What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-02 compared with 2023-10-27 · 310 added, 905 removed, 524 unchanged (70% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited March 31

2024 December 31

2023 March 31

Cash and cash equivalents $ 292.4 $ 931.1 $ 139.6

Restricted cash 7.7 18.1 0.4

Accounts and notes receivable

Accounts and notes receivable, gross 900.4 903.3 988.1

1 unchanged sentence

Accounts and notes receivable, net 886.1 889.7 975.0

Finished products

Raw materials

Products in process

Operating supplies and other

Inventories 647.2 615.6 585.6

Other current assets 74.2 70.4 91.9

Assets held for sale

Total current assets 1,907.6 2,524.9 1,792.5

Investments and long-term receivables 31.4 31.3 31.3

Property, plant & equipment

Property, plant & equipment, cost 11,949.3 11,835.5 11,413.5

2 unchanged sentences

Operating lease right-of-use assets, net 512.4 511.7 569.5

Goodwill 3,531.7 3,531.7 3,689.6

Other intangible assets, net 1,445.8 1,460.7 1,679.2

Other noncurrent assets 272.7 267.7 269.9

Total assets $ 13,910.9 $ 14,545.7 $ 14,076.9

Current maturities of long-term debt 0.5 0.5 0.5

Short-term debt

Trade payables and accruals 320.9 390.4 370.3

Other current liabilities 374.8 406.7 386.1

Liabilities held for sale

Total current liabilities 696.2 797.6 756.9

8 unchanged sentences

Outstanding 132.3 , 132.1 and 133.1 shares, respectively

132.3 132.1 133.1

Capital in excess of par value 2,865.0 2,880.1 2,832.9

1 unchanged sentence

Accumulated other comprehensive loss ( 142.1 ) ( 143.8 ) ( 153.1 )

Total shareholders'

Total shareholders' equity 7,491.9 7,483.4 6,986.9

Noncontrolling interest 24.7 24.5 23.8

Total equity $ 7,516.6 $ 7,507.9 $ 7,010.7

Total liabilities and equity $ 13,910.9 $ 14,545.7 $ 14,076.9

3 unchanged sentences

COMPREHENSIVE INCOME

Three Months Ended

Nine Months Ended

Unaudited Three Months Ended

in millions, except per share data 2024 2023

1 unchanged sentence

Cost of revenues ( 1,240.8 ) ( 1,347.0 )

Gross profit 304.9 302.0

Selling, administrative and general expenses ( 129.7 ) ( 117.3 )

Gain on sale of property, plant & equipment

and businesses

Loss on impairments

Other operating expense, net

Gain on sale of property, plant & equipment and businesses 0.6 1.7

Other operating income (expense), net ( 2.9 ) 0.8

Operating earnings 172.9 187.2

1 unchanged sentence

Interest expense, net ( 39.1 ) ( 49.0 )

Earnings from continuing operations

before income taxes

Earnings from continuing operations before income taxes

Income tax expense ( 28.9 ) ( 16.6 )

1 unchanged sentence

Loss on discontinued operations, net of tax ( 1.7 ) ( 2.1 )

Net earnings 102.9 120.9

Earnings attributable to noncontrolling interest ( 0.2 ) ( 0.2 )

2 unchanged sentences

Amortization of prior cash flow hedge loss 0.4 0.4

Amortization of actuarial loss and prior service

cost for benefit plans

Amortization of actuarial loss and prior service cost for benefit plans 1.3 1.3

Other comprehensive income 1.7 1.7

Comprehensive income 104.6 122.6

Comprehensive earnings attributable to

noncontrolling interest

Comprehensive earnings attributable to noncontrolling interest

( 0.2 ) ( 0.2 )

Comprehensive income attributable to Vulcan $ 104.4 $ 122.4

2 unchanged sentences

Discontinued operations ( 0.01 ) ( 0.01 )

Net earnings $ 0.78 $ 0.91

Diluted earnings (loss) per share attributable to Vulcan

1 unchanged sentence

Discontinued operations ( 0.01 ) ( 0.02 )

Net earnings $ 0.77 $ 0.90

Weighted-average common shares outstanding

Basic 132.4 133.2

Assuming dilution 133.1 133.7

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Unaudited Three Months Ended

in millions 2024 2023

Operating Activities

Net earnings $ 102.9 $ 120.9

Adjustments to reconcile net earnings to net cash provided by operating activities

Depreciation, depletion, accretion and amortization 150.9 148.4

Loss on impairments

Noncash operating lease expense 12.9 13.6

2 unchanged sentences

Share-based compensation expense 9.1 8.2

Deferred tax provision (benefit)

Changes in assets and liabilities before initial

effects of business acquisitions and dispositions

Deferred income taxes, net ( 2.1 ) ( 13.3 )

Changes in assets and liabilities before initial effects of business acquisitions and dispositions ( 102.2 ) ( 55.2 )

Other, net 4.2 2.3

Net cash provided by operating activities $ 173.4 $ 221.3

4 unchanged sentences

Payment for businesses acquired, net of acquired cash and adjustments ( 12.3 ) 0.5

Other, net ( 0.1 ) 0.0

Net cash used for investing activities $ ( 163.8 ) $ ( 61.7 )

9 unchanged sentences

Share-based compensation, shares withheld for taxes ( 23.8 ) ( 14.3 )

Net cash provided by (used for) financing activities

Net increase (decrease) in cash and cash equivalents and restricted cash

Other, net ( 0.1 ) 0.0

Net cash used for financing activities $ ( 658.7 ) $ ( 181.1 )

Net decrease in cash and cash equivalents and restricted cash ( 649.1 ) ( 21.5 )

Cash and cash equivalents and restricted cash at beginning of year 949.2 161.5

4 unchanged sentences

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.

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

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) and a major producer of aggregates-intensive downstream products such as asphalt mix and ready-mixed concrete.

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

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

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

4 unchanged sentences

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

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.

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

Virgin Islands and Washington D.C.

5 unchanged sentences

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 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).

Operating results for the three month period ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Our condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues and expenses.

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 September 30, 2023 will be reflected in management’s estimates for future periods.

Events that relate to conditions arising after March 31, 2024 will be reflected in management’s estimates for future periods.

NONCONTROLLING INTEREST

In connection with our acquisition of U.S.

Concrete in 2021, we obtained an 88 % controlling interest in the Orca Sand and Gravel Limited Partnership (Orca) which was formed to develop the Orca quarry in British Columbia, Canada.

We own an 88 % controlling interest in the Orca Sand and Gravel Limited Partnership (Orca) which was formed to develop the Orca quarry in British Columbia, Canada.

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

7 unchanged sentences

Restricted cash is included with cash and cash equivalents in the accompanying Condensed Consolidated Statements of Cash Flows.

Inventories and supplies are stated at the lower of cost or net realizable value.

Inventories are as follows:

in millions March 31

2024 December 31

2023 March 31

Finished products $ 512.7 $ 494.4 $ 437.8

Raw materials 58.7 51.2 70.6

Products in process 6.8 6.5 6.2

Operating supplies and other 69.0 63.5 71.0

Total inventories $ 647.2 $ 615.6 $ 585.6

DISCONTINUED OPERATIONS

In 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation.

In 2005, we sold substantially all the assets of our Chemicals business to a subsidiary of Occidental Chemical Corporation.

The financial results of the Chemicals business are classified as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income for all periods presented.

Results from discontinued operations are as follows:

Three Months Ended

Nine Months Ended

Discontinued Operations

in millions Three Months Ended

Pretax loss $ ( 2.3 ) $ ( 2.9 )

Income tax benefit 0.6 0.8

Loss on discontinued operations,

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).

Loss on discontinued operations, net of tax $ ( 1.7 ) $ ( 2.1 )

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 business (including certain matters as discussed in Note 8).

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

2 unchanged sentences

Three Months Ended

Nine Months Ended

Weighted-average common shares

in millions 2024 2023

Weighted-average common shares outstanding 132.4 133.2

Dilutive effect of

1 unchanged sentence

Other stock compensation awards 0.5 0.3

Weighted-average common shares

outstanding, assuming dilution

Weighted-average common shares outstanding, assuming dilution 133.1 133.7

All dilutive common stock equivalents are reflected in our earnings per share calculations.

3 unchanged sentences

Three Months Ended

Nine Months Ended

in millions 2024 2023

Antidilutive common stock equivalents 0.1 0.1

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).

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

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:

dollars in millions

Classification on the Balance Sheet

RECLASSIFICATIONS

As a result of a first quarter 2024 change in our internal management reporting structure, prior period segment information has been revised to conform to our current segment reporting structure.

This change had no impact on our prior consolidated results of operations, financial position or cash flows (refer to Note 13 for further information).

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

Lease right-of-use (ROU) assets and liabilities and the weighted-average lease terms and discount rates are as follows:

in millions Classification on the Balance Sheet March 31

2024 December 31

2023 March 31

Operating lease ROU assets $ 641.8 $ 636.1 $ 669.6

Accumulated amortization ( 129.4 ) ( 124.4 ) ( 100.1 )

Operating leases, net

Operating lease right-of-use assets, net

Operating leases, net Operating lease right-of-use assets, net 512.4 511.7 569.5

Finance lease ROU assets 60.4 62.3 91.6

Accumulated depreciation ( 21.5 ) ( 20.2 ) ( 16.6 )

Finance leases, net

Property, plant & equipment, net

Finance leases, net Property, plant & equipment, net 38.9 42.1 75.0

Total lease assets $ 551.3 $ 553.8 $ 644.5

Liabilities 1

Other current liabilities

Noncurrent operating lease liabilities

Other noncurrent liabilities

Operating Other current liabilities $ 47.3 $ 47.3 $ 48.6

Finance Other current liabilities 11.7 12.5 21.3

Operating Noncurrent operating lease liabilities 508.2 507.4 545.9

Finance Other noncurrent liabilities 14.6 16.6 30.5

Total lease liabilities $ 581.8 $ 583.8 $ 646.3

6 unchanged sentences

Finance leases 2.6 % 2.4 % 1.9 %

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.

The components o f l ease expense are as follows:

The decreases from March 31, 2023 in total lease assets and liabilities presented above primarily relate to the November 2023 sale of concrete operations in Texas (see Note 16 for additional information).

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

In addition to the lease assets and liabilities presented in the table above, we entered into an agreement to lease a terminal in California and expect to have all permits in place associated with all lease commencement options by the middle of 2024.

The components of lease expense are as follows:

Three Months Ended

Nine Months Ended

in millions 2024 2023

Finance lease cost

5 unchanged sentences

Sublease income ( 0.8 ) ( 0.8 )

Total lease cost

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 $ 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.

Total lease expense $ 37.1 $ 39.0

1 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 $ 18.4 million and $ 18.3 million for the three months ended March 31, 2024 and 2023, respectively.

Cash paid for finance leases (principal and interest) was $ 3.7 million and $ 6.1 million for the three months ended March 31, 2024 and 2023, 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 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.

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 being subject to CAMT in 2023.

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.

Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns while deferred tax liabilities represent items that will result in additional tax in future tax returns.

A summary of our deferred tax assets and liabilities is included in Note 9 “Income Taxes” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Each quarter, we analyze the likelihood that our deferred tax assets will be realized.

Realization of the deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character in either the carryback or carryforward period.

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.

In the first quarter of 2024, we recorded income tax expense from continuing operations of $ 28.9 million compared to $ 16.6 million in the first quarter of 2023.

The increase in tax expense was primarily due to a discrete tax benefit recognized in the first quarter of 2023 related to a 2022 business disposition.

In August 2022, the Inflation Reduction Act (IRA) was signed into law, effective for tax years beginning on or after January 1, 2023.

The IRA introduced 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.

We were not subject to CAMT in 2023 and do not anticipate being subject to CAMT in 2024.

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

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 ($ 9.6 million of which was recorded as of September 30, 2022).

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.

In 2023, Calica had deferred tax assets (including net operating losses) of $ 27.4 million against which we have a full valuation allowance recorded.

In 2024, we project a $ 6.7 million increase in deferred tax assets against which a valuation allowance was recorded as a component of the EAETR in the first three months of 2024.

A majority of the deferred tax assets relate to a net operating loss (NOL) carryforward which would expire between 2032 and 2034 if not utilized.

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 September 30, 2023.

We project Alabama NOL carryforward deferred tax assets at December 31, 2024 of $ 68.4 million against which we have a valuation allowance of $ 48.2 million.

Almost all of the Alabama NOL carryforward would expire between 2024 and 2029 if not utilized.

We recognize a tax benefit associated with a tax position when we judge it is more likely than not that the position will be sustained based upon the technical merits of the position.

For a tax position that meets the more likely than not recognition threshold, we measure the income tax benefit as the largest amount that we judge to have a greater than 50 % likelihood of being realized.

A liability is established for the unrecognized portion of any tax position.

Our liability for unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new legislation.

While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe our liability for unrecognized tax benefits is appropriate.

A summary of our deferred tax assets and liabilities is included in Note 9 “Income Taxes” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Revenues are measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.

1 unchanged sentence

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 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;

Our segment total revenues by geographic market for the three month periods ended March 31, 2024 and 2023 are disaggregated as follows (the decrease in Gulf Coast market concrete revenues is primarily attributable to the sale of concrete operations in Texas in November 2023;

see Note 16 for additional information):

Three Months Ended September 30, 2023

Total Revenues by Geographic Market 1

Segment sales

Intersegment sales

Total revenues

Three Months Ended September 30, 2022

Total Revenues by Geographic Market 1

Segment sales

Intersegment sales

Total revenues

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

in millions Aggregates Asphalt Concrete Total

Total Revenues by Geographic Market 1

East $ 339.0 $ 22.7 $ 75.9 $ 437.6

Gulf Coast 756.3 42.5 2.1 800.9

West 196.0 121.0 70.3 387.3

Segment sales $ 1,291.3 $ 186.2 $ 148.3 $ 1,625.8

1 unchanged sentence

Total revenues $ 1,211.2 $ 186.2 $ 148.3 $ 1,545.7

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

in millions Aggregates Asphalt Concrete Total

Total Revenues by Geographic Market 1

East $ 343.2 $ 21.8 $ 87.8 $ 452.8

Gulf Coast 789.1 46.2 136.2 971.5

West 164.3 101.8 61.1 327.2

Segment sales $ 1,296.6 $ 169.8 $ 285.1 $ 1,751.5

2 unchanged sentences

1 The geographic markets are defined by states/countries as follows:

East market - Arkansas, Delaware, Illinois, Kentucky, Marylan d, New Jersey, New York, N orth Carolina, Pennsylvania,

‎ Tennessee, Virgini a and Washington D.C.

East market - Arkansas, Delaware, Illinois, Kentucky, Maryland, New Jersey, New York, North Carolina, Pennsylvania, Tennessee, Virginia and Washington D.C.

Gulf Coast market - Alabama, Florida, Georgia, Louisiana, Mississippi, Oklahoma, South Carolina, Texas, U.S.

‎ Islands, Freeport (Bahamas), Puerto Cortés (Honduras) and Quintana Roo (Mexico)

West market - Arizon a, C alifornia, Hawaii, New Mexico 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.

Virgin Islands, Freeport (Bahamas), Puerto Cortés (Honduras) and Quintana Roo (Mexico)

West market - Arizona, California, Hawaii, New Mexico and British Columbia (Canada)

Total revenues are primarily derived from our p roduct 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 $ 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 total service revenues were $ 36.5 million ( 2.4 % of total revenues) and $ 35.0 million ( 2.1 % of total revenues) for the three months ended March 31, 2024 and 2023, respectively.

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

Although approximately 40 % to 55 % of our aggregates shipments have historically been used in publicly funded construction (such as highways, airports and government buildings), relatively insignificant sales are made directly to federal, state, county or municipal governments/agencies.

Therefore, although reductions in state and federal funding can curtail publicly funded construction, the vast majority of our aggregates business is not directly subject to renegotiation of profits or termination of contracts with state or federal governments.

Although approximately 40 % to 55 % of our aggregates shipments have historically been used in publicly funded construction (such as highways, airports and government buildings), a relatively small portion of our sales are made directly to federal, state, county or municipal governments/agencies.

Therefore, although reductions in state and federal funding can curtail publicly funded construction, the vast majority of our business is not directly subject to renegotiation of profits or termination of contracts with local, state or federal governments.

PRODUCT REVENUES

6 unchanged sentences

Three Months Ended

Nine Months Ended

Freight & Delivery Revenues

in millions 2024 2023

Total revenues $ 1,545.7 $ 1,649.0

Freight & delivery revenues 1

( 221.8 ) ( 226.0 )

Total revenues excluding freight & delivery $ 1,323.9 $ 1,423.0

4 unchanged sentences

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 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 .

Future revenues from unsatisfied performance obligations (including contracts with an expected duration of 1 year or less) at March 31, 2024 and 2023 were $ 158.6 million and $ 126.2 million, respectively.

The remaining period to complete the obligations at March 31, 2024 ranged from 1 month to 42 months.

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

9 unchanged sentences

▪ contain no minimum annual or cumulative guarantees by us for production or sales volume, nor minimum sales price

 are both volume and time limited (we expect the transactions will last approximately 20 years, limited by volume rather than time)

▪ are both volume and time limited (we expect the transactions will last approximately 20 more years, limited by volume rather than time)

We are the exclusive sales agent for, and transmit quarterly to the purchaser the proceeds from the sale of, the purchaser’s share of aggregates production.

3 unchanged sentences

Given the nature of the risks and potential rewards assumed by the buyer, the transactions do not reflect financing activities.

Changes in the VPP deferred revenue balances (current and noncurrent) are as follows:

Changes in our deferred revenue balances (current and noncurrent) are as follows:

Three Months Ended

Nine Months Ended

Deferred Revenue

Balance at beginning of period

in millions 2024 2023

Deferred revenue balance at beginning of period $ 152.8 $ 161.8

Revenue recognized from deferred revenue ( 1.7 ) ( 2.0 )

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 September 30, 2024 (reflected in other current liabilities in our September 30, 2023 Condensed Consolidated Balance Sheet).

Deferred revenue balance at end of period $ 151.1 $ 159.8

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 March 31, 2025 (reflected in other current liabilities in our March 31, 2024 Condensed Consolidated Balance Sheet).

FAIR VALUE MEASUREMENTS

5 unchanged sentences

Our assets subject to fair value measurement on a recurring basis are summarized below:

in millions March 31

2024 December 31

2023 March 31

Level 1 Fair Value

Fair Value Recurring

Mutual funds $ 31.1 $ 31.7 $ 28.3

Total $ 31.1 $ 31.7 $ 28.3

Level 2 Fair Value

Fair Value Recurring

Interest rate swaps $ 0.0 $ ( 0.3 ) $ 3.0

Money market mutual fund 0.8 0.5 0.4

We have two Rabbi Trusts for the purpose of providing a level of security for the employee nonqualified retirement and deferred compensation plans and for the directors'

nonqualified deferred compensation plans.

Total $ 0.8 $ 0.2 $ 3.4

We have two Rabbi Trusts for the purpose of providing a level of security for the employee nonqualified retirement and deferred compensation plans and for the directors' nonqualified deferred compensation plans.

The fair values of these investments are estimated using a market approach.

2 unchanged sentences

dollar-denominated money market instruments).

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.

Net gains of the Rabbi Trusts’ investments were $ 2.4 million and $ 1.1 million for the three months ended March 31, 2024 and 2023, respectively.

The portions of the net gains related to investments still held by the Rabbi Trusts at March 31, 2024 and 2023 were $ 2.3 million and $ 1.3 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

During the normal course of operations, we are exposed to market risks including interest rates, foreign currency exchange rates and commodity prices.

From time to time, we use derivative instruments to balance the cost and risk of such exposures.

From time to time, we use derivative instruments to balance the cost and risk of such expenses.

We do not use derivative instruments for trading or other speculative purposes.

1 unchanged sentence

Concurrently, we entered into fixed-to-floating interest rate swap agreements designated as fair value hedges in the amount of $ 550.0 million.

Under these swap agreements, we receive a fixed interest rate of 5.80 % (matches the fixed rate we pay on the $ 550.0 million of debt) and pay daily compound Secured Overnight Financing Rate (SOFR) plus 0.241 %.

The changes in the fair value of these swaps designated as fair value hedges are recorded in interest expense and are perfectly offset by changes in the fair value of the related debt also recorded in interest expense.

These swaps are recognized at fair value in the accompanying Condensed Consolidated Balance Sheets as follows:

Balance Sheet Location

Under these swap agreements, we received a fixed interest rate of 5.80 % (matches the fixed rate we paid on the $ 550.0 million of debt) and paid daily compound Secured Overnight Financing Rate (SOFR) plus 0.241 %.

These swap agreements terminated in March 2024, coinciding with the redemption of the debt.

The changes in the fair value of these swaps designated as fair value hedges were recorded in interest expense and were perfectly offset by changes in the fair value of the related debt also recorded in interest expense.

These swaps were recognized at fair value in the accompanying Condensed Consolidated Balance Sheets as follows:

in millions Balance Sheet Location March 31

2024 December 31

2023 March 31

Fair Value Hedges 1

Interest rate swaps

Other current assets

Interest rate swaps

Other noncurrent liabilities

Interest rate swaps net liability

Interest rate swaps Other current/noncurrent assets $ 0.0 $ 3.9 $ 3.8

Interest rate swaps Other current/noncurrent liabilities 0.0 ( 4.2 ) ( 0.8 )

Interest rate swaps net asset (liability) $ 0.0 $ ( 0.3 ) $ 3.0

1 See Note 5 for further discussion of fair value determination.

3 unchanged sentences

This amortization was reflected in the accompanying Condensed Consolidated Statements of Comprehensive Income as follows:

Three Months Ended

Nine Months Ended

Income Statement

in millions Income Statement

Location Three Months Ended

Cash Flow Hedges

Loss reclassified from AOCI

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.

Loss reclassified from AOCI Interest expense $ ( 0.5 ) $ ( 0.5 )

For the twelve-month period ending March 31, 2025, we estimate that $ 2.3 million of the $ 19.0 million net of tax loss in AOCI will be reclassified to interest expense.

Debt is detailed as follows:

Interest Rates

Short-term Debt

in millions Effective

Interest Rates March 31

2024 December 31

2023 March 31

Bank line of credit expires 2027 1

$ 0.0 $ 0.0 $ 0.0

Commercial paper expires 2027 1

Total short-term debt $ 0.0 $ 0.0 $ 0.0

Long-term Debt

Bank line of credit expires 2027 1

$ 0.0 $ 0.0 $ 0.0

Commercial paper expires 2027 1

Delayed draw term loan due 2026

550.0 550.0 550.0

4.50 % notes due 2025

4.65 % 400.0 400.0 400.0

5.80 % notes due 2026

0.0 550.0 550.0

3.90 % notes due 2027

4.00 % 400.0 400.0 400.0

3.50 % notes due 2030

3.94 % 750.0 750.0 750.0

7.15 % notes due 2037

8.05 % 129.2 129.2 129.2

4.50 % notes due 2047

4.59 % 700.0 700.0 700.0

4.70 % notes due 2048

5.42 % 460.9 460.9 460.9

Other notes 0.47 % 1.0 1.4 1.5

Total long-term debt - face value $ 3,391.1 $ 3,941.5 $ 3,941.6

1 unchanged sentence

Fair value adjustments 2

0.0 ( 0.3 ) 3.0

Total long-term debt - book value $ 3,331.2 $ 3,877.8 $ 3,877.4

3 unchanged sentences

1 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.

The effective interest rate excludes the impact of the interest rate swap described in Note 6.

2 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 $ 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.

Discounts and debt issuance costs are amortized using the effective interest method over the terms of the respective notes resulting in $ 3.5 million and $ 2.5 million of net interest expense for these items for the three months ended March 31, 2024 and 2023, respectively.

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

1 unchanged sentence

The delayed draw term loan was paid down to $ 1,100.0 million in September 2021 with cash on hand, paid down to $ 550.0 million in August 2022 using the proceeds from the issuance of commercial paper as described below and fully repaid in March 2023 using proceeds from the issuance of 5.80 % senior notes as described below.

Our unsecured line of credit was amended in August 2022 to increase the borrowing capacity 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 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 %.

In 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.

Our $ 1,600.0 million unsecured line of credit matures in August 2027 and contains covenants customary for an unsecured investment-grade facility.

As of March 31, 2024, we were in compliance with the covenants.

Borrowings on the line of credit bear interest, at our option, at either SOFR plus a margin or Truist Bank’s base rate plus a margin.

The margins are determined by our credit ratings.

1 unchanged sentence

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

As of March 31, 2024, 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 March 31, 2024, our available borrowing capacity under the line of credit was $ 1,510.8 million.

Utilization of the borrowing capacity was as follows:

3 unchanged sentences

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

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

As of March 31, 2024, we were in compliance with all term debt covenants.

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

Total proceeds of $ 546.6 million (net of discounts and transaction costs), together with cash on hand, were used to repay the $ 550.0 million delayed draw term loan.

We redeemed these notes at par in March 2024 using cash on hand and recognized noncash expense of $ 2.3 million with the acceleration of unamortized deferred debt issuance costs.

STANDBY LETTERS OF CREDIT

2 unchanged sentences

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, 2023 are summarized by purpose in the table below:

Standby Letters of Credit

Our standby letters of credit as of March 31, 2024 are summarized by purpose in the table below:

Risk management insurance $ 80.5

2 unchanged sentences

Certain of our aggregates reserves are burdened by volumetric production payments (nonoperating interest) as described in Note 4.

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 $ 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.

As the holder of the operating 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 $ 581.8 million as of March 31, 2024.

As summarized by purpose in Note 7, our standby letters of credit totaled $ 89.2 million as of March 31, 2024.

As described in Note 9, our asset retirement obligations totaled $ 325.7 million as of March 31, 2024.

LITIGATION AND ENVIRONMENTAL MATTERS

3 unchanged sentences

Generally, we share the cost of remediation at these sites with other PRPs or alleged PRPs in accordance with negotiated or prescribed allocations.

There is inherent uncertainty in determining the potential cost of remediating a given site and in determining any individual party's share in that cost.

As a result, estimates can change substantially as additional information becomes available regarding the nature or extent of site contamination, remediation methods, other PRPs and their probable level of involvement, and actions by or against governmental agencies or private parties.

2 unchanged sentences

Amounts accrued for environmental matters (measured on an undiscounted basis) are presented below:

in millions March 31

2024 December 31

2023 March 31

Accrued Environmental Remediation Costs

1 unchanged sentence

Retained from former Chemicals business 8.3 8.3 8.3

Total $ 41.5 $ 40.9 $ 36.8

We are a defendant in various lawsuits in the ordinary course of business.

23 unchanged sentences

It is unknown at this time how the settlement and approval of the Consent Decree with the EPA/DOJ would affect the Occidental lawsuits.

■ TEXAS BRINE MATTER (DISCONTINUED OPERATIONS) — Durin g o peration of its former Chemicals Division, Vulcan leased 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 (Texas Brine) was the operator contracted by Vulca n t o mine and deliver th e salt as brine.

W e sold our Chemicals Division in 2005 and transferred our rights and interests 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.

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

Throughout that period, Texas Brine Company (Texas Brine) was the operator contracted by Vulcan to mine and deliver the salt as brine.

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

In August 2012, a sinkhole developed in the vicinity of the Texas Brine mining operations.

Numerous lawsuits were filed thereafter in state court in Assumption Parish, Louisiana.

Other lawsuits, including class action litigation, wer e f iled in the United States District Court for the Eastern District of Louisiana in New Orleans.

Other lawsuits, including class action litigation, were filed in the United States District Court for the Eastern District of Louisiana in New Orleans.

In these lawsuits, the main plaintiffs sued numerous defendants, including Texas Brine, Occidental and Vulcan, alleging various damages including, but not limited to, property damages;

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

a claim by the State of Louisiana for response costs and civil penalties;

physical damages to oil and gas pipelines and storage facilities (pipelines);

28 unchanged sentences

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.

In December 2022, the trial court entered a judgment in the pipeline cases reflecting this stipulation.

Texas Brine has moved to assess trial costs against Vulcan.

I n December 2022, the trial court entered a judgment in the pipeline cases reflecting this stipulation.

Texas Brine moved to assess all trial costs against Vulcan.

Texas Brine and Vulcan thereafter reached a settlement, wherein Vulcan agreed to pay a portion of Texas Brine's trial costs, the amount of which was within the remaining immaterial loss recorded in the second quarter of 2022.

The December 2022 Phase 2 judgment did not address numerous of Texas Brine’s claims seeking hundreds of millions of dollars in damages that were dismissed prior to trial.

Texas Brine has appealed or is in the process of appealing each of those judgments.

Texas Brine has appealed those judgments.

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 decisions.

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

At this time, we also cannot reasonably estimate a range of liability pertaining to the claims brought by the State of Louisiana.

▪ NEW YORK WATER DISTRICT CASES AND NEW JERSEY NATURAL RESOURCE DAMAGES CASE (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 (TCA).

We are a defendant in 29 cases allegedly involvin g TCA.

We are a defendant in 29 cases allegedly involving TCA.

We are a defendant in 28 cases brought by New York water providers, and in one case brought by the State of New Jersey, all involving TCA stabilized with 1,4-dioxane.

6 unchanged sentences

We will vigorously defend these cases on substantive and procedural grounds.

At this time , we cannot determine the likelihood of loss , or reasonably estimate a range of loss, if any, pertaining to the above-referenced c ases.

■ HEWITT LANDFILL MATTER (SUPERFUND SITE) — In September 2015, the Los Angeles Regional Water Quality Control Board (RWQCB) issued a Cleanup and Abatement Orde r di recting Vulcan to assess, monitor, cleanup and abate wastes that have been discharged to soil, soil vapor, and/or groundwater at the former Hewitt Landfill in Los Angeles.

At this time, we cannot determine the likelihood of loss, or reasonably estimate a range of loss, if any, pertaining to the above-referenced cases.

▪ HEWITT LANDFILL MATTER (SUPERFUND SITE) — In September 2015, the Los Angeles Regional Water Quality Control Board (RWQCB) issued a Cleanup and Abatement Order directing Calmat Co., a Vulcan subsidiary (hereinafter "Vulcan") to assess, monitor, cleanup, and abate wastes that have been discharged to soil, soil vapor, and/or groundwater at the former Hewitt Landfill in Los Angeles.

Following an onsite and offsite investigation and pilot scale testing, the RWQCB approved a corrective action that includes leachate recovery, storm water capture and conveyance improvements, and a groundwater pump, treat and reinjection system.

Certain on-site source control measures have been implemented, and the new treatment system is fully operational.

C urrently-anticipated costs of these on-site source control activities have been fully accrued.

We are also engaged in an ongoing dialogue with the EPA , Honeywell, and the Los Angeles Department of Water and Power (LADWP) regarding the potential contribution of the Hewitt Landfill to groundwater contamination in the North Hollywood Operable Unit (NHOU) of the San Fernando Valle y Superfund Site.

Currently-anticipated costs of these on-site source control activities have been fully accrued.

We are also engaged in an ongoing dialogue with the EPA, Honeywell, and the Los Angeles Department of Water and Power (LADWP) regarding the potential contribution of the Hewitt Landfill to groundwater contamination in the North Hollywood Operable Unit (NHOU) of the San Fernando Valley Superfund Site.

The EPA and Vulcan entered into an AOC and Statement of Work having an effective date of September 2017 for the design of two extraction wells south of the Hewitt Landfill to protect the North Hollywood West (NHW) well field located within the NHOU.

In November 2017, we submitted a Pre-Design Investigation (PDI) Work Plan to the EPA, which sets forth the activities and schedule for collection of data in support of o ur evaluation of the need for a n offsite remedy.

In addition, this evaluation was expanded as part of the PDI to include the evaluation of a remedy in light of LADWP’s Rinaldi-Toluca (RT) wellfield project.

PDI investigative activities were completed between the first and third quarters of 2018, and in December 2018 we submitted a Draft PDI Evaluation Report to the EPA.

The PDI Evaluation Report summarizes data collection activities conducted pursuant to the Draft PDI Work Plan and provides model updates and evaluation of remediatio n alternatives for offsite areas.

The EPA provided an initial set of comments on the Draft PDI Evaluation Report in May 2019 and a final set of comments in October 2020.

The final set of comments included a request for Vulcan to revise and develop a final PDI Evaluation Report.

The final comments further provided, if Vulcan agrees, a proposal for an alternative approach for offsite remediation (as opposed to installation of offsite extraction wells) and development of a Supplemental PDI Evaluation Report (Supplemental Report) that would require the EPA to modify the remedy in the 2009 ROD as it relates to the Hewitt Landfill.

In December 2020, Vulcan submitted the Final PDI Evaluation Report, which included edits to the Draft PDI Evaluation Report and responses to the EPA’s comments.

In February 2023, the EPA requested that Vulcan provide the Supplemental Report and an Alternative Design Work Plan (ADWP).

Vulcan submitted the Supplemental Report in March 2023 and submitted the ADWP in May 2023.

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.

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.

The Draft PDI Evaluation Report summarizes data collection activities conducted pursuant to the Draft PDI Work Plan and provides model updates and evaluation of remediation alternatives for offsite areas.

The EPA provided a final set of comments to the Draft PDI Evaluation Report in October 2020.

The final set of comments included a request that Vulcan revise and develop a final PDI Evaluation Report.

The final comments further provided a proposal for an alternative approach for offsite remediation (as opposed to installation of offsite extraction wells) and development of a Supplemental PDI Evaluation Report (Supplemental Report) that would require the EPA to modify the remedy in the 2009 ROD as it relates to the Hewitt Landfill.

In December 2020, we submitted the Final PDI Evaluation Report, which included responses to the EPA’s comments.

At the EPA's request, we submitted a Supplemental Report in March 2023 and an Alternative Design Work Plan (ADWP) in May 2023.

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 option for addressing contamination in offsite areas, instead of the two wells proposed by the EPA.

In conjunction with its review of the Supplemental Report, the EPA held an initial meeting with stakeholders, including LADWP, in November 2023 and has requested additional meetings 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.

Honeywell contends that some of the contamination to be remediated by the treatment system it will build originated from the Hewitt Landfill and that Vulcan should fund some portion of the costs that Honeywell has incurred and will incur in developing and implementing the second interim remedy.

During the fourth quarter of 2021, Vulcan completed a partial settlement with Honeywell related to certain of the costs that Honeywell has incurred for an immaterial amount.

In March 2023, Honeywell filed a lawsuit against CalMat Co., a Vulcan subsidiary, and a third party alleging that Honeywell has incurred more than $ 11 million in costs to resolve its liability to the EPA and that it estimates that it will spend in excess of $ 100 million to construct and operate its water treatment system.

Honeywell seeks an "equitable share of necessary response costs"

from the defendants.

Honeywell contends that some of the contamination to be remediated by the treatment system it is building originated from the Hewitt Landfill and that Vulcan should fund some portion of the costs that Honeywell has incurred and will incur in developing and implementing the second interim remedy.

During the fourth quarter of 2021, we completed a partial settlement with Honeywell related to certain of the costs that Honeywell has incurred for an immaterial amount.

In March 2023, Honeywell filed a lawsuit against Vulcan and a third party alleging that Honeywell has incurred more than $ 11 million in costs to resolve its liability to the EPA and that it estimates that it will spend in excess of $ 100 million to construct and operate its water treatment system.

Honeywell seeks an "equitable share of necessary response costs" from the defendants.

Discussions are ongoing with Honeywell regarding the reasonable costs Honeywell has incurred.

2 unchanged sentences

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

Further, LADWP has announced plans to install new treatment capabilities at two city wellfields located near the Hewitt Landfill — the NHW wellfield and the RT wellfield.

LADWP has alleged that the Hewitt Landfill is one of the primary PRPs responsible for the contamination at the NHW wellfield and is one of many PRPs responsible for the contamination at the RT wellfield.

We are gathering and analyzing records and data and developing technical information to assess the reasonableness of LADWP’s remediation efforts and the extent of possible contribution by the Hewitt Landfill to the groundwater contamination in the area, consistent with the parallel request by the EPA.

This work is intended to assess Vulcan’s anticipated equitable contribution to LADWP’s remediation efforts.

Further, LADWP is constructing two new production and treatment facilities at city wellfields located near the Hewitt Landfill — the NHW wellfield and the RT wellfield (also referred to as the NHW treatment system and North Hollywood Central (NHC) treatment system, respectively).

LADWP has alleged that the Hewitt Landfill is one of the primary sources of contamination at the NHW treatment system and one of the sources of contamination at the NHC treatment system.

According to information available on the California State Water Resources Control Board (SWRCB) website, the capital cost of the NHW treatment system is estimated at $ 92 million, and the capital cost of the NHC treatment system is estimated at $ 245 million.

Both systems are expected to commence operations in 2024 and will thereafter incur costs for operation and maintenance.

LADWP has applied for and received substantial funding to contribute to both treatment systems from grants of Proposition 1 bond funding from the SWRCB.

According to information available on the SWRCB website, the bond money obtained for the NHW treatment system is $ 46 million, and the bond money obtained for the NHC treatment system is $ 95 million.

We anticipate continued discussions with LADWP regarding its potential claims.

In conjunction with those discussions, we are engaging in further efforts to gather and analyze records and data in order to assess the extent of possible contribution by the Hewitt Landfill to the groundwater contamination in the area, consistent with the parallel request by the EPA, and the reasonableness of LADWP’s remediation efforts.

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

Together, these efforts will allow us to analyze our anticipated equitable contribution to LADWP’s remediation efforts.

Among other factors, we anticipate that any equitable contribution should take into account the on-site source control and other measures implemented by Vulcan at the former Hewitt Landfill, the relative contribution and duration of any contaminants originating from the Hewitt Landfill to the LADWP systems, and the cost effectiveness of the LADWP systems.

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

13 unchanged sentences

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.

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

11 unchanged sentences

Three Months Ended

Nine Months Ended

ARO Operating Costs

in millions 2024 2023

Accretion $ 3.5 $ 3.4

Depreciation 2.4 2.2

Total $ 5.9 $ 5.6

ARO operating costs are reported in cost of revenues.

2 unchanged sentences

Three Months Ended

Nine Months Ended

Asset Retirement Obligations

in millions 2024 2023

Balance at beginning of period $ 324.1 $ 311.3

4 unchanged sentences

Balance at end of period $ 325.7 $ 311.9

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

BENEFIT PLANS

1 unchanged sentence

We sponsor two qualified, noncontributory defined benefit pension plans, the Vulcan Materials Company Pension Plan (VMC Pension Plan) and the CMG Hourly Pension Plan (CMG Pension Plan).

The VMC Pension Plan has been closed to new entrants since 2007 , and benefit accruals ceased in 2005 for hourly participants and 2013 for salaried participants.

The VMC Pension Plan has been closed to new entrants since 2007, and benefit accruals ceased in 2005 for hourly participants and in 2013 for salaried participants.

The CMG Pension Plan is closed to new entrants other than through one small union, and benefits continue to accrue equal to a flat dollar amount for each year of service.

1 unchanged sentence

The following table sets forth the components of net periodic pension benefit cost:

PENSION BENEFITS

Three Months Ended

Nine Months Ended

Components of Net Periodic Benefit Cost

in millions 2024 2023

Service cost $ 0.7 $ 0.6

Interest cost 8.2 8.5

3 unchanged sentences

Net periodic pension benefit cost $ 3.3 $ 4.0

Pretax reclassifications from AOCI included in

net periodic pension benefit cost

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.

Pretax reclassifications from AOCI included in net periodic pension benefit cost $ 1.5 $ 1.8

The contributions to pension plans for the three months ended March 31, 2024 and 2023, as reflected on the Condensed Consolidated Statements of Cash Flows, pertain to benefit payments under nonqualified plans for both periods.

POSTRETIREMENT PLANS

In addition to pension benefits, we provide certain healthcare and life insurance benefits for some retired employees.

In 2021, we amended our postretirement healthcare plan to increase our employer contribution rate from the previously capped level to a higher level effective 2022.

This served as a cost reduction for retirees in 2022 and beyond as we use this new benchmark for future employer contributions.

Substantially all our salaried employees and, where applicable, certain of our hourly employees may become eligible for these benefits if they reach a qualifying age and meet certain service requirements.

1 unchanged sentence

The following table sets forth the components of net periodic other postretirement benefit cost:

What changed 10-Q

Item 1. Financial Statements