the conversion of the bookings to shipments, I mean, like I said, our backlog is in a really good spot. But that backlog, again, only represents about 40% to 45% of our shipments. And if you look at the balance of it's kind of 50-50 between public and private. And so we really just need single-family to recover. And until we start continuing to see some relief on affordability and interest rates, I don't think we want to get out ahead of ourselves in thinking that demand can get back to anything really good. Single-family just has to kick in. And so we're going to continue to be very conservative as we look at that.

And we'll go next to Brian Brophy with Stifel.

You mentioned in some of your comments, some repairs and insurance costs that impacted the quarter. I think you also mentioned some plant rebuilds, can you size the impact from some of these costs that you had mentioned that impacted the quarter? Should we be thinking about these as more onetime or ongoing? And then is there any reason to think that some of these costs linger into the first quarter?

Yes. Let me start. I'll turn it over to Mary Andrews, just so give you a little more color on some of the numbers. But as you think about how the year played out in 2025, I mean, we went into 2025 saying we would anticipate low single-digit increases in cost. We finished the year at less than 2%. And now as we started 2025, we had a lot of weather impact at the first part of the year, seasonality as far as really the first 2 quarters were tremendously impacted. It's a lot of the work when we talk about project work, those expenses that we're doing within our plants, it just got pushed throughout the year. And even in the third quarter of last year, we said don't measure cost with 1 quarter because it can be so lumpy. That's how the year played out.

And so I think as we go into 2026, we plan these things out based on -- we would love for everything to be very uniform and like we spend the same amount every month is that's the way we would love to plan it out. But unfortunately, it's an outdoor sport and weather does impact that and weather does impact the timing of those.

As far as the plant rebuilds, we call those out because we have several rebuilds going on, large projects, but they're all accounted for in both our cost as well as our CapEx plan for 2026. So I think we have really good visibility there that gives us a lot of confidence. Anything Mary Andrews, do you want to add on kind of the lumpiness of that?

No. I would say as we called out, it's really timing, our 2026 guidance includes what we anticipate for this year. If you do think about the fourth quarter, I would think about that being kind of 50-50 revenue and cost in terms of where where we landed versus expectations. And the majority of that cost was related to those timing issues that Ronnie described.

At this time, there are no further questions in queue. I will now turn the meeting back to CEO, Ronnie Pruitt.

Thank you, operator. As I said at the start, I'm honored to be leading the men and women of Vulcan Materials to continue a track record of creating value for all of our stakeholders. When I reflect back on just 4.5 years ago, and I had the opportunity to join this organization, our trailing 12 months aggregate cash gross profit per ton was $7.33. In 2025, it was $4 or 55% higher and within the range of our long-term range that we said of $11 to $12 that we provided at our last Investor Day in 2022. We look forward to sharing with you our plans for continuous improvements and future growth at our upcoming 2026 Investor Day next month. Again, thank you all for your interest in Vulcan Materials.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, everyone. Welcome to the Vulcan Materials Company Third Quarter 2025 Earnings Call. My name is Bo 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 after today's call later today on the company's website.

[Operator Instructions] Now I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Please go ahead, sir.

Thank you, operator. Joining me today are Tom Hill, Chairman and CEO; Ronnie Pruitt, Chief Operating Officer; 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 advised 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 1 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.

Thank you, Mark, and thank all of you for joining our call this morning. Mary Andrews and I are happy to have Ronnie joining us today as we discuss the third quarter results and what lies ahead for the remainder of 2025 and moving into 2026. The third quarter financial results clearly demonstrate the consistent solid execution of our teams across the footprint. Gross margin and unit profitability expanded in each segment and adjusted EBITDA margin expanded 310 basis points. Adjusted EBITDA of $735 million improved 27% compared to the prior year. Thankfully, this year, we were not confronted with the same extreme weather events as the prior year. Aggregates shipments increased 12% in the quarter, resulting in 3% higher shipments on a year-to-date basis. Aggregates cash gross profit per ton grew 9% in the quarter through a combination of commercial and operational execution. As anticipated, the prior year acquisitions and a higher percentage of base shipments contributed to 150 basis points of mix headwinds in our aggregate freight-adjusted selling price.

Mix-adjusted pricing improved 5% in the quarter and 7% on a year-to-date basis. Our volume of operating efforts continue to benefit our cost performance. Aggregates freight-adjusted unit cash cost of sales was 2% lower than the prior year in the third quarter. I'm proud of the way our operators are adopting new tools and disciplines to drive plant efficiencies. And I'm excited about the runway ahead for continued profitability improvements, especially as private demand recovers.

Currently, strong momentum continues in public construction activity. The private nonresidential end use is improving while residential demand remains weak. [indiscernible] has been little relief and affordability to date, single-family housing starts and permits continue to decelerate across most U.S. markets. With our leading footprint, we are confident we are in the right markets to benefit from an eventual single-family residential recovery.

In multifamily residential and use, current data is more varied across geographies. Some states are already showing growth in starts, which should begin to help offset weakness in single-family activity. Private nonresidential construction activity is improving. Overall starts in our markets are positive on a trailing 6-month basis. Data center activity remains robust with approximately 60 million square feet under construction and another 140 million square feet proposed and in the planning stages. Nearly 80% of data center projects in the planning stage are within 30 miles of a Vulcan operation for both data centers and large project opportunities like LNG, which are also gaining momentum, Vulcan is in the right markets and well positioned to supply these projects and help create value for our customers. The same is true on the public side. Growth in public contract awards in our markets continue to outpace other markets.

Trailing 12 months awards were up 17% year-over-year in our footprint. And importantly, there's a long tail to public strength since approximately 60% of the IIJA funds are still yet to be spent. Given shipment trends year-to-date, coupled with the demand I just described, we now anticipate full year shipments to increase approximately 3%, yielding full year adjusted EBITDA of $2.35 billion to $2.45 billion, a 17% increase over the prior year at midpoint. Now I'll turn the call over to Ronnie to discuss our continued execution of our aggregates-led two-pronged growth strategy, Ronnie?

Thank you, Tom, and good morning. Over the last 24 months as Chief Operating Officer, I've been highly focused on growing the profitability of our existing business in addition to shaping our portfolio for optimal future growth. In the third quarter, our trailing 12 months aggregates cash gross profit per ton was $11.51, 27% higher than just 2 years ago. Our commitment to the Vulcan Way of selling and the Vulcan Way of Operating has supported this growth. Our organic growth, coupled with disciplined M&A and portfolio management positions us well to continue compounding results and creating value for shareholders. In early October, we completed the disposition of our asphalt and construction services assets.

We believe that these downstream positions that we strategically built over time are now more valuable to the acquirers than to us, and we will redeploy the proceeds into attractive growth opportunities in the future. I'll now pass the call to Mary Andrews to provide some additional details on our financial results and capital allocation before we share some of our preliminary views about next year.

Thanks, Ronnie, and good morning. The aggregates unit profitability improvement that Ronnie and our division teams are driving each day is foundational to our cash generation, overall growth and return on invested capital. Over the last 12 months, our free cash flow has increased by 31% to over $1 billion, and our conversion is 94%.

Complementing our free cash flow with incremental debt of $1 billion, we have grown our franchise through over $2 billion of acquisitions and returned approximately $300 million to shareholders through dividends and share repurchases, all while maintaining our adjusted EBITDA leverage ratio, just below our targeted range of 2 to 2.5x and improving our return on invested capital by 40 basis points. We are poised for additional profitable growth.

We also continue to prioritize reinvesting in our franchise. Year-to-date, we have deployed $442 million towards maintenance and growth capital expenditures and plan to spend approximately $700 million for the full year. Our trailing 12 months SAG expenses were $566 million and consistent with the prior year's trailing 12 months as a percentage of revenue at 7.2%. We are pleased with the results our investments in technology and talent are yielding in the business.

I'll now turn the call back over to Ronnie to provide some preliminary thoughts on 2026 before Tom makes some closing remarks.

Thank you, Mary, Andrews. Tom shared earlier our views on the current demand environment, and we anticipate those trends to continue into next year. Consistent growth in public improving private non-res and lingering softness in residential. Overall, we expect organic shipments to return to growth in 2026 and improved modestly year-over-year. We also anticipate mid-single-digit pricing improvement. We will maintain our focus on efficiency gains and cost discipline through our Vulcan Way of Operating efforts to continue to deliver expansion in aggregate cash gross profit per ton that exceeds historical averages.

Before I turn the call back over to Tom, I would like to express my gratitude for the opportunity to lead this organization and leverage the strong foundation Tom has built over the last decade. He has cultivated a culture of continuous improvement and created meaningful value for our shareholders. I'm excited about what lies ahead, and I'm confident Vulcan Materials will continue to deliver.

Tom, back over to you.

Thank you, Ronnie. I want to thank all the men and women of Vulcan Materials for living out the Vulcan Way each and every day, doing the right thing, the right way at the right time. Our safety and financial performance are evidence of their commitment to excellence and to continuous improvement. We are ready to finish the year strong and to continue our long track record of durable growth as we move into 2026.

And now, Mary Andrews, Ronnie and I will be happy to take your questions.

[Operator Instructions] We'll go first this morning to Trey Grooms with Stephens.

First, I want to say congratulations, Ronnie, on your new role, well deserved and also to Tom, it's been a pleasure working with you over the last several years, and we wish you the best on your next chapter. And I guess with that, Ronnie, maybe if you could, highlight some of your top priorities that you have for the Vulcan Materials team here as you take the reins and transition into your new position?

Sure. Thanks, Trey, for the question. First and foremost, I'm going to continue to build on the culture that Tom has grown through his leadership of Vulcan. And our culture is based on safety is our foundation and our people own and drive our results. Our strategic approach will continue to focus on enhancing our core through Vulcan Way of Operating and Vulcan Way of Selling and strategically, we'll continue to expand our reach. through disciplined aggregate-centric acquisitions as well as greenfield initiatives that are going to continue to complement our aggregate leading positions in our network.

We'll go next now to Tyler Brown with Raymond James.

First off, congrats, Ronnie. Congrats, Tom. But hey, this quarter's volumes were obviously great, benefited obviously for some pretty cold weather. We have the [indiscernible] comp. But you guys are guiding kind of towards the low end for the full year. Can you just talk about the trends into Q4? What's kind of driving towards the low end there? And then I appreciate the look on '26. But when you say modest improvement, can you put a finer point there, maybe talk about some of the puts and takes in the 3 -- call it, the 3 big end markets?

Yes. I think you got to look back a little bit at the third quarter before we go to Q4. Weather definitely cooperated in the third quarter. Volumes were up obviously double digit. But the big jump in volume was a combination of pent-up demand from the first half of the year, easy comps from last year and then importantly, strong and growing public demand and improving nonresidential demand. Now Q4 weather last year was very good. So tough comps in Q4. We predict 3% volume growth for the full year. With the exception of single-family construction, we see demand in other sectors getting better. I would tell you that October supported the full year guide of 3%. But Ronnie, why don't you talk a little bit about '26.

Yes, Tom, thanks. As Tom said, I think single-family will continue to be challenging until we get some of the affordability issues behind us. Public is quite strong. And as we look into public into 2026, we'll continue to see improved funding. And I think the more mature DOT execution from the states to get that money put in play. On the private non-res side, our starts have been positive in our markets for the previous 6 months. And as we look internally, our bidding activity, our bookings and our backlog really support demand growth as we go into next year. .

We'll go next now to Garik Shmois at Loop Capital.

Congrats to you both on your new roles moving forward. I wanted to ask just on the pricing, both the growth in the quarter and your confidence in the outlook in '26 that ticked down sequentially. Is there anything specific driving that? And how should we think about pricing a little bit more detail into 2026?

As expected, 5% -- 150 basis points of mix in there, which we talked about last quarter. Obviously, acquisitions have been a drag on prices, but pricing in those markets continues to improve, I'd call it as planned. But in the quarter, we had 20% more base driven by really good highway work in data centers. And while base is lower price, it's also lower cost, so we kept our unit margin momentum. I'm pleased -- very pleased with our ability to take that price to the bottom line and then some, as you saw costs go down in the quarter. And if you -- looking forward, I think growing highway demand and improvements in nonres will support higher prices and unit margins in '26. But Ronnie, why don't you talk a little bit about '26.

Yes, Tom is correct. I mean improving demand in public and private nonres will definitely support 2026 pricing. We sent out our letters in September for effective January 1. So we're in the middle of having those conversations now. I've been encouraged with those conversations, and that's really around the fixed plant, 40% of our business. On the bid work, our trailing 3-month backlog prices are showing acceleration and most of that work will ship in next year. And so still work to be done. But this, coupled with our operating performance should still provide us with continued superior unit margin growth over historical norms.

We'll go next now to Brian Brophy at Stifel.

This is Andrew on for Brian. I had a question about the unit cost down 2% in the quarter. How much of that was Volcan Way of Operating versus lower inflation versus volume benefits? And then additionally, as you're looking at next year, do you have any preliminary thoughts on how you're thinking about inflation or the cost piece into 2026 following such a phenomenal year this year.

Yes. Short answer, we've got no relief on inflation. I mean, things -- no prices have come down. They're not going up as fast. But I would really point it to the Vulcan Way of Operating, if you look at the whole year. I'm very pleased with our [indiscernible] cost in the quarter and the year, we're seeing improved operating efficiencies, but still early innings of Vulcan Way of Operating. And remember, in the first half of the year, we had weather issues. We had volume issues that actually hurt costs. But Ronnie and his team, were still able to keep the cost down. In Q3, we probably had some tailwinds from efficiencies, volume and more base sales. I think Ronnie and his operator operating and he should be pleased with this performance.

Yes. Thanks, Tom. I know our operators will appreciate those comments. First and foremost, our safety performance is really good and it's continuing to improve. [indiscernible] investment in technology, they're working. And that's the Vulcan Way of Operating. There's still improvement ahead, and so we'll continue to focus on those disciplines as we get into '26. But I've got confidence in our people and our processes and our disciplines and our technology. And I think it will be exciting to watch the Vulcan Way of Operating as we continue to go. Selling and as far as growing our margins, and I think our margin growth will continue to be even more dependable in the future.

We'll go next now to Anthony Pettinari at Citi.

This is Asher Sohnen on for Anthony. Congratulations all around. I just -- you guys talked about stronger backlogs, but I was wondering if you could maybe walk through some of your key geographies and what you're seeing there, like on an individual or a regional basis.

Yes. Actually, it's pretty widespread. I can't think of any that are down at this point. Probably the healthiest is going to be the Southeast, which is a benefit for us because that's probably where the higher unit margins are. But we've really seen a turn in the nonres side of the business, data centers have helped that and really strong growth in public demand. And I think that growth continues to accelerate for the next 2 or 3 years. So a good story. Obviously, single-family is still a drag for us and probably will be for a while. Hopefully, that turns next year. But in the meantime, the other sectors are taken up for that.

We'll go next now to Kathryn Thompson with Thompson Research Group.

First off, Tom, it's been a pleasure working with you over the years. Look forward to keeping up with you and Ronnie. We go back a couple of companies and congratulations on starting in CEO role in January. So yes. So looking forward, you had -- did a great job of [indiscernible] shaping our portfolio as was highlighted in the quarter you just reported. How are you thinking about what fits in your portfolio? And maybe what may not or who may be a better owner? And can you approach it from thinking about from either a product type, which was we saw this quarter or a geographic focus? And just maybe thinking bigger picture about kind of how you're thinking about that portfolio shaping going forward?

This is Ronnie. I'll take that question. I continue to be really pleased with the downstream business that we have. In the asphalt business, those businesses are really heavily influenced by the public funding and the strength in public funding. And so we're going to continue to focus on, one, safety as well as our financial performance. And we talk about the concrete and the divestiture that we announced this week. I mean that's our strategy. And we said early on when we bought Superior that we were going to evaluate that business and we would decide whether that was a business that we wanted to be in long term. We continue to see challenges on the private side in California. And so we thought the acquirers, it was a business that was going to be more valuable to them. I'll remind you that since the acquisition of U.S. Concrete, we now only have a couple of plants left in the Virginia D.C. area that are integrated with very successful Vulcan legacy concrete business, but we've also retained all those aggregates. So it complements our strategy of being aggregate led, and we're going to keep the expertise of both the asphalt and the concrete business. So if those businesses, as we look in the future and M&A presents those to us, we're not scared of that. But it's going to continue to be aggregate led. And I think that's our strategy, and you'll see us continue to be focused heavily on those aggregate led businesses.

We'll go next now to Phil Ng with Jefferies.

This is Jesse on for Phil. Congrats to Tom and Ronnie. Just real quick on M&A. Can you just kind of help us how you're thinking about the pipeline? You obviously will have quite a bit of dry powder given where your leverage is and post the divestitures. Just any geographies that you're particularly targeting?

Yes, this is Ronnie. I would tell you that we're still in process. And greenfield for us is a strategy of growth it takes time. Those will be timed with both market-driven as well as the timing of permits. And so we still have that going. When we talk about M&A opportunities, it's been a quiet year. We continue to have a really good list of targets out there. But the timing of those targets are really driven twofold, one by the seller in their readiness and then also by the market conditions. And so I would tell you, M&A this year is not surprising to us. We knew through some of the uncertainties with tariffs and other pauses in the interest rates that M&A was going to be paused, but I can assure you that we're still very active. We have a really strong list, and those M&A opportunities are going to continue to be aggregate led.

We go next now to [indiscernible] with Truist.

Congratulations, tremendous run here. I do have a question for Ronnie. You had talked about '26 kind of from a high level of continuing this just a wonderful run of cash gross profit per [indiscernible]. Just from a general level, would we -- from what you know today in the market, will we see something similar to the last couple of years, with the numbers you've been putting up and what could potentially take that higher?

What was the last part of that, Keith?

And what we get higher? What kind of things would you need to see something that would set even better than what we've seen in the last couple of years?

Look, we're coming off 3 years of muted demand in our markets. And so what we've been able to accomplish over the last 3 years, we're growing our cash gross profit has been twofold. One, the inflationary stuff helped our pricing early on. And this year, we've had some momentum on the cost side of our business. And so as we said earlier, demand is going to help. Some recovery in demand is going to help our pricing story. And when we look forward to that, but the Vulcan Way of Operating and Vulcan Way of Selling both support that from a cost side as well as the commercial side. And so I would tell you, as I said earlier in my comments, I think our cash gross profit will [indiscernible] and I think both sides of it, the cost and the commercial efforts will play a roll into that, but some demand will definitely help the price side of our story.

We'll go next now to Brent Thielman at D.A. Davidson.

Congrats to [indiscernible] team as well. I guess a 2-part question, I guess, just in terms of thinking about that mid-single-digit price growth in 2026. Part of the question is just that, is that consistent with the annual price increases you're planning for next year? And then the other thing I was wondering is just around that, how much sort of volume you bring into 2026 from acquisitions that sort of, lack of a better word, underpriced than you're pushing towards that Vulcan Way of sort of Selling.

Yes. I would tell you the 5.5% to mid-single digit is a combination of what we're seeing both with our backlog as we go into the year. So our bidding work, which accounts for about 60% as well as the announced letters that we have out with our fixed plants, which is about 40% of our business. And so those conversations, like I said, are happening now. Those letters were sent out in September. Those fixed plant increases will go into effect in January. When I look overall at how that is going to shape up, I think our backlog, and I said on a trailing 3 months, our bookings prices have been accelerating. And so it's a combination of that bid work and what opportunity we're seeing, especially around the private nonres side as well as we still need some help on single family. And so I feel good about our pricing going into next year. I think there's opportunities on both sides on the public and private side. But that's where we're at. And I think those conversations are going well. As far as acquired volumes, I think it's about 10 million tons of acquired volume coming out of last year, which was both [indiscernible]. And so as we've said before, it's taken us time. We're on that campaign. It's going as expected as far as North Carolina goes. And so I would anticipate that gap being made up with our normal Vulcan markets and what we're seeing in Raleigh, that gap will continue to be made up over the next 12 months.

We'll go next now to Steven Fisher with UBS.

Congrats, Tom and Ronnie. Just first a clarification. Have you changed your pricing expectation for the full year of 2025. I'm not sure if I missed that. And then on volumes, the 1% reduction, is that basically just single-family. And within your '26 outlook, are you starting -- if it is single-family affecting '25, do you assume that -- sort of that's still a drag in the first part of '26 and then a more accelerating part of the second half. I know it's still early, but just curious how you're seeing those dynamics.

Yes. So on pricing, I would call it fourth quarter probably very similar to third quarter as we continue to enjoy the big base volumes. Like I said, while they are at lower price, they're also at lower cost and very good margins. So happy have that work with the data centers and the big highway work. If you look at nonres going forward, I think it continues to grow. Public is very good. I think we probably see headwinds from res for a while, but it probably starting to bottom sometime in '26.

And [indiscernible] to [ Angel Castillo ] at Morgan Stanley.

Ronnie, Tom, I echo everyone's congratulations and well wishes and looking forward to working with you, Ronnie. Maybe just -- just regarding your quoting activity and projects pipeline, the acceleration you talked about, I was wondering if you could kind of dive a little deeper into that. Maybe just kind of as a starting point, just putting a finer point on the magnitude of what you saw in October versus perhaps 3Q levels? I know you've given kind of the last few months, but just if you could kind of split that up. And then maybe if you could expand also just on what's driving or what you think is driving kind of the acceleration here in activity. The reason I ask is because I feel like we've kind of heard about project backlogs and quoting activity being robust the last couple of years and conversion rates and delays shipments have kind of disappointed a little bit. So trying to understand, I guess, what gives us confidence that something has changed that will result in kind of the letting of projects moving faster. And within private, if you could expand a bit more like, is that -- are you seeing it happen outside of data centers and semiconductors as well? Or is it primarily just those two?

Yes. So look, we talked some in the first part of the year about projects -- pricing projects and then kind of getting postponed or pushed to pause button. We're not seeing that anymore. In fact, we've seen a lot of those projects actually go at supporting growth in our backlog. If we put it in our backlog we're pretty sure it's going to happen. It's very rare that once we put them in there, the projects don't go. So I have very good confidence that our backlog will be shipped and that growth will support growth as we look at 2026. I think that if you look forward, I think the nonresidential continues to grow. Ronnie, why don't you talk a little bit about kind of volume drivers in '26 and the momentum we carry into that.

Yes. I mean when I look at starts on the private nonres side, as Thomas said, in Vulcan-served markets, in September, on a trailing 6-month were up 7%, trailing 3 were up 8%. And so that momentum continues. As I look at the subsegments of our private non-res office data, stores and warehouses, institutional are all up. And our quoting activity and our bidding are on the same trajectory. And so as we look at it, I mean there is a lot of data center work out there. And that subcategory itself up 26%. But we've also booked 2 LNG projects. We booked a couple of manufacturing projects. We booked some retail. And so it's a combination. Data centers has definitely been a very good tailwind for us. But there's other sectors within the private nonres that also give us confidence as we look in 2026.

Yes, I would tell you that I think that is Ronnie, Mary Andrews, is we all look at '26, pretty good confidence we'll see volume growth. The public side -- I think I can't tell you how strong the public side is, it's very, very good. We've seen the turn in what we thought it was going to be. We think warehouses is now probably turning to growth in most of our markets. So as we talk a lot about single-family, it's still a headwind, but I think it continues to probably -- it will get better as we march through next year. So I think our confidence level that's pretty good.

We'll go next now to David MacGregor at Longbow Research.

This is [indiscernible] on for David. Congrats on a nice quarter. I was just hearing on public infrastructure, Slide 5 shows a nice acceleration in contract awards. I was just hoping you could break it down in some of your key markets and give any detail on how fiscal year '26 DOT budgets look there?

Yes. I would tell you, in our markets, it's very widespread. The public side, I can't underscore it, it's good and getting better. Remember, we're in year 4 of IIJA and it took 2 years to really get that started, which frustrated everyone, including us. But to be -- but as expected, so now we're seeing the state DOTs mature into substantially increased federal and state funding. All of our -- [indiscernible] our top 10 DOTs are all up for fiscal year '26. Trailing 12-month highway starts, as we said, are up 17% in Vulcan states and 5% in other states. So we are aware the DOTs are growing. I think simply put, the DOTs are putting that money to work now and they continue to get better at it. And remember, only 40% of the IIJA funds have been spent. So there's a long tail to this past '26.

Yes. And I think, as Tom said, that those funds will carry us well into '26 and '27 and beyond. And I would tell you there's 3 rules around reauthorization: One, it never happens on time; two, it will happen; and three, it's historically always been larger than the bill before. And so we're anticipating that. We think public will continue to remain strong. And if you think about the infrastructure of the country, we still got a lot of work to do. And so we're happy with where we're at on the public side, and we think that's -- it's going to continue strong in the future.

We'll go next now to Michael Dudas at Vertical Research.

Michael, we cannot hear you right now.

And we'll circle back around to Michael. We'll go next now to Adrian Huerta at JPMorgan.

Thank you Tom, congrats and best wishes. It was a pleasure to work with you all these years. Welcome, Ronnie -- and welcome, Ronnie. I know you for a few years on -- since U.S. Concrete, and I'm sure you're going to deliver very good results as well. Quick question on the costs. It's been quite impressive what you guys have been doing on the cost per tonne side over the last couple of quarters. thing you mentioned that you're still in the early innings on many of these measures that you're taking. Can you give us a sense on the [indiscernible] and for how many more quarters we can see very good performance on cost as we have seen in the last few quarters.

Yes. Thank you for the question. I would tell you, we're still in the early innings, and we've talked about Vulcan Way of Operating. The technology investment is complete within our top 127 plants, which represents over 70% of our production as a company. Where we're at today is really in the final stages of the human behavioral side. And so we have a lot of training going on with our plant operators using the tools, the process intelligence, the scheduling systems with our labor focus. And so my anticipation is we've got a long ways to go, but it's really exciting to watch. And I would tell you that as I look at what's transpired this year and then what we're forecasting for next year, these tools, these investments we've made and the processes that we go through around our operations and focusing on our critical critical size production and the yield on that and in the labor side, labor savings, I think we've got a lot of room. And I'm excited about it. And I think more importantly, our operators are the ones that are driving this. And so a lot more to come, but I would tell you, my anticipation is '26 is going to be even more momentum than it was in '25.

I would say that it's not just a quarter thing, this is years of marching forward with operating efficiency improvements. I think that Ronnie and his team, as I said earlier, should be very proud of their performance this year and may [indiscernible] help from weather and volume in Q3, but they did not in Q1 and Q2. In fact, surprisingly, how good the cost was given the conditions. But I think they have years of improvement ahead of them.

We'll go next now to Ivan Yi at Wolfe Research.

First congrats to Tom and Ronnie. I just want to go back to the aggregate pricing again. price per ton in 3Q was the smallest in a few years. And I get that there's some negative mix in there. But why is the year-over-year growth decelerated in recent quarters? It had been double digits and now you're guiding to 5% in '26. Just some color there.

Yes. I think a couple of things there. Obviously, we had headwinds from acquisitions. We -- in the first part of the year, we had headwinds from lower volumes in the Southeast, driven by weather. That helps -- that got back more normal in Q3. But you're sitting here on 3 years of negative volume and that does put some pressures on price. I think that's -- so we're kind of probably at a low point. I believe that the continued acceleration in public and now visibility to the private nonres going up really helps our conversations for pricing and our backlog pricing as we look into '26. Ronnie called that out, that we've put out in January, [indiscernible] price increases. We're having those conversations are going well. But importantly, before that, over the last few months, we're seeing acceleration in our backlog pricing, which is a very good foreshadowing for what's going to happen in 2026.

We'll go next now to Michael Dudas at Vertical Research.

Yes. I hope the mute is off here. Congrats t oTom and Ronnie. Also congrats to Mary Andrews with a great cash generation and the great cash flow numbers [indiscernible] maybe just as we get closer to wrap up here for Ronnie, as you look into to your tenure here for the next several years, maybe even a decade or so. As you look out maybe past 2026, how much different or not will Vulcan look like? And do you see the sense of the industry fundamentals and where we are? And given what you're seeing from competitors and from clients that this type of growth and sustainability in volume, pricing and certainly profit per ton growth is sustainable over the next several years.

Yes. Great question, [indiscernible]. I think as if you look out past '26, '27, '28 in the future, Vulcan is going to look very similar. And I would tell you, we're going to continue to be led by our strategy around enhancing our core, which is really investing in continuing to invest in Vulcan Way of Operating and Vulcan Way of Selling, which is going to really complement our margin growth, and it gives us confidence in that margin growth with those tools that we've invested in. And then on the strategic side, when we talk about expanding our reach, we're going to stay aggregate focused. And both within the markets that we serve and building the franchise that we have. And also as we look at geographical expansion, it's still going to be an aggregate led company. And to the future, you're going to see anything different than what Vulcan has continued to execute on those growth opportunities will be there, and we'll be right in the middle of it, but we're going to be very disciplined on what we look like and how we -- what those businesses are going to be led by is always going to be aggregates.

And gentlemen, appears we have no further questions this morning. Mr. Hill, I'll turn things back to you, sir, for any closing comments.

Thank you, and thank you all for your time this morning. As I step back and look at Vulcan's future, I feel both pride and excitement. Vulcan has fantastic talent and bench strength throughout the organization and particularly in leadership. Ronnie and Mary Andrews and their teams are seasoned, talented industry experts who are armed with a superior set of tools and disciplines embedded in the Vulcan Way of Selling and the Vulcan Way of Operating. Putting that together with our continuous improvement culture, we'll take Vulcans to remarkable heights. I'm very proud to have represented the men and women of Vulcan and I look forward to supporting Ronnie and Mary Andrews in the future. Thank you all for your interest in Vulcan and your friendships. Keep you and your families safe and healthy. Thank you.

Thank you very much, Mr. Hill again. Ladies and gentlemen, that will conclude today's Vulcan Materials Company earnings conference call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.