What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-05 · 387 added, 339 removed, 1140 unchanged (39% of the section changed)

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Other current assets

Assets held for sale

Total current assets

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Other current liabilities

Liabilities held for sale

Total current liabilities

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Three Months Ended

Six Months Ended

Nine Months Ended

in millions, except per share data

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and businesses

Loss on impairments

Other operating expense, net

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

Operating Activities

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Depreciation, depletion, accretion and amortization

Loss on impairments

Noncash operating lease expense

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Net cash used for investing activities

$ ( 1,760.6 )

Financing Activities

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Payment of current maturities and long-term debt

Proceeds from issuance of long-term debt

Debt issuance and exchange costs

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NATURE OF OPERATIONS

Vulcan Materials Company (the “Company,” “Vulcan,” “we,” “our”), a New Jersey corporation, is the nation’s largest supplier of construction aggregates (primarily crushed stone, sand and gravel), a major producer of asphalt mix and ready-mixed concrete, and a supplier of construction paving services.

Vulcan Materials Company (the “Company” or “Vulcan”), a New Jersey corporation, is the nation’s largest supplier of construction aggregates (primarily crushed stone, sand and gravel), a major producer of asphalt mix and ready-mixed concrete, and a supplier of construction paving services.

We operate primarily in the United States, and our principal product — aggregates — is used in virtually all types of public and private construction projects and in the production of asphalt mix and ready-mixed concrete.

We serve markets in twenty-two states, the U.S.

Virgin Islands, Washington D.C., the Bahamas and the local markets surrounding our operations in British Columbia, Canada and Quintana Roo, Mexico (see Note 8, NAFTA Arbitration).

We serve aggregates markets in twenty-two states, the U.S.

Virgin Islands, Washington D.C., and the local markets surrounding our operations in Freeport, Bahamas;

British Columbia, Canada;

Puerto Cortés, Honduras;

and Quintana Roo, Mexico (see Note 8, NAFTA Arbitration).

Our primary focus is serving metropolitan markets in the United States that are expected to experience the most significant growth in population, households and employment.

These three demographic factors are significant drivers of demand for aggregates.

While aggregates is our focus and primary business, we produce and sell asphalt mix and/or ready-mixed concrete in our Alabama, Arizona, California, Maryland, New Jersey, New Mexico, New York, Oklahoma, Pennsylvania, Tennessee, Texas, Virginia, the U.S.

Virgin Islands, Washington D.C.

and the Bahamas markets.

and Bahamas markets.

BASIS OF PRESENTATION

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For further information, refer to the consolidated financial statements and footnotes included in our most recent Annual Report on Form 10-K.

Operating results for the three and six month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, particularly in light of the uncertainty over the economic and operational impacts of the ongoing COVID-19 pandemic and the current conflict between Russia and Ukraine.

Operating results for the three and nine month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, particularly in light of the uncertainty over the economic and operational impacts of the current conflict between Russia and Ukraine.

Construction activity continues to be impacted by capacity constraints (including supply chain bottlenecks, labor shortages and transportation availability) and cost inflation.

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The most significant estimates and assumptions included in the preparation of these financial statements are related to goodwill and long-lived asset impairments, business combinations and purchase price allocation, pension and other postretirement benefits, environmental compliance, claims and litigation including self-insurance, and income taxes.

Events that relate to conditions arising after June 30, 2022, will be reflected in management’s estimates for future periods.

Events that relate to conditions arising after September 30, 2022 will be reflected in management’s estimates for future periods.

NONCONTROLLING INTEREST

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The remaining 12 % noncontrolling interest is held by the Namgis First Nation (Namgis).

This noncontrolling interest consists of the Namgis’ share of the fair value equity in the partnership offset by capital contributions loaned to the Namgis by us.

Our consolidated financial statements recognize the full fair value of all of the subsidiary’s assets and liabilities offset by the noncontrolling interest in total equity.

This noncontrolling interest consists of the Namgis’ share of the fair value equity in the partnership.

Our condensed consolidated financial statements recognize the full fair value of all of the subsidiary’s assets and liabilities offset by the noncontrolling interest in total equity.

RESTRICTED CASH

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Three Months Ended

Six Months Ended

Nine Months Ended

Discontinued Operations

1 unchanged sentence

Loss on discontinued operations,

Our discontinued operations include charges/credits related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals busines s (including certain matters as discussed in Note 8).

Our discontinued operations include charges related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals busines s (including certain matters as discussed in Note 8).

There were no revenues from discontinued operations for the periods presented.

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Three Months Ended

Six Months Ended

Nine Months Ended

Weighted-average common shares

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Three Months Ended

Six Months Ended

Nine Months Ended

Antidilutive common stock equivalents

RECLASSIFICATIONS

Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2022 presentation.

Our portfolio of nonmineral leases is composed of leases for real estat e (i ncluding office buildings, aggregates sales yards and terminals , and concrete and asphalt sites) and equipmen t ( including railcars and rail track, barges , and office, plant and mobile equipment).

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Total lease assets

Liabilities 1

Other current liabilities

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Finance leases

The increases from June 30, 2021 in ROU assets and liabilities presented above primarily relate to the acquisition of U.S.

Concrete (see Note 16 for additional information).

Includes lease assets and liabilities that are classified as held for sale as detailed in Note 16.

Our lease agreements do not contain residual value guarantees, restrictive covenants or early termination options that we deem material.

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Three Months Ended

Six Months Ended

Nine Months Ended

Finance lease cost

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Our short-term lease cost includes the cost of leases with an initial term of one year or less (including those with terms of one month or less).

Cash paid for operating leases was $ 40.8 million and $ 28.7 million for the six months ended June 30, 2022 and 2021, respectively.

Cash paid for finance leases was $ 19.4 million and $ 1.3 million for the six months ended June 30, 2022 and 2021, respectively.

Our estimated annual effective tax rate (EAETR) is based on full-year expectations of pretax earnings, statutory tax rates, permanent differences between book and tax accounting such as percentage depletion, and tax planning alternatives available in the various jurisdictions in which we operate.

Cash paid for operating leases was $ 60.0 million and $ 44.6 million for the nine months ended September 30, 2022 and 2021, respectively.

Cash paid for finance leases (principal and interest) was $ 28.0 million and $ 4.8 million for the nine months ended September 30, 2022 and 2021, respectively.

Our estimated annual effective tax rate (EAETR) is based on full-year expectations of pretax earnings, statutory tax rates and permanent differences between book and tax accounting such as percentage depletion.

For interim financial reporting, we calculate our quarterly income tax provision in accordance with the EAETR.

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Significant judgment is required in determining our EAETR.

In the second quarter of 2022, we recorded income tax expense from continuing operations of $ 63.7 million compared to $ 57.3 million in the second quarter of 2021.

The increase in tax expense was primarily related to an increase in pretax earnings and an increase in our reserve for uncertain tax positions.

For the first six months of 2022, we recorded income tax expense from continuing operations of $ 82.4 million compared to $ 118.0 million for the first six months of 2021.

The decrease in tax expense was primarily related to a decrease in pretax earnings in 2022 and the 2021 increase in the valuation allowance against the Alabama net operating loss (NOL).

In February 2021, the Alabama Business Competitiveness Act (ABC Act) was signed into law.

The ABC Act contained a provision requiring most taxpayers to change from a three-factor, double-weighted sales method to a single-sales factor method to apportion income to Alabama.

This provision had the effect of significantly reducing our apportionment of income to Alabama, thereby further inhibiting our ability to utilize our Alabama NOL carryforward.

As a result, we recorded a charge in the first quarter of 2021 to increase the valuation allowance by $ 13.7 million.

No other material tax impacts resulted from the enactment of the ABC Act.

In the third quarter of 2022, we recorded income tax expense from continuing operations of $ 82.3 million compared to $ 51.7 million in the third quarter of 2021.

The increase in tax expense was primarily related to an increase in pretax earnings, the recording of a valuation allowance during the quarter against the net operating losses of one of our Mexican subsidiaries (discussed further below) and the impairment of non-tax deductible goodwill (see Note 15).

For the first nine months of 2022, we recorded income tax expense from continuing operations of $ 164.6 million compared to $ 169.7 million for the first nine months of 2021.

The decrease in tax expense was primarily related to lower pretax earnings partially offset by the impairment of non-tax deductible goodwill.

In August 2022, the Inflation Reduction Act (IRA) was signed into law.

The IRA introduces a corporate alternative minimum tax (CAMT) of 15% applicable to corporations with adjusted financial statement income in excess of $1 billion, as well as certain climate-related tax provisions.

The CAMT provision is effective for tax years beginning on or after January 1, 2023.

We do not anticipate that the provisions of the IRA will be material to our income taxes.

We recognize deferred tax assets and liabilities (which reflect our best assessment of the future taxes we will pay) based on the differences between the book basis and tax basis of assets and liabilities.

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A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not (a likelihood of more than 50%) that some portion, or all, of a deferred tax asset will not be realized.

As discussed in Note 8, in May 2022, Mexican government officials unexpectedly and arbitrarily shut down our Calica operations in Mexico.

The impact of the shutdown, combined with recent increased costs (primarily due to underwater mining) has resulted in substantial losses.

We project that Calica will generate a net operating loss (NOL) deferred tax asset of $ 13.6 million for 2022.

Based on the weight of all available positive and negative evidence, we have concluded that it is more likely than not that Calica will be unable to realize the NOL deferred tax asset during the carryforward period.

Therefore, in the third quarter of 2022, we recorded a valuation allowance against the current year NOL deferred tax asset as a component of the EAETR.

Should the Mexican government lift the shutdown and/or we are successful in our NAFTA claim, we will reevaluate the need for a valuation allowance against the NOL deferred tax asset.

In February 2021, the Alabama Business Competitiveness Act (ABC Act) was signed into law.

The ABC Act contained a provision requiring most taxpayers to change from a three-factor, double-weighted sales method to a single-sales factor method to apportion income to Alabama.

This provision had the effect of significantly reducing our apportionment of income to Alabama, thereby further inhibiting our ability to utilize our Alabama NOL carryforward.

As a result, we recorded a charge in the first quarter of 2021 to increase the valuation allowance by $ 13.7 million.

No other material tax impacts resulted from the enactment of the ABC Act.

We project Alabama NOL carryforward deferred tax assets at December 31, 2022 of $ 61.6 million against which we have a valuation allowance of $ 42.9 million (after considering the ABC Act).

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Our segment total revenues by geographic market (excluding the U.S.

Concrete acquisition which is only presented by segment) for the three and six month periods ended June 30, 2022 and 2021 are disaggregated as follows:

Three Months Ended June 30, 2022

Concrete acquisition which is only presented by segment) for the three and nine month periods ended September 30, 2022 and 2021 are disaggregated as follows:

Three Months Ended September 30, 2022

Total Revenues by Geographic Market 1

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Total revenues

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Total Revenues by Geographic Market 1

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Total revenues

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Total Revenues by Geographic Market 1

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Total revenues

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Total Revenues by Geographic Market 1

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East market - Arkansas, Delaware, Illinois, Kentucky, Marylan d, N orth Carolina, Pennsylvania, Tennessee, Virgini a and Washington D.C.

Gulf Coast market — Alabama, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Quintana Roo (Mexico), South Carolina and Texas

Gulf Coast market - Alabama, Florida, Georgia, Louisiana, Mississippi, Oklahoma, South Carolina, Texas, Freeport (Bahamas), Puerto Cortés (Honduras) and Quintana Roo (Mexico)

West market - Arizon a, C alifornia and New Mexico

Concrete — British Columbia (Canada), California, Hawaii, New Jersey, New York, Oklahoma, Pennsylvania, Texas, the U.S.

Virgin Islands and Washington D.C.

Concrete - California, Hawaii, New Jersey, New York, Oklahoma, Pennsylvania, Texas, U.S.

Virgin Islands, Washington D.C., and British Columbia (Canada)

Total revenues are primarily derived from our product sales of aggregates (crushed stone, sand and gravel, sand and other aggregates), asphalt mix and ready-mixed concrete, and include freight & delivery costs that we pass along to our customers to deliver these products.

We also generate service revenues from our asphalt construction paving business and service revenues related to our aggregates business, such as landfill tipping fees.

Our total service revenues were $ 67.9 million ( 3.5 % of total revenues) and $ 60.8 million ( 4.5 % of total revenues) for the three months ended June 30, 2022 and 2021, respectively, and $ 106.9 million ( 3.1 % of total revenues) and $ 102.0 million ( 4.2 % of total revenues) for the six months ended June 30, 2022 and 2021, respectively.

Our total service revenues were $ 71.1 million ( 3.4 % of total revenues) and $ 66.2 million ( 4.4 % of total revenues) for the three months ended September 30, 2022 and 2021, respectively, and $ 178.0 million ( 3.2 % of total revenues) and $ 168.2 million ( 4.3 % of total revenues) for the nine months ended September 30, 2022 and 2021, respectively.

Our products typically are sold to private industry and not directly to governmental entities.

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Three Months Ended

Six Months Ended

Nine Months Ended

Freight & Delivery Revenues

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Three Months Ended

Six Months Ended

Nine Months Ended

Deferred Revenue

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Balance at end of period

Based on expected sales from the specified quarries, we expect to recognize $ 7.5 million of VPP deferred revenue as income during the 12-month period ending June 30, 2023 (reflected in other current liabilities in our June 30, 2022 Condensed Consolidated Balance Sheet).

Based on expected sales from the specified quarries, we expect to recognize $ 7.5 million of VPP deferred revenue as income during the twelve-month period ending September 30, 2023 (reflected in other current liabilities in our September 30, 2022 Condensed Consolidated Balance Sheet).

Fair Value Measurements

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dollar-denominated money market instruments).

Net gains (losses) of the Rabbi Trusts’ investments were $( 6.1 ) million and $ 3.4 million for the six months ended June 30, 2022 and 2021, respectively.

The portions of the net gains (losses) related to investments still held by the Rabbi Trusts at June 30, 2022 and 2021 were $( 6.3 ) million and $ 3.0 million, respectively.

Net gains (losses) of the Rabbi Trusts’ investments were $( 8.1 ) million and $ 2.4 million for the nine months ended September 30, 2022 and 2021, respectively.

The portions of the net gains (losses) related to investments still held by the Rabbi Trusts at September 30, 2022 and 2021 were $( 8.3 ) million and $ 2.0 million, respectively.

Interest rate swaps are measured at fair value using quoted market prices or pricing models that use prevailing market interest rates as of the measurement date.

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Additional disclosures for derivative instruments and interest-bearing debt are presented in Notes 6 and 7, respectively.

During the third quarter of 2022, net assets held for sale with a carrying value of $ 196.9 million were written down to their estimated fair value less cost to sell of $ 180.0 million, resulting in an impairment loss of $ 16.9 million.

The estimated fair value was determined based on the expected proceeds from the probable sale of the disposal group.

Refer to Note 16 for the major categories of assets and liabilities classified as held for sale and Note 15 for a related goodwill impairment charge.

Derivative Instruments

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Three Months Ended

Six Months Ended

Nine Months Ended

Cash Flow Hedges

Loss reclassified from AOCI

For the 12-month period ending June 30, 2023, we estimate that $ 2.1 million of the $ 21.8 million net of tax loss in AOCI will be reclassified to interest expense.

For the twelve-month period ending September 30, 2023, we estimate that $ 2.1 million of the $ 21.4 million net of tax loss in AOCI will be reclassified to interest expense.

Debt is detailed as follows:

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Bank line of credit expires 2027 1

Commercial paper expires 2027 1

Total short-term debt

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Bank line of credit expires 2027 1

Commercial paper expires 2027 1

Delayed draw term loan expires 2026

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Estimated fair value of long-term debt

Borrowings on the bank line of credit are classified as short-term if we intend to repay within twelve months and as long-term if we have the intent and ability to extend payment beyond twelve months.

Discounts and debt issuance costs are amortized using the effective interest method over the terms of the respective notes resulting in $ 2.4 million and $ 11.4 million of net interest expense for these items for the six months ended June 30, 2022 and 2021, respectively.

BRIDGE FACILITY, DELAYED DRAW TERM LOAN AND LINE OF CREDIT

Borrowings on the bank line of credit and commercial paper are classified as short-term if we intend to repay within twelve months and as long-term if we have the intent and ability to extend payment beyond twelve months.

Discounts and debt issuance costs are amortized using the effective interest method over the terms of the respective notes resulting in $ 5.0 million and $ 12.6 million of net interest expense for these items for the nine months ended September 30, 2022 and 2021, respectively.

DELAYED DRAW TERM LOAN, LINE OF CREDIT AND COMMERCIAL PAPER PROGRAM

In June 2021, concurrent with the announcement of the pending acquisition of U.S.

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The delayed draw term loan was drawn in August 2021 for $ 1,600.0 million upon the acquisition of U.S.

Concrete and was paid down to $ 1,100.0 million in September 2021 (amounts repaid are no longer available for borrowing).

In March 2022, the delayed draw term loan was amended to extend the maturity date from August

2024 to August 2026.

Concrete, was paid down to $ 1,100.0 million in September 2021 and was further paid down to $ 550.0 million in August 2022 (amounts repaid are no longer available for borrowing).

In March 2022, the delayed draw term loan was amended to extend the maturity date from August 2024 to August 2026.

The delayed draw term loan contains covenants customary for an unsecured investment-grade facility and mirror those in our line of credit.

As of June 30, 2022, we were in compliance with the delayed draw term loan covenants.

As of September 30, 2022, we were in compliance with the delayed draw term loan covenants.

Financing costs for the bridge facility commitment and the delayed draw term loan totaled $ 13.3 million, $ 9.4 million of which was recognized as interest expense in the second quarter of 2021.

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The margins are determined by our credit ratings.

As of June 30, 2022, the margin for SOFR borrowings was 0.875 % and the margin for base rate borrowings was 0.000 %.

Our unsecured $ 1,000.0 million line of credit was amended in March 2022 to extend the maturity date from September 2025 to September 2026.

As of September 30, 2022, the margin for SOFR borrowings was 0.875 %, and the margin for base rate borrowings was 0.000 %.

Our unsecured line of credit was amended in August 2022 to increase the amount from $ 1,000.0 million to $ 1,600.0 million and extend the maturity date from September 2026 to August 2027.

Our line of credit contains covenants customary for an unsecured investment-grade facility.

As of June 30, 2022, we were in compliance with the line of credit covenants.

As of September 30, 2022, we were in compliance with the covenants.

Borrowings on the line of credit bear interest, at our option, at either SOFR plus a margin ranging from 1.000 % to 1.625 % or Truist Bank’s base rate (generally, its prime rate) plus a margin ranging from 0.000 % to 0.625 %.

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We also pay a commitment fee on the daily average unused amount of the line of credit that ranges from 0.090 % to 0.225 % determined by our credit ratings.

As of June 30, 2022, the margin for SOFR borrowings was 1.125 %, the margin for base rate borrowings was 0.125 %, and the commitment fee for the unused amount was 0.100 %.

As of June 30, 2022, our available borrowing capacity under the line of credit was $ 745.9 million.

As of September 30, 2022, the margin for SOFR borrowings was 1.125 %, the margin for base rate borrowings was 0.125 %, and the commitment fee for the unused amount was 0.100 %.

In August 2022, we established a $ 1,600.0 million commercial paper program and borrowed $ 550.0 million under the program.

Commercial paper borrowings bear interest at rates determined at the time of issuance and as agreed between us and the commercial paper investors.

As of September 30, 2022, our available borrowing capacity under the line of credit was $ 1,210.0 million.

Utilization of the borrowing capacity was as follows:

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 $ 78.0 million was used to support standby letters of credit

Essentially all of our $ 3,941.9 million (face value) of term debt (which includes the $1,100.0 million delayed draw term loan) is unsecured.

Essentially all of our $ 3,941.9 million (face value) of term debt (which includes the $ 550.0 million delayed draw term loan and the $ 550.0 million commercial paper) is unsecured.

$ 2,840.2 million of such debt is governed by two essentially identical indentures that contain customary investment-grade type covenants.

As of June 30, 2022, we were in compliance with all term debt covenants.

As of September 30, 2022, we were in compliance with all term debt covenants.

In August 2021, we assumed $ 434.5 million (fair value) of senior notes due 2029 in connection with the acquisition of U.S.

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Such letters of credit typically have an initial term of one year , typically renew automatically, and can only be modified or canceled with the approval of the beneficiary.

Except for $ 24.8 million of risk management letters of credit that expire in July 2022, our standby letters of credit are issued by banks that participate in our $ 1,000.0 million line of credit, and reduce the borrowing capacity thereunder.

Our standby letters of credit as of June 30, 2022 are summarized by purpose in the table below:

Except for $ 26.1 million of risk management letters of credit that expire in 2023, our standby letters of credit are issued by banks that participate in our $ 1,600.0 million line of credit and reduce the borrowing capacity thereunder.

Our standby letters of credit as of September 30, 2022 are summarized by purpose in the table below:

Standby Letters of Credit

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As the holder of the working interest, we have responsibility to bear the cost of mining and producing the reserves attributable to this nonoperating interest.

As stated in Note 2, our lease liabilities totaled $ 774.9 million as of June 30, 2022.

As summarized by purpose in Note 7, our standby letters of credit totaled $ 102.9 million as of June 30, 2022.

As described in Note 9, our asset retirement obligations totaled $ 321.1 million as of June 30, 2022.

As stated in Note 2, our lease liabilities totaled $ 768.8 million as of September 30, 2022 (including liabilities classified as held for sale – see Note 16).

As summarized by purpose in Note 7, our standby letters of credit totaled $ 104.1 million as of September 30, 2022.

As described in Note 9, our asset retirement obligations totaled $ 340.0 million as of September 30, 2022.

LITIGATION AND ENVIRONMENTAL MATTERS

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It is unknown at this time how the proposed settlement with the EPA/DOJ would affect the Occidental lawsuit.

■ TEXAS BRINE MATTER (DISCONTINUED OPERATIONS) — During the operation of its former Chemicals Division, Vulcan secured the right to mine salt out of an underground salt dome formation in Assumption Parish, Louisiana from 1976 - 2005.

Throughout that perio d, t he Texas Brine Company (Texas Brine) was the operator contracted by Vulcan (and later Occidental Chemical Company (Occidental) ) to mine and deliver the salt.

We sold our Chemicals Division in 2005 and transferred our rights and interest related to the salt and mining operations to the purchaser, a subsidiary of Occidental, and we have had no association with the leased premises or Texas Brine since that time.

■ TEXAS BRINE MATTER (DISCONTINUED OPERATIONS) — Durin g o peration of its former Chemicals Division, Vulcan secured the right to mine salt out of an underground salt dome formation in Assumption Parish, Louisiana from 1976 - 2005.

Throughout that perio d, T exas Brine Company, L.L.C.

(Texas Brine) was the operator contracted by Vulca n t o mine and deliver th e brine.

W e sold our Chemicals Division in 2005 and transferred our rights and interest related to the salt and mining operations to the purchaser, a subsidiary of Occidental Chemical Company (Occidental), a nd we have had no association with the leased premises or Texas Brine since that time.

After the sale, Texas Brine continued to mine and deliver brine to Occidental.

In August 2012, a sinkhole developed in the vicinity of the Texas Brine mining operations, and numerous lawsuits were filed in state court in Assumption Parish, Louisiana.

Other lawsuits, including class action litigation, were also filed in federal court before the Eastern District of Louisiana in New Orleans.

Other lawsuits, including class action litigation, wer e f iled in federal court before the Eastern District of Louisiana in New Orleans.

There have been numerous defendants , including Texas Brine and Occidental, to the litigation in state and federal court.

Vulcan was first brought into the litigation as a third-party defendant in August 2013 b y T exas Bri ne .

We have since been added as a direct and third-party defendant by other parties, including a direct claim by the state of Louisian a.

We were then added as a direct and third-party defendant by other parties, including a direct claim by the S tate of Louisian a.

Damage categories encompassed within the litigation include, but are not limited to, individual plaintiffs’ claims for property damage ;

a claim by the S tate of Louisia na for response costs and civil penalties ;

claims by Texas Brine for past and future response costs , l ost profits and investment costs, indemnity payments, attorneys’ fees, other litigation costs and judicial interests;

claims by Texas Brine for past and future response costs , l os s of profits and investment opportunities, indemnity and contribution, attorneys’ fees, other litigation costs, and judicial interest;

c laims for physical damages to nearby oil and gas pipeline s and storage facilities (pipelines);

and business interruption claims .

In addition to the plaintiffs’ claims, we were also sued for contractual indemnity and comparative fault by both Texas Brine and Occidental.

I t is alleged that the sinkhole was caused, in whole or in part, by our negligent or fraudulent actions or failure to act.

It is also alleged that we breached the salt lease with Occidental , as well as an operating agreement and related contracts with Texas Brin e;

that we were strictly liable for certain property damages in our capacity as a former lessee of the salt lease;

The claims implicating Vulcan sound in tort and contract.

With regard to the tort claims, it has been alleged that the sinkhole was caused, in whole or in part, by our negligent or fraudulent actions or failure to act.

With regard to the contract claims, it has also been alleged that we breached the salt lease with Occidental , as well as an operating agreement and related contracts with Texas Brin e;

that we are strictly liable for certain damages in our capacity as a former lessee of the salt lease;

and that we violated certain covenants and conditions in the agreement under which we sold our Chemicals Division to Occidental.

We likewise made claims for contractual indemnity and on a basis of comparative fault against Texas Brine and Occidental.

Vulcan and Occidental have since dismissed all of their claims against one another.

Texas Brine has claims that remain pending against Vulcan and against Occidental.

A joint bench trial (judge only) began in September 2017 and ended in October 2017 in the pipeline cases.

The trial was limited in scope to the allocation of comparative fault or liability for causing the sinkhole, with a second trial phase addressed to contract and damages set to be held during the third quarter of 2022.

In December 2017, the judge issued a ruling on the allocation of fault among the three defendants as follows:

Occidental 50 %, Texas Brine 35 % (and its wholly-owned subsidiary) and Vulcan 15 %.

We likewise made claims for contractual indemnity and on the basis of comparative fault against Texas Brine and Occidental.

Vulcan and Occidental have since dismissed their claims against one another.

The State of Louisiana has claims that remain pending against Texas Brine, Vulcan, and Occidental.

Texas Brine and Occidental also have claims pending against each other in arbitration.

A joint bench trial (judge only) began in September 2017 and ended in October 2017 in the three pipeline cases.

The trial addressed comparative fault and liability for causing the sinkhole.

In December 2017, the judge issued a ruling allocating fault among the three defendants as follows:

Occidental (and affiliates) 50 %, Texas Brine (and its wholly-owned subsidiary) 35 % and Vulcan 15 %.

This ruling was appealed by the parties in each of the pipeline cases.

In December 2020, the Louisiana Court of Appeal, First Circuit issued its Notice of Jud gm ent and Disposition in one of the pipeline cases reversing in part and amending the trial court judgment to reallocate 20 % of the fault from Occidental to Texas Brine, with the result that 30 % of the fault is now allocated to Occidental and 55 % of the fault is now allocated to Texas Brine (and its wholly-owned subsidiary) .

In December 2020, the Louisiana Court of Appeal, First Circuit , issued a Notice of Jud gm ent and Disposition in one of the pipeline cases reversing in part and amending the trial court judgment to reallocate 20 % of the fault from Occidental to Texas Brine, with the result that 30 % of the fault is now allocated to Occidental and 55 % of the fault is now allocated to Texas Brine (and its wholly-owned subsidiary) .

The Court of Appeal affirmed the 15 % fault allocation to Vulcan.

Appeal made various other findings, including findings related to the arbitrability of certain claims between Occidental and Texas Brine.

In May 2021 and April 2022, the Court of Appeal issued judgments in the other two pipeline cases, assigning the same allocation of fault between the parties.

The Court of Appeal made various other findings, including findings related to the arbitrability o f cl aims between Occidental and Texas Brine.

In May 2021 and April 2022, the Court of Appeal issued judgments in the other two pipeline cases, assigning the same fault allocation.

Writs were sought from the Louisiana Supreme Court for review of all three appellate decisions.

Those applications were denied, resulting in final judgments regarding fault allocations in two of the three pipeline cases.

Texas Brine’s writ in the third pipeline case remains pending.

We have settled claims by all plaintiffs except in two outstanding cases, and our insurers to date have funded these settlements in excess of our self-insured retention amount.

The remaining cases involve Texas Brine and the State of Louisiana.

This quarter we recorded an immaterial loss related to the claims brought by Texas Brine.

Those applications were denied, resulting in final judgments regarding fault allocations in the three pipeline cases.

We have settled claims by all plaintiffs except claims by the State of Louisiana and Texas Brine, including a recent overlapping lawsuit by Texas Brine asserting claims and demands against Vulcan concerning potential exposure by Texas Brine to Occidental and the State of Louisiana and ongoing and future sinkhole-related Louisiana regulatory matters.

The new Texas Brine lawsuit also adds a former Vulcan employee as a defendant.

In August 2022, Vulcan removed this lawsuit to federal court and filed initial responsive pleadings.

During the second quarter of 2022, we recorded an immaterial loss related to claims by Texas Brine.

During August 2022, Vulcan and Texas Brine commenced a bench trial related to Texas Brine’s claims that remained pending in the three pipeline cases.

After three days of trial, the parties stipulated to the amount of Texas Brine’s tort damages at issue in the trial.

After applying Vulcan’s 15 % fault allocation, Vulcan’s stipulated financial responsibility for the damages at issue in the trial is within the immaterial loss recorded during the second quarter of 2022.

The court will now decide the amount of interest and costs, if any, to apply to the stipulated award.

We anticipate that the court’s judgment will be consistent with the immaterial loss recorded during the second quarter of 2022.

The stipulation did not resolve the numerous pre-trial judgments that are on appeal, which dismissed or barred what were potentially much more significant damage claims between Texas Brine and Vulcan.

We cannot at this time reasonably estimate the range of liability, if any, that could result if an appellate court reverses any of the trial court’s pre-trial judgments.

At this time w e cannot reasonably estimate a range of liability pertaining to the claims brought by the State of Louisiana.

The State’s lawsuit has been dormant awaiting final disposition of the Phase 1 (liability) proceedings, which remain pending before the Louisiana Supreme Court in one of the three pipeline cases.

The State’s lawsuit has been dormant awaiting final disposition of the Phase 1 (liability) proceedings in the three pipeline cases.

We are also unable to assess the range of liability, if any, that could result from Texas Brine’s new lawsuit.

■ NEW YORK WATER DISTRICT CASES (DISCONTINUED OPERATIONS) — During the operation of our former Chemicals Division, which was divested to Occidental in 2005, Vulcan manufactured a chlorinated solvent known as 1,1,1-trichloroethane.

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Discussions are ongoing with Honeywell regarding other costs Honeywell has incurred or will incur.

We are also gathering and analyzing data and developing technical information to determine the extent of possible contribution by the Hewitt Landfill to the groundwater contamination in the area.

We are also gathering and analyzing data and developing technical information to determine the extent of possible contribution by the Hewitt Landfill to the groundwater contamination in the area to be treated by Honeywell’s system, and we expect this work to be completed during the fourth quarter of 2022.

This work is also intended to assist in identification of other PRPs that may have contributed to groundwater contamination in the area.

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This work is also intended to assist in identification of other PRPs that may have contributed to groundwater contamination in the area.

Vulcan is also seeking access to LADWP’s list of PRPs.

At this time, we cannot reasonably estimate a range of a loss to Vulcan pertaining to this contribution claim.

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Six Months Ended

Nine Months Ended

ARO Operating Costs

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Six Months Ended

Nine Months Ended

Asset Retirement Obligations

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Balance at end of period

The increase in ARO liabilities from June 30, 2021 to June 30, 2022 primarily relate to those assumed in the acquisition of U.S.

Concrete (see Note 16).

The increase in ARO liabilities from September 30, 2021 to September 30, 2022 primarily relates to acquisitions completed in 2022 (see Note 16).

Benefit Plans

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Six Months Ended

Nine Months Ended

Components of Net Periodic Benefit Cost

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net periodic pension benefit cost

The contributions to pension plans for the six months ended June 30, 2022 and 2021, as reflected on the Condensed Consolidated Statements of Cash Flows, pertain to benefit payments under nonqualified plans for both periods.

The contributions to pension plans for the nine months ended September 30, 2022 and 2021, as reflected on the Condensed Consolidated Statements of Cash Flows, pertain to benefit payments under nonqualified plans for both periods.

POSTRETIREMENT PLANS

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Six Months Ended

Nine Months Ended

Components of Net Periodic Benefit Cost

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Under these plans, we match employees’ eligible contributions at established rates.

Expense recognized in connection with these matching obligations totaled $ 29.6 million and $ 35.0 million for the six months ended June 30, 2022 and 2021, respectively.

Expense recognized in connection with these matching obligations totaled $ 49.1 million and $ 49.9 million for the nine months ended September 30, 2022 and 2021, respectively.

other Comprehensive Income

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Pension and postretirement plans

Changes in AOCI, net of tax, for the six months ended June 30, 2022 are as follows:

Changes in AOCI, net of tax, for the nine months ended September 30, 2022 are as follows:

Postretirement

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Net current period OCI changes

Balances as of June 30, 2022

Balances as of September 30, 2022

Amounts reclassified from AOCI to earnings are as follows:

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Six Months Ended

Nine Months Ended

Amortization of Cash Flow Hedge Losses

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The terms and provisions of such shares will be determined by our Board of Directors upon any issuance of preferred shares in accordance with our Certificate of Incorporation.

There were no shares held in treasury as of June 30, 2022, December 31, 2021 and June 30, 2021.

Our common stock purchases (all of which were open market purchases) and subsequent retirements for the year-to-date periods ended are as follows:

in millions, except average cost

Shares Purchased and Retired

Total purchase price

Average cost per share

As of June 30, 2022, 8,064,851 shares may b e p urchased under the current authorizatio n o f our Board of Directo rs.

There were no shares held in treasury as of September 30, 2022, December 31, 2021 and September 30, 2021.

There were no common stock purchases for the periods ended September 30, 2022, December 31, 2021 and September 30, 2021.

As of September 30, 2022, 8,064,851 shares may b e p urchased under the current authorizatio n o f our Board of Directo rs.

Changes in total equity are summarized below:

Three Months Ended

Six Months Ended

Nine Months Ended

in millions, except per share data

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Balance at beginning of period

Acquisition of noncontrolling interest

Earnings (loss) attributable to noncontrolling interest

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Six Months Ended

Nine Months Ended

Total Revenues

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Certain temporarily idled assets are included within a segment's Identifiable Assets but the associated DDA&A is shown within Other in the DDA&A section above as the related DDA&A is excluded from segment gross profit.

The increases in Aggregates, Concrete and General corporate Identifiable Assets are largely attributable to the August 2021 U.S.

Concrete acquisition (see Note 16).

Includes assets classified as held for sale (see Note 16) .

Supplemental Cash Flow Information

Supplemental information referable to our Condensed Consolidated Statements of Cash Flows is summarized below:

Six Months Ended

Nine Months Ended

Cash Payments

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Recognition of new and revised lease obligations for 1

Operating leases

Finance leases

Operating lease ROU assets

Finance lease ROU assets

Amounts referable to business acquisitions

Operating lease ROU assets

Finance lease ROU assets

Other liabilities assumed

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Goodwill is allocated to reporting units for purposes of testing goodwill for impairment.

There were no charges for goodwill impairment in the six month periods ended June 30, 2022 and 2021.

Accumulated goodwill impairment losses amount to $ 252.7 million (year 2008) in our former Cement segment.

We test goodwill for impairment on an annual basis or more frequently if events or circumstances change in a manner that would more likely than not reduce the fair value of a reporting unit below its carrying value.

During the third quarter of 2022, we performed an interim goodwill impairment test due to a more-likely-than-not expectation of selling a reporting unit classified as held for sale (see Note 16).

The carrying value of this reporting unit exceeded its estimated fair value (based on the expected proceeds from the probable sale) resulting in an impairment loss of $ 50.9 million.

There were no charges for goodwill impairment in the nine month period ended September 30, 2021.

Accumulated goodwill impairment losses amount to $ 303.6 million ($ 252.7 million in our former Cement segment and $ 50.9 in our Concrete segment).

We have four reportable segments organized around our principal product lines:

Aggregates, Asphalt, Concrete and Calcium.

Changes in the carrying amount of goodwill by reportable segment from December 31, 2021 to June 30, 2022 are shown below:

Changes in the carrying amount of goodwill by reportable segment from December 31, 2021 to September 30, 2022 are shown below:

Totals at December 31, 2021

Goodwill of acquired businesses 1

Totals at June 30, 2022

Goodwill impairment

Totals at September 30, 2022

See Note 16 for acquisitions.

A decrease in the estimated fair value of one or more of our reporting units could result in the recognition of a material, noncash write-down of goodwill.

Acquisitions and Divestitures

BUSINESS ACQUISITIONS

2022 BUSINESS ACQUISITIONS — Through the six months ended June 30, 2022 , we purchased the following operations for total consideration of $ 233.5 million:

 Texas — five aggregates facilities (includes three production stage properties, one development stage property and one sales yard)

 Virginia — four ready-mixed concrete facilities and two idle ready-mixed concrete sites

2022 BUSINESS ACQUISITIONS — Through the nine months ended September 30, 2022 , we purchased the following operations for total consideration of $ 593.4 million:

 California — eight aggregates, four asphalt mix and seven ready-mixed concrete operations

 Texas — five aggregates operations

 Virginia — four ready-mixed concrete operations and two idle ready-mixed concrete sites

 Honduras — an aggregates operation serving limited markets along the Gulf Coast

The 2022 acquisitions listed above are reported in our consolidated financial statements as of their respective acquisition dates.

None of these acquisitions were material to our result s of operations or financial position either individually or collectively.

None of these acquisitions were material to our result s of operatio ns ei ther individually or collectively , and acquisition related expenses were immaterial.

The fair value of consideration transferred for these 2022 acquisitions and the preliminary amounts (pending final appraisals of intangible assets and property, plant & equipment and related deferred taxes) of assets acquired and liabilities assumed are summarized below:

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Accounts and notes receivable, net

Other current assets

Property, plant & equipment

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Contractual rights in place

Liabilities assumed

Deferred income taxes, net

Other liabilities assumed

Net identifiable assets acquired

A s a result o f the 2022 acquisitions, we recognized $ 41.3 million o f amortizable intangible assets and no goodwill .

The amortizable intangible assets will be amortized against earnings over a weighted-average 16 years and $ 41.3 million will be deductible for income tax purposes over 15 years.

A s a result o f the 2022 acquisitions, we recognized $ 61.2 million o f amortizable intangible assets and $ 12.1 million of goodwill .

The amortizable intangible assets will be amortized against earnings over a weighted-average of 15 years and will be deductible for income tax purposes over 15 years.

The $ 12.1 million of goodwill recognized represents deferred tax liabilities generated from carrying over the seller’s tax basis in the assets acquired.

No ne of the goodwill recognized will be deductible for income tax purposes.

2021 BUSINESS ACQUISITIONS — On August 26, 2021 , we purchased the following operations in connection with the acquisition of U.S.

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Nine Months Ended

Supplemental Pro Forma Results

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The fair value of consideration transferred for the U.S.

Concrete acquisition and the preliminary amounts (pending final inspection of p roperty, plant & equipment and related deferred taxes ) of assets acquired and liabilities assumed are summarized below:

Concrete acquisition and th e a mount s o f assets acquired and liabilities assumed are summarized below:

Fair Value of Purchase Consideration

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Additionally, during 2021, we purchased concrete operations in California for total consideration of $ 4.9 million.

A s a collective result o f the 2021 acquisitions, we recognized $ 685.5 million o f amortizable intangible assets and $ 570.3 million of goodwill (including an increase of $ 45.7 million from December 31, 2021) .

A s a collective result o f the 2021 acquisitions, we recognized $ 685.5 million o f amortizable intangible assets and $ 571.2 million of goodwill, representing an increase in goodwill of $ 46.6 million from December 31, 2021 (see Note 15 for subsequent impairment of a portion of this goodwill) .

The amortizable intangible assets will be amortized against earnings over a weighted-average period in excess of 15 years.

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DIVESTITURES AND PENDING DIVESTITURES

We had no significant divestitures through the six months ended June 30, 2022 .

In 2021, we sold:

 First quarter — a reclaimed quarry in Southern California resulting in a pretax gain of $ 114.7 million (net of a $ 12.9 million contingency and other directly related obligations)

No material assets met the criteria for held for sale at June 30, 2022, December 31, 2021 or June 30, 2021.

During the third quarter of 2022, we sold:

 Excess real estate in Southern California resulting in a pretax gain of $ 23.5 million

In the first quarter of 2 021, we sold:

 A reclaimed quarry in Southern California resulting in a pretax gain of $ 114.7 million (net of a $ 12.9 million contingency and other directly related obligations)

The probable divestiture of concrete operations in New York, New Jersey and Pennsylvania (acquired in the 2021 U.S.

Concrete acquisition) is presented as assets held for sale in the accompanying Condensed Consolidated Balance Sheet at September 30, 2022.

We expect the sale to occur in the fourth quarter of 2022.

The major classes of assets and liabilities classified as held for sale as of September 30 are as follows:

Held for Sale (Concrete Segment)

Land and land improvements, net

Buildings, machinery and equipment, net

Operating leases, net

Finance leases, net

Intangible contractual rights in place

reserve for assets held for sale

Total assets held for sale

Current operating lease liabilities

Current finance lease liabilities

Noncurrent operating lease liabilities

Noncurrent finance lease liabilities

Total liabilities held for sale

No material assets met the criteria for held for sale at December 31, 2021 or September 30, 2021.

New Accounting Standards

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Gulf Coast and the Eastern Seaboard where there are limited supplies of locally available, high-quality aggregates.

We serve these markets from quarries that have access to cost-effective long-haul transportation — shipping by barge and rail — and from our quarry on Mexico's Yucatan Peninsula (see Known Trends or Uncertainties within this Item 2.) with our fleet of Panamax-class, self-unloading ships.

We serve these markets from quarries that have access to cost-effective long-haul transportation — shipping by barge and rail — and from our quarries in Quintana Roo, Mexico (see Note 8, NAFTA Arbitration) and Puerto Cortés, Honduras (acquired in the third quarter of 2022) with our fleet of Panamax-class, self-unloading ships.

Additionally, as a result of our 2021 acquisition of U.S.

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While aggregates is our focus and primary business, we believe vertical integration between aggregates and downstream products, such as asphalt mix and ready-mixed concrete, can be managed effectively in certain markets to generate attractive financial returns and enhance financial returns in our core Aggregates segment.

We produce and sell asphalt mix and/or ready-mixed concrete primarily in our Alabama, Arizona, California, Maryland, New Jersey, New Mexico, New York, Oklahoma, Pennsylvania, Tennessee, Texas, Virginia, the U.S.

Virgin Islands, Washington D.C.

and the Bahamas markets.

and Bahamas markets.

Aggregates comprise approximately 95% of asphalt mix by weight and 80% of ready-mixed concrete by weight.

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EXECUTIVE SUMMARY

Financial highlights for Second Quarter 2022

Compared to second quarter of 2021:

Financial highlights for THIRD Quarter 2022

Compared to third quarter of 2021:

 Total revenues increased $571.8 million, or 38%, to $2,088.3 million

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 Aggregates segment gross profit increased $63.7 million, or 17%, to $436.1 million

 Unit profitability (as measured by gross profit per ton) decreased 1% to $6.31 per ton

 Unit profitability (as measured by gross profit per ton) increased 8% to $6.67 per ton

 Asphalt, Concrete and Calcium segment gross profit increased $35.1 million, or 162%, to $56.8 million, collectively

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 Operating earnings increased $43.0 million, or 16%, to $305.4 million

 Earnings attributable to Vulcan from continuing operations were $1.50 per diluted share compared to $1.47 per diluted share

 Earnings attributable to Vulcan from continuing operations were unchanged at $1.33 per diluted share

 Adjusted earnings attributable to Vulcan from continuing operations were $1.78 per diluted share, compared to $1.54 per diluted share

 Net earnings attributable to Vulcan were $187.3 million, a decrease of $8.0 million, or 4%

 Net earnings attributable to Vulcan were essentially unchanged at $177.1 million, an increase of $0.2 million

 Adjusted EBITDA was $507.0 million, an increase of $89.3 million, or 21%

 Includes an approximate $20 million negative impact related to our aggregates operations in Mexico that were unexpectedly and arbitrarily shut down in May

 Returned capital to shareholders via dividends ($53.2 million @ $0.40 per share versus $49.1 million @ $0.37 per share)

Total revenues increased sharply from the prior year driven by double-digit growth in our legacy operations as well as the addition of U.S.

Concrete operations.

Our teams continued to execute well and delivered another quarter of solid earnings growth amidst a challenging backdrop.

We are well on our way to delivering another year of double-digit earnings growth.

During the trailing-twelve months, we increased our Aggregates segment gross profit by 11% despite ongoing inflation and other external headwinds.

Robust growth in aggregates pricing and a relentless focus on operating disciplines will help us carry this momentum forward.

Our asphalt pricing actions, which began late last year, are increasingly offsetting sharply higher liquid asphalt costs, and we remain focused on growing our gross profit in our Asphalt segment.

In our Concrete segment, leading indicators for private nonresidential construction activity and a favorable pricing environment will support earnings growth in 2022.

Capital expenditures in the second quarter were $117.4 million, including $56.3 million for growth projects (year-to-date $240.1 million and $90.7 million, respectively).

Consistent with our expectations for the second half of the year, strong pricing momentum and solid operational execution led to earnings growth in each of our segments.

Aggregates cash gross profit per ton improved by 9%, a considerable acceleration from the first half of the year.

This momentum, along with the ongoing favorable pricing environment and current visibility into private nonresidential and infrastructure demand, reinforces our confidence in our ability to deliver strong earnings growth in 2022.

Capital expenditures in the third quarter were $137.6 million, including $66.4 million for growth projects (year-to-date $377.6 million and $157.1 million, respectively).

For the full year, we expect to spend $600 million to $650 million on capital expenditures.

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We will continue to review our plans and will adjust as needed, while being thoughtful about preserving liquidity.

During the quarter, we completed acquisitions of Virginia ready-mixed concrete facilities (see Note 16 to the condensed consolidated financial statements).

As of June 30, 2022, the ratio of total debt to trailing-twelve months Adjusted EBITDA was 2.6 times (2.5 times on a net debt basis).

During the quarter, we acquired strategic aggregates and downstream assets to complement our position in Northern California.

Additionally, we acquired a quarry in Honduras from which we have been distributing materials to certain Gulf Coast markets since 2019 (see Note 16 to the condensed consolidated financial statements).

As of September 30, 2022, the ratio of total debt to trailing-twelve months Adjusted EBITDA was 2.6 times (2.5 times on a net debt basis).

We remain committed to our stated long-term target leverage range of 2.0 to 2.5 times total debt to trailing-twelve months Adjusted EBITDA.

Interest expense, net of interest income, was $38.7 million in the second quarter compared with $41.7 million in the prior year.

Interest expense, net of interest income, was $46.1 million in the third quarter compared with $36.8 million in the prior year.

On a trailing-twelve months basis, return on invested capital was 13.6%, 0.6 percentage points (60 basis points) lower than the comparable prior year period.

We are focused on driving further improvement through solid operating earnings growth coupled with disciplined capital management.

We are revising our full-year Adjusted EBITDA guidance range to reflect the considerable pricing momentum in our aggregates business as well as higher than expected energy-related cost inflation that is currently impacting each of our segments.

Additionally, our outlook now reflects the previously disclosed impact ($80 million to $100 million) of the closure of our Mexico operations for the balance of 2022.

Updates to our expectations for 2022 include:

 Net earnings attributable to Vulcan of between $680 million to $760 million

 Adjusted EBITDA of between $1.60 billion to $1.70 billion

 Aggregates freight-adjusted price increase of 9% to 11% ($14.87 per ton in 2021)

 Mid-single digit growth in Aggregates segment cash gross profit per ton despite severe inflationary pressures from diesel fuel and other commodities and supply chain challenges

 Cash gross profit of $280 to $300 million in Asphalt, Concrete and Calcium segments, collectively, with the Concrete segment expected to account for approximately 80% of the total

 SAG expense of between $495 million to $505 million

 Interest expense of approximately $165 million

 Depreciation, depletion, accretion and amortization expense of approximately $565 million

Our ability to grow our aggregates unit profitability consistently during the last two years of pandemic-related disruptions differentiates us from the rest of our industry.

These results demonstrate the resiliency of our business and our ability to capitalize on changes in the macro environment.

We are positioned in markets that will continue to outperform other parts of the country, from a demand perspective, both in the near-term and longer term, and we expect both the favorable pricing dynamics and our strong execution to lead to attractive growth in aggregates unit profitability in 2022 and beyond.

Mexico Update

After the unexpected and arbitrary shut down of our Mexico operations on May 5, 2022, and upon suspension of its three-year customs permit (granted in March 2022) on May 13, 2022, we disclosed a potential EBITDA impact of $80 million to $100 million should we be unable to fully operate in Mexico for the balance of 2022.

Operations remain shut down, and the aforementioned potential impact has now been incorporated into our full year 2022 outlook as noted above.

On May 8, 2022, we filed an application in our NAFTA arbitration seeking permission to file an ancillary claim in connection with this latest shutdown of our remaining Mexico operations.

On July 11, 2022, the NAFTA arbitration tribunal granted our application.

The ancillary claim will be addressed as part of the pending arbitration, and it is expected that the NAFTA arbitration tribunal will issue a decision no earlier than 2023.

We have continued to execute well and now expect full-year 2022 Adjusted EBITDA of $1.640 to $1.680 billion.

Through the first nine months, aggregates shipments have exceeded the upper end of our expectations, driven by acquisitions and healthy underlying demand on our markets.

As we look ahead to 2023, leading indicators suggest that growing public construction activity, particularly highways, and the recovery in private nonresidential contract awards should help to offset contracting single-family residential demand.

The pricing environment remains positive, and we expect to carry the strong momentum into 2023.

Our industry-leading aggregates focus positions us well for continued growth and value creation.

We have a durable business model with strong fundamentals and less execution risk through economic cycles.

This durability is evidenced by the consistent growth in our aggregates unit profitability, despite ongoing volatility in the macro environment.

We are positioned in geographic markets that will continue to outperform other parts of the country from a demand perspective, both in the near term and long term, and we expect both the favorable pricing dynamics and our strong execution to lead to continued earnings growth.

RESULTS OF OPERATIONS

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Three Months Ended

Six Months Ended

Nine Months Ended

in millions, except unit and per unit data

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equipment and businesses

Loss on impairments

Operating earnings

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Net earnings attributable to Vulcan

Diluted earnings (loss) per share attributable

Diluted earnings (loss) per share attributable to Vulcan

Continuing operations

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Non-GAAP measures are defined and reconciled within this Item 2 under the caption Reconciliation of Non-GAAP Financial Measures.

second quarter 2022 Compared to second Quarter 2021

Second quarter 2022 total revenues were $1,954.3 million, up 44% from the second quarter of 2021.

THIRd quarter 2022 Compared to THIRd Quarter 2021

Third quarter 2022 total revenues were $2,088.3 million, up 38% from the third quarter of 2021.

Shipments increased in aggregates (+9%), asphalt mix (+13%) and ready-mixed concrete (+83%).

Likewise, gross profit increased in the Aggregates (+$28.6 million or 8%), Concrete (+$19.7 million or +191%) and Asphalt (+$0.1 million or less than 1%) segments.

A 102% increase in the unit cost of diesel fuel increased costs by $40.3 million from the prior year’s second quarter with most ($32.2 million) of this cost increase reflected in the Aggregates segment.

Net earnings attributable to Vulcan for the second quarter of 2022 were $187.3 million, or $1.40 per diluted share, compared to $195.3 million, or $1.46 per diluted share, in the second quarter of 2021.

Likewise, gross profit increased in the Aggregates (+$63.7 million or 17%), Asphalt (+$22.4 million or 318%) and Concrete (+$12.2 million or +85%) segments.

An 82% increase in the unit cost of diesel fuel increased costs by $30.6 million from the prior year’s third quarter with most ($27.5 million) of this cost increase reflected in the Aggregates segment.

Net earnings attributable to Vulcan for the third quarter of 2022 were $177.1 million, or $1.33 per diluted share, compared to $176.9 million, or $1.32 per diluted share, in the third quarter of 2021.

Each period’s results were impacted by discrete items, as follows:

Net earnings attributable to Vulcan for the second quarter of 2022 include:

Net earnings attributable to Vulcan for the third quarter of 2022 include:

 pretax net gain of $23.5 million related to the sale of excess real estate in Southern California

 pretax charges of $67.8 million associated with goodwill and long-lived asset impairments

 pretax charges of $0.4 million associated with divested operations

 pretax charges of $2.5 million associated with non-routine business development

 pretax charges of $0.9 million for managerial restructuring (related to U.S.

 pretax charges of $15.3 million for a litigation matter included in discontinued operations

Net earnings attributable to Vulcan for the second quarter of 2021 include:

 pretax charges of $2.1 million for managerial restructuring (related to acquisitions)

 $9.6 million of tax charges related to a Calica NOL carryforward valuation allowance

Net earnings attributable to Vulcan for the third quarter of 2021 include:

 pretax charges of $0.4 million associated with divested operations

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 pretax charges of $5.9 million for COVID-19 pandemic direct incremental costs

 pretax interest charges of $9.4 million related to financing the acquisition of U.S.

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $1.53 per diluted share for the second quarter of 2022 compared to $1.57 per diluted share in the second quarter of 2021.

Continuing Operations — Changes in earnings from continuing operations before income taxes for the second quarter of 2022 versus the second quarter of 2021 are summarized below:

 pretax charges of $3.5 million for managerial restructuring (related to U.S.

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $1.78 per diluted share for the third quarter of 2022 compared to $1.54 per diluted share in the third quarter of 2021.

Continuing Operations — Changes in earnings from continuing operations before income taxes for the third quarter of 2022 versus the third quarter of 2021 are summarized below:

earnings from continuing operations before income taxes

Second quarter 2021

Third quarter 2021

Higher aggregates gross profit

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Higher concrete gross profit

Lower calcium gross profit

Higher calcium gross profit

Higher selling, administrative and general expenses

Higher gain on sale of property, plant & equipment and businesses

Lower interest expense, net

Second quarter 2022

Second quarter Aggregates segment sales increased 25%, while gross profit increased $28.6 million, or 8%, to $402.4 million ($6.31 per ton).

Strong price growth and solid operational execution helped offset a $2.9 million unfavorable impact from selling acquired inventory after its markup to fair value, a $32.2 million unfavorable impact from significantly higher (102%) diesel fuel costs and inflationary pressures for many other parts and supplies.

Higher impairment charges

Higher interest expense, net

Concrete acquisition related expenses in 2021

Third quarter 2022

Third quarter Aggregates segment sales increased 27%, while gross profit increased $63.7 million, or 17%, to $436.1 million ($6.67 per ton).

Double-digit price growth and solid operational execution helped offset a $27.5 million unfavorable impact from significantly higher diesel fuel costs, $2.2 million unfavorable impact from selling acquired inventory after its markup to fair value, and continued inflationary pressures for many other parts and supplies.

Cash gross profit per ton was $8.41 in the quarter compared to $7.74 in the prior year quarter.

Excluding the impact of higher diesel fuel costs, cash gross profit per ton increased 9% to $8.50 per ton.

Results in the second quarter were also negatively impacted by the unexpected and arbitrary shut down by the Mexican government of our Mexico operations in early May.

Total aggregates shipments were 63.8 million tons versus 58.5 million in last year’s second quarter, an increase of 9%.

This increase reflects shipment contribution from acquisitions and construction activity consistent with our expectations.

Higher diesel fuel costs negatively impacted the Aggregates segment by $0.42 per ton.

Total aggregates shipments were 65.4 million tons versus 60.2 million in last year’s third quarter, an increase of 9%.

This increase reflects shipment contribution from acquisitions and healthy construction activity levels.

Same-store aggregates shipments increased 3%.

Shipment activity was particularly good in many southeastern markets and Texas.

Price growth in the second quarter was widespread across our markets.

Shipment growth was geographically widespread and particularly strong in many southeastern markets and California.

Price growth in the third quarter was consistently strong across our markets.

Freight-adjusted pricing was $16.79 per ton, an increase of 12.5% ($1.86 per ton) over the prior year.

Same-store freight-adjusted average sales price increased 9.0%, or

$1.35 per ton — excluding mix impact, aggregates price increased 9.6%.

We expect this pricing momentum to continue throughout the remainder of the year as the second round of price increases gains traction across our markets.

Freight-adjusted unit cash cost of sales increased 16%, or $1.16 per ton, as compared to the prior year’s second quarter.

Excluding the impact of higher diesel fuel costs and the impact of selling acquired inventory, cash cost of sales increased 8%, or $0.60 per ton.

Overall, non-aggregates segments gross profit of $43.8 million was $19.2 million higher than the prior year’s second quarter.

Asphalt segment gross profit of $13.6 million was up $0.1 million from the prior year’s second quarter.

Asphalt pricing increased 19.4%, or $11.28 per ton, helping offset a 42% ($29.5 million) increase in the average price paid for liquid asphalt as well as a $3.8 million year-over-year increase in natural gas cost.

Asphalt volumes increased 9% overall driven by growth in Arizona, California, and Texas, three of our largest asphalt markets.

Strong price growth through the first half of the year (up 16.8%, or $9.67 per ton, year-over-year) helped preserve unit material margins (selling price per ton less cost of raw materials per ton) despite sharp increases in liquid asphalt as well as higher prices for aggregates supplied by our Aggregates segment.

Concrete segment gross profit was $30.0 million for the second quarter compared to $10.3 million in the prior year.

Concrete results benefited from the contribution of U.S.

Concrete operations as well as strong price growth in our legacy operations.

Material unit margins improved as higher selling prices helped offset higher raw materials costs, including aggregates supplied by our Aggregates segment.

Same-store freight-adjusted average sales price increased 13.2%, or $1.97 per ton – excluding mix impact, aggregates price increased 12.4%.

Freight-adjusted unit cost of sales increased 16%, or $1.38 per ton, and cash cost of sales increased 17%, or $1.19 per ton, as compared to the prior year’s third quarter.

Excluding the impact of higher diesel fuel costs, freight-adjusted cash cost of sales increased 11%, or $0.77 per ton.

Overall, non-aggregates segments gross profit of $56.8 million was $35.1 million higher than the prior year’s third quarter.

Asphalt segment gross profit of $29.5 million was up $22.4 million from the prior year’s third quarter.

The year-over-year increase was driven by widespread volume improvement and continued pricing momentum.

Asphalt volumes increased 13% driven by growth in Arizona and California, our two largest asphalt markets.

Asphalt pricing increased 25.9%, or $15.37 per ton, more than offsetting a 42% ($33.1 million) increase in the average price paid for liquid asphalt as well as a $2.9 million year-over-year increase in natural gas cost.

Concrete segment gross profit was $26.5 million for the third quarter compared to $14.3 million in the prior year.

Concrete results benefited from the contribution of acquired operations as well as strong volume and price growth in our legacy operations.

Unit material margins improved as higher selling prices helped offset higher raw materials costs, including aggregates supplied by our Aggregates segment.

Segment results were negatively impacted by higher diesel prices and the availability of truck drivers and cement in certain markets.

Calcium segment gross profit of $0.2 million was $0.6 million lower than the prior year quarter.

SAG expenses were $134.4 million in the quarter, or 6.9% of total revenues, and included overhead expenses associated with U.S.

Concrete that were not in the prior year’s quarter.

Additionally, increased routine business development activities and more normalized travel expenses, due in part to integration activities, contributed to the year-over-year increase.

Trailing-twelve months SAG expenses were 7.3% of total revenues, down 0.3 percentage points (30 basis points) from the comparable prior year amount.

Other operating expense, which has an approximate run-rate of $12.0 million a year (exclusive of discrete items), is composed primarily of idle facilities expense, environmental remediation costs, property abandonments and gain (loss) on settlement of AROs.

Calcium segment gross profit was $0.8 million compared to $0.3 million in the prior year quarter.

SAG expenses were $135.3 million in the quarter, or 6.5% of total revenues.

Higher expenses versus the prior year were driven by elevated legal and professional fees, related mostly to Mexico and business development activities, and increased incentives driven by favorable current year performance.

Additionally, more normalized travel expenses and travel related to U.S.

Concrete integration activities contributed to the year-over-year increase.

Trailing-twelve months SAG expense was 7.1% of total revenues, down 0.5 percentage points (50 basis points) from the prior year.

For the three months ended September 30, 2022, we sold excess real estate in Southern California resulting in a pretax gain of $23.5 million ($17.5 million after tax).

There were no similar gains in the prior comparable period.

During the third quarter of 2022, we recognized a goodwill impairment charge of $50.9 million and a long-lived asset impairment charge of $16.9 million related to the probable divestiture of concrete operations in New York, New Jersey and Pennsylvania (expected to close in the fourth quarter of 2022, subject to obtaining regulatory approvals and the satisfaction of other customary closing conditions).

There were no similar charges in the prior comparable period.

Other operating expense is composed primarily of idle facilities expense, environmental remediation costs and gain (loss) on settlement of AROs.

Total other operating expense and significant items included in the total were:

 $6.2 million in second quarter 2022 — includes discrete items as follows:

 $0.4 million of charges associated with divested operations

 $0.2 million of non-routine business development charges (excludes items included in cost of goods sold)

 $0.9 million for managerial restructuring (related to U.S.

 $10.4 million in second quarter 2021 — includes discrete items as follows:

 $8.2 million in third quarter 2022 — includes discrete items as follows:

 $0.4 million of charges associated with divested operations

 $5.5 million of non-routine business development charges

 $0.3 million of non-routine business development charges (excludes items included in cost of revenues)

 $2.1 million for managerial restructuring (related to acquisitions)

 $30.8 million in third quarter 2021 — includes discrete items as follows:

 $21.7 million of non-routine business development charges (excludes items included in cost of revenues)

 $5.9 million for COVID-19 pandemic direct incremental costs

Other nonoperating income (expense) was a net expense of $4.7 million for the second quarter of 2022 and was unfavorable by $13.0 million from the second quarter of 2021.

This unfavorable variance resulted primarily from unfavorable Rabbi Trust gains/losses and benefit plan costs of $6.3 million and $3.4 million, respectively.

Net interest expense was $38.7 million in the second quarter of 2022 compared to $41.7 million in the second quarter of 2021.

The prior year quarter included $9.4 million of interest expense related to financing the acquisition of U.S.

Concrete (see Note 7 to the condensed consolidated financial statements).

Income tax expense from continuing operations was $63.7 million in the second quarter of 2022 compared to $57.3 million in the second quarter of 2021.

The increase in tax expense was primarily related to an increase in pretax earnings in 2022 and an increase in our reserve for uncertain tax positions.

Earnings attributable to Vulcan from continuing operations were $1.50 per diluted share in the second quarter of 2022 compared to $1.47 per diluted share in the second quarter of 2021.

Discontinued Operations — Second quarter pretax loss from discontinued operations was $17.6 million in 2022 compared with a pretax loss of $1.9 million in 2021.

Both periods include charges/credits related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business while the second quarter of 2022 includes an additional charge for a litigation matter.

 $3.5 million for managerial restructuring (related to U.S.

Other nonoperating income, net was a net income of $1.3 million for the third quarter of 2022 and was unfavorable by $1.8 million from the third quarter of 2021.

Net interest expense was $46.1 million in the third quarter of 2022 compared to $36.8 million in the third quarter of 2021.

Income tax expense from continuing operations was $82.3 million in the third quarter of 2022 compared to $51.7 million in the third quarter of 2021.

The increase in tax expense was primarily related to an increase in pretax earnings, the recording of a valuation allowance against the net operating losses of one of our Mexican subsidiaries and the impairment of non-tax deductible goodwill in the current quarter.

Earnings attributable to Vulcan from continuing operations were $1.33 per diluted share in the third quarter of 2022, unchanged from the third quarter of 2021.

Discontinued Operations — Third quarter pretax loss from discontinued operations was $1.6 million in 2022 compared with a pretax loss of $0.3 million in 2021.

Both periods include charges related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business.

For additional details, see Note 1 to the condensed consolidated financial statements under the caption Discontinued Operations.

year-to-date june 30, 2022 Compared to year-to-date june 30, 2021

Total revenues for the first six months of 2022 were $3,495.0 million, up 44% from the first six months of 2021.

year-to-date SEPTEMBER 30, 2022 Compared to year-to-date SEPTEMBER 30, 2021

Total revenues for the first nine months of 2022 were $5,583.3 million, up 41% from the first nine months of 2021.

Shipments increased in aggregates (+10%), asphalt mix (+10%) and ready-mixed concrete (+181%).

Gross profit increased in the Aggregates (+$111.5 million or 11%), Asphalt (+$22.6 million or 128%) and Concrete (+$52.3 million or 162%) segments.

An 83% increase in the unit cost of diesel fuel increased costs by $60.9 million from the first half of 2021 with most ($48.5 million) of this cost increase reflected in the Aggregates segment.

Net earnings attributable to Vulcan for the first six months of 2022 were $279.1 million, or $2.09 per diluted share, compared to $356.0 million, or $2.67 per diluted share, in the first six months of 2021.

A 98% increase in the unit cost of diesel fuel increased costs by $96.1 million from the first nine months of 2021 with most ($83.2 million) of this cost increase reflected in the Aggregates segment.

Net earnings attributable to Vulcan for the first nine months of 2022 were $456.2 million, or $3.42 per diluted share, compared to $532.9 million, or $3.99 per diluted share, in the first nine months of 2021.

Each period’s results were impacted by discrete items, as follows:

Net earnings attributable to Vulcan for the first six months of 2022 include:

Net earnings attributable to Vulcan for the first nine months of 2022 include:

 pretax gain of $23.5 million related to the sale of excess real estate in Southern California

 pretax charges of $67.8 million associated with goodwill and long-lived asset impairments

 pretax charges of $1.0 million associated with divested operations

 pretax charges of $8.1 million associated with non-routine business development

 pretax charges of $2.7 million for managerial restructuring (related to U.S.

 pretax charges of $4.9 million for managerial restructuring (related to acquisitions)

 pretax charges of $15.3 million for a litigation matter included in discontinued operations

Net earnings attributable to Vulcan for the first six months of 2021 include:

 $13.7 million of tax charges related to an increase in the Alabama NOL carryforward valuation allowance

 $9.6 million of tax charges related to a Calica NOL carryforward valuation allowance

Net earnings attributable to Vulcan for the first nine months of 2021 include:

 pretax net gain of $114.7 million related to the sale of a reclaimed quarry in Southern California

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 pretax charges of $9.7 million for COVID-19 pandemic direct incremental costs

 pretax interest charges of $9.4 million related to financing the acquisition of U.S.

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $2.25 per diluted share for the first half of 2022 compared to $2.26 per diluted share in the first half of 2021.

Continuing Operations — Changes in earnings from continuing operations before income taxes for year-to-date June 30, 2022 versus year-to-date June 30, 2021 are summarized below:

 pretax charges of $3.5 million for managerial restructuring (related to U.S.

 pretax interest charges of $9.4 million related to financing the U.S.

Concrete acquisition

 $13.7 million of tax charges related to an increase in the Alabama NOL carryforward valuation allowance

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $4.03 per diluted share for the first nine months of 2022 compared to $3.80 per diluted share in the first nine months of 2021.

Continuing Operations — Changes in earnings from continuing operations before income taxes for year-to-date September 30, 2022 versus year-to-date September 30, 2021 are summarized below:

earnings from continuing operations before income taxes

Year-to-date June 30, 2021

Year-to-date September 30, 2021

Higher aggregates gross profit

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Lower gain on sale of property, plant & equipment and businesses

Lower interest expense, net

Year-to-date June 30, 2022

First half 2022 Aggregates segment sales of $2,523.0 million were up 25% while aggregates shipments increased 11%, or 11.9 million tons, compared to the prior year.

Higher impairment charges

Higher interest expense, net

Concrete acquisition related expenses in 2021

Year-to-date September 30, 2022

Aggregates segment sales for the first nine months of 2022 were $4,013.5 million (up 26%) while aggregates shipments increased 10%, or 17.1 million tons, compared to the prior year.

Same-store aggregates shipments increased 4%, or 6.7 million tons.

Freight-adjusted average sales price for aggregates increased 7.4%, or $1.09 per ton, versus the first half of 2021.

Freight-adjusted average sales price for aggregates increased 9.2%, or $1.37 per ton, versus the first nine months of 2021.

Same-store freight-adjusted average sales price increased 9.8%, or $1.45 per ton — excluding mix impact, aggregates price increased 9.8%.

Aggregates segment gross profit was $645.2 million ($5.52 per ton) versus $597.5 million ($5.69 per ton) in the first half of 2021.

Cash gross profit per ton increased 1% from the prior year’s first half to $7.33 per ton.

First half 2022 freight-adjusted unit cost of sales increased 14%, or $1.26 per ton, versus the prior year.

The average unit cost of diesel fuel increased 83% versus the first half of 2021, decreasing Aggregates segment gross profit by $48.5 million or $0.41 per ton.

Additionally, first half r esults were negatively impacted by the aforementioned shut down by the Mexican government of our Mexico operations in early May.

Aggregates segment gross profit was $1,081.3 million ($5.94 per ton) versus $969.8 million ($5.87 per ton) in the first nine months of 2021.

Cash gross profit per ton increased 4% from the prior year’s first nine months to $7.72 per ton.

First nine months 2022 freight-adjusted unit cost of sales increased 14%, or $1.30 per ton, versus the prior year.

The average unit cost of diesel fuel increased 98% versus the first nine months of 2021, decreasing Aggregates segment gross profit by $83.2 million or $0.46 per ton.

On a trailing-twelve months basis, Aggregates segment gross profit margin as a percentage of segment sales excluding freight & delivery decreased 2.4 percentage points (240 basis points) to 35.8%.

Asphalt segment gross profit of $10.7 million was up $0.2 million from the first six months of 2021.

Asphalt segment gross profit of $40.2 million was up $22.6 million from the first nine months of 2021.

Asphalt mix shipments increased 10% while average unit selling prices increased 20%, or $11.90 per ton.

Compared to the prior year’s first half, asphalt mix unit material margins only decreased 1% despite a 39% increase in the average unit cost for liquid asphalt.

Concrete segment gross profit was $58.2 million for the first six months of 2022, an increase of $40.1 million from the prior year period.

Compared to the prior year’s first nine months, asphalt mix unit material margins increased 10% despite a 40% increase in the average unit cost for liquid asphalt.

Concrete segment gross profit was $84.7 million for the first nine months of 2022, an increase of $52.3 million from the prior year period.

Ready-mixed concrete shipments increased 181% (flat same-store) while the average sales price increased 11% and the unit material margins increased 12%.

Calcium segment’s gross profit of $0.8 million was down $0.7 million compared to the first half of 2021.

SAG expenses were $253.4 million versus $189.3 million in the prior year’s first half reflecting a 0.5 percentage point (50 basis point) decrease as a percentage of total revenues.

Calcium segment’s gross profit of $1.6 million was down $0.3 million compared to the first nine months of 2021.

SAG expenses were $388.7 million versus $293.1 million in the prior year’s first nine months reflecting a 0.4 percentage point (40 basis point) decrease as a percentage of total revenues.

The current year included overhead expenses associated with U.S.

Concrete that were not in the prior year’s first half.

Gain on sale of property, plant & equipment and businesses was $4.6 million in the first half of 2022 versus $117.4 million in the first half of 2021.

The 2021 amount includes the aforementioned net pretax gain of $114.7 million from the sale of a reclaimed quarry in Southern California.

Other operating expense, which has an approximate run-rate of $12 million a year (exclusive of discrete items), is composed primarily of idle facilities expense, environmental remediation costs, property abandonments and gain (loss) on settlement of AROs.

Concrete that were only in September of the prior year’s first nine months.

Gain on sale of property, plant & equipment and businesses was $28.4 million in the first nine months of 2022 versus $120.3 million in the first nine months of 2021.

The 2022 amount includes a net pretax gain of $23.5 million from the sale of excess real estate in Southern California while the 2021 amount includes a net pretax gain of $114.7 million from the sale of a reclaimed quarry in Southern California.

For the nine months ended September 30, 2022, we recognized a goodwill impairment charge of $50.9 million and a long-lived asset impairment charge of $16.9 million related to the probable divestiture of concrete operations in New York, New Jersey and Pennsylvania (expected to close in the fourth quarter of 2022).

There were no similar charges in the prior comparable period.

Other operating expense is composed primarily of idle facilities expense, environmental remediation costs and gain (loss) on settlement of AROs.

Total other operating expense and significant items included in the total were:

 $11.6 million in first half of 2022 — includes discrete items as follows:

 $0.7 million of charges associated with divested operations

 $0.2 million of non-routine business development charges (excludes items included in cost of goods sold)

 $2.7 million for managerial restructuring (related to U.S.

 $18.7 million in first half of 2021 — includes discrete items as follows:

 $19.8 million in first nine months of 2022 — includes discrete items as follows:

 $1.0 million of charges associated with divested operations

 $5.9 million of non-routine business development charges

 $0.5 million of non-routine business development charges (excludes items included in cost of revenues)

 $4.9 million for managerial restructuring (related to acquisitions)

 $44.9 million in first nine months of 2021 — includes discrete items as follows:

 $27.6 million of non-routine business development charges (excludes items included in cost of revenues)

 $9.7 million for COVID-19 pandemic direct incremental costs

Other nonoperating income (expense) was a net expense of $3.0 million for the first half of 2022, unfavorable by $17.2 million from the first half of 2021.

This unfavorable variance resulted primarily from unfavorable Rabbi Trust gains/losses and benefit plan costs of $9.5 million and $7.3 million, respectively.

Net interest expense was $74.7 million in the first half of 2022 compared to $74.8 million in the first half of 2021.

 $3.5 million for managerial restructuring (related to U.S.

Other nonoperating income (expense) was a net expense of $1.7 million for the first nine months of 2022, unfavorable by $19.0 million from the first nine months of 2021.

This unfavorable variance included unfavorable Rabbi Trust gains/losses and benefit plan costs of $10.5 million and $11.2 million, respectively.

Net interest expense was $120.8 million in the first nine months of 2022 compared to $111.6 million in the first nine months of 2021.

The 2022 expense factored in a higher debt level resulting from financing the acquisition of U.S Concrete while 2021 included $9.4 million of interest expense related t o f inancing the acquisition of U.S.

Concrete (see Note 7 to the condensed consolidated financial statements).

Income tax expense from continuing operations was $82.4 million in the first half of 2022 compared to $118.0 million in the first half of 2021.

The decrease in tax expense was primarily related to a decrease in pretax earnings in 2022 and the 2021 increase in the valuation allowance against the Alabama net operating loss (NOL).

Earnings attributable to Vulcan from continuing operations were $2.20 per diluted share in the first half of 2022 compared to $2.69 per diluted share in the first half of 2021.

Discontinued Operations — First half pretax loss from discontinued operations was $20.0 million in 2022 compared with a loss of $3.4 million in 2021.

Both periods include charges/credits related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business while 2022 includes an additional charge for a litigation matter.

Income tax expense from continuing operations was $164.6 million in the first nine months of 2022 compared to $169.7 million in the first nine months of 2021.

The decrease in tax expense was primarily related to lower pretax earnings partially offset by the impairment of non-tax deductible goodwill in the current year.

Earnings attributable to Vulcan from continuing operations were $3.54 per diluted share in the first nine months of 2022 compared to $4.01 per diluted share in the first nine months of 2021.

Discontinued Operations — First nine months pretax loss from discontinued operations was $21.7 million in 2022 compared with a pretax loss of $3.6 million in 2021.

Both periods include charges related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business while 2022 includes a $15.3 million charge for a litigation matter.

For additional details, see Note 1 to the condensed consolidated financial statements under the caption Discontinued Operations.

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Further, recently, the Mexican government has taken actions adverse to our operations in that country.

On May 5, 2022, Mexican government officials presented employees at our SAC TUN subsidiary in Quintana Roo, Mexico with arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations.

On May 13, 2022, the Mexican government suspended the three-year customs permit granted in March 2022 to our SAC TUN subsidiary and began a proceeding that could result in the revocation of that permit.

We strongly believe that the actions taken by Mexico are arbitrary and illegal.

We have sought injunctive relief in Mexico that, if granted and complied with, would enable us to resume normal operations including the extraction, processing and export of materials.

We intend to vigorously pursue all lawful avenues available to us in order to protect our rights, under both Mexican and international law, and resume normal operations as soon as permitted.

Our second quarter results included an approximate $20 million impact from this shutdown while our full year 2022 Outlook includes a potential EBITDA impact of $80 million to $100 million should we be unable to fully operate in Mexico for the balance of 2022.

On May 5, 2022, Mexican government officials presented employees at our Calica operations in Quintana Roo, Mexico with arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations.

On May 13, 2022, the Mexican government suspended the three-year customs permit granted in March 2022 to Calica and began a proceeding that could result in the revocation of that permit.

We strongly believe that the actions taken by Mexico are arbitrary and illegal, and we intend to vigorously pursue all lawful avenues available to us in order to protect our rights, under both Mexican and international law.

Our full year 2022 Outlook includes an EBITDA impact of $80 million to $100 million as a result of this shutdown.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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Three Months Ended

Six Months Ended

Nine Months Ended

in millions, except per ton data

43 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

in millions, except per ton data

23 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Trailing-Twelve Months

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Gain on sale of real estate and businesses, net

Loss on impairments

Charges associated with divested operations

4 unchanged sentences

Adjusted EBITDA

Represents non-routine charges or gains associated with acquisitions and dispositions.

Represents non-routine charges or gains associated with acquisitions and dispositions including the cost impact of purchase accounting inventory valuations.

NET DEBT TO ADJUSTED EBITDA

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Three Months Ended

Six Months Ended

Nine Months Ended

Diluted Earnings Per Share

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Diluted EPS attributable to Vulcan from continuing

Items included in Adjusted EBITDA above

AL NOL carryforward valuation allowance

Items included in Adjusted EBITDA above, net of tax

NOL carryforward valuation allowance

Acquisition financing interest costs

40 unchanged sentences

LIQUIDITY AND FINANCIAL RESOURCES

Our primary sources of liquidity are cash provided by our operating activities and a substantial, committed bank line of credit.

Our primary sources of liquidity are cash provided by our operating activities, a substantial, committed bank line of credit and our commercial paper program.

Additional sources of capital include access to the capital markets, the sale of surplus real estate, and dispositions of nonstrategic operating assets.

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 minimize financial and other covenants that limit our operating and financial flexibility

Included in our June 30, 2022 cash and cash equivalents and restricted cash balances of $123.7 million is $3.0 million of restricted cash as described in Note 1 under the caption Restricted Cash.

Included in our September 30, 2022 cash and cash equivalents and restricted cash balances of $146.9 million is $24.5 million of restricted cash as described in Note 1 under the caption Restricted Cash.

cash from operating activities

Six Months Ended

Nine Months Ended

Depreciation, depletion, accretion and amortization (DDA&A)

1 unchanged sentence

Net gain on sale of property, plant & equipment and businesses

Contributions to pension plans

Loss on impairments

Deferred tax expense

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Primarily reflects changes to working capital balances.

Net cash provided by operating activities was $325.5 million during the six months ended June 30, 2022, a $72.4 million decrease compared to the same period of 2021.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 46.5 days at June 30, 2022 compared to 41.7 days at June 30, 2021.

Additionally, our over 90 day balance of $39.1 million at June 30, 2022 was up from the $10.0 million at June 30, 2021.

Net cash provided by operating activities was $748.3 million during the nine months ended September 30, 2022, a $23.5 million increase compared to the same period of 2021.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 47.6 days at September 30, 2022 compared to 45.9 days at September 30, 2021.

Additionally, our over 90 day balance of $46.4 million at September 30, 2022 was $33.1 million above the $13.3 million at September 30, 2021.

All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.

cash from investing activities

Net cash used for investing activities was $468.7 million during the first six months of 2022, a $467.2 million increase in cash used compared to cash used of $1.5 million in the same period of 2021.

D uring the first six months of 2022, w e invested $290.6 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $192.2 million in the prior year period.

Net cash used for investing activities was $940.7 million during the first nine months of 2022, an $819.9 million decrease compared to cash used of $1,760.6 million in the same period of 2021.

This decrease was primarily attributable to less cash used for business acquisitions in the current period compared to the prior period.

During the first nine months of 2022, we acquired businesses for $528.0 million of cash consideration as compared to $1,634.5 million of acquisitions in the first nine months of 2021 (see Note 16 to the condensed consolidated financial statements).

Additionally, d uring the first nine months of 2022, w e invested $450.4 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $318.6 million in the prior year period.

Of this $450.4 million, $157.1 million was invested in internal growth projects to enhance our distribution capabilities, develop new production sites and enhance existing production facilities and other growth opportunities.

In the first six months of 2022, proceeds from the sale of property, plant & equipment were down $180.5 million from the first six months of 2021.

Further, in the first nine months of 2022, proceeds from the sale of property, plant & equipment were $37.8 million, a decrease of $154.6 million from the first nine months of 2021.

In 2021, we sold reclaimed real estate in Southern California for net cash proceeds of $182.3 million.

Additionally, during the first half of 2022 we acquired businesses for $188.1 million of cash consideration as compared to no business acquisitions in the same period of 2021 (see Note 16 to the condensed consolidated financial statements).

cash from financing activities

Net cash provided by financing activities in the first six months of 2022 was $25.4 million, compared to cash used of $626.0 million in the same period of 2021.

The current year includes a $176.0 million net draw on our line of credit (see Note 7 to the condensed consolidated financial statements).

The prior year period includes cash paid to retire the $500.0 million floating rate notes due March 2021 and $13.3 million of financing costs for a bridge facility commitment and delayed draw term loan.

Net cash provided by financing activities in the first nine months of 2022 was $97.8 million, compared to cash used of $25.8 million in the same period of 2021.

The current year includes a $312.0 million net draw on our line of credit.

The prior year includes $156.0 million of net cash provided from debt issuances and debt payments (see Note 7 to the condensed consolidated financial statements).

Additionally, capital returned to our shareholders increased by $12.2 million as a result of higher dividends ($1.20 per share compared to $1.11 per share).

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Line of credit 1

Commercial paper

Fixed versus Floating Interest Rate Debt

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we also paid upfront fees that are amortized to interest expense and pay fees for unused borrowing capacity and standby letters of credit.

At June 30, 2022, total debt to trailing-twelve months Adjusted EBITDA was 2.6 times (2.5 times on a net debt basis reflecting $123.7 million of cash on hand).

At September 30, 2022, total debt to trailing-twelve months Adjusted EBITDA was 2.6 times (2.5 times on a net debt basis reflecting $146.9 million of cash on hand).

Our weighted-average debt maturity was 11.3 years.

bridge facility, delayed draw term loan and line of credit

delayed draw term loan, line of credit AND COMMERICAL PAPER PROGRAM

In June 2021, concurrent with the announcement of the pending acquisition of U.S.

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The delayed draw term loan was drawn in August 2021 for $1,600.0 million upon the acquisition of U.S.

Concrete and was paid down to $1,100.0 million in September 2021 (amounts repaid are no longer available for borrowing).

Concrete, was paid down to $1,100.0 million in September 2021 and was further paid down to $550.0 million in August 2022 (amounts repaid are no longer available for borrowing).

In March 2022, the delayed draw term loan was amended to extend the maturity date from August 2024 to August 2026.

The delayed draw term loan contains covenants customary for an unsecured investment-grade facility and mirror those in our line of credit.

As of June 30, 2022, we were in compliance with the delayed draw term loan covenants.

As of September 30, 2022, we were in compliance with the delayed draw term loan covenants.

Borrowings, cost ranges and other details are described in Note 7 to the condensed consolidated financial statements.

Financing costs for the bridge facility commitment and the delayed draw term loan facility totaled $13.3 million, $9.4 million of which was recognized as interest expense in the second quarter of 2021.

Our unsecured $1,000.0 million line of credit was amended in March 2022 to extend the maturity date from September 2025 to September 2026.

Our unsecured line of credit was amended in August 2022 to increase the amount from $1,000.0 million to $1,600.0 million and extend the maturity date from September 2026 to August 2027.

Our line of credit contains covenants customary for an unsecured investment-grade facility.

Covenants, borrowings, cost ranges and other details are described in Note 7 to the condensed consolidated financial statements.

As of June 30, 2022, we were in compliance with the line of credit covenants, the margin for the Secured Overnight Financing Rate (SOFR) borrowings was 1.125%, the margin for base rate borrowings was 0.125%, and the commitment fee for the unused amount was 0.100%.

As of June 30, 2022, our available borrowing capacity under the line of credit was $745.9 million.

As of September 30, 2022, we were in compliance with the covenants, the margin for the Secured Overnight Financing Rate (SOFR) borrowings was 1.125%, the margin for base rate borrowings was 0.125%, and the commitment fee for the unused amount was 0.100%.

In August 2022, we established a $1,600.0 million commercial paper program and borrowed $550.0 million under the program.

Commercial paper borrowings bear interest at rates determined at the time of issuance and as agreed between us and the commercial paper investors.

As of September 30, 2022, our available borrowing capacity under the line of credit was $1,210.0 million.

Utilization of the borrowing capacity was as follows:

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 $78.0 million was used to support standby letters of credit

Essentially all of our $3,941.9 million (face value) of term debt (which includes the $1,100.0 million delayed draw term loan) is unsecured.

Essentially all of our $3,941.9 million (face value) of term debt (which includes the $550.0 million delayed draw term loan and the $550.0 million commercial paper) is unsecured.

$2,840.2 million of such debt is governed by two essentially identical indentures that contain customary investment-grade type covenants.

As of June 30, 2022, we were in compliance with all term debt covenants.

As of September 30, 2022, we were in compliance with all term debt covenants.

In August 2021, we assumed $434.5 million (fair value) of senior notes due 2029 in connection with the acquisition of U.S.

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CURRENT MATURITIES of long-term debt

The $0.5 million of current maturities of long-term debt as of June 30, 2022 is due as follows:

Third quarter 2022

The $0.5 million of current maturities of long-term debt as of September 30, 2022 is due as follows:

Fourth quarter 2022

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Second quarter 2023

Our debt ratings and outlooks as of June 30, 2022 are as follows:

Rating/Outlook

Senior Unsecured Term Debt

rating revised

Third quarter 2023

Our debt ratings and outlooks as of September 30, 2022 are as follows:

Standard & Poor's

rating revised

The number of our common stock issuances and purchases for the year-to-date periods ended are as follows:

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issued and outstanding

As of June 30, 2022, there were 8,064,851 shares remaining under the February 2017 Board of Directors’ share purchase authorization.

As of September 30, 2022, there were 8,064,851 shares remaining under the February 2017 Board of Directors’ share purchase authorization.

Depending upon market, business, legal and other conditions, we may purchase shares from time to time through the open market (including plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934) and/or privately negotiated transactions.

The authorization has no time limit, does not obligate us to purchase any specific number of shares, and may be suspended or discontinued at any time.

The detail of our common stock purchases (all of which were open market purchases) for the year-to-date periods ended are as follows:

in millions, except average cost

Shares Purchased and Retired

Total purchase price

Average cost per share

There were no shares held in treasury as of June 30, 2022, December 31, 2021 and June 30, 2021.

There were no shares held in treasury as of September 30, 2022, December 31, 2021 and September 30, 2021.

There were no common stock purchases for the periods ended September 30, 2022, December 31, 2021 and September 30, 2021.

off-balance sheet arrangements

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We believe that the accounting policies described in the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section of our Form 10-K require the most significant judgments and estimates used in the preparation of our consolidated financial statements, so we consider these to be our critical accounting policies.

There have been no changes to our critical accounting policies during the six months ended June 30, 2022.

There have been no changes to our critical accounting policies during the nine months ended September 30, 2022.

new Accounting standards

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 the highly competitive nature of the construction industry

 the impact of future regulatory or legislative actions, including those relating to climate change, wetlands, greenhouse gas emissions, the definition of minerals, tax policy or international trade

 the impact of future regulatory or legislative actions, including those relating to climate change, biodiversity, land use, wetlands, greenhouse gas emissions, the definition of minerals, tax policy and domestic and international trade

 the outcome of pending legal proceedings

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 healthcare costs

 labor shortages and constraints

 labor relations, shortages and constraints

 the amount of long-term debt and interest expense we incur

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements