Vulcan Materials Company

Good morning, ladies and gentlemen, and welcome to the Vulcan Materials Company's first quarter earnings call. My name is Chelsea, and I will be your conference call coordinator today. During the Q&A portion of this call, we ask that you limit your participation to one question. This will allow everyone who wishes the opportunity to participate. You may register to ask a question at any time by pressing the star and one on your touchtone phone. 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 your interest in Vulcan Materials. With me today are Tom Hill, Chairman and CEO, and Suzanne Wood, Senior Vice President and Chief Financial Officer. Today's call is accompanied by a press release and a supplemental presentation posted to our website, VulcanMaterials.com. A recording of this call will be available for replay later today at our website. Please be reminded that today's discussion 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. Reconciliations of any non-GAAP financial measures are defined and reconciled in our earnings release our supplemental presentation, and other SEC filings. As the operator indicated, please limit your Q&A participation to one question. With that, I'll now turn the call over to Tom.

Thank you, Mark, and thanks to everyone for joining the call this morning. As always, we appreciate your interest in Vulcan materials, and I hope that you and your families have had a safe and healthy start to the year. Our teams executed well in the first quarter, They remain focused on capitalizing on pricing opportunities and mitigating cost pressures. Their efforts have and will continue to result in the expansion of our unit margins. Our strategic disciplines are helping us to both take advantage of tailwinds and dampen headwinds in a very dynamic environment. We delivered solid results in the first quarter. We generated $294 million of adjusted EBITDA, a 20% increase over the prior year. despite accelerating inflation, continuing volatility in the energy markets, and ongoing disruptions in supply chains. This quarter, again, demonstrates the resiliency of our aggregates business and our team's strong execution of our strategic disciplines. Over the trading 12 months, we have delivered 10 percent adjusted EBITDA growth in spite of $131 million of higher energy-related cost. On a trading 12 months, aggregate cash gross profit per ton has improved for 15 consecutive quarters, absent the impact of selling acquired inventory. In all business segments, the pricing environment is strong due to growing demand and ongoing inflation. Momentum continued with year-over-year growth and aggregate mixed adjusted price increases sequentially for the fifth straight quarter. Our combined commercial and operational execution contributed to higher cash gross profit in both aggregates and total non-aggregate segments. In the downstream businesses, volume, price, and material margins improved in both product lines. Turning now to the segments, aggregates gross profit improved 9% to $243 million, or $4.58 per tonne. Demand is healthy across our footprint and volume improved 14% or 7% on the same store basis. Shipments were in line with expectations since the prior year's quarter was negatively impacted by the big February freeze. As anticipated, aggregate pricing showed strong momentum in the first quarter with freight adjusted pricing increasing 6% over the prior year's first quarter. Mixed adjusted pricing improved 7%. We expect to see continued strength in pricing throughout the year and are confident about mid-year price increases that will be particularly impactful to 2023. As expected, our costs were elevated in the quarter on a year-over-year basis since the inflationary impacts did not begin in Ernst until the second quarter last year. Over the 12 months of continuously rising diesel, and other inflationary impacts, our freight adjusted unit cash cost of sales has increased by 5%. In a challenging macro environment, this is a job well done, and I commend our operators for their hard work and for keeping each other safe and for delivering these results. In the first quarter, cash gross profit was $6.53 per ton, excluding the impacts of selling acquired inventory and higher diesel costs, cash gross profit was $6.90 per ton, a 5% improvement over the prior year. Asphalt cash gross profit of $6 million was in line with the prior year. Pricing actions initiated last year to offset rising liquid asphalt input costs positively impacted the first quarter results. Average selling prices increased 13%, versus last year and helped to improve unit materials margins. The average price of liquid asphalt was over 30% higher than the prior year, a $14 million headwind to our first quarter results. While we expect liquid asphalt prices to continue to rise, we are encouraged by the significant sequential improvement that we've seen in pricing over the last couple of quarters and we remain focused on improving our gross profit margin in asphalt. Concrete cash gross profit grew from $12 million to $49 million in the first quarter, driven primarily by the addition of U.S. concrete. Volume, price, and material margins all improved as higher selling prices offset higher material costs, including internally supplied aggregates. Now let's shift to the demand environment, which remains positive. Private demand is expected to grow in 2022 across all major categories, both single and multifamily housing, and both heavy and more traditional non-residential. Public demand is improving, and as funding is put in place from the Infrastructure Investment and Jobs Act, future growth is expected in both highways and other infrastructure. After double-digit growth in 2021, the residential end use is expected to grow, but at a more modest rate in 2022. Demand remains strong and starts are still positive. However, we are mindful of factors such as supply chain issues, rising interest rates, and labor constraints. With the continued demand for additional housing, multifamily demand is accelerating. Private non-residential demand has returned to growth in 2022. While demand will continue to be influenced by aggregate's intensive warehouse and distribution projects, other private segments like office, manufacturing, and industrial are now contributing to the sustainable growth in this end market. On a trading 12-month basis, square footage for total non-residential starts has grown for the last seven months and is now back to pre-COVID levels. Other external leading indicators, like ABI and the Dodge Momentum Index, also point toward growth for 2022. On the public side, demand growth is expected in both highways and other infrastructure. The timing of the impact of the Infrastructure Investment and Jobs Act will depend upon the pace at which states allocate additional funds and the time horizon needed to move from design to letting to construction. As we previously communicated, we anticipate the majority of the impact to be realized in 2023 and beyond. We are well positioned in attractive markets and are poised to benefit greatly from the legislation for years to come. With the solid demand backdrop and positive pricing environment, we remain confident in delivering significant earnings improvement in 2022. We are focused on leveraging our strategic disciplines to control what we can control and to diminish the impacts of things outside of our control. I will now turn the call over to Suzanne for further comments. Suzanne?

Thanks, Tom, and good morning to everyone. The macro challenges of the last 24 months have been well documented and discussed. We continue to confront these challenges from a position of strength led by our resilient aggregates business. Our commercial and operational execution are sound and supported by our strategic disciplines. Our balance sheet is strong. These factors combine to form our positive 2022 outlook. As Tom already highlighted, our strategic disciplines help us to take advantage of tailwinds and dampen the impact of headwinds. We've done that over the last eight quarters, delivering a 4% compound annual growth rate in our trailing 12 months cash unit margins in the face of a number of challenges. The current pricing environment provides tremendous support for both our near-term and longer-term results and will continue to leverage best practices and the collective knowledge of our talented teams to manage our overall costs. This is evident in our SAG cost, which as a percentage of total revenues declined 60 basis points versus the prior year's quarter. We continue to make progress on the integration of U.S. concrete to further leverage our costs. Now, with respect to the balance sheet, we took steps in the quarter to improve its structure. We extended the maturity of our $1.1 billion term loan to August 2026. The loan can be repaid in full or in part at any time with no penalty. Simultaneously, we also extended the maturity of our revolving credit facility to September 2026. Our net leverage is 2.6 times. That's just above the top end of our target range of two to two and a half times. Given our ability to generate strong cash flows, there is capacity to invest in other opportunities, whether organic or inorganic. Having said that, we do expect to move back within the target range by year end. As always, we'll remain disciplined as we allocate capital with a view to improving shareholder returns and maintaining financial flexibility and our investment grade ratings. We also remain focused on improving our return on investment. On a trailing 12 months basis, our ROIC at quarter end was 14%. And our adjusted EBITDA over the same time horizon has improved by 10%. And we expect continued growth in 2022. In February, we communicated expectations for 2022 of delivering adjusted EBITDA between $1.72 and $1.82 billion. We reiterate this guidance. We expect the favorable pricing dynamics and our strong execution to lead to attractive growth in aggregates unit profitability, as well as improvement in our downstream businesses. Our expectation of investing between $600 million and $650 million in capital expenditures remains unchanged. I'll now turn the call back over to Tom for closing remarks.

Thank you, Suzanne. In closing, I would like to remind you of three things our teams remain clearly focused on in order to deliver value for all of our stakeholders. One, executing at the local level. Two, driving unit margin expansion by focusing on our strategic disciplines. And three, maximizing synergies from recent acquisitions. Our people are what makes Vulcan better every day, and I appreciate the hard work of our entire Vulcan team. I'm excited about what we will accomplish in 2022 and for years to come. And now, Suzanne, I'll be happy to take your questions.

All right, thank you. At this time, if you would like to ask a question, please press the star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star and 1 to ask a question. And our first question will come from Trey Grooms with Stevens. Your line is now open.

Hey, good morning, Tom and Suzanne. How are you?

Good morning, Trey.

Good.

Good morning.

Great. Tom, first off, I know you talked a little bit about the pricing environment and that it clearly is strong. And you have an expectation for price momentum to step up in 2022. And, you know, I guess if you kind of go back to what you said in February, I think the guidance called for 6% to 8% increase this year in price versus last year, which came in, I think, closer to 3%. So, you know, and you put up 6% in the quarter, so clearly some nice acceleration there. But can you talk about the price momentum you're seeing today, you know, expecting through the year? and how you're thinking about mid-year increases relative to maybe, you know, where you were a few months ago.

Sure. I thought the performance in the first quarter was a really good start to the year. As you said, we reported six, mixed adjusted, we were at seven. If you remember in February, we predicted it to start off higher than, you know, at the low end of the range, but higher than the fourth quarter last year. and then we grow it sequentially as we march through the year. That combination of visibility to demand and coming demand, you couple that with inflation, it's just a good catalyst for price growth. All of our January and April increases are now in place. At this point, I feel very confident about mid-year price increases across the vast majority of our work. Now, remember, mid-year price increases will have some positive impact on 2022. But because of the delay in our work and our jobs, it's really more of a 23 play, and it sets us up really good for next year. So off to a really good start. I think we progress and continue to accelerate price as we go through the year, and we're already starting to set ourselves up for 2023. So, you know, as you said, a really good pricing environment.

And Trey, I'll just add one thing just to remind everyone. When we're talking about pricing and guidance, we all price in the industry a little bit differently and talk about it a little bit differently. So as a reminder, our pricing that we quote to you is freight adjusted, meaning that it's FOB the quarry. And therefore, it excludes transportation to long-haul markets. So in times of inflation and volatility, you know, that can make a big difference in the top line price that's quoted. But what's really important here, and I'm sure we'll come on to talk about unit margins later, is how much of that price you're really able to take to the bottom line.

Perfect. Thank you for that. And I'm going to stick with the one question, but I do got to take my hats off to you on the profit for tons as well, the good work on that side as well. Thank you. Thanks, Fred.

Thank you. Our next question will come from Stanley Elliott with Stifle.

Hey, good morning, everyone. Thank you for the question. Good morning. It actually was a nice segue for me. Hey, Tom, I was curious if you could talk a little bit more about, you know, the execution, controlling costs. I mean, freight adjusted costs up 11%. Doing a really nice job on the unit margins. We'd love to hear you guys talk a little bit more about what's happening behind the scenes.

Sure. You know, as we've talked about, our aggregates business is, we believe will beat inflation. While we continue to do a good job on price, I think our operators have really improved efficiencies to help offset inflation and offset the huge $59 million 12-month spike we've experienced in diesel and aggregates. And I think they're doing it all the time, making sure they service our customers to keep each other safe. So if you kind of look back over the last 12 months, we've held costs to 5% in the face of inflation and massive spikes in fuel and energy. I would tell you, I think that has been an excellent job from our operators, and I appreciate the job they're doing. And as always, they do it keeping our folks healthy and safe. And to me, what this demonstrates throughout the whole agri-business is that we're executing on our four strategic disciplines, and they're making a difference of obviously controlling wound control, but also offsetting outside pressures that maybe we had not expected when we started this journey.

Thanks, everybody. Best of luck.

Thank you.

Thank you. Our next question will come from Jerry Revick with Goldman Sachs.

Yes, hi. Good morning, everyone. Hey, good morning, Jerry. I'm wondering if you could just talk about the magnitude of inflation that you folks are seeing on labor and, you know, other inputs. And, you know, what do you expect the cadence of that to look like? In other words, when do we hit an easier comp from that standpoint? And I'm assuming the price realization is going to dovetail nicely with that cadence. But maybe I can get you to expand on price cost if you don't mind.

Sure, I'd be glad to. It's like everybody else. It's everywhere. To call out labor, probably a bit single-digit. You know, parts are up, hard-to-get parts, steel's up, rubber's up, everything's there. You know, the headline has to be in fuel and in energy. If you just look at diesel, we predicted – I'll tell you what, if you look at diesel and asphalt, what we said – Last quarter was probably a $50 million headwind in the first half of the year. That's probably going to be 50% higher at this point. We said it probably gets easier in comps in Q3 and 4, and we'll probably just comp over that. At this point, we still predict those now to be up in Q3 and 4. So, you know, it's tough, and it's there, and it's real. But as you pointed out, I think we offset that with price, and we continue – to improve our unit margins, which is our job. And I think that if you looked at our guidance, I think both Suzanne and I have confidence that we hit that guidance. And I think the first quarter was evidence of that. Thank you. Thank you.

Thank you. Our next question will come from Catherine Thompson with the Thompson Research Group.

Hi, thank you for taking my question today. Hi, good morning. So you have a good volume outlook and are seeing some areas that have not seen signs of life, including office, and you've yet to see the real momentum on a state level from public spending. And against this backdrop, there continue to be some supply chain snafus and you're tight in cement. across the U.S. We're even hearing some concerns about availability of certain types of rock heading into the peak construction season. How are, first, from your perspective, how is the supply chain journey for you as you manage your business now? And then how do you see it going forward for the remainder of 22 and really into 23 too? Thank you.

Yeah, so for us, I mean, it's impacted us a little bit, maybe a little on efficiencies with parts for mobile equipment. Hopefully that's improving, but we saw that for the first time in the first quarter. For our customers, I think it's a little bit different story. I thought that, you know, obviously the first quarter was strong, but remember we're comping over, you know, a pretty easy comp with the big freeze in February last year. So, again, it's just Q1 easy comp. The fundamentals in demand, I think, are really a good place and probably as good as we've seen in a long time with all four end uses should have shipments up in 2022. That said, as you pointed out, we've got labor and supply chain issues. Labor will affect our customers just catching up on work more than getting it done, but it also hurts us in transportation. It hurts the rail transportation. In any peak day with excellent weather, You just don't have enough trucks to deliver at peak demand, and so it kind of spreads it out. So as you point out, supply chain is just slowing some work. I think while that's being said, I think the good news is that work's not canceling. We're not seeing any jobs go away, and so while demand is there, it's not going away. It's just pushing it to the right and extending the cycle, and that's not all bad. potential for more sooner, but we haven't seen that easing yet as we go into the season.

Thank you very much.

Thank you.

Thank you. Our next question will come from Keith Hughes with Truist Securities.

Thank you. Several impressive things, but particularly asphalt, given some of the inflation seen in that sector. with the flat year of your performance. I guess my question is the next quarter or two, is there some recent inflation you're going to lag that's going to put some pressure, or do you think you're on the right side of costs now?

I think Q2 will see some pressures, as we've pointed out, because it's still a harder comp. We hadn't seen the big jump in – you started to see the inflation last year in Q2, but not the big jump in diesel and liquid. So Q2 has tougher comps kind of in all product lines. driven by energy. From a specific asphalt perspective, I was very pleased with the jump we saw in prices up 13%. And remember that we said in our guidance asphalt that we'd see gross profit grow driven by second half volumes and second half, you know, more than growth. I think that, you know, in the quarter, we saw liquid go up 130 bucks or $14 million. And the fact that we were able to offset it with price is a really good omen looking forward to the rest of the year. I think we've caught it, and I think as we progress through the year, we start back growing those unit margins and asphalt. Okay. Thank you. Thank you.

Thank you. Our next question will come from Garrick Schmoe with Loop Capital.

Oh, hi, thanks, and congrats on the quarter. I was just wondering if you can go into a little bit more detail just on the volume growth expectations for the rest of the year. You know, clearly Q1, you're up against a fairly easy comparison, but, you know, anything we should consider as a demand environment continues to improve for you.

Yeah, again, you know, I would stick to our guidance, which is five to seven kind of on volume growth. That's two to four same store growth. Again, great start. Again, easy comp, easy small quarter. I would call out this. I would stick to that guidance at this point until I see some ease. As we heard earlier, you've got labor issues. You've got supply chain issues. You could have cement issues. Being tight, I don't think it dampens volume that much, but You know, I don't see that easing at this point, so I would stick with our volume original growth until we see more.

And I think, like we said last quarter, I mean, if there is, you know, an easing, then, you know, we stand ready to benefit from that.

Yeah, understood. Thank you. Thank you.

Thank you. Our next question will come from David McGregor with Longbow Research.

Yes, good morning, everyone. Congratulations on the great quarter. Good morning. Impressive results. I guess I wanted to ask you about your EBITDA guidance range, the 172 to 182. And that's not changing, but obviously a lot within that is changing. And just responding to Garrick's question, you just talked about volume holding where you were in terms of beginning of year assumptions. Clearly, pricing is going to be a lot better. Can you just talk about how you're thinking about that cash cost inflation, that mid-single digit number you gave us back in February?

Yeah, so I think as I look at the year and just put some takes to the year after one quarter, and it's just the first quarter, I would say that it's probably upside to maybe to the high end of our pricing guidance, maybe upside on volume, although we haven't seen it yet. I think we'll have challenges. We knew we were going to have challenges on diesel. We got bigger challenges there than we had anticipated. We knew we were going to have challenges on liquid asphalt. Again, that has climbed more than we thought it would and will continue to climb. So we put all that together. I would tell you that I have good confidence in our guidance. It would need to see a little bit more before I would be willing to adjust it.

Okay. Thank you very much.

Sure.

Thank you. Our next question comes from Bill Meng with Jefferies.

Hey, guys. Congrats on a really strong quarter. Thanks, Sue. Tom and Suzanne, is there a good way to think about the mid-year increase from a contribution standpoint? And if demand remains pretty good, you see this being more of the norm and appreciating that the full impact is really more of a 2023 event. Can you get closer to double-digit pricing from an increase standpoint in the back half of this year? Sorry, a lot to unpack there.

No, it's okay. I think that if you step back and just look at the aggregates business, one of the really attractive attributes of aggregates is its pricing and elasticity. And from Vulcan's perspective, its ability to compound unit margins over time. That's specifically why we're in the aggregates business. That's why we're leading that business. That's why 90% of our gross profit is in aggregates. Today, the environment for price is growth is excellent, and it's really driven by the intersection of inflation, current demand, and visibility to growing demand. You've seen us sequentially grow price over the last five quarters, and I'm confident we'll continue that trend. So we started off at six or seven, depending on how you call the price in the quarter, and I think each quarter we'll continue to grow that as we progress forward. At this point, I would hope we would be at the higher end of that guidance at this point. Now, if you really want to be good at this business, you got to take that price to the bottom line, which is why we work so hard on those strategic disciplines and why it's not just about price, it's also about cost control and operating efficiencies. And so the combination of those two at this point, you know, even in the face of what we face with inflation, I think our troops are doing an excellent job, both in servicing our customers earning price, but also operating in the most efficient manner possible under some pretty tough circumstances.

Yeah, Phil, and I think you see that, you know, when you look at the guidance we called out, you know, at the beginning of the year, if you look at that cash gross profit per ton, and the guidance ranges that we've given call for that to go up, you know, high single digits year over year, and I'd, you know, I'd say at any time that's a good performance to be able to drive that to that level, but taking into consideration all the energy headwinds we've talked about and the inflation, despite the opportunity for some price increases, that's a performance I'd really be proud of.

For sure. I mean, given all the inflation you saw, the improvement in 1Q was pretty promising. Appreciate the call. Thank you.

Thank you. Our next question will come from Michael Dudas with Vertical Research.

Good morning, Mark, Suzanne, Tom. Good morning. Good morning. Tom, if you could share your thoughts on how the U.S. concrete integration is going relative to plan and what are the puts and takes you've seen over the first several months of having under the Vulcan family And is the New York kind of like the Northeast market? We hear about a lot of civil, a lot of work coming through various agencies in New York State. Are you seeing some of that for this year and going out into the next couple?

Yes, we are. New York, I think two things are happening in New York. The public demand is growing and there's some very big projects that are coming that are in the works. And now we're starting to see non-res up there starting to pop. So Good news at that market. If you step back and look at U.S. concrete, at this point, we're functioning as one business. The combined field teams operating as one team. I think, as you heard me say last quarter, the timing is turning out to be excellent for two reasons. As we talked about, non-residential man, which is so important to concrete, is in growth mode, and there's a lot of work coming in on across our footprint. And then pricing in all product lines, as we talked about, is really jumping in 2022. So it sets us up really well for that acquisition to create even more value for our shareholders.

Thank you.

Sure.

Thank you. Our next question will come from Courtney Yacobanis with Morgan Stanley.

Hi. Good morning, guys. Good morning. Just one clarification on the pricing comments. I know you've been talking a lot about the mid-years, but is your reiterated guidance include the upside from mid-years at the high end? Or I think last quarter you characterized it as not including mid-years in it. So just wanted to understand if that changed given the elevated diesel and liquid asphalt headwind that you are now baking in. And then secondly, On the downstream side, you've given us some guidance for gross profit last quarter. Any change to how we should be thinking about those business lines?

Yeah, so the pricing, I would point out, would still be in that 6 to 8, but probably on the high end of it. And you've got to remember that mid-year price increases will hit some of it in May, some of it in June, some of it in July. But because of the lag in our business, you'll get some benefit in 22, but it really sets you up. Most of that work is going to hit in 23. So while you'll see some benefit and push us, I would say, to the high end of that range, the big benefit is going to hit in 23, and that's great. I think from a downstream perspective, we would tell you it's the same. No change in guidance. Again, what we said was 300 to 325 cash gross profit in the downstream range. While we've seen inflationary pressures in both concrete and asphalt, we're also seeing price, and I would stick with our guidance and continue to grow our unit margins and volume, particularly second half loaded.

Okay, great. Thank you.

Thank you.

Thank you. Our next question comes from Michael Finnegar with Bank of America.

Hey, guys. Thanks for taking my question. Just following up, I mean, with the pricing now at the high end and what you started. So where you exit, I mean, you know, what, what kind of incremental should we be thinking about for next year? If you're looking at a 10 to 12% pricing in 2023, um, you know, should this basically this cash growth profit for time, which is growing high single digit, you know, how much is that accelerating? Should we be thinking about in 2023? and really thinking about those incrementals around that business.

Yeah. Well, too early to call pricing in 2023. Again, it's a nice setup with mid-year price increases. And I would always point you in aggregates to 6% incremental, same store. 60, yes. 60%, same store. And inflation puts pressure on that, particularly spikes in diesel. But if you look at it over the long term, I would guide you to that 60%.

Okay. And can gross margin and asphalt to ready mix, can that get back to 2020 levels next year? I know you're assuming that there's improvement in the second half this year, but with next year, if we get some moderation or just stabilization on these price increases, can we see those margins come back, or do you think there's something structural that keeps those margins in the downstream businesses from getting back to those levels?

I would remind you that 2020 was special for asphalt because of the sharp fall in liquid prices, and so it was probably an outlier, whereas 21 was also an outlier. The other way with the spike in liquid, it's somewhere in between those two, and I think we get back to more normalized prices I don't think there's anything structurally changed in asphalt. I think you just saw huge swings in liquid, which is abnormal, but we'll get back to more normalized margins in asphalt, and I think we're on our path there with what you saw in the first quarter.

All right. Thank you. Yeah, I want to just add here. I mean, look, we had a really good first quarter, and we're really excited about that. Our people worked very hard to deliver that, and we're very appreciative of to them for their efforts. And I think, you know, we certainly saw a good performance in price. You know, we said we're confident in mid-year price increases. And so while those are great to talk about, I just want to, you know, caution people, you know, let's not forget that there's a bit of another side to that equation. We've seen, you know, cost pressures. Tom talked about those in terms of energy and other inflation. So, When we reiterated our EBITDA guidance, we're really trying to take into effect both of those items.

Thank you.

Thank you. Our next question will come from Adam Thalheimer with Thompson Davis.

Hey, good morning, guys. Just a quick one on residential. Tom, I think you said residential decelerating growth this year. What are you hearing from some of your major home building clients, then maybe you can even kind of do a geographic walk for us. Thanks.

Yeah, the geographic walk is pretty easy. It's widespread. It's everywhere from a residential. And the housing market is just tight. I mean, in every market we operate in, maybe the exception of Illinois, but every place, even that one's not still got some tightness to it. But you can't find houses. I think residential demand continues to operate at a very high level. You still have supply chain issues. Again, demand is very good. Obviously, we'll see growth in 2022. I just don't think it's the white-hot level that we saw in 21 in single-family. Now, multifamily permits and starts are up double digits, so it's really heating up. Overall, both single-family and multifamily operates at a very high level and continues to be good. And I don't I think it's slowing down. I think the growth rate maybe has slowed a little bit, but it would have been tough to keep up at the rate we saw in 21.

Still at high levels.

Yeah. So growth just not, maybe not, is not at the level of growth that we saw in 21. But really good news. Understood. Thanks.

Thank you. Our next question will come from Brent Delman with D.A. Davidson.

Hey, thank you. Good morning. Hey, Tom, there's been some discussion about delays in certain infrastructure projects just because the costs sort of advanced beyond the original estimates of having to go back and kind of rebid it. Is that something you've seen become more pervasive across your markets in any sense, if that's had any effect at all in terms of swelling some of the good momentum? You know, I think that piece of your business should otherwise be doing.

I don't know that I've experienced the delays from inflation. I think when it comes to non-highway infrastructure, we should see growth in 2022. Starts in the last three months were up 16%. New subdivision work helps this segment. And I think we're well positioned. We are well positioned for some really big jobs that are coming in that sector. Um, and some, you know, everything's from lot repairs to airports to wind, farm work and rail and intermodal. Um, I think it continues to grow in 22 and 23. Okay. Thank you. Thank you.

Thank you. Our last question will come from Mike Dahl with RBC Capital Markets.

Hi, it's actually Chris Collado from Mike. Thanks for taking my question. Um, I understand that you guys still feel comfortable with your prior kind of volume outlook, but I just want to get a sense of the flexibility around that again in terms of supply chain pressures and the limiting factor that is on your outlook. Have supply chains improved at all this quarter, and what's your outlook there for the remainder of the year?

No, I would tell you the supply chain is still tight. I haven't seen any improvement. Labor is still tight. It doesn't impact you as much in Q1 because the volume's aren't at a high level they are in Q2 and Q3 in the construction season. So you're not operating at a high enough level to dampen it, which is what we're going to see in Q2, Q3. And it is supply chain from everything from windows to doors to doorknobs to switchgear to plumbing to pipe. It's just everywhere. And in the labor piece, not only dampens the construction companies, but also dampens, as I talked about, transportation. Both rail, you know, railroads are operating below, have been struggling, as everybody knows, to meet peak demand because they can't get crews. And then, you know, as I said, any day we're short on trucks in a peak shipping time. Again, I don't think it does away with demand. I just think it pushes it out and probably extends the cycle. So You know, not all bad news, although, you know, we like to ship as much as we can every day. If we don't get to it in the next quarter, the next quarter we'll get to it next year. So not all bad news. Hopefully that will ease up some as we progress the year. And, again, if that happens, we'll take advantage of it and we'll adjust and we'll communicate to you. But right now we just don't see it.

Understood. Appreciate the call. Sure.

Thank you. Ladies and gentlemen, this does conclude today's question and answer portion. It is now my pleasure to turn the call back over to Mr. Tom Hill for any closing remarks.

Thank you, Oprah. Listen, thank all of you for your interest in Vulcan materials and your time today. We hope that you and your family stay safe, and we look forward to talking to you throughout the quarter. Bye-bye. Thanks.