Good morning. Welcome, everyone, to the Vulcan Materials Company First Quarter 2025 Earnings Call. My name is David, 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 on 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 your 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, 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 the Vulcan Materials earnings call this morning. Our first quarter results showcase the powerful combination of our two-pronged growth strategy to improve earnings through compounding profitability in our organic business and adding strategic assets to our portfolio. Consistently expanding our cash gross profit per ton is key to successfully growing earnings through varied macroeconomic backdrops. In the first quarter, our teams delivered an impressive 20% year-over-year improvement. Complemented by the contribution from prior year acquisitions, the strong performance in our legacy business led to a 27% improvement in adjusted EBITDA and 420 basis points of expansion in adjusted EBITDA margin. I'm pleased with how our teams are executing on our Vulcan Way of Selling and Vulcan Way of Operating disciplines to consistently enhance our performance regardless of the demand backdrop. Aggregates shipments in the first quarter were 1% lower than the prior year. Shipments from acquired aggregates facilities partially offset the impacts of extremely cold weather across many of our markets and one last shipping day in the quarter. Our commercial execution and commitment to January price increases yielded 290 basis points of sequential price growth from the fourth quarter. And Aggregates freight-adjusted price improved 7% on a year-over-year basis. On a mixed adjusted basis, aggregates freight-adjusted price improved 8.5% over the prior year. Our operational execution and discipline in the quarter were noteworthy. Aggregates freight-adjusted unit cash cost of sales declined 3% compared to the prior year. Moderating inflationary pressures, a relentless focus on plant efficiencies, and some timing benefits of delayed expenditures due to weather conditions all contributed to the cost performance. Trailing 12 months, aggregates cash gross profit grew to $10.99 per ton, within a penny of our $11 to $12 goal and a ninth consecutive quarter of double-digit growth. Our aggregates business is performing well. Our downstream businesses are also performing well. Cash unit profitability in both asphalt and concrete expanded considerably by 19% and 77%, respectively. Total cash gross profit improved by over 50% through same-store unit profitability improvement and the benefit of the prior year acquisitions. We delivered a strong start to the year and we're focused on carrying that momentum forward as we navigate increasing macroeconomic volatility driven by the uncertainty in trade policy and unclear trajectory of interest rates. We believe that private demand will continue to face challenges this year, while public demand remains a healthy offset. Affordability issues and elevated interest rates persist as headwinds in residential construction activity. Single-family starts and permits have been declining recently and multifamily activity remains weak as anticipated. However, overall single-family inventory levels, particularly in Vulcan states, are below average historic levels, and mortgage performance measures do not point to distress in housing markets. Demographics in Vulcan markets support a consistent need for additional housing. So we continue to believe that the timing of additional interest rate reductions and overall improvement in affordability will dictate when residential construction activity returns to growth. While the trends in private nonresidential demand vary across categories, the interest rate environment and macroeconomic uncertainty seem to be delaying the timing of recovery and starts. Importantly, warehouse activity, the largest category in private nonresidential construction, appears to be stabilizing after multiple years of declines, and data center activity in our markets continues to accelerate. On the public side, IIJ-related spending remains a catalyst, with two-thirds of the highway dollars yet to be spent. Continued steady demand growth. Trailing 12-month contract awards in Vulcan states continue to outpace other markets. Capital plans in 9 of our top 10 states are up, and voters passed $45 billion of transportation spending ballot initiatives in the November election cycle in 12 of our key states. And as I said, public demand is healthy. It remains an important offset to private demand challenges in 2025. Our teams are closely monitoring the local market conditions and are well-positioned to respond to an ever-evolving environment by controlling what we can control, that is, how we perform on the commercial and operational sides of our business. By staying focused on our disciplines, I am confident in our ability to execute. We continue to expect to deliver between $2.35 billion and $2.55 billion of adjusted EBITDA in 2025. Now I'll turn the call over to Mary Andrews for some additional commentary on our first quarter.

Thanks, Tom, and good morning. Our consistent success and compounding results in our aggregates-led business is translating to attractive free cash flow. Over the last 12 months, we have generated $869 million of free cash flow, a 93% conversion of net earnings. We have allocated this capital to grow our business and return cash to shareholders. We have deployed $2.2 billion for strategic acquisition and returned $336 million to shareholders, while generating a return on invested capital of 16.2% and maintaining debt-to-adjusted EBITDA leverage within our target range of 2x to 2.5x. At the end of the first quarter and following the March redemption of our 2025 senior notes for $400 million, our net debt to adjusted EBITDA leverage was 2.2x, with over $190 million of cash on hand. A disciplined approach to capital allocation and a well-positioned balance sheet are fundamental to our long-term success. Our liquidity position and financial flexibility are competitive strengths as we navigate an uncertain macro economy, evaluate strategic growth opportunities, and continue to create value for our shareholders. Our first quarter results provided an outstanding start to 2025. Our organic business delivered strong results in all three segments, and the operations acquired in 2024 are performing well. We continue to evaluate the potential direct and indirect impacts of tariffs to our business. While we may experience some tariff-related inflationary pressures in our operating costs, we do not currently anticipate these impacts to have a material effect on earnings. Importantly, we have a proven business model that has successfully navigated a variety of external disruptions in recent history. We remain focused on what we can control and expanding our aggregate cash growth profit per ton regardless of the macro backdrop. Capital expenditures in the quarter were $105 million, and we continue to expect to spend between $750 million and $800 million for the full year. SAG expenses in the quarter were in line with our expectations, and we continue to expect full year SAG expense of between $550 million and $560 million. I'll now turn the call back over to Tom to provide a few closing remarks.

Thank you, Mary Andrews. I want to thank the men and women of Vulcan Materials for their hard work in the first quarter that translated to an outstanding safety and financial performance. Most importantly, they stayed focused on keeping each other safe, and their commitment to executing each day is showing up in our bottom line. Our focus is on what is ahead, maintaining our solid momentum and continuing to leverage our Vulcan Way of Selling and Vulcan Way of Operating disciplines to compound profitability in our legacy business, capture synergies from acquisitions, and deliver value for our shareholders. And now, Mary Andrews and I will be happy to take your questions.

Take our first question from Jerry Revich with Goldman Sachs. Please go ahead. Your line is open.

Good morning, Jerry.

Yes, hi, good morning, everyone.

Good morning.

Hi, Tom, Mary Andrews, Mark. Really impressive price cost spread you folks put up in the quarter. Tom, I'm wondering if you could just talk about how you're thinking about midyear price increases and cost cadence given the strong performance and the spread.

Yes, I guess as it goes to price, I would tell you as expected, we carry really good momentum into the year with prices up 7%, mix adjusted up 8.5%. I think it was a combination of two things. January 1 price increases pretty much went as expected and then we had really good pricing in our backlog and we continue to have good pricing in our backlog. So I thought the first quarter started the year off really good, keeping our guidance at 5 to 7, remembering that we have to turn that price into profit. And you saw Vulcan Way of Selling, a couple of Vulcan Way of Operating do that in Q1 with unit margins up some 20%. So a really good start to the year. And I think what that is, is simply the Vulcan Way of Selling and Vulcan Way of Operating at work. As it goes to mid-years, we've started those discussions now. We'll have those talks about midyear in all of our markets. I would expect a range of outcomes by market and by product line, much like the last couple of years. In those discussions, as we always say, the midyears will impact '26 more than they will '25. So, a really good start to the year, and pleased with the performance and pleased with the execution of the Vulcan Way of Selling and Vulcan Way of Operating.

Congratulations to the team. Thanks.

Thank you.

We'll take our next question from Tyler Brown with Raymond James. Please go ahead. Your line is open.

Hi, Tyler.

Hey, good morning. Hey, look, Tom, there's a lot of hand-wringing about the outlook for volumes, maybe more so on the private side. You guys kind of mentioned it up front, but obviously the 10 years in the housing market has been a little bit stubborn. But just in broad strokes, can you kind of give us an update on how you would kind of characterize the organic rock volumes in '25, if you kind of parse them between resi, non-resi, and public? Just kind of how do you get to that slightest organic volume?

We are maintaining our guidance of 3% to 5% despite challenges in the private sector. However, we continue to see strong growth in the public sector, both in highway and non-highway infrastructure. Non-highway infrastructure is performing particularly well. In the first quarter, shipments were down 1%, but this decline wasn't consistent; January and February saw a 7% drop due to extremely cold winter weather, while March experienced a 9% increase, supported by acquisitions and somewhat favorable weather conditions. I believe we can stick to our guidance of 3% to 5%, with challenges in the private sector but stronger performance in the public sector. It's worth noting that this growth may be more pronounced in the latter half of the year, particularly after last year's weather-related difficulties that created easier comparisons. Regarding project activity, while there are some concerns about projects being canceled or delayed, those that have been initiated are not being put on hold. We are bidding on a number of significant projects, though there seems to be some hesitation due to uncertainty. Importantly, our bookings have increased significantly in the public sector and have grown slightly in the private sector. Overall, total backlogs are higher compared to last year, indicating some pent-up demand. The main challenges likely lie with fixed concrete plant operations, impacted by private demand issues. So, it's a mixed start to the year, but I would emphasize that volume recovery is likely to be more concentrated in the second half.

Yes, great color, mixed bag. Got it. Thank you.

Thank you.

We'll take our next question from Anthony Pettinari with Citigroup. Please go ahead. Your line is open.

Hi, Anthony.

Hi, this is Asher Sohnen filling in for Anthony. Thanks for taking my question.

Okay.

I just wanted to ask for maybe an update around kind of your thoughts on administrative policy. Like, have you seen any kind of pressure on the pace of IJA rollout, project starts, maybe IRA-related projects, from any of the policy attitudes or kind of executive orders we've seen. I think last quarter there really wasn't much of an impact, so just wanted an update.

No, really no impact to us. I think when it comes to highway work or public demand, there's no uncertainty of highway funding at the federal level. IIJ funds are flowing, I'd say, as expected. Actually, the states right now are working on their new budgets. It appears that we'll see in our states growth over the next fiscal year, which starts kind of mid-summer. You've got to remember, obviously, there was also four local road, excuse me, 40 local road and bridge measures in last year's election, which was an additional $45 billion. So short story is, no impact from as far as funding for infrastructure. We actually see growth in federal, state, and local funding probably for the next couple of years in our markets, including 2025. As I said in my opening comments, you still got two-thirds of the IIJ funding yet to be spent. So, we feel really good about the public side.

Got it. Thanks. That's good to hear. I'll turn it over.

Thank you.

We'll take our next question from Keith Hughes with Truist. Please go ahead. Your line is open.

Hi, Keith.

Good morning.

Hey, how you doing? Thanks for the question and great quarter here. I guess the question is on costs and costs were down. Could you just talk about specifically what happened in the quarter and what your outlook on the cost side is for the rest of the year?

I appreciate your question about costs. Looking back at our original guidance, we had a great quarter with costs down 3%, despite slightly lower volumes and extremely cold weather in January and February. I'm proud of our team for this achievement. This performance can be attributed to three factors: first, we're seeing improvements in operating efficiencies, and the Vulcan Way of Operating is beginning to take effect. We expect this to improve further as the year progresses and our technology is fully utilized in the quarries. Second, our team did an excellent job controlling expenses, especially given the challenges posed by the cold weather. Lastly, we faced some cost pushback due to weather-related delays on certain projects. As we often mention, costs can be unpredictable from quarter to quarter. For the full year, we maintain our guidance of low to mid-single-digit cost reduction. We will do our best to exceed that, especially with the execution of the Vulcan Way of Operating, but it's too early to make definitive predictions. I'll hand it back to you.

Okay, great. Thank you.

Thank you.

We'll take our next question from Kathryn Thompson with Thompson Research Group. Please go ahead. Your line is open.

Good morning, Kathryn.

Good morning.

Good morning and thank you for taking my question today. I wanted to circle back just on two different things that tie into your Vulcan Way of Operating and Selling and the outlook. So the contacts that we speak to in the heavy materials space, we're finding that there are just have and have not in the construction industrial value chain, but what strikes us is on the heavy material side things are maybe not quite as bad as some of the headlines show. Could you marry also first are you seeing any type of significant project either cancellations or delays? And how does your Vulcan Way of Operating and Selling help differentiate yourself as you deal with a more uncertain environment? Thank you.

Yes, regarding project delays or cancellations, everything we have initiated seems to be progressing. Nothing that has started is being canceled or put on hold. As I mentioned earlier, we are actively bidding for a lot of work, although it is not being secured immediately. While this can be a bit frustrating, it is overall positive news because it indicates that potential clients are carefully evaluating their projects. They seem hesitant to commit until the broader market volatility settles down. Looking at our bookings, both public and private sectors are performing well, and our backlogs remain strong. I believe there is some pent-up demand that will materialize once there is more clarity in the market. Concerning our Vulcan Way of Selling and Operating, I credit the consistency and improvement in our unit margins over the past couple of years to this approach. It provides our sales team and operators with clear and forward-looking insights into how we manage our business. We are making good progress with the Vulcan Way of Selling, which is reflected in our pricing and execution in the markets. While we had a solid quarter, we must continue to demonstrate this performance over time. I am also pleased with the technology that is beginning to be implemented in our largest operations, although it's still in the early stages. We anticipate that there will be significant effort required from our operators throughout 2025 and into 2026, but it is yielding improved efficiencies. When you combine all these factors, it creates a model that enables us to leverage advantageous conditions while mitigating challenges as we consistently execute.

Right. Thank you very much.

Thank you.

We'll take our next question from Trey Grooms with Stephens. Please go ahead.

Hi, Trey.

Hey, good morning, Tom. Good morning, Mary Andrews, Mark.

Good morning.

And congrats on the good quarter.

Thank you.

So, the profitability has been touched on several times here, but 20% cash gross profit improvement, that's per unit. That's about as strong as we've seen. And I know there has been some puts and takes. And it sounded like the moderating inflation of course the productivity improvements. But I guess the one piece that I want to try to get my head around on as far as kind of thinking about the cadence as we move through the year would be on the things you pointed out, Tom, around some maybe delayed expenditures with stripping and things like that, that I understand are hard to call when that's going to happen, especially when weather is not your friend in a given quarter. But is there anything that you could give us on how to think about maybe the cadence of that? Is it going to be lumpy in a quarter here or there? How we should think about just the profitability as we kind of go through the quarters here?

Sure, I'll take that kind of in pieces. First of all, volume, as we said, it'll be back half loaded, both from a timing and a comp perspective. I think that's how I'd look at volume. On pricing, I think we'll be pretty consistent. I would guide you to 5% to 7% quarter-to-quarter. I think we'll be pretty consistent as we operate through the year with price. Cost, it's a harder call. As I always say, that cost is going to be lumpy. But as an investor, you want it that way because we need to spend the money when we need to spend the money and proactively not try to time it, or you'll have unpredicted maintenance and higher maintenance costs. So again, volume back half loaded, price pretty consistent, 5% to 7%, cost a little bit lumpy. Look, we had a great start to the year on cost. I would love to tell you we're going to beat the guide of low to mid, but we just need to see a few more quarters before we go there. Obviously, operators, that is their goal. That's what they want to do. But we got to play that out for a little while.

Yes, understood. And I guess just with that, if you could maybe touch to the downstream segments, because you're expecting, I think, some improvement there as well, which we saw some in the corridor. Is that kind of still the thought around downstream?

Yes, Trey, our downstream businesses are performing really well. We still expect them to contribute cash gross profit of about $360 million for the year. Two-thirds asphalt, probably one-third ready mix. And importantly, like you said, that's really a combination of strong unit profitability growth in the legacy operations coupled with the contribution from the acquisition. So both asphalt and ready mix got off to a good start and we still expect that level of profitability for the year.

Yes, got it. Thank you. I'll pass it on. Good luck.

Thank you.

We'll take our next question from Garik Shmois with Loop Capital. Please go ahead.

Good morning.

Oh, hi. Thanks. Hey, good morning and congrats on the quarter. I was hoping you could speak to pricing in a little bit more detail. First, if you could maybe help us understand where you are on integrating Wake Stone and getting pricing there up to the average. And then secondly, just on the midyears, I know it's early days and you mentioned traction should be similar to prior years, but just curious if you're getting any pushback or what kind of feedback you're getting considering the private construction slowdown from your ready mix customers, or are you seeing perhaps some more understanding given the expectations for inflation moving forward?

I would say that pricing is in line with our expectations. The January 1st adjustments went smoothly, and we're just beginning conversations for the midyear adjustments, so that remains to be seen. Pricing tends to be easier when demand is growing, and we are indeed seeing positive growth on the public side, which is advantageous and more predictable. Therefore, I would categorize the pricing situation as expected, though we still need to evaluate the midyear adjustments.

Yes, and then just overall, Garik, I think as it relates to the acquisitions, same as expected. Performance was good in the first quarter. We continue to expect the approximately $150 million of contribution for the full year and working hard to capitalize on our Vulcan Way of Selling and Vulcan Way of Operating disciplines to capture synergies with the acquisition as well as improving the legacy business.

Okay, makes sense. Thank you.

Thank you.

We'll take our next question from Steven Fisher with UBS. Please go ahead. Your line is open.

Good morning.

Thank you for the good morning. I appreciate it. Congratulations on the strong profit performance. I wanted to follow up on a question regarding the bidding you’ve mentioned in previous discussions, particularly where you've indicated that some elements are paused. It seems this is primarily affecting the private sector. Within those pauses, how extensive would you say the impact is? Are we mainly looking at very interest rate sensitive commercial projects, or does it also include more structural projects like data centers, semiconductors, or pharmaceutical and biotech initiatives that appear to have strong momentum? I’m curious about the extent of the hesitancy you're observing in decision-making.

I would say it's not very widespread. There are significant commercial projects that people are bidding on and moving forward with. Public work is progressing without any pauses. While the situation isn’t extensive, data centers are a positive area for us. Currently, we are heavily involved in data center projects, with 6% of the data centers under construction located in our region. Notably, 80% of the proposed data centers are within 30 miles of a Vulcan quarry, which presents a tremendous opportunity for us. Over the next few years, the data center sector will likely drive substantial power generation construction, which will be very aggregate intensive for us in the next 3 to 5 years. This area will also be a key growth point in the nonresidential sector. The pauses are primarily in big commercial projects, and while they’re occurring, they're not widespread. It’s interesting to see that major projects are being bid on, but the timing for some has been pushed back. For me, this is good news because eventually, they will move forward.

Terrific. Thank you.

Thank you.

We'll take our next question from Timna Tanners with Wolfe Research. Please go ahead.

Hey, good morning.

Hi, Timna.

I wanted to ask about not the direct impact of tariffs. I recognize you said those were limited, but the impact of the tariff-related uncertainty perhaps on your customers and acquisition candidates. Just wondering if there's anything incremental you can touch on there, please. Thanks.

Yes, to clarify on tariffs, we are continually assessing their potential effects on our business. I believe our model significantly minimizes the direct impact on Vulcan. Currently, we do not consider tariffs to significantly influence our cost outlook. It’s important to note that we control our largest expense, which is the rock in the ground. Additionally, our model enables us to quickly manage any cost fluctuations, as demonstrated during the recent inflationary period, which likely had a more substantial effect than tariffs. We do need to be cautious about the tariff-related costs for private construction, though it's still too early to determine the full impact. However, it's something we should all keep in mind.

Okay. But regarding like M&A candidates, are they acting differently because of the uncertainty? Or can you speak to your customers' impact? Again, recognize that the minimal impact direct is great.

Yes. On the heavy construction business like ready mix and asphalt, I don’t see a big impact at this point as far as customers are concerned. As far as M&A, we call out some smaller deals that we are talking about right now. I don’t think tariffs are having a big impact. What I do think is with M&A, it typically slows in times of volatility, and you’re seeing that right now. So we may have to let the wool spin a little bit before you see substantial M&A, but I think that’s a temporary pause.

Yes. And I think, Timna, importantly for us, we have the balance sheet obviously very well positioned for future growth as M&A opportunities do arise. The key for us is obviously to continue to be disciplined as we evaluate those so that we can deliver attractive returns on capital over time and continue to grow our leading aggregates positions. But we like our position and are well prepared to act in the M&A market if any of this uncertainty does impact that.

Got it. Okay. Thanks again.

Thank you.

We'll take our next question from Jean Veliz with D.A. Davidson. Please go ahead.

Hi.

Congrats on the quarter and thank you.

Good morning.

Yes, good morning. You mentioned that private bookings were up slightly. Could you comment on what types of work are seeing a slight increase in your bookings?

Yes, I think the bright spot in the private sector is data centers, most of which are within our areas of operation. On the public side, highway work is definitely increasing, but a significant highlight for us is infrastructure, particularly non-highway projects like water ports and airports. Those bookings have risen considerably, showing strong performance. In the private sector, we are seeing an uptick in data centers and we believe we have reached the bottom for warehouses, which means they are no longer a major drag on us as they were maybe a year ago.

And with the common owned warehouses, does that offset some of the residential? Or is this just a nice pickup that you hope to carry on through '26 into '26?

I believe the offset of single-family homes is primarily on the public side, particularly in highways and non-highway infrastructure. This has provided some support, but the main factor is the public demand.

All right. Great. Thank you so much.

We'll take our next question from Michael Feniger with Bank of America. Please go ahead. Your line is open.

Good morning.

Hey, guys.

Good morning.

Good morning, Tom. Good morning, everyone. Thanks for having me in. I just wanted to ask Tom with the conversation around tariffs, if in terms of just your own price cost. I mean, if contractors out there are bracing for higher input costs for materials, equipment, other areas, does this give you cover to be able to raise pricing even if your own costs, it looks like are actually trending lower when we see what’s happening with oil prices today and diesel. So I’m just wondering with the amount of aggregates that is in these projects, if all these other items are seeing inflationary and your customers are bracing for that, how do you kind of think about that when it comes to pricing relative to your costs that might not be going up to that degree?

We don’t base our pricing on costs; instead, we focus on earning it with our customers. When considering tariffs, it's important to also think about the rapid inflation we experienced over the last couple of years, which the market managed to absorb. I believe the tariff situation will resolve itself, and I don’t expect it to affect pricing for aggregates.

Thank you.

We'll take our next question from Philip Ng with Jefferies. Please go ahead.

Hey, good morning. It’s Jesse Barron on for Phil. Just a question on asphalt. Obviously, oil has come down here in the first quarter and then taken another step down in 2Q. Just curious kind of how that kind of translates into your own pricing and then on the cost side, kind of what the lags are there? Thank you.

So I thought asphalt had a good performance in the quarter despite the cold weather. The cash gross profit was up 24%. We did have some savings with liquid, which is about $3 million, but that product line continues to perform extremely well. And I think that with the public demand growth that we are seeing, it’s a good story for the asphalt business and a good story for aggregate component of the asphalt business, so a real support for us.

All right. Thanks. I will turn it over.

We'll take our next question from Michael Dudas with Vertical Research. Please go ahead. Your line is open.

Good morning, Tom, Mary Andrews and Mark.

Thank you, operator. Good morning, Tom, Mary Andrews and Mark.

Good morning.

For Mary Andrews, you highlighted in your prepared remarks your cash conversion, which is very solid. Maybe you can talk about for the next several quarters how that looks, any meaningful changes from what we’ve seen in history. And as you think about CapEx, growth versus maintenance and this deferred or maybe delay in M&A, given the volatility that we’ve seen, maybe we’ll see more in stock prices, and you did buyback some stock, but you had the debt repayment. Is that something that's certainly on the table maybe in near-term if we still get that volatility on the repurchase side? Thank you.

Yes. I believe that our cash conversion has remained at an attractive level, and we expect this to continue in the future. For our capital expenditures in 2025, we still plan to invest between $750 million and $800 million, which is slightly higher than last year mainly due to spending on large plant rebuild projects. We have been consistently reinvesting at levels we deem appropriate for the business's needs, so I do not foresee any significant changes in this area. We are always assessing various growth capital expenditure opportunities, and if we believe they can generate strong growth and good returns over time, we will consider them as they arise. It could be a worthwhile use of capital in the future, depending on other opportunities, but there are no changes in our approach to capital allocation at this time.

Thank you.

We'll take our next question from Angel Castillo with Morgan Stanley. Please go ahead. Your line is open.

Hi, good morning.

Hi, good morning. Thank you for taking my question and congrats on the strong quarter. Just two …

Thank you.

... quick ones for me. Just first on the power generation opportunity, Tom, that you mentioned, can you just give a sense of kind of the order of magnitude of how much more kind of intensity in terms of aggregates power generation might be? And just to clarify, is that kind of just the nuclear side? Or is there broader kind of power generation being more aggregates intensive? And then maybe one last one on price would just be you talked a lot about it from the VMC side, but curious if you’re seeing anything in terms of competitors’ discipline or mom and pops and kind of trends in how they’re going about mid years?

I'd take the pricing question first. On the midyears, it’s a little early on those as we are just beginning those conversations. I think that when it comes to midyears, we have those conversations every year and have those have had that probably for the last 4 years. So I guess no surprise and to be expected and nothing has changed as far as timing or the conversations on midyears. As far as power generation, I would tell you it’s probably going to be more of a late '26, '27 play and go on for probably about 5 years. Those will be extremely aggregate tenses. Those are big, big projects. I expect more gas generation power projects than nuclear early on, maybe nuclear later, but too early to call on that one. But those will be and they’ll be in the markets like Texas, Georgia, Virginia, Arizona, Illinois where the big data center projects are, as where I expect a lot of those and even some in other states. But there’s just a lack of power generation that we're seeing right now. So and if you talk to the power generation companies, they're just going to have to expand. And I think we'll see that over the next 5 years.

Very helpful. Thank you.

We'll take our next question from David MacGregor with Longbow Research. Please go ahead.

Yes, thanks for taking the questions and congrats on the strong quarter.

I guess I wanted to just follow-up on the discussion around tariffs and you are noting that it’s not going to be very impactful to the business, but I'm just wondering about the downstream and ready mix. And you've got tariffs that are likely to hit Mediterranean, Southeast Asian imports as well as port levies on many of these cement carrying vessels. I'm just wondering how you expect that to come into play in terms of the ready mix market and how you manage your margins through that? And then just secondly, if I could just ask about the cost performance, which was really impressive. But obviously, petroleum, liquid asphalt, you're getting a break there. But anything going on in terms of maintenance and repair, subcontracting services or parts? Any kind of moderation inflation in those boxes as well?

So on the cost piece first, we've seen some moderation on inflation and it's not coming down. It's just not going up as fast as it was a year or two ago. So that is helpful. I think operating efficiencies have helped that too. And then as I said, we actually just pushed some costs back in the year because we were too cold to do some projects that we wanted to do. As far as tariffs, I don’t see a big impact on our business or our the ready mix or the asphalt business on tariffs at this point. Obviously, that could change, but at this point, we don't see a big impact on it.

Thank you.

Thank you.

We'll take our next question from Brian Brophy with Stifel. Please go ahead. Your line is open.

Hello. This is Andrew Maser on for Brian. Thank you for taking my question. I just wanted to ask another on the plant automation journey. I think earlier in the call you said that these tools are now implemented in 125 locations or 75% of volumes. I was wondering where you expect these numbers to be by the end of this year or next year? And then is there any way to frame the benefits that you're beginning to see from these initiatives either from a volume throughput or unit cash cost savings perspective? Thank you.

Yes. To clarify, we have installed the instrumentation in the top 100 to 120 plants, but it has not been fully implemented yet. Currently, about 20% to 30% of these plants are operating at full efficiency. I believe it will take this year and into next year to align the technology with operational capabilities and production. Our goal is to maximize throughput while minimizing downtime and optimizing critical sizes, such as asphalt rock or concrete rock, where the efficiencies will come from. We are still in the early stages of realizing the full benefits. It’s too soon to determine the exact impact, but we are seeing some positive signs. Each plant is different; some may achieve 4% efficiency, while others could reach 10% or 12%. It's premature to quantify this in terms of tons per hour or cost benefits, but I am confident that it will provide assistance going forward, which is why we are pursuing it.

And there are no further questions on the line at this time. I will turn the program back to Tom Hill for any additional or closing remarks.

Thank you for your time this morning. Thank you for your interest in Vulcan Materials Company. We hope that you and your families stay safe and healthy, and we look forward to talking to you throughout the quarter. Good morning.

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