Good day, everyone, and welcome to the Vulcan Materials Company Fourth Quarter 2016 Earnings Call. My name is Yolanda, and I will be your conference call coordinator today. At this time, all participants have been placed in a listen-only mode to prevent any background noise. A question-and-answer session will follow the company's prepared remarks. And now, I would like to turn the call over to your host, Mr. Mark Warren, Director of Investor Relations for Vulcan Materials. Mr. Warren, please begin, sir.

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 on our website supplemental information for your review and use. Rather than walk through each slide on this call, we will focus on the highlights. 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. These risks are described in detail in the company's SEC reports including our earnings release and our most recent Annual Report on Form 10-K. Additionally, we will refer to certain non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures and other related information in both our earnings release and at the end of our supplemental presentation. Now, I'd like to turn the call over to Vulcan's Chairman and Chief Executive Officer, Tom Hill. Tom?

Thank you, Mark. And thank all of you for joining us for our fourth quarter earnings call. You know, it's a very exciting time to be in the Construction Materials business. We have great momentum, and we are as well-positioned as I've ever seen us and we're looking forward to a strong year in 2017 and looking past 2017. Our foundation for sustained growth is as strong as I've ever seen it in my 27 years with the company. Our fourth quarter results didn't match up with the prior year's fourth quarter, which was exceptionally strong in a tough comp. This comparison was affected in a large part because of an earlier end to the construction season in 2016, and also due to continued volume weakness in our California, Illinois and coastal Texas businesses. With the exception of these three areas, fourth quarter aggregate shipments were relatively strong compared to 2015. October-November shipments exceeded the prior year's strong comps, before falling off in the second half of December. This is even with a slowdown in new construction starts during the election cycle with its related uncertainty. Lower shipments volumes and production brought lower fixed cost absorption. At the same time, we made the right investments to support the increasing production we see coming in 2017. These basic and necessary investments to support growth in repair and maintenance and stripping, along with variances in end of the year accounting accruals negatively impacted our unit margins. But stepping back and looking at the full year and our underlying performance trends, what you see is continued compounding improvements in our execution, our service to customers, and in our profitability. We are of the strong view that we are in a long, multi-year recovery where we will continue to build our profitability, our franchise…

Thanks, Tom, and good morning everyone. As you saw outlined in our release, our performance expectations for 2017 line up with the business's trajectory since the second half of 2013, when the recovery in our part of the economy began, as well as with the longer range goals we've discussed previously. To give you a bit more color, I'll check through some of the expectations underpinning our guidance range of $1.125 billion to $1.225 billion in adjusted EBITDA. And I'll provide some comments regarding the timing in what could be a back-half-loaded year with uneven quarterly comparisons. I'll start with aggregate shipments, where we anticipate volume of between 190 million and 196 million tons or between 5% and 8% growth over 2016. Consistent with the preliminary outlook we shared during our September Investor Meeting in Atlanta, we expect year-over-year shipment growth across all end-use segments, residential, private non-res, public transportation and other public infrastructure and in nearly all of our geographic units. Construction materials demand continues to recover and to recover broadly. Longer-term project pipelines, what has been called the water behind the dam, continues to build. As it relates to our ultimate 2017 shipments, the key question may not be around demand per se, but rather around the pace at which the end-to-end construction sector can move to meet that demand. The recent improvement in construction starts we have seen serves as a positive leading indicator, particularly for the second half of the year. However, we still see constrained construction capacity for certain types of jobs in certain geographies. This uncertainty regarding shipment timing drives our wider range regarding 2017 tonnage. As Tom noted, the overall pricing climate remains positive. For aggregates pricing, we see a gain in freight adjusted average selling prices of between 5% and 7%. Price…

Thanks, John. At Vulcan, we've moved into 2017 with a great deal of confidence. Our business has come a long way over the last three years, and we intend to maintain that momentum. 2016, a year where we grew EBITDA by 16% on only a 2% gain in aggregates shipments really sets us up for a year that won't see the same volume headwinds. Certainly we are encouraged by the discussions taking place regarding infrastructure investment and corporate tax reform. The country needs these changes. Vulcan's working families need these changes, and yes, Vulcan shareholders also stand to benefit. We have the wind at our back. Our job, internally, as always is to focus on what we can control to serve our customers extraordinarily well, to operate safely and efficiently, and to deliver better and better returns from the capital that we deploy. At Vulcan, we're not satisfied with tailwinds. We're going to raise our internal expectations. We're going to raise our disciplines and our intensity another notch. We're not waiting for National Policy improvements to make our own business better. That's our job, and that's the job we're going to do. If we do that, we'll help our country grow and regain a competitive edge. We'll create jobs and opportunity for our people and we'll be even better positioned to grow for many years to come. Now, on the topic of growth and in particular acquisition-led growth, I'd like to offer a few thoughts on the M&A landscape as we see it today and our approach to it. You likely saw a number of recent bolt-on acquisitions referenced in our press release. This may appear to be a pickup in activity after a period of relative quiet. But I'll tell you, we've been working hard on this all along,…

Thank you. Certainly. And we'll go first to Bob Wetenhall with RBC Capital Markets. Please go ahead.

Hey, good morning. Congratulations on a very strong 2016. I was hoping you could just step me through the bridge in terms of the sequence of shipments from October, November, December because you guys sounded pretty bullish, I think, on your last update from November 3. And I was also hoping you could kind of give us a bridge on gross profit margin? I think John called out a couple items that affected fixed cost absorption like the timing of repair and maintenance work and stripping expenses, and whether those are like one-time costs that pertain to the quarter or whether kind of a normal incremental profitability that you guys generate will be visible as we move into the new year?

Yeah Bob, it's Tom. I'll start first with the – how we saw volumes in the fourth quarter. October and November were actually from a rates – from a shipping rates perspective, were ahead of the prior year and going very strong. The bottom line through it, at least ran out of – we ran out of time on the construction season. In 2015, we were able to ship all the way to the end of the year. And depending on the market second week, first week, third week of December we just – the season ended, and it just – that's what caught us. So I think the demand going forward is there. We're confident in 2017. The works there, in fact, was really exciting. It's going to be when the construction season starts up and who knows when that's going to be. But when it does, we'll start to see the large highway projects, that FAST Act flowing through plus some of the big non-res projects will start shipping.

Bob, I'll take – I'll start with your second question, but again, just on volume and you probably saw this referred to in our release, total business for the quarter on a shipping rate basis up 2.5%, October-November combined, that's despite the challenges that we had in California and Coastal Texas and Illinois. And just to give you a contrast, December was down 11%. So, really good momentum, particularly in our core markets, if you – core Southeastern markets, those were actually up in the quarter for the full quarter. They're up about 9% October-November on a shipping rate basis, down 7% in December, just to give you a sense for the fall off relative to last year. I'll highlight that because it kind of ties to your second question, Bob. There are really three big things in the quarter that affected unit margins in our Aggregates segment and gross profit margins in our Aggregates segment. And they're really all timing related. So the first thing we would say and call out is that the full year trends are the right trends to look at. The full year trends in terms of unit cost production being up 3% year-on-year, and then full year trends in terms of 14% improvement in unit gross profit margins in our Aggregates segment, those are the right numbers to focus on. With that said, let me kind of say what happened in the quarter. Again, really about timing, we noted first in the quarter that our unit cost of production increased 13%. Again, that compares to a 3% increase for the full year. That's all about timing of cost. So that's about $0.89 of cost increase in the quarter, that contrasts to about $0.22 for the year. Again, the $0.22 is the right number. But…

That's extremely helpful and clarifies what I was trying to understand. One other question, and then I'll turn it over, kind of a high-level question. It seems like you're saying this cycle is going to be stronger for longer and you're talking about mid-cycle profitability, which kind of seems like it shifted out a little bit just due to timing situation but a lot of things are going to come on in the back half of the year. I haven't heard Tom sound this optimistic in a while, and he put that out that $5 billion number there, which is a huge number in terms of balance sheet leverage if you want to buy something and free cash flow generation. What are your thoughts on capital allocation for the next 12 to 24 months? And you guys have any new thinking around that as we move closer towards mid-cycle? Thanks and good luck.

I'll start with kind of a CFO view and then Tom might comment more on just the M&A landscape and how we're approaching it broadly. But our overall capital allocation priorities are unchanged. So we will – and the thing to take away is we got the flexibility to do all of these things. So it's about balance and not either or for us. We will continue to make investments back in our franchise so that's next year CapEx guidance of about $300 million. Again, that includes some carryover for this year. And again, you'll see accelerating free cash flow in the business. We continue to have incremental debt capacity staying within our investment grade parameters. That could be roughly $2 billion of incremental capacity as we move through the recovery part of the cycle. We would expect dividend to continue to grow with earnings but we're very focused on the sustainability of that dividend. As Tom noted, we are actively involved, if not aggressive on the M&A trail. We're going to stay disciplined but we have a lot of really good opportunities there. We'll continue to pursue those. And then, we will continue to look to return excess cash after all those items to shareholders via opportunistic share repurchases that makes sense. Now, all those things with the same priorities we've talked about is just – we just know that we're entering 2017 in a really good position to pursue all those things. And Tom, I'll hand it off to you, maybe talk about M&A.

Yeah, Bob. I think that you saw us close a few that we noted in the press release. Don't be surprised if you see that pattern continue. We have a lot of conviction around the continuing improving cycle. And there is a lot of M&A opportunities out there, some of which we should be the clear owner of those. It's always difficult to predict timing, but what we will say is that we'll say, stay disciplined in our acquisition process. But I think you'll probably see this pattern continue.

Nice work guys. Stay in the course.

Thanks.

We'll take our next question from Jerry Revich with Goldman Sachs. Please go ahead. Jerry Revich - Goldman Sachs & Co.: Hi. Good morning, everyone.

Hey, Jerry.

Good morning, Jerry. Jerry Revich - Goldman Sachs & Co.: I'm wondering if you could just flesh out for us some visibility that you have into the ramp up into the back half of 2017? You've been very clear that the first quarter is a tough comp for a while now. I'm just wondering, can you just give us some data points either large project bids or whatever underpins visibility on the significant ramp up in the back half of 2017? And within that context, can you just talk about what you're seeing in Texas specifically, that's giving you confidence that Texas will return to growth in 2017?

Yeah. I think that as we look at 2017, we see broad based growth in, of course, all of our segments and our geographic footprint. The Mid Atlantic and the Southeast continues to be very, very strong. As we look at our confidence – as far as the timing of that, it's really about when the construction season starts. The work's there. We have visibility of jobs, we backlog the jobs, they're ready to go, it's in every market we have, when does the sun come out and when we start shipping, and when does that begin. So, that will control the timing and that could be first quarter or second quarter, but it's going to start. I'd like to touch for a minute on California. And as we said in California, it isn't if, it's really when and we're beginning to see that win come around, it's really going to be driven by the private side in California and we'd been very focused on the private side, particularly the non-residential, and I'm pleased with our team's execution on that. I would tell you in California, our customers are a lot more optimistic than they were a year ago. And we're beginning to see those large projects let and start, and we've backlogged a number of them. I'll give you a couple examples. The new Rams Stadium, we'll start to ship in the next couple months, and this is 750,000 tons. The Mid-Coast Trolley extension in San Diego, again, it will start to ship whenever the season starts. It's about 200,000 tons. Silver Lake Reservoir is a really nice project for us because there's a lot of base and fines. And then the Otay Ranch residential project is a good example of the res that's going on in California. It's…

Sure. I think that, that really affected the compares between 2015 and 2016. We had really big projects in 2015. They really kind of finished out in 2016, and we didn't see them ever flow through again in 2016. And I would tell you, they're probably not going to flow through in 2017. There are some out there, but they're not going to start till 2018. So what's built in here is really based on the highway program and conventional res and non-res growth, not the large energy projects. Jerry Revich - Goldman Sachs & Co.: Okay. And, John, in your prepared remarks, you said the price increases were well-received so far. Can you talk about the magnitude of the price increases in 2017 compared to the price increases that you put in at the start of 2016? And specifically, were you able to put in price increases into markets where volumes were down significantly in 2016?

Sure. I'll offer a couple comments, but I'll hand it out to Tom to kind of give you around the horn on what we're seeing in pricing, because it is really continued positive climate. First thing I'd say, Jerry, because it links into pricing is don't take our comments about back-half loaded as concerns about the underlying recovery at all. They're concerns if anything about timing, but you just heard Tom say, look, California and Texas are returning to growth for us. The rest of our franchise has been growing. Illinois should be flat, not at the same decline it had last year. So we're pretty excited about how we're set up for 2017. We're also just acknowledging a tough first quarter comp, and we're acknowledging the timing uncertainty we've seen with respect to large projects and when they actually take aggregate shipments. But, again, that's about timing, that's not about conviction in the recovery. Now, you see that in pricing. The market participants see the demand. It's a big driver. The demand coming is a big driver of the pricing climate. The magnitude of the changes varies across markets. But in total for us, the way we look at it is the compounding margin improvements we've seen should continue and continue apace and consistent with the long-term goals we've laid out. I will note in – sometimes get missed, but even in those markets that we had a lot of volume challenge last year, the Californias and Illinois as examples. We actually had quite healthy price increase. So it's not like all is bad in those markets, it's more of a temporary issue with respect to volumes. But let me hand it off to Tom to give maybe a better around the horn in what we're seeing in terms of the price increases we put in place so far.

Yeah, Jerry. With confidence in a long, gradual recovery ahead of us, the environment for price increases continues to be quite healthy. And it's driven obviously by improving demand, but also as we'll tell you, as we've always say, it's driven by the visibility that our customers have in the growing pipeline of work. We're seeing rising prices and/or margin expansions across our footprint and across all product lines. As I look at the numbers without – I'm not going to get into naming markets, but I'll give you some examples of price increases that we implemented January 1, reading down the list, $1.25, $1.35, $0.50, $1.75, $0.60. Look, these are robust price increases and there just continues to be a lot of confidence in a long sustained recovery, and it's showing up in pricing. Jerry Revich - Goldman Sachs & Co.: I'm sorry, just to clarify. Even markets like California and Texas that were down in 2016, you are getting significant price increases to start off 2017?

The answer to the question is, yes. In fact, we had price increases that were very, very healthy in those markets in 2016, and we'll continue to see price increases in 2017. Jerry Revich - Goldman Sachs & Co.: Thank you very much.

Thank you.

Our next question will come from Trey Grooms with Stephens Inc. Please go ahead.

Hey. Good morning, gentlemen.

Good morning, Trey.

One question, I guess is for John on the incrementals. I mean you gave us some good color on how to think about incrementals for the full year this year. And I understand that's the best way to look at the business overall. But you did also highlight the obvious tough comps we're facing here in the first quarter, not just you guys, but pretty much everybody is facing in the 1Q and how this year could be more back-end loaded. I get all that. But just for our modeling benefit, if we could get a little bit more color on how to think about the margins early in the year, especially given – coming off of a kind of a abnormal margin situation in 4Q and then you'll probably have kind of continued lack of fixed cost absorption in 1Q relative to other times in the year. Just any color, even if it's directionally on how to think about margins would be super helpful.

Trey, I'll try and give you some directional help, but you probably know what I'm going to say, which is we don't give quarterly guidance, and for a variety of reasons, particularly in a low-volume first quarter, let me just start by acknowledging that it's a little bit unpredictable. Okay?

Okay. And I understand that.

So I'll try and give you help, but I just want to make sure we're clear about that. I mean, keep in mind that our business as it ramps up, we're running a business now that daily shipment rates, depending where you are in the year, can range from 700,000 to 900,000 tons. It only takes a couple days shifting from – in the end of March, as an example, to have an impact on first quarter incrementals. So I'd tell you to really focus on trailing 12-month trends, and not over-read the first quarter regardless – just like we said last year's first quarter, don't over-read the blow-out numbers.

Sure.

So all that said...

Yeah.

...nothing that we see. There is no boogeyman in the business that we see that would lead to a slower overall rate of margin improvement. So there's some timing differences quarter-to-quarter, but there is nothing major negative out there. If I think about some of the factors at play, you already mentioned some. But diesel throughout the year, we'll see how it plays out. Our assumptions for our guidance have diesel a little bit less than $2, so that's a small headwind for us next year.

And what was the average for 2016? Sorry, just for...

Probably a $1.

$1.60.

$1.60.

Got it. Okay.

Rising during the year and the fourth quarter diesel was a slight headwind, but not a major headwind. And the next big factor I'd point out is just the timing of price increases, and how they flow through the work. Again, the first quarter number can be a little bit deceptive that way. But it's really difficult – our big question in the first quarter really is probably more about volume than underlying margin structure of the business. Now, we get a lot of great operating leverage and a lot of great fixed cost leverage, so without that volume it impacts our incrementals. But this is mostly about timing of volumes as opposed to seeing major changes out there on the cost horizon if that makes any sense.

Oh, yeah. Yeah, that's super helpful. And the big wildcard obviously being volume in the 1Q, given the tough comp is – that was kind of the reason for the question, because I know it's not easy for you guys to call, and definitely not easy for us sitting in our chairs with the kind of unique 1Q we're facing.

Once again, I know this isn't that helpful to you and that's why, again, that's why we don't give quarterly guidance. But if you think about full year trends – that continued double-digit growth in unit margins is something we still feel good about.

Got it. Okay. And then, also mix played a role in 4Q – given the outlook you have for your different geographies and how they might perform, you mentioned seeing California and Texas returning to some growth there. But given that outlook and then also for your end markets, is there any kind of a mix impact, good or bad, negative or positive, I guess, that we should be thinking about as we go through 2017 and any assumptions you've laid out there?

It's Tom. I don't see a lot of mix impact in 2017, and if it were to come from the base side, we'd be very happy with it. And it would be in additive to the volumes that would be at the high side of the volume guidance. But I think we feel pretty good about how we've looked at it and we do those budgets from the – those projections from the ground up. So I don't see a lot of mix in those numbers, and again, if it were there, we'd be pleased with it because it'd be fines and base.

We're referring to healthier product mix which...

Sure.

....with – as you well know, Trey, with some of the new construction coming on, can put a little bit of downward pressure on reported average selling price, but if you look at real like-for-like pricing, that trend is still very positive.

Got it. But you guys are reflecting that in the – in the range you gave?

We think we are in the 5% to 7%. Again, because our pricing decisions – you hear us say this all the time – are made so locally, I mean, some have been made well around this call. It can be a difficult number, but that's included in the range, the 5% to 7%. We don't see – I'm going to call it any deceleration in the pricing climate per se. We'll have mix effects across the business product and geographic, but the overall climate is – I mean, it's very consistent with last year.

Yeah. The climate is consistent. I think it continues to be healthy and it's not like you're getting price increases in asphalt rock but not in base. It's really across segments, and it's across product lines, and it's across the geographies.

Got it. And last one from me, just to kind of touch on that $5 billion that you mentioned earlier, Tom. Just to be clear that I'm making sure I understand that. And that's your expectation for cumulative free cash flow, so net of CapEx, cumulative free cash flow through the years as we kind of progress towards that mid-cycle volume. And I think you pointed to in the past is something like 250 million tons. Is that the right way to think about that $5 billion?

Two parts to it, Trey. It's roughly a $3 billion of cumulative free cash flow.

Okay.

And $2 billion of incremental debt capacity.

Got it.

And think of that incremental debt capacity is 2 to 2.25 times mid-cycle EBITDA. They were then investment grade parameters.

Got it. Okay.

A rough number, but not – your own modeling will probably come up with something not dissimilar.

Right. I think that's right.

And now, we're not going to get way ahead of ourselves and spend that money before we make it in some kind of crazy way. But it is a – the business model throws off a lot of cash and you know that, but that's just – it's worth thinking about.

Sure. All right. Thanks a lot guys. I appreciate you taking the question.

Thanks, Trey.

Our next question will come from Kathryn Thompson with Thompson Research Group. Please go ahead.

Hi. Thank you for taking my questions today. One is just a follow-up on pricing, as we have also seen pricing momentum improve, but I think just for the reminder for us on the call, could you go through your top five highest per unit priced markets? Because we know that there are some that have perhaps lagged on a volume basis, but it'd be helpful if you could just give us a reminder of those top five per unit priced markets?

Yeah, Kathryn, I think there is a little bit of a missed number here. Our top pricing markets are going to be, what we call remote markets. So, they're going to be on the coast where we ship products into them. And some of those may or may not be the top margin markets. Some are, some would lag some of those things. I think that – we'd tell you, it's such a local business, that's all going to be relative and the top pricing may not be the top margin. But I think the important here is that, we are seeing pretty good price increases consistent across all of our markets in all segments. I think that as those – as the projects kick in, particularly from the FAST Act and from the new state highway over 2017, 2018, and 2019, it will only continue to support price increases along with the private side, which just continues to grow.

And Kathryn, if you look at it, just building on Tom's answer, and I think – well, you know this I know, but especially if you look with a two-year or three-year view, there's a pretty good overlap between further remaining growth in the recovery and generally speaking markets that are higher margin, at least, as we sit here today. Now, we'd tell you that for the markets that are on average lower margin we're working hard to move that up, but as the recovery unfolds, that should be little bit of a tailwind to us and that we have a lot of room to go in markets that are attractive on a margin perspective already.

Okay. That's helpful. Just want a little bit more color on your higher stripping costs that you noted in the press release. I assume this is – you're typically building in the winter for the build up in the peak of the construction season in the spring and summer. But is it correct to assume that the higher stripping cost in part is driven by higher backlogs and expected higher demand, particularly for certain key products such as clean stone?

Yeah, Kathryn, that's exactly correct. We are making hay while the sun's shining in that we – while we don't have those shipments and don't have – well, that fell off in the second half of December gives us an opportunity to go ahead and get some work done, so that we could bank reserves that were stripped for the season that we see coming in, in 2017 and wouldn't have to go outside and maybe pay higher prices for. So this is just prudent long-term operations management.

Okay.

And Kathryn, those higher stripping and repair and maintenance expenses, just to be clear for everybody, they're in the $0.22 increase in unit cost of sales that we talked about for the full year. The distortion just happens because they occurred in the fourth quarter when we happen to have lower volume.

Yeah. Understood.

And you understand those economics plus our inventory economics.

Yeah. Absolutely. One other subject I want to talk about is your non-resident market. I know there's been a lot of focus on public end market, but one of the things we're focusing on is a little bit more expansive definition of infrastructure under the new administration. Could you break out how much of your non-res end market is more heavy versus kind of your traditional or commercial kind of office type non-res projects? And if you have any view just with the change of administration on how your thoughts on traditional infrastructure versus that more expansive definition? Thank you.

Yeah. I'll take the first part of that. First is that, I think we've seen really healthy growth in the non-res sector in office, lodging, warehouses, distribution. And what's lagged some is manufacturing, institutional, and government. They actually declined somewhat over the year, but I think we are seeing some return in those. The fundamentals ultimately for non-res are in a good shape. You got population growth, you got employment growth. You know the external indicators are showing strength today and you've also got really healthy residential growth, which will pull non-res behind it. I think if you look – step back and look at our footprint of where we seeing substantial strength in non-res would be the Southeast, the Mid-Atlantic, Southern California, Arizona, Texas, excluding Houston and we think that's, well, actually may show some small growth in the year. But overall, I think we see healthy growth in the non-res segment.

Kathryn, just building on that and talking a little bit about – I'm not going to call it new administration and discussions. But we probably know one thing that you're very well aware of, which is we're already exceptionally well-positioned against a number of the increases and infrastructure funding that are already happening, particularly at a state and local level. And you know that well, but (52:55) of those increases that are already happening and we're very well positioned against those, whether that's improved maintenance or new road construction or port construction or water improvement or you name it, all those things we're well positioned against. In terms of the broader definition of infrastructure and things like longer-term federal programs, one of the great things about aggregates focused business is we serve all those things. So we're absolutely fine and well positioned against a broader definition of infrastructure whether that's airports, intermodal facilities, typical transportation on and on and on and on, we're well positioned to serve substantially all of that increase in demand.

I'd tell you that – I'd add to that, Kathryn, if that happens, as John said, we're in a great position for that and all of those projects will need our products. And I'd add to that, that – Vulcan Materials will be essential to building those critical infrastructure projects. I mean, that's what we do. And they don't really happen without us very well.

Great. Thank you. And final just handholding question of the $40 million EBITDA shortfall, how much of that is transitory versus any ongoing type issue? Thanks very much for answering my questions.

Kathryn, if you're referring to the quarter and what might be seen as a shortfall in gross profit margin percentage to that $40 million?

Correct.

If I would say that, substantially all of that is transitory or timing and that the right number to look at would be a $0.22 increase in unit cost of sales for the year and not the $0.89.

Great. Thank you very much.

Our next question will come from Stanley Elliott with Stifel. Please go ahead. Stanley Elliott - Stifel, Nicolaus & Co., Inc.: Good morning, guys. Thank you for taking my question. A quick question. With all the – the $5 billion number you mentioned, Tom, it seemed like there was a lot of discussion around bolt-on sorts of acquisitions. Does that mean you're obviously fine with the footprint that's fantastic and you want to fill that in or are there larger acquisitions out there that you – that I didn't pick up on?

We'd tell you both and those are – those, you just had to be optimistic at. When they come around, you will be on top of them. They will, I think over time you will see us do both, the ones that I think that are out there immediately. Right now we're bolt-on, but you'll see the new footprints and larger acquisitions over time. So, this is something we're excited about and we work hard on this all the time. The results although are going to be choppy and that's just a timing issue. I think, as we always talk about, the important piece here is the discipline, where do we have synergies, what's unique to us, what do we pay for them. And then once we get them, you got to go work hard and really fast to integrate them and make them make money. Stanley Elliott - Stifel, Nicolaus & Co., Inc.: And kind of turning back to the election, whether it's the lockbox in Illinois or the proposition there in California that you guys kind of mention. When do you think those can start having a meaningful impact on – well, strictly through the public piece, when can that start to flow through, those additional monies on the public side in the California market? And then, broader thoughts around the lockbox and the ability to help approve kind of the Illinois market?

I think for the flow through, it's really – rule of thumb is always 18 months to 24 months now. You will see in some markets faster than that for repairs or overlays, and that just flows through past us. But by the time you collect the money, figure out which jobs you're going to do, engineer those jobs, let those jobs and they get started, it just takes that much time. And a perfect example of that is what we're going to see in the next few months in 2017 is that's how long it's taken for the FAST Act money and – states like Georgia, increases in Florida to flow through to shipments. But once they start, they start accelerating pretty fast. And so, the next two or three years or three or four years will be exciting to see the funds that we talked about two years ago flow through, these will just take a little time. Stanley Elliott - Stifel, Nicolaus & Co., Inc.: Perfect, guys. Thank you and good luck.

Our next question will come from Garik Shmois with Longbow Research. Please go ahead.

Hi. Thank you. I just had a question on the acquisitions, the bolt-ons you made in the fourth quarter here, early in the first quarter. How much of that is embedded in your 2017 volume guidance? And as a follow-up to that, is there any meaningful EBITDA contribution that we should be thinking about as well?

I'll start, Garik. The acquisitions we announced, the total consideration for those is around $137 million. When it gets ramped up, those businesses in combination should do about $21 million in EBITDA on a kind of annual run rate basis. And obviously growing from there and there's some synergy upside beyond that. But I would assume, for your modeling, that all of that is in our guidance, particularly the EBITDA, just because we're in the process of closing some of these, bringing them on, ramping them up. And so, as we've thought about it, that is in the guidance. Likely gives us some volume upside later in the year, as we get these fully integrated into our platform, and we'll kind of communicate that as the year goes on. But, as Tom said, these are really good extensions of our existing franchise. And we hope to have more of these to talk about as the year goes on.

Yeah, I think as we talked about earlier, this is a part of the discipline with acquisitions, and this is where the real work starts, that you got to integrate them fast and accurately and bring them up to speed as fast as we can. And we'll be working hard on that in 2017 to put them in the Vulcan family and get them performing with quality earnings as fast as we can.

Okay. So just to be clear, the 5% to 8% volume growth, we should assume that it does incorporate the acquisitions that you just made?

Yes.

Okay. Just my second question is just on highway demand. You talked quite a bit about that today, but just wanted to drill in a little bit more, because it was a source of frustration in 2016, particularly from a timing standpoint. And now, we're on the federal side in continuing resolutions, some of the leading indicators on highway contract awards have been soft over the last several months. So just wanted to stress test the mid single-digit volume guidance that you have for highway demand in 2017. And any other color or any other leading indicators or any geographical indicators that you can provide us that gives you confidence in that figure versus the risk in 2017 that we could be facing a similar set of disappointing timing issues like we saw in 2016?

Yeah, if you think you were frustrated with timing and some of those in 2016, you could imagine how John and I were. But I think – we stress test that pretty hard. We've looked at this and really said, okay, do we know when it's going to start? And these are projects that – actually some of them have already started a little bit. I mean, we saw a few of these projects (1:00:58) – a few thousand tons in the fourth quarter of 2016. But I'm looking at four jobs in Atlanta right now that would have a total of about 3 million tons that we have – three out of the four have actually just started, just a little bit. And as soon as the construction season starts, those will start. I can think of three in Texas that would total over time probably over a couple – probably a couple of million tons or over 2 million tons, and those – actually those are being – just let or being let, and we know that they'll start in the second and third quarter. So I think we have a lot more visibility and confidence that these jobs are ready to go. We've already shipped a little bit on them, and we're – as I said earlier, we're really – the timing here is not what year is it going to ship in, it's when does construction season start?

Okay, thanks. Just the last question, I might have missed it, but didn't hear much discussion on share buybacks. As it relates to the $5 billion of available capital over the next several years, shares here down a little bit today – relative underperformers, I guess since the election compared to some of the peers. How are you balancing the view of the share price with your free cash flow versus the M&A opportunities that you talked about today?

Garik, it's John. I think no change, so – as we discussed, we work through all of our capital allocation priorities. We'll be opportunistic in how we think about share repurchases. No commitment to buy any certain amount at a certain period of time. We'll report on it after the fact. But that said, as this recovery cycle moves forward, we should have the opportunity to balance both reinvestment in the core franchise, investment in growth, both M&A and internal investment for growth, and return on capital to shareholders via mix of dividend and share repurchase. For us, it's about balancing those things given our outlook for things like M&A activity. We did not buy any shares back in the fourth quarter. You kind of saw some M&A activity that we reported on, but no real change. So I would expect through the cycle, you're going to see that investment capacity deployed to good use, and that'll be some mix of growth oriented and returning to shareholders.

Great. Thanks so much.

We'll take our next question from Rohit Seth with SunTrust. Please go ahead.

Hey. Thanks for taking my question. My question is on the BOLD Act. And I know there's been some developments within the industry to create a successor bill to the FAST Act and there could be some overlap in the timing of when that would kick in, if it does develop as intended. Are you guys seeing any developments there? Is that something you guys are working with the trade group on? And if you have any color on that and what that impact would be on the business, that'd be great.

Yeah. The folks who worked on the BOLD Act did an outstanding job with that. It is a great idea. I think as you know right know, there's a lot of positive discussions in D.C. about infrastructure with a lot of people working really hard on solutions to funding infrastructure, which our company desperately needs and we obviously support. How that happens, we don't know yet. There's just a lot of uncertainty to it. We think it's a matter of when, not if. And when it happens, there's nobody better positioned to serve these projects than we are. It's what we do. It's who we are. It's how we started. But I think that overall, if you step back and look at this also, without any of that flowing through, you've got some very healthy highway projects coming in the next three years with increased funding from the FAST Act and from state funding, which is only increasing.

Got you. And then just in the first quarter, can you comment on weather trends that you've seen thus far? Is it in a headwind or a tailwind?

I think probably about neutral, with the exception of – probably a little bit of a headwind. I mean, California was very, very wet, as you well know. But with just two more months of this left and we'll just wait and see and we just don't know. Remember that 2016 was really, really good weather. But our markets look good and the work is there. So, whatever happens with the weather, the work is not going away and we'll ship it when the sun comes out.

Keep in mind that in the first quarter shipments typically accelerate through the quarter as we get more into the construction season. So I wouldn't read too much into January anyway.

Okay. And can you comment on some of the bidding activity you're seeing out there in the Southeast and in California, Texas?

Yeah. It continues to pick up both in – particularly in residential, non-residential and highway. The Southeast and the Mid-Atlantic states continue to be very, very good. We've seen Virginia pick up a little bit actually which was – it was a little bit flat last year and we're seeing it pick up. So, that is very encouraging for us. We spoke to California and Texas, both of those, particularly – both of those are healthy. Texas is, I guess, what I'd say, remains healthy and both public and private bid activity is very healthy. On the non-res side in California, I think and the res side where we continue to see it pick up and private – the private construction segment is what will drive growth in California this year.

Great. That's all I have. Thank you.

Thank you. We'll go next to Adam Thalhimer with Thompson Davis. Please go ahead. Adam Robert Thalhimer - Thompson Davis & Co.: Oh, great. Thanks. You referenced tight construction resources in the U.S. I'm just curious how pervasive that is? And then, thinking about 2017 as a whole, is that something that could push you towards the low end of the volume guidance but maybe the high end of the pricing guidance?

I think it depends on the market and when we say it's short, it's really, do they have the crews, do they have the lay down machines, do they have enough ready mix trucks and it's – it's different in every market. But I think that as you see the bidding work pick up, as the pipelines comes through the starts, that capacity will grow along with it. I think that those – that is always a healthy piece of pricing, but it is a piece of it. So it creates a healthy environment for pricing or one of things it does, but it's not the only one.

And rather than commenting just on 2017, it is a factor that's at play when we say a longer recovery could and maybe should be a more profitable recovery. But I don't – the dynamics are such that I wouldn't read too much just into 2017 on that just yet. And also to keep in mind, when we say capacity just to be clear that this really isn't our capacity. This is end-to-end construction sector. Our assets, as we sit here today, from an aggregates point of view have – they've in a single year produced more than 305 million tons of shipments. So this isn't a capacity issue for us. This is a end-to-end construction sector set of factors. Adam Robert Thalhimer - Thompson Davis & Co.: Okay. And then I just wanted to ask quickly on the acquisitions you've done past four or five months. Are those all pure aggregates or are they vertically integrated? And then what's your thought on making vertically integrated acquisitions?

Well, I think as we – as some of those are aggregates, some are asphalt, some are both. And I think that as always – in our foot print, it's really not so much about vertical integration for the sake of vertical integration, it's about markets and how we view the market and how we better serve the market. So as we go forward – our strategy is always to be, as we say, grounded in aggregates. That's really – that's our bread and butter and that's what we do. But we will be – we will look at acquisitions that are vertically integrated, if they fit that whole strategy and if they fit that market.

Typically, we use the word downstream or more specifically asphalt or concrete – vertically integrated is really how we're actually approaching it. Adam Robert Thalhimer - Thompson Davis & Co.: Got it. Thank you.

Our next question will come from Timna Tanners with Bank of America Merrill Lynch. Please go ahead.

Yeah. Hey, good morning, guys.

Hey, Timna. Good morning.

Oh, afternoon. So I'll just leave it to one question, we had a lot of discussion. But I mean, on a high level, we're just wondering and kind of surprised by the pricing guidance because if you look at the 7% that you achieved overall on a high level in 2016 and the guidance of 5% to 7%, that implies that there could be a downside to the momentum in pricing. And when you match that against the potential cost pressures that you've highlighted, whether they be from some of the constraints in getting labor (1:10:00) supply in the industry or diesel, that seem to us then a little bit low. So I was just wondering, is this a conservative guide? Are you trying to be – you usually have a pretty good track record in forecasting prices, so we're just wondering if there was another dynamic that we're missing?

I don't think there's any other dynamic. I don't think we have anything built in there for big diesel increases and if we did, we'd be fine with that because over time, they help support pricing and help support margin improvements. I think we feel confident in our pricing guidance. Obviously, we're going to work hard every day to better serve our customers and make our products and our services more valuable. I think at this point, we feel pretty confident in our guidance.

So to clarify then, if you do see higher diesel costs or higher labor costs or other costs, could we see that number increase accordingly?

First of all, yeah, cost will drive – it will help drive price. It's one of the dynamics that's always there, but from a diesel perspective sometimes it lags a little bit, but it always flows through. From a cost perspective, I think you really got to step back and look at the trend of cost in 2016, which I'd tell you, from a cost perspective over 12 months of – with very little production increases of only $0.22 and 3%, that's a pretty good trend and I like hearing that into 2017 along with the pricing momentum. So I think at this point – things will change through the year, but – and we'll adjust accordingly. But at this point, I think we're pretty confident in our guidance.

Okay.

Timna, I'd add, since you asked the question this way, about cost and price. We talk about this a lot and I know you know this. We run the business on margin and cash and that's a function of pricing, it's a function of product mix and production efficiency, it's a function of our operating efficiencies and how all those things work together, not just average selling prices. So, I think if you work through the guidance, you're going to see, an implied another year of very healthy unit margin improvement and at a rate faster than pricing at the moment would dictate. So I think, reading any deceleration into margin is certainly not what we see at the moment.

Okay. Appreciate it.

Thank you.

Thank you. And at this time, I would like to turn the conference back over to Tom Hill for any additional or closing remarks.

Well, thank you all for joining us this morning. As we look forward to the 2017, so I would coin it as, we're set up well for 2017. Our long-term cost trends are very good. Our markets are showing growth. And our pricing shows the confidence of us and our customers and the whole market in that long-term growth. So thanks again for joining us. And we look forward to you sharing news in 2017. Thank you.

That will conclude today's conference. Thank you all for your participation.