Vulcan Materials Company (VMC) Q1 2022 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Vulcan Materials Company's First Quarter Earnings Call. My name is Chelsea, and I will be your conference call coordinator today. [Operator Instructions] Now, I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Good morning, and thank you for your interest in Vulcan Materials. With me today are Tom Hill, Chairman and CEO; and Suzanne Wood, Senior Vice President and Chief Financial Officer. Today's call is accompanied by a press release and a supplemental presentation posted to our Web site, vulcanmaterials.com. A recording of this call will be available for replay later today at our Web site. Please be reminded that today's discussion may include forward-looking statements, which are subject to risks and uncertainties. These risks, along with other legal disclaimers, are described in detail in the company's earnings release and in other filings with the Securities and Exchange Commission. Reconciliations of any non-GAAP financial measures are defined and reconciled in our earnings release, our supplemental presentation and other SEC filings. As the operator indicated, please limit your Q&A participation to one question. With that, I'll now turn the call over to Tom.

Thank you, Mark, and thanks to everyone for joining the call this morning. As always, we appreciate your interest in Vulcan Materials, and I hope that you and your families had a safe and healthy start to the year. Our teams executed well in the first quarter. They remained focused on capitalizing on pricing opportunities, and mitigating cost pressures. Their efforts have and will continue to result in the expansion of our unit margins. Our strategic disciplines are helping us to both take advantage of tailwinds and dampen headwinds in a very dynamic environment. We delivered solid results in the first quarter. We generated $294 million of adjusted EBITDA, a 20% increase over the prior year, despite accelerating inflation, continuing volatility in energy markets, and ongoing disruptions in supply chains. This quarter again demonstrates the resiliency of our Aggregates business and our team's strong execution of our strategic disciplines. Over the trailing 12 months, we have delivered 10% adjusted EBITDA growth in spite of $131 million of higher energy-related cost. On a trailing 12 months, Aggregates' cash gross profit per ton has improved for 15 consecutive quarters absent the impact of selling-acquired inventory. In all business segments, the pricing environment is strong due to growing demand and ongoing inflation. Momentum continued with year-over-year growth in Aggregates' mix adjusted price increases sequentially for the fifth straight quarter. Our combined commercial and operational execution contributed to higher cash gross profit in both Aggregates and total non-Aggregate segments. In the downstream businesses, volume, price, and material margins improved in both product lines. Turning now to the segments, Aggregates' gross profit improved 9% to $243 million, or $4.58 per ton. Demand is healthy across our footprint, and volume improved 14% or 7% on same-store basis. Shipments were in line with expectations since the prior year's quarter was negatively impacted by the big February freeze. As anticipated, Aggregates' pricing showed strong momentum in the first quarter with freight adjusted pricing increasing 6% over the prior year's first quarter. Mix adjusted pricing improved 7%. We expect to see continuous strength in pricing throughout year, and are confident about midyear price increases that will be particularly impactful to 2023. As expected, our costs were elevated in the quarter on a year-over-year basis since the inflationary impacts did not begin in earnest until the second quarter last year. Over the trailing 12 months of continuously rising diesel and other inflationary impacts, our freight adjusted unit cash cost of sales has increased by 5%. In a challenging macro environment, this is a job well done, and I commend our operators for their hard work and for keeping each other safe and for delivering these results. In the first quarter, cash gross profit was $6.53 per ton. Excluding the impact of selling acquired inventory and higher diesel cost, cash gross profit was $6.90 per ton, a 5% improvement over the prior year. Asphalt, cash gross profit of $6 million was in line with the prior year. Pricing actions initiated last year to offset rising liquid asphalt input cost positively impacted the first quarter results. Average selling prices increased 13% versus last year, and helped to improve unit material's margins. The average price of liquid asphalt was over 30% higher than prior year, a $14 million headwind to our first quarter results. While we expect liquid asphalt prices to continue to rise, we are encouraged by the significant sequential improvement that we have seen in pricing over the last couple of quarters. And we remain focused on improving our gross profit margin in asphalt. Concrete cash gross profit grew from $12 million to $49 million in the first quarter, driven primarily by the addition of U.S. Concrete. Volume, price, and material margins all improved as higher selling prices offset higher material cost, including internally supplied Aggregates. Now, let's shift to the demand environment, which remains positive. Private demand is expected to grow in 2022 across all major categories, both single and multi-family housing, and both heavy and more traditional non-residential. Public demand is improving. And as funding is put in place from the Infrastructure Investment and Jobs Act, future growth is expected in both highways and other infrastructure. After double-digit growth in 2021, the residential end usage is expected to grow but at a more modest rate in 2022. Demand remains strong and [starts] [Ph] are still positive. However, [with a mountful] [Ph] of factors such as supply chain issues, rising interest rates, and labor constraints. With the continued demand for additional housing, multi-family demand is accelerating. Private non-residential demand has returned to growth in 2022. While demand will continue to be influenced by Aggregates' intensive warehouse and distribution projects, other private segments like office, manufacturing and industrial are now contributing to the sustainable growth in this end market. On the trailing 12-month basis, square footage for total non-residential starts has grown through the last seven months, and is now back to pre-COVID levels. Other external leading indicators like ABI and the Dodge Momentum Index also point towards growth of 2022. On the public side, demand growth is expected in both highways and other infrastructure. The timing of the impact of the Infrastructure Investment and Jobs Act would depend upon the pace which states allocate additional funds and the time horizon needed to move from design to letting to construction. As we previously communicated, we anticipate the majority of the impact to be realized in 2023 and beyond. We are well-positioned in attractive markets and are poised to benefit greatly from legislation for years to come. With the solid demand backdrop and positive pricing environment, we remain confident in delivering significant earnings improvement in 2022. We are focused on leveraging our strategic disciplines to control what we can control, and to diminish the impacts of things outside of our control. I will now turn the call over to Suzanne for further comments. Suzanne?

Thanks, Tom, and good morning to everyone. The macro challenges of the last 24 months have been well-documented and discussed. We continue to confront these challenges from a position of strength, led by our resilient Aggregates business. Our commercial and operational executions are sound, and supported by our strategic disciplines. Our balance sheet is strong. These factors combine to form our positive 2022 outlook. As Tom already highlighted, our strategic disciplines help us to take advantage of tailwinds and dampen the impact of headwinds. We've done that over the last eight quarters, delivering a 4% compound annual growth rate in our trailing 12-months cash unit margins in the face of a number of challenges. The current pricing environment provides tremendous support for both our near-term and longer term results, and we will continue to leverage best practices, and the collective knowledge of our talented teams to manage our overall costs. This is evident in our SAG cost, which, as a percentage of total revenues declined 60 basis points versus the prior year's quarter. We continue to make progress on the integration of U.S. Concrete to further leverage our cost. Now, with respect to the balance sheet, we took steps in the quarter to improve its structure. We extended the maturity of our $1.1 billion term loan to August, 2026. The loan can be repaid in full, or in part, at any time with no penalty. Simultaneously, we also extended the maturity of our revolving credit facility to September, 2026. Our net leverage is 2.6 times. That's just above the top-end of our target range of two to 2.5 times. Given our ability to generate strong cash flows, there is capacity to invest in other opportunities, whether organic or inorganic. Having said that, we do expect to move back within the target range by year-end. As always, we will remain disciplined as allocate capital, with a view to improving shareholder returns and maintaining financial flexibility, and our investment grade ratings. We also remain focused on improving our return on investment. On a trailing 12-months basis, our ROIC at quarter-end was 14%. And our adjusted EBITDA over the same time horizon has improved by 10%. And we expect continued growth in 2022. In February, we communicated expectations for 2022 of delivering adjusted EBITDA between $1.72 billion and $1.82 billion. We reiterate this guidance. We expect the favorable pricing dynamics and our strong execution to lead to attractive growth in Aggregates unit profitability, as well as improvement in our downstream businesses. Our expectation of investing between $600 million and $650 million in capital expenditures remains unchanged. I'll now turn the call back over to Tom for closing remarks.

Thank you, Suzanne. In closing, I would like to remind you of three things our teams remain clearly focused on in order to deliver value for all of our stakeholders; one, executing at the local level; two, driving unit margin expansion by focusing on our strategic disciplines; and three, maximizing synergies from recent acquisitions. Our people are what makes Vulcan better every day. And I appreciate the hard work of our entire Vulcan team. I am excited about what we will accomplish in 2022 and for years to come. And now, Suzanne, I will be happy to take your questions.

Thank you. [Operator Instructions] And our first question will come from Trey Grooms with Stephens. Your line is now open.

Hey, good morning, Tom and Suzanne. How are you?

Good morning, Trey. Good.

Hey, good morning.

Great. Tom, first off, I know you talked a little bit about the pricing environment, and then -- clearly strong, and you have an expectation for price momentum to step up in '22. And I guess if you kind of go back to what you said in February, I think the guidance called for 6% to 8% increase this year in price versus last year -- excuse me, which came in, I think closer to 3%. So, and you put 6% -- you put up 6% in the quarter, so clearly some nice acceleration there. But can you talk about the price momentum you are seeing today, you know, expecting through the year? And how are you thinking about midyear increases relative to maybe where you were a few months ago?

Sure. I thought the performance in the first quarter was a really good start for the year. As you say, we reported six. Mix adjusted, we were seven. If you remember, in February, we predicted it to start off higher than -- at the low-end of the range, but higher than the fourth quarter last year. And then, we grow it sequentially as we march through the year. That combination of visibility to demand and coming demand, we coupled that with inflation, it's just a good catalyst for price growth. All of our January and April increases are now in place. At this point, I feel very confident about midyear price increases across the vast majority of our work. Now, remember, midyear price increases will have some positive impact on 2022, but because of the delay in our work and our jobs, it's really more of a '23 play. And it sets us up really good for next year. So, off to a really good start. I think we progress and continue to accelerate price as we go through the year, and we're already starting to set ourselves up for 2023. So, as you said a really good pricing environment.

And Trey, I will just add one thing just to remind everyone. When we are talking about pricing and guidance, we all price in the industry a little bit differently and talk about it a little bit differently. So, as a reminder, our pricing that we quote to you is freight adjusted, meaning that it's FOB the quarry. And therefore, it excludes transportation to long haul market. So, in times of inflation and volatility, that can make a big difference in the top line price that's quoted. But what's really important here -- and I am sure we will come on to talk about unit margins later, is how much of that price you are really able to take to the bottom line.

Perfect. Thank you for that. And I am going to stick with the one question, but I do go to take my hats off to on the profit per ton as well that could work on that side as well. Thank you.

Thanks, Trey.

Thanks, Trey.

Thank you. Our next question will come from Stanley Elliott with Stifel.

Hey, good morning everyone. Thank you for the question. And --

Good morning.

-- it actually was a nice segue for me. Hey, Tom, I was curious if you could talk a little bit more about the execution, controlling cost, and freight-adjusted cost up 11%, doing a really nice job on the unit margins, but would love to hear you guys talk a little bit more about what's happening behind the scenes?

Sure. As we talked about, our Aggregates business, we believe will beat inflation. While we continue do a good job on price, I think our operators have really improved efficiencies to help offset inflation and offset this huge $59 million 12 months spike we've experienced in diesel and Aggregates. And I think they are doing it all the time, making sure they service our customers, and keeps you safe. So, if you kind of look back over the last 12 months, we have held cost to 5% in the face of inflation and massive spikes in fuel and energy. I would tell you, I think that has been an excellent job from our operators, and I appreciate the job they're doing, and as always they do it keeping our folks healthy and safe. And to me, what this demonstrates throughout the whole Aggregates business is that we are executing on our four strategic disciplines, and they're making a difference of, you know, obviously controlling, we are controlled but also offsetting other outside pressures that maybe we had not expected when we started this journey.

Thanks, everybody. Best of luck.

Thank you.

Thank you. Our next question will come from Jerry Revich with Goldman Sachs.

Yes, hi, good morning everyone.

Good morning, Jerry.

Hey, good morning, Jerry.

I'm wondering if you could just talk about the magnitude of inflation that you folks are seeing on labor and other inputs, and what do you expect the cadence of that to look like? In other words, when do we hit an easier comp from that standpoint? And I'm assuming the price realization is going to dovetail nicely with that cadence, but maybe I can get you to expand on price cost, if you don't mind.

Sure, I'd be glad to. Like everybody else it's everywhere. To call our labor probably bit single-digit, you know, parts are up, hard to get parts, steel is up, rubber is up, everything is there. The headline has to be in fuel, and in energy. If you just look at diesel, we predicted -- I would say, let's look at diesel and asphalt, what we said last quarter was probably a $50 million headwind in the first-half of the year, that's probably going to be 50% higher at this point. We said it probably gets easier in comps in Q3 and 4, and we would probably -- just comp over that, at this point, we still predict those now to be up in Q3 and 4. So, it's tough. It is there. It's real, but as you pointed out, I think we will offset that with price, and we continue to improve our unit margins, which is our job. And I think that if you looked at our guidance, I think both Suzanne and I have confidence that we hit that guidance, and I think the first quarter was evidence of that.

Okay, thank you.

Thank you.

Thank you. Our next question will come from Kathryn Thompson with The Thompson Research Group.

Hi, thank you for taking my questions today.

Hi, good morning.

So, you have a good volume outlook, and are seeing some areas that have not seen signs of life, including office, and you get to see the real momentum on a state level from public spending, and I guess there's backdrop there, you know, continue to be some supply chain [snappers] [Ph], and your tight increment across the U.S. We are hearing a few concerns about availability of certain types of rock hitting into the peak construction pieces. How are -- first, from your perspective, how is the supply chain journey for you as you manage through business now? And then, how you see it going forward for the remainder of '22 and really into '23 too? Thank you.

Yes, so, for us, I mean its impact is a little bit, maybe little on efficiencies, with parts for mobile equipment. Hopefully, that's improved, but we saw that for the first time in the first quarter. For our customers, I think it's a little bit different story. I thought -- you know, obviously the first quarter was strong, but remember, we are comping over pretty easy comp with the big freeze in February last year. So, again, it's just Q1 easy comp. The fundamentals in demand I think are really at good place, and price is good as we've seen in a long time, with all foreign uses should have shipments up in 2022. That said, as you pointed out, we have got labor and supply chain issues. Labor will affect our customers just getting -- catching up more than getting it done, but also hurts us in transportation, it hurts the rail transportation, at any peak day with excellent weather you just don't have enough flex to deliver it peak demand, and so it kind of -- it spreads it out. So, as you pointed out, supply chain is just slowing some work. I think while that being said, and the good news is that work is not cancelling; we are not seeing any jobs go away. And so, it's -- while the demand is there, it's not going to waste, it's pushing it to the right and extending the FICO, that's not at all bad. So, if we see some of these pressure ease, I think there is potential for more sooner, but we haven't seen that easing yet as we go into the season.

Thank you very much.

Thank you.

Thank you. Our next question will come from Keith Hughes with Chouest Securities.

Thank you. [Indiscernible] particularly asphalt, given some of the inflation seeing in that sector with the flat year-over-year performance. I guess my question is next quarter or two, is there some recent inflation you're going to lag, just kind of put some pressure or do you think you are on the right side of cost now?

I think Q2 we will see some pressure as we pointed out, because it's still a harder comp. We haven't seen the big jump in -- you start to see the inflation last year in Q2, but not the big jump in diesel and liquid. So, Q2 has tougher comps. It kind of -- in all product lines, driven by energy. From a specific asphalt perspective, I was very pleased with the jump we saw in prices up 13%, remember that we said in our guidance for asphalt that we see gross profit grow driven by second-half volumes in second-half, the modern growth. I think that in the quarter we saw liquid go up 130 bucks, or $14 million, and the fact that we were able to offset it with price is a really good omen looking forward to the rest of the year. I think we caught it, and I think as we progress through the year we start growing those unit margins in asphalt.

Okay, thank you.

Thank you.

Thank you. Our next question will come from Garik Shmois with Loop Capital.

Oh, hi, thanks, and congrats on the quarter. I was just wondering if you can go to a little bit more detail just on the volume, growth expectations for the rest of the year, clearly Q1 up against a fairly easy comparison, but anything which consider as the demand environment continues to improve for you?

Yes. Again, we will stick to our guidance, with five to seven kind of on volume growth that's two to four same-store, again, a great start, again, easy comp, easy -- small quarter. I would call out this, I would stick to that guidance, and at this point until I see someone ease, you know, as we heard earlier you've got labor issues, you got supply chain issues, you could have demand issues, being tied, I don't think it dampens volumes that much, but you know, I don't see that easing at this point. So, I would stick with our volume, original growth until we see more.

And I think like we said last quarter, I mean if there is you know, an easing, then we stand ready to benefit from that.

Yes, understood. Thank you.

Thank you.

Thank you. Our next question will come from David MacGregor with Longbow Research.

Yes, good morning everyone. Congratulations on the great quarter.

Good morning.

And pretty impressive --

Thank you.

-- impressive results. I guess I wanted to ask about the EBITDA guidance range, the 172-182, and that's not changing, but obviously a lot within that is changing, and just responding to Garik's question, you just talked about volume growth, where you were in terms of beginning of your assumptions, and clearly, pricing is going to be a lot better. Can you just talk about how you're thinking about that cash cost inflation in that mid single-digit number you gave us back in February?

Yes. So, I think that -- I think as I look at the year and just puts and takes to the year after one quarter, and it's just the first quarter, I would say that's probably upside, maybe to the high-end of our pricing guidance, maybe upside on volume, although we haven't seen it yet, I think we will have challenges, we knew we were going to have challenges on diesel, we got bigger challenges there than we had anticipated. We knew we were going to have challenges on liquid asphalt; again, that has climbed more than we thought it would, and it will continue to climb. So, we put all that together, I would tell you that I have good confidence in our guidance. It would need to see little bit more before I would be willing to adjust it.

Okay. Thank you very much.

Sure.

Thank you. Our next question comes from Philip Ng with Jefferies.

Hey, guys. Congrats on a really strong quarter.

Thank you.

John and Suzanne, is there a good way to think about the midyear increase from a contribution standpoint, and if demand remains pretty good, do you see this being more of the knock norm, and appreciating that, you know, the full impact is really more of a 2023 event. Can you get closer to like double-digit pricing from an increase standpoint in the back-half of this year? Sorry, a lot of impact there.

No, that's okay. I think that if you step back and just look at the Aggregates business, one of the really attractive attributes of Aggregates is its pricing and elasticity. And from Vulcan's perspective, it's ability to compound unit margins over time. That is specifically why we are in the Aggregates business, that's why we are leading that business, that's why 90% of our gross profit is in Aggregates. Today the environment for price growth is excellent, and it's really driven by the intersection of inflation, current demand, and visibility to growing demand. You've seen us sequentially grow price over the last five quarters, and I'm confident we will continue that trend. So, we started off at six or seven, depending on how you call the price in the quarter, and I think each quarter will continue to grow that as we progress forward. At this point I would hope we will be at the higher end of that guidance, at this point. Now, if you really want to be good at this business, you got to take that price to the bottom line, which is why we work so hard on those strategic disciplines, and why it's not just about price, it's also about cost control and operating efficiencies. And so, the combination of those two at this point, you know, even in the face of what we face with inflation, I think our troops are doing an excellent job both in servicing our customers, earning price, but also operating in the most efficient manner possible under some pretty tough circumstances.

Yes, Phil, and I think you see that, you know, when you look at the guidance we called out at the beginning of the year if you look at that cash gross profit per ton, and the guidance range is that we've given call for that to go up, you know, high single-digits year-over-year. And I would say at any time, that's a good performance to be able to drive that to that level, but taking into consideration, all of the energy headwinds we've talked about and the inflation, despite the opportunity for some price increases, that's a performance I would really be proud of.

For sure, I mean given all the inflation you saw improving in 1Q is pretty promising. Appreciate the color.

Yes, sure.

Thank you.

Thank you. Our next question will come from Michael Dudas with Vertical Research.

Good morning, Mark, Suzanne, and Tom.

Good morning.

Good morning.

Good morning.

Tom, if you could share your thoughts on how the U.S. Concrete integration is going relative to plan? And one of the puts and takes you've seen over the first several months of having [indiscernible] family? And is the New York kind of like northeast market, we hear about a lot of civil, lot of work coming through various agencies, are you seeing some of that through this year and going out into the next quarter?

Yes, we are. New York I think, two things happening to New York, the public demand is growing and there are some very big projects that are in the works. And now we are starting to see non-res up there starting to pop. So, good news is that market. If you step back and look at U.S. Concrete, at this point, we're functioning as one business. That's combined field teams, operating as one team, you heard me say last quarter the timing is turning out to be excellent for two reasons, as we talked about non-residential demand, which is so important to Concrete is in growth mode, and there is a lot of work coming in non across our footprint. And in pricing, in all product lines, as we talked about is really jumping in 2022. So, it sets us up really well for that acquisition to create even more value for our shareholders.

Thank you.

Sure.

Thank you. Our next question will come from Courtney Yakavonis with Morgan Stanley.

Hi, good morning, guys.

Good morning.

Just one clarification on the price income comments and we've been talking a lot about the mid years, but is your reiterated guidance includes the upside from mid-years at the high-end, or I think last quarter you characterized it as not including mid years and if so, just wanted to understand if that changed, given the elevated diesel in liquid asphalt headwind that you are now breaking in. And then secondly, on the downstream side, you've given us some guidance for gross profit last quarter and a change to how we should be thinking about those business lines?

Yes, so the pricing I would point out would still be in that six to eight, we're probably on the high end of it, and you got to remember that mid-year price increases will hit some of it in May, some of June, some of July. But because the lag in our business, you'll get some benefit in '22. But it really sets you up that we're most of that work is going to hit in '23. So it's -- well, you'll see some benefit and pushes I would say to the high end of that range. The big benefit is going to hit in '23. And that's great. I think from a downstream perspective, we would tell you it's the same, a no change and guidance. Again, what we said was 300 to 325 cash gross profit in the downstream, while we've seen inflationary pressures in both products, both concrete and asphalt. We're also seeing price and I would stick with our guidance and continue to grow our unit margins in volume, particularly second half loaded.

Okay, great.

Thank you.

Thank you. Our next question comes from Michael Feniger with Bank of America.

Hey, guys, thanks for taking my question. Just following up I mean with the pricing now at the high-end, or what you started, so where you exited. I mean, what kind of incremental should we be thinking about for next year if you're looking at a 10% to 12% pricing in 2023, should this basically just cash gross profit per ton, which is growing high single-digit, how much is that accelerating should we thinking about in 2023? And really think about those incrementals around that, that business?

Yes. Well, too early to call pricing and 2023. Again, it's nice set up with medium price increases. And I would always point you in aggregates to 6% incremental same store and I would 60%, same store and inflation puts pressure on that particularly spikes in diesel. But if you look at over the long-term, that's where I would guide you that 60%.

Okay. And can gross margin and asphalt rate mix, can that get back to 2020 levels next year? I know you're assuming that there's improved in the second half of this year. So with next year, if we get some moderation or just stabilization on these price increases, can we see those margins come back? Or do you think there's something structural that, that keeps those margins in those in the downstream businesses from getting back to those levels?

I'll remind you that 2020 was special for asphalt because of the shortfall in liquid prices. And so, it was probably an outlier, whereas '21 was also an outlier. The other way with a spike in liquid is somewhere in between those two and I think we get back to normal -- more normalized. I don't think there's anything structurally change in asphalt. I think you just saw huge swings in liquid, which is abnormal, but we'll get back to more normalized margins in asphalt and I think we were on our path there with what you saw in the first quarter.

Thank you.

Yes, I want to just add here, I mean, it's look we had a really good first quarter and we're really excited about that our people worked very hard to deliver that and we're very appreciative to them for their efforts. And I think we certainly saw good performance in price. We said we're confident in mid-year price increases and so while those are great to talk about I just want to caution people, let's not forget that there's a bit of another side to that equation. We've seen cost pressures, Tom talked about those in terms of energy and other inflation. So, when we reiterated our EBITDA guidance, we're really trying to take into effect that both of those items.

Thank you.

Thank you. Our next question will come from Adam Thalhimer with Thompson Davis.

Hey, good morning, guys.

Good morning.

Just a quick one on residential, Tom, you said that -- I think you said residential decelerating growth this year. What are you hearing from some of your major home building clients? Then maybe you can even kind of do a geographic walk for us? Thanks.

Yes. The geographic walk is pretty easy. It's widespread. It's everywhere for residential. The housing market is just tight. Every market we operate in maybe the exception of Illinois, but every play. Even that one is not -- still got some tightness to it, but you can't find houses. I think residential demand continues to operate at a very high level. You still have supply chain issues. Again, demand is very good. Obviously, we'll see growth in 2022. I just don't think it's the white hot level that we saw in '21 in single family. Now multi-family permits and starts were up double digit. So, it's really heating up. Overall, res continues in -- both single family and multi-family operates at a very high level and continues to be good. And I don't think it's slowing down. I think the growth rate may have slowed a little bit. But, it would have been tough to keep up with that rate we saw in '21.

We are still in high levels.

So growth is maybe not is not at the level of growth that we saw in '21, but really good news.

Understood. Thanks.

Thank you. Our next question will come from Brent Thielman with D.A. Davidson.

Hi, thank you, and good morning. Hey, Tom, there has been some discussion about delays in certain infrastructure projects just because the cost sort of advanced beyond the original estimates, have to go back and kind of re-bid it. Is that something you have seen become more pervasive across your markets? And any sense if that's had any effect at all in terms of slowing some of the good momentum, and I think that piece of your business should otherwise be doing?

I don't think -- I don't know that I have experienced the delays from inflation. I think when it comes to non-highway infrastructure we should see growth in 2022. Starts in the last three months were up 16%. New subdivision work helps this segment. And I think it's -- we are well-positioned for some really big jobs that are coming in that sector. And everything from lot repairs to airports to wind, farm work, and rail [indiscernible], I think it continues to grow in '22 and '23.

Okay, thank you.

Thank you.

Thank you. Our last question will come from Mike Dahl with RBC Capital Markets.

Hi, it's actually Chris Kalata for Mike. Thanks for taking my question. I understand that you guys still feel comfortable with your prior volume outlook. But, I just want to get a sense of the flexibility around that again in terms of supply chain pressures and limiting factor that is on your outlook. Have supply chains improved at all this quarter? And, what's your outlook there for the remainder of the year?

No, I would say the supply chain is still tight. I haven't seen any improvement. Labor is still tight. It doesn't impact to as much in Q1 because the volumes aren't at a high level they are in Q2 and Q3 in the construction season. So, you are not operating at high enough level to dampen it, which is what we are going to see in Q2 - Q3. And it is supply chain from everything from windows to doors to doorknobs, to switchgear to plumbing to pipe. It's just everywhere. And in the labor piece, not only dampens the construction companies but also dampens as I talk about transportation both rail -- the railroads are operating below -- it has been struggling as everybody knows to beat demand because they cannot get crews. And then as I said, they were short on trucks in peak shipping time. Again, I don't think it does away with demand. I just think it pushes it out and probably extended the cycle, so not all bad news, although we would like to ship as much as we can every day. If we don't get to it in the next quarter, the next quarter, it will get to it the next year, so, not all bad news. Hopefully, that will ease up some as we progress through year. And again, if that happens we will take advantage of it. And we will adjust and we will communicate to you. But, right now we just don't see it.

Understood. Appreciate the color.

Sure.

Thank you. Ladies and gentlemen, this does conclude today's question-and-answer portion. It is now my pleasure to turn the call back over to Mr. Tom Hill for any closing remarks.

Thank you, Operator. Listen, I thank all of you for your interest in Vulcan Materials, and your time today. We hope that you and your families stay safe, and we look forward to talking to you throughout the quarter. Bye-bye.

Thanks, everyone.

Ladies and gentlemen, this does conclude today's program, and we thank you for your participation. You may disconnect at any time.