Good morning. Welcome, everyone, to the Vulcan Materials Company Third Quarter 2024 Earnings Call. My name is Angela, 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. All lines have been placed in a listen-only mode. After the company's prepared remarks, there will be a question-and-answer session. 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.

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. During the Q&A, we ask that you limit your participation to one question. This will allow us to accommodate as many as possible during our time we have available. And with that, I'll turn the call over to Tom.

Thank you, Mark, and thank all of you for joining our call this morning. We continue to execute on our two-pronged strategy to deliver attractive long-term value creation for our shareholders. Results and activities in the third quarter demonstrate our success in consistently expanding our aggregate new profitability and successfully expanding our reach through strategic acquisition opportunities. Despite the disruption of four hurricanes impacting our industry-leading Southeast footprint, both gross margin and adjusted EBITDA margin expanded in the quarter. And year-over-year aggregates cash gross profit per ton increased double digits for the eighth consecutive quarter, a testament to the benefits of our unwavering focus on our Vulcan Way of Selling and Vulcan Way of Operating disciplines. In the quarter, we generated $581 million of adjusted EBITDA, a modest decline versus the prior year given 10% lower aggregate shipments and the prior year earnings contribution from the now divested Texas concrete business. Shipments in the quarter varied widely month-to-month and across geographies reflecting the interruption caused by extreme weather events. So let me walk you through how the quarter played out. In July, seven of our top 10 markets experienced significant year-over-year increases in rainfall and the first of four hurricanes, Hurricane Beryl, made landfall in our footprint. Average daily shipments were down mid-teens for the month. Shipments in August rebounded after a slow start due to Hurricane Debby tracking up the East Coast. Daily shipments in August, excluding the two shipping days most impacted by the hurricane, were only down 4%, consistent with our non-weather impacted demand view. As we are all aware, Hurricane Helene, the second of two September hurricanes, devastated many communities across Florida, Western North Carolina, East Tennessee and other parts of the Southeast. I am thankful to report that all of our employees are safe, and I'm proud of their immediate efforts to help our communities and neighbors. The catastrophic destruction in Western North Carolina and East Tennessee is both tragic and historic. Vulcan Materials is well positioned in the affected areas to support the immense rebuilding efforts that will be required. Due to the storm, shipments were down approximately 25% in the final week of September, resulting in quarterly shipments finishing 10% below the prior year. In spite of the challenges from volume, the pricing environment remains positive. Freight adjusted average selling prices improved 10% year-over-year with increases widespread across geographies. We continue to use our Vulcan Way of Selling disciplines and processes to deliver value to our customers and earn their daily business. We also remain focused on our Vulcan Way of Operating disciplines to drive efficiencies and lower unit costs. Although, weather and lower volumes were an even more significant headwind in the third quarter than the prior quarter, the rate of cost increases moderated. At the end of September, we announced the acquisition of Wake Stone Corporation, a leading pure-play aggregate supplier in the Carolinas. This acquisition is consistent with our aggregates led growth strategy and will be a great addition to the Vulcan family. We look forward to welcoming the Wake Stone team upon closing later this year. Now, shifting to demand. The overall demand environment is improving, but with different dynamics impacting each end use. Higher single-family starts over the last 3 months and 12 months provide a solid backdrop for growing single-family demand, particularly with potentially lower mortgage rates on the horizon to help address the ongoing affordability issue. Multifamily starts remain weak but should also benefit from a lower interest rate environment. Fundamentally, there is a consistent need for additional housing in Vulcan markets, which bodes well for future residential construction activity. In private non-residential construction, demand remains varied across categories. Most categories will benefit from improving interest rates since projects in the planning and design pipeline have been accumulating for some time now. Warehouse activity remains a headwind, but comps are easing and starts seem to be stabilizing near pre-COVID levels. Data centers are still robust and manufacturing remains a catalyst in some of our markets. Over time, light commercial activity should follow the positive trends in single-family housing. We are closely monitoring the macro dynamics and likely timing of private non-residential activity making the turn. On the public side, we continue to expect steady growth for multiple years. Our booking activity points to the conversion of growth in contract awards now flowing into aggregate shipments. I am confident we are well-positioned to finish the year strong and deliver approximately $2 billion of adjusted EBITDA in 2024. Now, I'll turn the call over to Mary Andrews to discuss a few more details about the quarter and 2024 before I share some preliminary views of 2025.

Thanks, Tom, and good morning. Tom covered for you some of our important achievements in the aggregates business during the third quarter. I want to highlight a few other items that underpin our confidence in the durability of our business and the solid execution of our team. Our downstream businesses continue to strategically complement our aggregates franchise in select markets. The asphalt business maintained healthy margins at nearly 16% in the third quarter and cash unit profitability improved 11%. Our concrete business on the East Coast also delivered unit profitability improvement, while the lower volumes related to weak private demand in Northern California compressed margins in our West Coast concrete business. Our SAG expenses in the quarter were $129 million or 6.4% of revenues, 10% lower than the prior year and 20 basis points favorable as a percent of revenues. We remain dedicated to both disciplined cost control and making strategic investments in talent and technology to support our business and drive innovation. Through the first nine months, we have generated nearly $1 billion of operating cash flow through our constant focus on maximizing our cash gross profit on every ton of aggregates we sell. After reinvesting over $400 million to sustain and improve our existing operations and grow our business through Greenfield development, we have yielded a 36% increase in free cash flow to deploy for expanding our reach through M&A and returning cash to shareholders. Year-to-date, we have allocated $206 million through strategic bolt-on acquisitions and returned $252 million to shareholders through dividends and common stock repurchases. For the full year, we now expect to spend between $625 million and $650 million of capital expenditures. Our balance sheet position provides us the strength and flexibility to grow. At September 30, net debt to trailing 12 months adjusted EBITDA leverage was 1.5x, giving us ample investment capacity within our target leverage range of 2x to 2.5x to fund the Wake Stone acquisition and other growth opportunities that will drive long-term value creation for shareholders. We continue to focus on our return on invested capital, which was 16.1%, a 70 basis points improvement over the last 12 months with higher adjusted EBITDA generated on lower average invested capital. I'll now turn the call back over to Tom to provide some preliminary thoughts on 2025 and a few closing remarks.

Thank you, Mary Andrews. As I look at 2025 and contemplate the demand backdrop, I expect aggregate shipments to grow next year. Public construction activity remains robust and the environment is improving for private construction activity. I am confident that Vulcan Materials will continue to execute at a high level and compound our industry-leading cash gross profit per ton at double-digit levels. I expect aggregate prices to continue to outpace historical norms and improve by high-single-digit in 2025. I also expect year-over-year cost trends to improve through a combination of execution on our Vulcan Way of Operating disciplines to drive improved efficiencies in our operations and moderating inflation. Vulcan Materials has the right products, aggregates in the right markets, but more importantly, I am confident we have the right focus and the right people to execute our strategy and deliver earnings growth in 2025. And now, Mary Andrews and I will be happy to take your questions.

We will go first to Garik Shmois with Loop Capital. Please go ahead.

Hi, thanks for having me on today. I was hoping to go over.

Good morning.

Hey, good morning. I was hoping you could go over a little more detail on the high-single-digit pricing outlook for next year. How much carryover is there for mid-years from this year? Any help on the pacing for pricing next year and any mix impacts we should be thinking about either from a product mix or a geographic mix standpoint?

Yes. First of all, I don't think we have any mix put in there. But let me go back in time a little bit. If you look at our mid-year price increases, they were largely as expected, kind of by market and by customer, very much similar to last year. And so that's a really healthy start for 2025 and I think that if you take mid-year price increases and couple that with what we see in our backlogs, it allows us to carry very good price momentum and visibility into next year. As we said in the press release, I think our preliminary view is high-single-digit increases for 2025. I think I'm confident in that. If you combine that with cost increases, which continue to moderate, I think it makes me feel really good about the continued double-digit unit margin growth throughout 2025. As you heard us say in the prepared remarks, we had eight quarters of double-digit cash gross profit per ton growth and remember, seven of those eight quarters we were dealing with declining volumes. So I think we're confident we continue that streak in 2025. I guess, I want to thank my teams. That's tough to do given the challenges that we've seen with weather and volume throughout this year, particularly in the third quarter. But I think they continue that success into next year. And what that tells me is that the Vulcan team is in control of the destiny to control what they can control.

Yes. And remember Garik, too, the reason we are so focused on that unit profitability improvement that Tom was talking about is that maximizing cash gross profit on every ton is the key to our free cash flow generation. To me, it's notable that on lower aggregate volumes and lower revenues year-to-date, EBITDA margin has expanded and free cash flow has increased 36%. So, as Tom said, our teams have executed very well in a really challenging environment. And frankly, I think they've provided a perfect example of just how durable this business is.

Yes, makes sense. Thanks for the color, Tom.

We'll go next to Trey Grooms with Stephens. Please go ahead.

Hey, good morning, Tom. Good morning, Mary Andrews. Hope everybody's doing well. So I know it's not always perfect science here, easy to do. But as you look at the quarter, can you try to parse out kind of what the weather impacts may have been versus demand and maybe how each played a role in the down 10% volume that we saw here in 3Q?

Yes. We tried to parse that out a little bit by month in the quarter, but obviously weather has been a big story this year, and the third quarter underscored that story. If you look at the year we've had, 17 out of our 20 largest markets with more rain than prior year. I would call underlying demand kind of still down mid-single-digit ex-weather. Looking forward to the fourth quarter, we saw Hurricane Milton give us a tough start. But since then we've seen good weather and we've seen our daily shipping rates bounce back, which is encouraging. But to get us back down to earth is still Q4. So how we finished the fourth quarter, I think will just depend on the number of good weather shipping days. So far so good at this point, but we got to see, I think, again in spite of extreme weather and volumes, our folks continue to expand unit margin by double digits. So we can't control the weather, but we control how we service our customers and price and cost. But again, I would call underlying demand, mid-single-digit and the rest weather, and we'll just see how the weather allows us to finish the fourth quarter.

Got it. Thanks for that. I just wanted to congratulate you on the nice improvement in cash gross profit per unit, especially given the volume challenges you faced. So thanks.

I appreciate that. I give all the credit to the people that sell and crush rock.

There you go. Okay, I'll pass it on. Thanks, everybody.

Thanks, man.

We will go next to Keith Hughes with Truist. Please go ahead.

Thank you. Questions on volume in 2025, I know you said they're going to be up, but we have some pretty easy comps with this weather you discussed. How much could it be up and is to getting the pricing that you just discussed for 2025 or you think you'll have to walk away from some shipments in order to get pricing that high?

I don't think there is any significant change in market share with the volume growth being in the low single digits. Looking at the volume projected for 2025, we will see some carryover from 2024 to 2025. This volume doesn't just disappear; it shifts back, which will provide a slight advantage for us. However, we will likely continue to face demand challenges related to non-residential and warehouse construction, though I hope that decline is starting to slow down. I expect to see overall growth in residential construction, with some hurdles in multi-family units. Single-family housing should recover, and there will be growth on the public side. It's still too early to make definitive predictions for 2025, but I would estimate a low single-digit growth with no influence from pricing changes.

And that's assuming normal weather.

I don't know what normal is anyway…

Whatever normal is?

Yes, yes.

We will go next to Anthony Pettinari with Citigroup. Please go ahead.

Tom, I was wondering if you could talk a little bit more about Wake Stone, just kind of how long you've been looking at that business and maybe the profile, the assets in terms of kind of the per unit profitability, how it sort of stands up against a larger company. Just any other details you could share?

Yes. We've known the brand for years and they run a good company. We looking at closing that business later this year, so not much of an impact, I would say, for this year. They operate in the triangle region of Eastern North Carolina, the Raleigh, Durham, Chapel Hill, and that's one of the 10 fastest growing regions in the country, so a great market. I had the pleasure of meeting with the entire Wake Stone team a few weeks ago. They're a talented bunch and we look forward to them joining the Vulcan family. We are confident that this will have substantial value creation for our shareholders. And I think we're like our strategy, we will say this is expanding our reach into some very attractive aggregate markets.

Okay. That's helpful. Is there a rough estimate of tonnage or should we wait for that?

Historically, they've been in the 8 million to 9 million ton range.

Got it, got it. That's helpful. I'll turn it over.

Thank you.

We will go next to Kathryn Thompson with Thompson Research Group. Please go ahead.

Hi, thank you for taking my question today. You touched on earlier in the Q&A about the volumes down 10%, yet, you were able to get double-digit cash gross profit per ton in the quarter. And you helped us bridge how this is achieved. Following in on that, compare and contrast what happened this quarter and in terms of what your outlook is in 2025 and are there any particular aspects, including cost, that could be different in 2025 versus current quarter? And then maybe also talk about what will be unchanged and what are the things that allow to put up double-digit cash gross profit per ton, even in space of double-digit volume declines. Thank you.

Yes. I think this kind of goes, that, that is the disciplines of the Vulcan Way of Selling and Vulcan Way of Operating and that's kind of simply put, you saw us continue pricing disciplines throughout this year. And I thought the teams did a good job with that. I think that they did a good job with mid-years, which helps us carry good momentum into 2025 from a pricing perspective. And then the conversations that we've had for the January 1 pricing, they're not complete, but they're pretty far down the road. And so that gives us some confidence of that high-single-digit from a pricing perspective. On the cost side, we've been sitting here facing double-digit costs, unit costs for a number of quarters now, which quite candidly is extremely high. A lot of that is inflation driven. Some of that this year is impacted by weather and by volume. But I think that our operating teams continue to execute on the disciplines from an operating perspective. And that is plant availability, throughput, tons per hour, tons per man hour, and all the metrics that go into what drives cost. So while we continue, I think, good pricing momentum going into 2025, I think we are starting to see our cost increases moderate and that's a combination, I think, of inflation moderating but also our operating efficiencies improving. And as far as those operating efficiencies, I think we got a long way to go. We were I guess put back a little bit this year because of inclement weather which gives you wet sticky material, it's hard to operate. So I would expect over the next few quarters that to the operating efficiency to continue to improve.

Great. Thanks so much and best of luck.

Thank you. Thank you.

We will go next to Jerry Revich with Goldman Sachs. Please go ahead.

Good morning, Jerry. Good morning, Jerry.

Yes. Hi, good morning, Tom, Mary Andrews, Mark, congratulations on the strong unit profitability given the volumes this quarter, mind as well. I want to ask the pricing sequentially I thought was quite constructive given the disruption in terms of relative to an attractive part of your footprint here. Can you just talk about how the weaker volumes this year are impacting the pricing cadence, if at all? I'm assuming new spot market business would have come online were it not for the demand decline. And how does that impact the planned pricing cadence in terms of the price increases that you've announced to customers for January 1 for 2025 compared to the cadence of pricing actions that you took in the beginning of 2024 just to calibrate us?

Look, demand, I mean volumes going down never helps price. But I think that the visibility to coming demand both on the public side, particularly on the public side, but now also we think some growth on the private side and residential are helpful for price. I think as far as you know, we talked about mid-year price increases that's a good up for 2025. It helped a little bit in 2024. I think if you look at the cadence in 2024, we were probably up a little bit higher from Q1 and Q2 than last year, probably not quite as high from Q2 into Q3, but that's just timing. And so I think that you put all that together where demand has been a drag I think is us and our customers look to 2025. I think the future looks much better from a public side and from a residential side and probably not as bad from a non-residential side. You pull that together. I think we're encouraged by opportunities for price and unit margin as we look out to 2025.

Can you comment on the timing aspect of that question, specifically January 1 versus April 1? How does that align with your plans?

Yes. Most of our price adjustments will take effect on January 1. There might be a few in April, but I can't recall any specific ones at the moment. This has been our practice for the last two or three years, and I expect it to continue with the January 1 timeline.

And just Jerry, talking about the sequential price, you're right. We thought that third quarter sequentially played out in line with what we expected, given the execution on the mid-year increases. So good momentum moving into the fourth quarter, which obviously we don't usually see sequential growth that too much mix really to call that, but tremendous momentum moving into 2025 and those January 1 increases.

Thank you.

Thank you.

We'll go next to Brent Thielman with D.A. Davidson. Please go ahead.

Good morning.

Hey, thanks. Hey, good morning. Thanks. Tom, I know a lot of attention on the private sector for 2025 and what may come, but on infrastructure, I mean, I know some of the leading indicators out there showed some flattening at relatively high level. Guess my question is, do you think your business can still see an acceleration in those volumes next year? I know you've got the weather stuff this year, but also just thinking about a lot of projects that are just still getting going that have been released over the last couple of years. So wanted to get your sense around that.

Yes, we are optimistic about the public sector. We are starting to observe funding from the Infrastructure Investment and Jobs Act and state and local sources coming into highways. Overall, we anticipate steady growth in public demand this year, in line with our expectations. Beyond the IIJA, there is significant state funding, especially in Texas and California, which are currently at peak letting levels. Additionally, states like Georgia, Tennessee, Florida, and South Carolina have approved substantial funding. When we combine all of this, it will influence some lettings in 2025 and beyond. With six of our largest states at all-time funding highs, we expect this to bolster public demand this year, next year, and likely for the next three to four years. Moreover, there are other infrastructure projects supported by the IIJA that are performing better than we initially anticipated. Overall, we feel confident about the public sector.

Very good. Thank you.

Thank you.

We'll go next to Phil Ng with Jefferies. Please go ahead.

Hey, guys, how are you doing? I guess, from a cost per ton standpoint, how should we think about the fourth quarter? Does that start to normalize? And we look out to 2025; your gross profit per ton has been pretty stellar, despite weaker volumes, does that accelerate a little more, as we get a little more volume growth as we think about next year in terms of cost per ton coming down as well?

I would expect the cost increases to start moderating. Despite the volumes and the weather challenges we faced in the quarter, we have continued to manage costs effectively, though material impacts have affected our efficiency. I believe that volume growth in a more typical weather pattern, along with the ongoing implementation of the Vulcan Way of Operating, will assist us in addressing our cost issues as we move forward and will support our double-digit margin growth. In summary, I anticipate our cost pressures to begin easing over the next few quarters.

Can we get it back normal, like in that low to mid-single-digit range in the fourth quarter or it's going to take a little longer? And is that a good basis for 2025?

That's a great target. But that's the target. I'm not paying in victory on that one yet, but yes, that's our goal is to get it back down to normal.

Okay. All right. Super. Thank you.

Thank you.

We'll go next to Timna Tanners with Wolfe Research. Please go ahead.

Hi, Timna.

Hey, good morning. Hello. I wanted to ask, if I could, about capital allocation, just shifting gears. So you paused the buyback, wondering why given such a strong free cash flow the quarter. You talked about more M&A. Is there still some left? I know you accentuated that on the last call. And just wondering in general if you can talk about other uses, including debt paydown potentially into next year with a maturity in the second quarter? Thanks.

So I'll let Mary Andrews go first with capital, and then I'll talk about acquisitions.

Yes. Timna, I think through the first nine months, our capital allocation decisions have been consistent with what we always communicate, which is the biggest gating item for us is always growth opportunities. We've obviously announced the Wake Stone opportunity and the pipeline remains active. So I think there's other opportunities ahead of us. We obviously have the balance sheet well-positioned to fund those growth opportunities. And also, as you mentioned, are taking into account the notes that are coming due in April of next year.

On M&A, I think we saw us close a couple of small bolt-ons in Alabama and Texas earlier in the year where obviously, we're excited about Wake Stone, and looking forward to closing that one. That aside, I think the M&A pipeline remains active. We're working on some other opportunities that we hope to get to the finish line and talk about in the next few quarters.

We'll go next to Michael Dudas with Vertical Research. Please go ahead.

Hey, Mike.

Good morning, Mary Andrews, Mark, and Tom. Tom, regarding the private sector, could you share insights on your manufacturing and industrial energy customers, particularly about their plans and how your backlog appears in relation to that market? Have you noticed any hesitancy in the private sector, perhaps due to the upcoming election? Once that is resolved, do you think there will be better conditions, especially as interest rates are expected to normalize, even though the market has been challenging in recent weeks? Will this help improve some of the volume figures you discussed today?

Yes. I think, obviously, the warehouses and distribution centers and the like that have been challenges. That being said, I think the drop on that is easing. And as you said, it's offset with heavy and heavy manufacturing and data centers that's been a good tailwind for us. That continues to be a good tailwind for us going into 2025. But I think it's insightful about what you said about what's in the pipeline. I think there's a lot of projects on hold. If you talk to a number of our customers and the large general contractors, they're bidding a lot of work, but nobody is pushing the button. I think that with the election being over, interest rates easing, hopefully in the second half of next year, we'll see some of these come off the sideline. But there is a lot of pent-up out there that's kind of a wait and see. So we hope that a number of factors helps ease that, and we see some of that come off. The second half of that will impact second half of 2025, but probably a bigger impact on 2026.

Thank you, Tom.

Thank you.

We'll go next to Tyler Brown with Raymond James. Please go ahead.

Hey, good morning.

Hey, Tom, I want to kind of come back to some prior comments. But where are you all on the plant technology journey that you talked about at the Analyst Day? And what do you think that those efficiencies mean increasing cost call it, disinflation perspective over the next couple of years? I mean, does it shave a point or two off of those unit costs? Just any way to frame it? I'm just trying to understand just how idiosyncratic it is bolt-on.

It's important to recognize your question relates to a significant development for us. We're in the early stages and have fully implemented this in about 25% to 30% of our operations. The capital costs are allocated to the remaining operations, particularly the top 110 to 120 plants, which account for approximately 70% to 75% of our production. We're experiencing double-digit throughput improvements in the plants where this has been fully implemented, but we still have a long way to go. I anticipate we will continue this progress through 2025. Adverse weather and other distractions, such as storms, may have hindered us, but Pruitt and the team are making good strides, and I believe they will complete this by early 2026. It’s challenging to quantify the exact dollar impact right now, and we’ve decided to focus on the throughput impact instead, as we know it leads to benefits. We expect to wrap up this process by the first or second quarter of 2026, and you are correct that it will affect our costs.

Excellent. Yes, that’s extremely helpful. Thanks.

Thank you.

We'll go next to Adam Thalhimer with Thompson Davis. Please go ahead.

Hey, good morning, guys.

Good morning.

Good morning.

I'm still a little fuzzy. What do you want us to plug in for volumes in Q4? And then Tom, how much demand variability are you seeing by state?

In the fourth quarter, if you provide the weather conditions for November and December, I can then give you the volume estimates for that period. It's challenging to predict because the situation is quite uncertain. As I mentioned, October began slowly but improved significantly. It has been dry in October, and our shipping performance was solid. However, we all know what can occur in November and December, making it difficult to forecast. I would estimate that the underlying demand for the year is down by mid-single digits. We observed some balance in October, but it ultimately depends on the number of shipping days available.

Yes. And Adam, I think overall, our volume guidance from the second quarter was minus 4% to minus 7%, and that's still what we expect for the full year on a demand environment, like Tom described, is down mid-single-digits and the rest of that weather impacted. So where we fall within that will depend on how fourth quarter plays out.

I'm sorry. What was your second question?

Demand variability by state.

That was difficult to determine because of the fluctuations this year. I believe everyone is managing, but Illinois has faced more public sector challenges than most states. Virginia has also encountered issues, as has Northern California. The others seem to be experiencing a decline in the low to mid-single-digit range. The Southeast appears to be the strongest. In Texas, when the rain stopped, we were able to ship quite well, despite a tough first half of the year. The second half has improved. Generally, most areas are seeing consistent declines in the mid-single-digit range, except for the more troubled regions, which include Northern California, Illinois, and parts of Virginia.

Got it. Thank you.

Thank you.

We'll go next to Mike Dahl with RBC Capital Markets. Please go ahead.

Good morning, Mike.

Good morning. Thank you for taking my question. I would like to follow up on Wake Stone, and I appreciate the comments regarding volume. Can you provide us with some clarity on how pricing looks compared to your core portfolio? Additionally, how has their pricing strategy evolved over the last couple of years in relation to the strategy you are implementing? Lastly, could you share any insights on the cash outlay required to complete the acquisition of Wake?

You might not be satisfied with my response, but it's important to note that this is a new market for us. We haven't previously operated in the Raleigh, Durham, Chapel Hill area, so we're venturing into unfamiliar territory from a commercial standpoint. We need to finalize the acquisition first, making it too early for me to comment on how we might operate differently there. Once we close the deal, I will have a clearer understanding of the markets and will be able to provide a better answer regarding our operations. As a standard practice, we generally do not disclose the purchase prices of acquisitions that aren't deemed material to the company. So, please give us some time, and once everything is finalized, we can offer more clarity about Wake Stone. We are genuinely excited about this acquisition, the talented Wake team, and the assets involved, as we believe they will enhance our presence in the Southeastern market where we aim to be a leader. We’ll share more information once the acquisition is complete.

Got it. Okay. Thanks.

Thank you.

We'll go next to Angel Castillo with Morgan Stanley. Please go ahead.

Hey, good morning. Thanks for taking my question. Just maybe I wanted to expand on that conversation a little bit more. As you think about more high-level kind of competitive pricing dynamics across your markets, just what are you seeing from maybe kind of the private side of competition in terms of being disciplined on price? And what does that kind of tell you about the price disparity of potential acquisition opportunities versus your corporate level?

It's hard for me to really comment on competitors pricing. Obviously, we get information about markets. But I think that as people look at the aggregates business, they understand the value of the rock in the ground and that's a depleting asset and you shouldn't give it away because you can't replace those tons and people understand that they got to make a return on investment, whether that's the private side or the public side. So I think that the pricing in the aggregates business has been good and will continue to be good. And I think the onset of growing public demand and potentially growing private demand only helps that situation.

Very helpful. Thank you.

Thank you.

We'll go next to Michael Feniger with Bank of America. Please go ahead.

Good morning.

Yes. Good morning. Thank you for fitting me in. Tom, could you discuss the target of $11 to $12 cash gross profit per ton that you had a few years ago, considering the current tonnage levels? How should we interpret this as we approach that figure? What are your thoughts on this? As we move into next year, it seems we might start to see an increase in volume or at least an end to the current volume declines.

Well, the short answer to that we got to give you new goals. We reached a lot faster than what we thought we would have. My hats off to my division presidents and all those division employees who accelerated that, that target a lot lower volumes than I would have expected, particularly in the face of, as I said, seven or eight quarters of falling demand. They just have done a good job, and they've executed on the Vulcan Way of Selling and Vulcan Way of Operating. But the short answer is, we owe ourselves and you do goals because we're basing down that $11 right now, and we plan on getting some of those new goals in the not-too-distant future.

Great. If I could ask one more question, I would like to hear your thoughts, Andrews, on the factors influencing free cash flow for next year. Specifically, I’m interested in how we should consider aspects like capital expenditures and any acquisitions as we look ahead to 2025. Thank you, everyone.

Yes. Mike, obviously, in February, we'll give full 2025 guidance and include a lot of the things that you just mentioned. But specific to CapEx, we believe we've been reinvesting at appropriate levels for the current business needs. If you look over the last five years, that's ranged 8% to 9% of revenues. As Tom said, we don't even have the acquisitions closed yet. So I don't have a specific view on what CapEx will look like for the acquired operations next year. But as you model, I think that our historical level is a reasonable place to be.

It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional remarks.

Thank you for your time. Thank you for your interest in Vulcan Materials. We look forward to talking to you throughout the quarter. We hope that you and your families are safe and healthy during the holiday season and look forward to talking to you soon. Thank you.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.