OTCPK:PILBF - Post by User
Post by
aggmanon Jul 24, 2014 11:02am
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Post# 22777674
Q2 Eagle Materials - read through; US themes
Q2 Eagle Materials - read through; US themesEagle Materials (EXP) reported Tue/Wed. Stock up +6% on the release and digestion - at all time high.
On the west coast - their cement plant is sold out, and they are expecting mid-to-high single digit demnd increase for remainder of year (i.e. 5%-8%). Candidly, this is their "weakest" market. Their five (5) other cement markets are seeing demand growth all "in double-digits" (i.e. 10% and greater).
Characterised Texan And Mountain cement markets as being "tight" - and thus in those markets they did an $8.ton cement price increase on 1 Jan (stuck) and 1 July (process of sticking) - with CEO saying $5-$7/ton should stick.
The themes in the US are that cement vols and pricing are up +4% & +5% QoQ. Eagle said they are effectively "SOLD OUT" in cement across their 6 plants. Also they are about to enter into the next 3-year round of pricing negotiations to their oil-field customers (they are 3 year committments).
So, from CX and EXP, we see confidence in vol, pricing, and future demand and pricing growth, as cement utilization gets back up to 90% (very market specific).
Martin Marietta Materials (MLM) report on Tuesday - we will be looking at vol and pricing, and also at comments on their SoCal cement plant - that touches on the LA market - and Polaris entry prospects.
Vulcan, now with new CEO, and another incremental dividend increase - will follow MLM in reporting. They have a significant exposure to CA, and provide commentary on the bay, central valley and the great LA Basin + San Diego.
What are we looking for from Polaris: Margin and price expansion consistent with Californian Comparables, and above the US average. Q2 is volumetrically strong - the litmus test is on pricing power, current and forecast.