Vulcan Materials Company

Good morning, welcome everyone to the Vulcan Materials Company first quarter 2025 earnings call. My name is David and I'll be your coordinator today. Please be reminded that today's call is being recorded and will be available for replay later on 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 your call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Mark Warren Thank you, Operator, and good morning, everyone. 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 balkanmaterials.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, 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 our 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 the Vulcan Materials earnings call this morning. Our first quarter results showcase the powerful combination of our two-pronged growth strategy to improve earnings through compounding profitability in our organic business. and adding strategic assets to our portfolio. Consistently expanding our cash gross profit per ton is key to successfully growing earnings through varied macroeconomic backdrops. In the first quarter, our teams delivered an impressive 20% year-over-year improvement. Complemented by the contribution from prior year acquisitions, the strong performance in our legacy business led to a 27% improvement in adjusted EBITDA and 420 basis points of expansion in adjusted EBITDA margin. I'm pleased with how our teams are executing on our Vulcan way of selling and Vulcan way of operating disciplines to consistently enhance our performance regardless of the demand backdrop. Aggregate shipments in the first quarter were 1% lower than the prior year. Shipments from acquired aggregate facilities partially offset the impacts of extremely cold weather across many of our markets and one less shipping day in the quarter. Our commercial execution and commitment to January price increases yielded 290 basis points of sequential price growth from the fourth quarter. And aggregate freight adjusted price improved 7 percent on a year-over-year basis. On a mixed adjusted basis, aggregate freight adjusted price improved 8.5 percent over the prior year. Our operational execution and discipline in the quarter were noteworthy. Aggregate's freight-adjusted unit cash cost of sales declined 3% compared to the prior year. Moderating inflationary pressures, a relentless focus on plant efficiencies, and some timing benefits of delayed expenditures due to weather conditions all contributed to the cost performance. Predating 12 months, Aggregate's cash gross profit grew to $10.99 per ton within a penny of our $11 to $12 goal and a ninth consecutive quarter of double-digit growth. Our area's business is performing well. Our downstream businesses are also performing well. Cash unit profitability in both asphalt and concrete expanded considerably by 19 and 77 percent respectively. Total cash gross profit improved by over 50 percent through same-store unit profitability improvement and the benefit of the prior year acquisitions. We delivered a strong start to the year, and we're focused on carrying that momentum forward as we navigate increasing macroeconomic volatility driven by the uncertainty in trade policy and unclear trajectory of interest rates. We believe that private demand will continue to face challenges this year, while public demand remains a healthy offset. Affordability issues and elevated interest rates persist as headwinds in residential construction activity. Single-family starts and permits have been declining recently, and multifamily activity remains weak as anticipated. However, overall single-family inventory levels, particularly in Vulcan states, are below average historic levels, and mortgage performance measures do not point to distress in housing markets. Demographics in Vulcan markets support a consistent need for additional housing, so we continue to believe that the timing of additional interest rate reductions and overall improvement in affordability will dictate when residential construction activity returns to growth. While the trends in private non-residential demand vary across categories, the interest rate environment and macroeconomic uncertainty seem to be delaying the timing of recovery and starts. Importantly, warehouse activity, the largest category in private non-residential construction, appears to be stabilizing after multiple years of declines, and data center activity in our markets continues to accelerate. On the public side, IJ-related spending remains a catalyst, with two-thirds of the highway dollars yet to be spent continued steady demand growth. Trading 12-month contract rewards in Vulcan states continue to outpace other markets. Capital plans in nine of our top 10 states are up, and voters passed $45 billion of transportation spending ballot initiatives in the November election cycle in 12 of our key states. And as I said, public demand is healthy and remains an important offset to private demand challenges in 2025. Our teams are closely monitoring the local market conditions and are well positioned to respond to an ever-evolving environment by controlling what we can control, that is, how we perform on the commercial and operational sides of our business. By staying focused on our disciplines, I am confident in our ability to execute. We continue to expect to deliver between $2.35 and $2.55 billion of adjusted EBITDA in 2025. Now I'll turn the call over to Mary Andrews for some additional commentary on our first quarter. Mary Andrews?

Thanks, Tom, and good morning. Our consistent success in compounding results in our aggregates-led business is translating to attractive free cash flow. Over the last 12 months, we have generated $869 million of free cash flow, a 93% conversion of net earnings. We have allocated this capital to grow our business and return cash to shareholders. We have deployed $2.2 billion for strategic acquisition and returned $336 million to shareholders. While generating a return on invested capital of 16.2%, and maintaining debt to adjusted EBITDA leverage within our target range of 2 to 2.5 times. At the end of the first quarter and following the March redemption of our 2025 senior note for $400 million, our net debt to adjusted EBITDA leverage was 2.2 times, with over $190 million of cash on hand. A disciplined approach to capital allocation and a well-positioned balance sheet are fundamental to our long-term success. Our liquidity position and financial flexibility are competitive strengths as we navigate an uncertain macro economy, evaluate strategic growth opportunities, and continue to create value for our shareholders. Our first quarter results provided an outstanding start to 2025. Our organic business delivered strong results in all three segments, and the operations acquired in 2024 are performing well. We continue to evaluate the potential direct and indirect impacts of tariffs to our business. While we may experience some tariff-related inflationary pressures in our operating costs, we do not currently anticipate these impacts to have a material effect on earnings. Importantly, we have a proven business model that has successfully navigated a variety of external disruptions in recent history. we remain focused on what we can control and expanding our aggregate cash growth profit per ton regardless of the macro backdrop. Capital expenditures in the quarter were $105 million, and we continue to expect to spend between $750 and $800 million for the full year. SAG expenses in the quarter were in line with our expectations, and we continue to expect full-year SAG expense of between $550 and $560 million. I'll now turn the call back over to Tom to provide a few closing remarks.

Thank you, Mary Andrews. I want to thank the men and women of Vulcan Materials for their hard work in the first quarter that translated to an outstanding safety and financial performance. Most importantly, they stayed focused on keeping each other safe, and their commitment to executing each day is showing up in our bottom line. Our focus is on what is ahead, maintaining our solid momentum and continuing to leverage our Vulcan Web selling and Vulcan Web operating disciplines to compound profitability in our legacy business, capture synergies from acquisitions, and deliver value for our shareholders. And now, Mary Andrews and I will be happy to take your questions.

At this time, if you'd like to ask a question, please press the star and 1 keys on your telephone keypad. Keep in mind, you can remove yourself from the question queue at any time by pressing star and 2. We'll take our first question from Jerry Revich with Goldman Sachs. Please go ahead. Your line is open.

Good morning, Jerry. Yes, hi. Good morning, everyone. Hi, Tom, Mary Andrews, Mark. Really impressive price-cost spread you folks put up in the quarter. Tom, I'm wondering if you'd just talk about how you're thinking about mid-year price increases and cost cadence given the strong performance and the spread.

Yeah, I guess as it goes to price, I would tell you, as expected, we carry really good momentum into the year with prices up 7%, mix adjusted up 8.5%. I think it was a combination of two things. January 1 price increases pretty much went as expected. And then we had really good pricing in our backlog, and we continue to have good pricing in our backlog. So I thought the first quarter started the year off really good. Keep our guidance at 5 to 7, remembering that we have to turn that price into profit. And you saw the Vulcan Wave selling, a couple of Vulcan operating do that in Q1 with unit margins up some 20%. So, you know, a really good start to the year. And I think what that is is simply the Vulcan Wave selling and Vulcan Wave operating at work. As it goes to mid-years, we've started those discussions now. We'll have those talks about mid-year in all of our markets. I would expect a range of outcomes by market and by product line, much like the last couple of years. In those discussions, as we always say, the mid-years will impact 26 more than they will 25. So, you know, a really good start to the year and pleased with the performance and pleased with the execution of the Vulcan Wave Selling and Vulcan Wave Operating.

congratulations to the team thanks thank you we'll take our next question from tyler brown with raymond james please go ahead your line dollar hey morning hey look tom there's a lot of hand-wringing about the outlook for volumes um maybe more so on the private side you know you guys kind of mentioned it up front but obviously the 10 years in the housing market's been a little bit stubborn but Just in broad strokes, can you kind of give us an update on how you would kind of characterize the organic rock volumes in 25 if you kind of parse them between resi, non-resi, and public? Just kind of how do you get to that flattish organic volume?

Yeah, so I think what we're saying is our guidance of three to five with the acquisitions, we keep that guidance. We think, as you said, we've got challenges on the private side, but we see continued really healthy growth on the public side, both in highway and in non-highway infrastructure, and the non-highway infrastructure is really going well. You know, Q1 shipments were down 1%, but it wasn't linear. January and February were down, you know, 7%, really driven by the extremely cold weather that we saw in the winter. And then we got to March... Shipments grew by 9%. That was aided by acquisitions and a little bit easier weather comps. So at this point, I think we stick to our guide of 3% to 5%, challenge private, stronger public. Now, remember, that's probably going to be back half loaded. If you remember last year, we had a really weather-challenged back half of the year, so a lot easier comps going into it. I think if you kind of look at what's going on in the market right now, Projects, people ask all the time, are you getting projects canceled or held? Projects that are started or go, they're not held, they're not canceled. Now, we're bidding a lot of big projects that, you know, people seem to be on the pause button kind of waiting for some uncertainty. And you couple that with, importantly, I think if you look at our bookings, they're up substantially on the public side. They're up slightly on private works. If you look at total backlogs, they're up year over year. So we're starting to see some water bill behind the dam. The challenges, I think, will be on probably the fixed concrete plant side, driven by challenges and private demand. So, you know, a mixed bag, a decent start to the year. But, again, I'd point you to back half loaded for volumes. Yeah, great call.

Mixed bag. Got it. Thank you.

Thank you. We'll take our next question from Anthony Pedinari with Citigroup. Please go ahead. Your line is open.

Hi, Anthony. Hi, this is Anthony. Hi, this is actually for Anthony. Thanks for taking my question. I just wanted to ask for maybe an update around kind of administrative policy. Like, have you seen any kind of pressure on the pace of IJA rollout, project starts, or maybe IRA-related projects from any of the policy attitudes or kind of executive orders we've seen? I think last quarter there really wasn't much of an impact. So I just wanted an update.

No, really no impact to us. I think when it comes to the highway work or public demand, There's no uncertainty of highway funding at the federal level. IHA funds are flowing, I'd say, as expected. Actually, the states right now are working on their new budgets. It appears that we'll see in our states growth over the next fiscal year, which starts kind of mid-summer. You got to remember, obviously, there was also four local road, excuse me, 40 local road and bridge measures in last year's election, which was an additional $45 billion. So short story is no impact as far as funding for infrastructure. We actually see growth in federal, state, and local funding probably for the next couple of years in our markets, including 2025. As I said in my opening comments, you've still got two-thirds of the IJ funding yet to be spent. So we feel really good about the public side. Got it. Thanks. That's good to hear. I'll turn it over.

Thank you. We'll take our next question from Keith Hughes with Truist. Please go ahead. Your line is open.

Hey, how are you doing? Thanks for the question and great quarter here. I guess the question is on cost and cost per gallon. Can you talk about specifically what happened in the quarter and what your outlook on the cost side is for the rest of the year?

Yeah, I would tell you, I would take you back to our original guide on costs. While the quarter was, it was a great quarter. Look, we're down 3%, excellent performance for our operating teams. We got costs down 3% with slightly lower volumes and very, very cold conditions in January, February. I'm proud of our operators. But I attribute the performance to three things. One, as I said, improving operating efficiencies, you know, the Vulcan way of operating and It's starting to kick in. We should see that get better as we progress through the year and really get that technology to work in those quarries. Second, I thought our folks did a really good job controlling spending matched to diminished ability to operate in the cold weather. And the third is we simply had some cost pushback. I mean, we had some projects because of the bad weather stripping and other things that we just couldn't do in the quarter that So, you know, cost, as we always say, it's lumpy quarter to quarter by nature. We take the full year, we take you back to our guide, which is kind of that low to mid-single digit. Now we'll do our best to beat that, and we've got the Vulcan way of operating, executing, and so I think we've got a shot at beating it. But at this point, too early to call, I take you back to guidance.

Okay, great. Thank you.

Thank you. We'll take our next question from Catherine Thompson with Thompson Research Group. Please go ahead. Your line is open.

Good morning, and thank you for taking my question today. I wanted to circle back just on two different things that tie into your Vulcan way of operating, selling, and the outlook. So the contacts that we speak to in the heavy material space, and we're finding that they're just have and have nots in the construction industrial value chain. But what strikes us is on the heavy material side, things are maybe not quite as bad as some of the headlines show. Could you, Mary, also first, are you seeing any type of significant project, either cancellations or delays? And how does your Vulcan way of operating selling hope differentiate yourself as you deal with a more uncertain environment? Thank you.

Yeah, so on project delays or cancellations, what we started seems to be going. Nothing's canceling once it started. Nothing's put on hold. As I said a minute ago, we're bidding a lot of work, Kathryn, and it's just not going right away. I think that is good news, a little bit frustrating, but good news because people are assessing projects. I think they just are not willing to pull the trigger until we get rid of some of the macro volatility. And as I said, if I look at our bookings, both on public and private, they're doing very well. Backlogs are healthy. So I think there is some flexibility pin up demand out there that will go later on once the world gets a little clearer. As it comes to the Vulcan way of selling and Vulcan way of operating, I attribute the consistency and improvement in unit margins over the last two plus years. That's what I attribute that to because it just gives us a lot of clarity and forward-looking information to our sales group and our operators of how we run our business. We're, you know, a little bit further ahead in the bulk of selling, and you're seeing that in price, and you're seeing that in execution of how we run our markets and ability to see forward in those markets. The bulk of operating, good quarter, but one quarter does not make, so we got, you know, we got to prove that out. I am pleased with the technology that is now being put to work in our 125, 120 largest operations. Very early stages of that, so I think, again, we'll have a lot of hard work for our operators throughout 2025 and beginning of 2026, but it is paying off, and we are seeing improved efficiencies. You put all that together, and it just gives us a model that is able to take advantage of tailwinds and offset headwinds of how we consistently execute.

Great. Thank you very much.

Thank you. We'll take our next question from Trey Grooms with Stevens. Please go ahead. Thanks, Ray.

Hey, good morning, Tom. Morning, Mary Andrews, Mark.

Morning.

And congrats on the good quarter. Thank you. So, you know, the profitability has been touched on several times here, but, you know, 20% cash gross profit improvement, that's per unit, that's huge. about as strong as we've seen. And I know there has been some puts and takes. And it sounded like the moderating inflation, of course, the productivity improvements. But I guess the one piece that I want to try to get my head around on, as far as kind of thinking about the cadence as we move through the year, would be on the things you pointed out, Tom, around some maybe delayed expenditures with stripping and things like that, that I understand are hard to call when that's going to happen, especially when weather is not your friend in a given quarter. But is there anything that you could give us on how to think about maybe the cadence of that? Is it going to be lumpy in a quarter here or there? How we should think about just the profitability as we kind of go through the quarters here?

Sure, I'll take that kind of in pieces. First of all, volume, as we said, it'll be back half loaded, both from a timing and a comp perspective. I think that's how I'd look at volume. On pricing, I think we'll be pretty consistent. I would guide you to that five to seven quarter to quarter. I think we'll be pretty consistent as we operate through the year with price. Cost, it's a harder call. As I always say, that cost is going to be lumpy. But as an investor, you want it that way because we need to spend the money when we need to spend the money and proactively not try to time it or you'll have unpredicted maintenance and higher maintenance costs. So, again, volume back half loaded, price pretty consistent, five to seven, cost a little bit lumpy. Look, you know, we had a great start to the year on cost. I would love to tell you we're going to beat the guy out of low to mid, but we just need to see a few more quarters before we go there. Obviously, our operators, that is their goal. That's what they want to do. But we've got to play that out for a little while.

Yeah, understood. Just with that, if you could maybe touch to the downstream segments, because you're expecting, I think, some improvement there as well, which we saw some in the quarter. Is that kind of still the thought around downstream?

Yeah, Trey, our downstream businesses are performing really well. We still expect them to contribute cash gross profit of about $360 million for the year. You know, two-thirds asphalt, probably one-third ready mix. And, you know, importantly, like you said, that's really a combination of, you know, strong unit profitability growth and the legacy operations coupled with the contribution from the acquisition. So both asphalt and ready mix got off to a good start. And, you know, we still expect that level of profitability for the year.

Yep. Got it. Thank you.

I'll pass it on. Good luck. Thank you. We'll take our next question from Garrick Schmoys with Loop Capital. Please go ahead.

Morning. Oh, hi. Thanks. Hey, good morning and congrats on the quarter. I was hoping you could speak to pricing in a little bit more detail. First, if you could maybe help us understand where you are on integrating Wakestone and getting pricing there up to the average. And then secondly, you know, just on the mid-years, I know it's early days and you mentioned traction should be similar to prior years, but just curious if you're getting any pushback or what kind of feedback you're getting considering from your ready-mix customers, or are you seeing perhaps some more understanding given the expectations for inflation moving forward?

Yeah, so I think that I would call, like I said, I would call pricing as expected. January 1s went well. Mid-years, we're just starting those conversations, so to be seen. Pricing is always easier with growing demand, and we're seeing that. Well, we got some... challenges on the private side. We're seeing good growth on the public side, which is always helpful. That's also a lot more predictable. So I would, I would, I guess I would call it as expected from a pricing perspective and to be seen kind of with mid years.

Yeah. And then just, you know, overall, Garrick, I think as it relates to the acquisitions, you know, same as, as expected performance was good in the first quarter. We continue to expect, you know, the approximately $150 million of contribution from, for the full year and, you know, working hard to capitalize on our Vulcan Wave selling and Vulcan Wave operating disciplines to, you know, capture synergies with the acquisition as well as improving the legacy business.

Okay. Makes sense. Thank you. Thank you. We'll take our next question from Stephen Fisher with UBS. Please go ahead. Your line is open.

Morning. Thanks very much. Morning. Thanks very much. Congrats on the profit performance. Just wanted to follow up a question on the bidding, which you addressed a couple of times, where you said some things are paused, which sounds like it's really on the private side. But within those pauses, how broad would you say those are? Is that mainly kind of very interest rate sensitive commercial type projects, or is it also – on things that are more perhaps structural in nature, things like the data centers or semiconductors or pharma, bio, or whatever, seeing these bigger projects that seem to have good momentum. I'm just curious how broad you're seeing that hesitancy on the decision-making to move right ahead.

I'd tell you it's not real broad. You're seeing some big commercial projects that people are taking bids on and not pulling the trigger as far as As far as public work, it's a go. Nothing's being paused there. I don't think it's that wide out there. As far as data centers, that is a bright spot for us. We're doing a lot of data center work right now. Six percent of the data centers that are under construction are in our footprint. If you look at what's coming up in data centers, 80 percent of the proposed data centers are within 30 miles of a Vulcan quarry. So that'll be a really bright spot for us and one that is a go. I think it would be interesting to watch the data center over the next few years because that's going to lead to substantial power generation construction, which will be very aggregate intensive for us over the next three to five years. And so that, too, will be a bright spot coming on non-residential. So the pause is big commercial work. I don't think it's that widespread. It's just interesting that you see some of those big projects We'll bid it, and the timing's just pushed back. I think, for me, it's good news because sooner or later it's going to go. Terrific. Thank you.

Thank you. Take our next question from Timna Tanners with Wolf Research. Please go ahead.

Hey, good morning. I wanted to ask about not the direct impact of tariffs. I recognize you said those were limited, but the impact of the tariff-related uncertainty perhaps on your customers and acquisition candidates. Just wondering if there's anything incremental you can touch on there, please. Thanks.

Yeah, so to be clear on tariffs, you know, we're constantly evaluating the possibilities of our impact on our business. I think our model really limits the direct impact for Vulcan. At this point, we don't think tariffs move the needle on our cost outlook. You got to remember, we own our largest cost component, which is the rock and the ground. And then you also got to remember, our model allows us to rapidly offset any cost volatility. And, you know, because you saw that when we had breakneck inflation, which is probably a lot bigger impact than the tariffs. You know, a watch, as you said, a watch for us on tariffs is the cost impact to private construction. I think that was a little early to call, but it is something that I think we need to be thoughtful of.

Okay. But regarding, like, M&A candidates, are they acting differently because of the uncertainty, or can you speak to your customer's impact? Again, recognize that the minimal impact direct is great. Okay.

Yeah, on the heavy construction business like ready mix and asphalt, I don't see a big impact at this point as far as customers are concerned. As far as M&A, you know, we call out some smaller deals that we're talking about right now. I don't think tariffs are having a big impact. What I do think is with M&A, it typically slows in times of volatility. And you're seeing that right now. So we may have to let the world spin a little bit for before you see substantial M&A, but, you know, I think that's a temporary pause.

Yeah, and I think, you know, Tim, importantly for us, we have the balance sheet obviously very well positioned for future growth, you know, as M&A opportunities, you know, do arise. The key for us, you know, is obviously to continue to be disciplined as we evaluate those so that we can deliver attractive returns on capital over time and, you know, continue to grow our leading aggregate positions, but we like our position and are well-prepared to act in the M&A market if any of this uncertainty does impact that.

Got it. Okay. Thanks again.

Thank you. We'll take our next question from Jean Valise with D.A. Davidson. Please go ahead.

Hi. Congrats, McCord, and thank you. Thank you. Good morning. Yeah, good morning. You mentioned that on the private bookings was up slightly. Do you mind commenting a little bit about what kind of works are you seeing that are picking up slightly through your bookings?

Yeah, I think the bright spot on the private side is data centers. Um, and it's, uh, you know, the majority of those are, are, are in our footprints. Um, I think on the public side, it's obviously it's highway work is up, but a really bright spot for us is infrastructure, uh, the non-highway work, which is water ports and airports. Uh, that's those, those bookings are up substantially. Um, and you know, a bright, again, a bright spot, but on the, on the, on the private side, the, the, I think it's two things is that data centers are up and we're starting to see kind of the bottom on warehouses. We think we've hit the bottom of that, so it's not as big a drag as it was maybe a year ago.

And with the comment on warehouses, does that offset some of the residential or is this just a nice pickup that you hope to carry on? through 26, into 26.

I think the offset on single family is really on the public side, is really highways and non-highway infrastructure. I mean, that has helped a little bit, but the real offset is the public demand. Great.

Thank you so much. We'll take our next question from Michael Feniger with Bank of America. Please go ahead. Your line is open.

Hey, guys. Morning. Morning, Tom. Morning, everyone. Thanks for having me in. I just wanted to ask, Tom, with the conversation around tariffs, in terms of just your own price cost, I mean, if contractors out there are bracing for higher input costs for materials, equipment, other areas, does this give you covered to be able to raise pricing, even if your own costs, it looks like, are actually trending lower. You know, we see what's happening with oil prices today and diesel. So I'm just wondering with the amount of aggregates that is in these projects, if all these other items are seeing inflationary and your customers are bracing for that, how do you kind of think about that when it comes to pricing relative to your cost that might not be going up to that degree?

Well, I think, first of all, we don't price on cost. You know, we price on earning it with our customers. I think if you look at, you know, if you look at tariffs, you've also got to put a little bit of perspective of what we saw with inflation over the last two or three years, which was breakneck. And, you know, the market absorbed it. I think the tariff thing will shake out. I think that I don't think it will have an impact on pricing when it comes to aggregates.

Thank you.

We'll take our next question from Philip Ng with Jefferies. Please go ahead.

Hey, good morning. It's Jesse Barone on for Phil. Just a question on asphalt. Obviously, we'll always come down here in the first quarter and then take another step down into Q. Just curious kind of how that kind of translates into your own pricing and then on the cost side, kind of what the lags are there. Thank you.

So I thought asphalt had a good performance in the quarter. Despite the cold weather, the cash gross profit was up 24%. We did have some savings with liquid, which is about $3 million, but that product line continues to perform extremely well, and I think that with the public demand growth that we're seeing, it's a good story for the asphalt business and a good story for the aggregate component of the asphalt business, so a real support for us.

All right, thanks. I'll turn it over. We'll take our next question from Michael Dudas with Vertical Research. Please go ahead.

Thank you, Operator. Good morning, Tom, Mary Andrews, and Mark. Good morning. From Mary Andrews, you highlighted in your remarks your cash conversion, which is very solid. Maybe you can talk about for the next several quarters how that looks, any meaningful changes from what we've seen in history. As you think about CapEx, you know, growth versus maintenance and this deferred or maybe delay in M&A, given the volatility that we've seen, maybe you'll see more in stock prices, and you did buy back some stock, but you had the debt repayment. Is that something that's certainly on the table maybe in the near term if we still get that volatility on the repurchase side? Thank you.

Yeah, so I think first as it relates to cash conversion, that has stayed at an attractive level. We would expect that to continue going forward. From a CapEx perspective, for 2025, we still plan to spend the $750 to $800 million that we had communicated. As you know, that's a bit higher than last year, primarily due to some spending on some large plant rebuild projects. But I would tell you, you know, we've been consistently reinvesting at what we believe to be appropriate levels for the needs of the business. So I wouldn't anticipate, you know, any big changes there. We are, you know, always evaluating, you know, lots of different growth capex, you know, opportunities and to the extent that, you know, We believe those can deliver, you know, good growth and attractive returns over time. You know, we'll evaluate those as they come up, and it could be, you know, a good use of capital going forward, depending on what the other opportunities are. But, you know, really no changes to our approach to capital allocation at this point.

Thank you.

We'll take our next question from Angel Castillo with Morgan Stanley. Please go ahead. Your line is open.

Hi, good morning. Thank you for taking my question, and congrats on the strong quarter. Just two quick ones for me. First, on the power generation opportunity that you mentioned, could you just give a sense of the order of magnitude of how much more intensity in terms of aggregates power generation might be? And just to clarify, is that just the nuclear side, or is there broader power generation being more aggregates intensive? And then maybe one last one on price would just be You talked a lot about it from the VMC side, but curious if you're seeing anything in terms of competitors, discipline, or mom and pops and kind of trends in how they're going about mid-years.

I'd take the pricing question first. On the mid-years, it's a little early on those as we're just beginning those conversations. I think that when it comes to mid-years, we have those conversations every year and have had that probably for the last four years or so. I guess no surprise and to be expected, and nothing's changed as far as timing or the conversations on mid-years. As far as power generation, I would tell you it's probably going to be more of a late 26, 27 play and go on for probably about five years. Those will be extremely aggratensive. Those will be big projects. I expect more gas generation power projects than nuclear early on, maybe nuclear later, but too early to call on that one. But Those will be, you know, and they'll be in the markets like Texas, Georgia, Virginia, Arizona, Illinois, where the big data center projects are. That's where I expect a lot of those, and even some in other states. But there's just a lack of power generation that we're seeing right now. So, and if you talk to the power generation companies, they're just going to have to expand, and I think we'll see that over the next five years.

Very helpful. Thank you.

We'll take our next question from David McGregor with Longbow Research. Please go ahead.

Thanks for taking the questions, and congrats on a strong quarter. I guess I wanted to just follow up on the discussion around tariffs, and you're noting that it's not going to be very impactful to the business, but I'm just wondering about the downstream in ReadyMix. You've got tariffs that are likely to hit Mediterranean, Southeast Asian imports, as well as port levies on many of these cement-carrying vessels. I'm just wondering how you expect that to come into play in terms of the ready-mix market and how you manage your margins through that. Secondly, if I could just ask about the cost performance, which was really impressive. But obviously diesel, petroleum, liquid asphalt, you're getting a break there. But anything going on in terms of maintenance and repair, subcontracting services or parts, any kind of moderation, inflation in those boxes as well?

So on the cost piece first, we have seen some moderation on inflation. And it's not coming down. It's just not going up as fast as it was a year or two ago. So that is helpful. I think operating efficiencies has helped that too. And then, as I said, we actually just pushed some costs back in the year because it was too cold to do some projects that we wanted to do. As far as tariffs, I don't see a big impact on our business or the Ready Mix or the asphalt businesses on tariffs at this point. Obviously, that could change, but at this point, we don't see a big impact on it.

Thank you.

Thank you. We'll take our next question from Brian Brophy with Stiefel. Please go ahead. Your line is open.

Hello. This is Andrew Mazur on for Brian. Thank you for taking my question. I just wanted to ask another on the plant automation journey. I think earlier in the call you said that these tools are now implemented in 125 locations or 75% of volumes. I was wondering where you expect these numbers to be by the end of this year or next year and then Is there any way to frame the benefits that you're beginning to see from these initiatives, either from a volume throughput or unit cash cost savings perspective? Thank you.

Yeah, so let me be clear. We put the instrumentation in the top 100, 120 plants. We have not fully implemented that instrumentation. At this point, probably maybe 20%, 30% of the plants are we getting the full efficiencies out of. And I think it will take this year a little bit in the next year before we can match the technology to the operating abilities and the production. And what you're trying to do there is maximize throughput, minimize downtime, and maximize throughput of critical sizes, whether it's asphalt rock or concrete rock. And that's where the efficiencies come in. Again, early stages of getting the full benefit out of that, Too early to call what that means except for degrees of good. But each plant, you know, when you look at these, you may get 4% out of one plant, 10%, 12% efficiency out of another plant. Way too early to call about what that means from a tons per hour, tons per critical size hour, or dollars per ton benefit. But it sure is going to help. And that's why we do it.

And there are no further questions on the line at this time. I'll turn the program back to Tom Hill for any additional or closing remarks.

Thank you for your time this morning. Thank you for your interest in Vulcan Materials Companies. We hope that you and your family stay safe and healthy, and we look forward to talking to you throughout the quarter. Good morning.

And this does conclude today's program. Thank you for your participation, and you may now disconnect.