Home and highway markets show signs of improvement

While we remain in a period of significant uncertainty, we are beginning to get little signs that the worst is behind us and that there is guarded optimism moving forward.

Housing appears to have hit bottom and is showing signs of modest improvement, albeit from an extreme historic low. Single-family housing put-in-place construction decreased by 5 percent in 2011, but is expected to grow 9 percent in 2012 to $116.2 billion. While this is good news, it pales in comparison to the 2005 level of nearly $435 billion.

The industry received another shot in the arm with the signing of the most recent federal highway bill, Moving Ahead for Progress in the 21st Century (MAP-21). While MAP-21 is welcome by the industry, it is a departure from the previous programs in that it is only a two-year program and falls short of the desired long-term commitment at increased funding levels.

This news in housing and highway construction, while modest, could be the beginning of the recovery for the construction materials sector. All we have to do now is get through the fall elections.

Recent transactions

Oldcastle Precast, Inc. has acquired the assets of U.S. Concrete’s precast concrete operations in California. Additionally, U.S. Concrete, Inc., through its wholly-owned subsidiary, Eastern Concrete Materials, Inc., has entered into a lease and marketing agreement with Granite Ready Mix, Scara-Mix, Inc., and related companies located on Staten Island, N.Y. The company will also market sand, stone, and recycled aggregates on the island.

W. R. Grace & Co. has acquired Rheoset Industria e Comercio de Aditivos Ltda. Rheoset is a manufacturer of concrete admixtures in Brazil.

Oberfields LLC, of Columbus, Ohio, has acquired Wilson Concrete Products, of Centerville, Ohio. The acquisition included Wilson Concrete’s equipment, trucks, forklifts, and concrete block inventory.

Irving Materials, Inc., headquartered in Greenfield, Ind., has acquired Rock Industries, Inc.’s aggregate quarries. Rock Industries is based in Plymouth, Ind.

Other news

Martin Marietta reported increased volume and profit for the second quarter. Overall aggregates segment volume was up 2.8 percent and pricing increased 2.4 percent. The company reported a profit of $36.8 million, up from $35.8 million a year earlier. Revenue increased 18 percent to $545.7 million; however, gross margin fell to 18.7 percent from 21.1 percent.

Vulcan Materials Co. reported a second quarter loss of $18.3 million compared with a loss of $8.1 million a year earlier on weaker volume and higher restructuring costs. Revenue slipped 1 percent to $694.1 million. Restructuring costs rose to $4.6 million from $1.8 million a year earlier.

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