Vulcan Materials Company · Risk factors

Prior heading: Our business is dependent on the construction industry and is subject to economic cycles

Our products are principally sold to the U.S. construction industry. Because our business is dependent on spending in both the public and private sector construction markets, our profits are sensitive to the underlying national, regional, and local economic conditions. Construction spending, which is cyclical, spending is affected by general economic conditions, changes in interest rates, demographic shifts, industry cycles, employment levels, inflation and other business, economic and financial factors that are beyond our control. A factors, any of which could contribute to a downturn in construction activities or spending in Vulcan-served markets. A downturn in Vulcan-served markets, particularly in our top revenue-generating markets, could have a material adverse effect on our business, financial condition, and results of operations.

Added · Removed · word-level comparison of the two filings

Prior heading: A pandemic, epidemic or other public health emergency, such as the ongoing coronavirus (COVID-19) pandemic, could have a material adverse effect on our business, results of operations, financial condition and cash flows

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the The COVID-19 pandemic. This pandemic has resulted in caused governments and businesses around the world implementing or reimplementing to implement strict measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures, and other measures. In addition, governments and central banks in several parts virus. The vast majority, if not all, of the world have enacted fiscal and monetary stimulus these measures to counteract the impacts of are no longer in place in the COVID-19 pandemic and may take further action as circumstances warrant. Consistent with federal guidelines and with United States. While our industry was deemed essential in every state in which we operate and local orders to date, we currently continue continued to operate across our footprint. Notwithstanding our continued operations and an economic environment that has shown signs of improvement, the COVID-19 pandemic has had and may have further negative impacts on footprint when such measures were in place, our operations, supply chain, transportation networks and customers, which may lower our revenues and EBITDA, including as a result of preventative and precautionary measures that we, other businesses and governments are taking. The COVID-19 pandemic is a widespread public health crisis that is adversely affecting the economies and financial markets of many countries. Any resulting economic downturn could adversely affect demand for our products and contribute to volatile supply and demand conditions affecting prices and volumes in the markets for our products and services. The progression of this matter has and may continue to transportation networks were negatively impact our business or results of operations impacted by affecting the health of such measures (including our employees own) and through the temporary closure of our operating locations or those health of our customers or suppliers. employees. The extent to which the COVID-19 outbreak impacts our business, results progression of operations, financial condition or cash flows will depend on future developments, which remain COVID-19 (which remains highly uncertain and cannot be predicted, including, but not limited to, the duration and geographic spread of the outbreak, its severity, the actions to contain the virus uncertain) or treat its impact including the reimplementation of restrictions on economic activity following new outbreaks, the availability, durability and efficacy of vaccines, the long-term impacts of the virus on transportation revenues, government budgets and other funding priorities and the extent and pace at which normal economic and operating conditions can resume. There can be no assurance that we will not be impacted by adverse consequences that another pandemic may be brought about result in future measures taken by pandemics on global financial markets, which may reduce resources, share prices and financial liquidity and may severely limit the availability of financing capital.governments and/or businesses (including our own) that could negatively impact our business.

Added · Removed · word-level comparison of the two filings

Prior heading: Our business is dependent on the timing and amount of federal, state and local funding for infrastructure

Our products are used in a variety of public infrastructure projects that are funded and financed by federal, state and local governments. In 2021, 2022, voters in local jurisdictions in Arizona, California, Florida, Georgia, North Carolina, South Carolina, Texas and Virginia, among others, approved bond and revenue-raising measures to provide additional resources for transportation projects. In 2020, Virginia passed new long-term highway funding legislation and voters in Arkansas made permanent a ½ cent gas tax increase first approved in 2012. In November 2021, the federal Infrastructure Investment and Jobs Act (IIJA), which included a five year road, bridge and public transportation program reauthorization at record levels, was signed into law. The These state and federal highway programs, as well as funding for other aggregates-intensive public infrastructure, will provide assistance to state departments of transportation, federal, state and local agencies, and metro areas support demand for our products for several years to come. However, given the time to set up new federal programs, varying state and local budgetary situations and the stages of projects, we cannot be entirely assured of the existence, amount and timing of appropriations for future public infrastructure projects.

Added · Removed · word-level comparison of the two filings

Prior heading: We are subject to various risks arising from our international business operations and relationships, which could adversely affect our business

We have international operations and are subject to both the risks of conducting international business and the requirements of the Foreign Corrupt Practices Act of 1977 (the FCPA). We face political and other risks, including legal risks for failure to comply with the FCPA, FCPA) associated with our international operations, including our largest aggregates production facility facilities including those located in Playa del Carmen, Mexico and our newly acquired aggregates production facility in British Columbia, Canada. Canada; Puerto Cortés, Honduras; and Quintana Roo, Mexico. These risks have included included, and may in the future include include, changes in international trade policies, such as the United States - Mexico - Canada Agreement (USMCA), imposition of duties, taxes or government royalties, arbitrary changes to permits, zoning classifications or operating agreements, or overt acts by foreign governments, including expropriations and other forms of takings of property. Recently, the Mexican government has taken actions that adversely affect our property and operations in that country, including delays in issuing a historically routine three-year customs permit for our deep-water port. Mexico instead issued a short-term customs permit that must be renewed after two months. While we continue to negotiate with the Mexican authorities arbitrary shutdown orders to reach an agreeable immediately cease underwater quarrying and mutually beneficial solution, failure by the Mexican government extraction operations. We continue to issue future customs permits or its taking of any other measures that force vigorously pursue all lawful avenues available to us in order to cease protect our rights, under both Mexican and international law and intend to resume normal operations in Mexico would have an adverse effect on our ability to supply customers.as soon as permitted.

Added · Removed · word-level comparison of the two filings

Prior heading: Within our local markets, we operate in a highly competitive industry which may negatively impact prices, volumes and costs

The construction aggregates industry is highly fragmented with a large number of independent local producers in a number of our markets. Additionally, in most markets, we also compete against large private and public companies, some of which are significantly vertically integrated. Therefore, there is intense competition in a number of markets in which we operate. This significant competition could lead to lower prices and lower sales volumes in some markets, negatively affecting our earnings and cash flows.volumes.

Added · Removed · word-level comparison of the two filings

Prior heading: The expanded use of aggregates substitutes could have a material adverse effect on our business, financial condition and results of operations

Recycled concrete and asphalt are increasingly being used in a number of our markets, particularly urban markets, as a substitute for aggregates. The expanded use of recycled concrete and asphalt could cause a significant reduction in the demand for aggregates.

Added · Removed · word-level comparison of the two filings

Prior heading: Our long-term success depends upon securing and permitting aggregates reserves in strategically located areas. If we are unable to secure and permit such reserves it could negatively affect our future earnings

Construction aggregates are bulky have a high weight-to-price ratio, and heavy and, therefore, difficult to transport efficiently. Because of the nature of the products, the freight transportation costs can quickly surpass exceed the production costs. cost of the aggregates. Therefore, except for geographic regions that do not possess commercially viable deposits of aggregates and are served by rail, barge or ship, the markets for our products tend to be localized around our quarry sites and are served by truck. New quarry sites often take years to develop; therefore, develop, so our strategic planning and new site development must stay ahead of actual growth. Additionally, in a number of urban and suburban areas in which we operate, it is increasingly difficult to permit new sites or expand existing sites due to community resistance. Therefore, our future success is dependent, in part, on our ability to accurately forecast future areas of high growth in order to locate optimal facility sites and on our ability to secure operating and environmental permits to operate at those sites.

Added · Removed · word-level comparison of the two filings

Prior heading: Our future growth depends in part on acquiring other businesses in our industry and successfully integrating them with our existing operations. If we are unable to integrate acquisitions successfully, it could lead to higher costs and could negatively affect our earnings

The expansion of our business Our ability to acquire and integrate businesses is dependent in part on the acquisition of existing businesses that own or control aggregates reserves. Disruptions in upon the availability of financing could make it more difficult to capitalize on potential acquisitions. Additionally, attractive businesses with regard to the acquisitions we owners that are able willing to complete, our future results will depend in part sell at fair market prices, conducting proper due diligence on our ability to successfully integrate these businesses with our existing operations.such available businesses, and developing and executing integration plans for acquired businesses.

Added · Removed · word-level comparison of the two filings

Prior heading: Our industry is capital intensive, resulting in significant fixed and semi-fixed costs. Therefore, our earnings are highly sensitive to changes in product shipment volumes

Due to the high levels of fixed capital required for extracting and producing construction aggregates, our profits earnings are negatively affected by significant decreases highly sensitive to changes in shipment volumes.product shipments. Therefore, it is important that our capital allocation decisions are properly informed and our capital deployment is well planned and executed.

Added · Removed · word-level comparison of the two filings

Prior heading: We use estimates in accounting for a number of significant items. Changes in our estimates could adversely affect our future financial results

As discussed more fully in “Critical Accounting Policies” under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we use estimates and assumptions that require significant judgment in accounting for: for the following items: goodwill impairment impairment of long-lived assets excluding goodwill business combinations and purchase price allocation pension and other postretirement benefits environmental compliance costs claims and litigation including self-insurance income taxes These Additionally, the calculation of mineral resources and reserves are estimates and depend upon geological interpretation and statistical inferences or assumptions drawn from drilling and sampling analysis. These estimates are subject to uncertainty due to factors that include the inherent variability of the deposit and recoverability of saleable material in the mining process. These estimates and assumptions could change significantly in the future and could adversely affect our financial position, results of operations, operations or cash flows.

Added · Removed · word-level comparison of the two filings

Prior heading: Changes in legal requirements and governmental policies concerning zoning, land use, environmental and other areas of the law may result in additional liabilities, a reduction in operating hours and additional capital expenditures

Our operations are affected by numerous federal, state and local laws and regulations, including those related to zoning, land use and environmental matters. Despite our compliance efforts, we have an inherent risk of liability in the operation of our business. These potential liabilities could have an adverse impact on our operations and profitability. In addition, our operations require numerous governmental approvals and permits, which often require us to make significant capital and operating expenditures to comply with the applicable requirements. Stricter laws and regulations, or more stringent interpretations of existing laws or regulations, may impose new liabilities, taxes or tariffs on us; reduce operating hours; require additional investment by us in pollution control equipment; create restrictions on our products; impede our access to reserves or hamper the opening of new new, or the expansion of existing existing, plants or facilities.

Added · Removed · word-level comparison of the two filings

Prior heading: We are involved in certain environmental matters. We cannot predict the outcome of these contingencies with certainty

We are involved in environmental investigations and cleanups at sites that we own or owned, where we operate or have operated or where we sent materials for recycling or disposal, as well as related offsite investigations and cleanups. We are also involved in several other complex, non-environmental, legal proceedings. As required by GAAP, we establish reserves when a loss is determined to be probable and the amount can be reasonably estimated. Our assessment of probability and loss estimates are based on the facts and circumstances known to us at a particular point in time. Subsequent developments related to these matters may affect our assessment and estimates of loss contingency, and could result in an adverse effect on our financial position, results of operations or cash flows. contingency. For a description of our current significant legal proceedings and environmental matters matters, see Note 12 “Commitments and Contingencies” in Item 8 “Financial Statements and Supplementary Data.”

Added · Removed · word-level comparison of the two filings

Prior heading: Climate change and climate change legislation or regulations may adversely impact our business

A number of governmental bodies have introduced or are contemplating legislative and regulatory change in response to the potential impacts of climate change. Such legislation or regulation, if enacted, potentially could include provisions for a “cap and trade” system of allowances and credits or a carbon tax, among other provisions. Other potential impacts of climate change include physical impacts, such as disruption in production and product distribution due to impacts from major storm events, shifts in regional weather patterns and intensities, availability of water and potential impacts from sea level changes. There is also a potential for climate change legislation provisions, and regulation to adversely impact the availability and/or cost of purchased energy and electricity. A number of our facilities are located in desert climates, and while we have not experienced any significant shortages of energy or water in the past, we cannot guarantee that we will not in the future. Furthermore, public expectations for reductions in greenhouse gas emissions could result in increased energy, transportation and raw material costs, and may require us to make additional investments in facilities and equipment. The impacts of climate change on our operations and the company overall are highly uncertain and difficult to estimate. However, climate change legislation and regulation concerning greenhouse gases could have a material adverse effect on our future financial position, results of operations or cash flows.electricity.

Added · Removed · word-level comparison of the two filings

Prior heading: Our future success greatly depends upon attracting and retaining qualified personnel, particularly in sales and operations

A significant factor in our future profitability is our ability to attract, develop and retain qualified personnel. Our success in attracting qualified personnel, particularly in the areas of sales and operations, is affected by changing demographics of the available pool of workers with the training and skills necessary to fill the available positions, the impact on the labor supply due to general economic conditions, and our ability to offer competitive compensation and benefit packages.

Added · Removed · word-level comparison of the two filings

Prior heading: Disputes with organized labor could disrupt our business operations

Labor unions represent approximately 16% 13% of our workforce. Disputes with our trade unions, or the inability to renew our labor agreements, may lead to strikes or other actions that could disrupt our business operations leading to higher costs and/or reduced revenues.operations.

Added · Removed · word-level comparison of the two filings

Prior heading: A significant interruption of our information technology systems (our own and that of our service providers such as Amazon Web Services) or the loss of confidential or other sensitive data (whether our own, our employees’, our suppliers’, or our customers’) could have a material adverse impact on our operations and financial results

The protection of our information technology systems and the data contained therein is critical to us. We have a dedicated information security team that executes, and updates as warranted based on emerging risk and new risk management technology, executes our information security program. program and routinely tests the security of our applications, networks, databases, etc. The loss of use of information technology systems (whether ours or our service providers), regardless of the cause, would disrupt our business operations. The failure to keep secure the confidential and sensitive data about our business, employees, suppliers and customers, regardless of the reason for such failure, could expose us, our employees, suppliers and/or our customers to the misuse of such data and could result in reputational harm and financial liability. The Audit Committee, which has oversight responsibility for our information security program, is briefed on such program at least twice annually, and our Chief Financial Officer is briefed on such program at least quarterly. While we have invested in the protection of our data and information technology and routinely test the security of our information systems network, we cannot be assured that our efforts will prevent breakdowns or breaches in our systems that could adversely affect our business.quarterly.

Added · Removed · word-level comparison of the two filings

Prior heading: Weather can materially affect our operating results

Almost all of our products are consumed outdoors in the public or private construction industry, and our production and distribution facilities are located outdoors. Inclement weather affects both our ability to produce and distribute our products and affects our customers’ short-term demand because their work also can be hampered by weather.weather. Potential impacts of climate change include disruption in production and product distribution due to impacts from major storm events, shifts in regional weather patterns and intensities, availability of energy and/or water, and sea level changes. A number of our facilities are located in desert climates, and while we have not experienced any significant shortages of energy or water in the past, we cannot guarantee that we will not in the future. Furthermore, public expectations for addressing climate change could result in increased energy, transportation and raw material costs and may require us to make additional investments in facilities and equipment.

Added · Removed · word-level comparison of the two filings

Prior heading: Our products are transported by truck, rail, barge or ship, often by third-party providers. Significant delays or increased costs affecting these transportation methods could materially affect our operations and earnings

Our products are distributed either by truck to local markets or by rail, barge or oceangoing vessel to remote markets. The costs distribution and cost of transporting our products distribution could be negatively affected by factors outside of our control, including such as rail service interruptions or rate increases, tariffs, rising fuel costs, truck/railcar/barge shortages, truck driver and rail crew shortages, capacity constraints and minimum tonnage requirements. Additionally, inclement weather, including hurricanes, tornadoes and other weather events, such as hurricanes and tornadoes, can negatively impact our distribution network.

Added · Removed · word-level comparison of the two filings

Prior heading: We use large amounts of electricity, diesel fuel, liquid asphalt and other petroleum-based resources that are subject to potential supply constraints and significant price fluctuation, which could affect our operating results and profitability

In our production and distribution processes, we consume significant amounts of electricity, diesel fuel, liquid asphalt and other petroleum-based resources. Additionally, we operate significant amounts of fixed and mobile equipment that require regular maintenance and replacement of parts. The availability and pricing of these resources are subject to market forces that are beyond our control. Our suppliers contract separately for the purchase of such resources, and our sources of supply could be interrupted should our suppliers not be able to obtain these materials due to higher demand or other factors that interrupt their availability. Variability in the supply and prices of these resources could materially affect our operating results from period to period, and rising costs could erode our profitability.forces.

Added · Removed · word-level comparison of the two filings