Aggregate top guns track 2012-13 gains, lags

Sources: Rock Products magazine; Martin Marietta Materials, Raleigh, N.C.; Vulcan Materials Co., Birmingham, Ala.

As part of their second-quarter financial reports and guidance into 2013, Martin Marietta and Vulcan Materials cite limited optimism for near-term shipments, driven by small, less-than-uniform production and pricing gains across their regions.

“With the challenges of 2011 and the first half of 2012 behind us, we remain optimistic for our second-half performance and outlook for 2013,” says Martin Marietta CEO Ward Nye. “The passage of MAP-21, which is essentially a final three-month continuing resolution through Sept. 30, 2012, followed by a two-year federal highway bill, provides us with a solid foundation for infrastructure construction.” Absent notable volume impact from this legislation before 2013, he adds, “We expect our infrastructure end-use market volume for the year to range from flat to down slightly.”

Nye anticipates double-digit volume growth in the company’s nonresidential end-use market, driven primarily by increased energy shipments, although some energy-sector activity will continue to be affected by natural gas prices, the timing of lease commitments for oil and natural gas companies, geographic transitions and weather conditions.

“We anticipate heritage aggregates product line shipments for the full year to increase 4 to 5 percent and pricing to increase 2 to 4 percent. A variety of factors beyond our direct control may exert pressure on our volumes, and our forecasted pricing increase is not expected to be uniform across the company. Heritage aggregates product line direct production costs per ton are expected to be flat compared with 2011, in spite of our expectation to reduce production as part of controlling our inventory levels,” Nye affirms.

Vulcan Materials credits year-over-year EBITDA (earnings before interest, taxes, depreciation and amortization) improvement to enterprise-wide cost reduction initiatives, including additional savings from its Profit Enhancement Plan, plus improved second half earnings in aggregate, concrete and asphalt segments. The company expects controllable costs in the second half of 2012 to decrease approximately $50 million from the prior year.

“Aggregates freight-adjusted pricing is expected to increase 1 to 3 percent in 2012,” says Vulcan Chairman Don James. “Aggregates demand should benefit from a recovery in private construction activity and stability in highway funding in our markets. As a result, same-[site] shipments are expected to increase 1 to 3 percent versus the prior year … The uneven pace of growth in shipments through the first half of 2012 across our key markets makes forecasting overall volume growth more difficult. The full-year outlook assumes a more normal geographic mix of shipments in the second half of 2012.”