Notable Items (all comparisons, unless noted, are versus the prior-year second quarter)
- Earnings per diluted share of $0.89 compared with $0.80 (prior-year quarter includes a $0.12 per diluted share charge for business development costs)
- Consolidated net sales of $508.7 million compared with $491.2 million
- Aggregates product line pricing up 1.7%; aggregates product line volume down 1.6%
- Consolidated gross profit margin of 21.0%, up 20 basis points
- Specialty Products record net sales of $56.6 million, generating earnings from operations of $18.7 million
- Consolidated selling, general and administrative (“SG&A”) expenses of $37.8 million, up 20 basis points as a percentage of net sales
- Consolidated earnings from operations of $69.4 million compared with $59.2 million (prior-year quarter includes $9.2 million of business development costs)
MANAGEMENT COMMENTARY (ALL COMPARISONS, UNLESS NOTED, ARE VERSUS THE PRIOR-YEAR SECOND QUARTER)
Nye continued, “During the quarter, pricing momentum in the aggregates product line continued with each of our reportable groups achieving increases. The West Group reported a 2.8% improvement, reflecting price increases implemented over the past year. The Mid-America and Southeast Groups reported average selling price increases of 1.9% and 0.4%, respectively, in the aggregates product line. Based on results through the first half of the year, we reaffirm our full-year pricing guidance of up 2% to 4% for the aggregates product line. Mid-year pricing increases that were recently implemented provide further support for continued pricing momentum. Our vertically integrated businesses also achieved pricing growth, with the ready mixed concrete and asphalt product lines reporting increases of 8.3% and 4.3%, respectively.
“Through the first half of the year, growth in construction activity has been concentrated in the private sector, which, on a year-to-date basis through May, reported a 12% increase in the value of construction put in place. Consistent with this trend, our private-sector markets reported volume growth over the prior-year quarter. The nonresidential market, which represented approximately 30% of second-quarter aggregates shipments, increased 7%. This growth was attributable to commercial construction, namely office and retail, and was partially offset by a decline in shipments to the energy sector due to a modest slowdown in shale oil field activity. The residential construction market continues to recover; housing starts are up more than 10% over the prior year and housing completions are up 20%. Shipments to the residential market increased 4% and accounted for 13% of second-quarter aggregates shipments, representing a more normalized and balanced percentage of our overall product sales. Our expectation is for further increases in residential volumes as the housing market continues to move toward a more sustainable equilibrium. Finally, the ChemRock/Rail end use market, approximately 10% of second-quarter aggregates shipments, increased 2%.