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Vulcan Materials Co (Holding Co) (NYSE:VMC)
Q2 2020 Earnings Call
Aug 4, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to Vulcan Materials Company's Second Quarter Earnings Conference Call. My name is Christie, 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.

Mark Warren -- Vice President, Investor Relations

Thank you, operator. Good morning to everyone and thank you for your interest in our company. 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 comments regarding the Company's results and projections 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 and other information are available in both our earnings release and at the end of our supplemental presentation. As the operator indicated, please limit your Q&A participation to one question, plus a follow-up. This will help maximize participation during our time together.

With that, I will now turn the call over to Tom.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thanks, Mark and thanks to everyone for joining the call today. We appreciate your interest in Vulcan Materials Company.

As always, but particularly in today's world, we hope you and your families are safe and healthy. In spite of the difficulties caused by the pandemic, our company is thriving, which demonstrates the strength of our people and of our core business. I'll take some time to comment on three accomplishments. First, our employees have continued to shine. I'm proud of how quickly they've adapted to rapidly changing environments. Since the start of the pandemic, they've shown again and again their flexibility, their tenacity and their commitment to everything from ensuring a safe workplace, to taking care of our customers. Our workforce is second to none and I appreciate everything they're doing to grow Vulcan Materials, regardless of challenges.

Second, our teams executed well on the operational and the financial contingency plans that we developed in the early days of the pandemic. Our approach was to identify, prioritize and focus on what we could control and did take the appropriate and decisive actions. At times like these, the ability to have vision, to make decisions quickly and accurately, and to execute effectively is critical. We continually review our location specific contingency plans and make the necessary adjustments, all the while sharing best practices across our network. The combination of these proactive plans, solid execution, good communication and the strength of our aggregates focus model, gives us confidence that we will continue to be successful.

And third, our strong second quarter and year-to-date results clearly demonstrate our ability to grow, our unit profitability and to improve our return on investment. We remained focused on what we can control, including maintaining our pricing disciplines and controlling our cost. Our success here is supported by our four strategic disciplines, particularly commercial excellence and operational excellence. You saw this in the second quarter. Despite a 2% decline in aggregates volume, we improved our adjusted EBITDA by 10%, our cash, gross profit per ton by 9% and on a trailing 12-month basis, our return on investment by 100 basis points.

Suzanne will review the quarter results in more detail shortly, but first, I want to describe some of the demand trends we're seeing. Certain leading indicators of construction activity appear to be showing signs of improvement, both sequentially and year-over-year. Housing has been the most resilient of our market segments, with June though, showing improvement and single-family housing leading the way. Permits and sorts have improved at a fast rate in our footprint, than in other states. Private nonresidential construction is the most variable end use, reflecting a wide range of building categories, each driven by different factors. At the end of 2019, the pipeline of new projects measured by square feet of contract awards had increased 10% from prior year in our markets compared to down 3% in other markets. This momentum reflected winners and losers both categorically and geographically.

In April, this momentum was interrupted by the pandemic, however, June showed improvement over April and May. As a leading supplier, in 90% of our markets, we are well positioned to supply all types of nonresidential construction, regardless of the category. As we think about current trends, it's important to keep in mind that unlike The Great Recession of 2008, private construction going into the pandemic was not overbuilt, both residential and nonresidential demand were below long-term averages. This suggests that the slowdown from the pandemic could be shorter in duration, assuming that the trajectory is not significantly interrupted by additional ways of new COVID cases. Highway construction was deemed an essential business at the onset of the pandemic and so has pretty much been business as usual. Now with shelter-in-place, gas construction failed and this affected state DOT revenues. But with reopenings, the revenues are recovering, the recovery coupled with proposed COVID-19 relief has the state DOT's outlooks improving.

We are encouraged as work continues in Congress to backstop DOT revenues lost to COVID-19 and to reauthorize the FAST Act. The House has already passed backstop funding for DOTs as well as a reauthorization bill. The Senate is working toward a COVID-19 recovery package now and we expect they will address reauthorization in September.

To summarize, the economic environment and certain leading indicators of construction activity showed improvement during the quarter, however, the evolving pandemic's effect on demand in our markets and the broader economy remains unclear. The volatility of new COVID cases restricts our visibility into the second half and as a result, the pace and scope of recovery, and therefore, our shipments volume is uncertain. As a consequence, we are not reinstating earnings guidance at this time. We will continue to monitor all aspects of our markets and as our visibility improves, with respect to the economic effect of the pandemic, we will resume our usual practice of providing guidance.

As we move forward, we will remain focused on the things that we can control, keeping our team safe and healthy, servicing our customers and executing on our operating disciplines. The maturing of our four strategic initiatives will continue to expand our margins. Our second quarter results clearly demonstrate that our strategic disciplines are working. The pandemic has not changed the underlying fundamentals of our aggregates focus model. Our business is sound, resilient and more easily adapted to the changing market conditions. We also have the solid foundation of a healthy balance sheet, strong liquidity and the full support and engagement of our people. Despite near-term uncertainty, we remain confident about our long-term prospects for growth.

Now, I'll hand the call over to Suzanne for some additional comments.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Thanks, Tom, and good morning. I'll cover some highlights from the quarter and comment briefly on our balance sheet and liquidity position.

As Tom mentioned, adjusted EBITDA for the second quarter increased by 10% to $408 million. In all three product lines Aggregates, Asphalt and Concrete, we achieved improved profitability. This was particularly noteworthy in the Aggregates segment, in which cash gross profit per ton increased by 9% to $7.69. For the trailing 12 months, cash gross profit per ton was almost $7, thus continuing our progress toward our goal of $9 per ton that we shared with you at our last Investor Day.

Our second quarter aggregate shipments declined by 2% from Q2 '19s level. Shipping patterns varied widely across our geographic footprint, but we're generally supported by healthy backlogs and our designation as an essential business. Key markets in the Southeast and Coastal Texas were negatively affected by wet weather, while shipments in California were impacted by shelter-in-place ordinances. Year-over-year shipment activity improved in Georgia, Illinois, Tennessee and the rest of Texas. In July, our aggregate shipments declined by mid-single digits compared to a strong year-over-year comp. The decline reflected some project delays and reduced non-residential activity.

During the quarter, our aggregate selling price improved by 3.3% on a mix-adjusted basis with all key markets reporting improvement. Total unit cost of sales declined by 1% and 3% on a cash cost basis as compared to the same quarter last year. This was despite lower sales volumes and a reduction in inventory. We carefully managed our production schedules and prudently controlled inventory, particularly in areas like Northern California, which were more acutely affected by shelter-in-place orders. The associated cost of reducing inventory offset the majority of an approximate $14 million tailwind from lower diesel fuel costs.

Moving to our non-aggregate segments, I'll start with Asphalt. Our gross profit this quarter improved by $3 million, as compared to last year's quarter. Although, asphalt shipments declined by 5%,we captured the benefit of lower liquid asphalt costs. The Concrete segments gross profit grew by 10% to $14 million. Shipments decreased by 4%, while average selling prices rose by 1%.

And in the quarter, SAG expenses declined 5% as a result of the continued execution of earlier cost reductions, lower incentive compensation expense and general cost control in response to the pandemic, as a percentage of revenue, the improvement was 31 basis points. We were particularly pleased as Tom said, with our improving return on investments profile. For the trailing 12 months ended June 30 it improved to 14.2% and consistent with past practice, this has been calculated on an adjusted EBITDA basis.

Turning now to the balance sheet and our liquidity, we took further steps this quarter to enhance our position. We issued $750 million of 10-year notes with a coupon of 3.5%. The purpose of this bond issuance was to retire a $250 million note that matured in June 2020. The remaining $500 million pre-funded the maturity of another note due March 2021. That note is not callable, so we will hold the cash on our balance sheet until then.

Our weighted average maturity of debt is 14 years and our weighted average interest rate is 4.1%. Our total gross debt to EBITDA leverage ratio is 2.5 times, but on a net debt to EBITDA basis, it's 1.9 times, reflecting the $817 million of cash on hand. At June 30, our available liquidity was a healthy $2 billion. Cash generation has been strong through the first half of the year.

Operating cash flows were $426 million through June and an increase of 41%. Capital spending is slightly less than the prior year's first six months. We still anticipate spending between $275 million and $325 million this year, mainly on operating and maintenance capex. Most of our growth projects remain on hold, and we'll continue to evaluate our capex as we gain further visibility into the second half of 2020. Our capital allocation priorities remain the same. Operating and maintenance capex remain our first priority, followed by dividends. Looking at M&A, we will remain disciplined in the evaluation of opportunities. And as I mentioned last quarter, we have temporarily paused our share buybacks until visibility improves.

I'll turn the call back over to Tom now for closing remarks.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thanks, Suzanne. Before we go to Q&A, I want to again, take this opportunity to thank the employees of Vulcan Materials Company for their efforts. Nowhere is their hard work and dedication were evident in our safety record. Our unit date injury rate is 0.82 accidents per 200,000 employees hours worked. That's a record safety performance. And we remain committed to keeping our employees' health and safety as our top priority.

And now, we'll be happy to take your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And your first question comes from Trey Grooms of Stephens.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Good morning, Trey.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Good morning, Trey.

Trey Grooms -- Stephens Inc. -- Analyst

Hey. Good Morning, Tom and Suzanne. And nice quarter in a very challenging environment. Hats off to you and the team.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Thank you.

Trey Grooms -- Stephens Inc. -- Analyst

So, clearly, there is still a lot of uncertainty out there in the face of the pandemic, but Tom, can you talk about both, what you feel good about and also, what gives you some concern as we look ahead into the back half of the year?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Sure. I think I would frame that in what we know and what we don't know. And starting with the unknowns, it's really driven by the pandemic, the trajectory of new cases is just dramatically changing month-to-month, making really difficult to us to actually evaluate the impact on our business. And I would break out into three buckets.

Number one, the severity of shelter-in-place, with a spike in new cases, will it slow work, will it slow jobs, will it postpone jobs? Number two, nonresidential construction, we have seen a bit of slowing in non-res construction. We saw jobs postpone in April, picked back up in May, and now with spikes, we've seen some other job postponed. We think the jobs going to go, the work's going to happen but the timing is going to be tricky of when they start back up. And then the third bucket would be, how we work. The state DOTs, they've been impacted with loss revenues. Right now, it's much better than we would have expected 90 days ago. Most DOTs, state duties are on the road to recovery, but further shelter-in-place orders could set this back. Most of our states are giving pretty good signs right now, and they just released -- mainly just released the budgets, which they say, they are reassess mid-fiscal year based on growing revenues in states and based on acts of Congress on what we get to backstop in the COVID Phase 4 Act.

Going into the third quarter, I would remember three things. First, third quarter is our largest quarter, it also can be our most volatile quarter with -- for this hurricane season. We are also comping over 2019 third quarter, which had no storms for the first time, no impactful storms for the first time in four years and volumes were up 8%, so little bit of a tough comp going into the quarter.

Turning to things we do know. I think, what we do know gives me confidence, we come at this in a real position of strength regardless of what happens. Our aggregate's business is advantage, particularly if demand should fall. Our footprint is at also advantage, and it's broad, it's diverse. Our people are really engaged, you saw that in their open safety performance, they have done an excellent job being nimble, being quick, be responsive to a rapidly changing environment. They have -- they are winning to this earnings the highest margins, and then they improved that by 9% in second quarter with volumes down, that improvement is not an accident. They have done the pre-work over the last three years to earn this. What you are seeing is our forward-strategic initiatives enhanced our execution.

We said that those would help us in good times and protects in challenging times, and you have seen that in the first half of the year, our balance sheet, liquidity strong. So, we are going to control what we can control. And I have a lot of confidence, that our people will be successful, whatever the world throws at them.

Trey Grooms -- Stephens Inc. -- Analyst

All right. Thanks for that. And that actually leading to my question. Controlling what you can control, and I'm looking at your cash gross profit return here, increased 9% on volume that was actually down a little bit, and clearly diesel was your friend, but more impressive is you pulled that off while reducing your inventory, so can you talk about some of the puts and takes of that unit profitability improvement, reduce cash spending and operating efficiencies that you put in place that you mentioned? And then, and how we should be thinking about that in the near to medium-term?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Yeah, well I think hats off to our operating teams and our sales teams. They should be -- because they're the ones that lead to the gradual outperformance. Solid, you saw solid price and we'll talk about -- more about that later, but from an operating side, it was just good execution, with unit margins down 3%. We had the tailwind of diesel offset by inventory reduction and the inventory reduction is just the prudent thing to do in places like San Francisco, where we had just a lot of unknowns of what shipments going to look like. I wouldn't expect us to see that in the second half, but the real driver was in the cost reductions, was driven by operators performance. It was things like plant throughput, plant availability, labor productivity, all of which improved, and what you're seeing there is just experienced operators and engage teams, executing on those operating disciplines, which I'm very proud of. So, just a really good performance and just good disciplines throughout the organization.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

And I'd just add to that. I think this is where having those operational contingency plans in place at the plant level that we talk so much about in the first quarter, having put those in place, I think this is where they really paid off. If you know going and based on certain conditions in certain trigger points, what you plan to do at the time, then it can all be executed in a very consistent and controlled manner and you're not scrambling around trying to figure out what actions to take. And when you have those in place, there is just a built-in flexibility there, because the conditions, they are changing, jobs are postponed, jobs are back on. And so, I really think that having the plans in place helped and also our folks having the daily flexibility of changing to meet whatever the situation was helped as well.

Trey Grooms -- Stephens Inc. -- Analyst

Yeah, it sounds like those plans are really paying off for you in a pretty challenging environment for sure. Well, OK. So I want to say care and thanks for taking my questions. I'll pass it on. Thank you.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Operator

Thank you. Your next question is from Anthony Pettinari of Citi.

Anthony Pettinari -- Citigroup -- Analyst

Hi, good morning.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Good morning.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Hi, good morning.

Anthony Pettinari -- Citigroup -- Analyst

Regarding the stimulus that's currently being negotiated, when you talk to customers and going back to the DOTs, is it possible to talk a little bit more about what folks are ultimately expecting to see or need to see with regard to interstate's and the infrastructure year mark? Do you feel comfortable about going forward with projects?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Yeah. I think if you look at just highways in general, overall, the highway funding situation is improving. As I said, it's a lot better what we had expected, 90 -- 60, 90 days ago. With the shelter-in-place lifting, you're seeing those gas tax revenues up in May and June. And also, you got to remember in nine of our 10 states, of our top 10 states, they are all going into this increasing user fees, so that also will help offset any setback that we saw from falling usage. Hopefully, we'll get progress out of Congress on COVID full relief. They asked to access $37 billion, which is down from the $50 billion, which we've talked about 90 days ago, there's a lot of work going on in that, so, hopefully that will happen. But as I said earlier, we hear better signals as we continue to go through this from state DOT's and I think they're getting themselves in a better place and all of them are saying they're going to reassess the situation, as we get to mid-year and hopefully funds have grown.

Anthony Pettinari -- Citigroup -- Analyst

Okay, that's helpful. And then on aggregates pricing, I'm just wondering, did you see any changes in pricing as you moved through the quarter and into July and August? One of your competitors has spoken about may be minor delays to price initiatives in the early days of COVID, when there were some disruptions. Just curious if you saw anything similar.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Yeah. I would take it in pieces of this. The reported price we have was three, we talked about unfavorable geographic mix, which cost us about 30 basis points and that was really North Carolina volumes being down and the Mississippi River and Illinois being up. Those -- that was really the basis of those 30 points. Then if you remember in our last call, we talked about some of our markets, where we normally have a April one price increase to fixed ready-mix plants, that may push 30 to 60 days, but it would come through and all those increases did come through. A number of them did push 30 to 60 days. And if you step back and look at that delay in pricing in the quarter, it cost us about 40 basis points. So, that was the outlier I would say in the quarter. That won't have any further impact as those are all in place. And I don't see any -- the pricing characteristics we see right now are aggregates is normal, they are resilient and I don't see anything that would change that environment at this point.

Anthony Pettinari -- Citigroup -- Analyst

Okay, that's very helpful. I'll turn it over.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. Your next question is from Kathryn Thompson of Thompson Research Group.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Good morning, Kathyrn.

Kathryn Thompson -- Thompson Research Group -- Analyst

Hi, good morning.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Good morning.

Kathryn Thompson -- Thompson Research Group -- Analyst

Thank you for taking my questions today. First on the policy side. We heard some very positive feedback from Caltrans on the fiscal '21 budget and lettings. Could you give a similar update for Illinois? And has the states been able to move forward with the Rebuild Illinois Act in terms of funding and lettings, in the face of COVID and lighter traffic volumes?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

It's steady. They are -- have a big goal to be a logistics center. It is a priority for them. We would think -- we don't think we'll see any fund -- any fall in funding in Illinois. They are -- as you know, they raised, they had less rates to raise gas taxes a year ago and that is in place. We think Illinois will come through. And they have to get this and come through, but like you said about California, we heard really good things out of Caltrans, as you know, it's actually in very good shape because they -- their gas tax members index went up, July 1 and has increased over last year. So, despite of issues with shelter-in-place and usage going down, they are quite ambitious in 2021, with their fiscal year 2020 just started. So to put that in perspective, the revenues for SB1 in 2020 were around $3 billion. They are expected to be $4.4 billion in '21. Now that's a fixed-term increase, but it is ambitious as Caltrans assumes, that's down from the 5 to 7, but again a -- over 50% increase from from last year. So they'll see a good year in fiscal year '20 and lettings in '21 in California.

Kathryn Thompson -- Thompson Research Group -- Analyst

And just to clarify, Tom, moving to my second question, was the increase in volumes in Illinois a function of higher infrastructure funding?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

I believe that's correct.

Kathryn Thompson -- Thompson Research Group -- Analyst

Okay. Then looking at cost, that's definitely been the theme this quarter for so many companies, not just in heavy materials, but other construction-related companies. When you look at some of the changes that are more structural versus transitory, could you maybe go through those? And then also, think about how this experience changed? How has it changed? How are you thinking about cost structure? Thank you very much.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Yeah. The fundamentals of what drive cost haven't changed and it's really the operating efficiencies and disciplines that are fundamental to our business. It is based on what I talked about earlier, which is maximizing your throughput and matching what you're producing to what you're selling, having the disciplines to where you do the pre-inspections of equipment, so you don't run into failure, and making sure that you get most and also, so that you have the plan availability and the lack of downtime. And then, just making sure all of that matches with labor productivity.

Those are hard to do. In good times, they are even harder to do when you have volatile volumes or falling volumes. So, I think our folks did an excellent job on those and they stayed focused on their plans and their execution and take care also. And again, it helps us make progress toward our longer-term cash gross profit per ton of $9.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Yeah. And while we're on that, Kathryn, I'll just comment on SAG, our administrative costs. In the quarter, they improved 31 basis point as a percentage of revenue that keeps pushing us toward our goal, because we're always looking for ways to try to leverage that overhead structure. And we had several things operating in our favor. We took a pretty good look at the cost structure at the end of the year, last year, beginning of this year and so, we have a number of those that are continuing to play through, until that comps over a little bit in the fourth quarter, but certainly in the first quarter of next year. A little bit lower incentive comp in the quarter, but also just general cost control along the way, and some of those things we're finding as people work-from-home. Some are perhaps a bit transitory but not all of them are. You find ways to be more efficient and that's really -- you automate things and that's really what we're looking for, because those are structural in that arena and things that can play forward. And I would say, if you think about probably what's the most transitory kind of cost evolve and the one that people would typically think about rising, when we will hopefully all get to the point where we can all be back in the office working together, everyone always point to travel expense and those sorts of things, but I think, Vulcan has learned something over this time of the pandemic, and I think other companies will as well, that there are certain ways in times to communicate using video or other technology, where your communication is actually I think more succinct and more clear, because every one's managing their time. And while you need to be out front and in front of your employees and I'm not implying that we would ever step away from that, I think there are ways that you can utilize that technology to even manage those costs when things get more back to normal.

Kathryn Thompson -- Thompson Research Group -- Analyst

Great, thank you, Tom and Suzanne. Have a good one and best of luck.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Yeah. Thanks, Kathyrn.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you. Stay safe.

Operator

Thank you. Your next question is from Jerry Revich of Goldman Sachs.

Jerry Revich -- The Goldman Sachs Group, Inc. -- Analyst

Yes, hi, good morning everyone.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Hi, good morning.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Good morning.

Jerry Revich -- The Goldman Sachs Group, Inc. -- Analyst

I'm wondering if you could comment on how much visibility you have in the near-term? Tom, I understand the comments about the tough comps but are you seeing the normal sequential build inactivity heading into the third quarter? The concern is, we've seen some camera level data in construction sites that suggests that activity slowed in the back half of July specifically. So I'm wondering if you could just comment on that relative to the visibility, the comments that you spoke to earlier, please?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

July, I don't think surprised us. July was also impacted by weather, really across -- we went across our footprint to the exception of California and I'm sure that had an impact on us. But the volatility is really, for me is not that the jobs are going to go, it's when they're going to go and I think that, that timing is hard to call, but the fact is, I don't see many jobs that are -- that were cancelled as opposed to being postponed.

Jerry Revich -- The Goldman Sachs Group, Inc. -- Analyst

Okay, thank you. And I'm wondering, can you talk about what you've seen in California, Florida and Texas, since we've seen the lock down steps kicking back in? Any meaningful impact on activity levels, as a result from what you can tell?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

The answer -- short answer to that question is, nothing meaningful at this point with the exception of some volatility in mainly commercial jobs, which we've talked a lot about already. California was the toughest, here, I talked about Caltrans, which looks good. The res and non-res in California were hit hard just because of more severe shelter-in-place, but are rebounding. If you-I'll give you some examples in residential, there is two mega projects, residential projects, one in LA and one in San Diego. We're supplying the developers, even though the res seem to be a little slow, decided to go ahead and accelerate putting the infrastructure in so that, because they feel like the job market, the house market will come back quickly and that allows them to build out faster. So, they go ahead and took the investment, put the infrastructure in. So while California is the hardest hit, it's a little behind everybody to recover, but the fundamentals for the private side are still in place and we know we're going to see substantial growth because of the funding, the substantial increase in funding in Caltrans in fiscal year 2021. So, overall, so far so good.

Texas, we've not seen any impact of the spikes at this point. So, hopefully they'll get that under control and I think it's trending in the right direction. Florida same answer, I don't think we've seen any impacts in the second half of July, first few days of August because of spikes in new cases at this point.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Yeah. And I would just add to that and this is more a comment on your first question, where we operate. Our geographic footprint is important in this too, as Tom was just pointing out. And certainly, when you look at res in terms of permits and starts, trailing six months, data trailing three months, data and even the most recent month of June, you're seeing some sequential improvement thereon on res and even on non-res, which is the one that is most often talked about.

It certainly took a big step backward in April when the pandemic really hit and there was a heightened sense of uncertainty. And we try not to over read this, but as you can imagine, we do study all these indicators, very, very carefully. And you've heard me say before, I'm a big fan of Dodge Data but even there, from that low point of April, we've begun to see some little bits of sequential improvement as we've moved through April, May and June. So, I think we are encouraged by that. I think it shows that the economy wants to recover and as Tom said, there is lots of work out there to be done, but I think it really does just come to what happens with the surges in case, but we, as we said earlier, we'll be ready when it goes because we are in the right places.

Jerry Revich -- The Goldman Sachs Group, Inc. -- Analyst

Okay. And lastly from a margin standpoint, congratulations to your team from us as well. As I hear you step through the drivers of the cost reduction, both SG&A and COGS, it sounds like none of those are one-time items. So as we think about third quarter and layer on the additional pricing that you spoke to earlier, Tom, it sounds like margins could actually expand on volumes that are down mid-to-high single-digits, and I just want to make sure that we're not missing any potential headwinds for us to think about whether it's further headwinds from inventory reductions or other pieces, as we think about what the better margin performance this quarter means about to go forward?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Yeah. So as we said, solid performance by our folks in the first half, both in price and their operating disciplines. I don't -- as I said, I don't think any -- I don't see anything changing our price cadence. As we look forward at the operations in cost, there is always some headwinds out there for repair and maintenance. The tailwinds from diesel were a big advantage in Q2, maybe not be quite as advantaged in the second half but we think there will be tailwinds there. We wouldn't -- I would not see us have again the inventory hit that we took. We are back in the game, so to speak and those plants are back operating. So I don't see that happening again.

I believe our operating efficiencies, as some improved in Q2. We are working hard on that to keep those. Remember third quarter's hurricane season, we've already seen two, don't think it was a big impact, but those storms can have -- that can have an impact on costs. I don't think they will at this point from those two. We've got our strategic initiatives that are working for. So, right now, it's too many variables to call out a specific number, but I think we have the right people, we have the right plans, we have the right execution and I would expect our unit margins to grow in the second half. And so that we'll make progress toward that longer-term goal of that we've talked about $9 a ton, cash gross profit per ton. We will see it grow again. A little bit too hard to call out that number just variables, but I have confidence in growth.

Jerry Revich -- The Goldman Sachs Group, Inc. -- Analyst

Okay. I appreciate the discussion. Thank you.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Thanks.

Operator

Thank you. Your next question is from Mike Dahl with RBC Capital Markets.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Hi, good morning.

Mike Dahl -- RBC Capital Markets -- Analyst

Morning. Thanks for...

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Good morning.

Mike Dahl -- RBC Capital Markets -- Analyst

Hope you guys are doing well. Thanks for taking...

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Yeah...

Mike Dahl -- RBC Capital Markets -- Analyst

The questions.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Thank you.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Sure.

Mike Dahl -- RBC Capital Markets -- Analyst

First question, obviously 3Q is a tough quarter overall from a comp standpoint in aggs, but looking at the monthly comps, could you give a sense of how your July comp stacks up relative to what growth you saw in August and September, last year?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

I don't know if I remember exactly though that sequentially, it was a kind of a steady growth quarter, it wasn't choppy if memory serves me right, and so I don't know that there was a lot of volatility last year between months within the quarter because the weather was pretty consistent. As I talked about, we didn't have the storms that we see in prior years. As I said, July this year, it was in all of our markets except for, I think except for California and Arizona, was fair, quite a bit wetter, so that had some impact on that mid-single digit decline in volume, as do, we talked about the volatility in the markets with jobs postponing, but I don't see a lot of volatility month-to-month in last year's quarter.

Mike Dahl -- RBC Capital Markets -- Analyst

Got it. Okay. And second question just on kind of the state DOTs, and Tom, I think in your opening remarks, you talked about potential for stimulus to shape up in a way that backstops some of the states, that's obviously been one of the more controversial parts of the different stimulus bills and debates in Washington right now. So, I guess couple of questions related to that. What are you hearing on the ground in terms of likelihood of that getting through and a final negotiation? And to what extent are your conversations with the state DOTs and the -- I guess the encouragement that they've had lately, how much of that is tied to an expectation that there is some state backstop in one of these COVID stimulus bills versus their specific funding that's been in place?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Well, obviously DOTs want that, they need that, they were negatively impacted by the pandemic and as those fall in revenues are absolutely caused by the pandemic. So, it's the right thing to do to backstop those. I think there -- they all hopefully will, I think that state level funding is likely to be part of the final package as a result of the House and Senate negotiations and state governments will have flexibility to how to use that. We're hopeful that the COVID 4 package is going to provide dollars targeted it's state DOTs. I think, they know and as to who wants that, is asked for the, they just real the $37 billion. As far as the conversation with the DOT's, I don't think they are putting their eggs in all in the basket of getting that backstop although they need it.

But I think what they're looking at is, is twofold, one is, as I said earlier, they've all increased -- nine of our -- most states have already -- in our footprint have already increased funding for highways, so that's helpful in the recovery. And then the lift to shelter-in-place is dramatically improving usage and so that's something else, they're watching, how fast does that come back and how that will -- as it continues will positively impact funding for the rest of fiscal year 2021. Those are the two -- those re -- those are the two buckets, I think that they're looking at when they want to reassess their mid-year budgets.

Mike Dahl -- RBC Capital Markets -- Analyst

Okay, that's helpful. Thank you.

Operator

Thank you. Your next question is from Phil Ng of Jefferies.

Philip Ng -- Jefferies Group LLC -- Analyst

Hey. Good morning, everyone.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Good morning.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Good morning.

Philip Ng -- Jefferies Group LLC -- Analyst

Congrats on a pretty solid quarter here in a tough backdrop.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Thank you.

Philip Ng -- Jefferies Group LLC -- Analyst

And really good to hear that trends are picking up sequentially on the non-res side, yeah, but curious if you can provide a little more color on the bidding activity, how extended are your backlogs? And while there's not a lot of cancellation, was just trying to gauge new work that's being put up for bid, perhaps for next year for non-res.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

So, if you just look at backlogs, we were down a little bit, but we thought we've seen improvement in the last -- in the trailing three months in our backlog. So, things are getting better and improving, and so I think, that's looking better.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Yeah. Let me just walk through with few of these things to see if I can give a little bit of color around that. I mean, clearly, as we were going into the start of the year, all three of the primary areas, res, non-res and highways were moving along very well and had some positive momentum, and we talked about that. On the call in February, COVID-19 was the big disruptive force and as I said earlier, all the -- all of those areas took a pretty sharp decline in April. I think, being in the states we're in, that's shown some resiliency, and certainly as the states began to reopen, that helped as well.

If we just sort of take them one by one and we talk about residential, clearly that one has been the most resilient, it's bounce back the most quickly and we really have the most visibility around that area. When we look at a couple of things, certainly look at starts, but we also look at sort of pre-leading indicators, if you will, to that. In terms of permits on a trailing six-month basis, a trailing one-month basis, particularly the trailing one-month basis and look at June, year-over-year were up double-digits in our states, and that compares to kind of a mid-single digits in other states. So that one appears to be moving along very well. We saw a couple of postponements there early on and those within about three weeks flipped and are back on track and have begun.

On the non-res side, again the new project pipeline was positive coming into the year. At the end of the year, actually if you looked at the trailing 12 months starts, they were up about 10% in our markets, which were a fair bit ahead of other markets. Again, we saw some -- your non-res is a broad category, but even then and certainly now, we see winners and losers both by category and geographically. And we do -- we have seen these small sequential improvements that are just these little, what I refer to is baby steps in the right direction. So it's encouraging, but we are watchful, and we are trying not to over read that. And Tom has talked about highways there. The awards activity is certainly up in our markets and so, we are feeling pretty good about where we stand relative to that.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Yeah. Specifically on non-res, we saw the monthly private non-res square foot starts drop dramatically in April, they stayed down in May, and then in June, we made up about half of that drop. So one of the questions I guess going forward is, again, timing on those projects and when they start going, well how does that trend look in July and August and what's going to happen. So, you know what Phil, but we've made progress back in non-res and hopefully that will continue over the next few months.

Philip Ng -- Jefferies Group LLC -- Analyst

Got it, that's super helpful. And on the public side, it sounds like the bidding activity and backlogs remain pretty strong, any particular states that we should have a more watchful eye when you think about activity going into next year? The reason why I'm probably asking is your backlog and bidding activity sounds pretty good, but one of your competitor kind of signal maybe a modest deceleration of trends in the coming quarters, appreciating footprint does matter, but any color on that front would be really helpful. Thanks a lot.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Yeah, the State, I would be most watchful for and our footprint would be Kentucky. It was just been hard hit and basically shut down their DOT, stocking lines had some challenges and obviously, North Carolina, which has been -- where everybody's talked about has had history of challenges. But if you look at our top five states which is Virginia DOT, it looks pretty good, Georgia at this point, they're saying that until they see more, they are may be down 11%,, but you got to remember that's coming off of an all-time record 2020 DOT year for Georgia, and our starts are up 15% there and our backlogs are very good going into this. Tennessee had no impact in 2020, a little bit of a wait and see on 2021, but at this point they don't see any high-level change from 2020 and 2021, and kind of same story for text DOT 2020 health, lags were very good. Their fiscal year '21 doesn't start from September, so they got some time, but at this point, they think they are in pretty good shape. So for our big states, I think the DOT's as we said, we're getting good signals and hopefully we'll get improving signals as we travel through their fiscal year.

Philip Ng -- Jefferies Group LLC -- Analyst

Thanks a lot. That's really great color.

Operator

Thank you. Your next question is from Stanley Elliott of Stifel.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Hey. Good morning, everybody. Thank you all for...

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Good morning.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Taking the question.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Sure.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

In terms of the debt due next year, So that the $500 million that you are going to pay down. Are you thinking about the leverage ratio that you all want to carry any differently at this point? I mean, you think about by 2021, you should be down below kind of the 1.5 to 2.5 sort of target, but just curious to see how you all are thinking about that with that commentary?

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Yeah, no, it's a very good question. I mean we -- the market was pretty choppy and that sort of March, April and even early May time period, when we would have normally been out in the market to take out the $250 million bond that was due in June. And so, when we had a decent window to go in, we just decided kind of as the abundance of caution to go ahead and issue the long-term bonds, 3.5% is a very good long-term coupon rate. And so we decided to go ahead and just pre-fund, if you will, that maturity of the $500 million bond in March 2021.

And you're right to point out that, our leverage on a net debt basis is now down at 1.9 times, just slightly below our often stated range of 2 to 2.5 times. And so with that as sort of the backdrop, the answer to your question is, look, the Board and management take a through the cycle approach to our leverage and our strategic planning and we are absolutely comfortable within that 2 to 2.5 times range. Certainly, we prefer to be at the lower end of it, during times of a bit of uncertainty like now. And so, that's really the reason that you have seen us drift toward the lower end of the range because we just like to have a little bit more visibility around the depth and the duration of the pandemic. So, I'm a conservative at heart, but I wouldn't read a sitting at 1.9 times as necessarily any long-term indicator, that we're going to move to 1.5 times for example.

We're going to be prudent and we're going to do the right thing for the business and we're going to make sure in our debt structure and in our leverage ratio, that we maintain maximum flexibility and optionality for the company. That's the main goal.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

That's perfect, right. Because I think, going into next year there is just additional flexibility with the cash flows that you guys should generate. I'll stop there and pass it on to somebody else.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Thank you.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Operator

Thank you. Your next question is from Adam Thalhimer of Thompson Davis.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Hey, good morning. Nice quarter.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Hi. Thank you.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

So, most of my questions have been answered. I was curious though on the downstream side. So for asphalt and concrete, kind of what your high level thoughts are for both for volumes and for margins in H2?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

I would tell you that both, well, let me take asphalt first. Our volumes really got hit in two places. California, with shelter-in-place and then Tennessee. We had a very large paving project last year that didn't repeat. So I would expect our volume -- I don't see a big change in the volume trends as we go through, as we look at our backlogs and the projects that are out there. I would -- right now, I would expect liquid to stay down. It can be volatile, so I would expect this a similar type of unit margin improvement as we march through the year on asphalt.

To ready-mix, the volumes there were impacted by shelter in -- in second quarter by shelter in place. In Northern California, with the jobs, we see the push back, timing may be a little tricky, as volumes going to be hard to, yes on that one at this point, just because there's so many variables there, but I think our unit margins will hold on too.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Okay. And then Tom, you've watched geographically. I think you did that walk on the public side and on the resi side. Just curious on the non-resi side, kind of which markets would be a watch?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

The California, as we talked about. While the fundamentals there are very good, it's just behind the rest of the country and I think it will continue to heal itself as shelter-in-place lift, but that one is going to be the most tricky one. As you look at going back to the East in Virginia, non-res construction is good. Georgia, non-res is actually quite good driven by warehouse and distribution construction, which is no surprise to anybody. And I would tell you same story in Tennessee, non-res and res or both shipping strong. Texas, res is good, non-res, good again, like everywhere else, warehouse and distribution.

We -- it was interesting about the Coast with non-res will be an interesting -- well we'll see what happens with LNG projects. And these are so important because they're such large projects, the projects we said, nothing has changed, with the exception to the outlook. We said at the end of the last quarter was the projects that we had started are going to go, the projects that had not started were pushed. That's still the case today. However, we are starting to have conversations about those projects, those future projects, we're starting to have the conversations about restarting back up in 2021. So, that could be some tailwinds for us as we go into '21 but too early to tell.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Okay, good color. Thank you.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Operator

Thank you. Your next question is from Michael Dudas of Vertical Research.

Michael S. Dudas -- Vertical Research Partners -- Analyst

Good morning, gentlemen, Suzanne.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Morning.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Good morning.

Michael S. Dudas -- Vertical Research Partners -- Analyst

Following up on the question before about capital allocation and the balance sheet, you deferred your growth capital spending prudently for 2020 least-to-date. Any thoughts on other changes into more of that growth capital spending where level could be given, how things are emerging, given the uncertainty and where some of your important states are benefiting or not benefiting from COVID restarts? And is that something that we could see once there is more visibility, maybe later this year to maybe you have a catch-up on that spending in 2021?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

I think we need to see more visibility before I would be comfortable releasing growth capital again and that's not a statement about anything about the mortgage is more statement. As we said all along, there's a lot of volatility and too many variables to make a call. So we just want to see more before we would be comfortable going back and restarting some of those growth projects. Now if you look at replacement capital, that's one that we'll be watching throughout the year and at this point, we're comfortable where we are but again, depending on how the year goes, we might -- we would flex off of that one faster than we would the growth capital.

Michael S. Dudas -- Vertical Research Partners -- Analyst

I appreciate that. Thanks.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Operator

Thank you. Your next question is from Seldon Clarke of Deutsche Bank.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Good morning.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Good morning.

Seldon Clarke -- Deutsche Bank AG -- Analyst

[Technical Issues] SG&A costs going forward is, the $91 million you saw in 2Q, sort of the right run rate to think about for the rest of the year?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Your first half of your question was cut off. If you could repeat, it would be helpful.

Seldon Clarke -- Deutsche Bank AG -- Analyst

Apologies. I'm just asking what the right run rate is for SG&A costs?

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Sure. Yeah, that falls into the category of we're not giving guidance for the rest of the second half. So I will decline to comment on a very specific number. But look, we said that we're going to leverage our overhead costs, that has been a long-term goal the company has been at about a long time and I think we made a lot of progress in the first half. So I would certainly expect us to continue to do that in the second half, but with respect to what the precise number or decrease is, we'll see when we get there, but continue to monitor it.

Seldon Clarke -- Deutsche Bank AG -- Analyst

Okay. And just switching gears, did you have to furlough any employees in the quarter and -- or do you expect to have to do so in the back half? And if so, are you having or seeing any issues on the the hiring side in regions that might be a little bit stronger than others? And if you do have to rehire, should we expect any temporary cost inflation from either hiring costs or there is a lag to again to select again poised more productive?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

So, to answer your question, in the second quarter, we did furlough some -- temporary furlough some employees and that was in an effort to make sure that we had the appropriate control inventories going into unknown times, as we said, we're past that. The vast majority of those employees are back to work or are scheduled to be back to work. I don't see us doing a lot of that in the second half as we see work coming audited our shipments, hopefully stabilize. Again there's a lot of unknowns to that at this point. I would -- if we did that, it would be minimal in a few select places, but off the top of my head, I can't name any right now.

So, as far as hiring, we're able to find employees when we -- to fill positions. I think, again, I'm very pleased with our workforce, which is very experienced and very disciplined and you saw that in the quarter but new hires a bit, a little bit of -- actually, does not just made very many right now, but we're able find people when we need to.

Seldon Clarke -- Deutsche Bank AG -- Analyst

Got it, OK. That's it from me. Thanks guys.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Operator

Thank you. Your next question is from Garik Shmois of Loop Capital.

Garik Shmois -- Loop Capital Markets -- Analyst

Hey, thanks.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Hey, Garik.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Good morning.

Garik Shmois -- Loop Capital Markets -- Analyst

Hi, thanks for squeezing me in. So as far as the volumes we saw in the quarter, I think the rate of declines weren't as bad as first feared. Do you think you're taking market share and can you talk a little bit about how you're thinking about volume versus price moving forward in a bit of an uncertain market? This relationship between the two chains, right now, just given kind of the uncertainties that you've talked about moving forward.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

No, I don't think you took any kind of market share and you don't do that when you're disciplined on price, its the wrong thing to do. I think what you -- what I thought -- you heard me talk about is the volatility in geographically, in the quarter on volumes. We had those states where we lost substantial volume North Carolina being one, California being be in another one, and then we had states where, Tennessee and the Mississippi River. So this -- you can't, you're comparing apples to oranges when you look at other companies, because all of our footprints are different. And going forward, the balance between price and volume is in my world is disciplined on price and we plan on having that disciplined. And that's what you heard me talk about, about the cadence looking out, I don't see any change in that and that is servicing our customers and being disciplined.

Garik Shmois -- Loop Capital Markets -- Analyst

Okay. Follow-up question. Just, you talked about geographic mix impacting pricing in the quarter, Just curious if you look out, is there anything that we should be thinking about as it relates to product mix? Whether it's a ramp in residential construction, does that impact...

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

I don't...

Garik Shmois -- Loop Capital Markets -- Analyst

Materially or anything like that?

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Yeah. I'm sorry, I don't see any particular volatility in product mix and you're always going to have it with geographies and that's weather and timing of projects, but product mix, I don't see any big changes between the different market segments, and I sure don't see any pricing changes between the different market segments.

Garik Shmois -- Loop Capital Markets -- Analyst

Great. Thank you very much.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Operator

Thank you. Your next question is from Adrian Huerta of JP Morgan.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Good morning.

Adrian Huerta -- JPMorgan Chase Bank -- Analyst

Hi. Good morning, Tom and Suzanne.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Good morning.

Adrian Huerta -- JPMorgan Chase Bank -- Analyst

Most of my questions have been answered, so just congrats on the nice results on margins, which I think, I mean, given the comments that you made, it seems the way, they will continue to trend down upwards at least on a year-on-year basis. So congrats again. And the only question that I may ask on the capital deployment. You did mention that you're going to wait to restart the growth projects, but as you mentioned, it is already -- you leveraged, it is below the range than you expect. What else can we see over the next couple of quarters or can we see the company for a couple of quarters again, even probably all the year, next year with a leverage in the 1.5% this quarter.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Yeah. As I said our range is 2 to 2.5 times and we're comfortable in that range. Just mathematically, we've dropped a bit below that, but I'm perfectly comfortable with that right now for the reasons I stated earlier. There are -- those growth projects that we have postponed, look, we evaluate all those on a returns basis, they're high yielding, they're very good projects. And so, at the appropriate time, I would fully expect to see those start back up, but I think, we just want to get a little bit more visibility on what happens over the next couple of quarters and hopefully, we'll get that visibility and things can continue on.

Adrian Huerta -- JPMorgan Chase Bank -- Analyst

And what is the size of some of those growth projects that then you could start out over the next couple of quarters?

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Well, we -- if you go back to the guidance that we gave at the beginning of the year in terms of capex, the growth capex element of that, I'm doing this from memory, but I believe it was $200 million. And so, we certainly spent a bit on that on some things that were already started in the first half, but that's the -- that was the expectation at the beginning of the year and we will just continue to watch that as we go forward and gain visibility and decide which ones, we start back up or if we start all of them up again. It's just prudent, get some visibility, make sure that we keep our flexibility of -- and optionality of leverage and cash flows, and that's the way that we'll continue to look at it. The beauty of this, and we've said this before is that, those projects are such that they can be easily stopped and started. And so we're really not, other than wanting to get on with them and do them because we think they are good projects, we're really not missing very much at this point.

Adrian Huerta -- JPMorgan Chase Bank -- Analyst

Understood. Thank you so much, Suzanne.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Sure, thank you.

Operator

Thank you. We have no further questions at this time. I will hand the floor back over to Tom for any additional or closing remarks.

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Well, thank all of you for taking the time to listen to our call today. We appreciate your interest and your continued support of Vulcan. Please stay healthy, and we look forward to talk to you in the weeks and months to come. Have a good day.

Operator

[Operator Closing Remarks]

Duration: 68 minutes

Call participants:

Mark Warren -- Vice President, Investor Relations

J. Thomas Hill -- Chairman of the Board, President and Chief Executive Officer

Suzanne H. Wood -- Senior Vice President and Chief Financial Officer

Trey Grooms -- Stephens Inc. -- Analyst

Anthony Pettinari -- Citigroup -- Analyst

Kathryn Thompson -- Thompson Research Group -- Analyst

Jerry Revich -- The Goldman Sachs Group, Inc. -- Analyst

Mike Dahl -- RBC Capital Markets -- Analyst

Philip Ng -- Jefferies Group LLC -- Analyst

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Michael S. Dudas -- Vertical Research Partners -- Analyst

Seldon Clarke -- Deutsche Bank AG -- Analyst

Garik Shmois -- Loop Capital Markets -- Analyst

Adrian Huerta -- JPMorgan Chase Bank -- Analyst

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