Vulcan Materials Company

Good morning. Welcome everyone to the Vulcan Materials Company third quarter 2023 earnings call. My name is Angela and I will be your conference call coordinator today. Please be reminded that today's call is being recorded and will be available for replay later today at the company's website. All lines have been placed in a listen only mode. After the company's prepared remarks, there will be a question and answer session. 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.

Thank you, Operator, and good morning, everyone. With me today are Tom Hill, Chairman and CEO, and Mary Andrews Carlisle, 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. 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 non-GAAP financial measures are defined and reconciled in our earnings release, our supplemental presentation, and other SEC filings. During the Q&A, we ask that you limit your participation to one question. This will allow us to accommodate as many as possible during the time we have available. And with that, I'll turn the call over to Tom.

Thank you, Mark, and thank all of you for joining our call this morning. In September, we officially surpassed our prior goal of $9 per ton cash gross profit on a 12-month basis. And that was before reaching the 230 million tons on the same store basis and despite macro challenges over the past four years that none of us likely anticipated back in the fall of 2019 when we initially set that target. This accomplishment perfectly demonstrates the durability of our Irish-led business. And I'm really proud of how our teams continue to execute at a high level. Compounding profitability through the solid execution of our Vulcan Web Selling and Vulcan Web Operating strategic disciplines is at the core of who we are across our coast-to-coast footprint. Today, our teams are intensely focused on our new target of $11 to $12 of cash gross profit per ton. Cash gross profit per ton growth is key to increasing our free cash flow and continue to create value for our shareholders. In the quarter, we generated $602 million of adjusted EBITDA, which is a 19% improvement over the prior year. Our aggregate asphalt and concrete product lines all posted another quarter of year-over-year growth margin improvement. In the aggregate segment, gross margin expanded by 200 basis points, and cash Gross profit per ton improved by 18% despite lower volumes. Shipments declined 2% in the quarter with variations across end uses and geographies. Residential weakness impacted the majority of our markets, while at the same time, many of our markets are seeing improving momentum in highway shipments. Private non-residential construction activity related to large industrial and manufacturing projects continue to drive healthy volume growth, particularly in Georgia and the Carolinas. Remember, footprint matters in the Irish business. Ours is unmatched in the southeast where private demand dynamics are currently strongest and across the country in states where IIJA investments will be the most significant. Pricing momentum continued across our footprint with all geographies achieving healthy year-over-year increases. Average selling prices improved 15% in the quarter and 3% sequentially, more than offsetting continued inflationary cost pressures. In asphalt, gross margin improved 660 basis points. Shipments increased 11% and across most geographies with particular strength in California. Average selling prices improved 2% and cash unit profitability improved over 50%, benefiting from lower liquid asphalt costs and solid manufacturing cost control. Concrete gross margin improved 120 basis points. cash unit profitability improved by over 30% despite lower volume that continued to be impacted by the slowdown in residential construction activity. Remember, prior year concrete segment earnings benefited from the contribution of the now divested New York, New Jersey, and Pennsylvania concrete operations. Through the first nine months of the year, we have executed well and successfully navigated evolving macro dynamics. Let me comment briefly on what we're currently seeing in each end use. Starting with residential, we're encouraged by the recent growth in single-family permits and starts in many geographies over the last three months. On the other hand, after providing some support for overall residential demand, multifamily starts have now began to pull back from historically high levels. Affordability and higher mortgage rates are likely to continue to have some impact on residential activity. But the underlying fundamentals remain firmly in place. Vulcan markets have low housing inventory levels and favorable demographics driving the need for additional housing. In private non-residential construction, trends differ across categories. As expected, warehouse activity, the largest non-res category, has softened. But manufacturing activity remains at high levels and is concentrated in the Balkan states. We have booked and are shipping on numerous large manufacturing projects where we offer customers a differentiated solution with our advanced footprint and logistics capabilities. On the public side, leading indicators remain supportive of continued growth in both highway and infrastructure. Trailing 12-month highway starts are up 18% and 2024 state budgets are at record levels. We continue to expect accelerating growth in public construction activity into next year and continued growth for the next several years. Our nimble sales and operating teams are well prepared to deliver value for our customers in any demand environment and to continue to improve unit profitability and drive value for our shareholders. Now, I'll turn the call over to Mary Andrews for some additional commentary on our third quarter performance and upgraded 2023 outlook. Mary Andrews?