Data Mining December 2010
AggMan Index shows modest increases as investors focus on future activity
While the index is off about 25 percent from the beginning of the year as compared to an increase of 11 percent in the overall S&P 500, the AggMan Index seems to have found a valuation floor with investors. Having hit a 12-month low in late August, the AggMan Index has shown modest increases throughout the past two months as investors are more focused on future activity than the continued weakness in current earnings, as we saw reported in the third quarter. This bend towards the future was evident over the past few weeks as several companies saw their stock prices rise despite lower financial performance. For example, Martin Marietta reported earnings of $52 million, or $1.13 per share, down from $55.5 million, or $1.23 per share a year earlier. However, Martin Marietta’s revenue increased over 4 percent to $509 million from a year earlier, but was lower than estimates of $515 million. Similarly, Vulcan’s third quarter earnings came in lower than expected, achieving 10 cents per diluted share versus expectations of 18 cents. Despite these results, both companies saw an increase of 5 to 10 percent in the days following their earnings release as investors continue to hear signs of optimism in 2011. As highlighted in releases across the industry, companies continue to see pressure on pricing, but volumes have started to show positive year-over-year comparisons. Furthermore, the index is benefiting from signs of spending at the state level, and companies in the index are highlighting these positive points. While Vulcan missed on earnings, the company was careful to point out the infrastructure spending that is set to happen in its key states. Additionally, HeidelbergCement, which slightly beat expectations, pointed out that Texas and California have only recently started to expand their infrastructure investments. As previously noted, the AggMan Index seems to have found a floor in recent months, but the index will continue to experience volatility until a clearer picture of the future is more certain.
Potential tax code changes may drive year-end deals
October was another quiet month for deals. There appears to be a push to close deals by year-end as many are concerned about changes in the tax code next year. As such, a slight uptick in activity is anticipated in the fourth quarter. The trend of corporate divestitures and small bolt-on transactions continued in October.
Cemex has agreed to acquire the remaining 50.01-percent interest in Ready Mix USA, LLC from its joint venture partner, Ready Mix USA, Inc., for approximately $380 million. The purchase price includes $17 million of debt, with closing expected to take place in September 2011. The transaction was triggered by joint-venture partner Ready Mix USA exercising a put option to sell its interest in the partnership to Cemex. The joint venture was established in 2005 and includes cement, aggregates, ready mix, and block assets in the southeastern United States.
Mount Construction Co., Inc. of Berlin, N.J., and Carpenter Brothers Materials, LLC of Telford, Pa., acquired a quarry and hot-mix asphalt plant in Montgomery County and renamed the operation as Harleysville Materials, LLC. The company’s products include red stones for construction, decorative, landscaping, and construction aggregates. The company was founded in 2010 and is based in Harleysville, Pa.
Argus Capital Partners LLC acquired the assets of Calucem, Inc. from Mid Europa Partners LLP. Calucem, Inc. manufactures calcium aluminate cements and quick setting cements. Calucem, Inc. was founded in 1998 and is headquartered in Allentown, Pa., with additional offices in Mannheim, Germany, and Singapore. Calucem, Inc. was formerly a subsidiary of HeidelbergCement AG.
Boral USA, through one of its subsidiaries, completed its acquisition of the remaining interest of MonierLifetile LLC from the Monier Group, whose principal place of business is located in Germany. Prior to this acquisition, Boral owned a 50-percent interest in MonierLifetile. Headquartered in Irvine, Calif., MonierLifetile is the largest manufacturer of premium-quality concrete roof tile in the country.
In other news, U.S. Concrete Inc. announced that its shares resumed trading on Oct. 15, 2010. The shares are quoted on the Over the Counter Bulletin Board (OTCBB) under the symbol USCR.