Notable Items (all comparisons, unless noted, are versus the prior-year third quarter)
- Earnings per diluted share of $1.54 compared with $1.36
- Record consolidated net sales of $600.5 million compared with $537.5 million
- Aggregates product line volume up 8.1%; aggregates product line pricing up 2.3%
- Consolidated gross margin (excluding freight and delivery revenues) of 23.8%, up 70 basis points
- Specialty Products third-quarter record net sales of $55.8 million and earnings from operations of $17.3 million
- Consolidated selling, general and administrative (“SG&A”) expenses of $37.1 million, or 6.2% of net sales
- Consolidated earnings from operations of $108.8 million compared with $91.5 million
- Acquired and successfully integrated three aggregates quarries in Atlanta, Georgia
MANAGEMENT COMMENTARY (ALL COMPARISONS, UNLESS NOTED, ARE VERSUS THE PRIOR-YEAR THIRD QUARTER)
Nye continued, “Each of the Aggregates business’ reportable segments posted aggregates product line volume growth, led by an 8.1% increase in the Mid-America Group. Consistent with trends noted earlier in the year, private-sector construction generated this growth. The nonresidential market, which comprised 30% of third-quarter aggregates shipments, increased 19% and growth was notable in both commercial construction and the energy sector. The residential market achieved volume growth of 15% and accounted for 13% of our quarterly shipments. Housing permits and starts, key indicators for residential construction activity, continue to have strong year-over-year improvement, which should help sustain the recovery in this market. The ChemRock/Rail market, 11% of aggregates volumes, reported higher ballast shipments and increased 13% over the prior-year quarter.
“Shipments to the infrastructure end-use market, which represented the remaining 46% of our aggregates product line business, were essentially flat with the prior-year quarter. Federal budget and deficit disputes and the uncertainty over future highway funding levels beyond the September 2014 expiration of the Moving Ahead for Progress in the 21 st Century Act, or MAP-21, have contributed to the reluctance of many states and municipalities to commit to large-scale projects. Additionally, while awards under the Transportation Infrastructure Finance and Innovation Act (TIFIA) component of MAP-21 have the ability to leverage up to $50 billion in financing for transportation projects of either national or regional significance, they continue to move at a slower pace versus earlier expectations with only two projects being awarded. While we still expect TIFIA to benefit several of our major markets – namely Texas, North Carolina and Florida – we do not expect any meaningful impact before the second half of 2014, and more notably in 2015.“Despite federal-level funding delays and concerns, we are encouraged by states’ recognition of the importance of sustained infrastructure investment. We have seen year-over-year growth in highway contract awards and construction employment in several of our key states, including Texas, Georgia, Colorado and Virginia. In Georgia, three regions in the southern part of the state began collecting a special-purpose local option sales tax on January 1, 2013. These monies are earmarked for transportation improvements, and we expect the pace of projects funded by this tax to accelerate as we move into 2014. Additionally, we anticipate a significant reconstruction effort in Colorado as a result of the recent flooding. We are well-positioned to work with the local Colorado communities to repair and/or replace hundreds of miles of washed-out roads and the significant number of destroyed homes, businesses and bridges.