Responses to the last 2 postsA blend of both.
The stall was set out high in that early January 2014 business update, and those high expectations have not been met - on the 6 months of this year that has been reported to date. Interestingly the stock is near its January 2014 launch point.
Aggregate is a very long term resource and it takes patience as an investor. The disconnect this year is between being a patient investor across from management talking up the prospects of the enterprise too robustly - and then not delivering per their plan.
So, I can understand a degree of investor frustration in the first 6-months of 2014.
On the otherside - this enterprise is growing nicely:
- SFO vols increasing
- Entry into LA, with higher prices and margins courtesy of a direct marketing approach
- having the capital in the Balance sheet to prudently assess and act on the next return-driven growth opportunities (be that ports, or be that a hard rock source to augment the sand & gravel of Orca).
- Cali demand keeps improving
- Cali pricing keeps improving
- with increasing vols (unit costs decreasing)
Entry into a market does not happen in a quarter or three - it takes time, to gradually enter, gain a stable foothold, prove your reputation and credibility and customers know you will be around for years.
Polaris has done that very successfully in SFO over the last 5-7 years - against the most miserable backdrop imaginable. That agurs well for the future.
What to focus on:
Pricing, Pricing, Pricing, Pricing.
This is managements key/critical challenge now, and in the next 12-18 months - show investors that there is value in your product, and that your customers will pay for that value (because cement, RMX, rock, fly ash, admixtures is all going up at healthy rates in SFO).
On BMW convertibles in 3 years. Smart call, this is one to salt away and not get too antsy every quarter. Look at it in 3 or 5 years and you'll be really pleased.
What is Polaris doing? It is gradually owning the front ddoor to the most valuable markets in California - imagine it having 4 points in the Bay, 2-3 in and around LA, 1-2 in San Diego and pushing 8-10M tons of sand & gravel and rock trough that net work - VMC, CEMEX or Heidlegerg will all pay appropriately for that network and source.
Also: its just not a valid comparison to compare VMC, MLM, CEMEX etc with Polaris - PLS is a 400M Mcap entrant, and MLM, VMC and $8BN-$10BN institutional rock banks with 60-80 years of market cred.
If you really wanted to comp PLS - you'd have to look at Vulcan's Yucatan quarry - or what Martin does in Nova Scotia.