Vulcan Materials, Martin Marietta execs share company outlooks

By |  December 22, 2017

Photos courtesy of Vulcan Materials.

The CEOs of the two largest aggregate producers in the United States offer a take on the near-term outlook for their companies and the industry.

Tom Hill, chairman and CEO of Vulcan Materials, the nation’s largest producer, says, “Our business remains on track with our longer-term goals and expectations. Growth in new construction starts in our markets continues to outpace the rest of the United States.”

Hill adds that recent acquisitions are performing well and should make meaningful contributions to the company’s earnings growth in 2018 and beyond.

“We remain confident in the sustained, multi-year recovery in materials demand across our markets and in the further compounding improvements to our unit profitability,” Hill says. “However, given the shortfall in shipments to date and due to certain lingering effects of third-quarter weather events on fourth quarter shipments, pricing and costs, we now expect full-year aggregate shipments to approximate the prior year, with full year Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately $1 billion.”

Hill

The company says it remains active in the pursuit of bolt-on acquisitions and other value-creating growth investments. Since January, Vulcan Materials has closed acquisitions totaling $212 million. These acquisitions complement the company’s existing positions in California, Illinois, New Mexico and Tennessee markets.

The company expects to close the Aggregates USA acquisition during the fourth quarter of this year.

Regarding the company’s earnings outlook for 2017, Hill says, “We are excited about the growth opportunities ahead of us. Leading indicators, such as growth in the pre-construction pipeline and in construction starts in our markets, as well as growth in our own order backlogs, point toward a return to growth in 2018 and beyond.” He adds, “Private demand continues to grow and public demand is firming up after relative weakness during the last 18 months.”

Martin Marietta

Ward Nye, chairman, president and CEO of Martin Marietta, says, “We remain confident in Martin Marietta’s long-term outlook, with the fundamental drivers for broad-based construction activity supporting a steady and extended, yet somewhat slower than anticipated, cyclical recovery across our geographic footprint.

Nye

“The United States,” Nye says, “is experiencing the third-longest construction recovery since the Great Depression, and we see this recovery continuing for the next several years. The building blocks to address the undeniable need for significant investment exist; however, we have yet to see meaningful growth in heavy construction activity, particularly in the public arena.”

Nye adds that positive momentum in residential and nonresidential construction has been offset by lackluster infrastructure activity, which continues to be significantly hindered by project delays and uncertainty concerning regulatory and other related reform.

“As a result, we expect aggregate shipments will continue its steady growth through the extended recovery,” he says.

Nye adds, “Looking ahead, our leading positions in many of the nation’s most attractive and otherwise vibrant markets should allow Martin Marietta to capitalize on the durable, multi-year construction recovery. Our customers maintain positive near- and medium-term outlooks, as supported by their reported strong backlogs.”

Nye says the company stands to benefit from the expected increased demand for infrastructure projects and private-sector construction activity as regulatory reform emerges and state DOTs and customers address labor constraints.

Residential construction is expected to continue growing, particularly in key Martin Marietta markets, driven by employment gains, historically low levels of construction activity over the previous years, low mortgage rates, higher lot development and higher multi-family rental rates.

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