Vulcan Materials Co

NYSE:VMC

Earnings Call Analysis

Vulcan Navigates Challenges and Sees Steady Growth Ahead

In Q2 2024, Vulcan Materials faced weather-related challenges but delivered its seventh consecutive quarter of double-digit improvement in aggregates profitability. The company achieved $603 million in adjusted EBITDA with a 170 basis point margin expansion despite a 5% decline in area shipments. Recent strategic acquisitions in Alabama and Texas enhanced production and distribution capabilities. Price increases of 12% ($2.29 per ton) helped offset rising costs. Vulcan expects unit profitability to continue rising and projects adjusted EBITDA for 2024 between $2 billion and $2.15 billion. Aggregate shipments are anticipated to decline 4-7%, but the solid pricing environment should support growth【4:0†source】【4:1†source】.

Introduction

The second quarter earnings call for Vulcan Materials Company provides an insightful overview of the company’s performance and strategic initiatives. The discussion, led by company executives, highlights notable achievements, challenges, and future expectations across various market segments.

Performance Overview

Vulcan Materials demonstrated resilience in the face of weather-related operational challenges. Despite a significant number of rain days, especially in May and June, the company reported its seventh consecutive quarter of double-digit year-over-year improvement in aggregates unit profitability. Adjusted EBITDA for the quarter was $603 million, with a margin expansion of 170 basis points. This growth occurred despite a 5% decline in shipments.

Strategic Acquisitions

During the quarter, Vulcan successfully executed two strategic bolt-on acquisitions, enhancing its aggregate production, distribution capabilities, and downstream asphalt business in key states like Alabama and Texas. These acquisitions align with the company’s commitment to expand its reach while strengthening core operational efficiencies.

Pricing and Cost Management

The pricing environment remained favorable, with freight-adjusted average selling prices increasing by 12% year-over-year. However, costs also rose, with average unit cash cost of sales up by 13%. Nevertheless, cash gross profit per ton saw a 12% improvement, underlining the company’s focus on unit profitability. Future guidance suggests aggregate prices will continue to grow by 10-12% for the full year.

Demand and Market Dynamics

The housing market showed mixed signals, with single-family starts recovering slower than anticipated and multifamily activity remaining weak. However, the long-term fundamentals for residential construction appear solid due to population growth and low inventories. On the non-residential front, light commercial activity remains sluggish, but an expected positive trend aligns with single-family housing due to likely interest rate drops. Public infrastructure growth is anticipated to persist, supported by increased IIJ funding.

Forward Guidance

Considering the current demand landscape and adverse weather impacts, Vulcan now expects aggregate shipments to decline by 4% to 7% for the full year. Despite this, the firm anticipates continued growth in adjusted EBITDA, margin expansion, and robust free cash flow generation. Full-year adjusted EBITDA is projected between $2 billion and $2.15 billion.

Capital Allocation

Vulcan is committed to capital investments to reinforce and expand its business operations. In the second quarter, capital expenditures for maintenance and growth projects amounted to $195 million, with expectations to spend between $625 million to $675 million for the year. Additionally, $181 million was allocated for strategic acquisitions and stock repurchases.

Inflation and Cost Pressures

Vulcan has adjusted its cost inflation guidance from mid-single digits to high-single digits, primarily due to volume impacts. Executives discussed the challenges of dealing with inflation and the operational inefficiencies caused by running wet material. Despite these pressures, the company remains focused on maintaining double-digit unit margin growth.

Conclusion

Vulcan Materials is poised for future growth, leveraging its solid pricing environment, strategic acquisitions, and effective cost management despite adverse weather conditions and inflationary pressures. The company’s disciplined approach to capital allocation and strategic planning underpins its long-term value creation strategy.

Earnings Call Transcript 2024-Q2

[Operator]

Good morning. Welcome, everyone, to the Vulcan Materials Company Second Quarter 2024 Earnings Call. My name is Todd, and I will be your conference call coordinator today. Please be reminded that today's call is being recorded. and will be available for replay later today at the company's website. [Operator Instructions].

Now I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

[Mark Warren, executive]

Thank you, operator, and good morning, everyone. With me today are Tom Hill, Chairman and CEO; and Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer.

Today's call is accompanied by a press release and a supplemental presentation posted to our website vulcanmaterials.com. Please be reminded that today's discussion may include forward-looking statements, which are subject to risks and uncertainties. These risks, along with other legal disclaimers, are described in detail in the company's earnings release and in other filings with the Securities and Exchange Commission. Reconciliations of non-GAAP financial measures are defined and reconciled in our earnings release, our supplemental presentation and other SEC filings. [Operator Instructions].

And with that, I'll turn the call over to Tom. .

[James Hill, executive]

Thank you, Mark, and thank all of you for your interest in Vulcan Materials. Our results demonstrate how our teams have successfully navigated a challenging first half of the year. Unfavorable weather conditions in many key markets impacted our shipments and operating efficiencies.

Our second quarter performance reinforces our consistent execution the durable characteristics of our aggregates-led business and the benefits of our continued focus on both enhancing our core and expanding our reach. Even in the face of lower aggregate shipments, and weather-driven inefficiencies, our teams delivered a seventh consecutive quarter of double-digit year-over-year improvement in aggregates unit profitability.

In our trailing 12 months, average cash gross profit per ton has reached $9.96 per ton, marking consistent progress towards our $11 to $12 target. These achievements exhibit the benefits of our commitment to enhancing our core through our Vulcan selling and Vulcan way of operating disciplines. But our strategy is two-pronged, and we are also focused on expanding our reach. During the second quarter, we closed 2 strategic bolt-on acquisitions.

These acquisitions enhance both our aggregate production and distribution capabilities and our downstream asphalt business in Alabama, Texas, 2 of our top 10 states. In the quarter, we generated $603 million of adjusted EBITDA and expanded our adjusted EBITDA margin by 170 basis points despite 5% lower area shipments. Shipments in the quarter were negatively impacted by a significant number of rain days in many markets, particularly in May across 70% of our geographies and in select key markets in April and June.

The pricing environment remained positive and freight-adjusted average selling prices improved 12% on or $2.29 per ton versus the prior year. Freight adjusted unit cash cost of sales increased 13% or $1.13 per ton. Most importantly, cash gross profit per ton improved over $1 per ton or 12%. We remain consistently focused on improving unit profitability on every ton we sell to maximize earnings and aeration in any man environment.

Let me share with you my thoughts on the current demand backdrop by discussing each end use. Single family starts again recovering in the second half of last year and continue to point growth in 2024, albeit at a slightly lower level than we had initially anticipated. The timing of starts converting to shipments continued affordability issues and persistent elevated interest rates are impacting both the pace of recovery and the likelihood of single-family growth fully offsetting weaker multifamily activity.

Looking ahead, the underlying fundamentals of population growth and low inventories in Vulcan markets continue to support long-term growth in residential construction. In private nonresidential construction, the landscape continues to vary across categories, but is unfolding largely as we anticipated for 2024. Warehouse activity is the biggest headwind with some positive momentum in manufacturing activity in data centers. Light commercial activity is still relatively weak.

But over time, we expect it to follow the positive trends in single-family housing and benefit from lower interest rates. On the public side, we continue to expect growth in 2024 as 2 consecutive years of record growth in contract awards flow into projects and aggregate shipments. The IIJ funding is benefiting both highways and other public infrastructure activity. Given the demand backdrop just discussed and the weather impacted first half shipments being down 6%. We now expect aggregate shipments to decline between 4% and 7% for the full year. Combined with solid pricing environment and double-digit profitability improvement, we still anticipate same-store adjusted EBITDA growth, margin expansion and attractive free cash flow generation in 2024.

Now I'll turn the call over to Mary Andrews for some additional commentary on our results and revised outlook. Andrew?

[Mary Carlisle, executive]

Thanks, Tom, and good morning. The strong fundamentals of our aggregates-led business and our consistent execution continued to deliver attractive cash generation, which, coupled with disciplined capital allocation, is driving our returns on invested capital higher over time. During the second quarter, we deployed capital to reinvest in and expand our existing franchise to grow our business through acquisitions and to return cash to shareholders. Capital expenditures for maintenance and growth projects were $195 million in the quarter and $298 million on a year-to-date basis. We continue to expect to spend between $625 million and $675 million for the full year. .

During the quarter, we also allocated $181 million to the strategic bolt-on acquisition common stock repurchases. Our return on invested capital has improved 160 basis points over the last 12 months, with a 10% improvement in adjusted EBITDA generated on flat average invested capital. And with net debt-to-adjusted EBITDA leverage of 1.7x at quarter end, we have considerable investment capacity within our target leverage range of 2 to 2.5x to capitalize on attractive acquisition opportunities that will drive long-term value creation for shareholders.

SAG expenses in the quarter were 6.7% of revenue and year-to-date have increased less than 3% over the prior year. We are focused on both disciplined cost control and

[Audio Gap]

in the first 6 months and lower shipments, we now expect unit freight adjusted cash cost of sales to increase high single digits compared to the prior year. We continue to expect aggregates prices to increase 10% to 12% for the year, driving another year of double-digit improvement in cash gross profit per ton. We anticipate that the strong unit profitability improvement, coupled with the lower volume expectations, will generate adjusted EBITDA between $2 billion and $2.15 billion for the full year.

I'll now turn the call back over to Tom to provide a few closing remarks.

[James Hill, executive]

Thank you, Mary Andrews. I want to conclude by thanking our talented Vulcan team for their commitments to each other and to excellence. As they work each day, Rainer Schein, to operate safely and deliver value for our customers and our shareholders. I am confident that we have the right two-pronged strategy of enhancing our core and expanding our reach. And I'm excited about the runway ahead of us on both fronts to drive attractive growth for Vulcan Materials.

And now Marry Andrew and I will be happy to take your questions.

[Operator]

[Operator Instructions] Our first question comes from Stanley Elliott with Stifel.

[Stanley Elliott, analyst]

Thank you all for taking the question. Tom, could you talk a little bit more about just the overall demand environment? I understand there's been pretty tough operating conditions kind of on a year-to-date basis and probably even into July a little bit. Any sort of help in how we should think about the balance of the year, kind of where you see momentum and things like that.

[James Hill, executive]

I think, Stanley, all of the data and the leading indicators would support demand as we originally expected back in February, with the exception of single-family demand growth the growth in [indiscernible] is a little slower than we would have expected maybe 4 or 5 months ago, and we'll talk about that a little bit later.

But as we look at the current volume guidance, as you said, we had a very wet July that influenced those numbers and will definitely have a negative impact on Q3. Where we ultimately fall in that volume range of a negative 4% negative 7% will really come down to the number of dry shipping days we have left in the last 5 months of the year. So I'd frame it underlying demand as expected, except a little bit slower growth in single family, weather has not been our friend. We'll see how the second half goes. I think the good news is we continue to expand unit margins by double digit. And I think our folks have taken a difficult hand in the first half and turn it to a winner, and I'm proud of their performance.

[Operator]

Our next question will come from Garik Shmois with Loop Capital.

[Garik Shmois, analyst]

Just wanted to follow up on that point with respect to the second half volume outlook. I was wondering if you could go into maybe a little bit more detail on how to think about the pent-up demand opportunity. I think you did speak to weather influencing you can get all the projects done. But is this the case of projects being delayed and not canceled, and just maybe a little bit more color on how you expect the second half of the year to play out from the [indiscernible].

[James Hill, executive]

Sure. I think that if you kind of look at what's happened and make that into the second half, your point of demand doesn't go away. It's absolutely spot on. And you probably got some pent up there and it comes down to what the weather does to us. I think it's -- looking back, if you'll explain the future that we were really impacted by rain in the first half, and I'll give you a couple of examples.

In Q2, Nashville had 30 rain days, and it dramatically impacted shipments. Look, we lost half of our shipping days in that Middle Tennessee market, DFW had doubled the amount of rainfall. So we just have dried out and could ship. The flip side of that is, you saw Atlanta weather pretty much normal and shipments were as expected. L.A. had weather normal and shipments were right on where we had planned. So weather has played a role it will impact Q3 as [indiscernible] was very wet. And now we're experiencing a tropical storm on the East Coast. So kind of a tough start to the third quarter. But as you said, the demand is still there. It's as we thought it was going to be. So these are temporary events and it doesn't go away. So we get dry days we're shipping [indiscernible].

[Operator]

We will take our next question from Anthony Penitari with Citi.

[Anthony Pettinari, analyst]

You raised the guide for cost inflation from mid-single digit to high single digit should we think about that incremental cost inflation as just essentially all volume deleverage? And are there any other kind of puts or takes, either good or bad, that we should think about for the second half on costs, whether it's diesel or other items?

[James Hill, executive]

Yes. I think you're insightful about the volume impact. It definitely has an impact on us. you saw our first half of 11%. I'd also tell you that it has been -- inflation was as we expected. Weather was a big difference in that and don't underestimate the efficiency impact of trying to run wet sticky material versus dry rock, which just flows a lot better. We think we can cost some of that cost back in the second half, so we can get back to the high single digit for the full year versus the 11% where we are. And I think all of that allows us to continue that double-digit unit margin growth.

[Operator]

We'll take our next question from Jerry Revich with Goldman Sachs.

[Jerry Revich, analyst]

Pricing for aggregates was really strong in the quarter, up nicely sequentially. Can you just talk about the the confidence around midyear that you focus in place guidance did not assume major pricing and it feels like you've got momentum just from contracts rolling.

So I'm wondering if you could just give us an update on how you expect the tailwind just from natural contracts rolling to play out in the third quarter compared to last year and then the incremental opportunity from midyears?

[James Hill, executive]

Yes, I'll give you some color on [indiscernible] let Mary just talk about sequential. The pricing momentum continues in all markets and all product lines. We had a successful midyear pricing campaign. I think both by customer and by market, I'd call it as we thought it was going to be as anticipated. But remember, as we explained, those midyear prices will have a small impact on 24 but a much bigger impact on '25. So we've already begun to set the solid foundation for pricing for '25.

As always, we would ultimately guide you the unit margin growth which was 12% despite weather and volumes down 5%. So I'm proud of operators hard work. Look, that kind of margin growth is tough to begin with. It's particularly difficult to earn when it's raining, you got bud in the [ mug ]. So really thanks to our team.

[Mary Carlisle, executive]

And Jerry, in terms of sequential growth, candidly, I would have expected a bit less sequential improvement in Q2 than what we realized really due to mix and timing. We still expect some modest additional sequential improvement in the back half given the impact of the midyear that Tom just discussed, paired with a higher jumping off point from a Q2 where we already captured some of the expected sequential improvement. I guess, as Tom said to me, what's really important is the solid underlying price environment, our continued expectation of realizing price increases in that 10% to 12% range the full year. And of course, ultimately, what you can take to the bottom line, like Tom just highlighted. .

[Operator]

Our next question from Katherine Thompson with the Thompson Research Group.

[Kathryn Thompson, analyst]

Please provide some good detail on project on your work. It's not necessarily lost, but it's delayed. And you've also given some good color just on pricing and continuing that double-digit pace, perhaps pointing to shrink a little bit more on the pricing question because it's a particular focus given lighter volumes even though those volumes are delayed. .

What type of impact are you seeing from product mix and geographic mix and really not as much looking backwards, but looking forward, in part because our channel checks are showing that you're starting to see a ramp-up of some larger infrastructure projects that were taking a while to build up. So any color that you can talk about in terms of product mix, geographic mix and how that may impact pricing on a go-forward basis?

[James Hill, executive]

Yes. So I think you're correct with the ramp-up of of infrastructure and public work, you'll see more base in fines, which is a little bit less lower prices. That being said, it's also lower cost and you need that mix to balance your plants, otherwise you get out of whack. I think that being said, while we'll have some impact on price, I don't expect it to have an impact on your margins. .

So why it's maybe not as material may not be as high as price as a concrete outer asphalt rock, he also comes with a cost benefit. So I would expect us to continue our present pace of elevated unit margins regardless of mix.

[Operator]

We'll take our next question from Angel Castillo with Morgan Stanley.

[Christopher Kalata, analyst]

Just to deliberate point, but I just wanted to maybe touch base on the price discussion a little bit more. To the extent that these meters that you've done, give you any kind of insight into preliminary views in 2025. Can you just talk about what kind of the shape of that is in terms of kind of the magnitude? Are we still talking about price increases next year in the kind of high single digits, low double digits range? And kind of along with that, just any sense of kind of customer sensitivity and kind of competitive discipline around price increases would be helpful.

[James Hill, executive]

I think we feel like the price run continues. We feel good about what we're bidding today. As I said, those mid-years, while they have a little bit of impact on second half of this year, they're going to have a much bigger impact in the first half of next year. So that leads us to also helps you when you saw having your price increase conversations in October for beginning of the year. I think it's too early to make a call on the level of pricing for 2025. But as I said, I think the conversations that happened for mid-year price increases are encouraging for 2025.

[Christopher Kalata, analyst]

That's helpful. And if I may just kind of clarify on the pricing, just a quick one. But 10% to 12%, I thought that was kind of the guidance that you had laid out before midyear. So what kind of change so that it now includes [indiscernible] kind of [indiscernible] Can you just help us understand that?

[James Hill, executive]

Well, I think, as I said, the mid-year help a little bit, but it doesn't get you out of that 10% to 12%. What it does is it sets you up for 2025.

[Operator]

Our next question will come from Mike Dahl with RBC Capital Markets.

[Michael Dahl, analyst]

It just as maybe just to help clarify kind of the cadence because it sounds like even with July, understandably some things are moved around with whether it's not like August has probably [indiscernible] been fantastic either. But when you're thinking about those puts and takes from the volume and also some of the price cost dynamics, can you put a finer point on within your guide, how you'd expect 3Q versus 4Q to play out?

[James Hill, executive]

Yes. I think that, first of all, the third quarter has already been impacted. July was extremely wet and particularly in our southeastern markets. And now you've got troubling storm blowing up the East Coast.

So it's going to -- you're starting off to a little bit of a rough start in Q3. I think as we said, the fundamentals of the underlying demand are still there. You've got some pent-up demand that [indiscernible] comes out, we'll ship well. You have asphalt producers, they're telling us get ready because [indiscernible] try out, we got to go. And so we'll be ready for them. I would call it -- and the fourth quarter is always tough to call because it's also weather dependent, and the season, hopefully, will stretch.

I do think that when you have a year where you have so much moisture it may push the season a little bit, so you may get a little extra bump out of Q4 that you wouldn't have in a normal weather year, which is because people want to get those projects done. And it comes down between the negative 4 to negative 7, what's -- how many shipping days do you have and when you have those shipping days. So a little bit of a rocky start with July and kind of this week with that trouble storm, but again, the demand is there. And when some comes out, we're shipping fine, as I talked about with L.A. and Atlanta.

[Mary Carlisle, executive]

Yes. And Mike, one other thing to keep in mind as you think about third quarter versus fourth quarter and the challenging start, Tom just mentioned from a weather perspective is that strictly from a seasonal basis, we have easier, relatively easier comps in the fourth quarter than we do in the third quarter. So if you think about where those volumes fall, that's something else to keep in mind as to how the back half might play out. .

[Operator]

Our next question will come from Trey Grooms with Stephens.

[Trey Grooms, analyst]

Tom. So you guys have closed a few bolt-on acquisitions this year. But if you could maybe talk about the pain there. Are you seeing any more or less opportunities? And any potential for larger transactions out there?

[James Hill, executive]

Yes. As you said, you saw us close on 2 smaller, I call it very strategic bolt-on acquisitions, kind of 1 in North Alabama and 1 in Texas. I would tell you that we'll close on some more meaningful acquisitions in the near future and which we'll share with you when the time is right. But it's a busy season for acquisitions. .

[Operator]

Our next question will come from David MacGregor with Longbow Research.

[Unknown Analyst]

This is Jon Allen on for David. I was just hoping you could provide some detail on what you're seeing for 2025 DOT budgets in key states for Vulcan and maybe [indiscernible] that's playing into your pricing outlook for 2025 and the ability to sustain double-digit pricing growth.

[James Hill, executive]

Yes. So I think that as we look at public demand out there, and just in general, the highway market. We're seeing the IJAA and state and local funds flow through to highway lettings right now. Overall, demand growth is similar to expectations. Steady growth in public demand. We've got a lot more funding in critical states.

You saw Tennessee, Georgia, Florida, all raise funds. George is up $1.5 billion. Tennessee had a 3, Florida had a 4. All of which -- we'll see that fund flow in the lettings in '25, '26 and '27. So 6 of our larger states are at record level funding. Texas, California are also at record levels. And all of this supports I'd say, growth and public demand for the next 3 or 4 years. So we should slow and steady wins the race here.

[Operator]

Our next question comes from Adam thalhimer with Thompson, Davis.

[Adam Thalhimer, analyst]

I thought it was a nice quarter. Are you -- like Trey, I was also curious on M&A. And gosh, it feels like every international materials companies trying to grow U.S. materials exposure. Are you seeing increased competition for deals?

[James Hill, executive]

I don't think much changed. Same bidders are out there. There's a lot going on. You also got to remember, you got pent-up demand from nothing going on last year as everybody was worried about a recession. So we'll get a look at all those opportunities. We pass a lot on a lot of them. I think it comes down to M&A, it's about discipline, what markets do you want to be in what synergies are you, what are you willing to pay for it and make sure you can get a return on what you're paying and then once you buy it, integrate it accurately and rapidly. .

[Operator]

Our next question comes from Phil Ng with Jefferies.

[Philip Ng, analyst]

I guess, Tom, just a little more perspective on this midyear increase. How did it kind of shake out relative to perhaps last year, appreciating A lot of this is really [ 425]. So help us kind of conceptualize perhaps how much of a carrier or price lift you could see next year? And the the demand...

[James Hill, executive]

Go ahead -- from a macro perspective, I'd say similar that's always going to be different when I say different, you get different customers, different product lines, different geographies where you got it last year, maybe you didn't get it this year or vice versa. So I would call it out very similar.

[Philip Ng, analyst]

Okay. Any way to kind of help us think about what that could transpire to from a carrier pricing next year? And from a demand standpoint, I heard you lower underlying demand still quite good when you don't have weather -- so some of this demand seems to be pushed out to 2025, right? So if that does kind of materialize in terms of how you're thinking about end markets, are you in a position to see volumes grow next year just because it's been pretty new in the last few years.

[James Hill, executive]

I think it's early to call. I think you continue to see growth in the public side. I think that we do know just because the funds are there and they're starting to flow into lettings. On the private side, I feel good that single-family will continue to grow. It's a little slower than what we anticipated. And it has some catch-up to do with lead indicators. .

And obviously, interest rates will help that. But we just don't have the inventory of houses in these markets to keep up with population growth. So I would expect the res to kind of slow and steady growth also I think the big question will be nonres. We've taken the hit on warehouses and distribution centers. The manufacturing is good, but interest rates will help that sector also. It's a matter of timing, I believe.

[Operator]

Our next question will come from Michael Dudas with Vertical Research.

[Michael Dudas, analyst]

Tom, let me follow up your final remark there to Phil. On the large private heavy nonres opportunities, can you talk about what your backlog looks like, how it looks on bidding relative to what it's been in the last 6 to 12 months? Are we seeing an acceleration of some of the larger type projects that are in your areas that you can certainly serve into over the next couple of years? Is that potentially a tailwind as we look through the second half of this year, [ weather ] permitting in 2025? .

[James Hill, executive]

Yes. It is definitely a tailwind. It is helping us with backlog a number of those big projects and big manufacturing projects. We're shipping on them now when the rain fits. And I think that will help us in '25. And I think there's more behind that. You've got with 12 projects in our footprint, you've got a number of data centers and then you continue to see growth in the reshoring of manufacturing facilities. So it is a tailwind for us.

I don't think it's a big enough tailwind yet to take on what happened with warehouses and distribution centers, but definitely helpful.

[Operator]

We'll take our last question from Michael Feniger with Bank of America.

[Michael Feniger, analyst]

Just, Tom, on the manufacturing side, it's been a tail on the private non-res based on your backlog pipeline, is that -- did you feel that, that means stable in '25? Because is there a risk that some of these manufacturing projects had been a tailwind kind of roll off and there's not enough to be backfilled. Just curious if you kind of address that how we head into 25? And just secondly, I know there was talks on the public infrastructure side, you highlighted the record growth in highway contract awards has really helped infrastructure this year. There's been some mixed data points in the last few months around that. Just curious if you feel like that's just more of a pause, and we see more of the funding sort of flow through to continue that trend into '25, '26.

[James Hill, executive]

Yes. I'll take the highway on first. I think that's just a matter of timing. The fund is sort of too big there. You got a lot more coming, as I talked about, the additional state funding and 6 of our top 10 states plus IIJA. On the public side, I think that I wouldn't get too worked up about a moment in time. As I said, I think slow and steady wins the race there, and I think it will be slow and steady for the next 3 or 4 years.

So I think that's solid. There will be some hotter moments and cooler moments, but overall, I think it will continue steady growth. On the manufacturing, we've got a healthy backlog, I think, and we're shipping on some of that backlog, but I don't see a big dip in the pipeline there. I think we continue to have other projects come up. And I think that's probably a strong point, particularly for Vulcan with the footprint we have. In closing, I'd like to thank you for your time and interest in Vulcan Materials Company. Our thoughts go out to our employees, our neighbors who have been or will be in the path to top storm. We hope they stay safe. We look forward to speaking with you through the quarter, and thank you again for your time this morning.

[Operator]

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