Good morning, ladies and gentlemen, and welcome to the Vulcan Materials Company's Q1 earnings call. My name is Chelsea and I will be your Conference Call coordinator today. During the Q&A portion of this call, we ask that you limit your participation to one question. This will allow everyone who wishes the opportunity to participate. You may register to ask a question at any time by pressing the star and one on your touch-tone phone. 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 website, vulcanmaterials.com. A recording of this call will be available for replay later today at our website. 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 have had a safe and healthy start to the year. Our teams executed well in the Q1 . They remain 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 Q1 . We generated $294 million of adjusted EBITDA, a 20% increase over the prior year, despite accelerating inflation, continued 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 twelve months, we have delivered 10% adjusted EBITDA growth in spite of $131 million of higher energy-related costs. On a trailing twelve 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 Q1 . Mix adjusted pricing improved 7%. We expect to see continued strength in pricing throughout the year and are confident about mid-year 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 Q2 last year.
Over the trailing twelve 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 Q1 , cash gross profit was $6.53 per ton. Excluding the impacts of selling acquired inventory and higher diesel costs, 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 costs positively impacted the Q1 results.
Average selling prices increased 13% versus last year and helped to improve unit materials margins. The average price of Liquid Asphalt was over 30% higher than prior year, a $14 million headwind to our Q1 results. While we expect Liquid Asphalt prices to continue to rise, we are encouraged by the significant sequential improvement that we've 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 Q1 , driven primarily by the addition of U.S. Concrete. Volume, price, and material margins all improved as higher selling prices offset higher material costs, 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 multifamily 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 use is expected to grow, but at a more modest rate in 2022. Demand remains strong and starts are still positive. However, we are mindful of factors such as supply chain issues, rising interest rates, and labor constraints. With the continued demand for additional housing, multifamily 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 a trailing twelve-month basis, square footage for total non-residential starts has grown for 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 toward growth for 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 will depend upon the pace at 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 impacts be realized in 2023 and beyond.
We are well- positioned in attractive markets and are poised to benefit greatly from the 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 execution 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 8 quarters, delivering a 4% compound annual growth rate in our trailing twelve 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'll 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 costs. 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 2-2.5 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'll remain disciplined as we 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 twelve 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. 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'm excited about what we will accomplish in 2022 and for years to come. Now, Suzanne and I will be happy to take your questions.
All right, thank you. At this time, if you would like to ask a question, please press the star and one on your touchtone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star and one to ask a question. Our first question will come from Trey Grooms with Stephens. Your line is now open.
Hey, good morning, Tom and Suzanne. How are you?
Morning, Trey. Good.
Good morning.
Great. Well, Tom, first off, you know, I know you talked a little bit about the pricing environment and that it, you know, clearly is strong. You have an expectation for price momentum to step up in 2022. You know, I guess if you kinda go back to what you said in February, I think the guidance called for 6%-8% increase this year in price versus last year. Excuse me. Which came in, I think closer to 3%. You know, you put up 6% in the quarter, so clearly some nice acceleration there. Can you talk about the price momentum you're seeing today, you know, expecting through the year? How you're thinking about mid-year increases relative to maybe, you know, where you were a few months ago?
Sure. I thought the performance in the Q1 was a really good start to the year. As you said, we reported 6%, mix-adjusted, we were at 7%. If you remember in February, we predicted it to start off higher, you know, but the low- end of the range, but higher than the Q4 last year. Then we grow it sequentially as we march through the year. You know, that combination of visibility to demand and coming demand, you couple 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 mid-year price increases across the vast majority of our work. Now remember, mid-year price increases will have some positive impact on 2022.
Because of the delay in our work and our jobs, it's really more of a 2023 play, and it sets us up really good for next year. 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 ourself up for 2023. You know, as you said, a really good pricing environment.
Trey, I'll just add one thing just to remind everyone. You know, when we're talking about pricing and guidance, you know, we all price in the industry a little bit differently and talk about it a little bit differently. 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 markets. In times of inflation and volatility, you know, that can make a big difference in the top- line price that's quoted. But what's really important here, and I'm sure we'll come on to talk about unit margins later, is how much of that price you're really able to take to the bottom- line.
Perfect. Thank you for that. I'm gonna stick with the one question, but I do gotta take my hats off to you on the profit per ton as well. The good work on that side as well. Thank you.
Thanks, Trey.
Thanks.
Thank you. Our next question will come from Stanley Elliott with Stifel.
Hey, good morning, everyone. Thank you for the question and
Good morning.
Actually it's a nice segue for me. Hey, Tom, I was curious if you could talk a little bit more about, you know, the execution, controlling costs. I mean, freight-adjusted costs up 11%. Doing a really nice job on the unit margins. Well, would love to hear you guys talk a little bit more about what's happening behind the scenes.
Sure. You know, as we've talked about, our Aggregates business, we believe will beat inflation, while we continue to do a good job on price. I think our operators have really improved efficiencies to help offset inflation and to offset the huge $59 million 12-month spike we've experienced in diesel and aggregates. I think they're doing it all the time, making sure they service our customers and keep each other safe. If you kinda look back over the last 12 months, we've held costs 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.
What this demonstrates throughout the whole aggregates business is that we're executing on our core strategic disciplines, and they're making a difference, you know, obviously controlling cost control, but also offsetting 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 Revick with Goldman Sachs.
Yes, hi. Good morning, everyone.
Good morning, Jerry.
I'm wondering if you could just talk about the magnitude of inflation that you folks are seeing on labor and, you know, other inputs, and, you know, what do you expect the cadence of that to look like? In other words, when do we hit an easier comp from that standpoint? I'm assuming the price realization's gonna dovetail nicely with that cadence. Maybe I can get you to expand on price cost if you don't mind.
Sure, I'd be glad to. It's like everybody else. It's everywhere. To call out labor, probably mid-single- digit. You know, parts are up, hard to get parts, steel's up, rubber's up, everything's there. You know, the headline has to be in fuel and in energy. If you just 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 gonna be 50% higher at this point. We said it probably gets easier in comps in Q3 and Q4, and we'd probably, you know, just comp over that. At this point, we still predict those now to be up in Q3 and Q4.
You know, it's tough, and it's there, and it's real. But as you pointed out, I think we offset that with price, and we continue to improve our unit margins, which is, you know, our job. 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 Q1 was evidence of that.
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 question today.
Hi. Good morning.
You have a good volume outlook and are seeing some areas that have not seen signs of life, including office, and you've yet to see the real momentum on a state-level from public spending. Against this backdrop, there, you know, continue to be some supply chain snags, and, you know, you're tight in cement across the U.S. We're even hearing some concerns about availability of certain types of rock heading into the peak construction season. First, from your perspective, how is the supply chain journey for you as you manage your business now? And then how do you see it going forward for the remainder of 2022 and really into 2023 too? Thank you.
Yeah. For us, I mean, it's impacted us a little bit, maybe a little on efficiencies with parts for mobile equipment. Hopefully, that's improving, but we saw that for the first time in the Q1 . For our customers, I think it's a little bit different story. I thought that, you know, obviously, the Q1 was strong. Remember, we're comping over, you know, a pretty easy comp with the big freeze in February last year. Again, it's just Q1 easy comp. The fundamentals in demand, I think, are really a good place and probably as good as we've seen in a long time, with all four end uses should have shipments up in 2022. That said, as you pointed out, we've got labor and supply chain issues.
Labor will affect our customers just getting, you know, catching up on work more than getting it done. It also hurts us in transportation. It hurts the rail transportation. In any, you know, peak day with excellent weather, you just don't have enough trucks to deliver at peak demand. It spreads it out. As you pointed out, supply chain is just slowing some work. I think with that being said, I think the good news is that work's not canceling. We're not seeing any jobs go away. It's, while demand is there, it's not going away, it's just pushing it to the right and extending the cycle, and that's not all bad. You know, if we see some of these pressures ease, I think there's 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 Truist Securities.
Thank you. Several impressive things there, but particularly asphalt, given some of the inflation seen in that sector with the flat year-over-year performance. I guess my question is next quarter or two, if there's some recent inflation you're gonna lag that's gonna put some pressure, or do you think you're on the right side of cost now?
I think Q2 will see some pressures, as we've pointed out, because it's still a harder comp. We hadn't seen the big jump. You started to see the inflation last year in Q2, but not the big jump in diesel and liquid. Q2 has tougher comps kinda 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 in asphalt that we'd see gross profit grow driven by second half volumes and second half unit margin growth. I think that, you know, in the quarter, we saw liquid go up 130 bucks or $14 million. 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 back growing those unit margins in asphalt.
Okay. Thank you.
Thank you.
Thank you. Our next question will come from Derek Schwach with Loop Capital Markets.
Oh, hi. Thanks, and congrats on the quarter. I was just wondering if you can go into a little bit more detail just on the volume growth expectations for the rest of the year. You know, clearly, Q1, you're up against a fairly easy comparison, but you know, anything we should consider as the demand environment continues to improve for you?
Yeah. Again, you know, I would stick to our guidance, which was 5%-7% kind of on volume growth. That's 2%-4% same store. Again, great start. Again, easy comp, you know, small quarter. I would call out this. I would stick to that guidance at this point until I see some ease. You know, as we heard earlier, you've got labor issues, you've got supply chain issues, you could have cement issues being tight. I don't think it dampens volume that much. You know, I don't see that easing at this point, so I would stick with our volume original growth until we see more.
I think, like we said last quarter, I mean, if there is, you know, an easing, then, you know, 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, and congratulations on a great quarter.
Good morning.
Impressive.
Thank you.
Impressive results. I guess I wanted to ask you about your EBITDA guidance range, the $172-$182. That's not changing, but obviously a lot within that is changing. Just responding to Derek's question, you just talked about volume building, where you were in terms of beginning of year assumptions. Clearly pricing is gonna be a lot better. Can you just talk about how you're thinking about that cash cost inflation or that mid-single- digit number you gave us, back in February?
Yeah. I think as I look at the year and just puts and takes to the year after one quarter, and it's just the Q1 , I would say that it'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'll have challenges. We knew we were gonna have challenges on diesel. We got bigger challenges there than we had anticipated. We knew we were gonna have the challenges on Liquid Asphalt. Again, that has climbed more than we thought it would and will continue to climb. When you put all that together, I would tell you that I have good confidence in our guidance, and we need to see a 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.
Thanks, Phil.
Tom and Suzanne, is there a good way to think about the mid-year increase from a contribution standpoint? If demand remains pretty good, do you see this being more of the new 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 to unpack there.
No, it's okay. I think that, you know, 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, its ability to compound unit margins over time. That's specifically why we're in the aggregates business. That's why we're leading in that business. That's why, you know, 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'll continue that trend.
We started off at, you know, 6 or 7, depending on how you call the price in the quarter, and I think each quarter we'll continue to grow that as we progress forward. I would, at this point, I would hope we would be at the higher- end of that guidance at this point. Now, if you really wanna be good at this business, you gotta take that price to the bottom- line, which is why we've worked so hard on those strategic disciplines and why it's not just about price, it's also about cost control and operating efficiencies.
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, I think you see that, you know, when you look at the guidance we called out, you know, at the beginning of the year. If you look at that cash gross profit per ton, the guidance ranges that we've given call for that to go up, you know, high single- digits year-over-year. I'd say at any time, that's a good performance to be able to drive that to that level. Taking into consideration, you know, all the energy headwinds we've talked about and the inflation, despite the opportunity for some price increases, you know, that's a performance I'd really be proud of.
For sure. I mean, given all the inflation you saw, improvement in 1Q is pretty promising. Appreciate the color.
Yeah. Sure.
Thank you.
Thank you. Our next question will come from Michael Dudas with Vertical Research.
Good morning, Mark.
Good morning.
... Tom.
Good morning.
Good morning.
Tom, if you could share your thoughts on how the U.S. Concrete integration is going, relative to plan, and what are the puts and takes you've seen over the first several months of having them in the Vulcan family. Is the New York kinda like the Northeast market? You know, you hear about a lot of civil, a lot of work coming through through the various agencies in New York State. Are you seeing some of that for this year and going out into the next couple?
Yes, we are. New York, I think two things are happening in New York. The public demand is rolling into some very big projects that are coming, that are in the works. Now we're starting to see non-res up there starting to pop. So good news at that market. If you step back and look at U.S. Concrete, at this point, we're functioning as one business with combined field teams operating as one team. I think as 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's a lot of work coming across our footprint. Then pricing in all product lines is, as we talked about, really jumping in 2022.
It sets us up really well for that acquisition to create even more value for our shareholders.
Thanks.
Sure.
Thank you. Our next question will come from Courtney Yakabanis with Morgan Stanley.
Hi. Good morning, guys.
Good morning.
Just one clarification on the pricing comments. I know you've been talking a lot about the mid-years, but is your reiterated guidance include the upside from mid-years at the high- end? Or I think last quarter you characterized it as not including mid-years in it. Just wanted to understand if that changed given the elevated diesel and Liquid Asphalt headwind that you are now baking in. Secondly, on the downstream side, you'd given us some guidance for gross profit last quarter. Any change to how we should be thinking about those business lines?
Yeah. The pricing I would point out we would still be in that, in that 6-8, but probably on the high- end of it. You gotta remember that mid-year price increases will hit some of it in May, some of them June, some of them July. Because of the lag in our business, you get some benefit in 2022, but it really sets you up. Most of that work's gonna hit in 2023. While you'll see some benefit and push us, I would say, to the high- end of that range, the big benefit's gonna hit in 2023, and that's great. I think from a downstream perspective, we would tell you it's the same. No change in guidance. Again, what we said was $300-$325 cash gross profit in the downstream.
While we've seen inflationary pressures in both products, both concrete and asphalt, we're also seeing pricing, and I would stick with our guidance and continue to grow our unit margins and volume, particularly second-half loaded.
Okay, great. Thank you.
Thank you.
Thank you. Our next question comes from Michael Vinegar with Bank of America.
Hey, guys. Thanks for taking my question. Just following- up, I mean, with the pricing now at the high- end and where you started. Where do you exit? I mean, you know, what kind of incremental should we be thinking about for next year if you're looking at a 10%-12% pricing in 2023? Basically the cash gross profit's a ton, which is growing high single- digit. You know, how much is that accelerating should we be thinking about in 2023, and really thinking about those incrementals around that business?
Yeah. Well, too early to call pricing in 2023. Again, it's nicely set up with mid-year price increases. I would always point you in aggregates to, you know, 6% incremental same store. I would under-
Sixty.
60, yes. 60% same store. You know, inflation puts pressure on that, particularly spikes in diesel. If you look at it over the long- term, that's where I would guide you, that 60%.
Okay. Can gross margin in asphalt and ready mix, can that get back to 2020 levels next year? I know you're assuming that there's improvement in the second half this year. 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 keeps those margins in the downstream businesses from getting back to those levels?
I would remind you that 2020 was special for asphalt because of the sharp fall in liquid prices. It was probably an outlier, whereas 2021 was also an outlier the other way with a spike in liquid. It's somewhere in between those two. I think we get back to more normalized. I don't think there's anything structurally changed 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. I think we're on our path there with what you saw in the Q1 .
Yeah. Yeah. I wanna just add here. I mean, look, we had a really good Q1 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. I think we certainly saw a good performance in price. We said we're confident in mid-year price increases. 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. You know, when we reiterated our EBITDA guidance, we're really trying to take into account that both of those items.
Thank you.
Thank you. Our next question will come from Adam Thalhimer with Thompson Davis & Co.
Hey, good morning, guys.
Good morning, Adam.
Just a quick one on residential. Tom, I think you said residential decelerating growth this year. What are you hearing from some of your major home building clients? Maybe you can even kinda do a geographic walk for us. Thanks.
Yeah. The geographic walk's pretty easy. It's widespread. It's everywhere from a residential and the housing market's just tight. I mean, in every market we operate in, maybe the exception of Illinois, but every place, and even that one's 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 2021 in single family. Now, multifamily permits and starts are up double- digits, so it's really heating up. Overall, res continues in both single family and multifamily, operates at a very high- level and continues to be good.
I don't see it slowing down. I think the growth rate may have slowed a little bit, but it would've been tough to keep up at that, the rate we saw in 2021.
It's still at high- levels.
Yeah. Growth is not at the level of growth that we saw in 2021, but really good news.
Understood. Thanks.
Thank you. Our next question will come from Brent Thailman with D.A. Davidson.
Hey. Thank you. Good morning. Hey, Tom, there's been some discussion about delays in certain infrastructure projects just because the costs sort of advanced beyond the original estimates and having to go back and kinda rebid it. Is that something you've seen become more pervasive across your markets in any sense if that's had any effect at all in terms of slowing some of the good momentum, you know, I think that piece of your business should otherwise be doing?
I don't know that I've 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. I think, you know, we're well-positioned. We are well-positioned for some really big jobs that are coming in that sector, and some, you know, everything from lot repairs to airports to wind farm work and rail intermodal. I think it continues to grow in 2022 and 2023.
Okay. Thank you.
Thank you.
Thank you. Our last question will come from Mike Dahl with RBC Capital Markets.
Hi. It's actually Chris Klont after Mike. Thanks for taking my question. Understanding you guys still feel comfortable with your prior kinda volume outlook, but I just wanted to get a sense of the flexibility around that again in terms of, you know, supply chain pressures and the 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 tell you supply chain is still tight. I haven't seen any improvement. Labor is still tight. It doesn't impact you as much in Q1 because the volumes aren't at a high- level they are in Q2 and Q3 in the construction season. You just don't, you're not operating at a high enough level to dampen it, which is what we're gonna see in Q2, Q3. It's, you know, it is supply chain from everything from windows to doors, to doorknobs, to switchgear, to plumbing, to pipe. It's just everywhere. The labor piece not only dampens the construction companies, but also dampens, as I talked about, transportation. Both rail, you know, railroads are operating below, struggling, as everybody knows, to meet peak demand 'cause they can't get crews.
You know, as I said any day, we're short on trucks in a peak shipping time. Again, I don't think it does away with demand. I just think it pushes it out and probably extends the cycle. You know, not all bad news, although, you know, we'd like to ship as much as we can every day. If we don't get to it in the next quarter, we'll get to it next year, so not all bad news. Hopefully, that'll ease up some as we progress through the year. Again, if that happens, we'll take advantage of it, and we'll adjust, and we'll communicate to you. Right now we just don't see it.
Understood. Appreciate the call.
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, 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.