|A window of record precipitation across Texas challenged scheduling for the Archer Western, Granite and Lane joint venture handling a major expansion of Interstate 35, north of Dallas. Weather did not hamper the early-May National Fall Prevention Stand-Down, which AGL marked with a message from a suitably perched icon, King Kongcrete.|
With stakes in some of the strongest cement, concrete and aggregate markets, the industry’s top bellwether operators sent investors parallel messages on year-to-date financial performance: Heavy spring rains, especially in Texas, had limited effect on overall sales and profitability improvements compared to the first six months of 2014. Upbeat second quarter 2015 earning reports, plus solid sales, pricing and profit projections, sent Martin Marietta Materials and Vulcan Materials stock toward all-time and eight-year highs, respectively.
Martin Marietta cited National Oceanic and Atmospheric Administration figures indicating the U.S. experienced the second wettest second quarter in more than a century. In Texas, where the producer holds much sway on the heels of its 2014 merger with TXI, agency figures show 2015 bringing the wettest January–June for the 121 years rainfall data has been tracked.
“These highly unusual factors resulted in nearly $100 million in deferred net sales across all product lines, which lowered gross profit by an estimated $27 million,” said Martin Marietta CEO Ward Nye. “Assuming normal levels of precipitation, we expect exceptional performance from our businesses in response to strong demand that was delayed during the first half of the year … As we look at the remainder of 2015 and into 2016, contractor backlogs and other macroeconomic indicators underscore the pent-up demand for our products, and that should allow us to capture delayed shipments in future quarters.
“Texas ranks second in the nation in job growth and has added almost one million jobs during the last three years. This coincides with all major Texas metropolitan areas reporting their highest growth rate in overall economic activity in more than 30 years.” A July 2015 Federal Reserve Bank of Dallas report, he added, notes Houston’s “refining, petrochemicals and service industries are managing to offset oilproducer woes,” while the Texas Department of Transportation’s fiscal year 2015 lettings budget of nearly $7.5 billion reflects major project activity acceleration and augments a multiyear backlog.
Despite extremely wet weather in Texas and other markets, Vulcan Materials logged second quarter revenue and gross profit increases of 13 percent and 34 percent, respectively, from the prior year, while existing aggregate sites’ shipments climbed 5 percent and freight-adjusted aggregates prices rose 6 percent against comparable 2014 figures. “The continuing recovery in construction activity across most of our markets was masked by extremely wet weather, particularly in April and May,” said CEO Tom Hill. Customer confidence and the overall demand outlook continue to improve, and, as expected, pricing momentum continues to strengthen.”