Tom Hill: Morning, Mike.
Mary Andrews Carlisle: Good morning.
Michael Dudas: Good morning, Mary Andrews. Mark and Tom. For Tom and Mary Andrews, when you talked about you allocated capital towards the land acquisitions here this quarter, up to $200 million, you talked about 2023. Maybe you can share like how that progress is and what’s the medium-, longer-term timing on some of the greenfield opportunities? Are there some that are closer rather than others? And on a big picture basis, how much is that kind of, if you think about, relative to investing the capital into those types of projects?
Mary Andrews Carlisle: Yes. So this year, those strategic reserve purchases, as you would have seen, we completed the majority of that in the third quarter. And we are working on our capital planning for next year right now. And Tom mentioned earlier, we do have a healthy pipeline of greenfield opportunities at varying stages. So we are working now to define what that spending will look like for 2024. I think if you think of capex overall as we go into next year, we think that the current levels for operating and maintenance capex are appropriate for our current business needs and kind of where we are in the cycle. The growth is the part that will move around a little bit more, but we wouldn’t expect the same level of land purchases next year as this year.
Michael Dudas: Okay. And you would add – so there’s capacity growth potential in those states or others as you’re looking out medium to longer term as those markets continue to be attractive for you guys…
Tom Hill: Yes. I think the answer is that yes. It’s also – what you’re looking at is where are the growth quarters and how do you get the most effective logistic position to those future growth quarters and what’s the timing of putting the capital in. And that’s the beauty of a greenfield is you can time the capital and you can – you don’t have to go in all at once. So if you’ve got a faster growing market where your greenfield is, you’d put a big plan in. And if you got – if it’s out there and you just want – in a slow growth, you’d put maybe a portable or smaller plan in. But I think that in a number of these, it is getting the most strategic position in those markets at the right time.
Michael Dudas: Thank you, Mary Andrews, Tom.
Operator: The next question comes from David MacGregor with Longbow Research. Please go ahead.
David MacGregor: Yes. Good morning, everyone, and thanks for taking my question.
Tom Hill: Morning, David.
Mary Andrews Carlisle: Morning.
David MacGregor: Good morning, Tom. Good morning, Mary Andrews. I guess my question is just on the timing on project starts. And I guess, are you seeing much in terms of change in the lag between awards announcements and aggregate shipments? I mean, is that lag greater than you would have otherwise expected at this point? And we’ve had quite a bit of inflation, obviously, in materials and labor and services. And I’m guessing a number of these projects are running above engineers’ estimates. Any projects being held back or delayed as a consequence of inflationary concerns and expectations that, if they were to defer, they might get better economics further down the road?
Tom Hill: As far as delay – as far as people – projects getting pushed back, we saw a little bit of that in a couple of states I’d say nine months ago. We’re not seeing that today at all. In fact, states are working hard to get projects out. Inflation has definitely had an impact on project costs, but we are still seeing growth in demand this year and we’ll see growth in demand next year despite inflation. And as you heard me talk about earlier, budgets are up in a number of states, what I’d say, dramatically. So I think they understand that. I don’t think I worry about projects being pushed back from a cost perspective. If it is delays to projects, it’s really delays to getting into lettings because of capacity of DOTs growing into the funding. But again, I think all that taken in. We continue to see gradual growth in highway demand next year and the next year and the next year and the next year.
David MacGregor: Are you seeing much in the way of revisions to engineers’ estimates?
Tom Hill: I’m sorry. I misunderstood you.
David MacGregor: Are you seeing much in the way of revisions to engineers’ estimates?
Tom Hill: Yes. They’re going up, and I think they’re adjusting to it appropriately. But there’s a lag there and they’re playing a little bit of catch-up because of inflation.
David MacGregor: Thank you, Tom.
Tom Hill: Thank you.
Operator: The next question comes from Michael Feniger with Bank of America. Please go ahead.
Tom Hill: Morning.
Mary Andrews Carlisle: Good morning.
Michael Feniger: Morning. Thanks for taking my questions. You gave some great color on 2024. Just to kind of put a finer point on it, when we think of the price versus cost spread you guys achieved in Q3, is that price versus cost spread expanding in 2024 or staying the same, given kind of the moving pieces you were indicating earlier?
Tom Hill: I think the simple answer is, and you’re not going to like, it was a little early to call. We’re still figuring that out. We’re trying to give you color very early on price and cost. And I think on price, we said high single digit, maybe in the low double digit on cost, really early on cost because we’re estimating high single digit, but we’re doing the work right now including negotiating with our vendors and doing the operating plans. I think what I am encouraged about on the cost perspective is I think we’ll see improved operating efficiencies because of the automation in the – what we’ve done in the plants, but also the complete program of the Vulcan Way of Operating. But to call that margin growth at this point, I think we’re just a little bit early. We’ll be back to you in February.
Michael Feniger: Appreciate that. And when we think of next year, how you kind of outlined potential movement in shipments when we think of the cadence to residential, public, light versus heavy? I’m just curious if you kind of help us understand how you think the cadence kind of plays out for next year. Is it – do you start strong? Or does it actually kind of get better through the year? You have kind of easier comps potentially in the second half. Just how we kind of think of these moving pieces, how that rolls through next year?
Tom Hill: I don’t know that I have – we’ve got that down yet. I think the puts and takes for next year go like this. And this is – and I’m not answering questions as far as sequencing to quarterly, but more what would be on the high side and what would drive us lower. And I think, number one, speed of – and really important, speed of how the dollars going to work and going to shipments will be at the forefront. Second would be, does single-family come roaring back or is it maybe a little slower? I hopefully think we’ll see growth in single family. It’s how fast and how far. And the macroeconomic – the macro – the demand – the fundamentals for demand in single-families there. But you’re fighting, obviously, cost and inflationary pressures and the price of a house.
