Financial Analysis

NOTE I: COMMITMENTS AND CONTINGENCIES Legal and Administrative Proceedings The Company is engaged in certain legal and administrative proceedings incidental to its normal business activities, including proceedings relating to environmental matters. The Company considers various factors in assessing the probable outcome of each matter, including but not limited to the nature of existing legal proceedings and claims, the asserted or possible damages, the jurisdiction and venue of the case and whether it is a jury trial, the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, the Companys experience in similar cases and the experience of other companies, the facts available to the Company at the time of assessment, and how the Company intends to respond to the proceeding or claim. The Companys assessment of these factors may change over time as proceedings or claims progress. The Company believes it is remote that the outcome of any currently pending legal or administrative proceeding will result in a material loss to the Company's financial condition, results of operations or cash flows based on currently available facts. Other Environmental Matters The Companys operations are subject to and affected by federal, state and local laws and regulations relating to the environment, health and safety, and other regulatory matters. Certain of the Companys operations may, from time to time, involve the use of substances that are …

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NOTE E: DEBT June 30, December 31, (in millions) 2026 2025 3.450 % Senior Notes, due 2027 300 299 3.500 % Senior Notes, due 2027 494 493 2.500 % Senior Notes, due 2030 474 473 2.400 % Senior Notes, due 2031 891 891 5.150 % Senior Notes, due 2034 739 739 6.25 % Senior Notes, due 2037 229 229 4.250 % Senior Notes, due 2047 591 591 3.200 % Senior Notes, due 2051 851 851 5.500 % Senior Notes, due 2054 727 727 Revolving Facility 1 95 Trade Receivable Facility 2 560 30 Total debt 5,951 5,323 Less: current maturities ( 860 ) ( 30 ) Long-term debt $ 5,091 $ 5,293 1 Borrowings bear interest, at the Companys option, at rates based upon the Secured Overnight Financing Rate (SOFR) or a base rate, plus, for each rate, a margin determined in accordance with a ratings-based pricing grid. Revolving Facility interest rate is 4.75 % at June 30, 2026. Any outstanding principal amounts, together with interest accrued thereon, are due in full on the maturity date. 2 Borrowings bear interest at a rate equal to the Adjusted Term Secured Overnight Financing Rate (Adjusted Term SOFR), as defined, plus 0.7 %. Trade Receivable Facility interest rate is 4.32 % and 4.57 % at June 30, 2026 and December 31, 2025, respectively. On May 14, 2026, the Company requested, and lenders consented to, an increase in the borrowing base of the Trade Receivable Facility from $ 400 million to $ 600 million. The Company funded the NFM acquisition (see Note B) using cash on hand and short-term borrowings under the Trade R …

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NOTE C: GOODWILL AND OTHER INTANGIBLE ASSETS The following table shows the changes in goodwill by reportable segment and in total: East West (in millions) Group Group Specialties Total Balance at January 1, 2026 $ 1,733 $ 1,672 $ 209 $ 3,614 Acquisitions 21 370 391 Divestitures ( 10 ) ( 10 ) Adjustments to purchase price allocations ( 1 ) ( 23 ) ( 6 ) ( 30 ) Foreign currency translation ( 6 ) ( 6 ) Balance at June 30, 2026 $ 1,743 $ 2,013 $ 203 $ 3,959 All intangible assets acquired during 2026 are from business combinations and are as follows: (in millions, except year data) Amount Weighted-average amortization period Subject to amortization: Customer relationships $ 108 17 years Use rights and other 13 25 years Total $ 121 18 years …

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NOTE G: INCOME TAXES The Company's effective income tax rate reflects the effect of federal and state income taxes on earnings and the impact of differences in book and tax accounting arising primarily from the permanent tax benefits associated with the statutory depletion deduction for mineral reserves. The effective income tax rates for continuing operations were 23.3 % and 20.3 % for the six months ended June 30, 2026 and 2025, respectively. The higher 2026 effective income tax rate compared with 2025 was primarily attributable to the revaluation of deferred tax liabilities driven by changes in the state jurisdictional mix of the business following the QUIKRETE transaction. The Company invests in renewable energy investment entities which qualify for tax credits and other tax benefits (RETC projects) and are accounted for under the proportional amortization method. For the six months ended June 30, 2026 , the Company's annualized effective tax rate includes the proportional amortization of these investments of $ 11 million, offset by other tax benefits of $ 10 million. For the six months ended June 30, 2025, the Company's annualized effective tax rate included the proportional amortization of these investments of $ 46 million, offset by $ 42 million of tax credits and $ 8 million of other tax benefits. Unfunded commitments related to these tax equity investments as of June 30, 2026 and December 31, 2025 are recorded in Unpaid commitments in limited liability companies on t …

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New Accounting Pronouncement In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (DISE), which requires public entities to disaggregate certain expense captions presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. These disclosures must be made in a tabular format in the footnotes to the financial statements. The new standard does not change the requirements for the presentation of expenses on the face of the statement of earnings. The ASU is effective prospectively for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and early adoption and retrospective application are permitted. The ASU will impact the Company's expense disclosures beginning with the financial statements included in the 2027 Annual Report on Form 10-K, but will have no impact on its results of operations, cash flows or financial condition.

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NOTE H: PENSION BENEFITS In connection with the Company's divestiture of its Midlothian cement plant, related cement distribution terminals, and Texas ready mixed concrete plants (see Note B), certain employees ceased to be active participants in the Company's qualified defined benefit pension plan. This event represented a curtailment and required the Company to remeasure its projected benefit obligation and plan assets in late April and early May. The Company elected a practical expedient and performed the remeasurement as of April 30, 2026, the month-end measurement date nearest to when the affected employees ceased to be active participants in the plan. The discount rate for the remeasurement was 6.21 % compared with 6.00 % prior to the remeasurement. As a result of the remeasurement, the Company recognized a curtailment gain of $ 5 million during the quarter ended June 30, 2026. The net periodic benefit cost for pension benefits includes the following components: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Service cost $ 4 $ 9 $ 17 $ 18 Interest cost 7 14 30 29 Expected return on assets ( 11 ) ( 20 ) ( 47 ) ( 41 ) Amortization of: Prior service cost 1 1 3 3 Actuarial loss 1 1 Curtailment gain ( 5 ) ( 5 ) Settlement charge 5 5 Net periodic benefit cost $ 1 $ 4 $ 4 $ 10 The components of net periodic benefit cost, other than service cost, are included in the line item Other nonoperating income, net , in the consolidated statement …

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NOTE J: SEGMENTS The Building Materials business is comprised of four divisions that represent individual operating segments. These operating segments are consolidated into two reportable segments, the East Group and the West Group, for financial reporting purposes, as they meet the aggregation criteria (see Note A for 2026 changes to the components of the East Group and West Group reportable segments). The Specialties business represents a separate operating and reportable segment. The Companys Chief Operating Decision Maker (CODM) is the Chief Operating Officer . The CODM reviews results by reportable segment on a quarterly basis and allocates resources to achieve the Companys strategic objectives based on an evaluation of each reportable segments performance. This evaluation is largely based on segment earnings (loss) from operations, as management believes this is the best metric of segment profitability and operating performance. Segment earnings (loss) from operations is also a measure used in determining incentive compensation targets and awards. Segment earnings (loss) from operations includes revenues less cost of revenues; selling, general and administrative expenses; other operating income and expenses, net; and excludes interest income and expense; other nonoperating income and expenses, net; and income tax expense. The significant expense categories shown below align with the segment-level information regularly provided to the CODM. Other costs of revenues for ea …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing