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 …..
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