Vulcan Materials CO 10-Q

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL COMMENTS OVERVIEW We provide the basic materials for the infrastructure needed to maintain and expand the U.S. economy. We operate primarily in the U.S. and are the nation's largest supplier of construction aggregates (primarily crushed stone, sand and gravel) and a major producer of aggregates-intensive downstream products such as asphalt mix and ready-mixed concrete. Our strategy and competitive advantage are based on our strength in aggregates which are used in most types of construction and in the production of asphalt mix and ready-mixed concrete. Demand for our products is dependent on construction activity and correlates positively with changes in population, employment and household formations. End uses include public construction (e.g., highways, bridges, buildings, airports, schools, prisons, sewer and waste disposal systems, water supply systems, dams, reservoirs and other public construction projects), private nonresidential construction (e.g., manufacturing, retail, offices and warehouses) and private residential construction (e.g., single-family houses, duplexes, apartment buildings and condominiums). Aggregates have a very high weight-to-price ratio and, in most cases, must be produced near where they are used; if not, transportation can cost more than the materials, rendering them uncompetitive compared to locally produced materials. Exceptions to this typical market structure include areas along the U.S. 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, 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. There are limited substitutes for quality aggregates. Due to zoning and permitting regulations and high transportation costs relative to the value of the product, the location of reserves is a critical factor to our long-term success. No material part of our business depends upon any single customer whose loss would have a significant adverse effect on our business. In 2024, our five largest customers accounted for approximately 8% of our total revenues, and no single customer accounted for more than 3% of our total revenues. Although approximately 40% to 55% of our aggregates shipments have historically been used in publicly-funded construction, such as highways, airports and government buildings, a relatively small portion of our sales are made directly to federal, state, county or municipal governments/agencies. Therefore, although reductions in state and federal funding can curtail publicly-funded construction, the vast majority of our business is not directly subject to renegotiation of profits or termination of contracts with local, state or federal governments. In addition, our sales to government entities span several hundred entities coast-to-coast, ensuring that negative changes to various government budgets would have a muted impact across such a diversified set of government customers. While aggregates is our focus and primary business, we believe vertical integration between aggregates and downstream products, such as asphalt mix and ready-mixed concrete, can be managed effectively in certain markets to generate attractive financial returns and enhance financial returns in our core Aggregates segment. We produce and sell aggregates-intensive asphalt mix and/or ready-mixed concrete products in our Alabama, Arizona, California, Maryland, New Mexico, Tennessee, Texas, Virginia, U.S. Virgin Islands and Washington D.C. markets. Aggregates comprise approximately 95% of asphalt mix by weight and 80% of ready-mixed concrete by weight. In both of these downstream businesses, aggregates are primarily supplied from our operations. SEASONALITY AND CYCLICAL NATURE OF OUR BUSINESS Almost all of our products are produced and consumed outdoors. Seasonal changes and other weather-related conditions can affect the production and sales volume of our products. Therefore, the financial results for any quarter do not necessarily indicate the results expected for the year. Normally, the highest sales and earnings are in the third quarter, and the lowest are in the first quarter. Furthermore, our sales and earnings are sensitive to national, regional and local economic conditions, demographic and population fluctuations, and particularly to cyclical swings in construction spending, primarily in the private sector. 25 EXECUTIVE SUMMARY FINANCIAL HIGHLIGHTS FOR FIRST QUARTER 2025 Compared to first quarter of 2024: ▪ Total revenues increased $88.9 million, or 6%, to $1,634.6 million ▪ Gross profit increased $60.4 million, or 20%, to $365.3 million ▪ Aggregates segment sales increased $44.6 million, or 3%, to $1,335.9 million ▪ Aggregates segment freight-adjusted revenues increased $60.6 million, or 6%, to $1,052.0 million ▪ Shipments decreased 1%, or 0.4 million tons, to 47.8 million tons ▪ Freight-adjusted sales price increased 7.0%, or $1.44 per ton, to $22.03 ▪ Aggregates segment gross profit increased $54.0 million, or 18%, to $357.3 million ▪ Unit profitability (as measured by gross profit per ton) increased 19% to $7.48 per ton ▪ Asphalt and Concrete segment gross profit increased $6.4 million to $8.0 million, collectively ▪ Selling, administrative and general (SAG) expenses increased $8.6 million (10 basis points as a percentage of total revenues) ▪ Operating earnings increased $53.5 million, or 31%, to $226.4 million ▪ Earnings attributable to Vulcan from continuing operations were $0.98 per diluted share compared to $0.78 per diluted share ▪ Adjusted earnings attributable to Vulcan from continuing operations were $1.00 per diluted share compared to $0.80 per diluted share ▪ Net earnings attributable to Vulcan were $128.9 million, an increase of $26.2 million or 26% ▪ Adjusted EBITDA was $410.9 million, an increase of $87.4 million, or 27% ▪ Returned capital to shareholders via dividends of $66.0 million at $0.49 per share versus $62.0 million at $0.46 per share ▪ Returned capital to shareholders via share repurchases of $38.1 million at $224.36 average price per share compared to $18.8 million at $265.44 average price per share The combination of our aggregates-led business and our consistent focus on our Vulcan Way of Selling and Vulcan Way of Operating disciplines resulted in strong earnings growth and margin expansion in the first quarter. Adjusted EBITDA increased 27%, and Adjusted EBITDA margin expanded 420 basis points over the prior year. Aggregates gross profit per ton improved 19%, and cash gross profit per ton improved 20%, with widespread improvements across our footprint. Our commercial and operational execution support our full-year outlook to deliver another year of earnings growth in 2025. Capital expenditures, including maintenance and growth projects, were $105.3 million in the first quarter. During 2025, we expect to spend between $750 million and $800 million on maintenance and growth projects. During the quarter, we returned $104.1 million to shareholders through $38.1 million of common stock repurchases and $66.0 million of dividends, a 29% increase versus the prior year. We used $400.0 million of cash on hand to redeem our 2025 notes this quarter, resulting in a ratio of total debt to trailing-twelve months Adjusted EBITDA of 2.3 times (2.2 times on a net debt basis, reflecting $192.9 million of cash on hand). We remain well positioned for continued growth with a strong liquidity position and balance sheet profile. Our weighted-average debt maturity was 13.4 years, and our total weighted-average effective interest rate was 5.00%. Interest expense, net of interest income, was $59.7 million in the first quarter compared with $39.1 million in the prior year. The $20.6 million increase is primarily due to a higher debt level resulting from the November 2024 notes issuances. On a trailing-twelve months basis, return on invested capital was 16.2%, a 10 basis points decrease over the prior year, primarily resulting from the fourth quarter 2024 acquisitions of Wake Stone Corporation (Wake Stone) and Superior Ready Mix Concrete, L.P. (Superior). OUTLOOK Our execution in the first quarter was strong, and we reiterate our full-year outlook to deliver $2,350 million to $2,550 million of Adjusted EBITDA. We continue to monitor the impact on overall economic activity from the uncertainty surrounding trade policy and the trajectory of interest rates. As always, we are focused on the things we can control. Our continued execution of our strategic disciplines has and will continue to lead to attractive cash generation and value creation for our shareholders regardless of external headwinds. 26 RESULTS OF OPERATIONS Total revenues are primarily derived from our product sales of aggregates, asphalt mix and ready-mixed concrete, and include freight & delivery costs that we pass along to our customers to deliver these products. We also generate service revenues from our asphalt construction paving business and services related to our aggregates business. We present separately our discontinued operations, which consist of our former Chemicals business. The following table highlights significant components of our consolidated operating results including EBITDA and Adjusted EBITDA. CONSOLIDATED OPERATING RESULTS HIGHLIGHTS Three Months Ended March 31 in millions, except per share and per unit data 2025 2024 Total revenues $ 1,634.6 $ 1,545.7 Cost of revenues (1,269.3) (1,240.8) Gross profit 365.3 304.9 Gross profit margin 22.3 % 19.7 % Selling, administrative and general expenses (138.3) (129.7) SAG as a percentage of total revenues 8.5 % 8.4 % Gain on sale of property, plant & equipment and businesses 7.4 0.6 Operating earnings 226.4 172.9 Interest expense, net (59.7) (39.1) Earnings from continuing operations before income taxes 164.1 133.5 Income tax expense (33.8) (28.9) Effective tax rate from continuing operations 20.6 % 21.6 % Earnings from continuing operations 130.3 104.6 Loss on discontinued operations, net of tax (0.9) (1.7) Earnings attributable to noncontrolling interest (0.5) (0.2) Net earnings attributable to Vulcan $ 128.9 $ 102.7 Diluted earnings (loss) per share attributable to Vulcan Continuing operations $ 0.98 $ 0.78 Discontinued operations (0.01) (0.01) Net earnings $ 0.97 $ 0.77 EBITDA 1 $ 408.4 $ 321.0 Adjusted EBITDA 1 $ 410.9 $ 323.5 Average Sales Price and Unit Shipments Aggregates Tons 47.8 48.1 Freight-adjusted sales price $ 22.03 $ 20.59 Asphalt Mix Tons 2.2 2.1 Average sales price $ 81.32 $ 77.83 Ready-mixed concrete Cubic yards 0.9 0.8 Average sales price $ 189.38 $ 182.73 1 Non-GAAP measures are defined and reconciled within this Item 2 under the caption " Reconciliation of Non-GAAP Financial Measures ". 27 FIRST QUARTER 2025 COMPARED TO FIRST QUARTER 2024 First quarter 2025 total revenues were $1,634.6 million, up 6% from the first quarter of 2024. Shipments decreased in aggregates (-1%) and increased in asphalt mix (+4%) and ready-mixed concrete (+15%). Gross profit increased in the Aggregates segment (+$54.0 million or 18%) and the Concrete segment (+$6.3 million or 204%) and remained flat in the Asphalt segment. Net earnings attributable to Vulcan for the first quarter of 2025 were $128.9 million, or $0.97 per diluted share, compared to $102.7 million, or $0.77 per diluted share, in the first quarter of 2024. Each period’s results were impacted by discrete items, as follows: Net earnings attributable to Vulcan for the first quarter of 2025 include: ▪ pretax charges of $1.2 million associated with non-routine acquisitions ▪ pretax loss on discontinued operations of $1.3 million ▪ $1.7 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 quarter of 2024 include: ▪ pretax charges of $0.1 million associated with non-routine acquisitions ▪ pretax loss on discontinued operations of $2.3 million ▪ $1.6 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 $1.00 per diluted share for the first quarter of 2025 compared to $0.80 per diluted share for the first quarter of 2024. CONTINUING OPERATIONS — Changes in earnings from continuing operations before income taxes for the first quarter of 2025 versus the first quarter of 2024 are summarized below: in millions First quarter 2024 $ 133.5 Higher aggregates gross profit 54.0 Higher asphalt gross profit 0.1 Higher concrete gross profit 6.3 Higher selling, administrative and general expenses (8.6) Higher gain on sale of property, plant & equipment and businesses 6.8 Higher interest expense, net (20.6) All other (7.4) First quarter 2025 $ 164.1 First quarter Aggregates segment gross profit increased 18% to $357.3 million (increased 19% to $7.48 on a per ton basis), and gross profit margin expanded 320 basis points. Cash gross profit per ton increased 20% to $10.63 per ton resulting from geographically widespread pricing growth and operational efficiencies. On a trailing-twelve months basis, cash gross profit per ton was $10.99, marking the ninth consecutive quarter of double-digit compounding improvement in unit profitability. Aggregates shipments decreased 1% compared to the prior year. Shipments from acquisitions partially offset one less shipping day in the quarter and challenging weather, particularly in February. Price increases effective at the beginning of the year resulted in another quarter of attractive growth. Freight-adjusted selling prices increased 7.0% (mix-adjusted pricing increased 8.5%) compared to the prior year. Freight-adjusted unit cash cost of sales decreased 3% ($0.33 per ton) as a result of continued operational cost discipline and moderating inflationary pressures. Overall, non-aggregates segments gross profit of $8.0 million was $6.4 million higher than the prior year’s first quarter. Asphalt segment gross profit of $4.8 million was in line with the prior year’s first quarter, and cash gross profit of $16.8 million was a 24% increase from the prior year. Asphalt mix shipments increased 4%, and pricing increased 4.5%, resulting in a 19% improvement in unit cash gross profit. Concrete segment gross profit of $3.2 million was up $6.3 million from the prior year's first quarter, and cash gross profit of $18.6 million was a 103% increase from the prior year. Unit gross profit increased 191%, and unit cash gross profit increased 77% through a combination of improvement in the legacy business and the benefit of acquired operations. Shipments increased 15%, and pricing increased 3.6% versus the prior year. SAG expense was $138.3 million for the first quarter compared to $129.7 million in the prior year. As a percent of total revenues on a trailing-twelve months basis, SAG expense was 7.2% in the first quarter, unchanged from the prior year. Gain on sale of property, plant & equipment and businesses was $7.4 million in the first quarter of 2025 compared to $0.6 million in the first quarter of 2024. 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 $8.0 million of expense for the first quarter of 2025 compared to $2.9 million of expense in the first quarter of 2024. 28 Other nonoperating income (expense), net was $2.6 million of expense for the first quarter of 2025 compared to $0.3 million of expense in the first quarter of 2024. Net interest expense was $59.7 million in the first quarter of 2025 compared to $39.1 million in the first quarter of 2024. The increase in interest expense was primarily due to a higher debt level resulting from the November 2024 notes issuances. Income tax expense from continuing operations was $33.8 million in the first quarter of 2025 compared to $28.9 million in the first quarter of 2024. The increase in tax expense was primarily due to an increase in pretax earnings. Earnings attributable to Vulcan from continuing operations were $0.98 per diluted share in the first quarter of 2025 compared to $0.78 per diluted share in the first quarter of 2024. DISCONTINUED OPERATIONS — First quarter pretax loss from discontinued operations was $1.3 million in 2025 compared with a pretax loss of $2.3 million in 2024. 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. KNOWN TRENDS OR UNCERTAINTIES 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. Our industry is experiencing uncertainty due to rapid changes in global trade policies including announced tariff increases, potential additional tariff increases and other measures that could restrict international trade. Economic pressures on our customers, including the challenges of inflation and the impact of tariffs and other trade measures, may negatively impact our shipment volumes. We will continue to evaluate the evolving macroeconomic environment to take action to mitigate the impact on our business. Further, the Mexican government has taken actions adverse to our property and operations in Mexico. On May 5, 2022, Mexican government officials presented employees at our Calica operations in Quintana Roo, Mexico with arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations. On May 13, 2022, the Mexican government suspended the three-year customs permit granted in March 2022 to Calica and began a proceeding that could result in the revocation of that permit. 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. For additional information regarding our Calica operations, see the NAFTA Arbitration section in Note 8 to the condensed consolidated financial statements. 29 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AGGREGATES SEGMENT FREIGHT-ADJUSTED REVENUES Aggregates segment freight-adjusted revenues is not a Generally Accepted Accounting Principle (GAAP) measure and should not be considered as an alternative to metrics defined by GAAP. We present this measure as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. It also excludes other revenues related to services, such as landfill tipping fees, that are derived from our aggregates business. Additionally, we use this metric as the basis for calculating the average sales price of our aggregates products. Reconciliation of this metric to its nearest GAAP measure is presented below: Three Months Ended March 31 in millions, except per unit data 2025 2024 Aggregates segment Segment sales $ 1,335.9 $ 1,291.3 Freight & delivery revenues 1 (264.3) (277.4) Other revenues (19.6) (22.5) Freight-adjusted revenues $ 1,052.0 $ 991.4 Unit shipments - tons 47.8 48.1 Freight-adjusted sales price $ 22.03 $ 20.59 1 At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote distribution sites. 30 CASH GROSS PROFIT GAAP does not define “cash gross profit,” and it should not be considered as an alternative to earnings measures defined by GAAP. We and the investment community use this metric to assess the operating performance of our business. Additionally, we present this metric as we believe that it closely correlates to long-term shareholder value. Cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization to gross profit. Segment cash gross profit per unit is computed by dividing segment cash gross profit by units shipped. Segment cash cost of sales per unit is computed by subtracting segment cash gross profit per unit from segment freight-adjusted sales price. Segment freight-adjusted sales price is calculated by dividing revenues generated from the shipment of product (excluding service revenues generated by the segments) by the total units of the product shipped. Reconciliation of these metrics to their nearest GAAP measures are presented below: Three Months Ended March 31 in millions, except per unit data 2025 2024 Aggregates segment Gross profit $ 357.3 $ 303.3 Depreciation, depletion, accretion and amortization 150.4 123.5 Cash gross profit $ 507.7 $ 426.8 Unit shipments - tons 47.8 48.1 Gross profit per ton $ 7.48 $ 6.30 Freight-adjusted sales price $ 22.03 $ 20.59 Cash gross profit per ton 10.63 8.86 Freight-adjusted cash cost of sales per ton $ 11.40 $ 11.73 Asphalt segment Gross profit $ 4.8 $ 4.7 Depreciation, depletion, accretion and amortization 12.0 8.9 Cash gross profit $ 16.8 $ 13.6 Unit shipments - tons 2.2 2.1 Gross profit per ton $ 2.13 $ 2.20 Average sales price $ 81.32 $ 77.83 Cash gross profit per ton 7.54 6.31 Cash cost of sales per ton $ 73.78 $ 71.52 Concrete segment Gross profit $ 3.2 $ (3.1) Depreciation, depletion, accretion and amortization 15.4 12.3 Cash gross profit $ 18.6 $ 9.2 Unit shipments - cubic yards 0.9 0.8 Gross profit per cubic yard $ 3.42 $ (3.77) Average sales price $ 189.38 $ 182.73 Cash gross profit per cubic yard 20.01 11.30 Cash cost of sales per cubic yard $ 169.37 $ 171.43 31 EBITDA AND ADJUSTED EBITDA GAAP does not define “Earnings Before Interest, Taxes, Depreciation and Amortization” (EBITDA), and it should not be considered as an alternative to earnings measures defined by GAAP. We use this metric to assess the operating performance of our business and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of earnings performance from period to period. Reconciliation of this metric to its nearest GAAP measure is presented below (numbers may not foot due to rounding): Three Months Ended March 31 Trailing-Twelve Months March 31 in millions 2025 2024 2025 2024 Net earnings attributable to Vulcan $ 128.9 $ 102.7 $ 938.2 $ 915.2 Income tax expense, including discontinued operations 33.4 28.3 253.8 308.1 Interest expense, net of interest income 59.7 39.1 190.9 169.8 Depreciation, depletion, accretion and amortization 186.4 150.9 667.7 619.5 EBITDA $ 408.4 $ 321.0 $ 2,050.6 $ 2,012.6 Loss on discontinued operations $ 1.3 $ 2.3 $ 9.2 $ 14.1 Gain on sale of real estate and businesses, net 0.0 0.0 (36.7) (67.1) Loss on impairments 0.0 0.0 86.6 28.3 Charges associated with divested operations 0.0 0.0 17.7 7.6 Acquisition related charges 1 1.2 0.1 17.4 1.7 Adjusted EBITDA $ 410.9 $ 323.5 $ 2,144.7 $ 1,997.1 1 Represents charges associated with acquisitions requiring clearance under federal antitrust laws. ADJUSTED DILUTED EPS ATTRIBUTABLE TO VULCAN FROM CONTINUING OPERATIONS Similar to our presentation of Adjusted EBITDA, we present Adjusted diluted earnings per share (EPS) attributable to Vulcan from continuing operations to provide a more consistent comparison of earnings performance from period to period. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below: Three Months Ended March 31 2025 2024 Diluted Earnings Per Share Net earnings attributable to Vulcan $ 0.97 $ 0.77 Items included in Adjusted EBITDA above, net of tax 0.02 0.02 NOL carryforward valuation allowance 0.01 0.01 Adjusted diluted EPS attributable to Vulcan from continuing operations $ 1.00 $ 0.80 32 NET DEBT TO ADJUSTED EBITDA Net debt to Adjusted EBITDA is not a GAAP measure and should not be considered as an alternative to metrics defined by GAAP. We, the investment community and credit rating agencies use this metric to assess our leverage. Net debt subtracts cash and cash equivalents and restricted cash from total debt. Reconciliation of this metric to its nearest GAAP measure is presented below: March 31 in millions 2025 2024 Current maturities of long-term debt $ 0.5 $ 0.5 Long-term debt 4,907.9 3,330.7 Total debt $ 4,908.4 $ 3,331.2 Cash and cash equivalents and restricted cash (192.9) (300.1) Net debt $ 4,715.5 $ 3,031.1 Trailing-Twelve Months (TTM) Adjusted EBITDA $ 2,144.7 $ 1,997.1 Total Debt to TTM Adjusted EBITDA 2.3x 1.7x Net Debt to TTM Adjusted EBITDA 2.2x 1.5x RETURN ON INVESTED CAPITAL We define “Return on Invested Capital” (ROIC) as Adjusted EBITDA for the trailing-twelve months divided by average invested capital (as illustrated below) during the trailing-five quarters. Our calculation of ROIC is considered a non-GAAP financial measure because we calculate ROIC using the non-GAAP metric EBITDA. We believe that our ROIC metric is meaningful because it helps investors assess how effectively we are deploying our assets. Although ROIC is a standard financial metric, numerous methods exist for calculating a company’s ROIC. As a result, the method we use to calculate our ROIC may differ from the methods used by other companies. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below (numbers may not foot due to rounding): Trailing-Twelve Months in millions March 31 2025 March 31 2024 Adjusted EBITDA $ 2,144.7 $ 1,997.1 Average invested capital Property, plant & equipment, net $ 7,175.1 $ 6,137.9 Goodwill 3,624.3 3,594.9 Other intangible assets 1,549.0 1,542.1 Fixed and intangible assets $ 12,348.4 $ 11,274.9 Current assets $ 2,057.7 $ 2,194.0 Cash and cash equivalents (328.0) (380.5) Current tax (38.2) (24.3) Adjusted current assets 1,691.6 1,789.2 Current liabilities (860.6) (781.6) Current maturities of long-term debt 80.5 0.5 Short-term debt 19.0 0.0 Adjusted current liabilities (761.1) (781.1) Adjusted net working capital $ 930.4 $ 1,008.1 Average invested capital $ 13,278.8 $ 12,283.0 Return on invested capital 16.2 % 16.3 % 33 2025 PROJECTED ADJUSTED EBITDA Projected Adjusted EBITDA is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below: in millions 2025 Projected Mid-point Net earnings attributable to Vulcan $ 1,090 Income tax expense, including discontinued operations 315 Interest expense, net of interest income 245 Depreciation, depletion, accretion and amortization 800 Projected EBITDA 1 $ 2,450 Items included in YTD Adjusted EBITDA 0 Projected Adjusted EBITDA $ 2,450 1 Includes $150 million estimated contribution from acquisitions. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures, other than the reconciliation of Projected Adjusted EBITDA as noted above. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results. LIQUIDITY AND FINANCIAL RESOURCES Our primary sources of liquidity are cash provided by our operating activities, a substantial, committed bank line of credit and our commercial paper program. Additional sources of capital include access to the capital markets, the sale of surplus real estate and dispositions of nonstrategic operating assets. We believe these financial resources are sufficient to fund our business requirements for 2025 including: ▪ contractual obligations ▪ capital expenditures ▪ debt service obligations ▪ dividend payments ▪ potential acquisitions ▪ potential share repurchases Our balanced approach to capital deployment remains unchanged. We intend to balance reinvestment in our business, growth through acquisitions and return of capital to shareholders, while sustaining financial strength and flexibility. We actively manage our capital structure and resources in order to balance the cost of capital and the risk of financial stress. We seek to meet these objectives by adhering to the following principles: ▪ maintain substantial bank line of credit borrowing capacity ▪ proactively manage our debt maturity schedule such that repayment/refinancing risk in any single year is low ▪ maintain an appropriate balance of fixed-rate and floating-rate debt ▪ minimize financial and other covenants that limit our operating and financial flexibility 34 CASH Included in our March 31, 2025 cash and cash equivalents and restricted cash balances of $192.9 million is $11.6 million of restricted cash as described in Note 1 to the condensed consolidated financial statements under the caption "Restricted Cash". CASH FROM OPERATING ACTIVITIES Three Months Ended March 31 in millions 2025 2024 Net earnings $ 129.4 $ 102.9 Depreciation, depletion, accretion and amortization 186.4 150.9 Noncash operating lease expense 13.5 12.9 Net gain on sale of property, plant & equipment and businesses (7.4) (0.6) Deferred income taxes, net (1.8) (2.1) Other operating cash flows, net 1 (68.6) (90.6) Net cash provided by operating activities $ 251.5 $ 173.4 1 Primarily reflects changes to working capital balances. Net cash provided by operating activities was $251.5 million during the three months ended March 31, 2025, a $78.1 million increase compared to the same period of 2024. The increase was primarily attributable to higher earnings after adjusting for non-cash charges for depreciation, depletion, accretion and amortization. Days sales outstanding, a measurement of the time it takes to collect receivables, were 42.3 days at March 31, 2025 compared to 43.0 days at March 31, 2024. Additionally, our over 90 day receivables balance was $28.5 million at March 31, 2025, an increase of $5.8 million from the $22.7 million balance at March 31, 2024. 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 $126.5 million during the first three months of 2025, a $37.3 million decrease compared to the same period of 2024. During the first three months of 2024, we acquired businesses for $12.3 million whereas there were no business acquisitions in the first three months of 2025. Conversely, during the first three months of 2025, we sold businesses in Texas for $19.0 million whereas there were no business dispositions in the first three months of 2024 (see Note 16 to the condensed consolidated financial statements for acquisitions and divestitures). Additionally, during the first three months of 2025, we invested $168.0 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $152.8 million in the prior year period. This $168.0 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 $532.9 million during the first three months of 2025, a $125.8 million decrease compared to cash used of $658.7 million in the same period of 2024. The current year includes cash paid to redeem the $400.0 million senior notes due 2025 whereas the prior year includes cash paid to redeem the $550.0 million senior notes due 2026. Additionally, we returned $104.1 million to shareholders (a $23.3 million increase over the prior year) through $66.0 million of dividends ($0.49 per share compared to $0.46 per share) and $38.1 million of common stock repurchases (170,000 shares repurchased at $224.36 average price per share in 2025 compared to 70,932 shares repurchased at $265.44 average price per share in 2024). 35 DEBT Certain debt measures are presented below: in millions March 31 2025 December 31 2024 March 31 2024 Debt Current maturities of long-term debt $ 0.5 $ 400.5 $ 0.5 Long-term debt 4,907.9 4,906.9 3,330.7 Total debt $ 4,908.4 $ 5,307.4 $ 3,331.2 Capital Total debt $ 4,908.4 $ 5,307.4 $ 3,331.2 Total equity 8,158.5 8,142.5 7,516.6 Total capital $ 13,066.9 $ 13,449.9 $ 10,847.8 Total Debt as a Percentage of Total Capital 37.6 % 39.5 % 30.7 % Weighted-Average Effective Interest Rates Line of credit 1 1.13 % 1.13 % 1.13 % Commercial paper 4.69 % 4.65 % 5.55 % Term debt 5.04 % 5.00 % 4.63 % Fixed Versus Floating Interest Rate Debt Fixed-rate debt 89.0 % 89.8 % 83.8 % Floating-rate debt 11.0 % 10.2 % 16.2 % 1 Reflects the margin above SOFR for SOFR-based borrowings; 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, 2025, total debt to trailing-twelve months Adjusted EBITDA was 2.3 times (2.2 times on a net debt basis reflecting $192.9 million of cash on hand). Our weighted-average debt maturity was 13.4 years, and our total weighted-average effective interest rate was 5.00%. LINE OF CREDIT AND COMMERCIAL PAPER PROGRAM Our $1,600.0 million commercial paper program was established in August 2022 and matures in November 2029. Commercial paper borrowings bear interest at rates determined at the time of borrowing and as agreed between us and the commercial paper investors. As of March 31, 2025, we had $550.0 million in long-term commercial paper borrowings with a 4.69% effective interest rate. Our $1,600.0 million unsecured line of credit was amended in November 2024 to extend the maturity date from August 2027 to November 2029. Our line of credit contains covenants customary for an unsecured investment-grade facility. Covenants, borrowings, cost ranges and other details are described in Note 7 to the condensed consolidated financial statements. As of March 31, 2025, 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, 2025, our available borrowing capacity under the line of credit was $1,576.1 million. Utilization of the borrowing capacity was as follows: ▪ None was borrowed ▪ $23.9 million was used to support standby letters of credit TERM DEBT All of our $4,990.7 million (face value) of term debt (which includes $550.0 million of commercial paper) is unsecured. All of the covenants in the debt agreements are customary for investment-grade facilities. As of March 31, 2025, we were in compliance with all term debt covenants. In November 2024, we issued $500.0 million of 4.95% senior notes due 2029, $750.0 million of 5.35% senior notes due 2034 and $750.0 million of 5.70% senior notes due 2054. Total proceeds of $1,975.0 million (net of discounts and transaction costs), together with cash on hand, were used to provide liquidity for acquisitions in 2024 and debt maturing in 2025. In March 2025, we redeemed the $400.0 million senior notes due April 2025 using cash on hand . 36 CURRENT MATURITIES OF LONG-TERM DEBT The $0.5 million of current maturities of long-term debt as of March 31, 2025 is due as follows: in millions Current Maturities Second quarter 2025 $ 0.0 Third quarter 2025 0.0 Fourth quarter 2025 0.0 First quarter 2026 0.5 DEBT RATINGS Our debt ratings and outlooks as of March 31, 2025 are as follows: Short-term Long-term Outlook Fitch F2 BBB Positive Moody's P-2 Baa2 Stable Standard & Poor's A-2 BBB+ Stable EQUITY The number of our common stock issuances and purchases for the year-to-date periods ended are as follows: in millions March 31 2025 December 31 2024 March 31 2024 Common stock shares at January 1, issued and outstanding 132.1 132.1 132.1 Common stock issued for share-based compensation plans 0.2 0.3 0.3 Common stock purchased and retired (0.2) (0.3) (0.1) Common stock shares at end of period, issued and outstanding 132.1 132.1 132.3 As of March 31, 2025, there were 6,647,118 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. The authorization has no time limit, does not obligate us to purchase any specific number of shares and may be suspended or discontinued at any time. The detail of our common stock purchases (all of which were open market purchases) for the year-to-date periods ended are as follows: in millions, except average price March 31 2025 December 31 2024 March 31 2024 Number of shares purchased and retired 0.2 0.3 0.1 Total purchase price $ 38.1 $ 68.8 $ 18.8 Average price per share $ 224.36 $ 254.71 $ 265.44 There were no shares held in treasury as of March 31, 2025, December 31, 2024 and March 31, 2024. 37 OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements such as financing or unconsolidated variable interest entities. STANDBY LETTERS OF CREDIT For a discussion of our standby letters of credit, see Note 7 to the condensed consolidated financial statements. CRITICAL ACCOUNTING POLICIES We follow certain significant accounting policies when preparing our consolidated financial statements. A summary of these policies is included in our Annual Report on Form 10-K for the year ended December 31, 2024 (Form 10-K). We prepare these financial statements to conform with accounting principles generally accepted in the United States of America. These principles require us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and contingent liabilities at the date of the financial statements. We base our estimates on historical experience, current conditions and various other assumptions we believe reasonable under existing circumstances and evaluate these estimates and judgments on an ongoing basis. The results of these estimates form the basis for our judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates. 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, 2025. NEW ACCOUNTING STANDARDS For a discussion of the accounting standards recently adopted or pending adoption and the effect such accounting changes will have on our results of operations, financial position or liquidity, see Note 17 to the condensed consolidated financial statements. 38 FORWARD-LOOKING STATEMENTS Certain matters discussed in this report, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to: ▪ general economic and business conditions ▪ our dependence on the construction industry, which is subject to economic cycles ▪ the timing and amount of federal, state and local funding for infrastructure ▪ changes in the level of spending for private residential and private nonresidential construction ▪ changes in our effective tax rate ▪ domestic and global political, economic or diplomatic developments ▪ the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks ▪ the impact of the state of the global economy on our businesses and financial condition and access to capital markets ▪ international business operations and relationships, including recent actions taken by the Mexican government with respect to our property and operations in that country ▪ the highly competitive nature of the construction industry ▪ a pandemic, epidemic or other public health emergency ▪ the impact of future regulatory or legislative actions, including those relating to climate change, biodiversity, land use, wetlands, greenhouse gas emissions, the definition of minerals, tax policy and domestic and international trade ▪ the outcome of pending legal proceedings ▪ pricing of our products ▪ weather and other natural phenomena, including the impact of climate change and availability of water ▪ availability and cost of trucks, railcars, barges and ships, as well as their licensed operators, for transport of our materials ▪ energy costs ▪ costs of hydrocarbon-based raw materials ▪ healthcare costs ▪ labor relations, shortages and constraints ▪ the amount of long-term debt and interest expense we incur ▪ changes in interest rates ▪ volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans ▪ the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses ▪ our ability to secure and permit aggregates reserves in strategically located areas ▪ our ability to manage and successfully integrate acquisitions ▪ the effect of changes in tax laws, guidance and interpretations ▪ significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets ▪ changes in technologies, which could disrupt the way we do business and how our products are distributed ▪ the risks of open pit and underground mining ▪ expectations relating to environmental, social and governance considerations ▪ claims that our products do not meet regulatory requirements or contractual specifications ▪ other assumptions, risks and uncertainties detailed from time to time in our periodic reports filed with the Securities and Exchange Commission All forward-looking statements are made as of the date of filing or publication. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. Investors are cautioned not to rely unduly on such forward-looking statements when evaluating the information presented in our filings, and are advised to consult any of our future disclosures in filings made with the Securities and Exchange Commission and our press releases with regard to our business and consolidated financial position, results of operations and cash flows. 39 INVESTOR INFORMATION We make available on our website, www.vulcanmaterials.com , free of charge, copies of our: ▪ Annual Report on Form 10-K ▪ Quarterly Reports on Form 10-Q ▪ Current Reports on Form 8-K Our website also includes amendments to those reports filed with or furnished to the Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as well as all Forms 3, 4 and 5 filed with the SEC by our executive officers and directors, as soon as the filings are made publicly available by the SEC on its EDGAR database ( www.sec.gov ). In addition to accessing copies of our reports online, you may request a copy of our Annual Report on Form 10-K, including financial statements, by writing to Denson N. Franklin III, Senior Vice President, General Counsel and Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242. We have a: ▪ Business Conduct Policy applicable to all employees and directors ▪ Code of Ethics for the CEO and Senior Financial Officers Copies of the Business Conduct Policy and the Code of Ethics are available on our website under the “Investor Relations” tab (“Governance” section). If we make any amendment to, or waiver of, any provision of the Code of Ethics, we will disclose such information on our website as well as through filings with the SEC. Our Board of Directors has also adopted: ▪ Corporate Governance Guidelines ▪ 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 & 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. Information included on our website is not incorporated into, or otherwise made a part of, this report. 40