Vulcan Materials CO

Vulcan Materials Company operates primarily in the U.S. and is the nation's largest supplier of construction aggregates (mainly crushed stone, sand and gravel) and a major producer of aggregates-intensive downstream products such as asphalt mix and ready-mixed concrete. The U.S. aggregates industry is composed of approximately 5,000 companies that operated approximately 11,000 facilities during 2025, and the ten largest aggregates producers accounted for approximately 35% of total U.S. aggregates production in 2025. The industry is highly fragmented, providing many opportunities for consolidation, and there are limited substitutes for quality aggregates. Long-term growth in demand for aggregates is largely driven by growth in population, jobs and households, and the drivers underpinning long-term demand and sustained pricing growth remain firmly in place in both the public and private sectors of the economy.

Vulcan is the largest aggregates supplier in the U.S. with a total U.S. market share of approximately 10%. Primary competitors named in the filing include Arcosa, Inc., Amrize, Cemex S.A.B. de C.V., CRH plc, Heidelberg Materials AG, Knife River Corporation, and Martin Marietta Materials, Inc. The company's competitive advantages include its position as the most aggregates-led public company in the U.S. construction materials industry, a coast-to-coast footprint serving 34 of the top 50 highest-growth metropolitan statistical areas in 23 states plus Washington D.C., and significant barriers to entry in many metropolitan markets due to stringent zoning and permitting regulations. The company has over 25,000 customers across the markets it serves.

Vulcan generates revenue primarily through the sale of construction aggregates, asphalt mix, and ready-mixed concrete, and includes freight and delivery costs that are passed along to customers. The company also generates service revenues from its asphalt construction paving business and services related to its aggregates business. The core business model is aggregates-led, with aggregates comprising approximately 95% of asphalt mix by weight and 80% of ready-mixed concrete by weight. The company's strategy for long-term value creation is built on an aggregates-led business, a discipline of durable growth, a holistic approach to land management, and a commitment to safety, health and the environment.

The Aggregates segment is the company's primary business, producing crushed stone, sand and gravel, and related products and services. During 2025, the company operated 425 active aggregates facilities. Aggregates segment sales were $6,297.2 million ¹ in 2025, and segment gross profit was $1,964.8 million ². Aggregates shipments were 226.8 million tons ³ in 2025, and the freight-adjusted sales price was $21.98 ⁴ per ton. The company currently has 16.6 billion tons ⁵ of proven and probable aggregates reserves, strategically located to economically serve high-growth areas. The Aggregates segment gross profit per ton was $8.66 ⁶ and cash gross profit per ton was $11.33 ⁷ in 2025.

The Asphalt segment produces and sells asphalt mix in Alabama, Arizona, California, New Mexico, Tennessee and Texas, and provides asphalt construction paving services in Alabama and Tennessee. During 2025, the company operated 71 asphalt facilities. Asphalt segment gross profit was $173.9 million ⁸ in 2025, and shipments were 13.4 million tons ⁹ with an average sales price of $81.93 ¹⁰ per ton. The Concrete segment produces and sells ready-mixed concrete in California, Maryland, Virginia, the U.S. Virgin Islands and Washington D.C. During 2025, the company operated 76 concrete facilities. Concrete segment gross profit was $35.9 million ¹¹ in 2025, and shipments were 4.5 million cubic yards ¹² with an average sales price of $188.82 ¹³ per cubic yard.

During 2025, the company disposed of its asphalt mix and construction paving operations in the greater Houston market, recognizing a pretax gain of $42.4 million ¹⁴. In the fourth quarter of 2025, the company entered into an agreement to divest its concrete business in California. The company returned capital to shareholders via dividends of $259.8 million ¹⁵ at $1.96 ¹⁶ per share and via share repurchases of $438.4 million ¹⁷ at an average price of $283.82 ¹⁸ per share, repurchasing 1,544,441 ¹⁹ shares. In March 2025, the company redeemed $400.0 million ²⁰ of senior notes due April 2025 using cash on hand. The company invested $702.9 million ²¹ in capital expenditures to replace or improve existing property, plant and equipment.

Total revenues increased $523.4 million ²², or 7%, to $7,941.1 million ²³ in 2025 from $7,417.7 million ²⁴ in 2024. Gross profit increased $175.0 million ²⁵, or 9%, to $2,174.6 million ²⁶ in 2025 from $1,999.6 million ²⁷ in 2024. Operating earnings increased $255.1 million ²⁸, or 19%, to $1,619.6 million ²⁹ in 2025 from $1,364.5 million ³⁰ in 2024. Net earnings attributable to Vulcan were $1,076.7 million ³¹ in 2025, an increase of $164.8 million ³², or 18%, from $911.9 million ³³ in 2024. Diluted earnings per share from continuing operations were $8.15 ³⁴ in 2025 compared to $6.91 ³⁵ in 2024. Adjusted EBITDA was $2,323.6 million ³⁶ in 2025, an increase of $266.4 million ³⁷, or 13%, from $2,057.2 million ³⁸ in 2024.

Management provided specific quantitative guidance for 2026. The company expects total shipments up 1% to 3% (226.8 million tons in 2025) ³⁹, freight-adjusted price improvement of 4% to 6% ($21.98 in 2025) ⁴⁰, and low-single digit increase in freight-adjusted unit cash cost ($10.65 in 2025) ⁴¹. The company expects total Asphalt and Concrete segment cash gross profit of approximately $290 million ⁴² ($322 million in 2025), with relative contribution of approximately 85% from the Asphalt segment and 15% from the Concrete segment. Selling, Administrative and General expenses are expected to be $580 million to $590 million ⁴³ ($564 million in 2025). Interest expense is expected to be approximately $225 million ⁴⁴. The company expects an effective tax rate of 22% to 23% ⁴⁵. Net earnings attributable to Vulcan are expected to be $1,100 million to $1,300 million ⁴⁶, and Adjusted EBITDA is expected to be between $2,400 million and $2,600 million ⁴⁷.

The company's durable growth is generated by organic growth in its existing business as well as inorganic growth through mergers and acquisitions, supplemented with greenfield developments. The company's strategy to enhance its core includes the Vulcan Way of Selling (Commercial Excellence and Logistics Innovation) and the Vulcan Way of Operating (Operational Excellence and Strategic Sourcing). From 2023 to 2025, aggregates gross profit per ton has increased from $7.40 to $8.66 (an increase of 17%) ⁴⁸, and aggregates cash gross profit per ton has increased from $9.46 to $11.33 (an increase of 20%) ⁴⁹. The company has set a target to achieve $11 to $12 aggregates cash gross profit per ton once it reaches 260 to 270 million tons ⁵⁰. The company delivered $11.33 of aggregates cash gross profit per ton on 227 million tons in 2025 ⁵¹.

The company's strategy to expand its reach includes mergers and acquisitions and greenfield development. During the last 10 years, the company has completed over 30 acquisitions, including more than 75 aggregates quarries and sales yards in its top 10 revenue states. From 2023 to 2025, the company invested $2,310.6 million ⁵² in business acquisitions. In 2024, the company acquired Wake Stone Corporation, which expanded its reach in high-growth geographies in the Carolinas, and Superior Ready Mix, L.P., which solidified its position as the leading aggregates producer in Southern California. The company also completed two bolt-on acquisitions during 2024 in Alabama and Texas. During the next decade (2025-2035), Woods and Poole Economics projects that 76% of the U.S. population growth, 75% of new jobs and 73% of household formations will occur in Vulcan-served states ⁵³.

The company expects continued improvement in Aggregates segment cash gross profit per ton ($11.33 in 2025) ⁵⁴. The company's strategic disciplines are expected to drive another year of earnings growth and further improvement in aggregates unit profitability. The company expects low-single digit increase in freight-adjusted unit cash cost ($10.65 in 2025) ⁵⁵. The company's Adjusted EBITDA margin expanded 160 basis points ⁵⁶ in 2025. The company's return on invested capital was 15.7% ⁵⁷ in 2025, a decrease of 0.5 percentage points (50 basis points) ⁵⁸ from the prior year.

The company expects capital spending for maintenance and growth projects of $750 million to $800 million ⁵⁹ in 2026. Depreciation, depletion, accretion and amortization expense is expected to be approximately $700 million ⁶⁰ in 2026. The company's capital allocation priorities are: operating capital (maintain and grow the value of the franchise), growth capital (including acquisitions and greenfields), dividend growth (with a keen focus on sustainability), and return excess cash to shareholders (primarily via share repurchases). During 2025, the company invested $702.9 million ⁶¹ in capital expenditures and paid a dividend per share of $1.96 ⁶² and total dividends of $259.8 million ⁶³.

The company expects capital spending for maintenance and growth projects of $750 million to $800 million ⁶⁴ in 2026. The company's long-term leverage target is 2.0 to 2.5x ⁶⁵. At December 31, 2025, total debt to Adjusted EBITDA was 1.9 times ⁶⁶ (1.8 times on a net debt basis, reflecting $189.4 million ⁶⁷ of cash on hand). The weighted-average debt maturity was 13.7 years ⁶⁸, and the total weighted-average effective interest rate was 5.0% ⁶⁹. The company's available liquidity was $1,760.2 million ⁷⁰, including $183.3 million ⁷¹ of unrestricted cash on hand.

The company faces headwinds from inflationary pressures and labor constraints, which can create short-term to medium-term headwinds. The industry is experiencing uncertainty due to rapid changes in global trade policies including announced tariff increases, potential additional tariff increases, potential new or renegotiated bilateral or multilateral trade agreements, and other measures that could restrict international trade. Economic pressures on customers, including the challenges of inflation and the impact of tariffs and other trade measures, may negatively impact shipment volumes. The Mexican government has taken actions adverse to the company's property and operations in Mexico, including arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations at the Calica operations in Quintana Roo, Mexico, and a presidential decree declaring the entirety of Calica's properties as a 'Natural Protected Area' which prohibits Calica from extracting petrous or construction materials from its properties.

The company faces risks related to its dependence on the construction industry, which is subject to economic cycles. Construction spending is affected by general economic conditions, changes in interest rates, demographic shifts, industry cycles, employment levels, inflation and other business, economic and financial factors. A downturn in Vulcan-served markets, particularly in the top revenue-generating markets, could have a material adverse effect on the business. The company's top ten revenue producing states accounted for 90% of 2025 revenues while the top five accounted for 63% ⁷². The company's business is also dependent on the timing and amount of federal, state and local funding for infrastructure, and the company cannot be entirely assured of the existence, amount and timing of appropriations for future public infrastructure projects.

The company's business is dependent on the construction industry and is subject to economic cycles, with construction spending affected by general economic conditions, changes in interest rates, demographic shifts, and inflation, and a downturn in Vulcan-served markets, particularly in the top revenue-generating markets, could have a material adverse effect. The company's long-term success depends upon securing and permitting aggregates reserves in strategically located areas, and in a number of urban and suburban areas it is increasingly difficult to permit new sites or expand existing sites due to community resistance. The company faces risks from international business operations, including actions taken by the Mexican government that have adversely affected its property and operations in Mexico, including arbitrary shutdown orders and a presidential decree declaring Calica's properties as a 'Natural Protected Area.' The company is involved in environmental investigations and cleanups, including the Hewitt Landfill Environmental Matter, where the company is engaged in groundwater testing and remedial procedures with the EPA, and the company has disclosed that it cannot reasonably estimate a range of loss pertaining to LADWP's potential contribution claim. The company's effective tax rate is subject to change, and the company faces a potential one-time cash outflow and tax expense of approximately $35 million ⁷³ related to a Mexican tax audit for 2018, which includes $23 million ⁷⁴ of interest and penalties, if it is unsuccessful in defending its tax position.

Management's message emphasizes that the aggregates-led business delivered another year of strong earnings growth and margin expansion, with net earnings attributable to Vulcan increasing 18%, Adjusted EBITDA improving 13%, and Adjusted EBITDA margin expanding 160 basis points. Management states that through a consistent focus on commercial and operational execution, the company continues to deliver attractive organic growth and expand its industry-leading aggregates gross profit per ton (which increased 5% to $8.66 per ton) and cash gross profit per ton (which increased 7% to $11.33). Management's expectations for 2026 include: total shipments up 1% to 3% ⁷⁵, freight-adjusted price improvement of 4% to 6% ⁷⁶, low-single digit increase in freight-adjusted unit cash cost ⁷⁷, total Asphalt and Concrete segment cash gross profit of approximately $290 million ⁷⁸, Selling, Administrative and General expenses of $580 million to $590 million ⁷⁹, interest expense of approximately $225 million ⁸⁰, capital spending of $750 million to $800 million ⁸¹, depreciation, depletion, accretion and amortization expense of approximately $700 million ⁸², an effective tax rate of 22% to 23% ⁸³, net earnings attributable to Vulcan of $1,100 million to $1,300 million ⁸⁴, and Adjusted EBITDA between $2,400 million and $2,600 million ⁸⁵. The strategic priorities emphasized for the period ahead are: continued improvement in Aggregates segment cash gross profit per ton, driving another year of earnings growth and further improvement in aggregates unit profitability through the Vulcan Way of Selling and Vulcan Way of Operating disciplines, and disciplined capital allocation balancing reinvestment in the business, growth through acquisitions, and return of capital to shareholders.