Segment Results
Aggregates
For the fourth quarter, gross profit increased 18 percent to $326 million, or $5.64 per ton. Cash gross profit per ton improved 6 percent from the prior year to $7.41. The year-over-year earnings improvement was widespread across the Company's footprint and resulted from both volume and price growth, as well as effective cost control. This year's fourth quarter results included an $8 million unfavorable impact from selling acquired inventory after its markup to fair value as part of the USCR acquisition and a $15 million unfavorable impact from significantly higher diesel fuel costs.

Total aggregates shipments increased 13 percent (7 percent on a same-store basis), reflecting improving demand across all end-market segments as well as the benefit of favorable weather in certain markets during November and December. As demand visibility improved, the pricing environment continued to strengthen, and the rate of pricing growth improved sequentially each quarter this year. In the fourth quarter, same-store freight-adjusted pricing increased 3.7 percent year-over-year (mix-adjusted pricing increased 4.2 percent) with the growth widespread across geographies.

Solid operational execution offset higher year-over-year costs for diesel fuel, inflation for certain parts and supplies, and operational disruptions caused by labor shortages. Freight-adjusted unit cash cost of sales increased 1 percent as compared to the prior year's fourth quarter.

For the full year, cash unit profitability increased 5 percent from the prior year to $7.43 per ton. This year-over-year improvement was driven by 7 percent volume growth, 3 percent price growth and effective cost control despite a more than 50 percent increase in diesel fuel prices. Positive pricing opportunities and improved operating efficiencies are expected to continue to help offset some of the cost inflation going forward.

Asphalt, Concrete and Calcium
Asphalt segment gross profit was $4 million in the quarter compared to $17 million in the prior year period. The year-over-year decrease in earnings was driven by higher costs for liquid asphalt ($17 million impact). The average cost of liquid asphalt during the fourth quarter was 35 percent higher than the prior year's fourth quarter when liquid prices were at a three-year low. Average selling prices for asphalt mix increased 5 percent, or $2.80 per ton, versus the prior year's fourth quarter as pricing actions initiated earlier in the year gained traction. Sequential price growth in asphalt mix eclipsed 2 percent per quarter since the sharp jump in liquid asphalt costs experienced late in the second quarter. Asphalt volumes declined 1 percent in California and Arizona (the Company's two largest asphalt markets) while volumes increased in Alabama, New Mexico, Tennessee, and parts of Texas. Overall, asphalt shipments declined by 1 percent.

For the full year, Asphalt gross profit decreased from $75 million in the prior year to $21 million. The year-over-year change in gross profit was primarily due to sharply higher costs for liquid asphalt ($41 million impact) and a rise in natural gas prices ($6 million impact). Asphalt volumes decreased 4 percent from the prior year. Volume growth in California, the Company's largest asphalt market, was more than offset by lower volumes in Arizona, the Company's second largest market. Efforts to mitigate the earnings impact of persistent energy inflation will continue with positive results in price growth expected to contribute to unit profitability improvement in 2022.

Fourth quarter Concrete segment gross profit increased from $9 million in the prior year to $22 million. Segment results benefited from higher shipments and price growth in the Company's legacy operations as well as the contribution from USCR operations. Material margins improved as higher selling prices helped offset higher raw materials costs, including aggregates supplied by the Company. Segment results were negatively impacted by higher diesel prices and the availability of drivers in certain markets.

For the full year, Concrete gross profit increased $10 million to $54 million. Earnings contributions from USCR operations more than offset the earnings impact from lower volumes in the Company's legacy Virginia operations. The lower volumes were due mostly to the timing of several large projects that were completed in the prior year. Material margins increased in the Company's legacy operations despite lower volumes.

Calcium segment gross profit was $0.3 million compared to $1.2 million in the prior year quarter.

Selling, Administrative and General (SAG) and Other Items
SAG expense was $125 million in the quarter, or 7.8 percent of total revenues, and included overhead expenses associated with the USCR business that were not in the prior year's quarter. Additionally, increased routine business development activities and more normalized travel expenses, due in part to integration activities, contributed to the year-over-year increase. Full year SAG expense was $418 million, or 7.5 percent of total revenues.

For the full year, gain on sale of property, plant & equipment and businesses was $120 million. This total amount included the sale of a reclaimed quarry in Southern California during the first quarter of 2021. The transaction resulted in a pretax gain of $115 million, or $0.64 per diluted share. The Company remains focused on its efforts to maximize the value of its portfolio of quarry operations as they move through their life-cycle of land management.

Financial Position, Liquidity and Capital Allocation
Capital expenditures in the fourth quarter were $173 million, including maintenance and growth projects as well as USCR. For the full year, capital expenditures were $465 million, including $170 million for growth projects. In 2022, the Company expects to spend $600 to $650 million, including growth and capacity-adding projects. These amounts also include spending for USCR operations acquired in August 2021. The Company will continue to review its plans and will adjust as needed, while being thoughtful about preserving liquidity.

At December 31, 2021, the ratio of total debt to Adjusted EBITDA was 2.7 times (2.5 times on a net debt basis). The Company remains committed to its stated long-term target leverage range of 2.0 to 2.5 times total debt to Adjusted EBITDA.

Interest expense, net of interest income, was $36 million in the fourth quarter compared with $34 million in the prior year. Interest expense, net of interest income, for the full year was $148 million compared to $134 million in the prior year. This full year increase includes financing costs associated with the USCR acquisition and is consistent with the Company's full year expectations.

On a trailing-twelve-month basis, return on invested capital was 14.2 percent. The Company remains committed to driving further improvement through solid operating earnings growth coupled with disciplined capital management.

Outlook
Regarding the Company's 2022 expectations, Mr. Hill said, "With a strong finish in the fourth quarter, we carry considerable momentum into the new year. Our markets are poised to outperform other parts of the country as demand continues to improve, and our industry-leading unit profitability increases with each passing quarter. We will continue to drive substantial value through the combination of our legacy business and the acquisition of USCR. Residential construction remains strong, and contract awards for private nonresidential buildings are growing again. On the public side, infrastructure investment is moving forward, and we are well positioned in attractive growth markets where the need is greatest. That said, labor shortages and supply chain disruptions are expected to continue to limit shipment growth in 2022. We expect the favorable pricing dynamics that improved throughout 2021 to be even better in 2022 and lead to attractive growth in aggregates unit profitability. Growing our aggregates unit profitability consistently during the last two years of pandemic-related disruptions demonstrates the resiliency of our business and our ability to capitalize on any changes in the macro environment."

Management expectations for 2022 include:

Net earnings attributable to Vulcan of between $800 to $890 million
Adjusted EBITDA of between $1.720 to $1.820 billion
High single-digit growth in Aggregates cash gross profit per ton ($7.43 in 2021)

Total shipment growth of 5 to 7 percent (222.9 million tons in 2021)
Freight-adjusted price increase of 6 to 8 percent ($14.87 per ton in 2021)
Mid-single digit increase in freight-adjusted cash cost (freight-adjusted price less segment cash gross profit per ton; $7.44 per ton in 2021) due to higher energy-related costs (mostly diesel fuel) and continued inflationary pressures in other areas

Cash gross profit of $300 to $325 million in Asphalt, Concrete and Calcium collectively

Concrete segment expected to account for approximately 75 percent of the total due to a full year of results from USCR operations as well as margin improvement in the Company's legacy operations
Asphalt earnings improvement driven by volume growth and price improvement. Higher prices for asphalt mix in the second half of 2022 are expected to reduce the earnings impact of higher liquid asphalt costs and natural gas used in production

SAG expenses of $485 to $495 million, including a full year of USCR
Interest expense of approximately $150 million
Depreciation, depletion, accretion, and amortization expense of approximately $540 million
An effective tax rate of 21 to 22 percent

Mexico Update
Since late 2018 and as previously disclosed, Vulcan has been engaged in a NAFTA arbitration with Mexico over Mexico's repudiation of an agreement to unlock a portion of Vulcan's reserves in Mexico and the arbitrary shutdown of a portion of our quarrying operations there. A hearing took place in July 2021, and we expect a decision in the second half of 2022.

While we await the final resolution from the NAFTA tribunal, we have continued to engage with government officials to pursue an amicable resolution of the dispute. Recently, however, Mexico has taken additional actions that adversely affect our operations in Mexico, including delays in issuing a historically routine three-year customs permit for our deep-water port at Punta Venado. Mexico has issued a short-term customs permit that must be renewed after two months.

Failure by the Mexican government to issue the customary three-year customs permit or its taking of any other measures that force us to cease operations in Mexico would have an adverse effect on our ability to supply customers. We continue to negotiate with the Mexican authorities to reach a mutually agreeable and beneficial solution.

The Company has quarried limestone legally in Mexico – on land that it owns – for over 30 years. Vulcan is the sole owner of four lots of land south of Playa del Carmen, Quintana Roo, that together form its "Sac Tun" operation, formerly known as Calica. Vulcan has the right to maintain full property ownership over these lots, owns the limestone reserves in these lots, and complies and has always complied with Mexican law, including the laws and permitting regulating the extraction, processing and exportation of limestone.

Conference Call
Vulcan will host a conference call at 10:00 a.m. CT on February 16, 2022. A webcast will be available via the Company's website at www.vulcanmaterials.com. Investors and other interested parties may access the teleconference live by calling 800-891-3968, or 785-424-1250 if outside the U.S. The conference ID is 9125567. The conference call will be recorded and available for replay at the Company's website approximately two hours after the call.

About Vulcan Materials Company
Vulcan Materials Company, a member of the S&P 500 Index with headquarters in Birmingham, Alabama, is the nation's largest supplier of construction aggregates – primarily crushed stone, sand and gravel – and a major producer of aggregates-based construction materials, including asphalt and ready-mixed concrete. For additional information about Vulcan, go to www.vulcanmaterials.com.

FORWARD-LOOKING STATEMENT DISCLAIMER
This document contains forward-looking statements. Statements that are not historical fact, including statements about Vulcan's beliefs and expectations, are forward-looking statements. Generally, these statements relate to future financial performance, results of operations, business plans or strategies, projected or anticipated revenues, expenses, earnings (including EBITDA and other measures), dividend policy, shipment volumes, pricing, levels of capital expenditures, intended cost reductions and cost savings, anticipated profit improvements and/or planned divestitures and asset sales. These forward-looking statements are sometimes identified by the use of terms and phrases such as "believe," "should," "would," "expect," "project," "estimate," "anticipate," "intend," "plan," "will," "can," "may" or similar expressions elsewhere in this document. These statements are subject to numerous risks, uncertainties, and assumptions, including but not limited to general business conditions, competitive factors, pricing, energy costs, and other risks and uncertainties discussed in the reports Vulcan periodically files with the SEC.

Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary significantly from those expressed in or implied by the forward-looking statements. The following risks related to Vulcan's business, among others, could cause actual results to differ materially from those described in the forward-looking statements: general economic and business conditions; a pandemic, epidemic or other public health emergency, such as the COVID-19 outbreak; Vulcan's dependence on the construction industry, which is subject to economic cycles; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction; changes in Vulcan's effective tax rate; the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; the impact of the state of the global economy on Vulcan's businesses and financial condition and access to capital markets; risks related to international business operations and relationships, including recent actions taken by the Mexican government with respect to Vulcan's property and operations in that country; the highly competitive nature of the construction industry; the impact of future regulatory or legislative actions, including those relating to climate change, wetlands, greenhouse gas emissions, the definition of minerals, tax policy or international trade; the outcome of pending legal proceedings; pricing of Vulcan's products; weather and other natural phenomena, including the impact of climate change and availability of water; availability and cost of trucks, railcars, barges and ships as well as their licensed operators for transport of Vulcan's materials; energy costs; costs of hydrocarbon-based raw materials; healthcare costs; labor shortages and constraints; the amount of long-term debt and interest expense incurred by Vulcan; changes in interest rates; volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully integrate acquisitions; the effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan's products are distributed; and other assumptions, risks and uncertainties detailed from time to time in the reports filed by Vulcan with the SEC. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement. Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this document except as required by law.

Vulcan Reports Fourth Quarter and Full Year 2021 Results