OTCPK:PILBF - Post by User
Post by
aggmanon Nov 13, 2015 9:29am
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Post# 24288439
more (frozen) food for thought
more (frozen) food for thoughtDear Frozen,
2 points:
1. Per Teach - i'm not sure anyone can read cycles anymore; but seriously the last 10 years down in the US have been so extreme - on so many levels - that its gotten so hard to read - as per the classists 7-year economic cycle (as I taught back in the late 60's).
I dont think we are long in the tooth - but i also think there are plenty of risks.
at the macro level - you've got this 6-year 325BN transportation bill (last one expired in 2009) - and that is a huge injection in the industry.
SF-Silicon Valley is the richest, most desireable market in the US - the best, the brighest, the soft-skinned, the smart and beautiful - they have all run there for the last 50 years - just wont change. In thy gold rush, sell shovels. Polaris is in good there. (Risk: Tech blows up)
Los Angeles - second largest urban area (behin NYC-NY) but with more roads. Its in the early stages of its construction recovery and besides what 1 M tons of rock in a market of 180M?
2. USCR throwing weight around (as CEMEX obviously have) - a risk for Polaris - but I take heart that in a world of increasing demand and prices - USCR and CEMEX use suppliers price increases as a validation to push their pricing in concrete - so really USCR and CX demand higher prices to push to their customers. Sandbrook also said it - we use higher prices to our advantage to expand margins.
On this topic - if you think Polaris gets cowered - I say the tide is turning - I hear it in the calls remarks. Pushing Value and price, the fixed price contracts have expired (GOOD) - lets talk 2015 turkey. Customers love the material - they will pay for it - so stop quibbling CEMEX.
And to build on Seattle's point - if a consolidator ultimately owns ORCA - they will have more muscle over the likes of USCR and CEMEX (in CA and other markets) and that premium will be totally understood and priced.
The next 4-5 quarters will prove to be fascinating in observing these dynamics, negotiations, and outcomes.