What changed in this filing

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Item 1. Financial Statements

2023-10-27 compared with 2023-08-04 · 264 added, 218 removed, 1165 unchanged (29% of the section changed)

13 unchanged sentences

Other current assets

Assets held for sale

Total current assets

11 unchanged sentences

Other current liabilities

Liabilities held for sale

Total current liabilities

19 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

in millions, except per share data

4 unchanged sentences

and businesses

Loss on impairments

Other operating expense, net

30 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

Operating Activities

1 unchanged sentence

Depreciation, depletion, accretion and amortization

Loss on impairments

Noncash operating lease expense

39 unchanged sentences

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 Mexico, Oklahoma, Tennessee, Texas, Virginia, U.S.

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

Virgin Islands and Washington D.C.

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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, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 .

Operating results for the three and nine month periods ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 .

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

1 unchanged sentence

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, 2023 will be reflected in management’s estimates for future periods.

Events that relate to conditions arising after September 30, 2023 will be reflected in management’s estimates for future periods.

NONCONTROLLING INTEREST

15 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Discontinued Operations

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Weighted-average common shares

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Antidilutive common stock equivalents

1 unchanged sentence

Additionally, we entered into an agreement to lease a terminal in California.

We expect the lease to commence in late 2023 or early 2024 once all required permits are obtained.

We expect to have all permits in place associated with all lease commencement options by early 2024.

Lease right-of-use (ROU) assets and liabilitie s a nd the w eighted-average lease term s and discount rate s are as follows:

10 unchanged sentences

Total lease assets

Liabilities 1

Other current liabilities

10 unchanged sentences

Finance leases

The decreases from June 30, 2022 in total lease assets and liabilities presented above primarily relate to the 2022 sale of concrete operations in New Jersey, New York and Pennsylvania (see Note 16 for additional information).

Balances at September 30, 2023 and September 30, 2022 include lease assets and liabilities classified as held for sale as detailed in Note 16.

The decreases from September 30, 2022 in total lease assets and liabilities presented above primarily relate to the 2022 sale of concrete operations in New Jersey, New York and Pennsylvania (see Note 16 for additional information).

Our lease agreements do not contain material residual value guarantees, restrictive covenants or early termination option s.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Finance lease cost

7 unchanged sentences

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 $ 36.6 million and $ 40.8 million for the six months ended June 30, 2023 and 2022, respectively.

Cash paid for finance leases (principal and interest) was $ 12.1 million and $ 19.4 million for the six months ended June 30, 2023 and 2022, respectively.

Cash paid for operating leases was $ 55.0 million and $ 60.0 million for the nine months ended September 30, 2023 and 2022, respectively.

Cash paid for finance leases (principal and interest) was $ 17.9 million and $ 28.0 million for the nine months ended September 30, 2023 and 2022, 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.

2 unchanged sentences

Significant judgment is required in determining our EAETR.

In the second quarter of 2023, we recorded income tax expense from continuing operations of $ 92.0 million compared to $ 63.7 million in the second quarter of 2022.

The increase in tax expense was due to higher pretax earnings.

For the first six months of 2023, we recorded income tax expense from continuing operations of $ 108.6 million compared to $ 82.4 million for the first six months of 2022.

The increase in tax expense was due to higher pretax earnings partially offset by a tax benefit from a prior year business disposition recorded in the first quarter.

In the third quarter of 2023, we recorded income tax expense from continuing operations of $ 85.8 million compared to $ 82.3 million in the third quarter of 2022.

The increase in tax expense was due to higher pretax earnings partially offset by a tax benefit related to a reserve recorded on the assets held for sale in the third quarter of 2023 (see Note 16) and a smaller valuation allowance recorded on Mexico losses when compared to the third quarter of 2022.

For the first nine months of 2023, we recorded income tax expense from continuing operations of $ 194.4 million compared to $ 164.6 million for the first nine months of 2022.

The increase in tax expense was due to higher pretax earnings partially offset by tax benefits from a prior year business disposition recorded in the first quarter of 2023 and the reserve recorded on the assets held for sale as noted above.

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

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As a result, in 2022, Calica generated a net operating loss (NOL) deferred tax asset of $ 14.5 million.

Based on the weight of all available positive and negative evidence, we concluded that it is more likely than not that Calica will be unable to realize the NOL deferred tax asset during the ten-year carryforward period resulting in a valuation allowance of $ 14.5 million in 2022 ( no ne of which was recorded as of June 30, 2022).

In 2023, we project a $ 15.2 million increase in deferred tax assets against which a valuation allowance was recorded as a component of the EAETR in the first six months of 2023.

In 2023, we project a $ 16.6 million increase in deferred tax assets against which a valuation allowance was recorded as a component of the EAETR in the first nine months of 2023.

Should the Mexican government lift the shutdown and/or if we are successful in our North American Free Trade Agreement (NAFTA) claim, we will reevaluate the need for a valuation allowance against the deferred tax assets.

We project Alabama NOL carryforward deferred tax assets at December 31, 2023 of $ 74.7 million, against which we have a valuation allowance of $ 54.3 million as of June 30, 2023.

We project Alabama NOL carryforward deferred tax assets at December 31, 2023 of $ 74.7 million, against which we have a valuation allowance of $ 54.3 million as of September 30, 2023.

Almost all of the Alabama NOL carryforward would expire between 2023 and 2029 if not utilized.

7 unchanged sentences

Costs to obtain and fulfill contracts (primarily asphalt construction paving contracts) are immaterial and are expensed as incurred when the expected amortization period is one year or less.

Our segment total revenues by geographic market for the three and six month periods ended June 30, 2023 and 2022 are disaggregated as follows (the decrease in East market concrete revenues is primarily attributable to the sale of concrete operations in New Jersey, New York and Pennsylvania in November 2022;

Our segment total revenues by geographic market for the three and nine month periods ended September 30, 2023 and 2022 are disaggregated as follows (the decrease in East market concrete revenues is primarily attributable to the sale of concrete operations in New Jersey, New York and Pennsylvania in November 2022;

see Note 16 for additional information):

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Total Revenues by Geographic Market 1

2 unchanged sentences

Total revenues

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Total Revenues by Geographic Market 1

2 unchanged sentences

Total revenues

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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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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 $ 69.7 million ( 3.3 % of total revenues) and $ 67.9 million ( 3.5 % of total revenues) for the three months ended June 30, 2023 and 2022, respectively, and $ 104.8 million ( 2.8 % of total revenues) and $ 106.9 million ( 3.1 % of total revenues) for the six months ended June 30, 2023 and 2022, respectively.

Our total service revenues were $ 76.7 million ( 3.5 % of total revenues) and $ 71.1 million ( 3.4 % of total revenues) for the three months ended September 30, 2023 and 2022, respectively, and $ 181.5 million ( 3.1 % of total revenues) and $ 178.0 million ( 3.2 % of total revenues) for the nine months ended September 30, 2023 and 2022, 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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Under this approach, recognized contract revenue equals the total estimated contract revenue multiplied by the percentage of completion.

Future revenues from unsatisfied performance obligations (including contracts with an expected duration of 1 year or less) at June 30, 2023 and 2022 were $ 130.2 million and $ 173.0 million, respectively.

The remaining period to complete the obligations at June 30, 2023 ranged from 1 month to 38 months.

Future revenues from unsatisfied performance obligations (including contracts with an expected duration of 1 year or less) at September 30, 2023 and 2022 were $ 116.3 million and $ 143.2 million, respectively.

The remaining period to complete the obligations at September 30, 2023 ranged from 1 month to 47 months .

Our construction contracts are unit priced, and an account receivable is recorded for amounts invoiced based on actual units produced.

17 unchanged sentences

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 twelve-month period ending June 30, 2024 (reflected in other current liabilities in our June 30, 2023 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, 2024 (reflected in other current liabilities in our September 30, 2023 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 $ 2.0 million and $( 6.1 ) million for the six months ended June 30, 2023 and 2022, respectively.

The portions of the net gains (losses) related to investments still held by the Rabbi Trusts at June 30, 2023 and 2022 were $ 2.1 million and $( 6.3 ) million, respectively.

Net gains (losses) of the Rabbi Trusts’ investments were $ 0.5 million and $( 8.1 ) million for the nine months ended September 30, 2023 and 2022, respectively.

The portions of the net gains (losses) related to investments still held by the Rabbi Trusts at September 30, 2023 and 2022 were $ 0.6 million and $( 8.3 ) 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.

2 unchanged sentences

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

During the third quarter of 2023, net assets held for sale with a carrying value of $ 513.3 million were written down to their estimated fair value less cost to sell of $ 485.0 million, resulting in an impairment loss of $ 28.3 million.

In addition, 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.

In both quarters, the estimated fair values (Level 1 fair value measurements) were determined based on the expected proceeds from the probable sales of the disposal groups.

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 in 2022.

Derivative Instruments

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Interest rate swaps

Other noncurrent assets

Other current assets

Interest rate swaps

Other current liabilities

Other noncurrent liabilities

Interest rate swaps net liability

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Income Statement

2 unchanged sentences

Interest expense

For the twelve-month period ending June 30, 2024, we estimate that $ 2.2 million of the $ 20.2 million net of tax loss in AOCI will be reclassified to interest expense.

For the twelve-month period ending September 30, 2024, we estimate that $ 2.2 million of the $ 19.8 million net of tax loss in AOCI will be reclassified to interest expense.

Debt is detailed as follows:

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See Note 6 for additional information on our fair value hedging strategy.

Discounts and debt issuance costs are amortized using the effective interest method over the terms of the respective notes resulting in $ 3.7 million and $ 2.4 million of net interest expense for these items for the six months ended June 30, 2023 and 2022, respectively.

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 $ 5.0 million of net interest expense for these items for the nine months ended September 30, 2023 and 2022, respectively.

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

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

As of June 30, 2023, we were in compliance with the covenants.

As of September 30, 2023, 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, 2023, 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 September 30, 2023, 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 through which we borrowed $ 550.0 million that was used to partially repay the delayed draw term loan.

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

As of June 30, 2023, our available borrowing capacity under the line of credit was $ 1,516.8 million.

As of September 30, 2023, our available borrowing capacity under the line of credit was $ 1,516.8 million.

Utilization of the borrowing capacity was as follows:

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All of the covenants in the debt agreements are customary for investment-grade facilities.

As of June 30, 2023, we were in compliance with all term debt covenants.

As of September 30, 2023, we were in compliance with all term debt covenants.

In March 2023, we issued $ 550.0 million of 5.80 % senior notes due 2026.

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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 June 30, 2023 are summarized by purpose in the table below:

Our standby letters of credit as of September 30, 2023 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 $ 631.1 million as of June 30, 2023.

As summarized by purpose in Note 7, our standby letters of credit totaled $ 83.2 million as of June 30, 2023.

As described in Note 9, our asset retirement obligations totaled $ 311.6 million as of June 30, 2023.

As stated in Note 2, our lease liabilities totaled $ 614.7 million as of September 30, 2023 (including liabilities classified as held for sale – see Note 16).

As summarized by purpose in Note 7, our standby letters of credit totaled $ 83.2 million as of September 30, 2023.

As described in Note 9, our asset retirement obligations totaled $ 315.5 million as of September 30, 2023.

LITIGATION AND ENVIRONMENTAL MATTERS

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Similar to the PDI Evaluation Report, the Supplemental Report and ADWP identified expansion of the onsite Hewitt remedy in conjunction with the offsite treatment being performed by LADWP as the preferred options for addressing contamination in offsite areas, instead of the two wells proposed by the EPA.

The EPA is currently reviewing the reports and has requested meetings with stakeholders including LADWP to determine a path forward.

During the second quarter of 2023, we accrued an immaterial amount based on an engineer’s estimate of the cost associated with the expansion of the onsite system.

The EPA provided initial comments on the Supplemental Report on August 1, 2023, and our response to their comments was provided on August 31, 2023.

The EPA is currently reviewing the response to comments and has requested meetings with stakeholders including LADWP to determine a path forward.

In December 2019, Honeywell agreed with LADWP to build a water treatment system (often referred to as the Cooperative Containment Concept or CCC or the second interim remedy) that will provide treated groundwater in the NHOU to LADWP for public water supply purposes.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations – Known Trends or Uncertainties).

On July 11, 2022, the NAFTA arbitration tribunal granted Legacy Vulcan’s application and ordered Mexico not to take any action that might further aggravate the dispute between the parties or render the resolution of the dispute potentially more difficult.

Legacy Vulcan’s ancillary claim will be addressed as part of the pending arbitration, and we expect that the NAFTA arbitration tribunal will issue a decision no earlier than 2024.

At this time, there can be no assurance whether we will be successful in our NAFTA claim, and we cannot quantify the amount we may recover, if any, under this arbitration proceeding if we are successful.

In July 2022, the NAFTA arbitration tribunal granted Legacy Vulcan’s application and ordered Mexico not to take any action that might further aggravate the dispute between the parties or render the resolution of the dispute potentially more difficult.

A hearing on the merits of the ancillary claim took place in August 2023.

We expect that the NAFTA arbitration tribunal will issue a decision on the claim and ancillary claim during the first half of 2024.

At this time, there can be no assurance whether we will be successful in our NAFTA claim and ancillary claim, and we cannot quantify the amount we may recover, if any, under this arbitration proceeding if we are successful.

It is not possible to predict the ultimate outcome of these and other legal proceedings in which we are involved, and a number of factors, including developments in ongoing discovery or adverse rulings, or the verdict of a particular jury, could cause actual losses to differ materially from accrued costs.

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Three Months Ended

Six Months Ended

Nine Months Ended

ARO Operating Costs

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Three Months Ended

Six Months Ended

Nine Months Ended

Asset Retirement Obligations

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Balance at end of period

ARO liabilities incurred as of September 30, 2022 primarily related to acquisitions completed in 2022 (see Note 16).

Benefit Plans

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Three Months Ended

Six Months Ended

Nine Months Ended

Components of Net Periodic Benefit Cost

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Amortization of actuarial loss

Net periodic pension benefit cost (credit)

Net periodic pension benefit cost

Pretax reclassifications from AOCI included in

net periodic pension benefit cost

The contributions to pension plans for the six months ended June 30, 2023 and 2022, 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, 2023 and 2022, 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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Three Months Ended

Six Months Ended

Nine Months Ended

Components of Net Periodic Benefit Cost

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Pretax reclassifications from AOCI included in

net periodic postretirement benefit credit

net periodic postretirement benefit cost

DEFINED CONTRIBUTION PLANS

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

Expense recognized in connection with these matching obligations totaled $ 41.1 million and $ 29.6 million for the six months ended June 30, 2023 and 2022, respectively.

Expense recognized in connection with these matching obligations totaled $ 58.6 million and $ 49.1 million for the nine months ended September 30, 2023 and 2022, 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, 2023 are as follows:

Changes in AOCI, net of tax, for the nine months ended September 30, 2023 are as follows:

Postretirement

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Net current period OCI changes

Balances as of June 30, 2023

Balances as of September 30, 2023

Amounts reclassified from AOCI to earnings are as follows:

Three Months Ended

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, 2023, December 31, 2022 and June 30, 2022.

There were no shares held in treasury as of September 30, 2023, December 31, 2022 and September 30, 2022.

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

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Average cost per share

As of June 30, 2023, 7,823,488 shares may b e p urchased under the current authorizatio n o f our Board of Directo rs.

The amount paid to purchase shares in excess of the par value is recorded in retained earnings.

As of September 30, 2023, 7,823,488 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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Three Months Ended

Six Months Ended

Nine Months Ended

Total Revenues

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The increase in Aggregates is primarily due to 2022 acquisitions, and the decrease in Concrete is primarily due to the divestiture of concrete operations in New Jersey, New York and Pennsylvania in November 2022 (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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During the third quarter of 2022, we recorded an interim goodwill impairment loss of $ 50.9 million related to the fourth quarter sale of a reporting unit comprised of concrete operations in New Jersey, New York and Pennsylvania (see Note 16).

There were no charges for goodwill impairment in the six month periods ended June 30, 2023 and 2022.

There were no charges for goodwill impairment in the nine-month period ended September 30, 2023.

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

Changes in the carrying amount of goodwill by reportable segment from December 31, 2022 to June 30, 2023 are shown below:

Changes in the carrying amount of goodwill by reportable segment from December 31, 2022 to September 30, 2023 are shown below:

Totals at December 31, 2022

Goodwill of acquired businesses 1

Totals at June 30, 2023

Totals at September 30, 2023 2

See Note 16 for acquisitions.

The current year includes a purchase price allocation adjustment from a prior year acquisition.

The Concrete segment balance at September 30, 2023 includes goodwill classified as held for sale as detailed in Note 16.

Acquisitions and Divestitures

BUSINESS ACQUISITIONS

2023 BUSINESS ACQUISITIONS — Through the six months ended June 30 , 2023, we completed no business acquisitions.

2022 BUSINESS ACQUISITIONS — Through the six months ended June 30, 2022, we acquired operations in Texas and Virginia for total consideration of $ 233.5 million ($ 188.1 million cash and $ 45.4 million noncash).

2023 BUSINESS ACQUISITIONS — Through the nine months ended September 30 , 2023, we completed no business acquisitions.

2022 BUSINESS ACQUISITIONS — Through the nine months ended September 30, 2022, we acquired operations in California, Texas, Virginia and Honduras for total consideration of $ 593.4 million ($ 528.0 million cash and $ 65.4 million noncash).

For the full year 2022 , including adjustments made in the current year, we purchased the following operations for total consideration of $ 593.7 million ($ 528.3 million cash and $ 65.4 million noncash):

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

The fair value of consideration transferred for these 2022 acquisitions and th e preliminary a mount s (pending final working capital adjustments) o f assets acquired and liabilities assumed as of June 30, 2023 are summarized below:

The fair value of consideration transferred for these 2022 acquisitions and th e a mount s o f assets acquired and liabilities assume d as of September 30, 2023 a re summarized below:

Fair Value of Purchase Consideration

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 Third quarter – excess real estate in Southern California resulting in a pretax gain of $ 23.5 million

No material assets met the criteria for held for sale at June 30, 2023, December 31, 2022 or June 30, 2022.

The probable divestiture of our concrete operations in Texas is presented as assets held for sale in the accompanying Condensed Consolidated Balance Sheet at September 30, 2023.

In addition, the divestiture of our concrete operations in New Jersey, New York and Pennsylvania in November 2022 was presented as assets held for sale in the accompanying Condensed Consolidated Balance Sheet at September 30, 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

Amortizable intangible assets, net

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, 2022.

New Accounting Standards

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EXECUTIVE SUMMARY

Financial highlights for SECOND Quarter 2023

Compared to second quarter of 2022:

Financial highlights for THIRD Quarter 2023

Compared to third quarter of 2022:

 Total revenues increased $97.5 million, or 5%, to $2,185.8 million

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 Asphalt, Concrete and Calcium segment gross profit increased $25.8 million, or 45%, to $82.6 million, collectively

 Selling, administrative and general (SAG) expenses increased $4.7 million but decreased 30 basis points as a percentage of total revenues

 Selling, administrative and general (SAG) expenses increased $8.6 million (10 basis points as a percentage of total revenues)

 Operating earnings increased $113.5 million, or 37%, to $418.9 million

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 Returned capital to shareholders via dividends of $57.2 million at $0.43 per share versus $53.2 million at $0.40 per share

 Returned capital to shareholders via share repurchases of $49.9 million at $206.82 average price per share compared to none in the prior quarter

Our earnings growth through the first half of 2023 reflects the compounding benefits of the consistent execution of our strategic disciplines and the strength of our aggregates-led business.

Aggregates gross profit margin has expanded 230 basis points, gross profit per ton has improved 26% to $6.96 and cash gross profit per ton has improved 23% to $8.98 per ton.

Strong sales and operating momentum across our business is expected to carry through the rest of the year.

Shipments have benefited from large industrial projects, and residential construction activity has been better than expected.

As a result, we now expect to deliver full-year Adjusted EBITDA of $1,900 million to $2,000 million, an increase of $150 million compared to our initial expectations communicated in February.

Through the first half of the year, cash provided by operating activities was $507.5 million, a 56% increase from the comparable prior year period.

Capital expenditures in the second quarter were $157.4 million, including $44.4 million for growth projects (year-to-date $270.2 million and $77.9 million, respectively).

As planned, we expect to spend $600 million to $650 million for maintenance and growth projects in 2023.

Additionally, we now expect to spend approximately $200 million on opportunistic land purchases for strategic reserves in California, North Carolina and Texas.

As of June 30, 2023, the ratio of total debt to trailing-twelve months Adjusted EBITDA was 2.1 times (2.0 times on a net debt basis).

Through the first nine months of 2023, net earnings attributable to Vulcan increased 55%, Adjusted EBITDA increased 23% and margin expanded 340 basis points.

Aggregates gross profit per ton has increased 23% to $7.32, and cash gross profit per ton has improved 21% to $9.31.

These strong results demonstrate the compounding benefits of our strategic disciplines and the durability of our aggregates-led business.

We remain focused on finishing the year strong and carrying solid momentum into next year.

As a result, we now expect our full-year Adjusted EBITDA to be $1,950 million to $2,000 million for 2023.

Capital expenditures in the third quarter were $140.9 million, including $60.5 million for growth projects (year-to-date $411.1 million and $138.4 million, respectively).

We expect to spend $600 million to $650 million for maintenance and growth projects in 2023.

Additionally, as planned, we began deploying capital for opportunistic land purchases of strategic reserves in California, North Carolina and Texas during the third quarter;

expenditures in the quarter were $172.9 million.

We returned $57.2 million to shareholders through dividends, a 7% increase versus the prior year’s third quarter.

As of September 30, 2023, the ratio of total debt to trailing-twelve months Adjusted EBITDA was 2.0 times (1.8 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 $46.7 million in the second quarter compared with $38.7 million in the prior year.

Interest expense, net of interest income, was $46.6 million in the third quarter compared with $46.1 million in the prior year.

On a trailing-twelve months basis, return on invested capital was 15.4%, a 180 basis points improvement from the comparable prior year period.

We are focused on continuing to drive improvement through solid operating earnings growth coupled with disciplined capital management.

We are increasing our full-year earnings expectations to reflect shipment trends and the earnings momentum in our Asphalt segment.

Through the first half of the year, aggregates shipments have been in line with the upper end of our original expectations.

Private non-residential construction activity has remained healthy and should partially offset declines in residential activity which have been more moderate than anticipated.

As a result, we are updating our volume outlook to reflect shipment levels through the first half.

As always, we remain focused on the things we can control, and we are well positioned to navigate shifts in demand and deliver attractive earnings growth in 2023.

Management expectations for 2023 include the following updates:

 Aggregates shipments down 1% to 4% (236.3 million tons in 2022)

 Total Asphalt, Concrete and Calcium segment cash gross profit of approximately $295 million

 Asphalt expected to contribute 50% to 55% of non-aggregates cash gross profit with mid-single digit growth in both volume and price

 Concrete expected to contribute 45% to 50% of non-aggregates cash gross profit reflecting the impact of the weather-challenged first quarter

 Net earnings attributable to Vulcan of between $855 million and $935 million

 Adjusted EBITDA of between $1,900 million and $2,000 million

 All other aspects of our expectations for 2023 remain unchanged

We continue to execute at a high level and successfully navigate the twists and turns of the broader macro economy.

Regardless of the macro environment, aggregates can be a price-cost winner in all parts of the cycle.

Our year-to-date unit profitability growth of more than 20% demonstrates the durability of our business.

Aggregates shipments continue to trend towards the upper end of full-year expectations, supported by industrial-related nonresidential projects in key markets and IIJA-related construction activity.

As a result, we expect full-year Adjusted EBITDA of $1,950 million to $2,000 million, a 21% improvement at the mid-point.

We expect 2024 to be another year of earnings growth and strong cash generation.

Geographic footprint is important, from both a diversification and growth standpoint, and ours is unmatched.

Leading indicators remain supportive of continued growth in public construction activity, and we are well positioned in high growth markets where the need is greatest.

On the private side, recovery in single-family construction activity and healthy shipment levels to large industrial-related projects, particularly manufacturing, will help partially offset continued softness in multi-family construction as well as other categories of nonresidential.

The overall pricing environment remains positive, and we carry good momentum into 2024.

We have a durable business model with strong fundamentals through economic cycles.

We are positioned in geographic markets that will continue to outperform other parts of the country, and our continued execution on our operating and commercial disciplines will lead to another year of earnings growth in 2024.

RESULTS OF OPERATIONS

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Six Months Ended

Nine Months Ended

in millions, except per share and per unit data

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equipment and businesses

Loss on impairments

Operating earnings

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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 2023 Compared to SECOND Quarter 2022

Second quarter 2023 total revenues were $2,112.9 million, up 8% from the second quarter of 2022.

THIRD quarter 2023 Compared to THIRD Quarter 2022

Third quarter 2023 total revenues were $2,185.8 million, up 5% from the third quarter of 2022.

Shipments decreased in aggregates (-2%) and ready-mixed concrete (-27%) and increased in asphalt mix (+11%).

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Conversely, gross profit decreased in the Concrete segment (-$0.4 million or 2%) as a result of the divestiture of our operations in New Jersey, New York and Pennsylvania in November 2022 (see Note 16).

Net earnings attributable to Vulcan for the second quarter of 2023 were $308.6 million, or $2.31 per diluted share, compared to $187.3 million, or $1.40 per diluted share in the second quarter of 2022.

Net earnings attributable to Vulcan for the third quarter of 2023 were $276.5 million, or $2.07 per diluted share, compared to $177.1 million, or $1.33 per diluted share in the third quarter of 2022.

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

Net earnings attributable to Vulcan for the second quarter of 2023 include:

 pretax net gain of $15.2 million related to the sale of real estate in Illinois

 pretax charges of $4.3 million associated with divested operations

Net earnings attributable to Vulcan for the third quarter of 2023 include:

 pretax charges of $28.3 million associated with long-lived asset impairments

 pretax charges of $1.2 million associated with non-routine acquisitions

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 $5.0 million of tax charges related to a Calica NOL carryforward valuation allowance

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

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 pretax loss on discontinued operations of $1.6 million

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $2.29 per diluted share for the second quarter of 2023 compared to $ 1.53 per diluted share for the second quarter of 2022.

Continuing Operations — Changes in earnings from continuing operations before income taxes for the second quarter of 2023 versus the second quarter of 2022 are summarized below:

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

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $2.29 per diluted share for the third quarter of 2023 compared to $ 1.78 per diluted share for the third quarter of 2022.

Continuing Operations — Changes in earnings from continuing operations before income taxes for the third quarter of 2023 versus the third quarter of 2022 are summarized below:

earnings from continuing operations before income taxes

Second quarter 2022

Third quarter 2022

Higher aggregates gross profit

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Lower concrete gross profit

Higher calcium gross profit

Lower calcium gross profit

Higher selling, administrative and general expenses

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

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

Lower impairment charges

Higher interest expense, net

Second quarter 2023

Second quarter Aggregates segment sales increased 13%, while gross profit increased $96.2 million, or 24%, to $498.6 million ($7.87 per ton).

Cash gross profit per ton was $9.76 in the quarter compared to $ 7.99 in the prior year quarter, an increase of 22%.

Gross profit margin increased 290 basis points due to strong pricing growth and improving efficiencies from our operating disciplines.

Earnings improvement was widespread across our footprint.

Total aggregates shipments were 63.4 million tons versus 63.8 million in last year’s second quarter, a decrease of 1% with variations across geographies.

Shipment activity in California was particularly strong, following the weather impacted first quarter.

Certain markets in the Southeast benefited from healthy shipment activity to industrial projects.

The pricing environment remains positive across our footprint.

Freight-adjusted pricing was $18.69 per ton, an increase of 15.0% ($2.44 per ton), with all markets realizing year-over-year improvement.

Consistent with expectations, Aggregates freight-adjusted unit cost of sales increased 9%, or $ 0.88 per ton, and cash cost of sales increased 8%, or $ 0.67 per ton, as compared to the prior year’s second quarter.

Persistent inflationary pressures for parts and supplies offset the benefit of lower diesel prices.

We remain focused on compounding improvements in unit profitability throughout the cycle through fixed cost leverage, price growth and operating efficiencies.

Overall, non-aggregates segments gross profit of $84.7 million was $40.9 million higher than the prior year’s second quarter.

Asphalt segment gross profit of $ 56.6 million was up $43.0 million from the prior year’s second quarter, and gross profit margin continued to expand.

Cash gross profit was $65.5 million compared to $22.1 million in the prior year.

The year-over-year improvement in earnings was driven by a combination of strong shipment growth, continued pricing momentum and lower liquid asphalt costs.

Asphalt shipments increased 16%, benefiting from solid growth in Arizona and California, our largest asphalt markets.

Asphalt pricing in creased 8.8%, or $6.10 per ton, with improvements across all markets.

Concrete segment gross profit was $ 27.0 million for the second quarter, down $ 3.0 million from the prior year.

Third quarter 2023

Third quarter Aggregates segment gross profit increased 17% to $508.4 million ($7.95 per ton), and gross profit margin expanded 200 basis points.

Cash gross profit per ton improved 18% to $9.92 per ton.

These improvements resulted from continued pricing momentum and solid operational execution.

Aggregates shipments decreased 2% as compared to the prior year’s third quarter.

Shipment growth in certain Southeastern markets continued to benefit from healthy industrial project activity which dampened the impact of weakness in residential demand.

Price growth in the third quarter was consistently strong with all markets realizing year-over-year improvement.

Freight-adjusted pricing increased 14.9%, or $2.50 per ton, as compared to the prior year, more than offsetting a 12% increase in freight-adjusted unit cash cost of sales.

On a sequential basis, freight-adjusted selling prices continued to improve, reflecting momentum from mid-year price increases, price growth realized on backlogged projects and the added benefit of positive geographic mix (approximately 200 basis points).

Overall, non-aggregates segments gross profit of $82.6 million was $25.8 million higher than the prior year’s third quarter.

Asphalt segment gross profit of $55.9 million was up $ 26.3 million from the prior year’s third quarter, and gross profit margin expanded 660 basis points.

Cash gross profit was $ 64.7 million compared to $38.4 million in the prior year.

Average selling prices increased 10.1 %, and u nit gross profit improved 22%, or $2.35 per cubic yard, despite lower shipments.

Current year results were impacted by the divestiture of our concrete operations in New Jersey, New York and Pennsylvania in November 2022 and the slowdown in residential construction activity.

Calcium segment gross profit was $ 1.1 million compared to $ 0.2 million in the prior year’s second quarter.

SAG expenses were $139.1 million in the quarter, or 6.6% of total revenues, a 30 basis points improvement from the prior year.

Trailing-twelve months SAG expense was 6.8% of total revenues, a 50 basis points improvement from the prior year.

We remain focused on further leveraging our overhead cost structure.

For the three months ended June 30, 2023, we sold real estate associated with a former recycled concrete facility in Illinois resulting in a pretax net gain of $15.2 million.

There were no similar gains in the prior comparable period.

Other operating income (expense), which is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and net rental income (expense), was $9.8 million of expense for the second quarter of 2023 compared to $6.2 million of expense in the second quarter of 2022.

Other nonoperating income (expense), net was $0.1 million of expense for the second quarter of 2023 compared to $4.7 million of expense in the second quarter of 2022.

Net interest expense was $46.7 million in the second quarter of 2023 compared to $38.7 million in the second quarter of 2022.

Income tax expense from continuing operations was $92.0 million in the second quarter of 2023 compared to $63.7 million in the second quarter of 2022.

The increase in tax expense was due to higher pretax earnings.

Earnings attributable to Vulcan from continuing operations were $2.33 per diluted share in the second quarter of 2023 compared to $1.50 per diluted share in the second quarter of 2022.

Discontinued Operations — Second quarter pretax loss from discontinued operations was $4.9 million in 2023 compared with a pretax loss of $17.6 million in 2022.

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 the second quarter of 2022 includes a $15.3 million charge for a litigation matter.

Asphalt mix shipments increased 11% with growth widespread across our footprint.

Modest price growth and lower liquid asphalt costs also contributed to the year-over-year improvement in earnings.

Concrete segment gross profit was $26.0 million for the third quarter, and gross profit margin expanded 120 basis points.

Cash gross profit was $ 46.5 million compared to $48.2 million in the prior year which included earnings from our divested operations in New Jersey, New York and Pennsylvania.

U nit gross profit improved 34 %, or $3.11 per cubic yard, despite lower shipments.

Shipments in the third quarter were impacted by the divestiture and the timing of large projects in the prior year.

Pricing increased 10.7%.

Calcium segment gross profit was $0.7 million compared to $ 0.8 million in the prior year’s third quarter.

SAG expense in the quarter was $ 143.9 million, or 6.6% of total revenues.

Trailing-twelve months SAG expense was 6.9% of total revenues, 20 basis points lower than the prior year.

We are currently finalizing an agreement for the disposition of our concrete assets in Texas, subject to obtaining regulatory approvals and the satisfaction of other customary closing conditions.

As a result, these assets were classified as held for sale during the quarter and resulted in a pretax long-lived asset impairment charge of $28.3 million ($21.1 million after tax).

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 divestiture of concrete operations in New Jersey, New York and Pennsylvania which closed in the fourth quarter of 2022.

Other operating income (expense), which is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and net rental income (expense), was $4.2 million of expense for the third quarter of 2023 compared to $8.2 million of expense in the third quarter of 2022.

Other nonoperating income (expense), net was $6.4 million of expense for the third quarter of 2023 compared to $1.3 million of income in the third quarter of 2022.

Net interest expense was $ 46.6 million in the third quarter of 2023 compared to $46.1 million in the third quarter of 2022.

Income tax expense from continuing operations was $ 85.8 million in the third quarter of 2023 compared to $82.3 million in the third quarter of 2022.

Earnings attributable to Vulcan from continuing operations were $ 2.09 per diluted share in the third quarter of 2023 compared to $1.33 per diluted share in the third quarter of 2022.

Discontinued Operations — Third quarter pretax loss from discontinued operations was $3.8 million in 2023 compared with a pretax loss of $1.6 million in 2022.

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, 2023 Compared to year-to-date june 30, 2022

Total revenues for the first six months of 2023 were $3,761.8 million, up 8% from the first six months of 2022.

YEAR-TO-DATE SEPTEMBER 30, 2023 Compared to year-to-date SEPTEMBER 30, 2022

Total revenues for the first nine months of 2023 were $5,947.6 million, up 7% from the first nine months of 2022.

Shipments decreased in aggregates (-2%) and ready-mixed concrete (-27%) and increased in asphalt mix (+7%).

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Conversely, gross profit decreased in the Concrete segment (-$34.0 million or 40%) as a result of the divestiture of our operations in New Jersey, New York and Pennsylvania in November 2022 (see Note 16).

Net earnings attributable to Vulcan for the first six months of 2023 were $429.3 million, or $3.21 per diluted share, compared to $279.1 million, or $2.09 per diluted share, in the first six months of 2022.

Net earnings attributable to Vulcan for the first nine months of 2023 were $705.8 million, or $5.28 per diluted share, compared to $456.2 million, or $3.42 per diluted share, in the first nine months of 2022.

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

Net earnings attributable to Vulcan for the first six months of 2023 include:

Net earnings attributable to Vulcan for the first nine months of 2023 include:

 pretax net gain of $15.2 million related to the sale of real estate in Illinois

 pretax charges of $28.3 million associated with long-lived asset impairments

 pretax charges of $4.7 million associated with divested operations

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 $11.2 million of tax charges related to a Calica NOL carryforward valuation allowance

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 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 $1.0 million associated with divested operations

1 unchanged sentence

 pretax loss on discontinued operations of $21.7 million

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $3.25 per diluted share for the first half of 2023 compared to $ 2.25 per diluted share for the first half of 2022.

Continuing Operations — Changes in earnings from continuing operations before income taxes for year-to-date June 30, 2023 versus year-to-date June 30, 2022 are summarized below:

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

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $5.54 per diluted share for the first nine months of 2023 compared to $ 4.03 per diluted share for the first nine months of 2022.

Continuing Operations — Changes in earnings from continuing operations before income taxes for year-to-date September 30, 2023 versus year-to-date September 30, 2022 are summarized below:

earnings from continuing operations before income taxes

Year-to-date June 30, 2022

Year-to-date September 30, 2022

Higher aggregates gross profit

3 unchanged sentences

Higher selling, administrative and general expenses

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

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

Lower impairment charges

Higher interest expense, net

Year-to-date June 30, 2023

Aggregates segment sales for the first six months of 2023 were $2,872.8 million (up 14%) while aggregates shipments decreased 1%, or 1.7 million tons, compared to the prior year.

Freight-adjusted average sales price increased 17.4%, or $2.77 per ton, versus the first six months of 2022.

Aggregates segment gross profit was $801.3 million ($6.96 per ton) versus $645.2 million ($5.52 per ton) in the first half of 2022.

Cash gross profit per ton increased 23% from the prior year’s first six months to $8.98 per ton.

Freight-adjusted unit cost of sales for the first half of 2023 increased 13%, or $1.33 per ton, versus the prior year.

Asphalt segment gross profit of $ 57.4 million was up $46.7 million from the first six months of 2022.

Year-to-date September 30, 2023

Aggregates segment sales for the first nine months of 2023 were $4,498.9 million (up 12%) while aggregates shipments decreased 2%, or 3.1 million tons, compared to the prior year.

Year-to-date freight-adjusted average sales price increased 16.5%.

Aggregates segment gross profit was $1,309.8 million ($7.32 per ton) versus $1,081.3 million ($5.94 per ton) in the first nine months of 2022.

Freight-adjusted unit cost of sales for the first nine months of 2023 increased 13%, or $1.29 per ton, versus the prior year.

The favorable pricing environment coupled with strong operational execution has led to consistent improvement in unit profitability through the first nine months.

On a year-to-date basis, gross profit per ton improved 23% to $7.32 per ton, and cash gross profit per ton improved 21% to $9.31 per ton.

Gross profit margin has expanded year-over-year in each quarter and has improved 220 basis points year-to-date.

Asphalt segment gross profit of $ 113.3 million was up $73.1 million from the first nine months of 2022.

Asphalt mix shipments increased 7% while average unit selling prices increased 7.4%, or $5.20 per ton.

Compared to the prior year’s first half, asphalt mix unit material margins increased 47% as a result of continued pricing momentum and lower liquid asphalt costs.

Concrete segment gross profit was $ 24.7 million for the first half of 2023, a decrease of $ 33.5 million from the prior year period.

Year-to-date gross profit margin expanded 800 basis points to 13%, resulting from solid volume and price growth and the benefit of lower liquid asphalt costs.

Concrete segment gross profit was $ 50.7 million for the first nine months of 2023, a decrease of $ 34.0 million from the prior year period which included earnings from our divested operations in New Jersey, New York and Pennsylvania.

Ready-mixed concrete shipments decreased 27% while the average sales price increased 11.0% and unit material margins increased 9%.

Current year results were impacted by the divestiture of our concrete operations in New Jersey, New York and Pennsylvania in November 2022.

Calcium segment gross profit of $ 1.9 million was up $1.1 million compared to the first half of 2022.

SAG expenses were $256.5 million versus $253.4 million in the prior year’s first half reflecting a 50 basis points improvement from the prior year.

Calcium segment gross profit of $2.5 million was up $ 0.9 million compared to the first nine months of 2022.

SAG expenses were $400.4 million (6.7% of total revenues) versus $388.7 million (7.0% of total revenues) in the prior year’s first nine months reflecting a 30 basis points improvement from the prior year.

We remain focused on further leveraging our overhead cost structure.

Gain on sale of property, plant & equipment and businesses was $18.5 million in the first half of 2023 versus $4.6 million in the first half of 2022.

The 2023 amount includes the aforementioned net pretax gain of $15.2 million from the sale of real estate associated with a former recycled concrete facility in Illinois.

Other operating income (expense), which is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and net rental income (expense), was $9.0 million of expense for the first half of 2023 compared to $11.6 million of expense in the first half of 2022.

Other nonoperating income (expense), net was $1.3 million of income for the first half of 2023 compared to $3.0 million of expense in the first half of 2022.

Net interest expense was $95.7 million in the first half of 2023 compared to $74.7 million in the first half of 2022.

Income tax expense from continuing operations was $108.6 million in the first half of 2023 compared to $82.4 million in the first half of 2022.

The increase in tax expense was due to higher pretax earnings partially offset by a tax benefit from a prior year business disposition recorded in the first quarter.

Earnings attributable to Vulcan from continuing operations were $3.25 per diluted share in the first half of 2023 compared to $2.20 per diluted share in the first half of 2022.

Discontinued Operations — First half pretax loss from discontinued operations was $7.9 million in 2023 compared with a pretax loss of $20.0 million in 2022.

Gain on sale of property, plant & equipment and businesses was $22.8 million in the first nine months of 2023 versus $28.4 million in the first nine months of 2022.

The 2023 amount includes a net pretax gain of $15.2 million from the sale of real estate associated with a former recycled concrete facility in Illinois while the 2022 amount includes a net pretax gain of $23.5 million from the sale of excess real estate in Southern California.

For the nine months ended September 30, 2023, we recognized a long-lived asset impairment charge of $28.3 million related to the probable divestiture of concrete operations in Texas.

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 divestiture of concrete operations in New Jersey, New York and Pennsylvania which closed in the fourth quarter of 2022.

Other operating income (expense), which is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and net rental income (expense), was $13.1 million of expense for the first nine months of 2023 compared to $19.8 million of expense in the first nine months of 2022.

Other nonoperating income (expense), net was $5.3 million of expense for the first nine months of 2023 compared to $1.7 million of expense in the first nine months of 2022.

Net interest expense was $142.2 million in the first nine months of 2023 compared to $120.8 million in the first nine months of 2022.

Income tax expense from continuing operations was $194.4 million in the first nine months of 2023 compared to $164.6 million in the first nine months of 2022.

The in crease in tax expense was due to higher pretax earnings reduced by tax benefits from a prior year business disposition recorded in the first quarter of 2023 and the reserve recorded on the assets held for sale.

Earnings attributable to Vulcan from continuing operations were $5.34 per diluted share in the first nine months of 2023 compared to $3.54 per diluted share in the first nine months of 2022.

Discontinued Operations — First nine months pretax loss from discontinued operations was $11.7 million in 2023 compared with a pretax loss of $21.7 million in 2022.

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.

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Six Months Ended

Nine Months Ended

in millions, except per ton data

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Six Months Ended

Nine Months Ended

in millions, except per ton data

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Three Months Ended

Six Months Ended

Nine Months Ended

Trailing-Twelve Months

Net earnings attributable to Vulcan

Income tax expense

Income tax expense, including discontinued operations

Interest expense, net of interest income

1 unchanged sentence

Loss on discontinued operations

Gain on sale of real estate and businesses, net

(Gain) loss on sale of real estate and businesses, net

Loss on impairments

5 unchanged sentences

Represents charges associated with acquisitions requiring clearance under federal antitrust laws.

Costs for trailing-twelve months ended June 30, 2022 include U.S.

Costs for trailing-twelve months ended September 30, 2022 include U.S.

Concrete acquisition related expenses of $0.5 million, the cost impact of purchase accounting inventory valuations of $11.8 million and change in control severance and retention charges of $13.5 million (see Note 16 for additional information).

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Three Months Ended

Six Months Ended

Nine Months Ended

Diluted Earnings Per Share

Net earnings attributable to Vulcan

Discontinued operations

Diluted EPS attributable to Vulcan from continuing

Items included in Adjusted EBITDA above, net of tax

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Return on invested capital

2023 projected ebitda

The following reconciliation to the mid-point of the range of 2023 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount).

Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance.

This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP.

2023 projected ADJUSTED ebitda

Projected Adjusted EBITDA is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP.

Reconciliation of this metric to its nearest GAAP measure is presented below:

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Net earnings attributable to Vulcan

Income tax expense

Income tax expense, including discontinued operations

Interest expense, net of interest income

1 unchanged sentence

Projected EBITDA

Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures, other than the reconciliation of Projected EBITDA as noted above.

Items included in Adjusted Diluted EPS above

Projected Adjusted EBITDA

For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

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

Included in our June 30, 2023 cash and cash equivalents and restricted cash balances of $168.2 million is $2.2 million of restricted cash as described in Note 1 under the caption Restricted Cash.

Included in our September 30, 2023 cash and cash equivalents and restricted cash balances of $345.0 million is $5.0 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)

Loss on impairments

Noncash operating lease expense

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

Contributions to pension plans

Deferred tax provision (benefit)

2 unchanged sentences

Primarily reflects changes to working capital balances.

Net cash provided by operating activities was $ 507.5 million during the six months ended June 30, 2023, a $ 182.0 million increase compared to the same period of 2022.

Net cash provided by operating activities was $ 1,055.2 million during the nine months ended September 30, 2023, a $ 306.9 million increase compared to the same period of 2022.

The increase was primarily attributable to a $250.1 million increase in net earnings and changes in working capital balances.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 43.8 days at June 30 , 2023 compared to 46.5 days at June 30 , 2022.

Additionally, our over 90 day receivables balance was $ 36.5 million at June 30, 2023, a decrease of $2.6 million from the $39.1 million balance at June 30, 2022.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 45.3 days at September 30 , 2023 compared to 47.6 days at September 30 , 2022.

Additionally, our over 90 day receivables balance was $ 28.1 million at September 30, 2023, a decrease of $18.3 million from the $46.4 million balance at September 30, 2022.

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 $ 203.2 million during the first six months of 2023, a $ 265.5 million decrease compared to cash used of $468.7 million in the same period of 2022.

Net cash used for investing activities was $ 509.2 million during the first nine months of 2023, a $ 431.5 million decrease compared to cash used of $940.7 million in the same period of 2022.

This decrease was primarily attributable to a $ 528.9 million decrease in payments for businesses acquired in the current period compared to the prior period.

During the first six months of 2022, we acquired businesses for $188.1 million (see Note 16 to the condensed consolidated financial statements).

Additionally, during the first six months of 2023, we received $130.0 million in proceeds from the collection of a note receivable related to the sale of concrete operations in New Jersey, New York and Pennsylvania in November 2022.

Furthermore, d uring the first six months of 2023, w e invested $ 354.6 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $290.6 million in the prior year period.

During the first nine months of 2022, we acquired businesses for $528.0 million (see Note 16 to the condensed consolidated financial statements).

Additionally, during the first nine months of 2023, we received $130.0 million in proceeds from the collection of a note receivable related to the sale of concrete operations in New Jersey, New York and Pennsylvania in November 2022.

Furthermore, d uring the first nine months of 2023, w e invested $ 666.3 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $450.4 million in the prior year period.

Of this $ 666.3 million, $ 138.4 million was invested in internal growth projects to enhance our distribution capabilities, develop new production sites and enhance existing production facilities.

An additional $172.9 million was invested in opportunistic land purchases of strategic reserves.

cash from financing activities

Net cash used for financing activities in the first six months of 2023 was $297.6 million, compared to cash provided of $25.4 million in the same period of 2022.

Net cash used for financing activities in the first nine months of 2023 was $362.5 million, compared to cash provided of $97.8 million in the same period of 2022.

The current year includes a $100.0 million net payment on our line of credit, whereas the prior year includes a $312.0 million net draw on our line of credit.

Additionally, we increased the capital returned to our shareholders by $58.0 million via higher dividends of $8.1 million ($0.43 per share compared to $0.40 per share) and higher share repurchases of $49.9 million (241,363 shares repurchased at $206.82 average price per share compared to none in the first half of 2022).

Additionally, we increased the capital returned to our shareholders by $62.0 million via higher dividends of $12.1 million ($1.29 per share compared to $1.20 per share) and higher share repurchases of $49.9 million (241,363 shares repurchased at $206.82 average price per share compared to none in the first nine months of 2022).

Certain debt measures are presented below:

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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, 2023, total debt to trailing-twelve months Adjusted EBITDA was 2.1 times (2.0 times on a net debt basis reflecting $168.2 million of cash on hand).

At September 30, 2023, total debt to trailing-twelve months Adjusted EBITDA was 2.0 times (1.8 times on a net debt basis reflecting $345.0 million of cash on hand).

Our weighted-average debt maturity was 10.2 years.

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

As of June 30, 2023, 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%.

As of September 30, 2023, we were in compliance with the covenants, 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 through which we borrowed $550.0 million that was used to partially repay the delayed draw term loan.

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

As of June 30, 2023, our available borrowing capacity under the line of credit was $1,516.8 million.

As of September 30, 2023, our available borrowing capacity under the line of credit was $1,516.8 million.

Utilization of the borrowing capacity was as follows:

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All of the covenants in the debt agreements are customary for investment-grade facilities.

As of June 30, 2023, we were in compliance with all term debt covenants.

As of September 30, 2023, we were in compliance with all term debt covenants.

In March 2023, we issued $550.0 million of 5.80% senior notes due 2026.

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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, 2023 is due as follows:

Third quarter 2023

The $0.5 million of current maturities of long-term debt as of September 30, 2023 is due as follows:

Fourth quarter 2023

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Second quarter 2024

Our debt ratings and outlooks as of June 30, 2023 are as follows:

Third quarter 2024

Our debt ratings and outlooks as of September 30, 2023 are as follows:

Standard & Poor's

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issued and outstanding

As of June 30, 2023, there were 7,823,488 shares remaining under the February 2017 share purchase authorization by our Board of Directors.

As of September 30, 2023, there were 7,823,488 shares remaining under the February 2017 share purchase authorization by our Board of Directors.

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.

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Average cost per share

There were no shares held in treasury as of June 30, 2023, December 31, 2022 and June 30, 2022.

There were no shares held in treasury as of September 30, 2023, December 31, 2022 and September 30, 2022.

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, 2023.

There have been no changes to our critical accounting policies during the nine months ended September 30, 2023.

new Accounting standards

For a discussion of the accounting standards recently adopted or pending adoption and the effect such accounting changes will have on our results of operations, financial position or liquidity, see Note 17 to the condensed consolidated financial statements.

In May 2023, the SEC adopted the final rule under SEC Release No.

34-97424, “Share Repurchase Disclosure Modernization,” which requires disclosures related to issuers’ daily share repurchases to provide investors with more detailed information to assess the purposes and effects of the repurchases.

The rule is effective for the first full fiscal quarter beginning on or after October 1, 2023.

We do not expect this rule to have a material impact on our consolidated financial statements.

In July 2023, the SEC adopted the final rule under SEC Release No.

33-11216, “Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure,” which requires disclosure of material cybersecurity incidents on Form 8-K beginning on December 18, 2023.

The rule also requires disclosure of our cybersecurity risk management, strategy and governance in the annual report on Form 10-K effective for fiscal years ending after December 15, 2023.

We do not expect this rule to have a material impact on our consolidated financial statements.

FORWARD-LOOKING STATEMENTS

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 changes in our effective tax rate

 domestic and global political, economic or diplomatic developments

 the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks

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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