Vulcan Materials Company

Good morning, ladies and gentlemen, and welcome to the Vulcan Materials Company's first quarter 2023 earnings call. My name is Travis, and I'll 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. Now, I'd like to turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin, sir.

Good morning and thank you for your interest in Vulcan Materials. With me today are Tom Hill, Chairman and CEO, and Mary Andrews Carlyle, 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. Additionally, 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. In the interest of time, please limit your Q&A participation to one question. This will allow for more questions during our time together. With that, I'll turn the call over to Tom.

Thank you, Mark, and thank all of you for joining our call this morning. Vulcan Materials is well positioned to deliver attractive growth in 2023. We got off to a solid start in the first quarter. and now expect to deliver between $1.85 and $1.95 billion in adjusted EBITDA this year, a 14% to 20% improvement versus the prior year. In the quarter, we generated $338 million of adjusted EBITDA, a 15% improvement over the prior year. Despite lower volumes in each of our major product lines, Total gross profit improved 12% and gross margin expanded by 90 basis points. I'm pleased with our team's execution as they remain focused on our Vulcan way of selling and Vulcan way of operating disciplines. The pricing environment is healthy. Year-over-year adjusted average price improved 19% in the quarter. Prices also improved in our downstream products by 15% in asphalt and 12% in concrete. As always, we are focused on capitalizing on pricing momentum and controlling costs to expand our margins. In the aggregate segment, gross margin improved by 170 basis points. Shipments declined 2% versus the prior year with wide variations across markets. Some areas benefited from favorable weather and carryover shipments from the wet fourth quarter. Others, like California and Texas, were challenged by excessive rainfall. All geographies delivered double-digit price improvement. And importantly, our cash gross profit per ton improved by 23 percent in the quarter, surpassing $8 per ton on a trading 12-month basis. And that's fall. Gross margins improved by 220 basis points despite higher natural gas and liquid asphalt cost and 11% lower volumes. Significant rainfall negatively impacted shipments in California and Arizona, our largest asphalt markets. Prices improved by 15% and more than offset high raw materials costs. Cash unit profitability and asphalt improved by 90% in the quarter. The concrete segment's cash growth profit was negatively impacted by the 2022 divestiture of our New York, New Jersey, and Pennsylvania operations, as well as weather-impacted volume in Texas and California and the resulting cost challenges. Now, shifting to the dynamic demand environment, which remains mixed both in terms of end uses and timings. We continue to expect modest growth in overall public demand, but contraction in private demand. While single-family housing starts continue to fall, some markets have begun to show early signs of decelerating declines. Multifamily housing starts have recently turned negative. However, they remained at high levels, particularly in Vulcan markets, and continue to dampen some of the impact of single-family weakness. Affordability is the fundamental driver of the declines in single-family activity. Low inventories, favorable demographic trends, and employment growth in our markets continue to support demand for new residential construction. While the pipeline of private non-residential projects remains supportive of near-term demand starts have eased in recent months. A positive trend in non-residential construction activity is the increasingly broad-based composition of starts. Industrial and manufacturing projects now account for more than 60% of starts. Recent trends in supply chain management, onshoring, and clean energy investment are among the catalysts for this shift in the drivers of non-residential construction. Our geography and service capabilities enable us to capitalize on these large projects. We have booked and are currently shipping to a number of these projects in many of our key markets, such as battery plants, electric vehicle manufacturing facilities, LNG facilities, and large warehouse parks. On the public side, momentum is building with trailing 12-month highway starts now exceeding $100 billion. The infrastructure investment and Jobs Act dollars are flowing. The impact of these historic levels of public construction awards on 2023 aggregate shipments will depend upon how quickly starts can turn into shipments. Other infrastructure starts are also growing, with trailing 12-month starts up 23%. In addition to significant IIJA funding for water, energy, ports, and airports, strong state and municipal revenue support non-highway infrastructure investment. Overall, 2023 demand for agri continues to be dependent upon the depth of the decline in residential construction activity and the timing of highway starts converting into agri shipments. Our durable agri business and best-in-class execution position us well to successfully navigate any shifts in demand. Now I'll turn the call over to Mary Andrews for some additional commentary on our first quarter performance and update 2023 outlook. Mary Andrews.