Aggregate production healthy thus far in 2023

Yanik

Good or very good, but not necessarily great.

That’s a common sentiment among aggregate producers for how their companies are performing through eight months of 2023.

Obviously, some would tell you they’re having great years. Construction materials businesses are, after all, local. But producers, at least, are generally pleased with how business has been through the bulk of 2023.

Maybe the weather could have been a little drier through a stretch of the production season. Perhaps production volumes could have been a little higher if not for bottlenecks with construction projects or equipment supply.

Still, the bottom line is the industry is healthy. 2023 might not be one for the record books, but producers will, by and large, take the outcomes they’ve gotten given high interest rates, high steel prices and the ongoing challenge of finding people who’ll show up to work.

Dynamics at play

The industry’s public producers published their financial reports for the second quarter as P&Q prepared this month’s edition for press.

Themes of those reports were that volumes were down and pricing was up. Pricing was up so much, in some cases, that producers established an assortment of second-quarter financial records.

As FMI Capital Advisors’ George Reddin recently shared, the business dynamics at play in the second quarter were some of the same ones present in the first quarter of 2023 and the fourth quarter of 2022.

“The themes there were strong demand, good pricing, good performance,” Reddin says. “Everything we’re seeing out there suggests those dynamics remain. Demand is strong. A lot of people are selling everything they can produce. Prices are improving.”

While aggregate volumes are down this year, it’s not like they’re down 20 or 25 percent. They’re down slightly from a 15-year-high mark, meaning business for most is pretty good.

“If they’re down 5 or 10 percent but it’s 5 percent or 10 percent off of a really high number, then producers are still really busy,” says Matt Dibble of Dibble Equipment, a dealer serving New York, Pennsylvania, New Jersey, Maryland and Delaware.

For Dibble Equipment, the key indicator of the industry’s health is its own equipment and capital project bookings. And as Dibble describes, those remain strong.

“People are still looking to improve plants and increase production,” he says. “Interest rates and steel prices are still high, but we haven’t seen a decline in demand for capital projects or capital equipment. I think a lot of that is because customers have stayed busy.”

One way or another, don’t close the book on 2023 anytime soon.

Says Travis Wise, VP/GM at Wingra Stone Co.: “It could turn into a great year depending on how the second half of the year goes.”

Featured photo: P&Q Staff

Related: The catalysts boosting construction materials firms right now