MLM reports Q3In essence this was a good result - dragged down by a significantly higher tax rate and some higher weather and supply costs (due to constraints caused by weather - in certain juristictions).
What I am really keying into is volume and pricing in their aggregate business - so let's look at that:
Q3 aggregate volumes on a like-for-like basis were 2.7% higher than in Q3-2013. And this was against a high comp. as in Q3-2013 there was a 7% increase. For the first nine months of 2014, heritage aggregate volumes increased by 7.5%.
MLM stands by its full-year guidance for an increase of between 6% and 8%.
5.1% increase in Q3 aggregate prices, on a like-for-like basis.
For the first nine months of 2014, heritage aggregate prices were 3.5% higher than in the same period in 2013. MLM's full-year forecast for an increase of between 3% and 5% in its heritage business is in tact.
So - taking mid point - you are looking at a business in the year doing vol +7% and price +4% better than 2013 and a 130 basis point margin expansion. I think as an aggregate industry bellwether this is a solid indication of a steady and consistent recovery across the US.
There is no geographic read through from MLM's heritage aggregate business to Polaris's key SFO market - as MLM does not sell aggs in CA. They have acquired the cement plant in SoCal from TXI.
Call comments:
- Strong comments on Texas market (creative funding of projects)
- Proposition 1 in Texas to vote next week; $1.7BN p.a. to Texas highways
- Gulf Coast strong
- Colorado infrastructure strong
- effect of decling diesel fuel is starting to work through the business
- 1 oct cement price increase announced in TX, will take 6 months to fully work through back log
- eastern US recovery solid - YoY
- Texas - bounding along - out pacing eastern US
- 2015 - broad guidance - end use demand growing, cement demand should increase in high single digits consistent with PCA. they see resi in their markets growing in double digits.