벌컨 머티리얼즈(VMC) 2026년 3분기 실적 콘퍼런스 콜: EBITDA, 에너지 비용 및 2027년 가격 정책

핵심 요약

• 벌컨 메티리얼스는 2026년 3분기 조정 EBITDA가 7억 700만 달러를 기록했다고 발표했다. 조정 EBITDA 마진율은 전년 동기 대비 20bp 상승한 32.3%를 기록했다.
• 골재 출하량은 전년 동기 대비 3% 감소했으나, 믹스 조정 평균 판매 가격은 5% 상승했다. 디젤을 제외한 운반비 조정 단위당 현금 매출원가는 3% 증가했다.
• 경영진은 디젤 및 액상 아스팔트로 인한 약 1억 2,000만 달러의 에너지 관련 역풍에도 불구하고, 2026년 조정 EBITDA가 약 24억 달러에 달할 것으로 예상하고 있다.
• 회사 측은 연간 조정 EBITDA 성장률을 약 3%, 동일 사업장 기준으로는 약 5%로 예상하고 있다. 연간 골재 단위당 마진은 약 4% 확대될 것으로 전망된다.
• 2027년의 경우 경영진은 2026년과 전반적으로 유사한 수요 환경 속에서 믹스 효과를 포함한 골재 가격이 한 자릿수 중후반대 비율로 상승할 것으로 예상하고 있다.
• 벌컨은 9월 30일 기준 조정 EBITDA 대비 순부채 비율이 1.9배를 기록하며 인수합병을 위한 재무제표 여력을 유지했다. 경영진은 연말 전에 몇 건의 추가적인 보트온 인수를 완료할 것으로 기대하고 있다.

주요 재무 데이터

사업 및 운영 실적

벌컨의 골재 중심 사업 모델은 가격 책정과 비용 통제를 통해 둔화된 출하 수요를 지속적으로 상쇄했다. 디젤 비용의 급격한 상승에도 불구하고 톤당 골재 현금 매출총이익은 완만하게 증가했다. 경영진은 가격 결정 도구, 프로세스 분석, 비가동 시간 단축 노력 등을 포함한 '벌컨 판매 방식(Vulcan Way of Selling)' 및 '벌컨 운영 방식(Vulcan Way of Operating)' 프로그램을 강조했다.

공공 부문 활동은 견조한 상태를 유지했다. 회사 측은 인프라 투자 및 일자리 법(IIJA) 자금의 약 35%가 아직 집행되지 않았다고 밝혔다. 벌컨이 진출한 시장의 직전 12개월 수주액은 2% 증가해 미국 전국 평균(1%)을 상회했다.

대형 프로젝트들이 민간 비주거용 수요를 지속적으로 뒷받침했다. 벌컨은 데이터 센터, 태양광 및 풍력 발전, LNG 시설, 발전소, 정유소, 제조업 프로젝트에 제품을 공급하고 있으며, 여기에는 텍사스 남부의 스페이스X와 토요타 프로젝트, 사우스캐롤라이나의 스카우트 모터스 프로젝트가 포함된다.

주거용 건설은 주택 가격 부담과 금리로 인해 지속적으로 제약을 받았다. 경영진은 벌컨의 주요 시장이 우호적인 인구통계학적 여건을 유지하고 있으나, 주택 경기 회복 시점은 여전히 불확실하다고 언급했다.

벌컨은 해당 분기 동안 두 건의 골재 관련 보트온 인수를 완료했고, 10월에 또 한 건을 완료했다. 인수한 자산은 텍사스, 테네시, 콜로라도 동남부, 오하이오 남부에서의 시장 점유율을 확대한다. 경영진은 인수 파이프라인이 견조하다고 설명하며, 연간 약 50만~100만 톤을 생산하는 자산을 대상으로 한 비대형 골재 인수 거래에 계속 집중하고 있다.

경영진 가이던스

경영진은 2026년 조정 EBITDA가 약 24억 달러에 달할 것으로 예상하고 있다. 이 전망치에는 첫 9개월 동안 발생한 약 8,000만 달러와 4분기에 예상되는 약 4,000만 달러를 포함해 연간 약 1억 2,000만 달러의 에너지 관련 역풍이 반영되어 있다.

현재의 출하 모멘텀이 지속된다는 가정 하에 연간 골재 물량은 매우 완만하게 증가할 것으로 예상된다. 믹스 조정 가격은 4분기에도 5% 선을 유지할 것으로 전망된다. 디젤을 포함한 연간 단위당 원가 상승률은 한 자릿수 중간대를 기록할 것으로 예상된다.

경영진은 전년도 기저효과 등에 힘입어 4분기에 전년 동기 대비 10%대 초반의 성장이 이루어짐에 따라, 연간 골재 단위당 마진이 약 4% 확대될 것으로 예상하고 있다. 판매관리비는 회사의 당초 예상 범위보다 약 3,000만 달러 낮을 것으로 보이며, 설비투자는 이전에 제시한 7억 5,000만~8억 달러 범위의 하단 부근에서 마무리될 것으로 예상된다.

2027년의 경우, 경영진은 지역 및 최종 시장에 따른 차이는 있겠지만 수요가 2026년과 전반적으로 유사한 수준을 유지할 것으로 예상한다. 믹스 효과를 포함한 골재 가격은 한 자릿수 중후반대의 비율로 인상될 것으로 전망된다. 이러한 전망은 2026년 중에 시행된 가격 조정과 1월 1일 자로 발표된 가격 인상을 반영한 것이다.

회사 측은 2027년 가격 정책에 힘입어 톤당 현금 매출총이익이 다시 성장세로 돌아설 것으로 기대하고 있다. 2026년 인수 효과를 포함한 상세한 출하량, 원가 및 수익성 가이던스는 2월에 발표될 예정이다.

리스크 및 주시 영역

• 에너지 인플레이션은 여전히 단기적으로 가장 큰 원가 압박 요인이다. 경영진은 디젤 가격이 높은 수준을 유지할 것에 대비하고 있으며, 하락 시점은 불확실하다는 점을 인정하고 있다.
• 골재 수요는 계속 둔화된 상태이며, 경영진은 현재 환경에서 고객들이 적극적으로 설비를 증설하지 않을 것으로 보고 있다.
• 주거용 건설은 주택 가격 부담과 금리로 인해 지속적인 압박을 받고 있어 회복 시점이 불명확한 상황이다.
• 경영진은 남은 IIJA 자금과 주 정부 프로그램이 관련 활동을 뒷받침할 것으로 기대하지만, 공공 수요는 부분적으로 연방 정부의 지속적인 승인과 신규 인프라 법안의 통과 시점에 의존하고 있다.
• 대형 민간 프로젝트의 진행 시점은 출하량 성장, 특히 데이터 센터, 제조업 및 에너지 인프라 분야의 성장에 실질적인 영향을 미칠 수 있다.

애널리스트 Q&A 주요 내용

가격 책정이 핵심 주제였다. 경영진은 상승한 디젤 비용을 상쇄하기 위한 가장 빠르고 효과적인 수단이 여전히 가격 인상이라고 밝혔다. 전체 사업의 약 절반은 일일 입찰을 통해 가격이 결정되며, 나머지는 고정 사업장과 연계되어 있다. 1월 가격 인상에 대한 고객 통지는 평소보다 일찍 이루어졌으며, 경영진은 현재의 인플레이션 환경 속에서 가격 인상이 더 신속하게 반영될 것으로 기대하고 있다.

2027년 마진과 관련하여, 경영진은 디젤 가격이 비싼 상태를 유지하더라도 한 자릿수 중후반대의 가격 상승 전망이 톤당 현금 매출총이익의 성장을 뒷받침할 것이라고 설명했다. 운영 효율성 제고 노력이 추가적인 이점을 제공할 것으로 기대되나, 상세한 단위당 원가 전망은 2월에 발표될 예정이다.

경영진은 남은 IIJA 자금, 주 정부 지출, 유료도로 관리청 및 민관 협력 사업(PPP)에 힘입어 2027년 공공 건설 파이프라인이 안정적인 상태를 유지할 것으로 평가했다. 민간 비주거용 건설 활동은 데이터 센터, 제조업, 에너지 프로젝트의 추진 시점에 따라 추가 상승 여력을 제공할 수 있다.

자본 배분과 관련해 회사는 현금 창출 능력이 향상됨에 따라 배당 및 자사주 매입을 지속하는 동시에 보트온 인수와 자체 성장에 자금을 투입할 수 있을 것이라고 밝혔다. 벌컨은 구조적 변화를 일으키는 대형 인수보다는 골재 중심의 인수 거래에 계속 집중할 계획이다.

실적 발표 컨퍼런스 콜 전문

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전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning, everyone. Welcome to the Vulcan Materials Company Third Quarter 2026 Earnings Call. My name is Bo, and I will be your conference call coordinator today. Just a reminder, today's call is being recorded for replay at the company's website. [Operator Instructions] I would now like to hand the call over to Mr. Mark Warren, Vice President, Investor Relations. Please go ahead, sir.

Mark Warren

Thank you, operator. Joining me today are Ronnie Pruitt, Chief Executive Officer; and Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer.

Before we begin, please note that a press release and a supplemental presentation related to this call are available at vulcanmaterials.com. Today's discussion includes forward-looking statements, which are subject to risks and uncertainties. Reconciliations of any non-GAAP financial measures and other disclosures are included in our earnings release, supplemental presentation and other SEC filings. During Q&A, we ask that you limit your participation to one question. This will help us to address as many questions as possible.

Now I'll turn the call over to Ronnie.

Ronnie Pruitt

Thanks, Mark, and thank you all for joining our Vulcan Materials third quarter earnings call this morning. During the quarter, we continued to successfully execute on our two-pronged growth strategy by improving the profitability of our organic business and expanding our aggregates franchise through disciplined bolt-on acquisitions.

Absent energy cost headwinds of approximately $40 million and adjusting for the prior year divestitures of some more cyclical downstream businesses, adjusted EBITDA for our underlying business grew 5% in the quarter, demonstrating the resilience of our aggregates-led strategy. Our operating and sales teams are aligned with our Vulcan Way of Operating and Vulcan Way of Selling disciplines. I am pleased with the execution we are seeing across our footprint, and I'm confident that there is significant value to create by staying focused on the fundamentals. Aggregates cash gross profit per ton continued to compound higher even with the inflationary pressures from higher energy costs.

During the quarter, we closed on 2 attractive bolt-on aggregate acquisitions and have since completed another acquisition earlier this month. This year, we have added strategic aggregate assets in 2 key Vulcan states, Texas and Tennessee, in addition to expanding our reach into the Southeastern Colorado and Southern Ohio markets. These acquisitions add long-term quality aggregate reserves to our portfolio, carry minimal risk, are easy to integrate and are synergistic with our existing assets.

The pipeline for future growth opportunities is healthy, and I expect we will complete several more transactions before the end of the year. Thoughtful portfolio actions and solid execution delivered adjusted EBITDA of $707 million and 20 basis points of year-over-year margin expansion in the quarter. On a seasonally adjusted basis, aggregates shipments momentum in the third quarter was similar to the second quarter and consistent with the current demand environment. On a year-over-year basis, shipments decreased 3%. The prior year benefited from favorable weather and outsized seasonally adjusted shipments in the third quarter following a slow start to the construction season due to severe winter weather and rainfall throughout the first half of last year.

Aggregates cash gross profit per ton expanded modestly over the prior year with higher freight-adjusted selling prices more than offsetting sharply higher diesel input costs. Our teams are executing well on the fundamentals they control. On a mix-adjusted basis, average selling prices in the quarter improved 5% compared to the prior year, with improvement widespread across geographies. Excluding diesel, aggregates freight adjusted unit cash cost of sales increased 3% compared to the prior year. Now let's shift to the demand backdrop against which our teams are delivering these solid results. The demand environment remains mixed across end uses with growth opportunities in some categories and challenges in others.

Our Vulcan Way of selling disciplines allow us to navigate complex market dynamics and maximize value in any environment. On the public side, activity remains healthy at healthy levels. There is still a long tail from IIJA with approximately 35% of funds yet to be spent. There is a current extension of the Federal Highway Authorization bill that maintains funding at current levels and is expected to be extended again until a bill is passed. These dynamics provide an environment in which states are continuing to let work and execute projects. Importantly, the opportunities in Vulcan markets continue to outpace the U.S. overall.

For example, trailing 12-month contract awards are up 2% in Vulcan markets versus 1% at a U.S. level. The need for continued investment in infrastructure is significant and something our elected officials are working to address. On the private side, large project opportunities continue to drive nonresidential activity. Our footprint is well aligned with the ongoing data center development and increase in energy and other manufacturing opportunities. We are currently shipping on a variety of solar, wind, LNG, power plant and refinery projects in addition to large-scale manufacturing projects like SpaceX and Toyota in South Texas and Scout Motors in South Carolina.

Our scale, quality and customer service make us a supplier of choice on large complex projects. The continued lack of housing affordability and a challenging rate environment are limiting residential construction activity. In Vulcan markets, demographics are favorable to the rest of the U.S. and create a fundamental need for additional housing, but timing of a recovery is still unclear given affordability dynamics. With a solid year-to-date execution from our operating teams, we expect to deliver another year of earnings growth and approximately $2.4 billion of adjusted EBITDA, even with a muted demand environment and over $100 million of energy headwinds now expected for the year.

With that, I'll turn the call over to Mary Andrews to provide some additional commentary on our third quarter performance, after which I will share some initial thoughts on 2027 before we take your questions.

Mary Carlisle

Thanks, Ronnie, and good morning. Ronnie highlighted the consistent execution of our two-pronged growth strategy. The same is true for capital allocation. We continue to prioritize reinvesting in our franchise, identifying disciplined opportunities for growth that align with our aggregate led strategy, supporting our steadily growing dividend and returning excess capital to shareholders through share repurchases. Through the first 9 months of this year, we have generated nearly $1 billion of operating cash flow and received cash proceeds of $572 million for downstream and noncore divestitures.

We have reinvested approximately $550 million into maintenance and growth capital expenditures, thoughtfully redeployed approximately $300 million of proceeds, primarily from the California concrete sale into strategic aggregates acquisitions and returned approximately $950 million to shareholders through a combination of dividends and $750 million of share repurchases. Importantly, we have moved our trailing 12 months return on invested capital 20 basis points higher since year-end.

At September 30, net debt to adjusted EBITDA leverage stood at 1.9x, providing plenty of capacity to continue to support an active acquisition pipeline. Up and down the P&L, we are focused on controlling what we can control. SAG expenses year-to-date are 3% lower than the prior year, even as we make incremental investments in technology and talent to support our strategic discipline. Closely managing our human capital, aligning compensation costs with results and driving efficiencies across the enterprise are all contributing to lower SAG year-over-year on both the percentage of revenue and absolute basis.

Now before we take your questions, I'll pass back to Ronnie to share some initial thoughts on what lies ahead in 2027.

Ronnie Pruitt

Thanks, Mary Andrews. As I look to 2027, I am confident we have the right strategy, the right team and the right focus to continue delivering earnings growth and value creation for shareholders. I expect the demand backdrop will largely be a continuation of the current environment with opportunities for growth varying across and even within end markets. Our backlogs and quote activity also support this outlook.

With a stable federal highway funding in place through the continuing resolution and steady growth in awards over the past several years, the public pipeline remains at healthy levels as we move into 2027. And we are hearing that there is a real focus in D.C. on getting the bill passed, which we expect to be a priority after the midterm elections. This bodes well for future public demand. On the private side, we expect that large project opportunities will continue to drive nonresidential activity and that residential will remain challenged until affordability is addressed.

Against the similar demand backdrop to 2026, we anticipate 2027 aggregate pricing to benefit from pricing actions taken this year as the inflationary environment set in and from announced increases for January 1. As a result, we expect aggregates prices to grow mid- to high single digits in 2027, creating a strong opportunity for attractive unit profitability expansion as we continue to control cost and leverage our Vulcan Way of Operating disciplines. We are in the midst of our annual planning cycle now, and we'll provide more detail in February on any shifts in the demand environment, our shipments outlook inclusive of 2026 acquisitions and our profitability expectations.

Now Mary Andrews and I will be happy to take your questions.

Operator

[Operator Instructions] We'll go first this morning to Trey Grooms with Stephens.

질의응답

Trey Grooms

So if it were not for the oil-related headwinds, it looks like you guys could be at the midpoint of the guidance range. So if you could maybe talk about some of the things you're doing to dampen the impact of inflation and grow EBITDA in what, as you guys said, is a fairly muted demand environment. And then from a high level, how are you thinking about the inflationary environment and how you plan to navigate that as you look into '27?

Ronnie Pruitt

Trey, thank you. You are correct. Our adjusted EBITDA performance, it would be directly in line with the expectations we set coming into the year, if not for that cumulative oil-related headwind that we currently expect to be over $100 million by the end of the year.

Our results really underscore the fundamental durability and the resilience of our pure-play aggregate business model. And I would remind you, our focus has really combined 2 things: our strategic commercial discipline, Vulcan Way of Selling and our operational agility through Vulcan Way of Operating. And both of those things have really paid off. We've expanded our year-to-date gross profit margin by 30 basis points, and we've grown our cash gross profit per ton by 2%. Price still remains our most effective lever to mitigate oil-related cost headwinds. And so you know that's just -- that's about timing. The oil-related stuff hit us coming into the year. I mean if you recall back, it hit us in the first quarter into the second quarter, we thought there were some talks around things may start to be muted with some end of the war.

And then they really set in, and we saw that in the third quarter. So what do we continue to do? Our pricing is up in the third quarter on a mix-adjusted basis, 5% year-over-year. And so our commercial teams are executing. And I'll remind you that about half of our products are sold through our daily bidding process, and half of them are through the fixed plant stuff. We have talked about what we're doing and what we expect for next year.

On the operational side, again, excluding that direct impact, our unit cash cost of sales is only up 3%. And I would tell you, that's just discipline and really demonstrating those strong operational things we can control across our footprint. Our advanced analytics, which we call process intelligence, it continues to drive and really enable us to optimize our critical product throughput. It eliminates unnecessary downtime and maximizes our efficiencies throughout our network. So I'm really pleased with our operators and the efforts they've continued to give. And as Mary Andrews said in her prepared remarks, our focus is on execution up and down the P&L.

So I'll turn it over to Mary Andrews to talk about some of the other puts and takes on what we've done to battle some of these headwinds.

Mary Carlisle

Yes. Thanks, Ronnie. I would just reiterate that our cost discipline does extend well beyond our operating facilities. Our SAG expenses were $137 million in the third quarter, down from $145 million in the prior year period. And that cost discipline alongside the consistent execution in each of our lines of business and also just the benefits of an aggregates-led portfolio allowed us to expand our adjusted EBITDA margin by 20 basis points in the quarter to 32.3%, which was a really solid performance.

Operator

We'll go next now to Phil Ng with Jefferies.

Philip Ng

Team is executing in a tough environment, Ronnie. When we kind of think about midyears being a little more flattish, and I think what you're outlooking for '27 is more of a flattish backdrop. What gives you confidence that getting mid- to high single-digit average pricing in 2027 is achievable? Any early feedback you've heard from your customers? Just given it's a noticeable step-up.

And one follow-up question and just a follow-up question on the mid- to high single-digit framework that you're calling for pricing next year. Is that on a reported basis just because mix has been a drag this year?

Ronnie Pruitt

Yes. So let me -- let's talk about the first expectation, and then I'll talk about the mix impact on that. So yes, we fully expect 2027 to be another year of healthy price growth. And as we said, mid- to high single digits and in a flattish environment, like you said. And so I would tell you, really 3 things that give us that confidence is, first, our commercial execution. And those conversations that you talk about, so remember, half fixed plant, half of our work is on a bid basis. One of the things we did this year is we pulled those announcements earlier.

So we sent out our announcements early to give our customers an opportunity to prepare for that. And so those conversations are going as expected in this kind of environment. And so I'm pleased with where those conversations are. And I'll remind you that diesel cost, no one is immune to that. And so it's not something that is unexpected from anyone that they understand the impact of the diesel. It's impacting them as well. And our customers are looking for opportunities to continue to get better value for their products as well. And so we're going to be one of the good excuses for them to go talk to their customers about. And so that's going as expected.

And two, I still think we have a stable demand environment. We've said flat, but it is stable. And I really look at let's talk about public. And if you recall back 4 to 5 years ago, when IIJA really kicked in, everyone was waiting on, well, we start to -- we started to see contract award levels go up, but where were the tons? And we kept getting asked, when are the tons going to come? And we said there's always that delay of the contracts get it awarded. And typically, that's 6 to 8 months after those contracts get awarded, the shipments start.

Well, that same thing is going to happen now that the bill is expiring. And so there's some concern out there, well, the bills expired, you're in this form of continuing resolution. But that's where we've said 35% of the dollars have yet to be spent, and there'll be a tail to that. And so we'll benefit the same way it took us time to get started on the front end. We'll continue shipping on the back end. So I believe public continues to remain steady. And on the private side, we've got really healthy bookings, backlog, quoting activity, and it is around large nonres projects. But it's not just data centers. Data centers has been a really, really good benefit to us, but we also see heavy infrastructure and some of the other projects that I called out in my prepared remarks on SpaceX and the Toyota factory in South Texas.

I mean, those are other kind of manufacturing that we're seeing kick in. And I think the energy side, we'll continue to see solar opportunities as well. So there's a lot of other things that are happening to support that stable demand environment. And then structurally, our advantaged footprint. And I would tell you that most of these large heavy nonresidential projects are located within our advantaged zone of a Vulcan facility, which, again, when you think about the proximity that, that gives us to these projects, it reinforces our position as a supplier of choice with those logistical moats that we have. And so I continue to have a lot of confidence in our pricing ability. And I think that's the story of aggregates over time and the historical side of it is that's what aggregates does. And it's just timing.

So we'll catch it this year, and we'll continue to move forward. As far as the mix side, I would tell you that's inclusive. When we give that kind of guidance, we're saying that we believe that's all in. And then we'll talk about within each quarter as we talk about, okay, where is the geographic impact of that? Where is the product mix impact of that. And so as we sit today, that mid- to high single-digit range is inclusive of mix impact.

Operator

We'll go next now to Garik Shmois with D.A. Davidson.

Garik Shmois

I just want to follow up on some of the demand observations you were just making in response to the last question. I was hoping you could unpack your demand outlook for '27 a little bit more. Could it be up just given the visibility that you have both on large projects and on infrastructure? And just maybe a little bit more color on what you're seeing on the light private side as well.

Ronnie Pruitt

Yes. No, thank you. I said similar to 2026. But I would tell you there's opportunities for growth, varying across markets and even within some of our individual end markets. And again, with the change we've seen on these large projects, it's location matters, and that's why we love our footprint. That's why we say we have an advantaged footprint. And we believe our footprint will continue to outperform the rest of the country when it comes to those growth opportunities. And that applies to single-family as well as these large nonres projects. And it also applies to public.

On the public side, like I said, I mean, I think we're seeing the back end of IIJA, and we'll continue to see those dollars flow I also believe the states are in a really good position. And so as we think about our states and the state funding levels, we're getting really good insight into what their letting schedules are going to be. Those numbers are out there, and we don't see any pullback on that. And then we're also seeing increasingly more innovation around P3 projects, toll authorities. I mean there's some really large projects. Atlanta has 2 of them, really large P3 projects that are in addition to IIJA, in addition to the typical state lettings. And so we're seeing different ways of funding. And again, as I step back and look at that side of it today, I'm not real concerned on the public side. I think we have midterms coming up, obviously.

We believe shortly after that, that the House and the Senate are both aligned on we need an infrastructure bill, and we believe they'll be hard at work at getting that done. And so I just don't see -- anticipate much disruption today on the public side. On the private side, again, I mean, I think it's really the primary engine for where some of that other growth could come from. If it was going to look different than what we see today, it would probably be on that private side, and it's really the timing of some of these large projects. We're seeing on the data center side, these projects are really fast. And so from the time we quote to the time we book to the time we start shipping, those things accelerate really quick.

The other things when it comes to manufacturing, the energy-related projects and other manufacturing are still in that typical 6 to 9 months, you quote it, you book it and then the shipments become later. But we're starting to see those things that we were talking about at the beginning of '26, we talked about manufacturing was going to start kicking back in. We're starting to see a lot of those things finally start to come out of the ground. And I think those are opportunities ahead of us. And then I think the energy side is another one. We've got transmission lines being built. We've got -- the energy one is a little more difficult because some of it is tied to a data center project. And so some of those are hard to split out. When you see the capital dollars of the data centers, some of those -- that's why they're so great is because some of those include the energy with them. And so I just see a lot of different dynamics here under the backdrop of what we're seeing today could be similar to '26. But to your point, there could be some opportunities for growth.

Operator

We'll go next now to Anthony Pettinari with Citi.

Anthony Pettinari

Ronnie, in the '27 outlook slide, you talk about portfolio management. And I'm just wondering if you could talk a little bit about the M&A landscape, what that looks like. And then with the cost inflation that's kind of rolling through the industry, does that maybe change the calculus for maybe some of the smaller players in terms of maybe opening up some opportunities on the acquisition side? Or just kind of curious what it looks like.

Ronnie Pruitt

Yes. I would say it's been a very active year thus far. And as I said in my prepared remarks, I think we've got the opportunity to close on several more before the end of the year. But for us, for Vulcan's strategy, it's going to continue to be aggregate led. It is a very simple story. We like to keep it simple. I talked about the ease of integration. I talked about the ease of execution. I talked about the ease of capturing those synergies. And these are in the form of bolt-ons.

And so where we're focused today is going to continue to be on those type of bolt-on acquisitions. They're very easy for our employees and bringing in those new employees to the Vulcan tent. It just is a lot easier to predict and a lot easier to execute. For our shareholders, it's a lot easier to predict. We're not going to surprise our shareholders with any of these deals that might not make sense for us and I would tell you that pipeline is very healthy. To your point, diesel has affected everyone. And I would tell you that we're having a lot of conversations with potential sellers, and they're feeling the impact of it. Now that timing is still -- it's their call. We're always actively looking. But the things we're looking at are going to be in the form of the things you've already seen us do, and those range in between 0.5 million to 1 million tons each. Some of those can be smaller or bigger, but nothing transformational for us. This is our discipline. I mean we really, really love executing the way we do, and they're very, very much within our control.

Operator

We'll go next now to Kathryn Thompson with Thompson Research Group.

Kathryn Thompson

On the policy side, and it can tie a little bit into the private, but the bigger picture, Ronnie, when you and I first met each other in the industry for maybe 50% and the Fed, the other half or give or take, for funding. But for many of your states, 75% of funding is coming from the states and not the Fed. And so Texas is a really good example. Then you have PPPs, which you talked about earlier in the Q&A. And in our backyard of Middle Tennessee, one of the biggest PPP projects is potentially on the slate to be the startup in the next year or 2, which would clearly benefit you guys.

As you think about the pie of funding for public that also has to trickle down to private, how do you think that pie looks 3 to 5 years from now? And so in other words, how important will the Fed really be as you see going forward? And what's the balance of state and private funding for overall infrastructure funding in the U.S. as we think of the broad trend of reshoring?

Ronnie Pruitt

Yes. Thanks. That was a lot. I appreciate you taking me back to the days we first met.

Kathryn Thompson

I know. I know. Way too long.

Ronnie Pruitt

I mean you're absolutely right, Kathryn. I mean -- and so what we see today is the Fed piece of it is still very important from an underlying reliable planning aspect. And so again, I think as we get a bill -- it gives the states at least that surety of where the dollars are going to come from. I like part of the BA250 was going back to the matching program, which is way more predictable for the states than the grant program was. And so I like the characteristics of what BA-250 did.

But you're absolutely right. We see a lot of different forms of funding, both at the state and the local and the public toll roads and public-private partnerships and those things. But I think where you're going with this is you've seen the inflationary environment, and we've talked about it. Inflation has eaten up some of the tons out there. And so where are those dollars? And you and I both know that road out there doesn't care. That road in any market you go to in Atlanta, L.A., Dallas-Fort Worth, Nashville, what do you do? You go sit in traffic. And fuel prices has not -- I haven't been anywhere to date where fuel prices have stopped traffic. Like everywhere I go, we still sit in traffic.

And so the roads are still deteriorating. The bridges are still need built. The infrastructure of the country still has to be taken care of and things are more expensive. So what are we going to have to do? We're going to have to get creative on funding. And I think that's what the states, the local municipalities as well as the federal are really addressing. And so I think it's -- to your point, things are going to look different in the future because it's going to have to be more creative and then you have the phenomenon of electric cars and hybrids and the fuel tax, is that going to cover it? So I think there's a lot of things that both the federal and the state are working on.

And looking forward, to your point, to the future of how are these things get paid for. But I'm excited about the opportunities that it's still in demand. I mean the roads are still going to be in demand. The bridges are going to still be needed and everyone loves driving their own cars. And so I think Public is in a really good spot. And to your point, I think we're going to get creative in the future on different ways of funding it as well.

Operator

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

Michael Dudas

Ronnie or maybe for Mary, for both of you guys. So encouraged to see the aggressiveness you showed in share repurchases, certainly with the share prices being down and valuation much more attractive than it had been. Maybe just going forward, I'm sure there's a balance to it. But given where you're targeting your acquisition opportunities on bolt-ons and ease of assimilation, et cetera. Is that going to -- and given where some of your CapEx might be on the growth side, maybe you could balance on like where -- is there going to be more opportunity for funding to support growth CapEx and maybe continued reasonable share repurchases as we look forward the plan over the next couple of years?

Ronnie Pruitt

Yes. I'll let Mary Andrews talk about our capital allocation, and then I'll follow up with some comments. Go ahead, Mary Andrews.

Mary Carlisle

Yes, Mike, as we've consistently communicated, including at the Investor Day back in March, our cash generation really has reset higher over the last several years. And that positions us really well to be able to continue to both fund M&A and other internal growth opportunities and to more consistently return capital to shareholders. And that's what you've seen in the last 12 months, and I think that's what you can expect to see going forward.

Ronnie Pruitt

Yes. And I'll add to Mary Andrew's point is we have reset at that level, which is -- it's a great place to be. Our balance sheet is in a really good spot. But even when it comes to those buckets of our typical maintenance CapEx. I mean when we look at maintenance CapEx today with the tools that we've invested in with Vulcan's operating, I mean, we're really looking at how do we drive more efficiencies. We don't want to just replace like-for-like. We want to drive more efficiencies with every dollar we spend. And so those dollars are getting put to work. And that's where you see truly our ability to outperform the market when it comes to how do we control our cost.

I mean these are really good investments we've made even in the form of maintenance CapEx. So every dollar we spend, we want to get a return on it. And this is a tough business. We break a lot of stuff. Crushing rock is hard, but it also gives us an opportunity that when we're going to replace it, how do we do that in a better way. And to Mary Andrew's other point of we've got lots of opportunities out there to grow this company. We're just going to be very disciplined. And it makes sense for us and our shareholders that we're really good at what we do in the aggregates business, and we're going to stay focused on that.

Operator

We'll go next now to Rohit Seth with B. Riley Securities.

Rohit Seth

Just back on the guidance on pricing, the mid- to high single digit, pretty wide range there. Can you just talk through what gets us to the low end and what's at the high end? Are you going to -- have you left room there to go back out at midyear? And so is this guide to pricing, what you expect come out of January 1? And maybe if you can touch on your cost expectations ex diesel for 2027.

Ronnie Pruitt

Yes. So Rohit, you always like to pin us down, don't you? I would tell you that we're in the middle of putting those plans together. We're going to give you a lot more insight into that as we get into the beginning of next year. And I would say that at the end, it's -- that range right now as it sits is really a function of the 2 sides of our business. The stuff we're bidding every day, and we see a lot of momentum on that.

Our quoting and booking activities looks really good. We're continuing to really push and using our Vulcan selling and our proprietary pricing tool to make great decisions as it looks at the value of our products and the commercial expertise of that. Our advantaged footprint plays into that. So the geographical position that we're in and where those projects are matters, value swings between some of our markets. And we have those disciplines to move price throughout our markets, but there's still some big swings between one market to the other.

And then on the fixed plant side, remember, our fixed plant business, people think about fixed plant and they jump right to concrete, but fixed plant also represents asphalt. The asphalt business is really good. The asphalt business really plays into the public side, and they have good demand structure. And so as I sit here today, I mean, I think the range we've given is a very achievable range. And I think as that plays out, we continue to develop those plans. We'll get a really good sense of what happens in January. And then in February, we'll come back and give you a lot more detail around that. But I'm excited about the opportunities we have. And just as we did coming out of the inflationary environment when COVID hit, we delivered. And my expectation is we're going to deliver again.

Rohit Seth

Fair enough. Maybe can you compare and contrast what -- how this cycle is compared to 2022? Still expect...

Ronnie Pruitt

Yes. From an inflationary standpoint, I mean, it's more tied to just oil related in the diesel side. We haven't seen a lot of trickle out into other things. The inflationary environment in 2022 was more broadly. And so there is that piece of it that we understand exactly what it is, but no one in our industry is immune to it. It is affecting everyone. It's affecting our customers. It's affecting our competitors. Everyone has to buy diesel. That's just part of it. And the other piece of it is the mix between coming out of that last inflationary period, resi was doing good but nonres wasn't as strong.

Now we got nonres stronger, so you got the phenomenon of large projects versus smaller resi projects. So there's a lot of differences, but I think the underlying piece of it is we're seeing inflationary pressures. And again, historically, what do we do? We're going to price through that. And so that's the similarity of it, and that's what we're expecting to do.

Operator

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

Angel Castillo Malpica

Ronnie, a lot of great detail and really helpful. Just wanted to continue, I guess, on the line of the price cost discussion. I think the way that this was described or the way I understood it is thinking back to the 2022, 2023 time frame. In the subsequent year, you get a little bit of kind of catch-up and incremental gross profit per ton growth. So just can you help me understand, I guess, as I -- or reconcile rather the 7% type of inflation that it seems like we're kind of experiencing right now with a mid- to high single-digit type of price increase target for next year?

And just how should we think about effectively like are we going to get more catch-up and incremental gross profit per ton growth next year? Or is it more of just a returning to kind of the algorithm? Just help us understand kind of the puts and takes there.

Ronnie Pruitt

Yes. No, I would tell you, as we sit here today and we think about the range we've given on pricing and where we think the cost side is going to be. I mean, right now, we're sitting here and our expectation is diesel is going to stay up. I mean -- and if it comes down, it's probably going to be mid- to late half of '27, and that's a guess. So we're going into the year planning on diesel to be high. And so that's where -- when you look at our pricing, we talk about those percentages, obviously, you're talking about 5% to 10% on an average selling price of $24 plus and then you're talking about cost side of $10 to $11.

And so yes, I mean, when we talk about those percentages, we will be back to growth. We will grow our cash gross profit per ton. The percentages sound similar, but you're talking about 2 relatively different numbers when it comes to our already very good price/cost spread. And so we're going to continue to grow that. And I would tell you that the initial outlook that we've given you puts us back in an opportunity to grow our cash gross profit per ton and continue to really keep the momentum towards the goal that we set of $20 a ton.

Mary Carlisle

And also, Angel, just on the cost side, remind you, inflation is one side of it. The other side is the way that we execute, and we fully believe that there are still opportunities ahead of us from investments we've been making in the Vulcan Way of Operating, and that's why it's really important for us to finish our planning here in the latter part of the year to be able to give you a good indication in February of the level of unit cost performance we think we can deliver in 2027.

Angel Castillo Malpica

That's very helpful. And then maybe just one last one on price. Can you talk about it a little bit in terms of what the expectation or the timing of it is? Like how much of this have you already gotten in terms of your bid work versus how much incrementally you need to get kind of early next year?

And then especially if you kind of split up the fixed business, just how much of that is kind of January pricing versus, I believe, ready-mix had already kind of moved back to one price increase in April. So trying to understand as we think about the mid- to high single digits April versus July, like kind of achieving or realizing that price, -- apologies if you already discussed it.

Ronnie Pruitt

Yes. No, I mean you go back to the nature of our business, it's about half and half, half of our business is the things we're bidding every day. And so those prices continue to move, and we've got good insight into what they're doing, which is baked into that, our confidence in what we will see in '27. And the other half is the fixed plant.

Our letters went out early, and we've seen support in the markets for January 1. Our expectation is it will be January 1. And we also will always have the discipline of our midyear increases. And so we have 2 shots at that. We will continue to always have the ability to do that. And we're going to be very disciplined around that. And so I look at it, I mean, I think there's -- it's all within that mid- to high single-digit guidance that we put out. It's a combination of the 2.

And I believe that the Vulcan Way of Selling, the tools we have and the insight that we have, the market intel that our people get and our disciplines around that are fully baked into that. And I've got all the confidence that we'll be able to achieve it.

Operator

And we'll go next now to Keith Hughes with Truist.

Keith Hughes

Ronnie, it sounds like as you said several times, you are talking to your customers, is there at least a good chance that you're going to get faster realization than what we've seen in other price increases more in the first quarter as opposed to this elongated push into the spring that happens in so many years?

Ronnie Pruitt

I mean that's what history would tell us, Keith. I mean, in these inflationary environments, it's not like these letters came to a surprise to anyone, and they're feeling it as well. And like I said earlier, I think they're looking for the opportunity to also go to their customers and get increases for their products that they're making with our products. And so they're going to use us in an excuse, which I love to be used as an excuse. And so I do think in these types of environments, you see more disciplines around that. And I do think that realization comes quicker. And that's something that I believe we will see in 2027.

Operator

We'll go next now to Ivan Yee with Wolfe Research.

Ivan Yi

More broadly speaking, as you look to next year, do you see more of an opportunity to improve gross margins through aggregate price increases or more through cost-cutting initiatives, a good mix of both. I guess what is the bigger lever in terms of driving the margin improvement next year?

Ronnie Pruitt

Yes. No, it's a good question. And as I said in one of my first comments, I mean, price continues to be our biggest lever. And it's our quickest lever to overcome. I would tell you the things we do operationally are critically important. And so when you look at Vulcan's performance, and why we are the leaders in our markets is because it is two-pronged. It is because we do Vulcan Way of Selling and Vulcan Way of Operating. So both are critically important. But I would tell you that the price side is where we're going to see these jumps around how do you get to this high -- mid- to high single digit is going to be around price because of the inflationary environment we see. But I would tell you our operators are out there every day trying to control costs, and they're doing an excellent job of that. And so both are important, but price continues to be our biggest lever.

Operator

And we'll go next now to Steven Fisher with UBS.

Steven Fisher

On the cost management. Wondering if you could just break down for us maybe the $100 million in terms of how that's falling over the course of the year, kind of what was Q2, Q3 and what you think in Q4, I think you said it might be $100 million plus. And then just related to this, the change in guidance, was it only for the $100 million of energy? Were there other offsetting puts and takes? Just because it looked like on the volume side, you were, I think, originally at 1% to 3% and now it looks like 1%. So I just wanted to clarify those couple of things, please.

Ronnie Pruitt

Yes, I'll let Andrew talk about the cost side of it, and then I'll circle back on the demand side. Go ahead.

Mary Carlisle

Yes. So as it relates to energy, Steve, we've had about $80 million year-to-date. That was about $40 million in the third quarter. We would expect something similar in the fourth quarter. So when it's all said and done, probably $120 million. That is a combination of diesel headwinds and also the increases in liquid asphalt in the asphalt business. As it relates to the guidance, I think Ronnie put it well earlier that very simply, our full year outlook, we would be near the midpoint, but for those energy headwinds.

Now there are some puts and takes up and down the P&L. I think for the full year, you'll now see volume to grow very modestly. This would assume continuation of current shipping momentum and fourth quarter pretty consistent with year-to-date results on a year-over-year basis. And very importantly, in this environment, we expect aggregates unit margin expansion even with those diesel price headwinds to yield probably 4% for the full year, which would mean low double digits in the fourth quarter on a year-over-year basis, given last year's comps about price and cost, mix adjusted price has been at 5%, which is the expectation coming into the year of what underlying pricing momentum was, expect that to be similar as we move through the fourth quarter.

And I think Ronnie just talked a lot about our cost execution, which we do think has been really good. And our operators have really delivered on those low single-digit cost increases we expected coming into the year, but for the fuel. And so now with the diesel impact, we will be closer to mid-single digits for the full year. And just a reminder, that would does imply, and we do expect that costs will look very different on a year-over-year basis in the fourth quarter, flattish to even potentially down given what last year's fourth quarter looks like.

And 2 other things maybe on guidance that outside of aggregates, the SAG, as I talked about earlier, has been a good story this year. We think that it will be about $30 million lower than the range that we initially provided. That's an important contributing factor to offsetting lower downstream earnings from the energy that we started with. And also, we do expect that our CapEx expenditures for the year will likely be at the lower end of that $750 million to $800 million that we provided. So there's a few details on kind of the puts and takes of guidance, and Ronnie may want to add in.

Ronnie Pruitt

No, I think that was great. I mean, Steve, the other thing I would say is, to Mary Andrews's point, I mean, when we look -- and we tried to give you some color year-over-year kind of the difference between the third quarter of this year versus last year. And if you recall, we started off the year this year much stronger and then we look at this and really a demand environment that we say has been flat to muted for 3 years in a row, nothing about these shipments are surprising to us at all because I mean, if you think about where our customers are today, they're looking at the same headwinds with fuel. They're looking at the same headwinds with demand environments in their local markets.

And so we just don't see a lot of people getting in a hurry going adding another crew, trying to run really fast. And I think everyone is just being patient with that. And so our shipments momentum is basically what we expected, and I think it carries through the fourth quarter. And then we'll give you more insight into what we believe '27 looks like more granularly as we continue to put our budgets together. But I think we've given you a pretty good insight into what we see the underlying demand environment is and our shipments reflect that.

Mary Carlisle

Yes. And I think the ultimate important part is that even with that $120 million, call it, of energy headwinds for the year, we expect to deliver adjusted EBITDA growth of approximately 3% or closer to 5% on a same-store basis. So our business is one that meant for times like these and that can perform well even with the macro challenges.

Operator

And we'll go next now to David MacGregor with Longbow Research.

David S. MacGregor

Ronnie, late in the call here, you provided a lot of detail in our call today. So thanks for all that. I guess I'd just be interested in maybe at a high level, what you learned from the midyears this year in terms of the current state of the markets and how maybe they were received versus your experience with midyears a year ago? And just any kind of observations that would extrapolate to how that shapes how you go to market in '27 with your price ask.

Ronnie Pruitt

Yes. I mean I think what we learned in midyears is what we've -- what we already knew was where are things going to be challenging at. They're going to be challenging in those smaller fixed plant guys that are really heavily tied to resi. Everything else went through as expected.

The other part of our business, when we talk about our bid work and our bookings, we continue to see really good momentum there. And we've talked in the past, what midyears does is it sets up success for the next year, and we're seeing that. We're seeing that in the conversations we're having today about our January increases. And so look, our pricing is going to always be a campaign. It's not like we sit around and go, okay, midyears hits, all right, now call that and now January hits, now call that, then midyears hit again. We're always focused on how do we continue to move price through this campaign. And so our customers understand that. We're very, very transparent when it comes to our pricing strategy and what we're going to be looking at, giving them lots of opportunities to do that.

So the midyears didn't surprise me. I think what we see in this environment is a lot of support out there in the market for pricing to be very disciplined when it comes to January 1 increases. And so I mean, I think we're in a great position, and I think our midyear has helped us set up to where we're at today to get our January increases. And that's what we've said in the past. That's what they're there for. They give us an opportunity to catch up with something we didn't expect and they give us a chance to set up the following year. And so that's what we'll continue to use them for.

David S. MacGregor

That's very helpful. And I may have missed it, but did you quantify the carryover on ASP for '27?

Ronnie Pruitt

I did not. No, I just said -- I give you a broad range on '27 and mid- to high, and then we'll give you more clarity on that as we get into next year.

Operator

Mr. Pruitt, it appears we have no further questions this morning. I'd like to turn the conference back to you, sir, for any closing comments.

Ronnie Pruitt

Yes. Thank you. I'm really proud of what Vulcan Materials has accomplished year-to-date. And we're focused on finishing the year strong, both from a safety and business results standpoint.

To my fellow Vulcan employees, keep each other safe and keep up the good work. To our customers, thank you for your partnership and the trust in Vulcan to provide value for your business. And to our shareholders, thank you for your investment. We are committed to continuing to deliver results and create shareholder value. Have a great day.

Operator

Thank you very much, Mr. Pruitt, and thank you, Ms. Carlisle. Again, ladies and gentlemen, this brings us to the end of today's meeting. We do appreciate your time and participation. You may now disconnect.