Vulcan Materials (VMC) Q3 2025 Earnings Transcript

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Date

Oct. 30, 2025, at 10 a.m. ET

Call participants

• Chairman and Chief Executive Officer — Tom Hill
• President and Chief Operating Officer — Ronnie Pruitt
• Chief Financial Officer — Mary Andrews Carlisle

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Takeaways

• Adjusted EBITDA -- $735 million for Q3 2025, representing a 27% increase compared to the prior year.
• Full-year adjusted EBITDA guidance -- Adjusted EBITDA of $2.35 billion–$2.45 billion for full-year 2025, implying 17% growth over the prior year at the midpoint.
• Aggregate shipments -- Increased 12% in Q3 2025, resulting in 3% higher shipments on a year-to-date basis.
• Aggregates cash gross profit per ton -- Rose 9% in Q3 2025 through commercial and operational gains.
• Mix-adjusted aggregates pricing -- Mix-adjusted pricing improved 5% in Q3 2025 and 7% on a year-to-date basis.
• Aggregates freight-adjusted unit cash cost of sales -- Decreased 2% compared to the prior year.
• Trailing twelve-month aggregate cash gross profit per ton -- $11.51 trailing twelve-month aggregate cash gross profit per ton, 27% higher than two years ago.
• Free cash flow -- Free cash flow increased by 31% over the last twelve months to over $1 billion; free cash flow conversion was 94% over the last twelve months.
• Acquisitions and capital return -- Over $2 billion spent on acquisitions and approximately $300 million returned to shareholders in dividends and buybacks over the last twelve months.
• Adjusted EBITDA leverage ratio -- Maintained just below the targeted 2-2.5x range.
• Return on invested capital -- Improved by 40 basis points over the last twelve months.
• Year-to-date capital expenditures -- $442 million in year-to-date capital expenditures, with plans for approximately $700 million for the full year 2025.
• Segment operating margins -- Adjusted EBITDA margin up 310 basis points.
• Dispositions -- Asphalt and construction services assets sold in early October; proceeds targeted for future growth opportunities.
• Public contract awards -- Up 17% on a trailing twelve-month basis within Vulcan's markets.
• IIJA funds utilization -- Approximately 60% of Infrastructure Investment and Jobs Act funds in Vulcan's footprint remain unspent.
• 2026 outlook -- Management anticipates organic shipment growth and mid-single-digit pricing improvement, supported by public and private nonresidential demand.
• Fixed plant price increases -- Letters issued in September to be effective Jan. 1, covering 40% of business activity.
• Trailing twelve-month SG&A expenses -- $566 million trailing twelve-month SG&A expenses, consistent with the prior year's trailing twelve months as a percentage of revenue, at 7.2%.
• Recent portfolio actions -- Concrete divestiture in California and retention of integrated plants in Virginia/D.C., reinforcing an aggregate-led strategy.

Summary

Vulcan Materials (NYSE:VMC) delivered significant operational improvements and disciplined capital allocation, as evidenced by margin expansion and robust cash generation. Management emphasized a favorable public construction environment, ongoing support from federal infrastructure funding, and improving trends in private nonresidential and multifamily markets. Portfolio realignment, including divestitures and acquisitions, supports a continued aggregate-focused strategy, while full-year guidance reflects confidence in both volume and margin growth across public, commercial, and select private verticals.

• Tom Hill stated that adjusted EBITDA margin expanded 310 basis points, indicating enhanced profitability across the business.
• Ronnie Pruitt said, "Organic growth, coupled with disciplined M&A and portfolio management, positions us well to continue compounding results and creating value for shareholders."
• Chief Financial Officer Mary Andrews Carlisle reported, "Over the last twelve months, our free cash flow has increased by 31% to over $1 billion," with a 94% conversion rate.
• Management noted that 80% of proposed data center projects in planning are within 30 miles of a Vulcan operation, highlighting favorable geographic positioning for growth.
• The quarter included the sale of downstream asphalt and construction services assets, with proceeds earmarked for redeployment into higher-return opportunities.
• Tom Hill expressed confidence in the long-term pipeline, stating, "Trailing 12-month awards were up 17% year over year in our footprint."
• Portfolio realignment continued, as CEO-designate Ronnie Pruitt explained the company will "continue to be aggregate-led," with future M&A focused on core assets and greenfield opportunities.

Industry glossary

• Aggregates: Crushed stone, sand, and gravel products used in construction.
• Mix-adjusted pricing: Selling price per unit normalized for product mix changes, isolating true price movement.
• Freight-adjusted: Pricing or costs restated to exclude the impact of shipping/freight.
• IIJA: Infrastructure Investment and Jobs Act, a federal program providing infrastructure funding.
• Greenfields: New operations or sites started from scratch, not acquired or already in operation.

Full Conference Call Transcript

Tom Hill: Thank you, Mark, and thank all of you for joining our call this morning. Mary Andrews and I are happy to have Ronnie joining us today as we discuss the third quarter results and what lies ahead for the remainder of 2025 and moving into 2026. The third quarter financial results clearly demonstrate the consistent solid execution of our teams across the footprint. Gross margin and unit profitability expanded in each segment, and adjusted EBITDA margin expanded 310 basis points. Adjusted EBITDA of $735 million improved 27% compared to the prior year. Thankfully, this year, we are not confronted with the same extreme weather events as the prior year.

Aggregate shipments increased 12% in the quarter, resulting in 3% higher shipments on a year-to-date basis. Aggregates cash gross profit per ton grew 9% in the quarter through a combination of commercial and operational execution. As anticipated, the prior year acquisitions and a higher percentage of base shipments contribute to 150 basis points of mix headwinds in our aggregate freight-adjusted selling price. Mix-adjusted pricing improved 5% in the quarter and 7% on a year-to-date basis. Our welcome of operating efforts continue to benefit our cost performance. Aggregates freight-adjusted unit cash cost of sales was 2% lower than the prior year in the third quarter.

I'm proud of the way our operators are adopting new tools and disciplines to drive plant efficiencies. And I'm excited about the runway ahead for continued profitability improvements, especially as private demand recovers. Currently, momentum continues in public construction activity. The private nonresidential end use is improving while residential demand remains weak. Since there has been little relief in affordability to date, single-family housing starts and permits continue to decelerate across most U.S. markets. With our leading footprint, we are confident we are in the right markets to benefit from an eventual single-family residential recovery. In multifamily residential end use, current data is more varied across geographies.

Some states are already showing growth in starts, which should begin to help offset weakness in single-family activity. Private nonresidential construction activity is improving. Overall starts in our markets are positive on a trailing six-month basis. Data center activity remains robust with approximately 60 million square feet under construction and another 140 million square feet proposed in the planning stage. Nearly 80% of data center projects in the planning stage are within 30 miles of the Vulcan operation. For both data centers and large project opportunities like LNG, are also gaining momentum. Vulcan is in the right markets and well-positioned to supply these projects and help create value for our customers. The same is true on the public side.

Growth in public contract awards in our markets continues to outpace other markets. Trailing twelve-month awards were up 17% year over year in our footprint. And importantly, there's a long tail to public strength since approximately 60% of the IIJA funds are still yet to be spent. Given shipment trends year to date coupled with the demand I just described, we now anticipate full-year shipments to increase approximately 3%, yielding full-year adjusted EBITDA of $2.35 to $2.45 billion, a 17% increase over the prior year at midpoint. Now I'll turn the call over to Ronnie to discuss our continued execution of our aggregates-led two-pronged growth strategy. Ronnie?

Ronnie Pruitt: Thank you, Tom, and good morning. The last 24 months as Chief Operating Officer, I've been highly focused on growing the profitability of our existing business in addition to shaping our portfolio for optimal future growth. In the third quarter, our trailing twelve-month aggregate cash gross profit per ton was $11.51, 27% higher than just two years ago. Commitment to the Vulcan Way of selling and the Vulcan Way of operating has supported this growth. Our organic growth, coupled with disciplined M&A and portfolio management, positions us well to continue compounding results and creating value for shareholders. In early October, we completed the disposition of our asphalt and construction services assets.

We believe that these downstream positions that we strategically built over time are now more valuable to the acquirers than to us. And we will redeploy the proceeds into attractive growth opportunities in the future. I'll now pass the call to Mary Andrews to provide some additional details on our financial results and capital allocation before we share some of our preliminary views about next year.

Mary Andrews Carlisle: Thanks, Ronnie, and good morning. Aggregates unit profitability improvement that Ronnie and our division teams are driving each day is foundational to our cash generation, overall growth, and return on invested capital. Over the last twelve months, our free cash flow has increased by 31% to over $1 billion, and our conversion is 94%. Complementing our free cash flow with incremental debt of $1 billion, we have grown our franchise through over $2 billion of acquisitions and returned approximately $300 million to shareholders through dividends and share repurchases. All while maintaining our adjusted EBITDA leverage ratio just below our targeted range of 2 to 2.5 times and improving our return on invested capital by 40 basis points.

We are poised for additional profitable growth. We also continue to prioritize reinvesting in our franchise. Year to date, we have deployed $442 million toward maintenance and growth capital expenditures and plan to spend approximately $700 million for the full year. Our trailing twelve-month SAG expenses were $566 million and consistent with the prior year's trailing twelve months as a percentage of revenue, at 7.2%. We are pleased with the results our investments in technology and talent are yielding in the business. I'll now turn the call back over to Ronnie to provide some preliminary thoughts on 2026 before Tom makes some closing remarks.

Ronnie Pruitt: Thank you, Mary Andrews. Tom shared earlier our views on the current demand environment, and we anticipate those trends to continue into next year. Consistent growth in public, improving private non-res, and lingering softness in residential. Overall, we expect organic shipments to return to growth in 2026 and improve modestly year over year. We also anticipate mid-single-digit pricing improvement. We will maintain our focus on efficiency gains and cost discipline through our Vulcan Way of operating efforts to continue to deliver expansion in aggregate cash gross profit per ton that exceeds historical averages.

Before I turn the call back over to Tom, I would like to express my gratitude for the opportunity to lead this organization and leverage the strong foundation Tom has built over the last decade. He has cultivated a culture of continuous improvement and created meaningful value for our shareholders. I'm excited about what lies ahead, and I'm confident Vulcan Materials will continue to deliver. Tom, back over to you.

Tom Hill: Thank you, Ronnie. I want to thank all the men and women of Vulcan Materials for living out the Vulcan Way each and every day, doing the right thing the right way at the right time. Our safety and financial performance are evidence of their commitment to excellence and to continuous improvement. We are ready to finish the year strong and to continue our long track record of durable growth as we move into 2026. And now Mary Andrews, Ronnie, and I will be happy to take your questions.

Operator: Thank you very much. We'll go first this morning to Trey Grooms with Stephens.

Trey Grooms: Hey, good morning, everyone. Hey, Tom. First off, I want to say congratulations, Ronnie, on your new role, well-deserved, and also to Tom, it's been a pleasure working with you over the last several years, and we wish you the best on your next chapter.

Tom Hill: Thanks, Trey.

Trey Grooms: Sure. And I guess with that, Ronnie, maybe if you could highlight some of your top priorities that you have for the Vulcan Materials team here as you take the reins and transition into your new position?

Ronnie Pruitt: Sure. Thanks, Trey, for the question. First and foremost, I'm going to continue to build on the culture that Tom has grown through his leadership of Vulcan. Our culture is based on safety as our foundation, and our people own and drive our results. Our strategic approach will continue to focus on enhancing our core through Vulcan Way of operating and Vulcan Way of selling. And strategically, we'll continue to expand our reach through disciplined, aggregate-centric acquisitions as well as greenfield initiatives that are going to continue to complement our aggregate-leading positions in our network.

Trey Grooms: Excellent. Thank you, Ronnie.

Ronnie Pruitt: Thanks, Trey.

Operator: Thank you. We'll go next now to Tyler Brown with Raymond James.

Tyler Brown: Hey, good morning, guys.

Tom Hill: Hey, Tyler.

Tyler Brown: Hey, first off, congrats, Ronnie, and congrats, Tom. But hey, this quarter's volumes were obviously great. Benefited obviously from some pretty calm weather. We have the Wackestone comp. But you guys are guiding kind of towards the low end for the full year. Can you just talk about the trends into Q4? What's kind of driving towards the low end there? And then I appreciate the look on '26. But when you say modest improvement, can you put a finer point there and maybe talk about some of the puts and takes in the three, call it, the three big end markets?

Tom Hill: Yes. I think you got to look back a little bit at the third quarter before we go to Q4. Weather definitely cooperated in the third quarter. Volumes were up obviously double-digit. But the big jump in volume was a combination of pent-up demand from the first half of the year, easy comps from last year, and then importantly strong and growing public demand and improving non-residential demand. Now Q4 weather last year was very good, so tough comps in Q4. We predict 3% volume growth for the full year. With the exception of single-family construction, we see demand in other sectors getting better. I would tell you that October supported the full-year guide of 3%.

But Ronnie, why don't you talk a little bit about '26?

Ronnie Pruitt: Yes, Tom. Thanks. As Tom said, I think single-family will continue to be challenging until we get some of the affordability issues behind us. Public is quite strong. And as we look into public into 2026, we'll continue to see improved funding. And I think the more mature DOT execution from the states to get that money put in play. On the private non-res side, our starts have been positive in our markets for the previous six months. And as we look internally, our bidding activity, our bookings, and our backlog really support demand growth as we go into next year.

Tyler Brown: Perfect. Thanks, guys.

Operator: Thank you. We'll go next now to Garik Shmois at Loop Capital.

Garik Shmois: Hi, thanks and congrats to you both on your new roles moving forward. I wanted to ask just on the pricing, both the growth in the quarter and your confidence in the outlook in '26, it ticked down. Sequentially. Is there anything specific driving that? And how should we think about pricing in a little bit more detail into 2026?

Tom Hill: Yes. Good morning. I would call pricing as expected. Five percent, 150 basis points of mix in there, which we talked about last quarter. Obviously, acquisitions have been a drag on prices, but pricing in those markets continues to improve, I'd call it, as planned. But in the quarter, we had 20% more base driven by really good highway work and data centers. And while base is lower priced, it's also lower cost, so we kept our unit margin momentum. I'm very pleased with our ability to take that price to the bottom line and then some as you saw costs go down in the quarter.

And if you look at forward, I think growing highway demand and improvements in non-res will support higher prices and year margins in 2026, but Ronnie, why don't you talk a little bit about '26?

Ronnie Pruitt: Yes, Tom is correct. I mean improving demand in public and private non-res will definitely support 2026 pricing. We sent out our letters in September for effective January 1, we're in the middle of having those conversations now. I've been encouraged with those conversations. And that's really all around the fixed plants, 40% of our business. On the bid work, our trailing three-month backlog prices are showing acceleration. And most of that work will ship in next year. So still work to be done, but this coupled with our operating performance should still provide us with continued superior unit margin growth over historical norms.

Operator: Thank you. We'll go next now to Brian Brophy at Stifel.

Andrew F. Maser: Hey, this is Andrew on for Brian. Thank you for taking my question. Hey, a question about the unit cost down 2% in the quarter. How much of that was Vulcan Way of operating versus lower inflation versus volume benefits? And then additionally, as you're looking at next year, do you have any preliminary thoughts on how you're thinking about inflation or the cost piece into 2026 following such a phenomenal year this year? Thanks.

Tom Hill: Yeah. Short answer on, we've got no relief on inflation. I mean, things no prices have come down. They're not going up as fast. But I would really point it to the Vulcan Way of operating if you look at the whole year. I'm very pleased with our operator's performance in our 2025 cost. In the quarter and the year, we're seeing improved operating efficiencies, but still early innings of Vulcan with operating. And remember, in the first half of the year, we had weather issues, we had volume issues that actually hurt costs, but Ronnie and his team were still able to keep the costs down. Q3, we probably had some tailwinds from efficiencies, volume, and more base sales.

I think Ronnie and his operators have worked very hard at Vulcan Way of operating, and he should be pleased with his performance.

Ronnie Pruitt: Yes. Thanks, Tom. And I know our operators will appreciate those comments. First and foremost, our safety performance is really good and is continuing to improve. And so when I look at our disciplines and our investment in technology, they're working. And that's the Vulcan Way of operating. There's still improvement ahead. And so we'll continue to focus on those disciplines as we get into 2026. But I've got confidence in our people and our processes, our disciplines, and our technology. And I think it will be exciting to watch the Vulcan Way of operating as we continue to go.

Selling and as far as growing our margins, and I think our margin growth will continue to be even more dependable in the future.

Operator: Great. Thank you. We'll go next now to Anthony Pettinari at Citi.

Asher Sohnen: Hi, this is Asher Sohnen on for Anthony. Thanks for taking my question and congratulations all around. You guys talked about stronger backlogs, but I was wondering if you could maybe walk through some of the key geographies and what you're seeing there on kind of an individual or regional basis?

Tom Hill: Yes. Actually, it's pretty widespread. I can't think of any that are down at this point. Probably the healthiest is going to be the Southeast, which is a benefit for us because that's probably where the higher unit margins are. But we've really seen a turn in the non-res side of the business. Data centers have helped that. And really strong growth in public demand. And I think that growth continues to accelerate the next two or three years. So a good story. Obviously, single-family is still a drag for us and probably will be for a while. Hopefully, it turns next year. But in the meantime, the other sectors are taking up for that.

Operator: Great. Thank you. We'll go next now to Kathryn Thompson with Thompson Research Group.

Kathryn Ingram Thompson: Hi. Good morning and thank you for taking my question today. First off, Tom, it's been a pleasure working with you over the years. Look forward to keeping up with you and Ronnie. We go back a couple of companies and congratulations on starting in the CEO role in January.

Ronnie Pruitt: Thank you. Thank you.

Kathryn Ingram Thompson: So yes, so kind of looking forward, you did a great job of shaping up the portfolio as was highlighted in the quarter you just reported. How are you thinking about what fits in your portfolio and maybe what may not or who may be a better owner? And can you approach it from thinking about from either a product type, which was we saw this quarter, or a geographic focus? So just maybe thinking bigger picture about kind of how you're thinking about that portfolio shaping going forward? Thanks very much.

Ronnie Pruitt: Yes, Kathryn, this is Ronnie. I'll take that question. I'm continuing to be really pleased with the downstream business that we have. In the asphalt business, those businesses are really heavily influenced by the public funding and the strength in public funding. So we're going to continue to focus on one, safety as well as our financial performance. And we talk about the concrete and the divestiture that we announced this week. I mean, that's our strategy. We said early on when we bought Superior that we were going to evaluate that business and we would decide whether that was a business that we wanted to be in long term.

Continue to see challenges on the private side in California, and so we thought the acquirers, it was a business that was going to be more valuable to them. I'll remind you that since the acquisition of U.S. Concrete, we now only have a couple of plants left in the Virginia DC area that are integrated with a very successful Vulcan legacy concrete business, but we've also retained all those aggregates. So it complements our strategy of being aggregate-led. And we're going to keep the expertise of both the asphalt and the concrete business. So if those businesses as we look in the future and M&A presents those to us, we're not scared of that.

But it's going to continue to be aggregate-led. I think that's our strategy, and you'll see us continue to be focused heavily on those aggregate-led businesses.

Kathryn Ingram Thompson: Thank you so much and good luck.

Ronnie Pruitt: Thank you.

Operator: Thank you. We'll go next now to Phil Ng with Jefferies.

Jesse Barone: Hey, good morning, guys. This is Jesse on for Phil. Congrats to Tom and Ronnie. Just real quick on M&A, can you just kind of help us how you're thinking about the pipeline? You obviously will have quite a bit of dry powder given where your leverage is in post the divestitures. Just any geographies that you're particularly targeting? Thanks.

Ronnie Pruitt: Yes, this is Ronnie. I would tell you one, we have a number of greenfields that are still in process. And greenfields for us is a form of growth. It takes time. Those will be timed with both market-driven as well as the timing of permits. And so we still have that going. When we talk about M&A opportunities, it's been a quiet year. We continue to have a really good list of targets out there. But the timing of those targets is really driven twofold: one, by the seller and their readiness and then also by the market conditions. And so I would tell you, M&A this year is not surprising to us.

We knew through some of the uncertainties with tariffs and other pauses in the interest rates that M&A was going to be paused. I can assure you that we're still very active. We have a really strong list, and those M&A opportunities are going to continue to be aggregate-led.

Jesse Barone: Great. Thanks. I'll turn it over.

Operator: We'll go next now to Keith Hughes with Truist.

Keith Brian Hughes: Thank you. Congratulations, Tom, on a tremendous run here. And I do have a question for Ronnie. You had talked about 2026. Kind of from a high level of continuing this just wonderful run of cash gross profit per ton. Just from a general level, from what you know today in the market, will we see something similar to the last couple of years with the numbers you've been putting up and what could potentially take that higher?

Ronnie Pruitt: What was the last part of that, Keith? And what would take it higher? What kind of things would you need to see something that would set, you know, even better than what we've seen in the last couple of years?

Keith Brian Hughes: Look, we're coming off three years of muted demand in our markets. And so what we've been able to accomplish over the last three years, we're growing our cash gross profit has been twofold. One, the inflationary stuff helped our pricing early on. And this year, we've had some momentum on the cost side of our business. And so as we said earlier, demand is going to help. Some recovery in demand is going to help our pricing story, and we look forward to that. But the Vulcan Way of operating and the Vulcan Way of selling both support that from above historical norms.

And I think both sides of it, the cost and the commercial efforts will play a role in that. But some demand will definitely help the pricing side of our story.

Keith Brian Hughes: Okay, great. Thank you.

Ronnie Pruitt: Thank you.

Operator: We'll go next now to Brent Thielman at D.A. Davidson.

Brent Thielman: Hey, thanks. Congrats to all of the team as well. I guess the two-part question, I guess, just in terms of thinking about that mid-single-digit price growth in 2026. Part of the question is just is that consistent with the annual price increase you're planning for next year? And then the other thing I was wondering is just around that. How much sort of volume do you bring into 2026 from acquisitions that, for lack of a better word, underpriced, and you're pushing towards that Vulcan Way of sort of selling?

Ronnie Pruitt: Yes, I would tell you the 5.5% to mid-single-digit is a combination of what we're seeing both with our backlog as we go into the year. So our bidding work accounts for about 60% as well as the announced letters that we have out with our fixed plants, which is about 40% of our business. And so those conversations, like I said, are happening now. Those letters were sent out in September. Those fixed plant increases will go into effect in January. When I look overall at how that is going to shape up, I think our backlogs, and I said on a trailing three months, our bookings prices have been accelerating.

And so, it's a combination of that bid work and what opportunities we're seeing, especially around the private non-res side. As well as we still need some help on single-family. And so feel good about our pricing going into next year. I think there's opportunities on both sides. On the public and private side. But that's where we're at. I think those conversations are going well. As far as acquired volumes, I think it's about 10 million tons of acquired volume coming out of last year, which was both Wake and Superior. And so as we've said before, it's taken us time. We're on that campaign. It's going as expected as far as North Carolina goes.

And so I would anticipate that gap being made up with our normal Vulcan markets and what we're seeing in Raleigh, that gap will continue to be made up over the next twelve months.

Brent Thielman: Very good. Thank you.

Ronnie Pruitt: Thank you.

Operator: We'll go next now to Steven Fisher with UBS.

Steven Michael Fisher: Thanks. Congrats, Tom and Ronnie. Just first a clarification. Have you changed your pricing expectation for the full year of 2025? I'm not sure if I missed that. And then on the volumes, the 1% reduction, is that basically just single-family? And within your '26 outlook, are you starting if it is single-family affecting 25%, do you assume that sort of that's still a drag on the first part of '26 and then a more accelerating part of the second half? I know it's still early, but just curious how you're seeing those dynamics.

Tom Hill: Yes. So on pricing, I would call the fourth quarter probably very similar to the third quarter as we continue to enjoy the big base volumes. Like I said, while they are at lower price, they're also at lower cost and very good margins. So happy to have that work with the data centers and the big highway work. If you look at non-res going forward, I think it continues to grow. Public is very good. I think we probably see headwinds from res for a while, but it probably shortens to bottom sometime in '26.

Steven Michael Fisher: Okay. Thank you.

Operator: And we'll go next now to Angel Castillo at Morgan Stanley.

Angel Castillo: Thanks and good morning, everyone. Ronnie, Tom, I echo everyone's congratulations and well wishes. And looking forward to working with you, Ronnie.

Ronnie Pruitt: Thank you.

Angel Castillo: You're welcome. Just regarding your quoting activity and projects pipeline, the acceleration you talked about, I was wondering if you could dive a little deeper into that. Maybe just kind of as a starting point, just putting a finer point on the magnitude of what you saw in October versus perhaps 3Q level. I know you've given kind of last few months, but just if you could kind of split that up and maybe if you could expand also just on what's driving or what you think is driving kind of the acceleration here in activity?

The reason I ask is because I feel like we've kind of heard about project backlogs and quoting activity being robust the last couple of years and conversion rates and delays shipments have kind of disappointed a little bit. So understand, I guess, what gives us confidence that something has changed that will result in kind of the letting of projects moving faster? And within private, you could expand a bit more like is that data are you seeing it happen outside of data centers and as well? Or is it primarily just those two?

Tom Hill: Yes. So look, we talked some in the first part of the year about projects pricing projects and then kind of getting postponed or pushed to pause button. We're not seeing that anymore. In fact, saw some of seen a lot of those projects actually go at supporting growth in our backlog. If we put it in our backlogs, we're pretty sure it's going to happen. It's very rare that once we put them in there that projects don't go. So I have very good confidence that our backlogs will be shipped in that growth will support growth as we look at 2026. I think that if you look forward, I think the nonresidential continues to grow.

Ron, why don't you talk a little bit about kind of volume drivers in '26 and the momentum we carry into that?

Ronnie Pruitt: Yes. I mean, I look at starts on the private non-res side, as Tom said, in Vulcan served markets, in September on trailing six months we're up 7%, trailing 3% were up 8%. So that momentum continues. As I look at the sub-segments of our private non-res, office data, stores and warehouses, institutional are all up. And our quoting activity and our bidding are on the same trajectory. And so as we look at it, I mean, is a lot of data center work out there. And that subcategory itself is up 26%. But we've also booked two LNG projects. We booked a couple of manufacturing projects. We've booked some retail. And so it's a combination.

Data centers have definitely been a very good tailwind for us. But there are other sectors within the private non-res that also give confidence as we look in 2026.

Tom Hill: Yes. I would tell you that I think that is Ronnie and Mary Andrews, as we all look at 2026, pretty good confidence we'll see volume growth. The public side, I can't tell you how strong the public side is. It's very, very good. We've seen the turn. We think in non-res data centers is bigger than what we thought it was going to be. We think warehouses is now probably turning to growth in most of our markets. So as we talk a lot about single-family, it's still a headwind, but I think it continues to probably it will get better as we march through next year. So I think our confidence level, that's pretty good.

Angel Castillo: Very helpful. Thank you.

Operator: We'll go next now to David MacGregor at Longbow Research.

Joe Nolan: Hey, good morning. This is Joe Nolan on for David. Congrats on a nice quarter.

Tom Hill: Thank you.

Joe Nolan: I was just wondering on public infrastructure, Slide five shows a nice acceleration in contract awards. Was just hoping you could break it down in some of your key markets and give any detail on how fiscal year 2026 DOT budgets look there?

Tom Hill: Yes. I would tell you, in our markets, it's very widespread. The public side, I can't underscore it. It's good and getting better. Remember, we're in year four of IIJA. And it took two years to really get that started, which frustrated everyone. Including us. But to be but as expected, so now we're seeing the state DOTs mature into substantially increased federal and state funding. All of our the vast our top ten DOTs are all up for fiscal year '26. Trailing twelve-month highway starts, as we said, are up 17% in 5% in other states. So we are where the DOTs are growing.

I think simply put, the DOTs are putting that money to work now and they continue to get better at it. And remember, only 40% of the IIJA funds have been spent. So there's a long tail to this past '26.

Ronnie Pruitt: Yes. And I think as Tom said that those funds will carry us well into '26 and '27 and beyond. And I would tell you there's three rules around reauthorization. One, it never happens on time. Two, it will happen and three, it's historically always been larger than the build before. And so we're anticipating that. We think public will continue to remain strong. And if you think about the infrastructure of the country, we still got a lot of work to do. And so we're happy with where we're at on the public side. And we think that's a it's going to continue strong in the future.

Joe Nolan: Okay. Very encouraging. Thanks. I'll pass it on.

Operator: We'll go next now to Michael Dudas at Vertical Research.

Michael Dudas: Mike, we can't hear you.

Operator: Michael, you might be on mute. We cannot hear you right now. And we'll circle back around to Michael. We'll go next now to Adrian Herta at JPMorgan.

Adrian Herta: Thank you. Hi, Tom. Congrats and best wishes. It was a pleasure to work with you all these years. And welcome Ronnie on since U.S. Concrete, and I'm sure you're going to deliver very good results as well. Quick question on the cost. It's been quite impressive what you guys have been doing on the cost per ton side over the last couple of quarters. I think you mentioned that you're still in the early innings on many of these measures that you're taking. Can you give us a sense of the actions you've been taking and for how many more quarters we can see very good performance on cost as we have seen in the last few quarters?

Ronnie Pruitt: Yes. Thank you for the question. I would tell you we're still in the early innings and we've talked about Vulcan Way of operating. The technology investment is complete within our top 127 plants, which represents over 70% of our production as a company. Where we're at today is really in the final stages of human behavioral side. And so we have a lot of training going on with our plant operators using the tools, the process intelligence, the scheduling systems with our labor focus. And so my anticipation is we got a long ways to go, but it's really exciting to watch.

And I would tell you that as I look at what's transpired this year, and then what we're forecasting for next year, these tools, these investments we've made and the processes that we go through around our operations and focusing on our critical size production and the yield on that and the labor side, labor savings, I think we've got a lot of room. And I'm excited about it and think more importantly, our operators are the ones that are driving this. So a lot more to come, but I would tell you my anticipation is 2026 is going to be even more momentum than it was in 2025.

Tom Hill: I would say that it's not just a quarter thing. This is years of marching forward with operating efficiency improvements. I think that Ronnie and his team, as I said earlier, should be very proud of their performance. This year. In Romania, they got help from weather and volume in Q3, but they did not in Q1 and Q2. In fact, surprisingly, how good the cost was given the conditions. But I think they have years of improvement ahead of them.

Adrian Herta: Great. Congrats. Thanks, Tom and Ronnie.

Tom Hill: Sure.

Operator: Thank you. We'll go next now to Ivan Yi at Wolfe Research.

Ivan Yi: Yes, good morning. First, congrats to Tom and Ronnie.

Ronnie Pruitt: Thank you.

Ivan Yi: Just to go to the aggregate pricing again. Price per ton in 3Q was the smallest in a few years and I get that there's some negative mix in there. But why is the year-over-year growth decelerated in recent quarters? It had been double digits and now you're guiding to 5%. In '26. Just some color there. Thank you.

Tom Hill: Yes. I think that a couple of things there. Obviously, we had headwinds from acquisitions. In the first part of the year, we had headwinds from lower volumes in the Southeast driven by weather that helps that got back more normal. Q3. You're sitting here on three years of negative volume and that does put some pressures on price. I think that's we're kind of probably at a low point. I believe that the continued acceleration in public and now visibility to the private non-res going up, really helps our conversations for pricing and our backlog pricing as we look into 2026. Ronnie called that out. That we've out January 1 price increases. We're having those conversations. They're going well.

But importantly, before that, over the last few months, we're seeing acceleration in our backlog pricing, which is a very good foreshadowing for going to happen in 2026.

Ivan Yi: Thank you.

Tom Hill: Thank you.

Operator: We'll go next now to Michael Dudas at Vertical Research.

Michael Dudas: Yes. Hope I the mute's off here. Good morning, Mary Anne. And Ronnie and Tom. Ronnie, Tom, the rest Good to hear from you.

Ronnie Pruitt: Yes. Congrats to Tom and Ronnie. Also congrats, Mary Andrews, the great cash generation and the great cash flow numbers you've been putting up here. So congrats to all.

Michael Dudas: Maybe just as we get close to wrap up here for Ronnie, as you look into your tenure here for the next several years, maybe even decade or so, as you look out maybe past 2026, how much different or not will Vulcan look like? And do you see the sense of the industry fundamentals and where we are in given what you're seeing from competitors and from clients that this type of growth in sustainability and volume pricing and certainly profit per ton growth is sustainable over the next several years?

Ronnie Pruitt: Yes. Great question, I mean, I think as if you look out past '26, '27, '28 in the future, Vulcan is going to look very similar. And I would tell you, we're going to continue to be led by our strategy around enhancing our core, which is really investing in continuing to invest in Vulcan Way of operating and Vulcan Way of selling, which is going to really complement our margin growth and it gives us confidence in that margin growth with those tools that we've invested in. Then on the strategic side, when we talk about expanding our reach, I mean, we're going to stay aggregate-focused.

Both within the markets that we serve and building the franchise that we have. And also as we look at geographical expansion, it's still going to be an aggregate-led company. And so I wouldn't tell you that as you look in the future, you're going to see anything different than what Vulcan has continued to execute on. Those growth opportunities will be there. And we'll be right in the middle of it. But going to be very disciplined on what we look like and how we what those businesses are going to be led by is always to be aggregates.

Michael Dudas: Thank you, Ronnie.

Operator: Thank you. And gentlemen, it appears we have no further questions this morning. Mr. Hill, I'll turn things back to you, sir, for any closing comments.

Tom Hill: Thank you, and thank you all for your time this morning. As I step back and look at Vulcan's future, I feel both pride and excitement. Vulcan has fantastic talent and bench strength throughout the organization and particularly in leadership. Ronnie and Mary Andrews and their teams are seasoned talented industry experts. Who are armed with a superior set of tools and disciplines embedded in the Vulcan Way of selling and the Vulcan Way of operating. Putting that together with our continuous improvement culture will take Vulcan's to remarkable heights. I'm very proud to have represented the men and women of Vulcan and I look forward to supporting Ronnie and Mary Andrews in the future.

Thank you all for your interest in Vulcan and your friendships. Keep you and your families safe and healthy. Thank you.

Operator: Thank you very much, Mr. Hill. Again, ladies and gentlemen, that will conclude today's Vulcan Materials Company earnings conference call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.

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