Vulcan Materials Company

Good morning ladies and gentlemen and welcome to the Vulcan Materials Company's second quarter earnings conference call. My name is John and I will be your conference call coordinator today. As a reminder today's call is being recorded. During the Q&A portion of this call we ask that you limit your participation to one question plus a follow-up. This will allow everyone who wishes the opportunity to participate. Now I will turn the call over to your host Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Good morning, and thank you for joining our second quarter earnings call. With me today are Tom Hill, Chairman and CEO, and Suzanne Wood, Senior Vice President and Chief Financial Officer. A question and answer session will follow their prepared remarks. Before we begin, I'd like to call your attention to our quarterly supplemental materials posted at our website, VulcanMaterials.com. You can access this presentation from the Investor Relations homepage of the website. Additionally, a recording of this call will be available for replay at our website later today. Please be reminded that comments regarding the company's results and projections may include forward-looking statements which are subject to risks and uncertainties. These risks, along with other legal disclaimers, are described in detail in the company's earnings release and in other filings with the Securities and Exchange Commission. Finally, management will refer to certain non-GAAP financial measures. You can find a reconciliation of these measures and other related information in both our earnings release and at the end of our supplemental presentation. Now I'd like to turn the call over to Tom.

Thank you, Mark, and thanks to everyone for joining our call today. We truly appreciate your interest in Vulcan Materials. Our second quarter results reflected our continued strong performance, a 15% improvement in adjusted EBITDA, an 11% improvement in aggregate gross profit per ton. We are relentlessly focused on unit margin. It is one of our most important metrics, and it increased in the second quarter by 58 cents to $5.74 per ton. On a trailing 12-month basis, our aggregate gross profit per ton has increased at a 12% compounded annual growth rate from the second quarter of 2013. We remain on track to achieve our full-year EBITDA expectations. Our overall results for the first half of the year and the trajectory of the principal drivers of profitability in our aggregate business, volume, price, and cost, were in line with our expectations. I'll spend a few minutes giving you some highlights of our performance in these areas. Aggregate shipments in the quarter increased by 4% year-over-year, or 3% on a same-store basis. This growth in volume reflects the solid underlying fundamentals in our markets. Shipments in our southeast and mid-Atlantic markets were particularly strong. California experienced another wet quarter, but despite this, shipments increased compared to the same period last year. Wet weather also affected shipments in Illinois, Tennessee, and Texas. The second driver of our profitability is price. and we performed well here also. Freight adjusted average sales price improved by 5.9% compared to the same quarter last year. On a mix adjusted basis, the increase was 5.4%. The 50 basis point difference was due to federal geographic mix. These increases were in line with our expectation, and the pricing gains were widespread. every key market across our footprint posted improved pricing. Our third key profitability driver centers on our cost disciplines and our operational efficiencies. Our management teams and our leaders across the company are keenly focused on this and are making good progress. We measure our operational efficiencies in a number of ways, but one key financial metric for Agris is same-store gross profit flow through. On a trailing 12-month basis, it was 65% at the end of June. Our operational execution at the plant level keeps improving, and it's rewarding to see that the hard work of our men and women at Vulcan is translating into strong incremental earnings. We will continue to focus on these disciplines because they are a significant contributor to the quality of our earnings, and our ability to compound our unit margins. As we look to the second half of the year, the overall view of our markets is generally unchanged. Shipments into private construction in markets are good. On the public side, demand is healthy and continues to strengthen with the increases in state and local highway funding being converted into backlogs and shipments. We believe that we are in the early stages of longer-term growth in highway demand, which is a function of increased state and local investment in infrastructure. Since our last call, another Vulcan state, Illinois, has passed legislation to increase revenues for roads. Since 2013, 11 states that make up 85% of our revenue have increased fuel taxes or increased other ongoing sources of revenue for highways. This supports our positive highway demand outlook, and the improved visibility underpins improving pricing. In summary, our backlogs are good, and our geographic footprint and capabilities put us in a strong position to take advantage of market opportunities. Now I'll turn the call over to Suzanne for some additional comments on the results. Suzanne?