Data Mining January 2011

| Published on January 2, 2011

AggMan Index: Three months of gains

John Neuner is the managing director at Harris Williams & Co. He can be reached at 804-648-0072 or jneuner@harriswilliams.com.

After a strong uptick early in the month following earnings, the AggMan Index ended the month with positive gains. While it did not hold the early month 10-percent increase that followed several public company earnings releases, the Index did continue its positive momentum with a 3-percent increase for the month, marking three months of gains in the sector. Throughout the past month, there has been little specific industry news imparting the Index as most investors in the sector are taking a wait-and-see approach to what the reshaped Congress will bring as it relates to infrastructure spending for 2011 and the future. With much of the country heading into the seasonal winter slow period, the news from the industry is likely to remain limited in terms of significant changes in volumes and pricing. The recent months have shown several moves by industry players to refocus on core markets or regions as several companies have announced divestitures, including CRH, Granite Construction, and Cemex. As we look at the Index, the biggest factor influencing the market in the coming months, aside from potential funding bills, is the broader economic climate. As this is being written, the Euro zone is struggling to support several member countries to try to stave off a broader European debt crisis. As we’ve seen in recent years, the global nature of the economy will most definitely have carryover impact on the U.S. construction markets if the European Union is not successful in its efforts. On the domestic front, the fed’s second round of quantitative easing, which could inject as much as $600 billion into financial markets, could have a positive impact on stimulating investment as it ripples into the construction markets. In looking forward for the Index, the next big industry events will likely be the year-end financial releases and any major funding bills that come in the waning days of the current Congress.



CRH America conducts successful bond offering

Recent M&A transactions

Martin Marietta Materials, Inc. acquired Loamy, LLC from American Timberlands Co. Loamy, LLC operates as a concrete sand and gravel mining and processing company. Founded in 2008, the company is based in Bethune, S.C.

George H. Reddin is a principal in FMI’s Investment Banking practice. He can be reached at 919-785-9286 or at greddin@fminet.com.

Dolese Bros. Co., based in Oklahoma City, acquired A&M Concrete Inc., which is based in Catoosa, Okla. The purchase adds about 30 employees to Dolese, as well as 30 ready-mix trucks and two concrete plants. With the A&M Concrete purchase, Dolese has 40 ready-mixed concrete plants in Oklahoma and Louisiana; more than 300 concrete mixer trucks; 15 facilities that provide stone, sand, and gravel; and a concrete block manufacturing plant.

CRH plc sold its Ivy Steel and Wire business (Ivy) in the United States for a total consideration of US$51 million to Insteel Industries, Inc. Based in Texas, Ivy manufactures welded wire reinforcement and wire products for concrete construction applications. Insteel Industries, Inc. is one of the largest manufacturers of steel wire reinforcing products for concrete construction applications in the United States.

Other transactions and news

CRH America, Inc., a wholly owned subsidiary of CRH plc, successfully priced its fifth US$ global bond offering consisting of 10-year and five-year notes. The total offering was $750 million with more than 80 institutional investors from North America and Europe participating in the transaction. The proceeds of the offering are intended to be used to retire existing debt and for general corporate purposes.

Congress Materials, LLC, based in Bridgeport, Texas, filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court. Congress Materials, LLC engages in the production and sale of construction aggregates. The company, formerly known as Green Aggregates, Inc., was founded in 2006 and has locations in Garland, Euless, Decatur, and Kerens, Texas; and Congress, Ariz.

Third quarter earnings for the construction materials sector were similar to the same period in 2009 or slightly worse. Most companies were not prepared at this time to provide specific guidance for 2011 due to the uncertainty of factors affecting funding in the public sector. By the next writing, there should be a better perspective on the producers’ outlook for 2011.

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