What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-02 · 195 added, 120 removed, 389 unchanged (45% of the section changed)

11 unchanged sentences

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

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

We serve these markets from quarries that have access to cost-effective long-haul transportation, including shipping by barge, rail and our fleet of Panamax-class, self-unloading ships.

Additionally, we serve markets in California and Hawaii from our quarry in British Columbia, Canada by means of a long-term marine shipping agreement with CSL Americas.

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EXECUTIVE SUMMARY

FINANCIAL HIGHLIGHTS FOR FIRST QUARTER 2024

Compared to first quarter of 2023:

FINANCIAL HIGHLIGHTS FOR SECOND QUARTER 2024

Compared to second quarter of 2023:

▪ Total revenues decreased $98.5 million, or 5%, to $2,014.4 million

▪ Gross profit increased $8.9 million, or 2%, to $592.2 million

▪ Aggregates segment sales decreased $5.3 million to $1,291.3 million

▪ Aggregates segment sales increased $32.7 million, or 2%, to $1,613.5 million

▪ Aggregates segment freight-adjusted revenues increased $75.7 million, or 6%, to $1,262.6 million

1 unchanged sentence

▪ Freight-adjusted sales price increased 12.2%, or $2.29 per ton, to $21.00

▪ Aggregates segment gross profit decreased slightly by $0.3 million to $303.3 million

▪ Aggregates segment gross profit increased $28.8 million, or 6%, to $528.5 million

▪ Unit profitability (as measured by gross profit per ton) increased 12% to $8.79 per ton

▪ Asphalt and Concrete segment gross profit increased $3.2 million to $1.6 million, collectively

▪ Selling, administrative and general (SAG) expenses increased $12.4 million (130 basis points as a percentage of total revenues)

▪ Operating earnings decreased $14.3 million, or 8%, to $172.9 million

▪ Earnings attributable to Vulcan from continuing operations were $0.78 per diluted share compared to $0.92 per diluted share

▪ Asphalt and Concrete segment gross profit decreased $19.9 million to $63.7 million, collectively

▪ Selling, administrative and general (SAG) expenses decreased $5.0 million and increased 10 basis points as a percentage of total revenues

▪ Operating earnings increased $2.5 million, or 0.6%, to $453.6 million

▪ Earnings attributable to Vulcan from continuing operations were unchanged at $2.33 per diluted share

▪ Adjusted earnings attributable to Vulcan from continuing operations were $2.35 per diluted share compared to $2.29 per diluted share

▪ Net earnings attributable to Vulcan were $308.0 million, a decrease of $0.6 million, or 0.2%

▪ Adjusted EBITDA was $323.5 million, a decrease of $14.2 million, or 4%

▪ Adjusted EBITDA was $603.1 million, an increase of $7.8 million, or 1.3%

▪ Returned capital to shareholders via dividends of $60.9 million at $0.46 per share versus $57.2 million at $0.43 per share

▪ Returned capital to shareholders via share repurchases of $18.8 million at $265.44 average price per share compared to none in the prior year

Our teams' solid execution helped us overcome challenging weather conditions throughout much of the first quarter.

Margins expanded despite lower aggregates shipments, demonstrating the durability of our aggregates business and its attractive compounding growth characteristics.

Aggregates gross profit per ton increased 8% in the first quarter, and cash gross profit per ton increased 10%, with improvements widespread across our footprint.

A consistent focus on our strategic disciplines coupled with continued pricing momentum reinforces our confidence in our full year outlook and our ability to deliver another year of double-digit earnings growth and strong cash generation.

Capital expenditures, including maintenance and growth projects, were $103.1 million in the first quarter.

▪ Returned capital to shareholders via share repurchases of $50.0 million at $250.88 average price per share versus $49.9 million at $206.82 average price per share

Our aggregates-led business delivered another quarter of gross profit and margin expansion.

Even with significant rainfall disrupting construction activity and operating efficiencies, our aggregates gross profit per ton and cash gross profit per ton increased 12%.

Gross profit margin expanded 120 basis points.

These results demonstrate our consistent execution and the durable characteristics of our business.

The construction environment remains supportive of continued aggregates price growth, and our focus remains on compounding aggregates unit profitability to drive earnings growth and strong cash generation.

Capital expenditures, including maintenance and growth projects, were $194.8 million in the second quarter and $297.9 million on a year-to-date basis.

During 2024, we expect to spend between $625 million and $675 million on maintenance and growth projects.

During the quarter, we returned $80.8 million to shareholders through $18.8 million of common stock repurchases and $62.0 million of dividends.

We used $550 million of cash on hand to redeem our 2026 notes, resulting in a ratio of total debt to trailing-twelve months Adjusted EBITDA of 1.7 times (or 1.5 times on a net debt basis reflecting $300.1 million of cash on hand).

Our stated long-term target leverage range is 2.0 to 2.5 times total debt to trailing-twelve months Adjusted EBITDA.

A strong liquidity and balance sheet profile positions us well for continued growth.

Our weighted-average debt maturity was 10.9 years, and our weighted-average effective interest rate was 4.78%.

Interest expense, net of interest income, was $39.1 million in the first quarter compared with $49.0 million in the prior year.

The decrease in interest expense reflects the first quarter 2024 redemption of $550.0 million senior notes due 2026.

On a trailing-twelve months basis, return on average invested capital was 16.3%, a 260 basis points improvement over the prior year.

Our operating performance in the first quarter was solid and in line with our expectations.

We remain on track to deliver $2,150 to $2,300 million of Adjusted EBITDA, marking the fourth consecutive year of double-digit growth.

The pricing environment remains positive, and our focus remains on compounding unit margins through all parts of the cycle, creating value for our shareholders through improving returns on capital.

During the quarter, we completed bolt-on acquisitions in both Alabama and Texas, two of our top ten states.

We also returned $110.9 million to shareholders through $50.0 million of common stock repurchases and $60.9 million of dividends in the second quarter.

Interest expense, net of interest income, was $40.2 million in the second quarter compared with $46.7 million in the prior year.

We remain well positioned for continued growth with a strong liquidity position and balance sheet profile.

Disciplined capital allocation has resulted in a 160 basis points improvement in return on average capital over the last twelve months.

As of June 30, 2024, the ratio of total debt to trailing-twelve months Adjusted EBITDA was 1.7 times (unchanged on a net debt basis), below our stated long-term target leverage range of 2.0 to 2.5 times.

Significant weather disruptions throughout the first half of the year impacted both construction activity and operating efficiencies, resulting in adjustments to our aggregates volume and cost outlook for the full year.

Despite the challenging environment, aggregates cash gross profit per ton has increased double-digits this year, and we expect this trend to continue for the remainder of the year.

The pricing environment remains positive, and overall demand fundamentals continue to underpin long-term growth.

Management expectations for 2024 include the following:

▪ Continued improvement in Aggregates segment cash gross profit per ton ($9.46 in 2023)

• Total shipments down 4% to 7% (234.3 million tons in 2023)

• Freight-adjusted price improvement of 10% to 12% ($19.00 in 2023)

▪ High-single digit increase in freight-adjusted cash cost (freight-adjusted price less segment cash gross profit per ton;

$9.54 in 2023)

▪ Total Asphalt and Concrete segment cash gross profit of approximately $275 million ($320 million in 2023 which included results from the concrete operations divested in late 2023)

▪ Selling, Administrative and General expenses of $550 million to $560 million ($543 million in 2023)

▪ Interest expense of approximately $155 million

▪ Depreciation, depletion, accretion and amortization expense of approximately $610 million

▪ An effective tax rate of 22% to 23%

▪ Net earnings attributable to Vulcan of $950 million to $1,070 million

▪ Adjusted EBITDA between $2,000 million and $2,150 million

RESULTS OF OPERATIONS

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Three Months Ended

June 30 Six Months Ended

in millions, except per share and per unit data 2024 2023 2024 2023

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Earnings from continuing operations before income taxes

404.7 404.3 538.3 543.9

Income tax expense (94.4) (92.0) (123.4) (108.6)

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Freight-adjusted sales price $ 21.00 $ 18.71 $ 20.82 $ 18.70

Tons 4.0 4.0 6.1 6.1

Average sales price $ 78.80 $ 75.52 $ 78.46 $ 74.80

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

FIRST QUARTER 2024 COMPARED TO FIRST QUARTER 2023

First quarter 2024 total revenues were $1,545.7 million, down 6% from the first quarter of 2023.

Shipments decreased in aggregates (-7%), decreased in ready-mixed concrete (-54%) and increased in asphalt mix (+3%).

Gross profit decreased slightly in the Aggregates segment (-$0.3 million) and increased in the Asphalt segment (+$3.9 million or 460%).

SECOND QUARTER 2024 COMPARED TO SECOND QUARTER 2023

Second quarter 2024 total revenues were $2,014.4 million, down 5% from the second quarter of 2023.

Shipments decreased in aggregates (-5%), decreased in ready-mixed concrete (-56%) and remained flat in asphalt mix.

Gross profit increased in the Aggregates (+$28.8 million or 6%) and Asphalt (+$2.4 million or 4%) segments.

Concrete segment gross profit decreased by $22.3 million (-83%) as a result of the divestiture of our operations in Texas in November 2023 (see Note 16 to the condensed consolidated financial statements).

Net earnings attributable to Vulcan for the first quarter of 2024 were $102.7 million, or $0.77 per diluted share, compared to $120.7 million, or $0.90 per diluted share in the first quarter of 2023.

Net earnings attributable to Vulcan for the second quarter of 2024 were $308.0 million, or $2.31 per diluted share, compared to $308.6 million, or $2.31 per diluted share, in the second quarter of 2023.

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

Net earnings attributable to Vulcan for the first quarter of 2024 include:

Net earnings attributable to Vulcan for the second quarter of 2024 include:

▪ pretax charges of $1.0 million associated with divested operations

▪ pretax charges of $0.8 million associated with non-routine acquisitions

1 unchanged sentence

▪ $1.1 million of tax charges related to a valuation allowance against Calica deferred tax assets, including NOL carryforwards

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

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

▪ pretax charges of $0.3 million associated with non-routine acquisitions

▪ pretax loss on discontinued operations of $4.9 million

▪ $2.6 million of tax charges related to a valuation allowance against Calica deferred tax assets, including NOL carryforwards

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $2.35 per diluted share for the second quarter of 2024 compared to $2.29 per diluted share for the second quarter of 2023.

CONTINUING OPERATIONS — Changes in earnings from continuing operations before income taxes for the second quarter of 2024 versus the second quarter of 2023 are summarized below:

Second quarter 2023

Higher aggregates gross profit 28.8

Higher asphalt gross profit 2.4

Lower concrete gross profit (22.3)

Lower selling, administrative and general expenses 5.0

Lower gain on sale of property, plant & equipment and businesses (12.9)

Lower interest expense, net 6.5

All other (7.1)

Second quarter 2024

Second quarter Aggregates segment gross profit increased 6% to $528.5 million (increased 12% to $8.79 on a per ton basis), and gross profit margin expanded 120 basis points.

Cash gross profit per ton improved 12% to $10.92 per ton.

Continued pricing and operational execution drove margin expansion despite lower shipments and challenging weather conditions throughout the quarter.

Aggregates shipments decreased 5% compared to the prior year as a result of significant rainfall in many key markets, particularly in Texas and across the Southeast.

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

Freight-adjusted selling prices increased 12.2%, as compared to the prior year.

Challenging weather conditions also impacted operating efficiencies and contributed to the year-over-year increase in freight-adjusted unit cash cost of sales in the quarter.

On a trailing-twelve months basis, unit cash cost of sales has increased 10%.

Overall, non-aggregates segments gross profit of $63.7 million was $19.9 million lower than the prior year’s second quarter.

Asphalt segment gross profit of $59.0 million was up $2.4 million from the prior year’s second quarter, and cash gross profit of $70.0 million was a 7% improvement over the prior year.

Asphalt mix shipments were in line with the prior year's second quarter, and pricing increased 4.3%.

Strong shipments in California were offset by lower shipments in Texas due to wet weather.

Concrete segment gross profit was $4.7 million for the second quarter, and cash gross profit was $16.6 million.

The prior year's second quarter included results from the previously divested operations in Texas.

SAG expense was $134.1 million for the second quarter compared to $139.1 million in the prior year.

As a percent of total revenues, SAG expense was 6.7% in the second quarter.

Gain on sale of property, plant & equipment and businesses was $3.8 million in the second quarter of 2024 compared to $16.7 million in the second quarter of 2023.

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

Other operating income (expense), net 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 $8.3 million of expense for the second quarter of 2024 compared to $9.8 million of expense in the second quarter of 2023.

Other nonoperating income (expense), net was $8.7 million of expense for the second quarter of 2024 compared to $0.1 million of expense in the second quarter of 2023.

The year-over-year increase was mostly driven by a foreign currency translation loss resulting from the rapid devaluation of the Mexican peso in June following the presidential election.

Net interest expense was $40.2 million in the second quarter of 2024 compared to $46.7 million in the second quarter of 2023.

Income tax expense from continuing operations was $94.4 million in the second quarter of 2024 compared to $92.0 million in the second quarter of 2023.

The increase in tax expense was primarily due to less excess tax benefits generated from share-based compensation recognized in the second quarter of 2024.

Earnings attributable to Vulcan from continuing operations were $2.33 per diluted share in the second quarter of 2024, unchanged from the second quarter of 2023.

DISCONTINUED OPERATIONS — Second quarter pretax loss from discontinued operations was $2.7 million in 2024 compared with a pretax loss of $4.9 million in 2023.

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, 2024 COMPARED TO YEAR-TO-DATE JUNE 30, 2023

Total revenues for the first six months of 2024 were $3,560.1 million, down 5% from the first six months of 2023.

Shipments decreased in aggregates (-6%), decreased in ready-mixed concrete (-55%) and remained flat in asphalt mix.

Gross profit increased in the Aggregates (+$28.6 million or 4%) and Asphalt (+$6.3 million or 11%) segments.

Concrete segment gross profit decreased by $23.0 million (-93%) as a result of the divestiture of our operations in Texas in November 2023 (see Note 16 to the condensed consolidated financial statements).

Net earnings attributable to Vulcan for the first six months of 2024 were $410.6 million, or $3.08 per diluted share, compared to $429.3 million, or $3.21 per diluted share, in the first six months of 2023.

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

Net earnings attributable to Vulcan for the first six months of 2024 include:

▪ pretax charges of $1.0 million associated with divested operations

▪ pretax charges of $0.9 million associated with non-routine acquisitions

▪ pretax loss on discontinued operations of $5.0 million

▪ $3.6 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 $0.80 per diluted share for the first quarter of 2024 compared to $0.95 per diluted share for the first quarter of 2023.

CONTINUING OPERATIONS — Changes in earnings from continuing operations before income taxes for the first quarter of 2024 versus the first quarter of 2023 are summarized below:

First quarter 2023 $ 139.6

Lower aggregates gross profit (0.3)

▪ $2.7 million of tax charges related to a valuation allowance against Calica deferred tax assets, including NOL carryforwards

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

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

▪ pretax charges of $4.7 million associated with divested operations

▪ pretax charges of $0.8 million associated with non-routine acquisitions

▪ pretax loss on discontinued operations of $7.9 million

▪ $6.2 million of tax charges related to a valuation allowance against Calica deferred tax assets, including NOL carryforwards

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $3.14 per diluted share for the first six months of 2024 compared to $3.25 per diluted share for the first six months of 2023.

CONTINUING OPERATIONS — Changes in earnings from continuing operations before income taxes for year-to-date June 30, 2024 versus year-to-date June 30, 2023 are summarized below:

Year-to-date June 30, 2023

Higher aggregates gross profit 28.6

Higher asphalt gross profit 6.3

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All other (12.5)

First quarter 2024 $ 133.5

First quarter Aggregates segment gross profit decreased slightly to $303.3 million (increased 8% to $6.30 on a per ton basis).

Cash gross profit per ton improved 10% to $8.86 per ton, despite lower shipments due to unfavorable weather conditions throughout most of the quarter.

Improvements in unit profitability were widespread across our footprint and resulted from continued pricing momentum and solid operational execution.

Price increases effective at the beginning of the year resulted in another quarter of attractive growth.

Freight-adjusted selling prices increased 10.2%, or $1.90 per ton, as compared to the prior year to $20.59, with all markets realizing year-over-year improvement.

Freight-adjusted unit cash cost of sales increased 10%, primarily driven by a 7% decline in aggregates shipments due to unfavorable weather.

On a trailing-twelve months basis, unit cash costs increased 9%, marking the fourth consecutive quarter of unit cost deceleration.

Overall, non-aggregates segments gross profit of $1.6 million was $3.2 million higher than the prior year’s first quarter.

Asphalt segment gross profit of $4.7 million was up $3.9 million from the prior year’s first quarter, and cash gross profit of $13.6 million was up $3.8 million compared to the prior year.

Asphalt mix shipments increased 3%, and pricing increased 6.0%.

Strong shipments in Arizona and California, our largest asphalt markets, were partially offset by lower shipments in Texas due to weather impacts.

Concrete segment gross profit was a loss of $3.1 million for the first quarter.

Cash gross profit was $9.2 million compared to $18.0 million in the prior year which included earnings from our divested operations in Texas.

While unit gross profit declined compared to the prior year's first quarter, unit cash gross profit improved 10% despite lower volumes.

SAG expense of $129.7 million was in line with our expectations for the first quarter.

On a trailing-twelve months basis, SAG expense was $555.1 million, or 7.2% of total revenues.

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 $2.9 million of expense for the first quarter of 2024 compared to $0.8 million of income in the first quarter of 2023.

Other nonoperating income (expense), net was $0.3 million of expense for the first quarter of 2024 compared to $1.4 million of income in the first quarter of 2023.

Net interest expense was $39.1 million in the first quarter of 2024 compared to $49.0 million in the first quarter of 2023.

Year-to-date June 30, 2024

Aggregates segment sales for the first six months of 2024 were $2,904.9 million (up 1%) while aggregates shipments decreased 6%, or 6.9 million tons, compared to the prior year.

Year-to-date freight-adjusted average sales price increased 11.3%.

Aggregates segment gross profit was $831.8 million ($7.68 per ton) in the first six months of 2024 versus $803.2 million ($6.97 per ton) in the prior year.

On a year-to-date basis, cash gross profit per ton improved 11% to $10.01 per ton.

Aggregates shipments decreased 6% as compared to the prior year due to unfavorable weather.

Freight-adjusted selling prices increased 11.3% as compared to the prior year reflecting continued positive momentum.

Freight-adjusted unit cost of sales for the first six months of 2024 increased 12%, or $1.41 per ton, versus the prior year.

Asphalt segment gross profit of $63.7 million was up $6.3 million from the first six months of 2023, and cash gross profit of $83.5 million was an 11% improvement over the prior year.

Asphalt mix shipments increased 1%, and average unit selling prices increased 4.9%, or $3.66 per ton.

Concrete segment gross profit was $1.7 million for the first six months of 2024, and cash gross profit was $25.8 million.

The prior year included results from our previously divested operations in Texas.

SAG expenses were $263.8 million (7.4% of total revenues) versus $256.5 million (6.8% of total revenues) in the prior year’s first six months.

Gain on sale of property, plant & equipment and businesses was $4.4 million in the first six months of 2024 versus $18.5 million in the first six months of 2023.

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.

Other operating income (expense), net 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 $11.3 million of expense for the first six months of 2024 compared to $9.0 million of expense in the first six months of 2023.

Other nonoperating income (expense), net was $8.9 million of expense for the first six months of 2024 compared to $1.3 million of income in the first six months of 2023.

Net interest expense was $79.3 million in the first six months of 2024 compared to $95.7 million in the first six months of 2023.

The decrease in interest expense reflects the first quarter 2024 redemption of $550.0 million senior notes due 2026.

Income tax expense from continuing operations was $28.9 million in the first quarter of 2024 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.

Earnings attributable to Vulcan from continuing operations were $0.78 per diluted share in the first quarter of 2024 compared to $0.92 per diluted share in the first quarter of 2023.

DISCONTINUED OPERATIONS — First quarter pretax loss from discontinued operations was $2.3 million in 2024 compared with a pretax loss of $2.9 million in 2023.

Income tax expense from continuing operations was $123.4 million in the first six months of 2024 compared to $108.6 million in the first six months of 2023.

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

Earnings attributable to Vulcan from continuing operations were $3.11 per diluted share in the first six months of 2024 compared to $3.25 per diluted share in the first six months of 2023.

DISCONTINUED OPERATIONS — First six months pretax loss from discontinued operations was $5.0 million in 2024 compared with a pretax loss of $7.9 million in 2023.

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.

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Three Months Ended

June 30 Six Months Ended

in millions, except per ton data 2024 2023 2024 2023

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Three Months Ended

in millions, except per ton data 2024 2023

June 30 Six Months Ended

in millions, except per unit data 2024 2023 2024 2023

Aggregates segment

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Depreciation, depletion, accretion and amortization 128.0 119.6 251.5 232.0

Aggregates segment cash gross profit $ 426.8 $ 415.9

Cash gross profit $ 656.5 $ 619.3 $ 1,083.3 $ 1,035.2

Unit shipments - tons 60.1 63.4 108.3 115.2

Aggregates segment gross profit per ton $ 6.30 $ 5.86

Aggregates segment freight-adjusted sales price $ 20.59 $ 18.69

Aggregates segment cash gross profit per ton $ 8.86 $ 8.03

Aggregates segment freight-adjusted cash cost of sales per ton $ 11.73 $ 10.66

Gross profit per ton $ 8.79 $ 7.88 $ 7.68 $ 6.97

Freight-adjusted sales price $ 21.00 $ 18.71 $ 20.82 $ 18.70

Cash gross profit per ton 10.92 9.76 10.01 8.98

Freight-adjusted cash cost of sales per ton $ 10.08 $ 8.95 $ 10.81 $ 9.72

Asphalt segment

1 unchanged sentence

Depreciation, depletion, accretion and amortization 11.0 8.9 19.8 17.8

Asphalt segment cash gross profit $ 13.6 $ 9.8

Cash gross profit $ 70.0 $ 65.5 $ 83.5 $ 75.2

Unit shipments - tons 4.0 4.0 6.1 6.1

Asphalt segment gross profit per ton $ 2.20 $ 0.41

Asphalt segment average sales price $ 77.83 $ 73.44

Asphalt segment cash gross profit per ton $ 6.31 $ 4.70

Asphalt segment cash cost of sales per ton $ 71.52 $ 68.74

Gross profit per ton $ 14.82 $ 14.24 $ 10.40 $ 9.49

Average sales price $ 78.80 $ 75.52 $ 78.46 $ 74.80

Cash gross profit per ton 17.57 16.48 13.63 12.44

Cash cost of sales per ton $ 61.23 $ 59.04 $ 64.83 $ 62.36

Concrete segment

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Depreciation, depletion, accretion and amortization 11.9 19.5 24.1 39.9

Concrete segment cash gross profit $ 9.2 $ 18.0

Cash gross profit $ 16.6 $ 46.5 $ 25.8 $ 64.6

Unit shipments - cubic yards 0.9 2.1 1.7 3.9

Concrete segment gross profit per cubic yard $ (3.77) $ (1.36)

Concrete segment average sales price $ 182.73 $ 161.25

Concrete segment cash gross profit per cubic yard $ 11.30 $ 10.24

Concrete segment cash cost of sales per cubic yard $ 171.43 $ 151.01

Gross profit per cubic yard $ 5.05 $ 12.95 $ 0.94 $ 6.40

Average sales price $ 180.24 $ 163.82 $ 181.40 $ 162.64

Cash gross profit per cubic yard 17.92 22.27 14.83 16.76

Cash cost of sales per cubic yard $ 162.32 $ 141.55 $ 166.57 $ 145.88

EBITDA AND ADJUSTED EBITDA

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Three Months Ended

March 31 Trailing-Twelve Months

June 30 Six Months Ended

June 30 Trailing-Twelve Months

in millions 2024 2023 2024 2023 2024 2023

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Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Diluted Earnings Per Share

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Current maturities of long-term debt $ 0.5 $ 0.5

Short-term debt 95.0 0.0

Long-term debt 3,331.7 3,873.2

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Trailing-Twelve Months

in millions March 31

2024 March 31

in millions June 30

Adjusted EBITDA $ 2,005.0 $ 1,814.5

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Projected EBITDA $ 2,068

Items included in Adjusted EBITDA above 0

Items included in YTD Adjusted EBITDA 7

Projected Adjusted EBITDA $ 2,075

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

Included in our March 31, 2024 cash and cash equivalents and restricted cash balances of $300.1 million is $7.7 million of restricted cash as described in Note 1 to the condensed consolidated financial statements under the section Restricted Cash.

Included in our June 30, 2024 cash and cash equivalents and restricted cash balances of $111.6 million is $0.6 million of restricted cash as described in Note 1 to the condensed consolidated financial statements under the section Restricted Cash.

CASH FROM OPERATING ACTIVITIES

Three Months Ended

Six Months Ended

in millions 2024 2023

Net earnings $ 411.2 $ 429.5

Depreciation, depletion, accretion and amortization (DDA&A) 150.9 148.4

Depreciation, depletion, accretion and amortization 307.7 303.3

Noncash operating lease expense 25.7 27.3

5 unchanged sentences

1 Primarily reflects changes to working capital balances.

Net cash provided by operating activities was $173.4 million during the three months ended March 31, 2024, a $47.9 million decrease compared to the same period of 2023.

Net cash provided by operating activities was $374.5 million during the six months ended June 30, 2024, a $133.0 million decrease compared to the same period of 2023.

The decrease was primarily attributable to a $18.3 million decrease in net earnings and changes in working capital balances.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 43.0 days at March 31, 2024 compared to 44.1 days at March 31, 2023.

Additionally, our over 90 day receivables balance was $22.7 million at March 31, 2024, a decrease of $26.5 million from the $49.2 million balance at March 31, 2023.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 41.4 days at June 30, 2024 compared to 43.8 days at June 30, 2023.

Additionally, our over 90 day receivables balance was $25.3 million at June 30, 2024, a decrease of $11.2 million from the $36.5 million balance at June 30, 2023.

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 $163.8 million during the first three months of 2024, a $102.1 million increase compared to cash used of $61.7 million in the same period of 2023.

This increase was primarily attributable to a $130.0 million note receivable collected in 2023 related to the 2022 sale of concrete operations in New Jersey, New York and Pennsylvania.

During the first three months of 2024, we acquired businesses for $12.3 million (see Note 16 to the condensed consolidated financial statements) whereas there were no business acquisitions in 2023.

Additionally, during the first three months of 2024, we invested $152.8 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $193.6 million in the prior year period.

Net cash used for investing activities was $533.8 million during the first six months of 2024, a $330.6 million increase compared to the same period of 2023.

During the first six months of 2024, we acquired businesses for $193.4 million of cash consideration whereas there were no business acquisitions in 2023 (see Note 16 to the condensed consolidated financial statements).

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

Furthermore, during the first six months of 2024, we invested $344.2 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $354.6 million in the prior year period.

This $344.2 million investment includes both maintenance and internal growth projects to enhance our distribution capabilities, develop new production sites and improve existing production facilities.

CASH FROM FINANCING ACTIVITIES

Net cash used for financing activities was $658.7 million during the first three months of 2024, a $477.6 million increase compared to cash used of $181.1 million in the same period of 2023.

The current year includes cash paid to redeem the $550.0 million senior notes due 2026 whereas the prior year includes a $100.0 million net payment on our line of credit.

Additionally, we returned $80.8 million to shareholders through $62.0 million of dividends ($0.46 per share compared to $0.43 per share) and $18.8 million of common stock repurchases of (70,932 shares repurchased at $265.44 average price per share compared to none in the first three months of 2023).

Net cash used for financing activities was $678.3 million during the first six months of 2024, a $380.7 million increase compared to cash used of $297.6 million in the same period of 2023.

The current year includes cash paid to redeem the $550.0 million senior notes due 2026 partially offset by a $95.0 million net issuance of commercial paper whereas the prior year includes a $100.0 million net payment on our line of credit.

Additionally, we returned $191.6 million to shareholders (a $27.3 million increase over the prior year) through $122.8 million of dividends ($0.46 per share compared to $0.43 per share) and $68.8 million of common stock repurchases (270,142 shares repurchased at $254.71 average price per share in 2024 compared to 241,363 shares repurchased at $206.82 average price per share in 2023).

Certain debt measures are presented below:

in millions March 31

in millions June 30

2024 December 31

2023 March 31

Current maturities of long-term debt $ 0.5 $ 0.5 $ 0.5

Short-term debt 95.0 0.0 0.0

Long-term debt 3,331.7 3,877.3 3,873.2

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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 March 31, 2024, total debt to trailing-twelve months Adjusted EBITDA was 1.7 times (1.5 times on a net debt basis reflecting $300.1 million of cash on hand).

At June 30, 2024, total debt to trailing-twelve months Adjusted EBITDA was 1.7 times (unchanged on a net debt basis reflecting $111.6 million of cash on hand).

Our weighted-average debt maturity was 10.5 years, and our total weighted-average effective interest rate was 4.80%.

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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.

As of June 30, 2024, we had $95.0 million in short-term commercial paper borrowings and $550.0 million in long-term commercial paper borrowings.

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

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

As of March 31, 2024, 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%.

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

As of June 30, 2024, 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%.

As of June 30, 2024, our available borrowing capacity under the line of credit was $1,504.8 million.

Utilization of the borrowing capacity was as follows:

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▪ $95.2 million was used to support standby letters of credit

All of our $3,391.1 million (face value) of term debt (which includes the $550.0 million commercial paper) is unsecured.

All of our $3,486.1 million (face value) of term debt (which includes $645.0 million of commercial paper) is unsecured.

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

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

As of June 30, 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.

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CURRENT MATURITIES OF LONG-TERM DEBT

The $0.5 million of current maturities of long-term debt as of March 31, 2024 is due as follows:

The $0.5 million of current maturities of long-term debt as of June 30, 2024 is due as follows:

in millions Current

Second quarter 2024 $ 0.0

Third quarter 2024 $ 0.0

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First quarter 2025 0.5

Our debt ratings and outlooks as of March 31, 2024 are as follows:

Second quarter 2025 0.0

The above table excludes $400.0 million of notes due April 2025 as we have the intent and ability to refinance these notes on a long-term basis.

Our debt ratings and outlooks as of June 30, 2024 are as follows:

Short-term Long-term Outlook

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

in millions March 31

in millions June 30

2024 December 31

2023 March 31

Common stock shares at January 1, issued and outstanding 132.1 132.9 132.9

Common Stock Issuances

Share-based compensation plans 0.3 0.2 0.2

Common Stock Purchases

Purchased and retired (0.1) (1.0) 0.0

Common stock issued for share-based compensation plans 0.3 0.2 0.2

Common stock purchased and retired (0.3) (1.0) (0.2)

Common stock shares at end of period, issued and outstanding 132.1 132.1 132.9

As of March 31, 2024, there were 7,016,328 shares remaining under the February 2017 share purchase authorization by our Board of Directors.

As of June 30, 2024, there were 6,817,118 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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The detail of our common stock purchases (all of which were open market purchases) for the year-to-date periods ended are as follows:

in millions, except average cost March 31

in millions, except average price June 30

2024 December 31

2023 March 31

Number of shares purchased and retired 0.3 1.0 0.2

Total purchase price $ 68.8 $ 200.0 $ 49.9

Average cost per share $ 265.44 $ 204.52 $ 0.00

There were no shares held in treasury as of March 31, 2024, December 31, 2023 and March 31, 2023.

Average price per share $ 254.71 $ 204.52 $ 206.82

There were no shares held in treasury as of June 30, 2024, December 31, 2023 and June 30, 2023.

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 three months ended March 31, 2024.

There have been no changes to our critical accounting policies during the six months ended June 30, 2024.

NEW ACCOUNTING STANDARDS

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▪ Corporate Governance Guidelines

▪ Charters for our Audit, Compensation, Executive, Finance, Governance and Safety, Health & Environmental Affairs Committees

▪ Charters for our Audit, Compensation & Human Capital, Executive, Finance, Governance and Safety, Health & Environmental Affairs Committees

These documents meet all applicable SEC and New York Stock Exchange regulatory requirements.

The Charters of the Audit, Compensation and Governance Committees are available on our website under the “Investor Relations” tab (“Governance – Committee Composition” section) or you may request a copy of any of these documents by writing to Denson N.

The Charters of the Audit, Compensation & Human Capital and Governance Committees are available on our website under the “Investor Relations” tab (“Governance – Committee Composition” section) or you may request a copy of any of these documents by writing to Denson N.

Franklin III, Senior Vice President, General Counsel and Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.

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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 2. Management’s Discussion and Analysis