What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-08-07 · 163 added, 153 removed, 431 unchanged (42% of the section changed)

32 unchanged sentences

EXECUTIVE SUMMARY

FINANCIAL HIGHLIGHTS FOR SECOND QUARTER 2024

Compared to second quarter of 2023:

FINANCIAL HIGHLIGHTS FOR THIRD QUARTER 2024

Compared to third quarter of 2023:

▪ Total revenues decreased $181.9 million, or 8%, to $2,003.9 million

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

▪ Gross profit decreased $25.8 million, or 4%, to $565.2 million

▪ Aggregates segment sales decreased $56.0 million, or 3%, to $1,572.4 million

▪ Aggregates segment freight-adjusted revenues decreased $7.7 million, or 1%, to $1,228.0 million

▪ Shipments decreased 10%, or 6.3 million tons, to 57.7 million tons

▪ Freight-adjusted sales price increased 10.2%, or $1.96 per ton, to $21.27

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

▪ Aggregates segment gross profit decreased $10.6 million, or 2%, to $498.5 million

▪ Unit profitability (as measured by gross profit per ton) increased 9% to $8.63 per ton

▪ Asphalt and Concrete segment gross profit decreased $15.2 million to $66.7 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

▪ Selling, administrative and general (SAG) expenses decreased $14.8 million (20 basis points as a percentage of total revenues)

▪ Operating earnings decreased $81.8 million, or 20%, to $337.1 million

▪ Earnings attributable to Vulcan from continuing operations were $1.57 per diluted share compared to $2.09 per diluted share

▪ Adjusted earnings attributable to Vulcan from continuing operations were $2.22 per diluted share compared to $2.29 per diluted share

▪ Net earnings attributable to Vulcan were $207.6 million, a decrease of $68.9 million, or 25%

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

▪ Adjusted EBITDA was $580.6 million, a decrease of $21.6 million, or 4%

▪ Returned capital to shareholders via dividends of $60.8 million at $0.46 per share versus $57.2 million at $0.43 per share

▪ 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.

Results and activities in the third quarter evidence the consistent execution of our two-pronged strategy to generate durable growth.

We continue to enhance our core through expansion of our aggregates gross profit per ton, which increased 9% in the third quarter.

In addition, our industry-leading cash gross profit per ton increased 10% in the third quarter and has grown by double-digits for eight consecutive quarters.

We also recently announced the acquisition of Wake Stone Corporation, a leading pure-play aggregates producer, that will expand our reach in high-growth geographies in the Carolinas.

Our Vulcan Way of Selling and Vulcan Way of Operating disciplines remain fundamental to compounding profitability across our franchise and successfully integrating new operations.

Capital expenditures, including maintenance and growth projects, were $104.3 million in the third quarter and $402.2 million on a year-to-date basis.

During 2024, we expect to spend between $625 million and $650 million on maintenance and growth projects.

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.

During the quarter, we returned $60.8 million to shareholders through dividends, a 6% increase versus the prior year.

Interest expense, net of interest income, was $38.4 million in the third quarter compared with $46.6 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

As of September 30, 2024, the ratio of total debt to trailing-twelve months Adjusted EBITDA was 1.7 times, below our stated long-term target leverage range of 2.0 to 2.5 times.

On a trailing twelve months basis, return on invested capital improved 70 basis points over the prior year to 16.1%.

The acquisition of Wake Stone Corporation is consistent with our disciplined capital allocation priorities and aggregates-led strategy of continuing to expand our reach to better serve more high-growth regions in the United States, most notably with this transaction in Raleigh, North Carolina.

The acquisition is expected to provide more than 60 years of quality hard rock reserves.

We expect to close the transaction during the fourth quarter of this year, subject to the satisfaction of customary closing conditions.

While significant weather disruptions have impacted construction activity through the first nine months of the year, overall demand fundamentals continue to underpin long-term growth.

The pricing environment remains positive, and we continue to execute well.

Given the decline in shipments to date and continued weather events so far in the fourth quarter, we now expect full-year Adjusted EBITDA of approximately $2,000 million.

As we look to 2025, we expect aggregates price to improve high-single digits, costs to benefit from moderating inflation and our Vulcan Way of Operating discipline, and most importantly cash gross profit per ton to continue expanding at double-digit levels.

A demand backdrop underpinned by growth in public construction activity and an improving private demand environment should lead to volume growth in 2025.

Our steadfast focus to execute at the highest level – both commercially and operationally – positions us well to capitalize on improving volume and grow earnings.

RESULTS OF OPERATIONS

5 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

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

6 unchanged sentences

Gain on sale of property, plant & equipment and businesses 0.2 4.3 4.6 22.8

Loss on impairments (86.6) (28.3) (86.6) (28.3)

Operating earnings 337.1 418.9 963.5 1,057.3

24 unchanged sentences

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

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 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.

THIRD QUARTER 2024 COMPARED TO THIRD QUARTER 2023

Third quarter 2024 total revenues were $2,003.9 million, down 8% from the third quarter of 2023.

Shipments decreased in aggregates (-10%), decreased in ready-mixed concrete (-56%) and increased in asphalt mix (+1%).

Gross profit decreased in the Aggregates segment (-$10.6 million or 2%) and increased in the Asphalt segment (+$4.3 million or 8%).

Concrete segment gross profit decreased by $19.5 million (-75%) in part 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 third quarter of 2024 were $207.6 million, or $1.56 per diluted share, compared to $276.5 million, or $2.07 per diluted share, in the third quarter of 2023.

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

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

▪ pretax charges of $1.0 million associated with divested operations

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

▪ pretax charges of $86.6 million associated with a goodwill impairment

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

1 unchanged sentence

▪ $1.9 million of tax charges related to a valuation allowance against Calica deferred tax assets, including NOL carryforwards

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

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

▪ pretax charges of $4.3 million associated with divested operations

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

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

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

1 unchanged sentence

▪ $5.0 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

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $2.22 per diluted share for the third quarter of 2024 compared to $2.29 per diluted share for the third quarter of 2023.

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

Third quarter 2023

Lower aggregates gross profit

Higher asphalt gross profit 4.3

2 unchanged sentences

Lower gain on sale of property, plant & equipment and businesses (4.1)

Higher impairment charges

Lower interest expense, net 8.2

All other (5.8)

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.

Third quarter 2024

Third quarter Aggregates segment gross profit decreased 2% to $498.5 million (increased 9% to $8.63 on a per ton basis), and gross profit margin expanded 40 basis points.

Cash gross profit per ton increased 10% to $10.89 per ton, despite lower shipments and harsh weather conditions throughout the quarter.

Improvements in unit profitability were widespread across our footprint.

Aggregates shipments decreased 10% compared to the prior year.

Shipments across the Southeast were impacted by significant rainfall in July, followed by numerous hurricanes and severe storms in August and September.

The prior year's third quarter included fewer severe weather events.

The pricing environment remained positive across our footprint.

Freight-adjusted selling prices increased 10.2%, 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.

Freight-adjusted unit cash cost of sales was negatively impacted by lower volume and challenging, weather-affected operating conditions;

freight-adjusted cash cost of sales dollars remained flat compared to the prior year.

Overall, non-aggregates segments gross profit of $66.7 million was $15.2 million lower than the prior year’s third quarter.

Asphalt segment gross profit of $60.2 million was up $4.3 million from the prior year’s third quarter, and cash gross profit of $72.2 million was a 12% improvement over the prior year.

Asphalt mix shipments increased 1%, and pricing increased 6.1%.

Concrete segment gross profit of $6.5 million was down $19.5 million from the prior year's third quarter, and cash gross profit of $17.4 million was a 63% decrease from the prior year.

The prior year's third quarter included results from the previously divested operations in Texas which accounted for the majority of the year-over-year decline in cash gross profit.

SAG expense was $129.1 million for the third quarter compared to $143.9 million in the prior year.

As a percent of total revenues, SAG expense was 6.4% in the third quarter, a 20 basis point improvement compared to the prior year.

Gain on sale of property, plant & equipment and businesses was $0.2 million in the third quarter of 2024 compared to $4.3 million in the third quarter of 2023.

During the third quarter of 2024, we recorded an $86.6 million pretax goodwill impairment charge related to a reporting unit that includes concrete operations acquired from U.S.

Concrete in 2021 ($84.2 million after tax).

During the third quarter of 2023, our concrete assets in Texas were classified as held for sale, resulting in a pretax long-lived asset impairment charge of $28.3 million ($21.1 million after tax).

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 $12.6 million of expense for the third quarter of 2024 compared to $4.2 million of expense in the third quarter of 2023.

Other nonoperating income (expense), net was $3.8 million of expense for the third quarter of 2024 compared to $6.4 million of expense in the third quarter of 2023.

Net interest expense was $38.4 million in the third quarter of 2024 compared to $46.6 million in the third quarter of 2023.

Income tax expense from continuing operations was $85.2 million in the third quarter of 2024 compared to $85.8 million in the third quarter of 2023.

The tax expense is comparable to the amount recorded in the third quarter of 2023, as the reduction in pretax earnings in the third quarter of 2024 was primarily due to a goodwill impairment, the majority of which was non-tax deductible.

Earnings attributable to Vulcan from continuing operations were $1.57 per diluted share in the third quarter of 2024 compared to $2.09 per diluted share in the third quarter of 2023.

DISCONTINUED OPERATIONS — Third quarter pretax loss from discontinued operations was $1.8 million in 2024 compared with a pretax loss of $3.8 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.

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

Total revenues for the first nine months of 2024 were $5,564.0 million, down 6% from the first nine months of 2023.

Shipments decreased in aggregates (-7%), decreased in ready-mixed concrete (-55%) and increased in asphalt mix (+1%).

Gross profit increased in the Aggregates (+$18.0 million or 1%) and Asphalt (+$10.6 million or 9%) 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.

Concrete segment gross profit decreased by $42.5 million (-84%) in part 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 nine months of 2024 were $618.2 million, or $4.65 per diluted share, compared to $705.8 million, or $5.28 per diluted share, in the first nine 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:

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

▪ pretax charges of $86.6 million associated with a goodwill impairment

▪ pretax charges of $1.0 million associated with divested operations

2 unchanged sentences

▪ $4.5 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:

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

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

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

▪ pretax charges of $4.7 million associated with divested operations

2 unchanged sentences

▪ $11.2 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

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $5.37 per diluted share for the first nine months of 2024 compared to $5.54 per diluted share for the first nine months of 2023.

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

Year-to-date September 30, 2023

Higher aggregates gross profit 18.0

1 unchanged sentence

Lower concrete gross profit (42.5)

Higher selling, administrative and general expenses (7.3)

Lower selling, administrative and general expenses

Lower gain on sale of property, plant & equipment and businesses (18.2)

Higher impairment charges

Lower interest expense, net 24.5

All other (18.2)

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.

Year-to-date September 30, 2024

Aggregates segment sales for the first nine months of 2024 were $4,477.3 million (down 1%), and shipments decreased 7%, or 13.2 million tons, compared to the prior year.

Aggregates segment gross profit was $1,330.3 million ($8.01 per ton) in the first nine months of 2024 versus $1,312.3 million ($7.32 per ton) in the prior year.

On a year-to-date basis, cash gross profit per ton increased 11% to $10.31 per ton.

Freight-adjusted selling prices increased 10.9% as compared to the prior year.

Freight-adjusted unit cost of sales for the first nine months of 2024 increased 12%, or $1.37 per ton, versus the prior year.

Asphalt segment gross profit of $123.9 million was up $10.6 million from the first nine months of 2023, and cash gross profit of $155.8 million was an 11% improvement over the prior year.

Asphalt mix shipments increased 1%, and average unit selling prices increased 5.4%, or $4.05 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.

Concrete segment gross profit of $8.2 million was down $42.5 million from the first nine months of 2023, and cash gross profit of $43.1 million was a 61% decrease from the prior year.

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.

SAG expenses were $393.0 million (7.1% of total revenues) versus $400.4 million (6.7% of total revenues) in the prior year’s first nine months.

Gain on sale of property, plant & equipment and businesses was $4.6 million in the first nine months of 2024 versus $22.8 million in the first nine 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.

For the nine months ended September 30, 2024, we recorded an $86.6 million pretax goodwill impairment charge related to a reporting unit that includes concrete operations acquired from U.S.

Concrete in 2021 ($84.2 million after tax).

For the nine months ended September 30, 2023, we recognized a pretax long-lived asset impairment charge of $28.3 million ($21.1 million after tax) related to the fourth quarter divestiture of our concrete assets in Texas.

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 $23.9 million of expense for the first nine months of 2024 compared to $13.1 million of expense in the first nine months of 2023.

Other nonoperating income (expense), net was $12.7 million of expense for the first nine months of 2024 compared to $5.3 million of expense in the first nine months of 2023.

Net interest expense was $117.7 million in the first nine months of 2024 compared to $142.2 million in the first nine 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 $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.

Income tax expense from continuing operations was $208.5 million in the first nine months of 2024 compared to $194.4 million in the first nine months of 2023.

The increase in tax expense was primarily due to a goodwill impairment recorded in the third quarter of 2024, the majority of which was non-tax deductible, and a discrete benefit recognized in the first nine months of 2023 related to a 2022 business disposition, partially offset by lower pretax earnings.

Earnings attributable to Vulcan from continuing operations were $4.68 per diluted share in the first nine months of 2024 compared to $5.34 per diluted share in the first nine months of 2023.

DISCONTINUED OPERATIONS — First nine months pretax loss from discontinued operations was $6.8 million in 2024 compared with $11.7 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.

1 unchanged sentence

KNOWN TRENDS OR UNCERTAINTIES

Inflationary pressures and labor constraints are factors that impact our operations.

Although inflationary pressures can create short-term to medium-term headwinds, the combination of inflation and visibility of demand has created, and may continue to create, a favorable environment for price increases.

Additionally, labor constraints have caused delays and inefficiencies in our operations as well as those of our customers.

If labor constraints continue and demand remains positive, our operations may proceed at a slower pace, which may effectively extend the recovery while allowing us the opportunity to compound price, control costs and grow earnings.

Inflationary pressures and labor constraints can be factors that impact our operations.

Although inflationary pressures can create short-term to medium-term headwinds, the combination of inflation and visibility of demand may create a favorable environment for price increases.

Additionally, labor constraints can cause delays and inefficiencies in our operations as well as those of our customers.

If labor constraints continue, our operations may proceed at a slower pace, which may effectively extend the recovery while allowing us the opportunity to compound price, control costs and grow earnings.

Further, the Mexican government has taken actions adverse to our property and operations in Mexico.

1 unchanged sentence

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

In September 2024, the Mexican government ordered the closure of Calica's already-suspended quarrying activities and the shutdown of certain activities at Calica's Punta Venado port facilities.

On September 23, 2024, the President of Mexico signed a presidential decree declaring the entirety of Calica's properties as a "Natural Protected Area" (the "ANP Decree").

Among other provisions, the ANP Decree prohibits Calica from extracting petrous or construction materials from its properties.

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

9 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

in millions, except per ton data 2024 2023 2024 2023

18 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

in millions, except per unit data 2024 2023 2024 2023

33 unchanged sentences

Three Months Ended

June 30 Six Months Ended

June 30 Trailing-Twelve Months

September 30 Nine Months Ended

September 30 Trailing-Twelve Months

in millions 2024 2023 2024 2023 2024 2023

17 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

11 unchanged sentences

Current maturities of long-term debt $ 0.5 $ 0.5

Short-term debt 95.0 0.0

Long-term debt 3,329.2 3,874.3

14 unchanged sentences

Trailing-Twelve Months

in millions June 30

in millions September 30

2024 September 30

Adjusted EBITDA $ 1,983.3 $ 1,909.8

36 unchanged sentences

▪ dividend payments

▪ potential acquisitions

▪ potential acquisitions (including the proposed acquisition of Wake Stone Corporation)

▪ potential share repurchases

7 unchanged sentences

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

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.

Included in our September 30, 2024 cash and cash equivalents and restricted cash balances of $434.3 million is $1.1 million of restricted cash as described in Note 1 to the condensed consolidated financial statements under the section Restricted Cash.

CASH FROM OPERATING ACTIVITIES

Six Months Ended

Nine Months Ended

in millions 2024 2023

1 unchanged sentence

Depreciation, depletion, accretion and amortization 468.4 464.4

Loss on impairments 86.6 28.3

Noncash operating lease expense 38.6 40.7

5 unchanged sentences

1 Primarily reflects changes to working capital balances.

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 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.

Net cash provided by operating activities was $969.5 million during the nine months ended September 30, 2024, an $85.7 million decrease compared to the same period of 2023.

The decrease was primarily attributable to changes in working capital balances.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 43.3 days at September 30, 2024 compared to 45.3 days at September 30, 2023.

Additionally, our over 90 day receivables balance was $26.3 million at September 30, 2024, a decrease of $1.8 million from the $28.1 million balance at September 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 $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.

Net cash used for investing activities was $641.8 million during the first nine months of 2024, a $132.6 million increase compared to the same period of 2023.

During the first nine months of 2024, we acquired businesses for $206.4 million of cash consideration whereas there were no business acquisitions in 2023 (see Note 16 to the condensed consolidated financial statements).

Additionally, the first nine 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.

Partially offsetting these net increases to cash used for investing activities, during the first nine months of 2024, we invested $441.0 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $666.3 million in the prior year period.

This $441.0 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 $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.

Net cash used for financing activities was $842.6 million during the first nine months of 2024, a $480.1 million increase compared to cash used of $362.5 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 $252.4 million to shareholders (a $30.9 million increase over the prior year) through $183.6 million of dividends ($1.38 per share compared to $1.29 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 June 30

2024 December 31

in millions September 30

2024 December 31, 2023 September 30

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

Short-term debt 95.0 0.0 0.0

Long-term debt 3,329.2 3,877.3 3,874.3

14 unchanged sentences

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

At June 30, 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).

At September 30, 2024, total debt to trailing-twelve months Adjusted EBITDA was 1.7 times (1.5 times on a net debt basis reflecting $434.3 million of cash on hand).

Our weighted-average debt maturity was 10.4 years, and our total weighted-average effective interest rate was 4.70%.

3 unchanged sentences

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.

As of September 30, 2024, we had $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.

1 unchanged sentence

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

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.

As of September 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 September 30, 2024, our available borrowing capacity under the line of credit was $1,504.8 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 June 30, 2024, we were in compliance with all term debt covenants.

As of September 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.

2 unchanged sentences

CURRENT MATURITIES OF LONG-TERM DEBT

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

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

in millions Current

Third quarter 2024 $ 0.0

Fourth quarter 2024 $ 0.0

1 unchanged sentence

Second quarter 2025 0.0

Third 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:

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

Short-term Long-term Outlook

Fitch F2 BBB Stable

Fitch F2 BBB Positive

Moody's P-2 Baa2 Stable

1 unchanged sentence

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

in millions June 30

2024 December 31

in millions September 30

2024 December 31, 2023 September 30

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

2 unchanged sentences

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

As of June 30, 2024, there were 6,817,118 shares remaining under the February 2017 share purchase authorization by our Board of Directors.

As of September 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.

1 unchanged sentence

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 price June 30

2024 December 31

in millions, except average price September 30

2024 December 31, 2023 September 30

Number of shares purchased and retired 0.3 1.0 0.2

1 unchanged sentence

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.

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

OFF-BALANCE SHEET ARRANGEMENTS

11 unchanged sentences

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

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

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

NEW ACCOUNTING STANDARDS

29 unchanged sentences

▪ our ability to manage and successfully integrate acquisitions

▪ our proposed acquisition of Wake Stone Corporation, including:

▪ our ability to complete the transaction on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary approvals and the satisfaction of other closing conditions to consummate the proposed transaction

▪ the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive merger agreement relating to the proposed transaction

▪ failure to realize the expected benefits of the proposed transaction

▪ significant transaction costs and/or unknown or inestimable liabilities

▪ the risk that Wake Stone Corporation’s business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected

▪ risks related to future opportunities and plans for the combined company

▪ disruption from the proposed transaction, making it more difficult to conduct business as usual or maintain relationships with customers, employees or suppliers

▪ the possibility that, if Vulcan does not achieve the perceived benefits of the proposed transaction as rapidly or to the extent anticipated by financial analysts or investors, the market price of Vulcan’s common stock could decline

▪ the effect of changes in tax laws, guidance and interpretations

28 unchanged sentences

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