April 1, 2014
After a significant wave of activity last month, there is little to report this month. At the same time, the news from the sector is positive, with a strong showing by many of the publicly traded companies for the fourth quarter and year as a whole. Additionally, highway transportation financing received a boost from President Obama, which should give funding efforts some increased momentum.
U.S. Concrete, Inc., through its wholly owned subsidiary, Ingram Concrete, LLC, completed the acquisition of Young Ready-Mix, Inc., a single-site, ready-mix concrete producer in Brady, Texas.
The news from the publicly traded companies has been positive for performance in 2013 and expectations for 2014:
• CRH reported a 2-percent increase in like-for-like sales in the Americas during 2013. EBITDA was up 10 percent.
• Eagle Materials reported record cement sales in the third quarter at more than 1.1 million tons and a 39-percent increase in revenues at $228.8 million.
• Vulcan Materials reported revenue in the fourth quarter of $680.3 million, an increase of 11.8 percent from the prior-year quarter. Adjusted EBITDA (excluding gain on sale of real estate) was $129 million, up 43.3 percent from the prior-year quarter.
• Cemex reported a 4-percent increase in sales during the fourth quarter of 2013 to approximately $3.9 billion and an increase of 2 percent for the year to $15.2 billion. EBITDA increased by 4 percent during the fourth quarter to $642 million and increased by 1 percent for the year to $2.6 billion. Cemex’s operations in the United States reported net sales of $819 million in the fourth quarter of 2013, up by 8 percent from the same period in 2012. Operating EBITDA increased to $77 million in the quarter, versus $13 million in the same quarter of 2012.
• Titan reported a 4-percent increase in sales in 2013 and rose to $1.64 billion. EBITDA rose by 0.1 percent to $272 million. This is the first time the construction materials group has reported improved operating results in seven years. In North America, Titan’s sales rose by 11 percent to $570 million, and its operating profit rose to $44.4 million.
President Obama has called for a $302 billion, four-year transportation proposal that would increase and stabilize financing for the Highway Trust Fund. The chairman of the Ways and Means Committee, Dave Camp (R-Mich.), submitted a draft of legislation for tax reform. In addition to several measures designed to simplify the tax code, the Tax Reform Act of 2014 allocates $126.65 billion to the Highway Trust Fund. While this
legislation is not expected to pass in its entirety, the noise level on passing a transportation bill is heating up, which bodes well for the construction materials sector.
George H. Reddin is a principal in FMI’s Investment Banking practice. He can be reached at 919-785-9286 or at email@example.com.