Volume Outlook
Q: How is the demand environment affecting volume outlook?
A: Management noted that underlying demand remains as expected, except for slower growth in single-family housing. Wet weather has negatively impacted shipments, particularly in July, influencing third-quarter volumes. They anticipate full-year volumes to be down 4% to 7%, depending on the number of dry shipping days remaining. The demand is still there, and projects are delayed rather than canceled. - -

Pricing Momentum
Q: Can you discuss pricing trends and outlook?
A: Pricing momentum continues strong across all markets and products. They achieved a successful midyear price increase, which will have a more significant impact in 2025. Despite volumes being down 5%, they expanded unit margins by 12%. They expect aggregate price increases in the 10% to 12% range for the full year. - - -

Cost Inflation
Q: What is driving the increased cost inflation guidance?
A: The guidance for cost inflation was raised from mid-single digit to high single digit, largely due to volume deleverage from lower shipments. Weather-related inefficiencies, such as handling wet, sticky materials, also impacted costs. Management expects to recapture some costs in the second half, aiming for high single-digit inflation for the full year. -

Public Infrastructure Funding
Q: How do 2025 DOT budgets impact your outlook?
A: Record-level funding in key states like Tennessee, Georgia, and Florida—with increases of $1.5 billion to $4 billion—supports growth in public demand over the next 3 to 4 years. Six of their larger states are at record funding levels, which is expected to drive steady growth in the highway market. - -

Acquisition Opportunities
Q: Are you seeing more opportunities for acquisitions?
A: Management closed two strategic bolt-on acquisitions this year in North Alabama and Texas. They anticipate closing more meaningful acquisitions in the near future. The M&A market is active, and they prioritize disciplined evaluation of opportunities to ensure returns. - -

Manufacturing Projects Outlook
Q: What is the outlook for manufacturing projects in 2025?
A: The backlog for large manufacturing projects remains healthy, and they are currently shipping on some projects. Management does not see a significant dip in the pipeline and expects these projects to continue being a tailwind into 2025. They acknowledge the risk of projects rolling off but are encouraged by ongoing reshoring efforts. - -

M&A Competition
Q: Are you experiencing increased competition for deals?
A: The competitive landscape for acquisitions hasn't changed significantly. While many international materials companies are looking to grow U.S. exposure, they focus on disciplined evaluation, targeting markets with synergies, and ensuring returns on investments. -

Impact of Product Mix
Q: How is product and geographic mix affecting pricing?
A: An increase in public infrastructure projects may shift the product mix toward base and fines, which have lower prices but also lower costs. Management does not expect this mix change to impact unit margins and aims to maintain elevated margins regardless of the mix. -

Nonresidential Demand
Q: Can you update on large private nonresidential opportunities?
A: There's an acceleration of large manufacturing projects, data centers, and reshoring of facilities, boosting their backlog. While not enough to offset declines in warehouses and distribution centers, these projects are helpful and expected to continue over the next few years. - -

Carryover Pricing
Q: How will midyear price increases carry into next year?
A: The midyear price increases will have a small impact on the second half of 2024 but a much larger impact on 2025 pricing. While it's too early to specify the level of pricing for 2025, the successful midyear increases set a solid foundation for continued pricing momentum. - - -