Vulcan’s Hill reflects on 2017, year ahead

By |  February 17, 2018

Tom Hill, Vulcan Materials chairman and CEO, offered some thoughts on the company’s 2017 performance and looked ahead to the coming months in a conference call with investors.

Hill characterized the pace of public construction activity last year as “frustrating,” as state Departments of Transportation adjust to new and higher levels of funding that’s led to a mix of large projects being delayed. Hill also detailed how the company expected highway and infrastructure shipments to increase by 3 percent in 2017. Instead, they declined by 7 percent.

Still, his outlook for demand at Vulcan is largely positive.

“Customer confidence strengthened throughout the year and we’ve entered 2018 encouraged of what we’re seeing with ABI, the Dodge Momentum Index, long-term project pipelines and other leading indicators,” Hill says. “These and other factors suggest private demand in Vulcan-served markets should continue to grow faster across the nation as a whole.”

Hill

According to Hill, the long-term fundamentals for public demand also strengthened over the past year. Public demand is finally beginning to translate into an extended period of growth.

“Our order backlogs related to public infrastructure work have continued to build,” he says. “And importantly, we have recently seen public construction start activity return to year-over-year growth, signaling a better conversion of these backlogs into shipments.

“Now, it is certainly going to take multiple years for public construction activity to ramp up fully to these new higher levels of funding,” Hill adds. “But for many of our markets, 2018 should represent an inflection point at the front end of several years of sustained growth. Improved visibility reinforces a positive pricing plan.”

In terms of demand, Hill likes what he sees in the Southeast, as well as in Arizona, California and Texas.

“California will benefit significantly from increased public spending, and our reserve base holds tremendous value,” he says. “We are where the growth is, from San Diego to the Bay Area. In L.A. for example, we’ve added additional high-quality reserves in a huge market where reserves are lacking. In the Central Valley, we have permitted a major new quarry north of Fresno that will serve a region of [the] state that is expected to see the fastest growth over the next decade.”

After a tough year, Hill expects Vulcan’s Texas operations to benefit from more normalized weather patterns in Houston and other coastal areas.

“Backlogs of work continue to build as the demand environment keeps improving,” he says. “Public infrastructure began to kick in on top of the healthy private growth we were already seeing in key markets.”

Kevin Yanik

About the Author:

Kevin Yanik is the editor-in-chief of Pit & Quarry magazine. Yanik can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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