Vulcan Materials CO (VMC)

ITEM 7

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

The objective of our management’s discussion and analysis is to help investors understand our operations and current business environment from the perspective of our management. The following discussion should be read in conjunction with the consolidated financial statements and the accompanying notes contained in this Annual Report. The following generally includes a comparison of our results of operations and liquidity and capital resources for 2024 and 2023. For the discussion of changes from 2022 to 2023 and other financial information related to 2022, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 22, 2024.

EXECUTIVE SUMMARY

FINANCIAL SUMMARY FOR 2024

COMPARED TO 2023:

▪Total revenues decreased $364.2 million, or 5%, to $7,417.7 million

▪Gross profit increased $51.1 million, or 3%, to $1,999.6 million

▪Selling, administrative and general (SAG) expenses decreased 2% to $531.1 million and increased 20 basis points as a percentage of total revenues

▪Operating earnings decreased $62.9 million, or 4%, to $1,364.5 million

▪Earnings attributable to Vulcan from continuing operations were $6.91 per diluted share, compared to $7.06 per diluted share

▪Adjusted earnings attributable to Vulcan from continuing operations were $7.53 per diluted share, compared to $7.00 per diluted share

▪Net earnings attributable to Vulcan were $911.9 million, a decrease of $21.3 million, or 2%

▪Adjusted EBITDA was $2,057.2 million, an increase of $45.9 million, or 2%

▪Aggregates segment sales increased $30.7 million, or 1%, to $5,949.6 million

▪Aggregates segment freight-adjusted revenues increased $174.9 million, or 4%, to $4,636.2 million

▪Shipments decreased 6%, or 14.6 million tons, to 219.9 million tons

▪Freight-adjusted sales price increased 10.8%, or $2.06 per ton to $21.08

▪Aggregates segment gross profit increased $79.9 million, or 5%, to $1,816.7 million

▪Unit profitability (as measured by gross profit per ton) increased 12% to $8.26 per ton

▪Unit profitability (as measured by cash gross profit per ton) increased 12% to $10.61 per ton

▪Asphalt and Concrete segment sales decreased $490.9 million, or 21%, to $1,899.1 million, collectively

▪Asphalt and Concrete segment gross profit decreased $28.8 million, or 14%, to $182.9 million, collectively

▪Returned capital to shareholders via dividends of $244.4 million at $1.84 per share versus $228.4 million at $1.72 per share

▪Returned capital to shareholders via share repurchases of $68.8 million at $254.71 average price per share compared to $200.0 million at $204.52 average price per share

Our aggregates-led business delivered a strong finish to the year. Adjusted EBITDA in the fourth quarter improved 16%, and Adjusted EBITDA margin expanded 370 basis points. The favorable pricing environment coupled with strong operational execution led to consistent year-over-year improvement in aggregates gross profit per ton each quarter (and double-digit improvement in cash gross profit per ton) – finishing 2024 with aggregates gross profit per ton of $9.02 and cash gross profit per ton of $11.50 for the fourth quarter. As we look to 2025, the pricing environment remains favorable, and we are focused on our operating disciplines to manage costs and improve efficiencies. By controlling what we can control, we expect to deliver approximately 19% growth in Adjusted EBITDA.

At year-end 2024, total debt to Adjusted EBITDA was 2.6 times (2.3 times on a net debt basis, reflecting $600.8 million of cash on hand). Our weighted-average debt maturity was 12.6 years, and our total weighted-average effective interest rate was 5.0%. Return on invested capital was 16.2%. We remain well positioned for continued growth with a strong liquidity position and balance sheet profile.

Adjusted EBITDA, Aggregates segment freight-adjusted revenues, cash gross profit per ton, debt to Adjusted EBITDA and return on invested capital are non-GAAP measures. See the definitions and reconciliations within this Item 7 under the caption “Reconciliation of Non-GAAP Financial Measures.”

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CAPITAL ALLOCATION

Our balanced approach to capital allocation remains unchanged. Through economic cycles we intend to balance reinvestment in our business, growth through acquisitions and internal growth projects, and return of capital to shareholders while maintaining financial strength and flexibility evidenced by our strong balance sheet and investment-grade credit ratings. Our capital allocation priorities are as follows:

1.Operating Capital (maintain and grow the value of our franchise)

2.Growth Capital (including acquisitions and greenfields)

3.Dividend Growth (with a keen focus on sustainability)

4.Return Excess Cash to Shareholders (primarily via share repurchases)

Our first priority is to maintain and protect our valuable franchise by keeping our operations in good working order to ensure the production of high quality materials and timely delivery of goods and services to our customers. This capital requirement expands and contracts as production and shipment levels change. During 2024, we invested $638.0 million in capital expenditures to replace or improve existing property, plant & equipment.

Our second priority is to grow our franchise, primarily through business acquisitions and complemented by internal growth investments. For business acquisitions, we tend to look for bolt-on acquisitions, which are easier to integrate, and will pursue large business combinations that are the right fit and the right price. We use strategic and returns-based criteria to price potential acquisitions and are disciplined in our approach. We evaluate many potential acquisitions and only make offers on a few. We closed six business acquisitions during 2024 for total consideration of $2,297.1 million, including our acquisitions of Wake Stone Corporation (Wake Stone) and Superior Ready Mix, L.P. (Superior). Wake Stone was a leading pure-play aggregates supplier in the Carolinas, and Superior was an integrated aggregates, asphalt and concrete producer in Southern California. These acquisitions add quality aggregates reserves to our existing franchise in three attractive states. We also completed bolt-on acquisitions in both Alabama and Texas. All of our 2024 acquisitions were in our top 10 revenue states, demonstrating consistency with our disciplined capital allocation priorities and aggregates-led strategy of continuing to expand our reach through value-enhancing acquisitions.

Our third priority is growing the dividend with a keen focus on sustainability through the economic cycle. During 2024, we paid a dividend per share of $1.84 and paid total dividends of $244.4 million.

And finally, if there is excess cash after fulfilling the prior capital allocation priorities, we will consider returning cash to shareholders via share repurchases. During 2024, we returned $68.8 million to our shareholders through share repurchases.

For a detailed discussion of our acquisitions and divestitures, see Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data.”

MARKET DEVELOPMENTS AND OUTLOOK

We carry solid momentum into 2025 and are well positioned to deliver another year of strong earnings growth and cash generation. Continued strength in public construction activity and our recent acquisitions support our expectations for volume growth in 2025. The pricing environment remains positive, and inflationary pressures continue to moderate. This backdrop, coupled with our Vulcan Way of Selling and Vulcan Way of Operating disciplines, will lead to further expansion in our industry-leading aggregates cash gross profit per ton and value creation for our shareholders.

Our expectations for 2025 include:

▪A third consecutive year of double-digit year-over-year growth in Aggregates segment cash gross profit per ton ($10.61 in 2024)

▪Shipments growth of 3% to 5% (219.9 million tons in 2024)

▪Freight-adjusted price improvement of 5% to 7% ($21.08 in 2024); inclusive of over 100 basis points of negative mix impact from recent acquisitions

▪Low to mid-single digit increase in freight-adjusted unit cash cost (freight-adjusted price less segment cash gross profit per ton; $10.47 in 2024)

▪Total Asphalt and Concrete segment cash gross profit of approximately $360 million ($272 million in 2024)

▪Relative contribution of approximately two-thirds from the Asphalt segment and one-third from the Concrete segment

▪Selling, Administrative and General expenses of $550 million to $560 million ($531 million in 2024)

▪Interest expense of approximately $245 million

▪Capital spending for maintenance and growth projects of $750 million to $800 million

▪Depreciation, depletion, accretion and amortization expense of approximately $800 million

▪An effective tax rate of 22% to 23%

▪Net earnings attributable to Vulcan of $1,010 million to $1,170 million

▪Adjusted EBITDA between $2,350 million and $2,550 million (includes $150 million contribution from acquisitions)

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POSITIONED FOR GROWTH AND VALUE CREATION

DURABLE BUSINESS MODEL TO EXTEND THE CYCLE AND SUSTAIN GROWTH

▪39% improvement in Aggregates gross profit per ton since 2022

▪36% improvement in Aggregates cash gross profit per ton since 2022

▪Industry-leading commercial, logistics, operational and sourcing capabilities

▪End market fundamentals support continued growth outlook

▪Poised to benefit from generational investment in infrastructure that could extend the growth cycle by mitigating private construction cyclicality

We have continued to deliver strong financial performance over time and through business cycles. Through our aggregates-led strategy and focus on our strategic disciplines — the Vulcan Way of Selling (Commercial Excellence & Logistics Innovation) and the Vulcan Way of Operating (Operational Excellence & Strategic Sourcing), as outlined in Item 1 “Business” under the “Business Strategy” heading — we have created one of the most profitable public companies in our industry as measured by aggregates gross profit per ton.

In 2019, we set a target of $9 of cash gross profit per ton on volumes of 230 to 240 million tons, which we exceeded in 2023. In 2022, we set a new target to achieve $11 to $12 cash gross profit per ton once we reach 260 to 270 million tons. We delivered $10.61 of cash gross profit per ton on 220 million tons in 2024, exiting the year with cash gross profit of $2,332 million. Our durable growth strategy gives us confidence that we will deliver more value to our shareholders on every ton of aggregates we sell.

Cash gross profit per ton is a non-GAAP measure. See the definitions and reconciliations within this Item 7 under the caption "Reconciliation of Non-GAAP Financial Measures."

More than an aggregates supplier, we are a business dedicated to customer service and finding creative solutions to meet our customers’ needs. Being a valued partner and trusted supplier means that we are providing the right product, with the right specifications, that is the right quality, delivered the right way — on time and safely. Our One Vulcan, Locally Led approach, in which our employees work together to leverage the size and strengths of Vulcan as a whole, while running their operations with a strong entrepreneurial spirit and sense of ownership, allows us to deliver market-leading services to our customers.

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Transportation costs are passed along to our customers, and because aggregates have a very high weight-to-price ratio, those costs can add up quickly when transporting aggregates long distances. Having the most extensive distribution network of any aggregates producer sets us apart. Combining our trucking, rail, barge and ocean vessel shipping logistics capabilities allows us to provide better customer solutions and create a seamless customer experience at a competitive price. As an approximation, a truck has a capacity of 20-25 tons of aggregates; a railcar has a capacity of 4-5 truckloads; a barge has a capacity of 65 truckloads; and our ocean vessels have the capacity of 2,500 truckloads.

Production and sales are currently halted at our Calica operations in Mexico. For additional information, see Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data.”

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INDUSTRY LEADER WITH CLEAR COMPETITIVE ADVANTAGES

▪Largest U.S. aggregates producer with strategic geographic diversity

▪423 active aggregates facilities with 16.5 billion tons of reserves

▪Leading unit profitability margins driven by operational expertise and pricing performance

▪76% of the U.S. population growth over the next decade is projected to occur in Vulcan-served states

Over time, we have strategically and systematically built one of the most valuable aggregates franchises in the U.S. with a footprint that is impossible to replicate. Zoning and permitting regulations have made it increasingly difficult to expand existing quarries or to develop new quarries. Such regulations, while curtailing expansion, also increase the value of our reserves that were zoned and permitted decades ago.

Demand for aggregates correlates positively with changes in population, household formations and employment. We have a coast-to-coast footprint that serves 35 of the top 50 highest-growth metropolitan statistical areas (MSAs). As state and federal spending increase, Vulcan is poised to benefit greatly from growing private and public demand for aggregates, thereby delivering significant long-term value for our shareholders.

Source: Woods & Poole CEDDS 2024

Based on people added from 2024 to 2034

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STRONG CASH FLOW GENERATION AND INVESTMENT-GRADE BALANCE SHEET

▪Financial capacity to sustain capital reinvestment in current asset base and to fund growth

▪Maintain an investment-grade credit position

▪Continue to leverage current capital base to grow earnings and maximize cash generation

▪Prudently pursue attractive acquisitions and greenfields

▪Return value to shareholders with dividends and stock repurchases

Free Cash Flow Growth

in millions

Free cash flow is a Non-GAAP measure and calculated by subtracting purchases of property, plant and equipment from operating cash flows. Free cash flow is useful to investors in understanding how existing cash from operations is utilized as a source for sustaining our current capital plan and future development growth.

Our financial position is strong as evidenced by our long-term investment-grade credit ratings (Fitch BBB/Moody’s Baa2/Standard & Poor’s BBB+). At December 31, 2024, our available liquidity was $2,064.5 million, including $559.7 million of unrestricted cash on hand, significantly higher than our liquidity needs. Our leverage ratio, as measured by total debt to Adjusted EBITDA, was 2.6 times at December 31, 2024 (our net debt to Adjusted EBITDA ratio at December 31, 2024 was 2.3 times). Our long-term leverage target is 2.0 to 2.5x.

*These years include significant acquisition activity (see Part I, Item 1 "Business" under the caption "Business Strategy" for further details).

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SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE

A strategy for sustainable, long-term value creation must include doing right by our employees, our neighbors and the environment in which we operate. Over our more than six decades as a public company, we have built a strong, resilient and vital business on this foundation of doing things the right way.

We are a leader in our industry in safety, health and environmental performance, with a safety record substantially better than the industry average. We apply the shared experiences, expertise and resources at each of our locally led sites with an emphasis on taking care of one another. The result is a record of safety excellence that consistently outperforms the industry.

Vulcan MSHA Injury Rate Compared to Aggregates Industry

Number of Injuries per 200,000 Hours Worked

Source: Bureau of Labor Statistics records and internal Vulcan data.

*The aggregates industry MSHA injury rate for 2024 was not available as of the filing of this report.

We focus on our environmental stewardship programs with the same commitment that we bring to our health and safety initiatives resulting in 98% citation-free inspections out of all 2024 federal and state environmental inspections. As an industry leader, our aim is to meet — and strive to exceed — all federal, state and local environmental regulations.

However, sustainability means looking beyond what is required of a company by governments and regulators. Sustainability is reflected in our business strategy. We lead community relations programs that serve our neighbors while ensuring that we grow and thrive in the communities where we operate. In all parts of our company, from local operations to our corporate and regional offices to our international business and ocean-going shipping, we are focused on ensuring that our operations are efficient in ways that are economically and environmentally sustainable. It’s the right thing to do for our business and our stakeholders.

We continue to make progress on reducing our carbon footprint, increasing our energy efficiency, and measuring and reducing our water use. We also manage our land with biodiversity in mind. During 2024, we operated 33 sites containing wildlife enhancement programs that are certified by the Wildlife Habitat Council in addition to several other sites that are working towards certification.

We recognize that the aggregates mining in which we engage is an interim use of the approximately 310,000 acres of land in our portfolio. Our land and water assets will be converted to other valuable uses at the end of mining. Effective management throughout the life cycle of our land — from pre-mining utilization as agriculture and timber development, to post-mining development as water reservoirs or residential and commercial development — not only generates significant additional value for our shareholders but greatly benefits the communities in which we operate.

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RESULTS OF OPERATIONS

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

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

CONSOLIDATED OPERATING RESULTS HIGHLIGHTS

1Non-GAAP measures are defined and reconciled within this Item 7 under the caption "Reconciliation of Non-GAAP Financial Measures."

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Net earnings attributable to Vulcan for 2024 were $911.9 million ($6.85 per diluted share) compared to $933.2 million ($6.98 per diluted share) in 2023. Each year's results were impacted by discrete items, as follows:

Net earnings attributable to Vulcan for 2024 include:

▪pretax net gain of $36.7 million related to the sale of real estate in Virginia

▪pretax charges of $86.6 million associated with a goodwill impairment

▪pretax charges of $17.7 million for divested operations

▪pretax charges of $16.3 million associated with non-routine acquisitions

▪pretax loss on discontinued operations of $10.2 million

Net earnings attributable to Vulcan for 2023 include:

▪pretax net gain of $67.1 million related to the sale of excess real estate and businesses

▪pretax charges of $28.3 million for long-lived asset impairments related to the sale of businesses

▪pretax charges of $7.9 million for divested operations

▪pretax charges of $2.1 million associated with non-routine acquisitions

▪pretax loss on discontinued operations of $14.7 million

▪$12.9 million of tax charges related to a valuation allowance against Calica deferred tax assets, including net operating loss (NOL) carryforwards

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $7.53 per diluted share for 2024 compared to $7.00 per diluted share for 2023.

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

Year-over-year changes in earnings from continuing operations before income taxes are summarized below:

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OPERATING RESULTS BY SEGMENT

We present our results of operations by segment at the gross profit level. We have three operating (and reportable) segments organized around our principal product lines: (1) Aggregates, (2) Asphalt and (3) Concrete. Management reviews earnings for our reporting segments principally at the gross profit level.

1.AGGREGATES

SHIPMENTS

in millions

Aggregates shipments decreased 6%, reflecting underlying demand as well as the impacts from severe weather events in the third quarter which were not all recovered during the fourth quarter of 2024.

Our year-over-year freight-adjusted selling price1 for aggregates:

▪increased 10.8% in 2024

▪increased 15.9% in 2023

▪increased 10.3% in 2022

1We routinely arrange the delivery of our aggregates to the customer. Additionally, we incur freight costs to move aggregates from the production site to remote distribution sites. These costs are passed on to our customers in the aggregates price. We remove these pass-through freight & delivery revenues (and any other aggregates-derived segment revenues, such as landfill tipping fees) from the freight-adjusted selling price for aggregates. See the "Reconciliation of Non-GAAP Financial Measures" within this Item 7 for a reconciliation of freight-adjusted revenues.

Part II 41

The pricing environment remained positive. Freight-adjusted pricing increased 10.8% ($2.06 per ton) versus the prior year to $21.08, with all markets realizing year-over-year improvement.

AGGREGATES GROSS PROFIT

in millions

AGGREGATES CASH GROSS PROFIT

in millions

Aggregates segment gross profit increased 5% to $1,816.7 million (or $8.26 per ton), and gross profit margin expanded 120 basis points. Cash gross profit per ton increased 12% (or $1.15 per ton) from the prior year to $10.61 resulting from continued pricing growth and moderating cost trends. Improvements in unit profitability were widespread across our footprint.

Freight-adjusted unit cash cost of sales increased 10%, or $0.91 per ton. Shipments in 2024 and 2023 were negatively impacted by the absence of tons available from our Mexico operations which were unexpectedly and arbitrarily shut down by the Mexican government in 2022 (for additional information, see Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data”).

2ASPHALT

SHIPMENTS

in millions

Asphalt segment gross profit was $170.1 million (an increase of $20.5 million), and cash gross profit was $214.2 million, a 16% increase from the prior year. Shipments increased slightly, and pricing increased 5.7%, or $4.33 per ton.

ASPHALT GROSS PROFIT

in millions

ASPHALT CASH GROSS PROFIT

in millions

Our year-over-year average sales price1 for asphalt mix:

•increased 5.7% in 2024

•increased 6.3% in 2023

•increased 21.2% in 2022

1Asphalt mix average sales price is calculated by dividing revenues generated from the shipment of asphalt mix by the total tons shipped. The sales price calculation excludes service revenues generated from our asphalt construction paving business.

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3.CONCRETE

SHIPMENTS

in millions

Concrete segment gross profit was $12.8 million, a decrease of $49.3 million from the prior year which included earnings from our divested operations in Texas. Cash gross profit was $58.3 million, and unit cash gross profit was $16.35 per cubic yard.

CONCRETE GROSS PROFIT

in millions

CONCRETE CASH GROSS PROFIT

in millions

Our year-over-year average sales price1 for ready-mixed concrete:

▪increased 9.6% in 2024

▪increased 10.7% in 2023

▪increased 11.1% in 2022

1Ready-mixed concrete average sales price is calculated by dividing revenues generated from the shipment of ready-mixed concrete by the total cubic yards shipped. The sales price calculation excludes immaterial revenues generated from the sale of raw materials.

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SELLING, ADMINISTRATIVE AND GENERAL EXPENSES

in millions

As a percentage of total revenues, SAG expense was:

▪7.2% in 2024 — increased 20 basis points

▪7.0% in 2023 — unchanged from the prior year

▪7.0% in 2022 — decreased 50 basis points

Our comparative headcount levels at year-end:

▪increased 9% in 2024

▪decreased 8% in 2023

▪increased 6% in 2022

The 2024 increase in our employment level was primarily the result of acquisitions (see Note 19 "Acquisitions and Divestitures" in Item 8 “Financial Statements and Supplementary Data”). As noted above, 2024 SAG expense was $531.1 million, 2% lower than the prior year, or 7.2% as a percentage of total revenues. The current year includes overhead costs associated with acquisitions completed during the year. We expect to realize cost synergies in 2025 as the acquired operations become fully integrated.

GAIN ON SALE OF PROPERTY, PLANT & EQUIPMENT AND BUSINESSES

in millions

The 2024 gain on sale of property, plant & equipment and businesses of $52.3 million includes a pretax gain of $36.7 million from the sale of a former sales yard in Virginia. The 2023 gain on sale of property, plant & equipment and businesses of $76.4 million includes a pretax gain of $65.7 million from the sale of excess real estate in Virginia and a pretax gain of $15.2 million from the sale of real estate associated with a former recycled concrete facility in Illinois, partially offset by a pretax loss of $13.8 million related to the sale of our Texas concrete operations. We remain focused on our efforts to maximize the value of our portfolio of quarry operations as they move through their life-cycle of land management. For additional details, see Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data.”

LOSS ON IMPAIRMENTS

Loss on impairments was $86.6 million in 2024 which represents a goodwill impairment charge related to a reporting unit that includes concrete operations acquired from U.S. Concrete in 2021. Loss on impairments was $28.3 million in 2023 which represents a long-lived asset impairment charge related to the Texas concrete operations that were sold during the fourth quarter of 2023.

See Note 18 “Goodwill and Intangible Assets” and Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data” for additional discussion.

OTHER OPERATING EXPENSE, NET

Other operating income (expense) is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and rental income (expense). Total other operating expense and significant and/or discrete items included in the total were:

▪$69.7 million in 2024 — includes the following:

▪$17.7 million of charges associated with divested operations

▪$8.5 million of charges associated with non-routine acquisitions (excludes items included in cost of revenues)

▪$34.9 million of idle facilities expenses

•$26.4 million in 2023 — includes the following:

▪$7.9 million of charges associated with divested operations

▪$1.6 million of charges associated with non-routine acquisitions (excludes items included in cost of revenues)

▪$27.4 million of idle facilities expenses

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OTHER NONOPERATING INCOME (EXPENSE), NET

Other nonoperating income (expense), net was $22.1 million of expense in 2024 and $2.7 million of expense in 2023, composed primarily of pension and postretirement benefit costs (excluding service costs), foreign currency transaction gains/losses, Rabbi Trust gains/losses and net earnings/losses of nonconsolidated equity method investments.

INTEREST EXPENSE

in millions

Interest expense was $191.2 million in 2024 compared to $196.1 million in 2023. See Note 6 “Debt” in Item 8 “Financial Statements and Supplementary Data” for additional discussion.

INCOME TAXES

Our income tax expense from continuing operations for the years ended December 31 is shown below:

The $48.0 million decrease in our 2024 income tax expense compared to 2023 was primarily related to a decrease in earnings from continuing operations and the income tax benefit recorded for the remeasurement of our deferred taxes at a new blended income tax rate. The $106.4 million increase in our 2023 income tax expense compared to 2022 was primarily related to an increase in earnings from continuing operations.

During the fourth quarter of 2024, we determined that the rate at which our deferred tax liabilities will reverse has decreased, largely as a result of changes in our state tax profile from the Wake Stone acquisition. As a result, we remeasured our deferred tax liabilities and recorded a tax benefit of $21.9 million.

In May 2022, Mexican government officials unexpectedly and arbitrarily shut down our Calica operations in Mexico. In 2024, Calica had deferred tax assets (including NOLs) of $27.5 million. Although Calica continues to record losses, the devaluation of the Mexican peso during the year resulted in an immaterial change to its deferred tax assets in U.S. dollars. As a result, we recorded a charge to increase the valuation allowance by $0.1 million to $27.5 million in 2024. The Calica NOL deferred tax asset carryforward of $23.3 million would expire between 2032 and 2033 if not utilized. Should the Mexican government lift the shutdown and/or we are successful in our North American Free Trade Agreement (NAFTA) claim, we will reevaluate the need for a valuation allowance against the deferred tax assets.

For additional information, see Note 9 “Income Taxes” in Item 8 “Financial Statements and Supplementary Data.”

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DISCONTINUED OPERATIONS

Pretax loss from discontinued operations was:

•$(10.2) million in 2024

•$(14.7) million in 2023

•$(25.2) million in 2022

Pretax loss from discontinued operations for 2024 and 2023 resulted primarily from general and product liability costs, including legal defense costs and environmental remediation costs associated with our former Chemicals business. In addition, 2022 includes a $15.3 million charge for a litigation matter (see Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data”). For additional information about discontinued operations, see Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data.”

KNOWN TRENDS OR UNCERTAINTIES

Inflationary pressures and labor constraints can be factors that impact our operations. Although inflationary pressures can create short-term to medium-term headwinds, the combination of inflation and visibility of demand may create a favorable environment for price increases. Additionally, labor constraints can cause delays and inefficiencies in our operations as well as those of our customers. If labor constraints continue, our operations may proceed at a slower pace, which may effectively extend the recovery while allowing us the opportunity to compound price, control costs and grow earnings.

Further, the Mexican government has taken actions adverse to our property and operations in Mexico. On May 5, 2022, Mexican government officials presented employees at our Calica operations in Quintana Roo, Mexico with arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations. On May 13, 2022, the Mexican government suspended the three-year customs permit granted in March 2022 to Calica and began a proceeding that could result in the revocation of that permit. In September 2024, the Mexican government ordered the closure of Calica's already-suspended quarrying activities and the shutdown of certain activities at Calica's Punta Venado port facilities. On September 23, 2024, the President of Mexico signed a presidential decree declaring the entirety of Calica's properties as a "Natural Protected Area" (the "ANP Decree"). Among other provisions, the ANP Decree prohibits Calica from extracting petrous or construction materials from its properties. We strongly believe that the actions taken by Mexico are arbitrary and illegal, and we intend to vigorously pursue all lawful avenues available to us in order to protect our rights, under both Mexican and international law. For additional information regarding our Calica operations, see the NAFTA Arbitration section in Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data.”

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

AGGREGATES SEGMENT FREIGHT-ADJUSTED REVENUES

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

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

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CASH GROSS PROFIT

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

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EBITDA AND ADJUSTED EBITDA

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

1Represents charges associated with acquisitions requiring clearance under federal antitrust laws. Wake Stone acquisition related costs in 2024 include acquisition related expenses of $3.8 million and the cost impact of purchase accounting inventory valuations of $6.4 million. Superior acquisition related costs in 2024 include acquisition related expenses of $4.7 million (see Note 19 for additional information).

ADJUSTED DILUTED EPS ATTRIBUTABLE TO VULCAN FROM CONTINUING OPERATIONS

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

NET DEBT TO ADJUSTED EBITDA

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

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RETURN ON INVESTED CAPITAL

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

2025 PROJECTED EBITDA

Projected EBITDA is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:

1See the Market Developments and Outlook section (earlier within this Item 7) for the assumptions used to build this projection.

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

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LIQUIDITY AND FINANCIAL RESOURCES

Our primary sources of liquidity are cash provided by our operating activities, a substantial, committed bank line of credit and our commercial paper program. Additional sources of capital include access to the capital markets, the sale of surplus real estate and dispositions of nonstrategic operating assets. We believe these financial resources are sufficient to fund our business requirements for 2025, including:

▪contractual obligations

▪capital expenditures

▪debt service obligations

▪dividend payments

▪potential acquisitions

▪potential share repurchases

Our future contractual payments as of December 31, 2024 are summarized in the table below:

1Includes fees for unused borrowing capacity and fees for standby letters of credit. The figures for all years assume that the amount of unused borrowing capacity and the amount of standby letters of credit do not change from December 31, 2024.

2Excludes lease renewal options which are included in the table labeled Maturity of Lease Liabilities in Note 7 “Leases” in Item 8 “Financial Statements and Supplementary Data.”

3Noncapital unconditional purchase obligations relate primarily to transportation and electricity contracts.

4Payments in “Thereafter” column for benefit plans are for the years 2030-2034. The future contributions are based on current economic conditions and may vary based on future interest rates, asset performance, participant longevity and other plan experience.

5Excludes discounted asset retirement obligations in the amount of $427.4 million at December 31, 2024, the majority of which have an estimated settlement date beyond 2029 (see Note 17 “Asset Retirement Obligations” in Item 8 “Financial Statements and Supplementary Data”).

During 2025, we expect to spend between $750 million and $800 million in total on capital expenditures, including growth projects.

As of December 31, 2024, we were contingently liable for $863.6 million within 463 surety bonds underwritten by various surety companies. These bonds guarantee our performance and are required primarily by states and municipalities and their related agencies. The top five in amount totaled $210.8 million (24%) and were for certain construction contracts and reclamation obligations. We have agreed to indemnify the underwriting companies against any exposure under the surety bonds. No material claims have been made against our surety bonds.

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

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

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

▪maintain substantial bank line of credit borrowing capacity

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

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

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

We will continue to assess our liquidity sources and needs in order to take appropriate actions to meet our objectives.

CASH

Included in our December 31, 2024 cash and cash equivalents and restricted cash balances of $600.8 million is $41.1 million of restricted cash (see Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” under the caption "Restricted Cash").

CASH FROM OPERATING ACTIVITIES

in millions

Net cash provided by operating activities is derived primarily from net earnings before noncash deductions for depreciation, depletion, accretion and amortization.

1Primarily reflects changes to working capital balances.

2024 VERSUS 2023 — Net cash provided by operating activities was $1,409.6 million during 2024, a $127.2 million decrease compared to 2023 which primarily resulted from changes in working capital balances.

Days sales outstanding, a measurement of the time it takes to collect receivables, were 45.6 days at December 31, 2024 compared to 46.1 days at December 31, 2023. Our over 90 day receivables balance of $29.6 million at December 31, 2024 was $2.0 million higher than the December 31, 2023 balance of $27.6 million. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.

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CASH FROM INVESTING ACTIVITIES

in millions

2024 VERSUS 2023 — Net cash used for investing activities was $2,814.9 million during 2024, a $2,651.4 million increase compared to 2023. During 2024, we acquired businesses for $2,266.2 million of cash consideration whereas there were no business acquisitions in 2023. Additionally, proceeds from the sale of property, plant & equipment and businesses were down $653.3 million in 2024 from the prior year, which includes cash proceeds from the sale of our concrete operations in Texas and the collection of a note receivable related to the 2022 sale of concrete operations in New Jersey, New York and Pennsylvania (see Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data” for further information). Partially offsetting these net increases to cash used for investing activities, during 2024, we invested $603.5 million in our existing operations (includes changes in accruals for property, plant & equipment), a $269.1 million decrease compared to 2023. This $603.5 million investment includes both maintenance and internal growth projects to enhance our distribution capabilities, develop new production sites and improve existing production facilities.

CASH FROM FINANCING ACTIVITIES

in millions

2024 VERSUS 2023 — Net cash provided by financing activities in 2024 was $1,056.9 million, compared to $585.6 million of cash used in 2023. The current year includes proceeds of $2,000.0 million from the issuance of senior notes and cash paid to redeem the $550.0 million senior notes due 2026 (see Note 6 "Debt" in Item 8 “Financial Statements and Supplementary Data”). The prior year includes a $100.0 million net payment on our line of credit. Additionally, we returned $313.2 million to shareholders (a $115.2 million decrease compared to the prior year due to lower share repurchases) through $244.4 million of dividends ($1.84 per share compared to $1.72 per share) and $68.8 million of common stock repurchases (270,142 shares repurchased at $254.71 average price per share compared to 977,591 shares repurchased at $204.52 average price per share).

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DEBT

Certain debt measures as of December 31 are outlined below:

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

At December 31, 2024, total debt to Adjusted EBITDA was 2.6 times (2.3 times on a net debt basis reflecting $600.8 million of cash on hand). Our weighted-average debt maturity was 12.6 years, and our total weighted-average effective interest rate was 4.97%.

LINE OF CREDIT AND COMMERCIAL PAPER PROGRAM

Our $1,600.0 million commercial paper program was established in August 2022 and matures in November 2029. Commercial paper borrowings bear interest at rates determined at the time of borrowing and as agreed between us and the commercial paper investors. As of December 31, 2024, we had $550.0 million in long-term commercial paper borrowings.

Our $1,600.0 million unsecured line of credit was amended in November 2024 to extend the maturity date from August 2027 to November 2029. Our line of credit contains covenants customary for an unsecured investment-grade facility. Covenants, borrowings, cost ranges and other details are described in Note 6 “Debt” in Item 8 “Financial Statements and Supplementary Data.” As of December 31, 2024, we were in compliance with the line of credit covenants, the margin for Secured Overnight Financing Rate (SOFR) borrowings was 1.125%, the margin for base rate borrowings was 0.125% and the commitment fee for the unused amount was 0.100%.

As of December 31, 2024, our available borrowing capacity under the line of credit was $1,504.8 million. Utilization of the borrowing capacity was as follows:

▪None was borrowed

▪$95.2 million was used to support standby letters of credit

TERM DEBT

All of our $5,391.1 million (face value) of term debt (which includes the $550.0 million commercial paper) is unsecured. All of the covenants in the debt agreements are customary for investment-grade facilities. As of December 31, 2024, we were in compliance with all term debt covenants.

In March 2023, we issued $550.0 million of 5.80% senior notes due 2026. We redeemed these notes at par in March 2024 using cash on hand and recognized noncash expense of $2.3 million with the acceleration of unamortized deferred debt issuance costs.

In November 2024, we entered into a $2,000.0 million unsecured delayed draw term loan which was partially drawn in November 2024 upon the acquisition of Wake Stone. Subsequently, the delayed draw term loan balance was fully repaid and terminated in November 2024 using proceeds from the issuance of senior notes as described below.

In November 2024, we issued $500.0 million of 4.95% senior notes due 2029, $750.0 million of 5.35% senior notes due 2034 and $750.0 million of 5.70% senior notes due 2054. Total proceeds of $1,975.0 million (net of discounts and transaction costs), together with cash on hand, were used to repay the outstanding balance on the $2,000.0 million delayed draw term loan and to provide liquidity for acquisitions and debt maturing in 2025.

For additional information regarding term debt, see Note 6 “Debt” in Item 8 “Financial Statements and Supplementary Data.”

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DEBT PAYMENTS AND MATURITIES

Scheduled debt payments during 2024 and 2023 were $0.5 million in the first quarter of each year. As of December 31, 2024, maturities for the next four quarters and for the next five years are as follows (excluding any borrowings on the line of credit):

Subsequent to year end, in February 2025 we delivered a notice of redemption to holders of our 4.50% senior notes due 2025, providing for the full redemption of the $400.0 million aggregate principal amount of these notes. We expect to complete this redemption in March 2025 using existing cash on hand.

For additional information regarding debt payments and maturities, see Note 6 “Debt” in Item 8 “Financial Statements and Supplementary Data.”

DEBT RATINGS

Our debt ratings and outlooks as of December 31, 2024 are as follows:

EQUITY

The number of our common stock issuances and purchases are as follows:

As of December 31, 2024, there were 6,817,118 shares remaining under the February 2017 share purchase authorization by our Board of Directors. Depending upon market, business, legal and other conditions, we may purchase shares from time to time through the open market (including plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934) and/or privately negotiated transactions. The authorization has no time limit, does not obligate us to purchase any specific number of shares and may be suspended or discontinued at any time.

The detail of our common stock purchases (all of which were open market purchases) are as follows:

There were no shares held in treasury as of December 31, 2024, 2023 and 2022.

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STANDBY LETTERS OF CREDIT

For a discussion of our standby letters of credit, see Note 6 “Debt” in Item 8 “Financial Statements and Supplementary Data."

CRITICAL ACCOUNTING POLICIES

We follow certain significant accounting policies when preparing our consolidated financial statements. A summary of these policies is included in Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data.”

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

We believe the following critical accounting policies require the most significant judgments and estimates used in the preparation of our consolidated financial statements:

1.Goodwill impairment

2.Impairment of long-lived assets excluding goodwill

3.Business combinations and purchase price allocation

4.Pension and other postretirement benefits

5.Environmental compliance costs

6.Claims and litigation including self-insurance

7.Income taxes

1.GOODWILL IMPAIRMENT

Goodwill represents the excess of the cost of net assets acquired in business combinations over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Goodwill impairment exists when the fair value of a reporting unit is less than its carrying amount. Goodwill is tested for impairment annually, as of November 1, or more frequently whenever events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment evaluation is a critical accounting policy because goodwill is material to our total assets (as of December 31, 2024, goodwill represents 22% of total assets), and the evaluation involves the use of significant estimates, assumptions and judgment.

HOW WE TEST GOODWILL FOR IMPAIRMENT

Goodwill is tested for impairment at the reporting unit level, one level below our operating segments. We have identified 14 reporting units (of which 10 carry goodwill) based primarily on geographic location. We have the option of either assessing qualitative factors to determine whether it is more likely than not that the carrying value of our reporting units exceeds their respective fair value or proceeding directly to a quantitative test. We elected to perform the quantitative impairment test for all years presented.

The quantitative impairment test compares the fair value of a reporting unit to its carrying value, including goodwill. If the fair value exceeds its carrying value, the goodwill of the reporting unit is not considered impaired. However, if the carrying value of a reporting unit exceeds its fair value, we recognize an impairment loss equal to that excess.

HOW WE DETERMINE CARRYING VALUE AND FAIR VALUE

We determine the carrying value of each reporting unit by assigning assets and liabilities, including goodwill, to those units as of the measurement date. We estimate the fair values of the reporting units using both an income approach (which involves discounting estimated future cash flows) and a market approach (which involves the application of revenue and EBITDA multiples of comparable companies). We consider market factors when determining the assumptions and estimates used in our valuation models. Finally, to assess the reasonableness of the reporting unit fair values, we compare the total of the reporting unit fair values to our market capitalization.

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OUR FAIR VALUE ASSUMPTIONS

We base our fair value estimates on market participant assumptions we believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty and actual results may differ. Changes in key assumptions or management judgment with respect to a reporting unit or its prospects may result from a change in market conditions, market trends, interest rates or other factors outside of our control, or underperformance relative to historical or projected operating results. These conditions could result in a significantly different estimate of the fair value of our reporting units which could result in an impairment charge in the future.

The significant assumptions in our discounted cash flow models include our estimate of future profitability, capital requirements and the discount rate. The profitability estimates used in the models were derived from internal operating budgets and forecasts for long-term demand and pricing in our industry. Estimated capital requirements reflect replacement capital estimated on a per unit basis and, if applicable, acquisition capital necessary to support growth estimated in the models. The discount rate was derived using a capital asset pricing model.

RESULTS OF OUR IMPAIRMENT TESTS

Prior to our annual impairment test in 2022, we recorded an interim goodwill impairment loss of $50.9 million related to the sale of a reporting unit comprised of concrete operations in New Jersey, New York and Pennsylvania. The results of our annual impairment test for 2022 indicated that the estimated fair values of two other Concrete segment reporting units exceeded carrying values by less than 15%. One of those Concrete segment reporting units was sold during the fourth quarter of 2023. The results of our annual impairment test for 2023 indicated that the estimated fair value of the other Concrete segment reporting unit exceeded carrying value by less than 5%. During the third quarter of 2024, we determined that a triggering event had occurred with respect to this reporting unit. Based on an interim goodwill impairment test, we determined that the estimated fair value of this reporting unit was less than its carrying value. As a result, we recorded an $86.6 million noncash impairment charge. The results of our annual impairment test for 2024 indicated that the estimated fair values of all reporting units with goodwill substantially exceeded their carrying values.

For additional information about goodwill, see Note 18 “Goodwill and Intangible Assets” and Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data.”

2.IMPAIRMENT OF LONG-LIVED ASSETS EXCLUDING GOODWILL

We evaluate the carrying value of long-lived assets, including intangible assets subject to amortization, when events and circumstances indicate that the carrying value may not be recoverable. The impairment evaluation is a critical accounting policy because long-lived assets are material to our total assets (as of December 31, 2024, net property, plant & equipment represents 49% of total assets while net other intangible assets represents 10% of total assets), and the evaluation involves the use of significant estimates, assumptions and judgment. The carrying value of long-lived assets is considered impaired when the estimated undiscounted cash flows from such assets are less than their carrying value. In that event, we perform a fair value analysis and recognize a loss equal to the amount by which the carrying value exceeds the fair value.

Fair value is estimated primarily by using a discounted cash flow methodology that requires considerable judgment and assumptions. Our estimate of net future cash flows is based on historical experience and assumptions of future trends which may be different from actual results. We periodically review the appropriateness of the estimated useful lives of our long-lived assets.

We test long-lived assets for impairment at a significantly lower level than the level at which we test goodwill for impairment. In markets where we do not produce downstream products (e.g., asphalt mix and ready-mixed concrete), the lowest level of largely independent identifiable cash flows is at the individual aggregates operation or a group of aggregates operations collectively serving a local market or remote markets through our rail and water distribution networks. Conversely, in vertically integrated markets, the cash flows of our downstream and upstream businesses are not largely independently identifiable as the selling price of the upstream products (aggregates) impacts the profitability of the downstream business.

During 2024, we recorded no significant losses on impairment of long-lived assets. During the third quarter of 2023, we recognized a long-lived asset impairment loss of $28.3 million for assets classified as held for sale (subsequently sold during the fourth quarter). In addition, during the third quarter of 2022, we recognized a long-lived asset impairment loss of $16.9 million for assets classified as held for sale (subsequently sold during the fourth quarter of 2022). Refer to Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data” for further information.

We maintain certain long-lived assets that are not currently being used in our operations. These assets totaled $609.1 million at December 31, 2024, representing a 14% increase from December 31, 2023. Of the total $609.1 million, approximately 35% relates to real estate held for future development and expansion of our operations. In addition, approximately 15% is comprised of real estate (principally former mining sites) pending development as commercial or residential real estate, reservoirs or landfills. The remaining 50% is composed of aggregates, asphalt and concrete operating assets idled temporarily. We evaluate the useful lives and the recoverability of these assets whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.

For additional information about long-lived assets and intangible assets, see Note 4 “Property, Plant & Equipment” and Note 18 “Goodwill and Intangible Assets” in Item 8 “Financial Statements and Supplementary Data.”

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3.BUSINESS COMBINATIONS AND PURCHASE PRICE ALLOCATION

Our strategic long-term plans include potential investments in value-added acquisitions of related or similar businesses. When an acquisition is completed, our consolidated statements of comprehensive income include the operating results of the acquired business starting from the date of acquisition, which is the date that control is obtained.

HOW WE DETERMINE AND ALLOCATE THE PURCHASE PRICE

The purchase price is determined based on the fair value of consideration transferred to and liabilities assumed from the seller as of the date of acquisition. We allocate the purchase price to the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed as of the date of acquisition. Goodwill is recorded for the excess of the purchase price over the net fair value of the identifiable assets acquired and liabilities assumed. The purchase price allocation is a critical accounting policy because the estimation of fair values of acquired assets and assumed liabilities is judgmental and requires various assumptions. Additionally, the amounts assigned to depreciable and amortizable assets compared to amounts assigned to goodwill, which is not amortized, can significantly affect our results of operations.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction and therefore represents an exit price. A fair value measurement assumes the highest and best use of the asset by market participants. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as described below:

Level 1: Quoted prices in active markets for identical assets or liabilities

Level 2: Inputs that are derived principally from or corroborated by observable market data

Level 3: Inputs that are unobservable and significant to the overall fair value measurement

Level 1 fair values are used to value investments in publicly-traded entities and assumed obligations for publicly-traded long-term debt.

Level 2 fair values are typically used to value acquired machinery and equipment, land, buildings, and assumed liabilities for asset retirement obligations, environmental remediation and compliance obligations. Additionally, Level 2 fair values are typically used to value assumed contracts at other-than-market rates.

Level 3 fair values are used to value acquired mineral reserves as well as leased mineral interests (referred to in our financial statements as contractual rights in place) and other identifiable intangible assets. We determine the fair values of owned mineral reserves and leased mineral interests using a lost profits approach and/or an excess earnings approach. These valuation techniques require management to estimate future cash flows. The estimate of future cash flows is based on available historical information and future expectations and assumptions determined by management but is inherently uncertain. Key assumptions in estimating future cash flows include sales price, shipment volumes, production costs and capital needs. The present value of the projected net cash flows represents the fair value assigned to mineral reserves and mineral interests. The discount rate is a significant assumption used in the valuation model and is based on the required rate of return that a hypothetical market participant would assume if purchasing the acquired business, with an adjustment for the risk of these assets not generating the projected cash flows.

Other identifiable intangible assets may include, but are not limited to, patents, tradenames and trademarks. The fair values of these assets are typically determined by an excess earnings method, a replacement cost method or a market approach.

MEASUREMENT PERIOD ADJUSTMENTS

We may adjust the amounts recognized in an acquisition during a measurement period after the acquisition date. Any such adjustments are the result of subsequently obtaining additional information that existed at the acquisition date regarding the assets acquired or the liabilities assumed. Measurement period adjustments are generally recorded as increases or decreases to goodwill, if any, recognized in the transaction. The cumulative impact of measurement period adjustments on depreciation, amortization and other income statement items are recognized in the period the adjustment is determined. The measurement period ends once we have obtained all necessary information that existed as of the acquisition date but does not extend beyond one year from the date of acquisition. Any adjustments to assets acquired or liabilities assumed beyond the measurement period, unless as a result of an error, are recorded through earnings.

For additional information about business combinations and purchase price allocations, see Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data.”

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4.PENSION AND OTHER POSTRETIREMENT BENEFITS

Accounting for pension and other postretirement benefits requires that we use assumptions for the valuation of projected benefit obligations (PBO) and the performance of plan assets. The valuation is a critical accounting policy because pension and other postretirement benefit obligations and plan assets are material to our balance sheet. Each year, we review our assumptions for discount rates (used for PBO, service cost and interest cost calculations), expected return on plan assets and the cost of covered healthcare benefits. Due to plan changes made in 2013, annual pay increases do not materially impact plan obligations.

▪Discount Rates — We use a high-quality bond full yield curve approach (specific spot rates for each annual expected cash flow) to establish the discount rates at each measurement date.

▪Expected Return on Plan Assets — Our expected return on plan assets is a long-term view based on our current asset allocation and a judgment informed by consultation with our retirement plans’ consultant and our pension plans’ actuary.

▪Rate of Increase in the Per Capita Cost of Covered Healthcare Benefits — We project the expected increases in the cost of covered healthcare benefits.

Refer to Note 10 “Benefit Plans” in Item 8 “Financial Statements and Supplementary Data” for the discount rates used for PBO, service cost and interest cost calculations; the expected return on plan assets; and the rate of increase in the per capita cost of healthcare benefits.

Changes to the assumptions listed above would have an impact on the PBO and the annual net benefit cost. The following table reflects the favorable and unfavorable outcomes associated with a change in certain assumptions:

As of the December 31, 2024 measurement date, the fair value of our pension plan assets decreased from $647.9 million for the prior year-end to $607.1 million primarily due to an increase in the level of intermediate and long-term bond yields during the year.

The discount rate is the weighted-average of the spot rates for each cash flow on the yield curve for high-quality bonds as of the measurement date. As of the December 31, 2024 measurement date, the PBO of our pension plans decreased from $693.3 million to $640.8 million. This decrease was primarily due to the increase in discount rates for the plans (approximately 0.7 percentage points). The PBO of our postretirement plans decreased from $44.2 million to $42.2 million. This decrease was primarily due to the increase in discount rates for the plans (approximately 0.6 percentage points) and favorable claims experience.

During 2025, we expect to recognize net pension expense of $8.9 million and net postretirement expense of $4.9 million compared to expense of $13.2 million and expense of $5.1 million, respectively, in 2024. The expected decrease in pension expense is primarily due to the increase in the expected return on plan assets, and the expected decrease in postretirement expense is primarily due to the increase in discount rates and favorable claims experience.

We anticipate that contributions totaling approximately $9.6 million to the funded pension plans will be required during 2025, and we do not anticipate making a discretionary contribution. We currently do not anticipate that the funded status of any of our plans will fall below statutory thresholds requiring accelerated funding or constraints on benefit levels or plan administration.

For additional information about pension and other postretirement benefits, see Note 10 “Benefit Plans” in Item 8 “Financial Statements and Supplementary Data.”

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5.ENVIRONMENTAL COMPLIANCE COSTS

Our environmental compliance costs include the cost of ongoing monitoring programs, the cost of remediation efforts and other similar costs. Our accounting policy for environmental compliance costs is a critical accounting policy because it involves the use of significant estimates and assumptions and requires considerable management judgment.

HOW WE ACCOUNT FOR ENVIRONMENTAL COSTS

To account for environmental costs, we:

▪expense or capitalize environmental costs consistent with our capitalization policy

▪expense costs for an existing condition caused by past operations that do not contribute to future revenues

▪accrue costs for environmental assessment and remediation efforts when we determine that a liability is probable and we can reasonably estimate the cost

At the early stages of a remediation effort, environmental remediation liabilities are not easily quantified due to the uncertainties of various factors. The range of an estimated remediation liability is defined and redefined as events in the remediation effort occur, but generally liabilities are recognized no later than completion of the remedial feasibility study. When we can estimate a range of probable loss, we accrue the most likely amount. If no amount in the range of probable loss is considered most likely, the minimum loss in the range is accrued. As of December 31, 2024, the difference between the amount accrued and the maximum loss in the range for all sites for which a range can be reasonably estimated was $4.1 million; this amount does not represent our maximum exposure to loss for all environmental remediation obligations as it excludes those sites for which a range of loss cannot be reasonably estimated at this time. Our environmental remediation obligations are recorded on an undiscounted basis.

Accrual amounts may be based on technical cost estimations or the professional judgment of experienced environmental managers. Our Safety, Health and Environmental Affairs Management Committee routinely reviews cost estimates and key assumptions in response to new information, such as the kinds and quantities of hazardous substances, available technologies and changes to the parties participating in the remediation efforts. However, a number of factors, including adverse agency rulings and unanticipated conditions as remediation efforts progress, may cause actual results to differ materially from accrued costs.

For additional information about environmental compliance costs, see Note 8 “Accrued Environmental Remediation Costs” in Item 8 “Financial Statements and Supplementary Data.”

6.CLAIMS AND LITIGATION INCLUDING SELF-INSURANCE

We are involved with claims and litigation, including items covered under our self-insurance program. We are self-insured for losses related to workers' compensation up to $3.0 million per occurrence and automotive and general/product liability up to $10.0 million per occurrence. We have excess coverage on a per occurrence basis beyond these retention levels.

Under our self-insurance program, we aggregate certain claims and litigation costs that are reasonably predictable based on our historical loss experience and accrue losses, including future legal defense costs, based on actuarial studies. Certain claims and litigation costs, due to their unique nature, are not included in our actuarial studies. For matters not included in our actuarial studies, legal defense costs are accrued when incurred.

Our accounting policy for claims and litigation including self-insurance is a critical accounting policy because it involves the use of significant estimates and assumptions and requires considerable management judgment.

HOW WE ASSESS THE PROBABILITY OF LOSS

We use both internal and outside legal counsel to assess the probability of loss, and we establish an accrual when the claims and litigation represent a probable loss and the cost can be reasonably estimated. Significant judgment is used in determining the timing and amount of the accruals for probable losses, and the actual liability could differ materially from the accrued amounts.

For additional information about claims and litigation including self-insurance, see Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” under the caption "Claims and Litigation Including Self-Insurance."

7.INCOME TAXES

VALUATION OF OUR DEFERRED TAX ASSETS

We file federal, state and foreign income tax returns and account for the current and deferred tax effects of such returns using the asset and liability method. We recognize deferred tax assets and liabilities (which reflect our best assessment of the future taxes we will pay) based on the differences between the book basis and tax basis of assets and liabilities. Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns while deferred tax liabilities represent items that will result in additional tax in future tax returns.

Significant judgments and estimates are required in determining our deferred tax assets and liabilities. These estimates are updated throughout the year to consider income tax return filings, our geographic mix of earnings, legislative changes and other relevant items. We are required to account for the effects of changes in income tax rates on deferred tax balances in the period in which the legislation is enacted.

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Each quarter we analyze the likelihood that our deferred tax assets will be realized. Realization of the deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character in either the carryback or carryforward period. A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not (a likelihood of more than 50%) that some portion, or all, of a deferred tax asset will not be realized. A summary of our deferred tax assets is included in Note 9 “Income Taxes” in Item 8 “Financial Statements and Supplementary Data.”

LIABILITY FOR UNRECOGNIZED TAX BENEFITS

We recognize a tax benefit associated with a tax position when we judge it is more likely than not that the position will be sustained based upon the technical merits of the position. For a tax position that meets the more likely than not recognition threshold, we measure the income tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized. A liability is established for the unrecognized portion of any tax position. Our liability for unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new legislation.

Generally, we are not subject to significant changes in income taxes by any taxing jurisdiction for the years before 2021. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe our liability for unrecognized tax benefits is appropriate.

We consider a tax position to be resolved at the earlier of the issue being “effectively settled,” settlement of an examination, or the expiration of the statute of limitations. Upon resolution of a tax position, any liability for unrecognized tax benefits will be released.

Our liability for unrecognized tax benefits is generally presented as noncurrent. However, if we anticipate paying cash within one year to settle an uncertain tax position, the liability is presented as current. We classify interest and penalties associated with our liability for unrecognized tax benefits as income tax expense.

NEW ACCOUNTING STANDARDS

For a discussion of the accounting standards recently adopted or pending adoption and the effect such accounting changes will have on our results of operations, financial position or liquidity, see Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” under the caption "New Accounting Standards."

FORWARD-LOOKING STATEMENTS

The foregoing discussion and analysis, as well as certain information contained elsewhere in this Annual Report, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor created thereby. See the discussion in "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995" in Part I above.

ITEM 7

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

The objective of our management’s discussion and analysis is to help investors understand our operations and current business environment from the perspective of our management. The following discussion should be read in conjunction with the consolidated financial statements and the accompanying notes contained in this Annual Report. The following generally includes a comparison of our results of operations and liquidity and capital resources for 2023 and 2022. For the discussion of changes from 2021 to 2022 and other financial information related to 2021, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on February 24, 2023.

EXECUTIVE SUMMARY

FINANCIAL SUMMARY FOR 2023 (compared to 2022)

Total revenues increased $466.7 million, or 6%, to $7,781.9 million

Gross profit increased $390.9 million, or 25%, to $1,948.5 million

Selling, administrative and general (SAG) expenses increased 5% to $542.8 million, unchanged as a percentage of total revenues

Operating earnings increased $476.0 million, or 50%, to $1,427.4 million

Earnings attributable to Vulcan from continuing operations were $7.06 per diluted share, compared to $4.45 per diluted share

Adjusted earnings attributable to Vulcan from continuing operations were $7.00 per diluted share, compared to $5.11 per diluted share

Net earnings attributable to Vulcan were $933.2 million, an increase of $357.6 million, or 62%

Adjusted EBITDA was $2,011.3 million, an increase of $385.7 million, or 24%

Aggregates segment sales increased $637.1 million, or 12%, to $5,909.9 million

Aggregates segment freight-adjusted revenues increased $577.1 million, or 15%, to $4,452.3 million

Shipments decreased 1%, or 2.0 million tons, to 234.3 million tons

Freight-adjusted sales price increased 15.9%, or $2.60 per ton to $19.00

Aggregates segment gross profit increased $325.1 million, or 23%, to $1,733.6 million

Unit profitability (as measured by gross profit per ton) increased 24% to $7.40 per ton

Asphalt, Concrete and Calcium segment sales decreased $192.9 million, or 7%, to $2,399.0 million, collectively

Asphalt, Concrete and Calcium segment gross profit increased $65.7 million, or 44%, to $214.9 million, collectively

Returned capital to shareholders via dividends of $228.4 million at $1.72 per share versus $212.6 million at $1.60 per share

Returned capital to shareholders via share repurchases of $200.0 million at $204.52 average price per share compared to none in the prior year

2023 was an exceptional year for our company. We generated $933.2 million in net earnings attributable to Vulcan (a 62% increase over the prior year), produced $2,011.3 million in Adjusted EBITDA (a 24% increase over the prior year), expanded EBITDA margin by 360 basis points and generated $1,536.8 million of operating cash flow that can be reinvested in our business. Our industry leading aggregates gross profit per ton was $7.40 for the full year (a 24% improvement), and cash gross profit per ton was $9.46 per ton for the full year (a 21% improvement), with both metrics increasing each quarter on a year-over-year basis. Six consecutive years of unit profitability improvement during a continuously shifting macro backdrop demonstrates the durability of our uniquely positioned aggregates-led business. We carry momentum into 2024, and our focus is the same – compounding unit margins through all parts of the cycle and creating value for our shareholders through improving returns on capital.

At year-end 2023, total debt to Adjusted EBITDA was 1.9x, or 1.5x on a net debt basis, reflecting $949.2 million of cash on hand. Our weighted-average debt maturity was 10 years, and the effective weighted average interest rate was 4.9%.

Return on invested capital improved 280 basis points to 16.3% through a combination of solid operating earnings and disciplined capital management.

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Adjusted EBITDA, Aggregates segment freight-adjusted revenues, cash gross profit per ton, debt to Adjusted EBITDA and Return on invested capital are non-GAAP measures. See the definitions and reconciliations within this Item 7 under the caption “Reconciliation of Non-GAAP Financial Measures.”

CAPITAL ALLOCATION

Our balanced approach to capital allocation remains unchanged. Through economic cycles we intend to balance reinvestment in our business, growth through acquisitions and internal growth projects, and return of capital to shareholders while maintaining financial strength and flexibility evidenced by our strong balance sheet and investment-grade credit ratings. Our capital allocation priorities are as follows:

1.Operating Capital (maintain and grow the value of our franchise)

2.Growth Capital (including acquisitions and greenfields)

3.Dividend Growth (with a keen focus on sustainability)

4.Return Excess Cash to Shareholders (primarily via share repurchases)

Our first priority is to maintain and protect our valuable franchise by keeping our operations in good working order to ensure the production of high quality materials and timely delivery of goods and services to our customers. This capital requirement expands and contracts as production and shipment levels change. During 2023, we invested $424.5 million in capital expenditures to replace or improve existing property, plant & equipment.

Our second priority is to grow our franchise through business acquisitions and internal growth projects. For business acquisitions, we tend to look for bolt-on acquisitions which are easier to integrate and will pursue large business combinations that are the right fit and the right price. We use strategic and returns-based criteria to price potential acquisitions and are disciplined in our approach. We evaluate many potential acquisitions and only make offers on a few. We did not complete any business acquisitions in 2023. However, during the last 10 years, we have completed almost 40 acquisitions, including more than 70 aggregates quarries and sales yards in our top 10 revenue states. Internal growth projects have generally been among our highest returning projects. During 2023, we invested $200.8 million in internal growth projects to secure new aggregates reserves, develop new production and/or distribution sites, enhance our distribution capabilities and support the targeted growth of our asphalt and concrete operations. We deployed an additional $203.6 million of capital for opportunistic land purchases of strategic reserves in California, North Carolina and Texas.

Our third priority is growing the dividend with a keen focus on sustainability through the economic cycle. During 2023, we paid a dividend per share of $1.72 and paid total dividends of $228.4 million.

And finally, if there is excess cash after fulfilling the prior capital allocation priorities, we will consider returning cash to shareholders via share repurchases. During 2023, we returned $200.0 million to our shareholders through share repurchases.

For a detailed discussion of our acquisitions and divestitures, see Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data.”

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MARKET DEVELOPMENTS AND OUTLOOK

We are well positioned to deliver another year of earnings growth and strong cash generation in 2024. The pricing environment remains positive, and we expect pricing momentum and operational execution will lead to attractive expansion in aggregates unit profitability, regardless of the macro demand environment.

Our expectations for 2024 include:

Continued improvement in Aggregates segment cash gross profit per ton ($9.46 in 2023)

Total shipments flat to down 4% (234.3 million tons in 2023)

Freight-adjusted price improvement of 10% to 12% ($19.00 in 2023)

Mid-single digit increase in freight-adjusted unit cash cost (freight-adjusted price less segment cash gross profit per ton; $9.54 in 2023)

Total Asphalt, Concrete and Calcium segment cash gross profit of approximately $275 million ($323 million in 2023, which included approximately 4 million cubic yards from concrete operations divested in late 2023)

Relative contribution of approximately 70% from the Asphalt segment and 30% from the Concrete segment

Selling, Administrative and General expenses of $550 million to $560 million ($543 million in 2023)

Interest expense of approximately $155 million

Depreciation, depletion, accretion and amortization expense of approximately $610 million

An effective tax rate of 22% to 23%

Net earnings attributable to Vulcan of $1,070 million to $1,190 million

Adjusted EBITDA between $2,150 million and $2,300 million

Additionally, we expect to spend $625 million to $675 million on capital expenditures, including growth projects. We will continue to review our plans and will adjust as needed, while being thoughtful about preserving liquidity.

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POSITIONED FOR GROWTH AND VALUE CREATION

DURABLE BUSINESS MODEL TO EXTEND THE CYCLE AND SUSTAIN GROWTH

27% improvement in Aggregates gross profit per ton since 2021

27% improvement in Aggregates cash gross profit per ton since 2021

Industry-leading commercial, logistics, operational and sourcing capabilities

End market fundamentals support continued growth outlook

Poised to benefit from generational investment in infrastructure that could extend and sustain cyclical growth

We have continued to deliver strong financial performance over time and through business cycles. Through our aggregates-led strategy and focus on our strategic disciplines — the Vulcan Way of Selling (Commercial Excellence & Logistics Innovation) and the Vulcan Way of Operating (Operational Excellence & Strategic Sourcing), as outlined in Item 1 “Business” under the “Business Strategy” heading — we have created one of the most profitable public companies in our industry as measured by aggregates gross profit per ton.

In 2019, we set a target of $9 of cash gross profit per ton on volumes of 230 to 240 million tons, which we exceeded in 2023. Our durable growth strategy gives us confidence that we will deliver more value to our shareholders on every ton of aggregates we sell. Our new target: achieve $11 to $12 cash gross profit per ton when we reach 260 to 270 million tons.

More than an aggregates supplier, we are a business dedicated to customer service and finding creative solutions to meet our customers’ needs. Being a valued partner and trusted supplier means that we are providing the right product, with the right specifications, that is the right quality, delivered the right way — on time and safely. Our One-Vulcan, Locally Led approach, in which our employees work together to leverage the size and strengths of Vulcan as a whole, while running their operations with a strong entrepreneurial spirit and sense of ownership, allows us to deliver market-leading services to our customers.

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Transportation costs are passed along to our customers, and because aggregates have a very high weight-to-price ratio, those costs can add up quickly when transporting aggregates long distances. Having the most extensive distribution network of any aggregates producer sets us apart. Combining our trucking, rail, barge and ocean vessel shipping logistics capabilities allows us to provide better customer solutions and create a seamless customer experience at a competitive price. As an approximation, a truck has a capacity of 20-25 tons of aggregates; a railcar has a capacity of 4-5 truckloads; a barge has a capacity of 65 truckloads; and our ocean vessels have the capacity of 2,500 truckloads.

Production and sales are currently halted at our Calica operations in Mexico. For additional information, see Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data.”

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INDUSTRY LEADER WITH CLEAR COMPETITIVE ADVANTAGES

Largest U.S. aggregates producer with strategic geographic diversity

#1 or #2 aggregates position in markets accounting for approximately 90% of revenues

Leading unit profitability margins driven by operational expertise and pricing performance

76% of the U.S. population growth over the next decade is projected to occur in Vulcan-served states

Over time, we have strategically and systematically built one of the most valuable aggregates franchises in the U.S. with a footprint that is impossible to replicate. Zoning and permitting regulations have made it increasingly difficult to expand existing quarries or to develop new quarries. Such regulations, while curtailing expansion, also increase the value of our reserves that were zoned and permitted decades ago.

Demand for aggregates correlates positively with changes in population, household formations and employment. We have a coast-to-coast footprint that serves 35 of the top 50 highest-growth metropolitan statistical areas (MSAs). As state and federal spending increases, Vulcan is poised to benefit greatly from growing private and public demand for aggregates, thereby delivering significant long-term value for our shareholders.

Source: Woods & Poole CEDDS 2023

Based on people added from 2023 to 2033

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STRONG CASH FLOW GENERATION AND INVESTMENT-GRADE BALANCE SHEET

Financial capacity to sustain capital reinvestment in current asset base and to fund growth

Maintain an investment-grade credit position

Continue to leverage current capital base to grow earnings and maximize cash generation

Prudently pursue attractive acquisitions and greenfields

Return value to shareholders with dividends and stock repurchases

Our financial position is strong as evidenced by our long-term investment-grade credit ratings (Fitch BBB/Moody’s Baa2/Standard & Poor’s BBB+). At December 31, 2023, our available liquidity was $2,447.9 million, including $931.1 million of unrestricted cash on hand, significantly higher than our liquidity needs. Our leverage ratio, as measured by total debt to Adjusted EBITDA, has improved from 3.3x at December 31, 2014 to 1.9x at December 31, 2023 (our net debt to Adjusted EBITDA at December 31, 2023 was 1.5x), slightly below our stated leverage target of 2.0 to 2.5x.

SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE

A strategy for sustainable, long-term value creation must include doing right by our employees, our neighbors and the environment in which we operate. Over our more than six decades as a public company, we have built a strong, resilient and vital business on this foundation of doing things the right way.

We are a leader in our industry in safety, health and environmental performance, with a safety record substantially better than the industry average. We apply the shared experiences, expertise and resources at each of our locally led sites with an emphasis on taking care of one another. The result is a record of safety excellence that consistently outperforms the industry.

Source: Bureau of Labor Statistics records and internal Vulcan data.

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We focus on our environmental stewardship programs with the same commitment that we bring to our health and safety initiatives resulting in 97% citation-free inspections out of all 2023 federal and state environmental inspections. As an industry leader, our aim is to meet — and strive to exceed — all federal, state and local environmental regulations.

However, sustainability means looking beyond what is required of a company by governments and regulators. Sustainability is reflected in our business strategy. We lead community relations programs that serve our neighbors while ensuring that we grow and thrive in the communities where we operate. In all parts of our company, from local operations to our corporate and regional offices to our international business and ocean-going shipping, we are focused on ensuring that our operations are efficient in ways that are economically and environmentally sustainable. It’s the right thing to do for our business and our stakeholders.

We continue to make progress on reducing our carbon footprint, increasing our energy efficiency, and measuring and reducing our water use. We also manage our land with biodiversity in mind. During 2023, we operated 39 certified wildlife habitat sites, the fifth largest number of sites in the nation, as certified by the Wildlife Habitat Council.

We recognize that the aggregates mining in which we engage is an interim use of the approximately 300,000 acres of land in our portfolio. Our land and water assets will be converted to other valuable uses at the end of mining. Effective management throughout the life cycle of our land — from pre-mining utilization as agriculture and timber development, to post-mining development as water reservoirs or residential and commercial development — not only generates significant additional value for our shareholders but greatly benefits the communities in which we operate.

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RESULTS OF OPERATIONS

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

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

CONSOLIDATED OPERATING RESULTS HIGHLIGHTS

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Net earnings attributable to Vulcan for 2023 were $933.2 million ($6.98 per diluted share) compared to $575.6 million ($4.31 per diluted share) in 2022. Each year's results were impacted by discrete items, as follows:

Net earnings attributable to Vulcan for 2023 include:

pretax net gain of $67.1 million related to the sale of excess real estate and businesses

pretax charges of $28.3 million for long-lived asset impairments related to the sale of businesses

pretax charges of $7.9 million for divested operations

pretax charges of $2.1 million associated with non-routine acquisitions

pretax loss on discontinued operations of $14.7 million

$12.9 million of tax charges related to a valuation allowance against Calica deferred tax assets, including net operating loss (NOL) carryforwards

Net earnings attributable to Vulcan for 2022 include:

pretax net gain of $6.1 million related to the sale of excess real estate and businesses

pretax charges of $67.8 million for goodwill and long-lived asset impairments related to the sale of businesses

pretax charges of $3.8 million for divested operations

pretax charges of $17.1 million associated with non-routine acquisitions

pretax loss on discontinued operations of $25.2 million

$14.5 million of tax charges related to a Calica NOL carryforward valuation allowance

Adjusted for these discrete items, earnings attributable to Vulcan from continuing operations (Adjusted Diluted EPS) was $7.00 per diluted share for 2023 compared to $5.11 per diluted share for 2022.

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

Year-over-year changes in earnings from continuing operations before income taxes are summarized below:

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OPERATING RESULTS BY SEGMENT

We present our results of operations by segment at the gross profit level. We have four operating (and reportable) segments organized around our principal product lines: (1) Aggregates, (2) Asphalt, (3) Concrete and (4) Calcium. Management reviews earnings for our reporting segments principally at the gross profit level.

1. AGGREGATES

Our year-over-year aggregates shipments:

decreased 1% in 2023

increased 6% in 2022

increased 7% in 2021

Aggregates shipments decreased 1%, reflecting weakness in residential demand partially offset by healthy industrial project activity in certain Southeastern markets.

Our year-over-year freight-adjusted selling price1 for aggregates:

increased 15.9% in 2023

increased 10.3% in 2022

increased 3.0% in 2021

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The pricing environment remained positive in 2023 with all markets realizing year-over-year improvement. Freight-adjusted pricing increased 15.9% versus the prior year to $19.00.

Aggregates segment gross profit increased 23% to $1,733.6 million (or $7.40 per ton), and gross profit margin expanded 260 basis points. Cash gross profit per ton increased 21% from the prior year to $9.46, resulting from continued pricing momentum, solid execution and moderating inflationary pressures. Improvements in unit profitability were widespread across our footprint and marked the seventh consecutive quarter of year-over-year growth. We expect pricing momentum and operational execution will lead to attractive expansion in aggregates unit profitability in 2024, regardless of the macro demand environment.

Freight-adjusted unit cash cost of sales increased 11%, or $0.97 per ton. Unit cost benefited from lower diesel prices and moderating inflationary pressures on certain parts and supplies. Shipments in 2023 and 2022 were negatively impacted by the absence of tons available from our Mexico operations which were unexpectedly and arbitrarily shut down by the Mexican government in May of 2022 (for additional information, see Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data”).

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2. ASPHALT

Our year-over-year asphalt mix shipments:

increased 10% in 2023

increased 7% in 2022

decreased 4% in 2021

Asphalt segment gross profit was $149.6 million (an increase of $92.3 million), and gross profit margin expanded 730 basis points to 13%. Cash gross profit was $185.2 million, a 100% increase from the prior year. Shipments increased 10%, and pricing increased 6.3%, or $4.47 per ton.

Our year-over-year average sales price1 for asphalt mix:

increased 6.3% in 2023

increased 21.2% in 2022

increased 1.5% in 2021

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3. CONCRETE

Our year-over-year ready-mixed concrete shipments:

decreased 29% in 2023

increased 88% in 2022 1

increased 90% in 2021 1

Concrete segment gross profit was $62.1 million in 2023, a decrease of $27.2 million from the prior year which included earnings from our divested operations in New Jersey, New York, Pennsylvania and Texas. Cash gross profit decreased $37.5 million to $134.9 million, while unit cash gross profit improved 11% despite lower volumes. Average selling prices increased 10.7% to $166.95.

Our year-over-year average sales price1 for ready-mixed concrete:

increased 10.7% in 2023

increased 11.1% in 2022

increased 5.3% in 2021

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4. CALCIUM

Calcium segment gross profit increased $0.6 million from 2022 to $3.2 million.

In total, the 2023 gross profit contribution from our three non-aggregates segments (Asphalt, Concrete and Calcium) was $214.9 million, a $65.7 million or 44% increase from 2022. In addition, the 2023 cash gross profit contribution from these three segments was $323.5 million, a $55.9 million or 21% increase from 2022.

SELLING, ADMINISTRATIVE AND GENERAL (SAG) EXPENSES

in millions

As a percentage of total revenues, SAG expense was:

7.0% in 2023 — unchanged from the prior year

7.0% in 2022 — decreased 50 basis points

7.5% in 2021 — increased 10 basis points

Our comparative total company employment levels at year-end:

decreased 8% in 2023

increased 6% in 2022

increased 26% in 2021

SAG expenses were $542.8 million or 7.0% as a percentage of total revenues, unchanged from 2022.

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GAIN ON SALE OF PROPERTY, PLANT & EQUIPMENT AND BUSINESSES

in millions

The 2023 gain on sale of property, plant & equipment and businesses of $76.4 million includes a pretax gain of $65.7 million from the sale of excess real estate in Virginia and a pretax gain of $15.2 million from the sale of real estate associated with a former recycled concrete facility in Illinois, partially offset by a pretax loss of $13.8 million related to the sale of our Texas concrete operations. The 2022 gain on sale of property, plant & equipment and businesses of $10.7 million includes a pretax gain of $23.5 million from the sale of excess real estate in Southern California partially offset by a pretax loss of $17.4 million related to the sale of our concrete operations in New Jersey, New York and Pennsylvania. We remain focused on our efforts to maximize the value of our portfolio of quarry operations as they move through their life-cycle of land management. For additional details, see Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data.”

LOSS ON IMPAIRMENTS

Loss on impairments was $28.3 million in 2023 which represents a long-lived asset impairment charge related to the Texas concrete operations that were sold during the fourth quarter. Loss on impairments was $67.9 million in 2022 which includes a $50.9 million goodwill impairment charge and a $16.9 million long-lived asset impairment charge related to the divestiture of our New Jersey, New York and Pennsylvania concrete operations.

See Note 18 “Goodwill and Intangible Assets” and Note 19 “Acquisitions and Divestitures” in Item 8 “Financial Statements and Supplementary Data” for additional discussion.

OTHER OPERATING EXPENSE, NET

Other operating income (expense) is composed primarily of idle facilities expense, environmental remediation costs, gain (loss) on settlement of AROs, finance charges collected and rental income (expense). Total other operating expense and significant discrete items included in the total were:

$26.4 million in 2023 — includes discrete items as follows:

$7.9 million of charges associated with divested operations

$1.6 million of charges associated with non-routine acquisitions (excludes items included in cost of revenues)

$34.0 million in 2022 — includes discrete items as follows:

$3.8 million of charges associated with divested operations

$9.3 million of charges associated with non-routine acquisitions (excludes items included in cost of revenues)

OTHER NONOPERATING INCOME (EXPENSE), NET

Other nonoperating income (expense), net was $2.7 million of expense in 2023 and $5.1 million of income in 2022, and was composed primarily of pension and postretirement benefit costs (excluding service costs), foreign currency transaction gains/losses, Rabbi Trust gains/losses and net earnings/losses of nonconsolidated equity method investments.

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INTEREST EXPENSE

in millions

Interest expense was $196.1 million in 2023 compared to $169.2 million in 2022. This increase was primarily due to the increase in market rates underlying our floating rate debt. See Note 6 “Debt” in Item 8 “Financial Statements and Supplementary Data” for additional discussion.

INCOME TAXES

Our income tax expense from continuing operations for the years ended December 31 is shown below:

The $106.4 million increase in our 2023 income tax expense compared to 2022 was primarily related to an increase in earnings from continuing operations. The $7.1 million decrease in our 2022 income tax expense compared to 2021 was primarily related to a decrease in earnings from continuing operations partially offset by the tax impact from the impairment of non-tax deductible goodwill.

In May 2022, Mexican government officials unexpectedly and arbitrarily shut down our Calica operations in Mexico. As a result, in 2022, Calica generated a NOL deferred tax asset of $14.5 million. Based on the weight of all available positive and negative evidence, we concluded at the time that it was more likely than not that Calica would be unable to realize the NOL deferred tax asset during the ten-year carryforward period resulting in a valuation allowance of $14.5 million. In 2023, Calica continued to generate losses resulting in a $12.9 million increase in deferred tax assets (including NOLs) against which a valuation allowance was recorded. The Calica NOL carryforward would expire between 2032 and 2033 if not utilized. Should the Mexican government lift the shutdown and/or we are successful in our NAFTA claim, we will reevaluate the need for a valuation allowance against the deferred tax assets.

For additional information, see Note 9 “Income Taxes” in Item 8 “Financial Statements and Supplementary Data.”

DISCONTINUED OPERATIONS

Pretax loss from discontinued operations were:

$(14.7) million in 2023

$(25.2) million in 2022

$(4.5) million in 2021

Pretax loss from discontinued operations for 2023 and 2022 resulted primarily from general and product liability costs, including legal defense costs and environmental remediation costs associated with our former Chemicals business. In addition, 2022 includes a $15.3 million charge for a litigation matter (see Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data”). For additional information about discontinued operations, see Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data.”

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KNOWN TRENDS OR UNCERTAINTIES

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

Further, the Mexican government has taken actions adverse to our property and operations in Mexico. On May 5, 2022, Mexican government officials presented employees at our Calica operations in Quintana Roo, Mexico with arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations. On May 13, 2022, the Mexican government suspended the three-year customs permit granted in March 2022 to Calica and began a proceeding that could result in the revocation of that permit. We strongly believe that the actions taken by Mexico are arbitrary and illegal, and we intend to vigorously pursue all lawful avenues available to us in order to protect our rights, under both Mexican and international law. For additional information regarding our Calica operations, see the NAFTA Arbitration section in Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data.”

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

AGGREGATES SEGMENT FREIGHT-ADJUSTED REVENUES

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

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CASH GROSS PROFIT

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

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EBITDA AND ADJUSTED EBITDA

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

ADJUSTED DILUTED EPS attributable to vulcan FROM CONTINUING OPERATIONS

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

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NET DEBT TO ADJUSTED EBITDA

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

return on invested capital

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

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2024 PROJECTED EBITDA

Projected EBITDA is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:

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

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LIQUIDITY AND FINANCIAL RESOURCES

Our primary sources of liquidity are cash provided by our operating activities, a substantial, committed bank line of credit and our commercial paper program. Additional sources of capital include access to the capital markets, the sale of surplus real estate and dispositions of nonstrategic operating assets. We believe these financial resources are sufficient to fund our business requirements for 2024, including:

contractual obligations

capital expenditures

debt service obligations

dividend payments

potential acquisitions

potential share repurchases

During 2024, we expect to spend between $625 million and $675 million on capital expenditures, including growth projects. Excluding future cash requirements for conditional capital expenditures, our future contractual payments as of December 31, 2023 are summarized in the table below:

Subsequent to year end, in February 2024 we elected to redeem all of the $550.0 million aggregate principal amount of our outstanding 5.80% senior notes due 2026. We expect to complete this redemption in March 2024 using existing cash on hand.

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As of December 31, 2023, we were contingently liable for $828.2 million within 427 surety bonds underwritten by various surety companies. These bonds guarantee our performance and are required primarily by states and municipalities and their related agencies. The top five in amount totaled $199.4 million (24%) and were for certain construction contracts and reclamation obligations. We have agreed to indemnify the underwriting companies against any exposure under the surety bonds. No material claims have been made against our surety bonds.

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

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

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

maintain substantial bank line of credit borrowing capacity

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

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

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

We will continue to assess our liquidity sources and needs in order to take appropriate actions to meet our objectives.

CASH

Included in our December 31, 2023 cash and cash equivalents and restricted cash balances of $949.2 million is $18.1 million of restricted cash (see Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” under the caption Restricted Cash).

Net cash provided by operating activities is derived primarily from net earnings before noncash deductions for depreciation, depletion, accretion and amortization.