Vulcan Materials Q1 2023 Earnings Call Transcript

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May 4, 2023

There are 10 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Vulcan Materials Company's First Quarter 2023 Earnings Call. My name is Travis, and I will be your conference call coordinator today. During the Q and A portion of this call, we ask that you limit your participation to one question. This will allow everyone who wishes the opportunity to participate. Now Now I would like to turn the call over to your host, Mr.

Operator

Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin, sir.

Speaker 1

Good morning, and and thank you for your interest in Vulcan Materials. With me today are Tom Hill, Chairman and CEO and Mary Andrews Carlisle, today, Senior Vice President and Chief Financial Officer. Today's call is accompanied by a press release and a supplemental presentation posted to our atvolcanmaterials.com. Additionally, a recording of this call

Speaker 2

will be available for replay later today at our website.

Speaker 1

Today. Please be reminded that today's discussion may include forward looking statements, which are subject to risks and uncertainties. These risks, today, 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. Today. Reconciliations of any non GAAP financial measures are defined and reconciled in our earnings release, our supplemental presentation today and other SEC filings.

Speaker 1

In the interest of time, please limit your Q and A participation to one question. Today. With that, I'll turn the call over to Tom.

Speaker 3

Today. Thank you, Mark, and thank all of you for joining our call this morning. Vulcan Materials is well positioned to deliver attractive growth in 2023. We got off to a solid start in the Q1 and now expect to deliver between today. $1,850,000,000 $1,950,000,000 in adjusted EBITDA this year, a 14% to 20% improvement versus to prior year.

Speaker 3

In the quarter, we generated $338,000,000 of adjusted EBITDA, today, a 15% improvement over the prior year. Despite lower volumes in each of our major product lines, today. Total gross profit improved 12% and gross margin expanded by 90 basis points. Today. I'm pleased with our team's execution as they remain focused on our Vulcan way of selling and Vulcan way of operating disciplines.

Speaker 3

Today. The pricing environment is healthy. Year over year adjusted aggregate price improved 19% in the quarter. Today. Prices also improved in our downstream products by 15% in asphalt and 12% in concrete.

Speaker 3

Today. As always, we are focused on capitalizing on pricing momentum and controlling costs to expand our margins. Today. In the aggregate segment, gross margin improved by 170 basis points. Shipments declined 2% versus the prior year today.

Speaker 3

With wide variations across markets, some areas benefited from favorable weather and carryover shipments from the wet 4th quarter. Today. Others like California and Texas were challenged by excessive rainfall. Today. All geographies delivered double digit price improvement.

Speaker 3

And importantly, our cash gross profit per ton improved by 23% in the today, surpassing $8 per ton on a trailing 12 month basis. In today. Gross margins improved by 2 20 basis points despite higher natural gas and liquid asphalt cost today. And 11% lower volumes. Significant rainfall negatively impacted shipments in California and Arizona, our largest asphalt markets.

Speaker 3

Today. Prices improved by 15% and more than offset high raw materials costs. Cash unit profitability today. And asphalt improved by 90% in the quarter. The Concrete segment's cash gross profit was negatively impacted by the 20 to the 2022 divestiture of our New York, New Jersey and Pennsylvania operations as well as today.

Speaker 3

Weather impacted volume in Texas and California and resulting cost challenges. Now shifting to the dynamic demand environment, today, which remains mixed both in terms of end uses and timing. We continue to expect modest growth in overall public demand, today. While single family housing starts continue to fall, some markets have begun to show early signs today. Multifamily housing starts have recently turned negative.

Speaker 3

However, they remained at high levels, particularly in Vulcan markets and continue to dampen some of the impact of single family weakness. Today. Affordability is the fundamental driver of the declines in single family activity. Low inventories, today. Graphic trends and employment growth in our markets continue to support demand for new residential construction.

Speaker 3

Today. While the pipeline of private non residential projects remain supportive of near term demand starts have eased in recent months. Today. A positive trend in non residential construction activity is the increasingly broad based composition of starts. Today.

Speaker 3

Industrial and manufacturing projects now account for more than 60% of Starz. Recent trends in supply chain management, today. Onshoring and clean energy investment are among the catalysts for this shift in the drivers of nonresidential today. Our geography and service capabilities enable us to capitalize on these large projects. We have booked today and are currently shipping to a number of these projects in many of our key markets such as battery plants, today.

Speaker 3

Electric Vehicle Manufacturing Facilities, LNG Facilities and Large Warehouse Parks. Today. On the public side, momentum is building with trailing 12 month highway starts now exceeding $100,000,000,000 today. The Infrastructure Investment and Jobs Act's dollars are flowing. The impact of these historic levels of public construction awards today.

Speaker 3

Today. Other infrastructure starts are also growing with trailing 12 month starts up 23%. Today. In addition to significant IIJA funding for water, energy, ports and airports, strong state and municipal revenue support today. Overall, 2023 demand for Aggregates continues to be dependent upon today.

Speaker 3

The depth of decline in residential construction activity and the timing of highway starts converting into aggregate shipments. Today. Our durable agates business and best in class execution position us well to successfully navigate today. Now I'll turn the call over to Mary Andrews for some additional commentary on our Q1 performance

Speaker 4

today. Thanks, Tom, and good morning. In the Q1, our adjusted EBITDA margin to expand at 140 basis points with solid operational execution and disciplined SAG cost management. Our SAG expenses as a percentage of revenue improved by 60 basis points in the quarter and moved below 7% on a trailing 12 month basis. We remain focused on continuing to leverage our SAG cost base, while making strategic investments in talent and technology to support our business needs.

Speaker 4

Net debt to adjusted EBITDA was 2.2x@quarterend, squarely within our stated target range of 2x to 2.5x. Our investment grade balance sheet gives us flexibility today. And optionality to continue investing in both organic and inorganic opportunities. During the quarter, we today. $113,000,000 in capital expenditures and continue to expect to spend between $600,000,000 6 today.

Speaker 4

$50,000,000 for the full year. As we allocate capital, we are focused on improving our return on invested capital. Today. On a trailing 12 month basis, our return on invested capital improved sequentially by 20 basis points from year end to 13.7%. Today.

Speaker 4

Tom shared with you our increased adjusted EBITDA outlook for 2023. On the heels of a strong 2022, in in which adjusted EBITDA improved by 12%, we now expect to exceed that growth in 2023 with 14% to 20% improvement. Today. Based on the success of our aggregates pricing efforts in the Q1, which yielded 10% sequential improvement today and 19% mix adjusted year over year improvement. We now expect prices to improve approximately 15% for the full year.

Speaker 4

Today. Coupling the strong pricing momentum with our industry leading operational execution, we expect to deliver even stronger year over year improvement in cash today. Our next question comes from the line of Chris Murphy. Please go ahead. Thanks, Chris.

Speaker 4

Thanks, Chris. Thanks, Chris. Thanks, Chris. Good morning, everyone. Today.

Speaker 4

I'll now turn the call back over to Tom for some closing remarks.

Speaker 3

Thank you, Mary Andrews. In closing, I want to remind you of today. 2 things that we are focused on each and every day. 1st, keeping our people safe. Our people are the lifeblood of our business in our culture.

Speaker 3

2nd, improving unit profitability and growing earnings regardless of the demand environment. Today. Our aggregates led business and our best in class execution position us well for driving long term sustainable value for all of our to stakeholders. And now, Mary Andrews and I will be happy to take your questions.

Operator

Today.

Speaker 3

Today.

Operator

Our first question comes from Trey Grooms, Stephens.

Speaker 5

Today. Hey, good morning, Tom, Mary Andrews and Mark. Hope everybody is well. Nice work on the quarter and aggregate Pricing particularly strong, so hats off to you and the team for such strong execution there. And Tom, I was hoping maybe you could talk a little more typically about the overall pricing environment and your thoughts on kind of the rest of the year as we look through the balance of the year for pricing.

Speaker 5

Today.

Speaker 3

Sure, Trey. As you saw, prices up 19% mix adjusted for the quarter, so great start. Today. Our January 1 price increases were successful and they're really broad based. So I appreciate our team's hard work on earning price.

Speaker 3

Today. And based on that success, you saw us raise the guidance to 15% for the full year. As we said, the pricing comps will get a lot today. So a good start to the year, but there's always work to be done to earn price. Today.

Speaker 3

And we feel really good about the 15%. But remember, you still have to take that price to the bottom line, which is what happened in the Q1 where we improved our unit margins by today. Some 23 percent and that kind of unit margin expansion is generally consistent with what was in our guidance. Today. And that's just the bulk of way of ops and the bulk of selling at work.

Speaker 4

Trey, one other thing on that note, on the margin side, we were today. I'm pleased to for aggregate's gross margin to expand 170 basis points in the Q1 after being compressed today. Each quarter, year over year last year, as we took those rapidly rising costs through the P and L and our pricing efforts in 2022 that Tom talked today. And has begun now into 2023, returned us to gross margin growth. And we would expect today.

Speaker 4

The year over year improvement continues to accelerate as the year progresses.

Operator

Today. Our next question comes from Stanley Elliott, Stifel.

Speaker 2

Hey, good morning everyone. Thank you for the question and congratulations on the strong start. Today. Tom, you mentioned kind of some nuances developing within the end market. I think that's one thing that's different this year versus today.

Speaker 2

Maybe some other cycles in the past, would love to get your kind of thoughts around what's happening on the private non res side, since there seems to be more moving parts as we're looking forward.

Speaker 3

Good morning, Stanley. Yes, you're right. Non res construction to shipments Continues to be really healthy and we saw that evidenced in the Q1. We would continue to expect the non residential sector to maintain today. The really high levels that we came off of last year, and it's really driven by warehouses, distribution and now manufacturing and industrial.

Speaker 3

Today. If I had to risk and reward that sector, I would put the risk in that sector would include maybe some slowing in warehouses. We have not seen that yet, today. But we're watching it. And the other question I would have is, does light non res that follow subdivision, today.

Speaker 3

Does it start to slow? Again, haven't seen that yet, but watching it. Now the flip side, the potential upside to shipments in non residential construction for me would today. The number of massive industrial and manufacturing projects that are on the horizon or just starting to ship. Today.

Speaker 3

To give you some color around that, we have now have some 20 excuse me, some 12 major industrial projects, today. Most of which are in our backlogs that total 8,500,000 tons. Now today. Some of those are multi year projects, so all that's not going to go in 'twenty three. So I would describe non res right now as very healthy, so far so good today for a healthy non residential demand in 2023.

Operator

Today. Our next question comes from Anthony Pettinari, Citi.

Speaker 2

Good morning.

Speaker 4

Good morning, Anthony.

Speaker 6

Today. Hey. I think previously

Speaker 2

you talked about ag shipments to public projects expected to be up maybe low single digits in 2023 today with IIJA maybe flowing through in the back half. And I was wondering if you had any sort of updated thoughts on the cadence of those public volumes today. Over the remaining quarters of the year or maybe between the first half and the second half, how we should think about the flow through, especially with IIJA projects?

Speaker 3

Today. Yes. I would tell you back half loaded. Sylvain will answer that question. The sector the highway sector is really the whole public sector, but particularly highways, is set up today.

Speaker 3

Funding is at all time record levels and importantly all three areas of funding of government today. You got federal, state and municipal all at all time highs and all of that is starting today. I'll give you a little color around lettings, which are really healthy. In California, in the Q4 of last year, Q1 of this year, today. Combined, those lettings will be over $2,000,000,000 which is an all time high for 2 quarters in California.

Speaker 3

Moving to Texas is even better. In the 1st two quarters of today. 2020 3, the lettings will be at some almost $8,000,000,000 again, all time high. Today. So highway contract awards as we said are now over $100,000,000,000 and we still today.

Speaker 3

So we'll still see 'twenty three shipments, we predict in low single digit. And today. That is just that is indicative of how much time it takes for those big lettings to flow through the shipments. So a solid 'twenty three, but a much larger growth

Operator

today. Your next question comes from Jerry Revich, Goldman Sachs.

Speaker 7

Today. Hi, good morning Tom, Mary Andrews, Mark. Nice quarter. I want to ask a couple of things today. In the quarter, on the volume side, if we just think about normal seasonality off of your Q1 run rate, today.

Speaker 7

That suggests your volumes could actually be up year over year in the Q2. And I'm just wondering is that consistent with the cadence that you're seeing in the business? And today. Similar vein, really strong gross margins for aggregates in the quarter. Normally, your margins are up 10

Operator

today.

Speaker 3

I'll take the volume and let Mary Andrews handle the margin. I think today. The volumes were in the quarter, we were down 2% and weather had a big play on that. Weather in California and Texas and Arizona were a drag on us. Today.

Speaker 3

But the weather in the East and Southeast were really positive. And in the East and Southeast, we probably had today. Some volume that pushed from the Q4 last year, which had really wet weather into the Q1 of this year. As far as our outlook, today. It really hasn't changed.

Speaker 3

The negative 2% to 6%. We've got challenges in single family, which are going to be more today. I think for me, the timing is going to be key of how fast those highway shipments today. Go from lettings to shipments. But in all of this, I think, is the backdrop.

Speaker 3

We've got today. The bulk of the selling and the bulk of the operating, which gives me confidence that we'll continue to improve our performance regardless of demand challenges, which you've seen us do quarter in and quarter out over the last few years.

Speaker 4

Yes. And Jerry, in terms of margins, yes, I think that a typical today. Sequential improvement is what you should expect. And as I said, on a year over year basis, we'll see significant acceleration Quarter to quarter as we progress off that 170 basis points from the Q1.

Operator

Today. Our next question comes from Mike Dahl, RBC Capital.

Speaker 6

Good morning. Thanks for taking my questions. Today. Mary Andrews, with respect to the other parts of the guidance, I think last quarter, I'm not sure if this is formal guide, but you talked about today. Cost inflation being up high single digit and the release said that cost in ag today.

Speaker 6

It's tracking consistent with expectations. So I'm wondering kind of if that's still the expectation and then if it is, is it right to think about today. From a gross profit per ton standpoint, the new price on top of that might suggest something in kind of like a low 20s year on year increase

Speaker 3

today. Yes. Quickly, you're correct on your assumption on today. Gross profit per tonne improvements. If I step back and look at cost, we're still facing the impact of today.

Speaker 3

Stubborn inflation in parts and services. If you looked in the Q1, weather on the West It negatively impacted the Q1 cost. But remember, as we progress through the year, our comps on costs today. So we're still guiding to the high single digit cost inflation and I would describe that as probably than expected parts and services and also delays in delivery is costing us just because it keeps equipment down. Today.

Speaker 3

That's offset some by probably better than expected diesel cost. We'll today. But all that being said, we'll continue to work on our operating efficiencies through the bulk we have operating. But at this point, I I think we're still very comfortable with that high single digit guide.

Speaker 4

Yes. And Mike, just on the gross profit per ton and cash gross profit per ton improvement today. From the beginning, we thought that'd be much more consistent this year. And so that 23% we saw in the Q1, in the low 20s for the rest is a good assumption.

Operator

Today. Our next question comes from Kathryn Thompson, Thompson Research Group.

Speaker 3

Good morning, Kathryn. Today.

Speaker 8

Good morning. Great quarter. Just to have a clarification, based on our channel checks, today. We're seeing, as you already described, pretty robust demand in the year today. And even possibly some tightness in materials in some key markets or multiple markets throughout the U.

Speaker 8

S. As we end the construction season. In light of the strong pricing commentary we had in the quarter, today. This is open up the possibility for additional pricing actions midyear. And then also along with that today.

Speaker 8

It's a long term view when you look at reassuring population shift and government supported funding for IIJ, inflation reduction today. How does this play into your long term view on pricing? Thanks so much.

Speaker 3

Today. Yes, I think that so as far as pricing the rest of the year, we did not assume a second half price increase today. Thank you. That said, we are have announced midyear today. Price increases in most in the vast majority of our markets.

Speaker 3

We feel like you got to earn that first. So we'll report on our progress today. On those midyear efforts in August as far as bid work, we're pushing price day in and day out on our bid work and that's just part of to welcome way to selling. As far as the you're spot on, on the large projects today. Both on the public side, highways and non highway, we're going to see a lot more large projects and a lot more money flowing.

Speaker 3

We also, as you said, starting to see the big manufacturing industrial projects, which we think continue well into the future. Today. All of that bodes extremely well for pricing because that gives us and our customers visibility to coming demand today. And those large projects, both public and the big industrial ones tend to be there's more surety of those projects than once they announce them, they're going to happen. Today.

Speaker 3

And so that also gives surety demand, which is a very good backdrop for pricing.

Operator

Today. Our next question comes from Keith Hughes, Truist Securities.

Speaker 3

Hi, Keith. Hi, Matt.

Operator

Hey, Thank

Speaker 6

you very much. I guess switching to the discussion on non residential, today. Specifically on heavy, there's a lot of positives out there right now. How far of visibility do you have on that business? In other words, could we be seeing several years of really strong heavy work to be done?

Speaker 3

Yes. That You are going to see a number of years both in manufacturing industrial and in the big energy projects along the coast. Today. There is a healthy pipeline of that both in either their budgeting, their bidding or their engineering. And so I today.

Speaker 3

Like you said, I believe we'll see years of this and I think it will really bode well both for volumes and price.

Speaker 6

And on that your light today. Give it a short cycle, your visibility is not nearly that long on line. Is that correct?

Speaker 3

That's correct.

Operator

Today. Our next question comes from Brent Thielman, D. A. Davidson.

Speaker 6

Today. Hey, good morning. Hey, Tom, I was just curious on the balance. What was the hit from the residential today. Volume only down 2%, including weather just on the surface, it doesn't look like that much.

Speaker 3

Today. So if you look at it, about half of our markets took a hit in res and about half today. We're positive, so I'd tell you by mid single digit. But as we said, We'll feel the impact of the fall in starts permits and starts in single family. We'll really feel that in the second half of the year.

Speaker 3

So today. Pretty much as expected right now. I think it's and plus with weather in Arizona, Texas and California masked some of that, so it's today. Harder to see, but we think that is more of a second half play as those starts have to go through the pipeline. Today.

Operator

Our next question comes from Phil Ng, Jefferies.

Speaker 2

Good morning. This is actually Colin on for Phil. I just wanted to touch on the geographic mix. I know pricing was aided by that today. But could you talk about how that mix might have helped gross margins and how we should think about that mix benefit going forward?

Speaker 2

Thank you.

Speaker 3

Today. I don't think it's going to I don't think that's a big play on gross margin. It was only 1% on price. Today. So it really did not it really didn't have an impact on much impact on price or on margins.

Speaker 3

Today.

Operator

Our next question comes from Kennen Tanners, Wolfe Research. Today.

Speaker 6

Good morning, gentlemen.

Speaker 4

Thanks, Tim. Thanks, Tim.

Speaker 9

Thanks. Two things I haven't heard you address that I'd like to hear from, please. One is today. Just the labor markets broadly, I know it's been a bigger issue for your customers, but I would appreciate an updated thoughts there. And then it's been I think May will be a year anniversary since today.

Speaker 9

Mexican operations were shut and there's been some noise down there. So I would love your take on that as well. Thanks.

Speaker 3

Yes. I would describe the labor market as easing. Today. I think it's a combination of the labor market's easing and I think we've gotten better with retention over the last year, done a lot of work on that. So today.

Speaker 3

It is still an issue, probably still a bigger issue for our customers, but not like it was 12 months ago or 18 months ago. Today. On Mexico, really not a lot of change. We remain illegally shut down, and the proceedings with the NAFTA tribunal continue. Today.

Speaker 3

We would hope to get a ruling on that sometime in 2024.

Operator

Today. Our next question comes from Adam Thalhimer, Thompson Davis.

Speaker 3

Hi, Adam. Good morning.

Speaker 6

Today. Hey, good morning guys. Great quarter. Hi.

Speaker 2

I am starting to get questions from clients on the debt ceiling. If we don't get an increase, do you You think there's a risk to federal infrastructure support?

Speaker 3

Well, I mean, that would be the first time that's happened. So today. I would doubt that while everybody is wringing their hands over it, I think we'll solve this problem and we'll continue with our infrastructure spending.

Speaker 2

Today. And the prior government shutdowns haven't been a big deal, have they?

Speaker 3

Well, I don't want to see one, but I don't think it's going to impact to our

Speaker 6

infrastructure projects.

Operator

Today. Our next question comes from Michael Dudas, Vertical Research.

Speaker 6

Hi, Michael. Today. Good morning, gentlemen, Mary Andrews. Andrew, I just want to share your thoughts on how operating free cash

Speaker 3

today. I'm going

Speaker 6

to today. The M and A pipeline and will we

Speaker 3

best guess, do we see any visible activity by year end with

Speaker 4

today. Yes. So we were pleased with our free cash flow. It's obviously very cash generative business today. Over the trailing 12 months, our free cash flow conversion has stayed over 90%.

Speaker 4

So we today. We're pleased with that result, and we'll be take our consistent disciplined approach as we think about how to allocate that capital today.

Speaker 3

On M and A, it remains I guess we have a number of today. Smaller bolt ons in the pipeline along with a number of greenfields that we're working on, I would tell you kind of normal today. From the smaller bolt on and greenfield perspective, as far as large projects or large M and A, those tend to be lumpy. Today. When they come along, we'll be in the game and we'll take advantage.

Speaker 3

And as always, we'll be disciplined in all of this about today. What markets we're in, what synergies are unique to us and what we pay for it. So today.

Operator

Our next question comes from Gerrick Smoiz, today.

Speaker 3

Good morning, Garrett.

Speaker 4

Good morning, Garrett.

Speaker 6

Hey, good morning. Nice quarter. I wanted to ask on the highway outlook, you're counting on today. The demand showing up later this year. I'm curious just how does the lag between project starts and when volumes today.

Speaker 6

Has that changed at all just given the size of the projects in the pipeline?

Operator

I think

Speaker 3

it's a little bit. We would always call that 9 to 12 months, but larger projects can take longer today. Just because of more complex engineering, more complex permitting and more complex planning around those and When they run into a snag, it stops a big chunk of work or pushes it back. I would not change today. The 9 to 12 rule of thumb, except for every once in a while now you'll come across a multimillion ton highway project today.

Speaker 3

That can get pushed out past that limit, but I think the 9% to 12% is still a good rule of thumb.

Operator

Today. Our next question comes from David MacGregor, Longbow Research.

Speaker 3

Hey, David.

Speaker 4

Good morning.

Speaker 6

Hey, Tom Congratulations on a strong quarter. Phenomenal. Thank you. Yes. I guess, today.

Speaker 6

Interested in just any update you've got on transportation. I know you've got some long haul tonnage there. You're talking about strength down along the coast. Today. How is that changing?

Speaker 6

Is it changing for the better? Do you view that as a potential risk? And have you been able to lock up capacity? And if so, for how today.

Speaker 3

I think as we talked about rock is still short on all coasts, and it's driven primarily by bottlenecks on railroads. I think the railroads are working hard to improve and they're making progress, today. But there's still gaps there. And I don't know that I see it as risk for 2023. It has its challenges.

Speaker 3

Today. But I think we'll work with our partners in the road to work through those challenges and be fine in 2023.

Operator

Today. Our next question comes from Michael Feniger, Bank of America.

Speaker 3

Today. Hi, Martin. Good morning.

Speaker 6

Good morning, guys. Thanks for taking my questions. Just 2. So the first one, the pricing obviously very strong at 18.5% today. And your full year range of 15%.

Speaker 6

So does pricing kind of finish the year, I think the year below today. That range, do you think we're still in that double digit territory? I'm just trying to think of that pricing cadence. Then the second question, just the operating leverage in aggregate. I think you typically target like a 60% flow through.

Speaker 6

Are there periods where that can be above that level? I I guess I'm just trying to think out mid year price increases potentially sticking, diesel rolling over. Could we see flow through above that target range for certain periods? Today. Thank you.

Speaker 3

You can first of all, on the flow through piece of this, you can see that above and you can see it below inflation big inflationary today. Put pressure on that, as we said, as does fuel. I think if you look at this year, I would be a little bit cautious because you're still going to have some really sticky inflationary pressures on parts and services. Today. I think as what we've said is that as we progress through the year, the percentage price increase today.

Speaker 3

It won't stay up at the 20% range because you're comping over such a sequentially high March through 2022 in price. Today. The flip side of that is in cost. As we said, you're seeing really high year over year cost at this point. Today.

Speaker 3

They should ease as we go through the year because the inflationary comps ease as we go. That all that put all that together, we think we're pretty consistent in that 20 today.

Operator

Our final question comes from Dylan Cumming, today, Morgan Stanley.

Speaker 2

Hey, good morning. Thanks for

Speaker 6

the questions. Just wanted to ask

Operator

if you could put a finer point in some

Speaker 2

of the non res commentary. I think there are to concerns out there with regards to the tire financing environment, how that could impact both the light and heavy non res kind of side of the equation. Just curious if you're hearing sentiment around that from customers and what the kind of

Speaker 3

latest today. I would put it this way. So far what we're seeing in non res is really solid. Today. Some shifting towards heavy industrial and manufacturing, today.

Speaker 3

But we've not seen any impact on our markets yet on non residential. Now today. That being said, we're watchful and we're watching it, but so far so good in non res for 2023. But to your point, I think everybody's watching

Speaker 6

today.

Operator

Today. I would now like to turn the call back over to Tom Hill for any closing remarks.

Speaker 3

We appreciate your interest and your today. We appreciate your interest in Vulcan Materials. We look forward to seeing you throughout the quarter to update you on our progress. Today. We hope that you and your families remain healthy and safe, and we'll talk to you throughout the quarter.

Speaker 3

Thanks.

Operator

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

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