Vulcan Materials CO

Previous wording

Aggregates have a very high weight-to-price ratio and, in most cases, must be produced near where they are used; if not, transportation can cost more than the materials, rendering them uncompetitive compared to locally produced materials. Exceptions to this typical market structure include areas along the U.S. Gulf Coast and the Eastern Seaboard where there are limited supplies of locally available, high-quality aggregates. We serve these markets from quarries that have access to cost-effective long-haul transportation — shipping by barge and rail — and from our quarries in Quintana Roo, Mexico (see the NAFTA Arbitration section in Note 8 to thecondensed consolidated financial statements) and Puerto Cortés, Honduras with our fleet of Panamax-class, self-unloading ships. Additionally, we serve markets in California and Hawaii from our quarry in British Columbia, Canada by means of a long-term marine shipping agreement with CSL Americas.

Current wording

Aggregates have a very high weight-to-price ratio and, in most cases, must be produced near where they are used; if not, transportation can cost more than the materials, rendering them uncompetitive compared to locally produced materials. Exceptions to this typical market structure include areas along the U.S. Gulf Coast and the Eastern Seaboard where there are limited supplies of locally available, high-quality aggregates. We serve these markets from quarries that have access to cost-effective long-haul transportation, including shipping by barge, rail and our fleet of Panamax-class, self-unloading ships. Additionally, we serve markets in California and Hawaii from our quarry in British Columbia, Canada by means of a long-term marine shipping agreement with CSL Americas.

Previous wording

▪Aggregates segment freight-adjusted revenues increased $23.3 million, or 2%, to $991.4 million

Current wording

▪Aggregates segment sales increased $32.7 million, or 2%, to $1,613.5 million

Previous wording

▪Freight-adjusted sales price increased 10.2%, or $1.90 per ton to $20.59

Current wording

▪Freight-adjusted sales price increased 12.2%, or $2.29 per ton, to $21.00

Previous wording

▪Unit profitability (as measured by gross profit per ton) increased 8% to $6.30 per ton

Current wording

▪Unit profitability (as measured by gross profit per ton) increased 12% to $8.79 per ton

Previous wording

▪Asphalt and Concrete segment gross profit increased $3.2 million to $1.6 million, collectively

Current wording

▪Asphalt and Concrete segment gross profit decreased $19.9 million to $63.7 million, collectively

Previous wording

▪Selling, administrative and general (SAG) expenses increased $12.4 million (130 basis points as a percentage of total revenues)

Current wording

▪Selling, administrative and general (SAG) expenses decreased $5.0 million and increased 10 basis points as a percentage of total revenues

Previous wording

▪Net earnings attributable to Vulcan were $102.7 million, a decrease of $18.0 million, or 15%

Current wording

▪Net earnings attributable to Vulcan were $308.0 million, a decrease of $0.6 million, or 0.2%

Previous wording

▪Returned capital to shareholders via dividends of $62.0 million at $0.46 per share versus $57.2 million at $0.43 per share

Current wording

▪Returned capital to shareholders via dividends of $60.9 million at $0.46 per share versus $57.2 million at $0.43 per share

Previous wording

▪Returned capital to shareholders via share repurchases of $18.8 million at $265.44 average price per share compared to none in the prior year

Current wording

▪Returned capital to shareholders via share repurchases of $50.0 million at $250.88 average price per share versus $49.9 million at $206.82 average price per share

Previous wording

Capital expenditures, including maintenance and growth projects, were $103.1 million in the first quarter. During 2024, we expect to spend between $625 million and $675 million on maintenance and growth projects. During the quarter, we returned $80.8 million to shareholders through $18.8 million of common stock repurchases and $62.0 million of dividends.

Current wording

Capital expenditures, including maintenance and growth projects, were $194.8 million in the second quarter and $297.9 million on a year-to-date basis. During 2024, we expect to spend between $625 million and $675 million on maintenance and growth projects. During the quarter, we completed bolt-on acquisitions in both Alabama and Texas, two of our top ten states. We also returned $110.9 million to shareholders through $50.0 million of common stock repurchases and $60.9 million of dividends in the second quarter.

Previous wording

Interest expense, net of interest income, was $39.1 million in the first quarter compared with $49.0 million in the prior year. The decrease in interest expense reflects the first quarter 2024 redemption of $550.0 million senior notes due 2026.

Current wording

Interest expense, net of interest income, was $40.2 million in the second quarter compared with $46.7 million in the prior year.

Previous wording

First quarter 2024 total revenues were $1,545.7 million, down 6% from the first quarter of 2023. Shipments decreased in aggregates (-7%), decreased in ready-mixed concrete (-54%) and increased in asphalt mix (+3%). Gross profit decreased slightly in the Aggregates segment (-$0.3 million) and increased in the Asphalt segment (+$3.9 million or 460%). Concrete segment gross profit decreased by $0.7 million (-28%) as a result of the divestiture of our operations in Texas in November 2023 (see Note 16 to thecondensed consolidated financial statements).

Current wording

Second quarter 2024 total revenues were $2,014.4 million, down 5% from the second quarter of 2023. Shipments decreased in aggregates (-5%), decreased in ready-mixed concrete (-56%) and remained flat in asphalt mix. Gross profit increased in the Aggregates (+$28.8 million or 6%) and Asphalt (+$2.4 million or 4%) segments. Concrete segment gross profit decreased by $22.3 million (-83%) as a result of the divestiture of our operations in Texas in November 2023 (see Note 16 to thecondensed consolidated financial statements).

Previous wording

Net earnings attributable to Vulcan for the first quarter of 2024 were $102.7 million, or $0.77 per diluted share, compared to $120.7 million, or $0.90 per diluted share in the first quarter of 2023. Each period’s results were impacted by discrete items, as follows:

Current wording

Net earnings attributable to Vulcan for the second quarter of 2024 were $308.0 million, or $2.31 per diluted share, compared to $308.6 million, or $2.31 per diluted share, in the second quarter of 2023. Each period’s results were impacted by discrete items, as follows:

Previous wording

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $0.80 per diluted share for the first quarter of 2024 compared to $0.95 per diluted share for the first quarter of 2023.

Current wording

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $2.35 per diluted share for the second quarter of 2024 compared to $2.29 per diluted share for the second quarter of 2023.

Previous wording

CONTINUING OPERATIONS — Changes in earnings from continuing operations before income taxes for the first quarter of 2024 versus the first quarter of 2023 are summarized below:

Current wording

CONTINUING OPERATIONS — Changes in earnings from continuing operations before income taxes for the second quarter of 2024 versus the second quarter of 2023 are summarized below:

Previous wording

Price increases effective at the beginning of the year resulted in another quarter of attractive growth. Freight-adjusted selling prices increased 10.2%, or $1.90 per ton, as compared to the prior year to $20.59, with all markets realizing year-over-year improvement. Freight-adjusted unit cash cost of sales increased 10%, primarily driven by a 7% decline in aggregates shipments due to unfavorable weather. On a trailing-twelve months basis, unit cash costs increased 9%, marking the fourth consecutive quarter of unit cost deceleration.

Current wording

Price growth in the second quarter was strong with all markets realizing year-over-year improvement. Freight-adjusted selling prices increased 12.2%, as compared to the prior year.

Previous wording

Overall, non-aggregates segments gross profit of $1.6 million was $3.2 million higher than the prior year’s first quarter.

Current wording

Overall, non-aggregates segments gross profit of $63.7 million was $19.9 million lower than the prior year’s second quarter.

Previous wording

Asphalt segment gross profit of $4.7 million was up $3.9 million from the prior year’s first quarter, and cash gross profit of $13.6 million was up $3.8 million compared to the prior year. Asphalt mix shipments increased 3%, and pricing increased 6.0%. Strong shipments in Arizona and California, our largest asphalt markets, were partially offset by lower shipments in Texas due to weather impacts.

Current wording

Asphalt segment gross profit of $59.0 million was up $2.4 million from the prior year’s second quarter, and cash gross profit of $70.0 million was a 7% improvement over the prior year. Asphalt mix shipments were in line with the prior year's second quarter, and pricing increased 4.3%. Strong shipments in California were offset by lower shipments in Texas due to wet weather.

Previous wording

Other operating income (expense), which is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and net rental income (expense), was $2.9 million of expense for the first quarter of 2024 compared to $0.8 million of income in the first quarter of 2023.

Current wording

Other operating income (expense), net which is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and net rental income (expense), was $8.3 million of expense for the second quarter of 2024 compared to $9.8 million of expense in the second quarter of 2023.

Previous wording

DISCONTINUED OPERATIONS — First quarter pretax loss from discontinued operations was $2.3 million in 2024 compared with a pretax loss of $2.9 million in 2023. Both periods include charges related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. For additional details, see Note 1 to the condensed consolidated financial statements under the caption Discontinued Operations.

Current wording

DISCONTINUED OPERATIONS — Second quarter pretax loss from discontinued operations was $2.7 million in 2024 compared with a pretax loss of $4.9 million in 2023. Both periods include charges related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. For additional details, see Note 1 to the condensed consolidated financial statements under the caption Discontinued Operations.

Previous wording

Other nonoperating income (expense), net was $0.3 million of expense for the first quarter of 2024 compared to $1.4 million of income in the first quarter of 2023.

Current wording

Other nonoperating income (expense), net was $8.9 million of expense for the first six months of 2024 compared to $1.3 million of income in the first six months of 2023.

Previous wording

Net interest expense was $39.1 million in the first quarter of 2024 compared to $49.0 million in the first quarter of 2023. The decrease in interest expense reflects the first quarter 2024 redemption of $550.0 million senior notes due 2026.

Current wording

Net interest expense was $79.3 million in the first six months of 2024 compared to $95.7 million in the first six months of 2023. The decrease in interest expense reflects the first quarter 2024 redemption of $550.0 million senior notes due 2026.

Previous wording

Income tax expense from continuing operations was $28.9 million in the first quarter of 2024 compared to $16.6 million in the first quarter of 2023. The increase in tax expense was primarily due to a discrete tax benefit recognized in the first quarter of 2023 related to a 2022 business disposition.

Current wording

Income tax expense from continuing operations was $123.4 million in the first six months of 2024 compared to $108.6 million in the first six months of 2023. The increase in tax expense was primarily due to a discrete benefit related to a 2022 business disposition recognized in the first six months of 2023.

Previous wording

Included in our March 31, 2024 cash and cash equivalents and restricted cash balances of $300.1 million is $7.7 million of restricted cash as described in Note 1 to the condensed consolidated financial statements under the section Restricted Cash.

Current wording

Included in our June 30, 2024 cash and cash equivalents and restricted cash balances of $111.6 million is $0.6 million of restricted cash as described in Note 1 to the condensed consolidated financial statements under the section Restricted Cash.

Previous wording

Net cash provided by operating activities was $173.4 million during the three months ended March 31, 2024, a $47.9 million decrease compared to the same period of 2023. The decrease was primarily attributable to a $18.0 million decrease in net earnings and changes in working capital balances.

Current wording

Net cash provided by operating activities was $374.5 million during the six months ended June 30, 2024, a $133.0 million decrease compared to the same period of 2023. The decrease was primarily attributable to a $18.3 million decrease in net earnings and changes in working capital balances.

Previous wording

Days sales outstanding, a measurement of the time it takes to collect receivables, were 43.0 days at March 31, 2024 compared to 44.1 days at March 31, 2023. Additionally, our over 90 day receivables balance was $22.7 million at March 31, 2024, a decrease of $26.5 million from the $49.2 million balance at March 31, 2023. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.

Current wording

Days sales outstanding, a measurement of the time it takes to collect receivables, were 41.4 days at June 30, 2024 compared to 43.8 days at June 30, 2023. Additionally, our over 90 day receivables balance was $25.3 million at June 30, 2024, a decrease of $11.2 million from the $36.5 million balance at June 30, 2023. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.

Previous wording

Net cash used for investing activities was $163.8 million during the first three months of 2024, a $102.1 million increase compared to cash used of $61.7 million in the same period of 2023. This increase was primarily attributable to a $130.0 million note receivable collected in 2023 related to the 2022 sale of concrete operations in New Jersey, New York and Pennsylvania. During the first three months of 2024, we acquired businesses for $12.3 million (see Note 16 to the condensed consolidated financial statements) whereas there were no business acquisitions in 2023. Additionally, during the first three months of 2024, we invested $152.8 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $193.6 million in the prior year period. This $152.8 million investment includes both maintenance and internal growth projects to enhance our distribution capabilities, develop new production sites and improve existing production facilities.

Current wording

Net cash used for investing activities was $533.8 million during the first six months of 2024, a $330.6 million increase compared to the same period of 2023. During the first six months of 2024, we acquired businesses for $193.4 million of cash consideration whereas there were no business acquisitions in 2023 (see Note 16 to the condensed consolidated financial statements). Additionally, the first six months of 2023 includes the collection of a $130.0 million note receivable related to the 2022 sale of concrete operations in New Jersey, New York and Pennsylvania. Furthermore, during the first six months of 2024, we invested $344.2 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $354.6 million in the prior year period. This $344.2 million investment includes both maintenance and internal growth projects to enhance our distribution capabilities, develop new production sites and improve existing production facilities.

Previous wording

Net cash used for financing activities was $658.7 million during the first three months of 2024, a $477.6 million increase compared to cash used of $181.1 million in the same period of 2023. The current year includes cash paid to redeem the $550.0 million senior notes due 2026 whereas the prior year includes a $100.0 million net payment on our line of credit. Additionally, we returned $80.8 million to shareholders through $62.0 million of dividends ($0.46 per share compared to $0.43 per share) and $18.8 million of common stock repurchases of (70,932 shares repurchased at $265.44 average price per share compared to none in the first three months of 2023).

Current wording

Net cash used for financing activities was $678.3 million during the first six months of 2024, a $380.7 million increase compared to cash used of $297.6 million in the same period of 2023. The current year includes cash paid to redeem the $550.0 million senior notes due 2026 partially offset by a $95.0 million net issuance of commercial paper whereas the prior year includes a $100.0 million net payment on our line of credit. Additionally, we returned $191.6 million to shareholders (a $27.3 million increase over the prior year) through $122.8 million of dividends ($0.46 per share compared to $0.43 per share) and $68.8 million of common stock repurchases (270,142 shares repurchased at $254.71 average price per share in 2024 compared to 241,363 shares repurchased at $206.82 average price per share in 2023).

Previous wording

At March 31, 2024, total debt to trailing-twelve months Adjusted EBITDA was 1.7 times (1.5 times on a net debt basis reflecting $300.1 million of cash on hand). Our weighted-average debt maturity was 10.9 years, and our total weighted-average effective interest rate was 4.78%.

Current wording

At June 30, 2024, total debt to trailing-twelve months Adjusted EBITDA was 1.7 times (unchanged on a net debt basis reflecting $111.6 million of cash on hand). Our weighted-average debt maturity was 10.5 years, and our total weighted-average effective interest rate was 4.80%.

Previous wording

In 2022, we established a $1,600.0 million commercial paper program through which we borrowed $550.0 million that was used to partially repay the delayed draw term loan. Commercial paper borrowings bear interest at rates determined at the time of borrowing and as agreed between us and the commercial paper investors.

Current wording

In 2022, we established a $1,600.0 million commercial paper program through which we borrowed $550.0 million that was used to partially repay the delayed draw term loan. As of June 30, 2024, we had $95.0 million in short-term commercial paper borrowings and $550.0 million in long-term commercial paper borrowings. Commercial paper borrowings bear interest at rates determined at the time of borrowing and as agreed between us and the commercial paper investors.

Previous wording

As of March 31, 2024, our available borrowing capacity under the line of credit was $1,510.8 million. Utilization of the borrowing capacity was as follows:

Current wording

As of June 30, 2024, our available borrowing capacity under the line of credit was $1,504.8 million. Utilization of the borrowing capacity was as follows:

Previous wording

▪$89.2 million was used to support standby letters of credit

Current wording

▪$95.2 million was used to support standby letters of credit

Previous wording

All of our $3,391.1 million (face value) of term debt (which includes the $550.0 million commercial paper) is unsecured. All of the covenants in the debt agreements are customary for investment-grade facilities. As of March 31, 2024, we were in compliance with all term debt covenants.

Current wording

All of our $3,486.1 million (face value) of term debt (which includes $645.0 million of commercial paper) is unsecured. All of the covenants in the debt agreements are customary for investment-grade facilities. As of June 30, 2024, we were in compliance with all term debt covenants.

Previous wording

As of March 31, 2024, there were 7,016,328 shares remaining under the February 2017 share purchase authorization by our Board of Directors. Depending upon market, business, legal and other conditions, we may purchase shares from time to time through the open market (including plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934) and/or privately negotiated transactions. The authorization has no time limit, does not obligate us to purchase any specific number of shares and may be suspended or discontinued at any time.

Current wording

As of June 30, 2024, there were 6,817,118 shares remaining under the February 2017 share purchase authorization by our Board of Directors. Depending upon market, business, legal and other conditions, we may purchase shares from time to time through the open market (including plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934) and/or privately negotiated transactions. The authorization has no time limit, does not obligate us to purchase any specific number of shares and may be suspended or discontinued at any time.

Previous wording

We believe that the accounting policies described in the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section of our Form 10-K require the most significant judgments and estimates used in the preparation of our consolidated financial statements, so we consider these to be our critical accounting policies. There have been no changes to our critical accounting policies during the three months ended March 31, 2024.

Current wording

We believe that the accounting policies described in the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section of our Form 10-K require the most significant judgments and estimates used in the preparation of our consolidated financial statements, so we consider these to be our critical accounting policies. There have been no changes to our critical accounting policies during the six months ended June 30, 2024.

Previous wording

▪Charters for our Audit, Compensation, Executive, Finance, Governance and Safety, Health & Environmental Affairs Committees

Current wording

▪Charters for our Audit, Compensation & Human Capital, Executive, Finance, Governance and Safety, Health & Environmental Affairs Committees

Previous wording

The Charters of the Audit, Compensation and Governance Committees are available on our website under the “Investor Relations” tab (“Governance – Committee Composition” section) or you may request a copy of any of these documents by writing to Denson N. Franklin III, Senior Vice President, General Counsel and Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.

Current wording

The Charters of the Audit, Compensation & Human Capital and Governance Committees are available on our website under the “Investor Relations” tab (“Governance – Committee Composition” section) or you may request a copy of any of these documents by writing to Denson N. Franklin III, Senior Vice President, General Counsel and Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.