渥肯建材 (VMC) 2015 Q4 法說會逐字稿

Welcome to the Vulcan Materials Company fourth-quarter earnings call. My name is Bridgette and I will be your conference call coordinator today.

(Operator Instructions)

Now, I would like to turn the call over to your host, Mr. Mark Warren, Director of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Thank you, Bridgette. Good morning, everyone, and thank you for your interest in Vulcan Materials Company. Joining me today for this call are Tom Hill, Chairman and CEO, and John McPherson, Executive Vice President, Chief Financial and Strategy Officer.

To facilitate our discussion today we have made available during this webcast and on our website supplemental information. Rather than walk through each slide as we've done in past calls, Tom and John will summarize the highlights of our fourth-quarter results and outlook for 2016. We believe this approach will assist your analysis and will allow more time to respond to your questions.

With that said, please be reminded that comments regarding the Company's results and projections may include forward-looking statements, which are subject to risks and uncertainties including general economic and business conditions; the timing and amount of federal, state, and local funding for infrastructure; and the highly competitive nature of the construction materials industry. These and other risks and uncertainties are described in detail in the Company's SEC reports, including our earnings release and our most recent annual report on Form 10-K.

In addition, during this call management will refer to certain non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure and other related information in our earnings release and at the end of the supplemental presentation. Now I would like to turn the call over to Vulcan's Chairman and Chief Executive Officer, Tom Hill. Tom?

Thank you, Mark, and thank you all for joining us for our fourth-quarter earnings call. I hope you have had time to review our earnings release and the supplemental information posted earlier today on our website. As Mark mentioned, John and I will summarize the highlights of our fourth-quarter results and the outlook for 2016. Then we will be happy to take your questions.

We remain highly focused on the fundamentals of our business at Vulcan, on the clear opportunities in front of us. Regardless of recent concerns that have swept through global securities markets, we are focused on the things that we control, and on our improving profitability. We have made a lot of progress over the last year and we have a good report for you today.

Aggregates volumes are up nicely, pricing is positive, our gross profit per ton numbers continue to be really impressive. We are controlling our costs. But first, I would like to start the conversation by making three basic points.

Number one, we finished the year strong. Our teams Company-wide are executing our aggregate-focus strategy extremely well.

Second, I assure you that we will sustain this focus into 2016. We believe these efforts will result in more than $1 billion in adjusted EBITDA this year. Circumstances obviously vary across our geographical footprint, but the gradual recovery in demand continues in each of our in-use segments.

Third, our performance throughout 2015, as we continue to move through the early stages of construction recovery, demonstrated clear and steady progress towards the longer-range goals and the expectations we put forth at our Investor Day last year. With very few exceptions, construction activity in the markets we serve still remains well below long-term trends. However, we are positioned for multiple years of double-digit revenue growth with strong conversion of those incremental sales to gross profit.

Now, I would like to go a little deeper into our fourth-quarter and full-year results. John will then hit the highlights of our 2016 outlook, and I will conclude with some observations about our path forward.

Let me say up front, I am pleased with how we finished 2015. Our mindset at Vulcan is that we can always improve, and we work hard on getting better all the time in every aspect of the business.

Shipments were strong in the fourth quarter whenever and wherever the weather cooperated. As we noted in our third-quarter call, many of our customers have seen their backlogs grow as demand continues to pick up and as they face capacity constraints.

We saw higher levels of shipments on weekends, and many of our customers were beginning to keep their crews on as long as the weather allowed. Those trends held up through the fourth quarter.

Firming demand and reasonably dry weather in California and Florida contributed to year-over-year shipment growth exceeding 15% in those states. Shipments in Georgia grew by 22% despite wet weather. On the other hand, shipments increased in the low single digits in Texas. This was due to extremely wet weather in October and November. The underlying shipment trends in each of these states continue to be good.

In total, same-store shipments for the quarter were up more than 8% in our aggregate segment, 4% in our asphalt segment, and 2% in our concrete segment. For the year, we shipped 178 million tons of aggregates. This is slightly above our mid-year forecast of 177 million tons, and an increase of about 10% over 2014's shipments. All in all, this was a very solid year of volume [growth].

Remember, this is from an asset base that has delivered aggregate shipments of approximately 300 million tons. As we talked about before, we are still early in the recovery towards 255 million tons, which we believe represents a more normal mid-cycle level of shipments. We have a broad base of demand both in terms of geography and end-use markets. We see each of our end-use markets continuing to grow.

Some of our Texas markets are at the upper end of the spectrum of normalized demand, having enjoyed extremely strong growth. Most of our markets, however, are still well below normal demand and should enjoy steady growth for years to come. We are seeing good growth on both coasts with still a lot of upside.

Other individual markets in the central United States, such as Nashville, Knoxville, and Chattanooga, are also continuing to strengthen. When you put it all together the longer-term shipment trends we focus on continue to look good across most of our markets.

Regarding pricing, we continue to experience a positive pricing environment in most of our markets. This is a result of three factors. First, we've invested substantial capital in the business to serve our customers and need to earn a fair return.

Second, we continue to see increasing customer confidence in the recovery. Third, the construction industry is increasingly focused on improving returns on capital as volumes remain well below normal levels.

Overall, freight-adjusted average sales price for aggregates increased 11% on a same-store basis, or $1.18 per ton compared to the prior year's fourth quarter. In the quarter, we estimate $0.15-per-ton help from product and geographic mix. For the full year, average selling prices increased 7%.

Now, I would like to take -- make a few remarks regarding our customer service and cost-control efforts. Throughout the quarter our teams did an excellent job meetings our customers' needs, including tight deadlines and complex demands on big projects, both safely and efficiently.

During the quarter, we saw improvement in repair maintenance costs and overtime labor costs. This improvement contributed to our strong finish for the year.

Costs during the first three quarters of 2015 had begun to rise as increasing volumes required us to run our plants longer. This led to more repairs and higher spending on parts and supplies and associated labor. Now I said in our last call, we are very focused on improving these costs. And we are beginning to see these improvements in September.

The improvements continued, and I am proud of our operating people for the work they have done here. We remain intensely focused on managing these costs efficiently, balancing the factors affecting production quality, service, and cost.

Still, a clear picture comes with a longer-term view. For the year, our unit cost of sales and aggregates declined slightly as our employees remained focused on continuous improvement. We got better at controlling costs as the year progressed. We also saw reduced expenditures as diesel costs declined.

Setting aside external forces, our strong emphasis on cost control near term and longer term will not change. Overall, I am pleased with the progress we have made with our execution and our focus. We continue to focus on customer service, employee development, cost control, and our safety performance. We saw marked improvement in our safety performance in the fourth quarter.

Let me emphasize, this is a continuous improvement track. A process of working to get better every day. We have made good progress but there is still more work to be done. A strong example of the progress we have made is the outstanding job our teams did converting incremental revenue into incremental gross profit.

Flow-through in the quarter was 89% on a same-store basis, obviously strong results. But better to look at it on a trending 12-month basis where was 77%, well ahead of the 60% threshold we target longer term.

Our unit profitability in aggregates continues to improve, something our employees work hard on and can be very proud of. Gross profit margin on a same-store basis increased 38% in the fourth quarter compared to the prior year's quarter.

Unit gross profit margin was $5.38 per ton. This marks 12 consecutive quarters of expanding unit margin. We will continue this trend. On a trending 12-month basis, unit margin increased by 29% to $4.38 per ton.

Now, there is the slide you have seen before, slide 11, that covers this. I would like to call your attention to it because it's impressive. Here you will see that for the trending 12 months we shipped 178 million tons, 38 million tons more than the year prior to the start of the recovery.

Aggregates segment gross profit for the year was $756 million or $398 million ahead of the 12 months before the recovery began. On 38 million tons of improvement, we have delivered almost $400 million in incremental segment gross profit. Gross profit per ton has increased $1.69 or 66% during this period. A 27% increase in shipments has been converted into an increase in gross profit in excess of 100%.

Looking at 2015 as a whole, you can clearly see the benefits of our aggregate-focused strategy. We have the assets and capabilities in place to service our customers. We have the focused execution to drive profitability, and we have a very strong platform for continuing growth. With that, I will turn the call over to John for additional comments on our earnings performance and outlook for the remainder of the year. John?

Thanks, Tom, and good morning to everyone. As Tom just highlighted, and as you've seen in our release, we had a strong finish to a strong year.

A year with same-store aggregates shipments up 7%, aggregates pricing up 7%, strong conversion of that incremental revenue into incremental gross profit, improved material margins in our asphalt and concrete businesses, and continued leveraging of SAG to revenues.

We expect to see much of the same in 2016. Another year of continuous compounding improvement in our execution and in our results. To complement the information shared in our release, I will first offer a few comments regarding the demand environment, then outline our performance expectations for the year and briefly note our plans for capital allocation.

As Tom said, we see a broadening recovery in demand across each of our end-use segments and across most of our geographic footprint. In total, we see demand across the markets we serve growing approximately 7%, with some upside potential based on the rate at which rising DOT budgets and public infrastructure funding convert into active construction projects and materials shipments.

We project private demand in the markets we serve to grow approximately 10% year over year, supported by growth in both residential and nonresidential activity. We see continued double-digit growth in residential construction across our footprint, with nonresidential construction continuing to expand, albeit at a slower pace than 2015.

Although certain measures of private nonresidential construction suggested some decline in the second half of the year, our on-the-ground view indicates continued solid growth. And importantly, employment data and other macroeconomic and demographic factors further signal a sustained recovery in private demand across our markets.

Much has been made about the potential impact of lower oil prices. We continue to monitor trends in private construction activity in markets such as Houston. But to date, we have not seen a materially negative impact when looking at our portfolio as a whole.

I will now turn to public demand, where we see 2016 being something of a transition year and in a positive way. Across our markets, we expect demand growth tied to public construction of approximately 5%. Longer-term visibility, with respect to public demand, has improved markedly with the passage of the federal highway bill, state-level funding initiatives, and record levels of local tax receipts.

In addition, the public construction share of tax receipts remains at 20-year lows and at ultimately unsustainable levels. This shift to higher levels of total public funding, combined with greater visibility, should allow for a higher percentage of new construction in the mix, which bodes well for our materials demand, and in our case, product balance.

All of this is good, but at this point, we don't see the full benefit of these trends impacting our volumes until 2017 and beyond. We will monitor the lag between DOT budgets rising and a commensurate increase in project activity throughout the year. But to be clear, rising public construction activity is beginning to kick in, with the question being, at what pace?

Finally, we continue to see the overall rate of recovery in many markets constrained by construction labor shortages and other bottlenecks in the total construction supply chain. Although this situation can inhibit the overall rate of shipment growth in the near term and lengthen the time required to return to normalized levels, it does provide further support for disciplined increases in pricing, margins, and ultimately returns on capital.

So against this backdrop of approximately 7% total demand growth in 2016, what do we expect to deliver in terms of financial results? As we've stated, our 2016 guidance is for between $1 billion and $1.1 billion in adjusted EBITDA, an approximately 25% increase over 2015. We don't give quarterly guidance, as you know, and we encourage investors to consider longer-term trends in addition to quarter-to-quarter results.

I will now comment on certain of the factors and assumptions underpinning our annual guidance. You should consider these figures to be mid-points of current management expectations and keep in mind that our results vary widely across the individual markets we serve.

Starting with aggregate shipments. We're projecting a total of 191 million tons, or an increase of 7% over the prior year. On the geographic basis, we expect the growth in 2016 to be relatively widespread, with higher rates in markets such as Arizona, Florida, Georgia and Southern California offsetting lower-than-average rates in markets such as Texas, where we see continued growth but at a slower rate than the Company as a whole, and Illinois where we project a small decline in year-over-year shipments.

As with 2015, we may see a greater share of shipments occur in the second half of the year, in part due to the impact of El Nino weather on our Western states, and in part due to the expected flow of large project activity throughout the year. Again, as Tom noted, the overall pricing climate for our materials remains positive and constructive. We're entering the year with good momentum and we currently expect freight-adjusted average selling prices for aggregates to increase 7% in 2016, in line with the increase seen in 2015.

Please keep in mind that pricing decisions in our business are made locally with wide variances by product type and geography. Our local teams will continue to balance pricing, customer service, operating efficiencies, and the overall sales and production mix, all with an eye toward improving total unit margins and earning a fair return on capital employed.

These shipment and pricing expectations of course suggest mid-double-digit growth in freight adjusted revenues for the aggregate segment. We expect to continue converting these incremental revenues into incremental gross profit at a 60% or higher rate. Consistent with this view, we expect gross profit in the segment to increase by approximately 25% year over year, and we expect to realize continued improvements in our per-ton margins.

We also expect to see continued profit improvement in our asphalt and concrete segments, following on the strong gains posted in 2015. We currently project gross profit for these segments combined to increase approximately 20% in 2016. These operations are well positioned to benefit from the continued recovery and demand, due to improvements to our asset portfolio, as well as our internal operating efficiencies.

Our current forecast for SAG is $295 million, approximately 3% growth over 2016. We plan to continue to leverage SAG to sales even as we make important investments in our sales and customer service capabilities. Administrative headcount should remain essentially flat year over year.

To recap, we expect to see in 2016 much the same of what you've seen in a very positive 2015, as well as through the entire early stage of the recovery so far. Our people at all levels of the organization are focused on helping our customers grow, controlling what they can control, and driving continuously improved results for our shareholders and other stakeholders.

Now I will conclude with some brief remarks regarding capital allocation. Our aggregate-centric strategy and the way we manage it day by day is geared toward generating significant amounts of free cash flow even in periods of depressed demand. That's by design, as you would expect, and we give it a great deal of focus.

Our priorities for allocating that cash flow and managing the inherent cyclicality of our business have not changed from those we've outlined at different times over the course of the last year or so. In short, we intend to balance three objectives: reinvesting in the business for productivity and growth, maintaining adequate financial strength and flexibility, and a disciplined return of capital to shareholders.

With respect to reinvestment, I will note that we plan to allocate approximately $275 million of cash this year to what we call core CapEx. That is reinvestment to sustain and improve the performance and productivity of our current operations. In addition, we expect to invest a meaningful amount in growth, whether in the form of acquisitions, or the internal development of new production and distribution capacity.

With respect to financial strength and flexibility, I will note that our debt-to-EBITDA ratio has lowered to 2.4 times. Refinancing activities during 2015 extended our debt durations while lowering our weighted-average interest rate.

We do not expect to use cash in the near term to lower our total debt of approximately $2 billion. Rather, we have the financing capacity and the liquidity needed to fund smart reinvestments in growth such as those I just mentioned. And we intend to maintain that flexibility throughout the cycle.

Finally, we expect the amount of capital returned to shareholders to increase as the recovery moves forward. As noted previously, we expect the dividend to grow roughly in line with earnings during the recovery phase of the cycle. We also expect to use opportunistic share repurchase to return additional capital over time. With that, I will hand the call back to Tom.

Thank you, John. You've heard me talk about the strong year we had and the things we consistently focus on to deliver superior results. Ours is a long-term business. We set long-range goals and work hard to get where we think we can be given our world-class assets and people.

We are pleased with our 2015 results and the way we are positioned for future success. We've made clear progress towards the goals that we set forth in our Investor Day, last February, and are very much on track. We are on track to achieve $2 billion in EBITDA at normal levels of demand.

We are on track moving steadily towards a normalized demand level of 255 million tons per year for Vulcan aggregates. We are on track for continuing gradual recovery in each major end market and in most of our geographies. We now have a fully funded long-term highway bill, and we are very pleased to see healthy increases in state and local funding for highways and other public construction.

We continue to anticipate aggregates segment cash gross profit at normal demand in the range of $8.25 per ton. This will be the result of solid sales execution, continued growth weighted towards our more profitable geographies, pricing fundamentals that continue to strengthen, and consistently strong incremental margins.

At normal demand levels, we also see greater profitability in our non-aggregates segment in the range of $175 million. Here, we benefit from continuing operating discipline and improvements, the strength in portfolio that came with our asset swap in early 2015, and improving materials margins.

We also remain on track with SAG costs, moving towards 6% as a percent of sales. SAG as a percent of revenue declined 70 basis points in 2015. We intend to further leverage SAG to sales growth.

As we look forward, we believe that we are well-positioned for several years of double-digit top-line growth with strong conversion to the bottom line. No matter how you look at this, I am pleased to tell you that we are executing well and that is the watchword of our people. Execute, execute, execute. Control your own destiny and finish strong.

I am very proud of our people and the good work they are doing. I can promise you that we are all committed to making a good Company better every day. We are excited about where we are today, and we are even more excited about where this Company is going. Now, if the operator will give the required instructions, we will be happy to respond to your questions.

(Operator Instructions)

Timna Tanners, Bank of America Merrill Lynch.

Thanks for all the great detail. I was wondering if you could provide a little bit more color around what would comprise the range of your guidance. If you could speak a little bit about volumes and how much that might include deferred tons from last year's weather, and talk a little bit more about color regarding Texas, that would be great.

I don't think -- when it comes to deferred tons in the fourth quarter, maybe a little bit. But as you heard us talk about our customers and the sense of urgency when the sun came out and when they were ready to work whether it was weekends or evenings, they pushed a lot of work through. There may be a little bit but probably not a lot of deferred work from 2015 into 2016. Your second question was about Texas. I think that how we look at Texas is -- obviously, it's a very big state with multiple markets and multiple market dynamics.

Breaking that down a little bit, Dallas, Fort Worth, San Antonio, West Texas, all have very healthy demand growth that we think will flow into 2016. Houston and some of the coastal markets may have some softening in the private side but overall I think that when you look at Texas it's still growing.

The only other one for me it if I could is if you could give us an update on what you're seeing in terms of M&A opportunities in general and how receptive are the mom-and-pops right now or do you think new geographies are kind of where you've been expanding recently is your focus?

We continue to see opportunities for attractive acquisitions. The timing of that is always an unknown or a question mark, just because when people decide they want to sell.

The key piece of that is discipline -- being disciplined and what we buy, what we pay for, and being very disciplined about how we integrate it into the Vulcan family. We also have to be very disciplined and clear about the synergies that are unique to Vulcan and how we leverage them.

Timna, this is John, just a couple of things I'd add on your question. First, just to be clear our outlook for 2016 does not include the impact of any new M&A. It includes the impact of transactions already done but not any new M&A.

If you're looking for things that can be kind of swing factors in volume, one we've called out is, again how quickly this higher level of public funding for construction converged into actual shipments for us. That can be a little bit difficult to predict and so I think that's a swing factor we will look at during the year.

Apart from a lot of the attention Texas gets I guess we would just also note that for us we see a very much a broadening of demand across our markets. Our demand growth in 2016 is really driven not by just any single state story. It's really driven by the entire portfolio and we think that's healthy for us. We are excited about it.

Bob Wetenhall, RBC Capital Markets.

Congratulations on a very nice finish to the year. I was hoping you guys could give a little bit of color -- your incremental gross profit margin was off the chart, well ahead of what we were expecting. Can you give us a little idea of how to think about that?

Obviously you've got some terrific price but you also called out mix. And then you mentioned there's some aggressive cost control on repairs and maintenance and also a tailwind from oil. I just wanted to get a better framework for thinking about this and the likelihood of this persisting into 2016.

Bob, it's John, I will start. As we always do we would focus you on the 12 month number not just the single quarter number. We think it gives you a good read.

I would encourage you to look at the 77 for the year as a more meaningful number than any individual quarter. We just think that's a better way to look at the business given the timing of how various revenues and costs can flow quarter to quarter.

Now if you -- you may have already done the math but you will see that our outlook for 2016 implies a flow-through rate that's above the 60% threshold that we see as a long-term number, but it's below the 77 that we did in 2015.

A couple things we think about as we look at next year, one is that we expect to have higher stripping cost as we prepare for future growth. Those are items that are expensed in the current year but they really prepare us for growth over multiple years. That's a bit of a factor we are considering in our 2016 outlook. We are also keeping an eye on what happens with diesel prices throughout the year.

We continue to believe that 60% is a very good long-term number. We expect to see something north of that in 2016. But I would also tell you, and I'm sure Tom will echo this, we are really confident and pleased with how our teams are executing. Because that's really where the rubber meets the road in our business. Our local teams are doing a fantastic job. We expect that execution strength to continue into the new year.

That's really helpful. I wanted to ask on slide 9, you had pointed out the large improvement that you are getting in gross profit per ton. I wanted to see what you're expecting, where can gross profit per ton climb to by the end of 2016 and what are your assumptions for the non-aggregates business in terms of volume growth?

You laid out that 7% number for core aggregates. I just wanted to see your thinking on the non-aggregate businesses in terms of volume trends. Thanks and good luck.

I will handle the non-aggregates. I think if we look at asphalt, we look at volumes probably up in the high single-digit, low double-digit range. Concrete, same kind of range.

I think we have with both of those -- both concrete and asphalt we have a very good -- like aggregates we have a very good healthy pricing and margin environment with rising customer confidence and demand growth.

Bob, one more thing on the asphalt and concrete businesses before getting to aggregates profits. Keep in mind that our asphalt business over time is really well exposed, if you will, to increases in public funding across many states. And so while the short term margin structure for asphalt can fluctuate, long-term returns on capital can be very stable and very attractive, again tied to public funding, a little bit more on balance.

To your point on aggregate margins per ton. First I will draw your attention to the longer term, that's how we think about the business. As you heard Tom say we think we are very much on track with the longer term outlook we put out at our investor day a year ago, which would imply on a cash basis per ton margins north of $8.

And if you look and see what's happening in pricing, if you look and see what's happening in our operating leverage, if you look at our results so far through the recovery, we are at least on track with that long-term goal. I want to draw your attention to that because that's really how we think about it.

In the shorter term for 2016 we continue to expect margins per ton to increase faster than the rate of pricing. So the year-over-year increase might be around 20% roughly, maybe slightly below that.

And again that ties back to a flow-through that is above the long-term 60% threshold but a little bit below last year. We think it's a reasonable expectation, something we are confident our teams can deliver on.

And if I could just sneak one in, on asphalt pricing, looks like it's breaking away from the positive trends in aggregate and concrete. How should we think about that into the end of the year?

We experienced a very good year in asphalt in 2015. Our people will continue to do an excellent job with quality and service, create value for our customers. Like stone, as I said earlier, there's a real healthy pricing and margin story when it comes to customer confidence, backlogs, people having vision, particularly with the highway build and asphalt.

I think our folks are doing an excellent job of managing cost, material margins while at the same time creating value for our customers. We will tell you -- and it's really hard to look at just price in asphalt, you really need to look at margin because the fluctuations in materials cost. We plan to expand our unit margins in asphalt slightly of 2016 over 2015.

Cool. Great quarter, and good luck.

Trey Grooms, Stephens.

You had a great year. My question I guess would be around pricing. Can you talk about geographically where you guys are seeing higher pricing relative to, or price increases I should say, relative to some markets maybe that aren't as strong from a price increase standpoint? I know you said that most of your markets realize solid price improvement but any color you can give us geographically on that?

I would answer this way, where we've seen the recovery more mature, those markets in general tend to be having higher price increases and it's all about the environment. But across the footprint, we see good pricing environment with rising demand.

The entire construction materials sector, whether that's contracting asphalt, concrete, is seeing improvements in margin. I think people are really pressing that. You've got customer confidence and good vision of what's going to happen.

That vision is really helped by the federal highway bill that passed. Now people know they've got five years of funding. States know they've got five years of funding. I think as you see that, that can only help the pricing environment.

Our folks are working hard to improve the value that we bring to our customers. Overall, where we've seen the recovery a little more mature, we see better pricing environment.

That makes sense. Thanks for that. As a follow up, how should we be thinking about the favorable product and geographic mix that we saw on pricing?

I think you pointed out that it was about $0.15 positive impact. Is that kind of a one time benefit -- I know it's not one time, but I guess the question is should we be expecting a similar type benefit as we look into the coming quarters and into 2016 being a favorable price -- excuse me, a favorable geographic and product mix?

Driving in the quarter some of that $0.15 was a one-time event. An example would be some very high-value product we shipped in South Carolina associated with some flood control. Some of that we would call out as a little bit one time.

But what I would underscore is that even if you take that out our pricing for the year, the pricing trend we're on, was actually still a good bit above the 7% we laid out for the year particularly in the same-store basis. I would think about the trend going into next year and the momentum for next year on a percentage basis, it's more like 7 plus as opposed to 11. Just because of what you're comping over period to period.

Let me underscore one more thing. There is no deceleration happening on pricing. The environment is still positive construction. What I would tell you is that we have 7% in 2015, we expect 7% in 2016, we're entering the year with good momentum, we have a lot of visibility to it; and it's a pretty strong story.

Just one more for me. On the outlook for private is up 10%, I think you guys have said res being up double-digits. I think that implies still some pretty healthy growth in your outlook for non-res. Specifically, what do you guys seeing that gives you guys confidence that the non-res market is going to continue to improve with that kind a clip? And also, if you could give us any idea of what your mix is in heavy commercial versus -- heavy non-res versus light in your non-res exposure would be great.

I'll start. I think we see and you said it, steady growth in the nonresidential sector included (inaudible) is mid-single digit growth in nonresidential. And while we've gotten some mixed singles -- we've all got some mixed signals about non-res construction with leading indicators, our outlook is very consistent with what we're hearing from our customers, with what we're seeing on the ground and what we experienced day in and day out.

I think we are quite confident in our nonresidential forecast and it's steady. You said it best, it's steady growth.

Stephen Kim, Barclays

I wanted to see if we could talk a little bit about your -- whether you saw a strengthening relative to your expectations at the end of the quarter, at the end of Q3 for example? You didn't really narrow your guidance range and it came in above the high end. If you sort of had to step back and look at how things trended over the course of the quarter is it true that things really exceeded your expectations at the end of the quarter and where would you say the greatest source of the upside surprise was?

I will start. I think a lot of it had to do with great execution by our people, frankly. Weather helped in a couple of markets. You saw that in the volumes, but overall weather was kind of a mixed bag in the quarter. Really, really wet and really, really warm.

I think what we saw was on the demand side, a lot of what we would have expected which is shipment patterns consistent with this continuing recovery. You heard Tom say when people were able to get work done, they did the work.

But internally the organization, our execution on pricing and margin management and cost control in the quarter was excellent, and reflected strong performance throughout the year. We had challenged our people, Tom had challenged our people to finish strong and they did so. I think you see that reflected in our results.

I would echo what John said, in that our folks are really focused on executing and finishing, and they did that. I think what you also see is, we talked about this a lot, that sense of urgency out in the overall construction industry and they are focused on execution and they finish the year strong and with a sense of urgency because they got work behind it going into 2016. They need to finish despite inclement weather at times.

That helps. Thanks very much for that. I think you, from what I can gather from your comment on capital allocation it didn't sound like you were looking to -- you were not including share repurchases in your guide or in your outlook. I'm just curious, have you bought any shares back so far this year? That's basically the main question I had.

Obviously, we haven't bought any shares back this year because we're still in the blackout period until today. You'll see in our financial statements reflection the shares we purchased toward the end of last year before the blackout purchase ended, fairly modest amount.

A might just repeat what we've stated many, many times which is in the context of our overall capital allocation priorities, which of course include reinvesting for growth and includes financial flexibility and include returning capital to shareholders. Within that context we would expect over time to have some, what we call, opportunistic share repurchases. Complements the dividend which we also expect to grow with earnings, and we will report on that of course every quarter.

So you don't have a [10b5-1] plan in place?

No.

Thanks very much guys.

Kathryn Thompson, Thompson Group.

Thanks for taking my question. I have to apologize we had our tower knocked out due to construction jobs in the Nashville area.

We like construction in the Nashville area. Sorry about your power.

It is what it is. Just more on the policy side, in your opinion when you look at that 22% growth in Georgia volumes, how much of that was assumption of normal weather versus seeing an early impact with passage of [household 170] volumes? Just from our numbers it adds an estimated $750 million to FY16 and $820 million to FY17 in terms of incremental transportation revenues. The reason we're getting [in the field] is that yes, there was definitely a weather impact, but how much was that volume also driven just by the passage of that bill?

I will start with the weather in that I think it was -- it's a little confusing because it was extremely wet in Georgia, yet it was extremely warm. We had help with the warm weather but got really -- the wet weather should have hurt us. I think it goes back to the thing that you were talking about is, that we had a number of large projects that there was a sense of urgency of when they could work, they went to work. In fact would that sometimes use more rock because you've got to get out of the mud.

I think that there is overall in Georgia, there is really solid underlying demand growth in all market segments. In every one of them. It's really healthy.

I do not think that the increased highway funding in Georgia has started yet. In fact usually that takes 18 to 24 months to flow through. Georgia is trying to accelerate that, in fact as John talked about earlier, you could see more of that in 2016 than would be normal possibly, but they've got to get that out there.

To answer your question, it is the impact of really solid underlying demand growth in all market segments, not the improvement in the highway funding.

Not yet. Because we share your view and longer-term enthusiasm with respect to the funding changes in Georgia. They were very long overdue. We absolutely agree, it's just not yet.

I think what you're seeing now has been a long building improvement and a lot of private construction in Atlanta which, Kathryn, as you well know, is one of the most depressed of all the markets in which we operated in. We have a fantastic position and team in Georgia. We're really excited about the outlook there.

So in other words it's 75% to 80% increase in state funding (inaudible), there really is no impact yet in volume?

I don't think you were seeing that yet in the fourth quarter, maybe a teeny bit. We will keep an eye on how much we see in 2016.

Garik Shmois, Longbow Research.

Congratulations. A couple questions on pricing if I could. Your run rate exiting above the 7% average for 2015, and above the guidance for 2016.

Just wondering why, just given the strength and pricing that we saw on the back half of the year, why wouldn't we automatically assume that the pricing guidance is conservative? And John I think you alluded that it's a 7% plus view, but what would it take if -- for pricing to trend maybe towards the low end of your internal expectations?

I will start, Garik. Trying to trend toward the low-end, first thing we feel like we have very pretty good visibility on pricing side. Now pricing on our business, Garik, as you know is a function of literally thousands of decisions made throughout the course of the year. So it's a little bit inherently harder to predict.

I think if we were going to trend toward the lower end, unless something unforeseen happens, to some degree it would be a function of geographic or product mix. Some shift in that, that we just don't see right now. But I would echo as Tom said, the conditions for that kind of pricing increase would seem to be in place. And therefore it's included in our guidance.

You're not expecting much in the way of a big step up in DOT funding to benefit 2016 demand; it sounds like a 2017 benefit. But in the case there is some demand that comes through in the second half of 2016 from some new large infrastructure projects, conceptually can you help us understand how that might impact pricing if your business mix ends up skewing towards the start of new big highway work?

A couple things. First of all I think we do have increased funding in -- DOT funding in 2016, maybe not Georgia or a lot of the -- some Georgia -- but you've got a number of states that have huge increases in DOT funding that we have built in 2016. Texas is one, they're going from $6.1 billion to $9.8 billion. Florida goes up substantially.

We've got six or seven states that have already passed increased funding that will flow through in 2016. The big impacts on the highway bill and as funding increases, we need to take another step in 2017, coupled with the state DOTs will start letting larger jobs with the visibility of having long-term funding.

As far as pricing is concerned, I think as it does flow through, it will be a mix of work on the job. Obviously asphalt prices tend to be the high end of the spectrum, base on the low, but I think it could possibly help prices but I probably tell you it will probably be pretty neutral.

Garik, if history is any guide, it should be positive for margins and overall returns. And again, it's one more reason we keep getting people focused on the margin per ton line and not just the price line.

Adam Thalhimer, BB&T.

Good morning guys, congrats on a great quarter. You guys started out the discussion saying you were surprised how skeptical people are about the construction recovery.

Then when you talk about double-digit revenue growth from multiple years, that's something I would expect people to try to poke holes into. What would give you confidence in saying that about years beyond 2016?

I think, Adam, one of the things that's been a real game changer for this is the passage of the long-term highway bill and the passage in multiple states for long-term substantially increased funding. That gives us -- that really gives us the industry and us visibility and it gives you a foundation -- a growing foundation in the public sector of demand growth.

Adam, you need to look into it and understand of course that really with the exception of just a couple markets in Texas, all of our markets, and our markets on balance are still well below normalized levels of demand. Construction activity has a long way to recover. It's not even driven by new economic growth.

And at the levels we're talking about, we'd still have multiple years before we get back to 45 year trends of normal consumption. Mid- to high single-digit shipment growth and mid- to high single-digit revenue growth, if I can do the math correctly, is more than double-digit revenue growth.

That's where this continuous steady rate of gradual recovery. Is it going to be a perfect straight line absolute linear quarter to quarter? Of course not.

History hasn't worked that way but history would also show that we absolutely recover to normal and then in fact expand beyond that. I think of you take a longer-term view it's actually -- it's not -- in fact it's if anything conservative relative to history.

Thanks for reiterating that and then just lastly, I wanted to follow up on Trey's question. I think he was trying to get a breakdown of the heavy and light non-res, light non-res being the work that would typically follow housing and then maybe heavy -- maybe you can give us a sense for what your exposure would be in the big energy projects along the Gulf Coast.

I tell you it's a good mix. With housing continue to grow you will see the light follow that and it always does. We see really good housing growth in 2016. As far as the heavy, we still have substantial amount of projects along the Gulf Coast -- energy projects actually going into 2016, some into 2017 and some into 2018.

We've not seen -- we've seen a few new ones start to look at engineering and permitting, but that segment continues to be healthy whether it's refinery expansion, port jobs, ethanol crackers, we still see substantial projects. We have -- our outlook is very clear for 2016, and pretty clear going into 2017.

Ted Grace, Susquehanna.

Great quarter, great end of the year. John, I was wondering if you could just step through either a gross profit per ton bridge or a consolidated EBITDA bridge just so we can get quarter of magnitude, kind of what the benefit in 4Q was. It's not hard to figure pricing and volume but kind of R&M benefits, energy. We were estimating maybe $10 million of year-on-year benefit from diesel and aggregates alone. Could you maybe just step through that so we've got the data?

Ted, some of it we can do off-line in more detail, but let me give the highlights, kind of quarter and year. And as always, I try to draw more attention to the year. In the quarter you saw that our ton of cost of sales per unit declined. That was a combination of as you said continued diesel benefit year over year, roughly in the range of what you discussed.

But unlike previous quarters we did a better job of managing our per ton expenses of R&M and some other costs. So on balance we had a decline in cost of sales for the quarter and I think you saw that.

For the year we had a slight decline into our cost of sales and that was really diesel benefits offsetting some rising per ton costs that we commented on throughout the year in terms of R&M, parts and supplies, associated labor with that, et cetera, as well as some overtime labor as we ramped up production. We're really pleased with execution we had in the fourth quarter.

We are not taking for granted that all those issues are behind us. We are still ramping up production and are still well below what you would normally think of as the sweet spot of production levels in many of our plants. So it's something we'll very much keep an eye on and manage tightly as we go through 2016.

And on a related basis if you kind of run rate current diesel prices and it would imply something like $30 million or so year-on-year benefit, just dimensionalize what's baked into guidance or expectations?

I think our current guidance, our current plans would have diesel prices rising slightly relative to where they are now. It might be something that I need to check hour by hour the way oil prices have been moving. But we don't have a further decline in prices baked into our plan.

The second thing I was hoping ask is just on SAG, a bit above our expectations in the fourth quarter. I know you highlighted kind of pension and profit sharing and some investment in sales. Can walk through 4Q kind of relative to expectation just so we can appreciate that?

Sure, and I'll do it relative to the year, too, so I wouldn't -- don't read 4Q as a run rate change; there were some accrual timing issues that made 4Q higher. So I wouldn't read run rate from 4Q. For the year we are obviously a bit above our expectations which is not something we are pleased with. I think that year we executed better than we forecasted, to be honest.

Some of my comments on SAG, which is probably a number I would like to be zero, as a CFO. Our comments on SAG would be that administrative headcount year on year remained essentially flat. The core wage element of our SAG was well in control.

The variances were driven by fringes which is pension, payroll taxes, some deferred comp, calculations, those kinds of things, which we frankly just did not forecast as well as a I would have liked to at the beginning of the year. Some of those were driven a little bit higher with our rising stock price.

We also had higher outside services fees and professionals fees, those were legal and tax. And a couple other items associated with some changes we're making and some investments we're making on the sales side of our business. And then finally our sales headcount was modestly higher in the year in our SAG associated with that as we continued to invest in growth for the future.

So again, I think the execution was solid. We would like to see that number grow at more like 3% than what we saw in the past year. We will work to control it and we will certainly continue to leverage it to sales.

That's helpful. Great quarter again and best of luck this year.

Todd Vencil, Sterne Agee.

Good morning. A lot of stuff's been knocked out but just a couple of follow-ups. I want to beat the non-res horse a little bit more just given that, that's where a lot of investor concern has been focused and everything you are saying would seem to completely contradict and/or refute a lot of what I've been hearing over the past few weeks from people on the other end of the phone.

You talked about some mixed signals from the forward-looking indicators and that doesn't jive with what you're seeing on the ground. Can you kind of -- kind of help me think about how you put those two things together?

What among the forward indicators would look soft, and have you seen any reflection of that, and it just doesn't balance out or you feel like the forward-looking indicators are suggesting softness or simply off-base or being interpreted wrong?

I think you've got -- just to look at the indicators you've got [Dodge], who actually showed some weakness in Q3 and Q4. Then you got the construction backlog indicator by the Association of Builder Contractors which for the US was flat but for our market in the South was up about 10% or 15% for Q4.

And then more importantly, what we're seeing in our individual markets you still got solid growth in the non-res. I'll give you little flavor on that. If we looked at how we saw -- if you sit here where we are, non-res going in 2016, we say that Atlanta will be up high single digits, Nashville up -- excuse me high double-digit, Nashville up mid double-digit, Phoenix low double-digit, Chicago, low double-digit, Charlotte 10% or 11%.

You've got a lot of cities and a lot of locations where there is still very healthy growth in non-res and trying to take an indicator on a national level is tough to put into our world where it's just local and we've got good visibility.

Perfect. That helps a lot. On the public side your comments about the fact that a lot of the highway build stuff isn't going to kick in until 2016.

Georgia hasn't started to kick in yet in terms of their state improvements and their transportation funding. Is there -- would you think that highway growth in 2017 could be better than the growth rate in 2016 because of these factors?

Yes. And I would tell you that I think that will continue to grow 2016, 2017, 2018, 2019, out to the future as -- because the federal funding is compounded at 3% per year. Then you've got a number of states who have already or are already now collecting funds. Those funds will continue to grow in the future, and as important as anything, then that work will start flowing through.

As I said earlier you've got -- normally you have, unless somebody is really accelerated or has plans on the shelf, you've got 18 to 24 months of lag time from collecting the taxes to shipping rock. Now Georgia has announced publicly that they are going to be very aggressive about trying to turn work out in 2016 and I think they're working hard at that.

We are pulling for them, but it just takes time to do plans, get engineering, place bids, and even get permits. So it will be, and I said earlier, this is a game changer for an industry in that you've now got a real visibility out into the future for multiple years and you've got a foundation that is continuing to grow.

Perfect. Thanks a lot.

Jerry Revich, Goldman Sachs.

Good morning. Tom, wondering if you could talk about the price increase for January 1 that you've put through for 2016 and how does that compare versus the price increase that was rolled out to start last year?

I tell you that it depends on the market. We really come back to this every time. We make literally thousands of pricing decisions every day. You've got some markets where we have January 1 price increases and you've got others that have a cadence of April 1. You've got others that have a cadence of April and October, or January and July.

It's really all over the board and there's not just one price increase that goes out there. I would tell you that from where I sit, I'm very confident in our 7%. That will be over quarter, over quarter, month over month, that will be choppy, it always is.

But with the end of the day like we told you last year, we were solid in the 7% and that's where we finished. I think going forward, though, I think as you look at it that the environment for pricing, and I talk about this a lot because it's so important, of customer confidence and improving visibility out into the future and rising demand is very important.

As we think about the way the pricing cadence worked out over the course of 2015, like you said you built momentum over the course of the year which was really the first time we saw that in this cycle, are you thinking about the pricing cadence in 2016 aligning up in similar fashion when you roll up all of the thousands of pricing decisions like you mentioned?

It's hard to predict because first of all you're comping over very different numbers. So at this point I'm not sure sitting here in the first couple weeks of February that's really hard to predict. It could line up like that or you could see it be much more solid or much more steady through the year. It's just too hard to predict with only a few weeks gone in the year.

And then in terms of the Department of Transportation budget comments that you made, can talk about your view of 5% growth how much of that is based on their budgets versus what you're hearing from the folks in procurement, and I guess what's the potential that we get projects started sooner relative to what's implied by a 5% comment?

Again that 5% is a rollup from a lot of different markets, a lot of different DOTs, and even more local engineering segments of DOTs, or districts of DOTs. Our folks usually have pretty good visibility to that, just because they spend a lot of time knowing what those projects are going to look like.

As I think John said earlier, you could see some big DOT projects get pushed forward. We would welcome that but at this point -- and they're talking like -- for example in Georgia and a number of other states there is a lot of talk about that, but we haven't seen it come to fruition yet and we don't count that until we see that happen. I couldn't predict whether that will happen or not.

James Armstrong, Vertical Research.

Thanks for taking my question, and congrats on a good quarter. First question I have is margins in the fourth quarter were really strong, then you mentioned fuel but as fuel costs have come down have you seen distances that you can ship aggregates rise and if so what effect are you seeing from that trend?

Theoretically that could happen but I will also tell you that with rising demand, rising confidence, people are servicing the market and profitably servicing the market closer to them, as opposed to they don't have to reach out because the work is improving right around where they are.

This goes back to pricing environment and the health of it and people recognizing that we are not back to normal demand, yet they've got to make returns on the investments they have and that is true for aggregates, or asphalt, or concrete, or contracting. While I understand why you asked the question and it's a very good one, it's not playing out that way.

Most of our urban markets, which is a concentration for us, you've got a lot of other barriers to long-haul shipping or truck -- long trucking that go way beyond diesel cost. It's availability of drivers, availability of trucks, traffic patterns, regulatory issues around trucking, unpredictable service quality the further you're trucking the stuff. There are a lot more things, particularly in urban environments, that go into this just diesel price right now.

That helps. Switching gears to the highway bill that you touched on a lot on today's call, you don't see much impact in 2016 yet, but what projects are out there and what type of visibility do you have for 2017 and beyond? Can you help us quantify that a little bit?

I'm not sure I can give you individual projects. There are a number of very large projects that are in the works. There's bidding that are out there.

I think, and I'm not sure I can identify off the top of my head, any specific large projects, but places like Tennessee for example have actually held a number of projects because they did not have visibility. What those are I'm not sure I could quote to you but that's an example.

I think what you will also see is, it will be two things, it will be -- part of it will be expansion and new projects which we love because they are more aggregate intensive. But you've got a lot of states like South Carolina that really are -- and a number of other states that really have a lot of maintenance issues that will flow through very quickly. It may not be large projects, but with that funding there, they will go ahead, and these are overlays and things like that which will come faster than the large projects.

That helps. Thank you.

Stanley Elliott, Stifel.

Thank you for fitting me in. Quick question about the improvements you guys made on cost side of the equation. You talked about repaired maintenance costs coming down.

Is that because of new equipment that's come in, some of the growth CapEx to help bring those numbers come down? And then the second part to the question was around labor costs with lower overtime, does that mean that you sufficiently kind of staffed up some of these plants that had been needing or borderline needing a second shift or what have you, to the point where now it should be smoother sailing heading into 2016?

I think you a little bit answered your own question in that obviously, replacement capital and [particularly] mobile equipment or [fixed] equipment helped [inshore] costs. But it's really -- what we really focus on while we do that, and do that appropriately, what we really focus on is doing proper preventative maintenance and timing and fixing things the right way the first time so you are not throwing good money after bad.

When it comes to whether it's labor or uses of diesel or cost in general, I think it's that continuous focus on operating efficiencies. You heard us talk about we struggle with labor -- our folks to find it. Actually in the back third of the year it wasn't just the last quarter, it was September forward, they made significant improvements on their efficiencies, their labor, and their planning.

Again, you're correct about shifts where you're bringing things up and you're running multiple crews between even more plants. Labor can be a challenge without appropriate planning. I am very pleased with our operating people at their never being satisfied, they're campaigning for continuous improvement. They focus and work hard every day and I give them credit. They are never satisfied and they work tirelessly on it.

All of this is about compounding that continuous improvement to give us the margin expansion that we've enjoyed over the last ten quarters. That speaks to that never being satisfied and that continuous campaign to improve and improve those operating efficiencies.

One last one, the issues kind of going on at the credit market, does that have any bearing on when you guys ultimately and finally get bumped up to investment grade?

You probably have to ask the rating agencies. It should not, from my point of view, but that's obviously up to the agencies.

Fair enough. Thanks guys and congratulations and best of luck.

Brent Thielman, D.A. Davidson.

Great quarter and great year. John, can you elaborate on your comment about product balances, public sector you work with? Are you referring to some of the downstream businesses or is that related to the types of aggregates you expect to sell as the market gets more momentum?

It's more the types of aggregates. New construction can be a lot more aggregate intensive. It helps us, if you will, produce and sell the full product mix whether that's asphalt sizes, concrete sizes, base.

It's very efficient work for us when we do it the right way. It's just a better mix than we've had earlier in the recovery. My main point from that, that I make to people, is we tend to focus only on the price impact when it's conceivable that it could have a marginally negative price impact yet be very positive (inaudible) margins.

Got it. I know a lot of questions on this highway bill, I'll ask one more. I'm curious your thoughts -- states now have greater federal funding clarity. Do you see or hear any conversations or anticipate that this bill could actually be a catalyst for more states now to kind of think about a gas or sales tax?

I know we have seen a few of them already but given the sense that they have some idea of what's coming to them from the federal government and there are certain needs out there. Could that push more through in terms of -- ?

Absolutely. I think you said it best. It is being a catalyst for states that haven't increased their funding to take matters into their own hands. They recognize the opportunity that have with increased and long-term federal funding, so you are seeing a number of states, California, South Carolina, for example, who are -- their legislature -- the state legislatures are in the throes of trying to address much-needed infrastructure improvements.

Of all of this, with the bill in place of your served markets, where do you think this is going to have the biggest impact, or where do you feel like the burden's been greatest because of a lack of federal funding clarity?

I think we have had a number of states that have -- Tennessee to be an example, Arkansas as an example, South Carolina as an example -- that have been very hesitant to increase their own funding but also let much-needed major projects that are multi-year, because either they have a legal obligation that they can't or they're worried about being paid back. I think as you said in your opening question and comment, it will be a catalyst for both.

Mike Betts, Jefferies.

I have two questions if I could please. First one on --

Mike, I'm sorry I can't hear you.

Can you hear me any better now?

That's great, sorry about that.

No worries. I had two questions if I could, Tom. First one returning to the non-res area, is it possible to give us some indication of when you kind of did the budget, roughly what proportion of the work assumed in non-res was already contracted and therefore there's some kind of certainty? Because I'm sure you follow all of the contracts [towards] states rather than you took a view it might happen just to give us some -- maybe some a bit more confidence in that non-res numbers?

And then secondly on the asphalt, because you expanded quite significantly in 2015. How much now is kind of maintenance work which is let probably during the year that the work is done rather than long-term contracts?

Clearly on the non-res, I'm not sure I can give you percentage of what is back-logged, that's really hard to do because so many of those are small jobs that you have to get into the local detail on whether it's a Walmart parking lot or a big box store or a high rise. That's really hard to predict.

The heavy side of it is pretty clear.

That's where I was going. The big work, the major projects, we have very good clarity and in fact we are already shipping them or we know exactly when they are going to start because those jobs have very tight, very tough deadlines, very specific delivery obligations; and so we know exactly what's going on with those.

You were asked earlier, and I am not sure that you wanted to answer, but the rough split between heavy and light?

I'm not sure I have a number for you. I will have to get back with you on that.

And on the asphalt again, a bit short-term work versus longer-term work, the rough proportions and what happens, I guess, and if the asphalt price moves massively?

I think there is probably a pretty good mix of short-term and long-term work. The majority of it I would -- usually when you look at that overlays or shorter term, new construction is longer-term, you're going to be more heavily weighted towards the shorter term for overlays as opposed to new construction.

I would tell you that towards the end of this year and moving into 2017 and 2018 you'll see the market piece of that of the longer-term growth, and we've seen that grow over the last 18 months. But the majority of it's going to be shorter term.

Material margins and asphalt can fluctuate period to period. I'm not sure that this is quite what you're asking, but we don't have lots and lots of long-term fixed-price contracts or anything like that. So obviously, the margin could fluctuate period to period.

As you know asphalt can be a little more volatile in this margin than some other parts of the business, although generally always positive and good. But no, we don't have lots of long-term fixed-price contracts that gives us some big exposure.

And to finalize on that, have you -- the liquid asphalt price I think [the cost] was declining, but way slower than the oil price. Is that still the situation?

Liquid asphalt prices have probably somewhat leveled off. I think that's how we -- as we planned this, that would be our plan now.

Who knows, as none of us do, but as I said earlier with that we do have a modest increase improvement in our unit margins in asphalt. And that's really driven by some operating efficiencies and some -- actually some new plan -- some new capital we put into that product line as well as we think we've gotten a little bit better from an operating perspective.

Understood. That's great. Thank you both very much.

We have no further questions at this time. I would now like to turn the call back over to Tom Hill for any closing remarks.

I will tell you thank you very much for your interest in Vulcan Materials. I would like to thank our folks for their tireless effort to improve our Company.

I would also like to reiterate we are very excited about our future. We look forward to talking to you in the weeks to come. Thank you.

Thank you. This does conclude today's conference call. You may now disconnect your line.