Wednesday, April 1, 2015

Vulcan Materials Poised To Rise Amid Cyclical Recovery

This article was first published by Seeking Alpha on March 4, 2015.

By Sarfaraz A. Khan

Vulcan Materials (NYSE:VMC) is the biggest producer of construction aggregates in the U.S., such as crushed stone, sand and gravel, as well as one of the leading producers of other aggregates-based construction materials, such as asphalt and concrete. These materials are then used in the development of various construction projects such as highways, buildings and sewer systems.

Vulcan Materials and its peer Martin Marietta Materials (NYSE:MLM) represent the duopoly in the U.S. aggregates market. However, Vulcan Material owns the biggest proven and probable reserves of aggregates in the U.S. and benefits from having significant coast-to-coast footprint, with exposure to some of the key states that will be responsible for 75% of the total growth of the U.S. population, 71% of the growth in household formation as well as above-average employment growth during the ten years ending 2020. This puts Vulcan in a strong position to post long-term growth.

Vulcan reported its annual results earlier in February in which the company's revenues and adjusted earnings (EBITDA) climbed by 8% and 28% to $2.99 billion and $600 million respectively, thanks to the 10% increase in aggregates shipments and 2% increase in freight-adjusted selling price. Raw aggregates have been responsible for a majority of Vulcan's revenues and profits. Last year, Vulcan generated 78% of its total revenues and 92% of its gross profits from sale of aggregates.

Those revenues, however, were still lower than what Vulcan earned prior to the financial crisis. During 2006-08, the company's annual revenues were more than ….. read full article at Seeking Alpha.