Vulcan Materials VMC Q4 2025 Earnings Call Insights

Call Participants

The key individuals participating in the call included Ronnie Pruitt, the Chief Executive Officer, Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer, and Mark Warren, Vice President of Investor Relations.

Key Performance Highlights

Vulcan Materials delivered impressive results for the year, with adjusted EBITDA reaching $2.3 billion, marking a solid 13% increase from the previous period. This achievement came alongside margin expansion of 160 basis points, bringing the margin to 29.3%. The company also hit a significant milestone in aggregate cash gross profit per ton at $11.33, representing a 7% rise and aligning perfectly with the long-term target range of $11 to $12 per ton.

Aggregate shipments totaled around 227 million tons, reflecting a 3% growth overall. While same-store shipments saw a slight decline, the expansion was primarily fueled by contributions from recent acquisitions. On the pricing front, aggregates mix-adjusted pricing rose by 6% for the entire year, with a 5% increase specifically in the fourth quarter. Meanwhile, aggregates units cash cost of sales climbed by less than 2% throughout the year, showcasing strong discipline in managing operational expenses.

Operating cash flow surged past $1.8 billion, a robust 29% improvement over the prior year. Free cash flow experienced even stronger growth, exceeding 40% after accounting for $678 million in capital expenditures, thanks to solid aggregates performance and the benefits from recent acquisitions. Leverage levels improved, with net debt to adjusted EBITDA settling at 1.8 times following the redemption of $400 million in 2025 notes and the repayment of $550 million in commercial paper.

The company returned substantial value to shareholders, distributing $698 million through $260 million in dividends and $438 million in share repurchases. SG&A expenses came in at $564 million, equating to 7.1% of revenue, which represented a 10 basis point improvement compared to the previous year.

2026 Guidance Outlook

Looking ahead to 2026, Vulcan Materials projects aggregates shipments growth in the range of 1% to 3%. Freight-adjusted average selling prices for aggregates are anticipated to grow between 4% and 6%. Units cash cost of sales for aggregates is expected to rise by a low single-digit percentage. Adjusted EBITDA is forecasted to fall between $2.4 billion and $2.6 billion.

For the downstream segment, cash gross profit is projected at approximately $290 million, with about 85% originating from the asphalt segment. SG&A expenses are guided at $580 million to $590 million. Depreciation, depletion, amortization, and accretion expenses are estimated at $700 million. Interest expense is expected around $225 million, paired with an effective tax rate of 22% to 23%. Capital expenditures are planned at $750 million to $800 million, incorporating $50 million shifted from the prior year for major plant rebuild initiatives.

Management expressed optimism regarding the M&A pipeline, describing it as very healthy and anticipating increased activity, particularly in aggregates and expansion into new geographic areas. Regarding IIJA funding, more than 50% of the program’s funds are still unspent, providing clear visibility into public demand extending at least through 2027. Large projects now account for roughly 45% of bookings, propelled by data center developments and public sector initiatives.

Management elaborated on mix and pricing dynamics, noting that base stone prices for data center projects typically range $8 to $10 below clean stone prices. While this mix represents a short-term pricing challenge, its impact on margins remains limited. All 2026 guidance excludes the pending Bay Area ready-mix divestiture, which at the midpoint implies over 10% same-store growth.

Challenges and Risks

Several challenges were highlighted during the call. Single-family residential activity underperformed initial expectations, resulting in full-year volumes and pricing at the lower end of projections. Weather disruptions played a role, including early winter in certain seasonal markets and exceptionally wet conditions in Southern California, which elevated costs and tempered fourth-quarter EBITDA relative to forecasts. Ongoing housing affordability issues and elevated interest rates may continue to hinder residential volume recovery and limit potential upside in 2026. Additionally, the timing of plant repairs and associated insurance costs introduced some lumpiness in fourth-quarter expenses, influenced by weather patterns that cannot be entirely normalized.

Overall Summary

Vulcan Materials reported a year characterized by substantial growth in EBITDA and free cash flow, driven by enhancements in aggregates profitability, rigorous cost controls, and effective integration of recent acquisitions. Although same-store volumes remained essentially flat, pricing gains provided a boost, tempered somewhat by product mix shifts from major data center projects, which are expected to influence future margin profiles. The leadership team offered clear strategic direction, emphasizing sustained public infrastructure demand, a measured approach to mergers and acquisitions, and the removal of pending divestitures from 2026 projections.

The 2026 outlook focuses on moderate shipment and EBITDA expansion, alongside cost discipline and a growing contribution from asphalt profits amid evolving mix dynamics. This guidance is supported by resilience against funding uncertainties and a strong emphasis on operational leverage. The company noted that over 50% of IIJA funding remains available, ensuring multi-year demand support from public works projects. Public and significant private initiatives, especially data centers, now comprise about 45% of bookings, significantly shaping backlog composition and shipment schedules.

The CFO highlighted that the guidance midpoint, on a same-store basis excluding the ready-mix divestiture, points to more than 10% growth in 2026. The CEO stressed that volume assumptions remain conservative, factoring in subdued single-family demand and current backlog makeup, even amidst strong performance and opportunities in key regions. Cost control discipline is embedded in the Vulcan Way of Operating, encompassing process intelligence, labor optimization, and plant productivity enhancements, which are pivotal for ongoing efficiency gains.

Industry Terminology

• Aggregates Cash Gross Profit Per Ton: This essential profitability indicator is computed by dividing the cash gross profit from the aggregates segment by the total tons shipped, serving as a gauge for operational effectiveness and pricing achievement.
• Mix-Adjusted Price: This represents the average selling price modified to eliminate influences from shifts in geographic areas, product types, and customer bases, facilitating accurate year-over-year pricing assessments.
• IIJA: Stands for the Infrastructure Investment and Jobs Act, a federal initiative providing multi-year funding for U.S. infrastructure projects, directly affecting aggregates demand in Vulcan’s operational regions.
• Base Stone: A cost-effective aggregate used mainly as a base layer in construction projects, differing from the higher-margin clean stone applied in advanced stages or specialized uses.
• Clean Stone: Aggregate that has been washed or screened, offering superior quality and pricing compared to base stone, commonly utilized in concrete production or surface works.
• Backlog: Refers to secured orders and project commitments yet to be fulfilled, acting as a forward-looking signal for imminent demand trends.

Full Earnings Call Transcript

Mark Warren opened the discussion by thanking the operator and introducing the participants: Ronnie Pruitt, Chief Executive Officer, and Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer. He noted that the call was supported by a press release and supplemental presentation available on the company’s website at vulcanmaterials.com. Warren reminded listeners that the discussion might contain forward-looking statements subject to various risks and uncertainties, detailed in the earnings release and SEC filings. Reconciliations for non-GAAP measures were available in the release, presentation, and filings. He requested that questions during Q&A be limited to one per participant to maximize participation. With that, he handed over to Ronnie Pruitt.

Ronnie Pruitt expressed gratitude to Mark and welcomed everyone to the call. He conveyed his honor in leading Vulcan Materials Company, representing its dedicated employees. He celebrated an exceptional safety record and another year of strong growth in earnings and cash flow. Pruitt praised the team’s execution in 2025, positioning the company ideally for upcoming opportunities. Vulcan remains committed to enhancing its core business and growing its leading aggregates platform in existing and new markets.

In 2025, adjusted EBITDA hit $2.3 billion, up 13% from the prior year, with margins expanding 160 basis points to 29.3%. Aggregate cash gross profit per ton advanced to $11.33, meeting the $11 to $12 target and powering operating cash flow beyond $1.8 billion, a 29% jump. As anticipated, aggregates unit profitability kept growing, public demand expanded steadily, though single-family residential demand fell short of initial forecasts, placing full-year volume and price at the lower end of expectations.

Pruitt commended the operating and sales teams for adapting to a fluid market by managing inventories judiciously and controlling costs tightly, despite some fourth-quarter timing issues beyond their influence. Aggregates units cash cost of sales rose by under 2% for the year, exemplifying the Vulcan Way of Operating (VWO) in action—leveraging tools and processes to focus on controllable factors. With VWO rollout progressing and more gains ahead, Pruitt is confident in sustained improvements.

Aggregate shipments reached about 227 million tons, up 3% for the year, driven by prior acquisitions; same-store shipments dipped slightly. In Q4, shipments grew 2% year-over-year, despite sharp drops in East Tennessee and North Carolina due to outsized prior-year volumes from Hurricane Helene recovery. Aggregates mix-adjusted pricing gained 6% annually and 5% in Q4. Geographic mix from acquisitions boosted volumes in high-price markets, while product mix shifts affected reported pricing.

Accelerated bookings for large, diverse-product projects led to rapid shipment conversions, pressuring sequential Q4 pricing but signaling robust 2026 demand and Vulcan’s status as a preferred supplier for urgent large-scale work. Through superior commercial and operational efforts, aggregates cash gross profit per ton rose 7% yearly, reinforcing confidence in the team’s ability to build unit profitability. Pruitt then transitioned to Mary Andrews Carlisle for more on 2025 results.

Mary Andrews Carlisle thanked Ronnie and greeted the audience. She described 2025 results as evidence of the company’s dual growth strategy: expanding aggregates cash gross profit per ton across the board and leveraging prior acquisitions. This drove free cash flow up over 40% after $678 million in capex for maintenance, operations, and growth projects. Strong cash flows enabled swift deleveraging post a $2 billion long-term notes issuance in late prior year, readying the balance sheet for future pursuits.

Shareholders received $260 million in growing dividends and $438 million in repurchases. Year-end net debt to adjusted EBITDA was 1.8x. In March, $400 million 2025 notes were redeemed at par, and $550 million commercial paper was repaid in the second half, cutting interest costs while preserving issuance flexibility. SG&A hit $564 million, or 7.1% of revenue—10 basis points better than last year—reflecting returns from tech and talent investments.

Over three years, via business enhancements and portfolio tweaks, adjusted EBITDA margins improved over 700 basis points, and return on invested capital rose over 200 basis points. Further gains are expected with the ready-mix divestiture close and 2026 profitability lifts. Carlisle passed back to Ronnie.

Ronnie Pruitt thanked Mary Andrews. For 2026, Vulcan aims to sustain compounding growth amid improving demand. Public demand growth will pair with private recovery for modest overall increase. Rising demand supports pricing and operations. Trailing 12-month highway starts in Vulcan markets grew at triple the national rate. IIJA and state/local funds boost spending. Though IIJA authorization ends in September, over 50% funds remain, flowing multi-year; reauthorization efforts are underway.

Public non-highway investments like water/sewer grew double-digits in 2025, aiding 2026 shipments. Single-family housing affordability lingers but is an administration focus; residential stays limited in 2026, with H2 monitoring. Private non-residential varies but shows modest 2026 growth promise in industrial/non-res categories, led by data centers—over 150 million sq ft under construction, 450 million announced, 70%+ near Vulcan plants. Vulcan’s scale, reliability, logistics suit these projects.

Thus, 2026 aggregate shipments: 1-3% growth; freight-adjusted ASP: 4-6%; units cash costs: low single-digits up. This yields high single-digit+ aggregates cash gross profit per ton growth, driving earnings/cash. Adjusted EBITDA: $2.4-2.6 billion. Pruitt handed to Mary Andrews for guidance details.

Mary Andrews Carlisle thanked Ronnie. Downstream cash gross profit: ~$290 million, ~85% asphalt post ready-mix pruning. SG&A: $580-590 million. DDA&A: ~$700 million. Interest: ~$225 million. Tax: 22-23%. Capex: $750-800 million, including $50 million shifted for plant rebuilds. Expect EBITDA margin expansion, EBITDA growth, strong cash in 2026. Open for questions.

Q&A Session

The operator introduced the first question from Trey Grooms of Stephens.

Trey Grooms noted Q4 results and 2026 guide suggest Q4 not indicative of trends. He sought confidence levels, end-market demand puts/takes, pricing/profitability outlook.

Ronnie Pruitt affirmed strong execution, poised for demand leverage and healthy 2026 pricing. Public starts solid in backlog; non-highway public strong. Private non-res led by industrial/data centers converting fast to shipments; power gen to grow. Warehouses bottoming with green shoots. Residential soft but modest 2026 improvement if rates/affordability aid. After three muted years, 2026 modest growth aids costs/pricing. Vulcan selling disciplines optimize pricing; fixed plant increases accepted, private visibility aids mid-years. VWO plant focus + volume tailwinds costs. Positioned for profitability/cash gross profit capture.

Mary Andrews Carlisle added Q4 context: solid 2025 but tough comps sans hurricane relief geography. Flat EBITDA hit by residential weakness, early winter/SoCal wet weather, repair/insurance timing. 2026 guide shows compounding progress.

Trey thanked for details and passed.

Next, Tyler Brown from Raymond James.

Tyler sought pricing bridge: 5% mix-adjusted vs. reported, triple whammy (geography sans storm repeat, low-ASP base/fill book-burn, M&A drag). Quantify 3-pt gap; 2026 shaping—low early/high later amid mix?

Mary Andrews Carlisle confirmed triple whammy: 300bps ~2/3 geographic (prior high-ASP storm markets), 1/3 split acquisitions (Q4 < full-year 100bps) and product mix (projects). 2026 pricing low H1, higher H2 with improving demand/comps. Ronnie on projects.

Ronnie Pruitt: Backlog/bookings stronger YoY; backlog ~40-45% shipments. Large projects (25k+ tons) up from 30% to 45% bookings, data center-driven. Initial base/fill mix hit, but maturation brings clean stone.