Vulcan Materials 10-Q 2023-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
‎For the quarterly period ended March 31, 2023
‎OR ‎
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
‎For the transition period from to
‎Commission File Number 001-33841

‎VULCAN MATERIALS COMPANY‎(Exact name of registrant as specified in its charter)

‎ New Jersey****‎(State or other jurisdiction of incorporation)			‎20-8579133 ‎(I.R.S. Employer Identification No.)
‎1200 Urban Center Drive, Birmingham**,** Alabama ‎(Address of principal executive offices)			‎35242‎(zip code)
‎**(205)** 298-3000****‎(Registrant's telephone number including area code)
‎Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
‎Title of each class	‎Trading Symbol			Name of each exchange on ‎which registered
Common Stock, $1 par value	VMC			New York Stock Exchange
‎Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o ‎ ‎Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o ‎ ‎Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
‎Large accelerated filer þ		‎Accelerated filer o			‎Smaller reporting company o
‎Non-accelerated filer o					‎Emerging growth company o
‎If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
‎Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
‎Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
## ‎ Class					## Shares outstanding ‎ at April 24, 2023
## Common Stock, $1 Par Value					## 133,059,406

9

VULCAN MATERIALS COMPANY FORM 10-Q QUARTER ENDED MARCH 31, 2023 Contents
			Page
PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Cash Flows Notes to Condensed Consolidated Financial Statements	2 3 4 5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
	Item 4.	Controls and Procedures	44
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	45
	Item 1A.	Risk Factors	45
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
	Item 4.	Mine Safety Disclosures	45
	Item 6.	Exhibits	46
		Signatures	47
Unless otherwise stated or the context otherwise requires, references in this report to “Vulcan,” the “Company,” “we,” “our,” or “us” refer to Vulcan Materials Company and its consolidated subsidiaries.

‎

part I financial information

FINANCIAL STATEMENTS

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited	March 31			December 31			March 31
in millions	2023			2022			2022
Assets
Cash and cash equivalents	$ 139.6			$ 161.4			$ 123.1
Restricted cash	0.4			0.1			9.9
Accounts and notes receivable
Accounts and notes receivable, gross	988.1			1,056.2			928.6
Allowance for credit losses	(13.1)			(10.9)			(10.7)
Accounts and notes receivable, net	975.0			1,045.3			917.9
Inventories
Finished products	437.8			439.3			412.2
Raw materials	70.6			63.4			63.2
Products in process	6.2			6.0			4.4
Operating supplies and other	71.0			70.6			44.7
Inventories	585.6			579.3			524.5
Other current assets	91.9			115.9			87.2
Total current assets	1,792.5			1,902.0			1,662.6
Investments and long-term receivables	31.3			31.8			36.5
Property, plant & equipment
Property, plant & equipment, cost	11,413.5			11,306.4			10,724.1
Allowances for depreciation, depletion & amortization	(5,368.6)			(5,255.1)			(4,998.5)
Property, plant & equipment, net	6,044.9			6,051.3			5,725.6
Operating lease right-of-use assets, net	569.5			572.6			679.7
Goodwill	3,689.6			3,689.6			3,709.2
Other intangible assets, net	1,679.2			1,702.1			1,751.9
Other noncurrent assets	269.9			285.2			295.3
Total assets	$ 14,076.9			$ 14,234.6			$ 13,860.8
Liabilities
Current maturities of long-term debt	0.5			0.5			3.9
Short-term debt	0.0			100.0			100.0
Trade payables and accruals	370.3			454.5			390.1
Other current liabilities	386.1			401.6			398.7
Total current liabilities	756.9			956.6			892.7
Long-term debt	3,876.9			3,875.2			3,874.5
Deferred income taxes, net	1,060.1			1,072.8			1,007.7
Deferred revenue	157.8			159.8			166.8
Noncurrent operating lease liabilities	545.9			548.4			631.7
Other noncurrent liabilities	668.6			669.6			689.1
Total liabilities	$ 7,066.2			$ 7,282.4			$ 7,262.5
Other commitments and contingencies (Note 8)
Equity
Common stock, $1 par value, Authorized 480.0 shares,
Outstanding 133.1, 132.9 and 132.9 shares, respectively	133.1			132.9			132.9
Capital in excess of par value	2,832.9			2,839.0			2,806.8
Retained earnings	4,174.0			4,111.4			3,787.2
Accumulated other comprehensive loss	(153.1)			(154.7)			(151.6)
Total shareholders' equity	6,986.9			6,928.6			6,575.3
Noncontrolling interest	23.8			23.6			23.0
Total equity	$ 7,010.7			$ 6,952.2			$ 6,598.3
Total liabilities and equity	$ 14,076.9			$ 14,234.6			$ 13,860.8
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

‎

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF ‎COMPREHENSIVE INCOME

	Three Months Ended
Unaudited	March 31
in millions, except per share data	2023			2022
Total revenues	$ 1,649.0			$ 1,540.7
Cost of revenues	(1,347.0)			(1,271.9)
Gross profit	302.0			268.8
Selling, administrative and general expenses	(117.3)			(119.0)
Gain on sale of property, plant & equipment
and businesses	1.7			2.6
Loss on impairments	0.0			(0.1)
Other operating income (expense), net	0.8			(5.3)
Operating earnings	187.2			147.0
Other nonoperating income, net	1.4			1.5
Interest expense, net	(49.0)			(35.9)
Earnings from continuing operations
before income taxes	139.6			112.6
Income tax expense	(16.6)			(18.7)
Earnings from continuing operations	123.0			93.9
Loss on discontinued operations, net of tax	(2.1)			(1.8)
Net earnings	120.9			92.1
Earnings attributable to noncontrolling interest	(0.2)			(0.3)
Net earnings attributable to Vulcan	$ 120.7			$ 91.8
Other comprehensive income, net of tax
Amortization of prior cash flow hedge loss	0.4			0.4
Amortization of actuarial loss and prior service
cost for benefit plans	1.3			0.7
Other comprehensive income	1.7			1.1
Comprehensive income	122.6			93.2
Comprehensive earnings attributable to
noncontrolling interest	(0.2)			(0.3)
Comprehensive income attributable to Vulcan	$ 122.4			$ 92.9
Basic earnings (loss) per share attributable to Vulcan
Continuing operations	$ 0.92			$ 0.70
Discontinued operations	(0.01)			(0.01)
Net earnings	$ 0.91			$ 0.69
Diluted earnings (loss) per share attributable to Vulcan
Continuing operations	$ 0.92			$ 0.70
Discontinued operations	(0.02)			(0.01)
Net earnings	$ 0.90			$ 0.69
Weighted-average common shares outstanding
Basic	133.2			133.0
Assuming dilution	133.7			133.6
Effective tax rate from continuing operations	11.9**%**			16.6%
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

‎

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
Unaudited	March 31
in millions	2023			2022
Operating Activities
Net earnings	$ 120.9			$ 92.1
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation, depletion, accretion and amortization	148.4			141.0
Loss on impairments	0.0			0.1
Noncash operating lease expense	13.6			16.4
Net gain on sale of property, plant & equipment and businesses	(1.7)			(2.6)
Contributions to pension plans	(1.9)			(2.0)
Share-based compensation expense	8.2

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL COMMENTS

Overview

We provide the basic materials for the infrastructure needed to maintain and expand the U.S. economy. We operate primarily in the U.S. and are the nation's largest supplier of construction aggregates (primarily crushed stone, sand and gravel), a major producer of asphalt mix and ready-mixed concrete, and a supplier of asphalt construction paving services. Our strategy and competitive advantage are based on our strength in aggregates which are used in most types of construction and in the production of asphalt mix and ready-mixed concrete.

Demand for our products is dependent on construction activity and correlates positively with changes in population growth, household formation and employment. End uses include public construction (e.g., highways, bridges, buildings, airports, schools, prisons, sewer and waste disposal systems, water supply systems, dams, reservoirs and other public construction projects), private nonresidential construction (e.g., manufacturing, retail, offices, industrial and institutional) and private residential construction (e.g., single-family houses, duplexes, apartment buildings and condominiums).

Aggregates have a very high weight-to-value ratio and, in most cases, must be produced near where they are used; if not, transportation can cost more than the materials, rendering them uncompetitive compared to locally produced materials. Exceptions to this typical market structure include areas along the U.S. Gulf Coast and the Eastern Seaboard where there are limited supplies of locally available, high-quality aggregates. We serve these markets from quarries that have access to cost-effective long-haul transportation — shipping by barge and rail — and from our quarries in Quintana Roo, Mexico (see Note 8, NAFTA Arbitration) and Puerto Cortés, Honduras (acquired in 2022) with our fleet of Panamax-class, self-unloading ships. Additionally, as a result of our 2021 acquisition of U.S. Concrete, we serve markets in California and Hawaii from our quarry in British Columbia, Canada by means of a long-term marine shipping agreement with CSL Americas.

There are limited substitutes for quality aggregates. Due to zoning and permitting regulation and high transportation costs relative to the value of the product, the location of reserves is a critical factor to our long-term success.

No material part of our business depends upon any single customer whose loss would have a significant adverse effect on our business. In 2022, our five largest customers accounted for 7% of our total revenues, and no single customer accounted for more than 2% of our total revenues. Although approximately 40% to 55% of our aggregates shipments have historically been used in publicly-funded construction, such as highways, airports and government buildings, a relatively small portion of our sales are made directly to federal, state, county or municipal governments/agencies. Therefore, although reductions in state and federal funding can curtail publicly-funded construction, the vast majority of our business is not directly subject to renegotiation of profits or termination of contracts with local, state or federal governments. In addition, our sales to government entities span several hundred entities coast-to-coast, ensuring that negative changes to various government budgets would have a muted impact across such a diversified set of government customers.

While aggregates is our focus and primary business, we believe vertical integration between aggregates and downstream products, such as asphalt mix and ready-mixed concrete, can be managed effectively in certain markets to generate attractive financial returns and enhance financial returns in our core Aggregates segment. We produce and sell asphalt mix and/or ready-mixed concrete primarily in our Alabama, Arizona, California, Maryland, New Mexico, Oklahoma, Tennessee, Texas, Virginia, the U.S. Virgin Islands and Washington D.C. markets. Aggregates comprise approximately 95% of asphalt mix by weight and 80% of ready-mixed concrete by weight. In both of these downstream businesses, aggregates are primarily supplied from our operations.

Seasonality and cyclical nature of our business

Almost all of our products are produced and consumed outdoors. Seasonal changes and other weather-related conditions can affect the production and sales volume of our products. Therefore, the financial results for any quarter do not necessarily indicate the results expected for the year. Normally, the highest sales and earnings are in the third quarter, and the lowest are in the first quarter. Furthermore, our sales and earnings are sensitive to national, regional and local economic conditions, demographic and population fluctuations, and particularly to cyclical swings in construction spending, primarily in the private sector.

EXECUTIVE SUMMARY

Financial highlights for FIRST Quarter 2023

Compared to first quarter of 2022:

Total revenues increased $108.3 million, or 7%, to $1,649.0 million

Gross profit increased $33.2 million, or 12%, to $302.0 million

Aggregates segment sales increased $173.1 million, or 15%, to $1,294.3 million

Aggregates segment freight-adjusted revenues increased $143.2 million, or 17%, to $965.9 million

Shipments decreased 2%, or 1.3 million tons, to 51.7 million tons

Freight-adjusted sales price increased 20.3%, or $3.15 per ton to $18.67

Aggregates segment gross profit increased $60.0 million, or 25%, to $302.8 million

Unit profitability (as measured by gross profit per ton) increased 28% to $5.85 per ton

Asphalt, Concrete and Calcium segment gross profit decreased $26.8 million, or 103%, to a loss of $0.8 million, collectively

Selling, administrative and general (SAG) expenses decreased $1.7 million (60 basis points as a percentage of total revenues)

Operating earnings increased $40.2 million, or 27%, to $187.2 million

Earnings attributable to Vulcan from continuing operations were $0.92 per diluted share compared to $0.70 per diluted share

Adjusted earnings attributable to Vulcan from continuing operations were $0.95 per diluted share, compared to $0.73 per diluted share

Net earnings attributable to Vulcan were $120.7 million, an increase of $28.9 million, or 31%

Adjusted EBITDA was $337.6 million, an increase of $43.7 million, or 15%

Returned capital to shareholders via dividends ($57.2 million @ $0.43 per share versus $53.2 million @ $0.40 per share)

The powerful combination of our aggregates-led business and our commitment to execute on our strategic disciplines resulted in strong earnings growth in the first quarter. Aggregates segment earnings increased sharply with gross profit per ton improving 28% and cash gross profit per ton improving 23% despite lower shipments and persistent inflationary cost pressures. As we look ahead, we are increasing our full-year earnings outlook to reflect the pricing momentum and solid execution realized in our first quarter results. We now expect full-year Adjusted EBITDA of $1,850 million to $1,950 million.

Capital expenditures in the first quarter were $112.8 million, including $33.5 million for growth projects. For the full year, we expect to spend $600 million to $650 million on capital expenditures, including growth projects. We will continue to review our plans and will adjust as needed.

As of March 31, 2023, the ratio of total debt to trailing-twelve months Adjusted EBITDA was 2.3 times (2.2 times on a net debt basis). We remain committed to our stated long-term target leverage range of 2.0 to 2.5 times total debt to trailing-twelve months Adjusted EBITDA.

Interest expense, net of interest income, was $49.0 million in the first quarter compared with $35.9 million in the prior year.

On a trailing-twelve months basis, return on invested capital was 13.7%, a 20 basis points improvement from December 31, 2022. We are focused on driving improvement through solid operating earnings growth coupled with disciplined capital management.

OUTLOOK

We are increasing our full-year earnings expectations to incorporate the success of our pricing efforts during the first quarter. Leading indicators of demand remain mixed, and full-year shipments for 2023 will ultimately depend upon the depth of the decline in residential construction activity and the timing of highway starts converting to shipments. Despite a challenging macro-environment, our uniquely positioned aggregates business and our best-in-class execution position us to successfully navigate shifts in demand.

Management expectations for 2023 include the following updates:

Aggregates segment freight-adjusted price growth of approximately 15% ($16.40 in 2022)

Net earnings attributable to Vulcan of between $815 million and $895 million

Adjusted EBITDA of between $1,850 million and $1,950 million

All other aspects of our expectations for 2023 remain unchanged from those reported as part of our fourth quarter earnings release in February

RESULTS OF OPERATIONS

Total revenues are primarily derived from our product sales of aggregates, asphalt mix and ready-mixed concrete, and include freight & delivery costs that we pass along to our customers to deliver these products. We also generate service revenues from our asphalt construction paving business and services related to our aggregates business. We present separately our discontinued operations, which consist of our former Chemicals business.

The following table highlights significant components of our consolidated operating results including EBITDA and Adjusted EBITDA.

consolidated operating ResultS highlights

	Three Months Ended
	March 31
in millions, except per share, unit and per unit data	2023			2022
Total revenues	$ 1,649.0			$ 1,540.7
Cost of revenues	(1,347.0)			(1,271.9)
Gross profit	302.0			268.8
Gross profit margin	18.3%			17.4%
Selling, administrative and general (SAG)	(117.3)			(119.0)
SAG as a percentage of total revenues	7.1%			7.7%
Operating earnings	187.2			147.0
Interest expense, net	(49.0)			(35.9)
Earnings from continuing operations
before income taxes	139.6			112.6
Income tax expense	(16.6)			(18.7)
Effective tax rate from continuing operations	11.9%			16.6%
Earnings from continuing operations	123.0			93.9
Loss on discontinued operations,
net of income taxes	(2.1)			(1.8)
Earnings attributable to noncontrolling interest	(0.2)			(0.3)
Net earnings attributable to Vulcan	$ 120.7			$ 91.8
Diluted earnings (loss) per share attributable to Vulcan
Continuing operations	$ 0.92			$ 0.70
Discontinued operations	(0.02)			(0.01)
Diluted net earnings per share attributable to Vulcan	$ 0.90			$ 0.69
EBITDA 1	$ 336.7			$ 289.3
Adjusted EBITDA 1	$ 337.6			$ 293.9
Average Sales Price and Unit Shipments
Aggregates
Tons (thousands)	51,738			53,020
Freight-adjusted sales price	$ 18.67			$ 15.52
Asphalt Mix
Tons (thousands)	2,077			2,322
Average sales price	$ 73.44			$ 64.06
Ready-mixed concrete
Cubic yards (thousands)	1,762			2,500
Average sales price	$ 161.25			$ 143.81
Calcium
Tons (thousands)	59			54
Average sales price	$ 38.11			$ 34.67

1	Non-GAAP measures are defined and reconciled within this Item 2 under the caption Reconciliation of Non-GAAP Financial Measures.

FIRST quarter 2023 Compared to FIRST Quarter 2022

First quarter 2023 total revenues were $1,649.0 million, up 7% from the first quarter of 2022. Shipments decreased in aggregates (-2%), asphalt mix (-11%) and ready-mixed concrete (-30%). Conversely, gross profit increased in the Aggregates (+$60.0 million or 25%) and Asphalt (+$3.7 million or 130%) segments while it declined in the Concrete (-$30.6 million or 108%) segment.

Net earnings attributable to Vulcan for the first quarter of 2023 were $120.7 million, or $0.90 per diluted share, compared to $91.8 million, or $0.69 per diluted share in the first quarter of 2022. Each period’s results were impacted by discrete items, as follows:

Net earnings attributable to Vulcan for the first quarter of 2023 include:

pretax charges of $0.6 million associated with non-routine business development

pretax charges of $0.3 million for managerial restructuring (related to acquisitions)

$3.6 million of tax charges related to a Calica NOL carryforward valuation allowance

Net earnings attributable to Vulcan for the first quarter of 2022 include:

pretax charges of $0.3 million associated with divested operations

pretax charges of $2.5 million associated with non-routine business development

pretax charges of $1.8 million for managerial restructuring (related to U.S. Concrete)

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $0.95 per diluted share for the first quarter of 2023 compared to $0.73 per diluted share in the first quarter of 2022.

Continuing Operations — Changes in earnings from continuing operations before income taxes for the first quarter of 2023 versus the first quarter of 2022 are summarized below:

earnings from continuing operations before income taxes

in millions
First quarter 2022	$ 112.6
Higher aggregates gross profit	60.0
Higher asphalt gross profit	3.7
Lower concrete gross profit	(30.6)
Higher calcium gross profit	0.1
Lower selling, administrative and general expenses	1.7
Lower gain on sale of property, plant & equipment and businesses	(0.9)
Higher interest expense, net	(13.1)
All other	6.1
First quarter 2023	$ 139.6

First quarter Aggregates segment sales increased 15%, while gross profit increased $60.0 million, or 25%, to $302.8 million ($5.85 per ton). Cash gross profit per ton was $8.02 in the quarter compared to $6.53 in the prior year quarter. Gross profit margin expanded 170 basis points due to strong pricing growth and solid operational execution. This earnings improvement was widespread across our footprint.

Total aggregates shipments were 51.7 million tons versus 53.0 million in last year’s first quarter, a decrease of 2%. Shipments across the Southeast and East coast benefited from more favorable weather, while shipments in California and Texas were impacted by significant rainfall throughout most of the quarter. First quarter volume also benefited from some shipments delayed by unfavorable weather in the fourth quarter of 2022.

The pricing environment remains positive. Pricing actions effective at the start of the year resulted in another quarter of accelerating price growth. Freight-adjusted pricing was $18.67 per ton, an increase of 20.3% ($3.15 per ton) over the prior year, with all markets realizing year-over-year improvement. Adjusting for mix impacts, average selling prices increased 18.5% in the first quarter.

Consistent with expectations, freight-adjusted unit cost of sales increased 17%, or $1.88 per ton, and cash cost of sales increased 18%, or $1.66 per ton, as compared to the prior year’s first quarter. Solid operational execution helped mitigate continued year-over-year inflationary pressures, particularly for parts and services. The average price of diesel was 3% higher ($1.7 million) than the prior year. We remain focused on compounding improvements in unit margins throughout the cycle through fixed cost leverage, price growth and operating efficiencies.

Overall, non-aggregates segments gross profit was a loss of $0.8 million, $26.8 million lower than the prior year’s first quarter.

Asphalt segment gross profit of $0.8 million was up $3.7 million from the prior year’s first quarter. Cash gross profit was $9.8 million compared to $5.7 million in the prior year. Asphalt pricing increased 14.6%, or $9.38 per ton, and drove the year-over-year improvement in earnings. The average unit cost of liquid asphalt was 7% higher ($3.6 million) than the prior year. Asphalt volumes decreased 11% driven by lower shipments in California and Arizona, our largest asphalt markets, due to significant rainfall in the quarter.

Concrete segment gross profit was a loss of $2.4 million for the first quarter, down $30.6 million from the prior year. Cash gross profit was $18.0 million compared to $49.3 million in the prior year. Current year results were impacted by the divestiture of our concrete operations in New York, New Jersey and Pennsylvania. Additionally, unfavorable weather in California and Texas and a slowdown in residential construction activity affected segment earnings. Average selling prices increased 12.1%, partially offsetting higher raw materials, diesel and labor costs.

Calcium segment gross profit was $0.8 million compared to $0.7 million in the prior year quarter.

SAG expenses were $117.3 million in the quarter, or 7.1% of total revenues, a 60 basis points improvement from the prior year. Trailing-twelve months SAG expense was 6.9% of total revenues, a 50 basis points improvement from the prior year. We remain focused on further leveraging our overhead cost structure.

Other operating income (expense), which is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and net rental income (expense), was $0.8 million of income for the first quarter of 2023 compared to $5.3 million of expense in the first quarter of 2022.

Other nonoperating income, net was $1.4 million for the first quarter of 2023, a slight decrease from $1.5 million in the first quarter of 2022.

Net interest expense was $49.0 million in the first quarter of 2023 compared to $35.9 million in the first quarter of 2022.

Income tax expense from continuing operations was $16.6 million in the first quarter of 2023 compared to $18.7 million in the first quarter of 2022. The decrease in tax expense was due to a tax benefit from a prior year business disposition, offsetting the higher taxes on the increase in pretax earnings in 2023.

Earnings attributable to Vulcan from continuing operations were $0.92 per diluted share in the first quarter of 2023 compared to $0.70 per diluted share in the first quarter of 2022.

Discontinued Operations — First quarter pretax loss from discontinued operations was $2.9 million in 2023 compared with a pretax loss of $2.4 million in 2022. Both periods include charges related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. For additional details, see Note 1 to the condensed consolidated financial statements under the caption Discontinued Operations.

KNOWN TRENDS OR UNCERTAINTIES

Inflationary pressures and labor constraints are trends continuing to impact our operations in 2023. Although inflationary pressures can create short- to medium-term headwinds, the combination of inflation and improving visibility of demand has created and may continue to create a favorable environment for price increases. Additionally, labor constraints (especially truck drivers) have caused delays and inefficiencies in our operations as well as those of our customers. If labor constraints continue and demand remains strong, our operations may proceed at a slower pace, which may effectively extend the recovery while allowing us the opportunity to compound price, control costs and grow earnings.

Further, the Mexican government has taken actions adverse to our property and operations in that country. On May 5, 2022, Mexican government officials presented employees at our Calica operations in Quintana Roo, Mexico with arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations. On May 13, 2022, the Mexican government suspended the three-year customs permit granted in March 2022 to Calica and began a proceeding that could result in the revocation of that permit. We strongly believe that the actions taken by Mexico are arbitrary and illegal, and we intend to vigorously pursue all lawful avenues available to us in order to protect our rights, under both Mexican and international law. For additional information regarding our Calica operations, see Note 8, NAFTA Arbitration.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Aggregates segment FREIGHT-ADJUSTED REVENUES

Aggregates segment freight-adjusted revenues is not a Generally Accepted Accounting Principle (GAAP) measure and should not be considered as an alternative to metrics defined by GAAP. We present this measure as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. It also excludes other revenues related to services, such as landfill tipping fees, that are derived from our aggregates business. Additionally, we use this metric as the basis for calculating the average sales price of our aggregates products. Reconciliation of this metric to its nearest GAAP measure is presented below:

	Three Months Ended
	March 31
in millions, except per ton data	2023			2022
Aggregates segment
Segment sales	$ 1,294.3			$ 1,121.2
Less
Freight & delivery revenues 1	309.7			272.4
Other revenues	18.7			26.1
Freight-adjusted revenues	$ 965.9			$ 822.7
Unit shipments - tons	51.7			53.0
Freight-adjusted sales price	$ 18.67			$ 15.52

1	At the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated level) and freight to remote distribution sites.

cash gross profit

GAAP does not define “cash gross profit,” and it should not be considered as an alternative to earnings measures defined by GAAP. We and the investment community use this metric to assess the operating performance of our business. Additionally, we present this metric as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. Cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization to gross profit. Segment cash gross profit per unit is computed by dividing segment cash gross profit by units shipped. Segment cash cost of sales per unit is computed by subtracting segment cash gross profit per unit from segment freight-adjusted sales price. Reconciliation of these metrics to their nearest GAAP measures are presented below:

	Three Months Ended
	March 31
in millions, except per ton data	2023			2022
Aggregates segment
Gross profit	$ 302.8			$ 242.8
Depreciation, depletion, accretion and amortization	112.3			103.6
Aggregates segment cash gross profit	$ 415.1			$ 346.4
Unit shipments - tons	51.7			53.0
Aggregates segment gross profit per ton	$ 5.85			$ 4.58
Aggregates segment cash gross profit per ton	$ 8.02			$ 6.53
Aggregates segment freight-adjusted sales price	$ 18.67			$ 15.52
Aggregates segment freight-adjusted cash cost of sales per ton	$ 10.65			$ 8.99
Asphalt segment
Gross profit	$ 0.8			$ (2.9)
Depreciation, depletion, accretion and amortization	9.0			8.6
Asphalt segment cash gross profit	$ 9.8			$ 5.7
Unit shipments - tons	2.1			2.3
Asphalt segment gross profit per ton	$ 0.41			$ (1.23)
Asphalt segment cash gross profit per ton	$ 4.70			$ 2.48
Asphalt segment average sales price	$ 73.44			$ 64.06
Asphalt segment cash cost of sales per ton	$ 68.74			$ 61.58
Concrete segment
Gross profit	$ (2.4)			$ 28.2
Depreciation, depletion, accretion and amortization	20.4			21.1
Concrete segment cash gross profit	$ 18.0			$ 49.3
Unit shipments - cubic yards	1.8			2.5
Concrete segment gross profit per cubic yard	$ (1.36)			$ 11.29
Concrete segment cash gross profit per cubic yard	$ 10.24			$ 19.72
Concrete segment average sales price	$ 161.25			$ 143.81
Concrete segment cash cost of sales per cubic yard	$ 151.01			$ 124.09
Calcium segment
Gross profit	$ 0.8			$ 0.7
Depreciation, depletion, accretion and amortization	0.0			0.0
Calcium segment cash gross profit	$ 0.8			$ 0.7

EBITDA and adjusted ebitda

GAAP does not define “Earnings Before Interest, Taxes, Depreciation and Amortization” (EBITDA), and it should not be considered as an alternative to earnings measures defined by GAAP. We use this metric to assess the operating performance of our business and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of earnings performance from period to period. Reconciliation of this metric to its nearest GAAP measure is presented below (numbers may not foot due to rounding):

	Three Months Ended						Trailing-Twelve Months
	March 31						March 31
in millions	2023			2022			2023			2022
Net earnings attributable to Vulcan	$ 120.7			$ 91.8			$ 604.4			$ 602.0
Income tax expense	16.6			18.7			190.9			158.2
Interest expense, net of interest income	49.0			35.9			181.4			150.5
Loss on discontinued operations, net of tax	2.1			1.8			19.0			4.0
Depreciation, depletion, accretion and amortization	148.4			141.0			594.9			503.6
EBITDA	$ 336.7			$ 289.3			$ 1,590.6			$ 1,418.5
Gain on sale of real estate and businesses, net	$ 0.0			$ 0.0			$ (6.1)			$ 0.0
Charges associated with divested operations	0.0			0.3			2.8			1.5
Business development 1	0.6			2.5			8.6			36.5
COVID-19 direct incremental costs	0.0			0.0			0.0			10.9
Loss on impairments	0.0			0.0			67.8			4.6
Pension settlement charge	0.0			0.0			0.0			12.1
Restructuring charges	0.3			1.8			5.7			16.8
Adjusted EBITDA	$ 337.6			$ 293.9			$ 1,669.4			$ 1,501.0

1	Represents non-routine charges or gains associated with acquisitions and dispositions including the cost impact of purchase accounting inventory valuations.

Adjusted Diluted EPS attributable to vulcan from continuing Operations

Similar to our presentation of Adjusted EBITDA, we present Adjusted diluted earnings per share (EPS) attributable to Vulcan from continuing operations to provide a more consistent comparison of earnings performance from period to period. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:

	Three Months Ended
	March 31
	2023			2022
Diluted Earnings Per Share
Net earnings attributable to Vulcan	$ 0.90			$ 0.69
Less: Discontinued operations	(0.02)			(0.01)
Diluted EPS attributable to Vulcan from continuing
operations	$ 0.92			$ 0.70
Items included in Adjusted EBITDA above, net of tax	$ 0.01			$ 0.03
NOL carryforward valuation allowance	0.02			0.00
Adjusted diluted EPS attributable to Vulcan from
continuing operations	$ 0.95			$ 0.73

NET DEBT TO ADJUSTED EBITDA

Net debt to Adjusted EBITDA is not a GAAP measure and should not be considered as an alternative to metrics defined by GAAP. We, the investment community and credit rating agencies use this metric to assess our leverage. Net debt subtracts cash and cash equivalents and restricted cash from total debt. Reconciliation of this metric to its nearest GAAP measure is presented below:

							March 31
in millions							2023			2022
Debt
Current maturities of long-term debt							$ 0.5			$ 3.9
Short-term debt							0.0			100.0
Long-term debt							3,876.9			3,874.5
Total debt							$ 3,877.4			$ 3,978.4
Less: Cash and cash equivalents and restricted cash							140.0			133.0
Net debt							$ 3,737.4			$ 3,845.4
Trailing-Twelve Months (TTM) Adjusted EBITDA							$ 1,669.4			$ 1,501.0
Total debt to TTM Adjusted EBITDA							2.3x			2.7x
Net debt to TTM Adjusted EBITDA							2.2x			2.6x

RETURN ON INVESTED CAPITAL

We define “Return on Invested Capital” (ROIC) as Adjusted EBITDA for the trailing-twelve months divided by average invested capital (as illustrated below) during the trailing 5-quarters. Our calculation of ROIC is considered a non-GAAP financial measure because we calculate ROIC using the non-GAAP metric EBITDA. We believe that our ROIC metric is meaningful because it helps investors assess how effectively we are deploying our assets. Although ROIC is a standard financial metric, numerous methods exist for calculating a company’s ROIC. As a result, the method we use to calculate our ROIC may differ from the methods used by other companies. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below (numbers may not foot due to rounding):

				Trailing-Twelve Months
				March 31			December 31			March 31
dollars in millions				2023			2022			2022
Adjusted EBITDA				$ 1,669.4			$ 1,625.6			$ 1,501.0
Average invested capital
Property, plant & equipment, net				$ 5,910.0			$ 5,810.4			$ 5,109.6
Goodwill				3,707.1			3,708.5			3,485.0
Other intangible assets				1,723.5			1,737.5			1,507.7
Fixed and intangible assets				$ 11,340.6			$ 11,256.4			$ 10,102.3
Current assets				$ 1,918.0			$ 1,898.8			$ 1,854.2
Less: Cash and cash equivalents				141.0			161.3			474.0
Less: Current tax				45.6			47.2			32.3
Adjusted current assets				1,731.4			1,690.3			1,347.9
Current liabilities				999.6			1,002.1			740.8
Less: Current maturities of long-term debt				1.2			2.1			10.5
Less: Short-term debt				137.6			137.6			20.0
Adjusted current liabilities				860.8			862.4			710.3
Adjusted net working capital				$ 870.6			$ 827.9			$ 637.6
Average invested capital				$ 12,211.2			$ 12,084.3			$ 10,739.9
Return on invested capital				13.7%			13.5%			14.0%

2023 projected ebitda

The following reconciliation to the mid-point of the range of 2023 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount). Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:

			2023 Projected
in millions			Mid-point
Net earnings attributable to Vulcan				$ 855
Income tax expense				240
Interest expense, net of interest income				195
Depreciation, depletion, accretion and amortization				610
Projected EBITDA				$ 1,900

Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures, other than the reconciliation of Projected EBITDA as noted above. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

LIQUIDITY AND FINANCIAL RESOURCES

Our primary sources of liquidity are cash provided by our operating activities, a substantial, committed bank line of credit and our commercial paper program. Additional sources of capital include access to the capital markets, the sale of surplus real estate and dispositions of nonstrategic operating assets. We believe these financial resources are sufficient to fund our business requirements for 2023 including:

contractual obligations

capital expenditures

debt service obligations

dividend payments

potential acquisitions

potential share repurchases

Our balanced approach to capital deployment remains unchanged. We intend to balance reinvestment in our business, growth through acquisitions and return of capital to shareholders, while sustaining financial strength and flexibility.

We actively manage our capital structure and resources in order to balance the cost of capital and the risk of financial stress. We seek to meet these objectives by adhering to the following principles:

maintain substantial bank line of credit borrowing capacity

proactively manage our debt maturity schedule such that repayment/refinancing risk in any single year is low

maintain an appropriate balance of fixed-rate and floating-rate debt

minimize financial and other covenants that limit our operating and financial flexibility

Cash

Included in our March 31, 2023 cash and cash equivalents and restricted cash balances of $140.0 million is $0.4 million of restricted cash as described in Note 1 under the caption Restricted Cash.

cash from operating activities

	Three Months Ended
	March 31
in millions	2023			2022
Net earnings	$ 120.9			$ 92.1
Depreciation, depletion, accretion and amortization (DDA&A)	148.4			141.0
Loss on impairments	0.0			0.1
Noncash operating lease expense	13.6			16.4
Net gain on sale of property, plant & equipment and businesses	(1.7)			(2.6)
Contributions to pension plans	(1.9)			(2.0)
Deferred tax provision (benefit)	(13.3)			1.1
Other operating cash flows, net 1	(44.7)			(70.5)
Net cash provided by operating activities	$ 221.3			$ 175.6

1	Primarily reflects changes to working capital balances.

Net cash provided by operating activities was $221.3 million during the three months ended March 31, 2023, a $45.7 million increase compared to the same period of 2022. The increase was primarily attributable to a $28.8 million increase in net earnings and changes in working capital balances.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 44.1 days at March 31, 2023 compared to 44.8 days at March 31, 2022. Additionally, our over 90 day receivables balance of $49.2 million at March 31, 2023 was up from the $43.4 million at March 31, 2022. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.

cash from investing activities

Net cash used for investing activities was $61.7 million during the first three months of 2023, a $240.8 million decrease compared to cash used of $302.5 million in the same period of 2022. This decrease was primarily attributable to a $148.7 million decrease in payments for businesses acquired in the current period compared to the prior period. During the first three months of 2022, we acquired businesses for $148.2 million (see Note 16 to the condensed consolidated financial statements). Additionally, during the first three months of 2023, we received $130.0 million in proceeds from the collection of a note receivable related to the sale of concrete operations in New Jersey, New York and Pennsylvania in November 2022. Furthermore, during the first three months of 2023, we invested $193.6 million in our existing operations (includes changes in accruals for property, plant & equipment) compared to $160.4 million in the prior year period. Of this $193.6 million, $33.5 million was invested in internal growth projects to enhance our distribution capabilities, develop new production sites and enhance existing production facilities.

cash from financing activities

Net cash used for financing activities in the first three months of 2023 was $181.1 million, compared to cash provided of $18.4 million in the same period of 2022. The current year includes a $100.0 million net payment on our line of credit, whereas the prior year includes a $100.0 million net draw on our line of credit. Additionally, capital returned to our shareholders increased by $4.0 million as a result of higher dividends ($0.43 per share compared to $0.40 per share).

debt

Certain debt measures are presented below:

			March 31			December 31			March 31
dollars in millions			2023			2022			2022
Debt
Current maturities of long-term debt			$ 0.5			$ 0.5			$ 3.9
Short-term debt			0.0			100.0			100.0
Long-term debt			3,876.9			3,875.2			3,874.5
Total debt			$ 3,877.4			$ 3,975.7			$ 3,978.4
Capital
Total debt			$ 3,877.4			$ 3,975.7			$ 3,978.4
Total equity			7,010.7			6,952.2			6,598.3
Total capital			$ 10,888.1			$ 10,927.9			$ 10,576.7
Total Debt as a Percentage of Total Capital			35.6%			36.4%			37.6%
Weighted-average Effective Interest Rates
Line of credit 1			1.13%			1.13%			1.13%
Commercial paper			5.23%			4.79%			N/A
Term debt			4.73%			4.75%			3.72%
Fixed versus Floating Interest Rate Debt
Fixed-rate debt			72.1%			70.3%			70.4%
Floating-rate debt			27.9%			29.7%			29.6%

1		Reflects the margin above SOFR for SOFR-based borrowings; we also paid upfront fees that are amortized to interest expense and pay fees for unused borrowing capacity and standby letters of credit.

At March 31, 2023, total debt to trailing-twelve months Adjusted EBITDA was 2.3 times (2.2 times on a net debt basis reflecting $140.0 million of cash on hand). Our weighted-average debt maturity was 10.7 years.

delayed draw term loan, line of credit AND COMMERICAL PAPER PROGRAM

In June 2021, we entered into a $1,600.0 million unsecured delayed draw term loan which was fully drawn in August 2021 upon the acquisition of U.S. Concrete. The delayed draw term loan was paid down to $1,100.0 million in September 2021 with cash on hand, paid down to $550.0 million in August 2022 using the proceeds from the issuance of commercial paper as described below and fully repaid in March 2023 using proceeds from the issuance of 5.80% senior notes as described below.

Our unsecured line of credit was amended in August 2022 to increase the borrowing capacity from $1,000.0 million to $1,600.0 million and extend the maturity date from September 2026 to August 2027. Our line of credit contains covenants customary for an unsecured investment-grade facility. Covenants, borrowings, cost ranges and other details are described in Note 7 to the condensed consolidated financial statements. As of March 31, 2023, we were in compliance with the covenants, the margin for the Secured Overnight Financing Rate (SOFR) borrowings was 1.125%, the margin for base rate borrowings was 0.125% and the commitment fee for the unused amount was 0.100%.

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

As of March 31, 2023, our available borrowing capacity under the line of credit was $1,516.8 million. Utilization of the borrowing capacity was as follows:

None was borrowed

$83.2 million was used to support standby letters of credit

TERM DEBT

All of our $3,941.6 million (face value) of term debt (which includes the $550.0 million commercial paper) is unsecured. All of the covenants in the debt agreements are customary for investment-grade facilities. As of March 31, 2023, we were in compliance with all term debt covenants.

In March 2023, we issued $550.0 million of 5.80% senior notes due 2026. Total proceeds of $546.6 million (net of discounts and transaction costs), together with cash on hand, were used to repay the $550.0 million delayed draw term loan.

CURRENT MATURITIES of long-term debt

The $0.5 million of current maturities of long-term debt as of March 31, 2023 is due as follows:

	Current
in millions	Maturities
Second quarter 2023	$0.0
Third quarter 2023	0.0
Fourth quarter 2023	0.0
First quarter 2024	0.5

debt ratings

Our debt ratings and outlooks as of March 31, 2023 are as follows:

			Short-term		Long-term		Outlook
Fitch			F2		BBB		Stable
Moody's			P-2		Baa2		Stable
Standard & Poor's			A-2		BBB+		Stable

Equity

The number of our common stock issuances and purchases for the year-to-date periods ended are as follows:

	March 31			December 31			March 31
in millions	2023			2022			2022
Common stock shares at January 1,
issued and outstanding	132.9			132.7			132.7
Common Stock Issuances
Share-based compensation plans	0.2			0.2			0.2
Common Stock Purchases
Purchased and retired	0.0			0.0			0.0
Common stock shares at end of period,
issued and outstanding	133.1			132.9			132.9

As of March 31, 2023, there were 8,064,851 shares remaining under the February 2017 authorization by our Board of Directors. Depending upon market, business, legal and other conditions, we may purchase shares from time to time through the open market (including plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934) and/or privately negotiated transactions. The authorization has no time limit, does not obligate us to purchase any specific number of shares and may be suspended or discontinued at any time.

There were no shares held in treasury as of March 31, 2023, December 31, 2022 and March 31, 2022.

There were no common stock purchases for the periods ended March 31, 2023, December 31, 2022 and March 31, 2022.

off-balance sheet arrangements

We have no off-balance sheet arrangements such as financing or unconsolidated variable interest entities.

Standby Letters of Credit

For a discussion of our standby letters of credit, see Note 7 to the condensed consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

We follow certain significant accounting policies when preparing our consolidated financial statements. A summary of these policies is included in our Annual Report on Form 10-K for the year ended December 31, 2022 (Form 10-K).

We prepare these financial statements to conform with accounting principles generally accepted in the United States of America. These principles require us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and contingent liabilities at the date of the financial statements. We base our estimates on historical experience, current conditions and various other assumptions we believe reasonable under existing circumstances and evaluate these estimates and judgments on an ongoing basis. The results of these estimates form the basis for our judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates.

We believe that the accounting policies described in the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section of our Form 10-K require the most significant judgments and estimates used in the preparation of our consolidated financial statements, so we consider these to be our critical accounting policies. There have been no changes to our critical accounting policies during the three months ended March 31, 2023.

new Accounting standards

For a discussion of the accounting standards recently adopted or pending adoption and the effect such accounting changes will have on our results of operations, financial position or liquidity, see Note 17 to the condensed consolidated financial statements.

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to:

general economic and business conditions

a pandemic, epidemic or other public health emergency, such as the COVID-19 outbreak

our dependence on the construction industry, which is subject to economic cycles

the timing and amount of federal, state and local funding for infrastructure

changes in the level of spending for private residential and private nonresidential construction

changes in our effective tax rate

the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks

the impact of the state of the global economy on our businesses and financial condition and access to capital markets

international business operations and relationships, including recent actions taken by the Mexican government with respect to our property and operations in that country

the highly competitive nature of the construction industry

the impact of future regulatory or legislative actions, including those relating to climate change, biodiversity, land use, wetlands, greenhouse gas emissions, the definition of minerals, tax policy and domestic and international trade

the outcome of pending legal proceedings

pricing of our products

weather and other natural phenomena, including the impact of climate change and availability of water

availability and cost of trucks, railcars, barges and ships, as well as their licensed operators, for transport of our materials

energy costs

costs of hydrocarbon-based raw materials

healthcare costs

labor relations, shortages and constraints

the amount of long-term debt and interest expense we incur

changes in interest rates

volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans

the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses

our ability to secure and permit aggregates reserves in strategically located areas

our ability to manage and successfully integrate acquisitions

the effect of changes in tax laws, guidance and interpretations

significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets

changes in technologies, which could disrupt the way we do business and how our products are distributed

the risks of open pit and underground mining

expectations relating to environmental, social and governance considerations

claims that our products do not meet regulatory requirements or contractual specifications

other assumptions, risks and uncertainties detailed from time to time in our periodic reports filed with the SEC

All forward-looking statements are made as of the date of filing or publication. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. Investors are cautioned not to rely unduly on such forward-looking statements when evaluating the information presented in our filings, and are advised to consult any of our future disclosures in filings made with the Securities and Exchange Commission (SEC) and our press releases with regard to our business and consolidated financial position, results of operations and cash flows.

INVESTOR information

We make available on our website, www.vulcanmaterials.com, free of charge, copies of our:

Annual Report on Form 10-K

Quarterly Reports on Form 10-Q

Current Reports on Form 8-K

Our website also includes amendments to those reports filed with or furnished to the Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as well as all Forms 3, 4 and 5 filed with the SEC by our executive officers and directors, as soon as the filings are made publicly available by the SEC on its EDGAR database (www.sec.gov).

In addition to accessing copies of our reports online, you may request a copy of our Annual Report on Form 10-K, including financial statements, by writing to Denson N. Franklin III, Senior Vice President, General Counsel and Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.

We have a:

Business Conduct Policy applicable to all employees and directors

Code of Ethics for the CEO and Senior Financial Officers

Copies of the Business Conduct Policy and the Code of Ethics are available on our website under the “Investor Relations” tab (“Governance” section). If we make any amendment to, or waiver of, any provision of the Code of Ethics, we will disclose such information on our website as well as through filings with the SEC.

Our Board of Directors has also adopted:

Corporate Governance Guidelines

Charters for its Audit, Compensation, Executive, Finance, Governance and Safety, Health & Environmental Affairs Committees

These documents meet all applicable SEC and New York Stock Exchange regulatory requirements.

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

Information included on our website is not incorporated into, or otherwise made a part of, this report.

‎

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

We are exposed to certain market risks arising from transactions that are entered into in the normal course of business. To manage these market risks, we may use derivative financial instruments. We do not enter into derivative financial instruments for trading or speculative purposes.

As discussed in the Liquidity and Financial Resources section of Part I, Item 2, we actively manage our capital structure and resources to balance the cost of capital and risk of financial stress. Such activity includes balancing the cost and risk of interest expense. In addition to floating-rate borrowings, we at times use interest rate swaps to manage the mix of fixed-rate and floating-rate debt.

In March 2023, we issued $550.0 million of 5.80% fixed-rate debt maturing in March 2026. Concurrently, we entered into fixed-to-floating interest rate swap agreements designated as fair value hedges in the amount of $550.0 million. Under these swap agreements, we receive a fixed interest rate of 5.80% (matches the fixed rate we pay on the $550.0 million of debt) and pay daily compound SOFR plus 0.241%. The changes in the fair value of these swaps designated as fair value hedges are recorded in interest expense consistent with the change in fair value of the hedged fixed-rate debt. At March 31, 2023, we recognized a net asset of $3.0 million equal to the fair value of this swap and a corresponding increase in the fair value of the hedged fixed-rate debt.

At March 31, 2023, the estimated fair value of our long-term debt including current maturities was $3,770.7 million compared to a face value of $3,941.6 million. The estimated fair value was determined by averaging several asking price quotes for the publicly traded notes and assuming par value for the remainder of the debt. The fair value estimate is based on information available as of the balance sheet date. The effect of a decline in interest rates of one percentage point would increase the fair value of our debt by approximately $0.3 million.

We are exposed to certain economic risks related to the costs of our pension and other postretirement benefit plans. These economic risks include changes in the discount rate for high-quality bonds and the expected return on plan assets. The impact of a change in these assumptions on our annual pension and other postretirement benefits costs is discussed in our most recent Annual Report on Form 10-K.

controls and procedures

disclosure controls and procedures

We maintain a system of controls and procedures designed to ensure that information required to be disclosed in reports we file with the SEC is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. These disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a - 15(e) or 15d - 15(e)), include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer, with the participation of other management officials, evaluated the effectiveness of the design and operation of the disclosure controls and procedures as of March 31, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2023.

We are in the process of replacing our legacy quote to cash software system for our ready-mixed concrete operations. We expect the full implementation of this system to be completed in the fourth quarter of 2023.

No other changes were made during the first quarter of 2023 to our internal controls over financial reporting, nor have there been other factors that materially affect these controls.

part Ii other information

ITEM 1

legal proceedings

Certain legal proceedings in which we are involved are discussed in Note 12 to the consolidated financial statements and Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2022. See Note 8 to the condensed consolidated financial statements of this Form 10-Q for a discussion of certain recent developments concerning our legal proceedings.

risk factors

There were no material changes to the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of our equity securities during the quarter ended March 31, 2023 are summarized below.

							Total Number			Maximum
							of Shares			Number of
							Purchased as			Shares that
	Total						Part of Publicly			May Yet Be
	Number of			Average			Announced			Purchased
	Shares			Price Paid			Plans or			Under the Plans
Period	Purchased			Per Share			Programs			or Programs 1
2023
Jan 1 - Jan 31	0			$ 0.00			0			8,064,851
Feb 1 - Feb 28	0			$ 0.00			0			8,064,851
Mar 1 - Mar 31	0			$ 0.00			0			8,064,851
Total	0			$ 0.00			0

1

In February 2017, our Board of Directors authorized us to purchase up to 10,000,000 shares of our common stock. As of March 31, 2023, there were 8,064,851 shares remaining under this authorization. Depending upon market, business, legal and other conditions, we may purchase shares from time to time through the open market (including plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934) and/or privately negotiated transactions. The authorization has no time limit, does not obligate us to purchase any specific number of shares and may be suspended or discontinued at any time.

We did not have any unregistered sales of equity securities during the first quarter of 2023.

ITEM 4

MINE SAfETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 of this report.

exhibits

Exhibit 4.1		Tenth Supplemental Indenture, dated as of March 3, 2023, between Vulcan Materials Company and Regions Bank, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 3, 2023) 1
Exhibit 31(a)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31(b)		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32(a)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32(b)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 95		MSHA Citations and Litigation
Exhibit 101		The following unaudited financial information from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements.
Exhibit 104		Cover Page Interactive Data File – the cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 is formatted in iXBRL (contained in Exhibit 101).

1	Incorporated by reference

Our SEC file number for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 001-33841.

‎

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VULCAN MATERIALS COMPANY
Date May 5, 2023	/s/ Randy L. Pigg Randy L. Pigg Vice President, Controller (Principal Accounting Officer)
Date May 5, 2023	/s/ Mary Andrews Carlisle Mary Andrews Carlisle Senior Vice President and Chief Financial Officer (Principal Financial Officer)