PCA recently released forecasts for each of the major regions of the country, along with several sub-regions. Several consistent trends emerged, as well as a few concerns. Here are a few takeaways and things to watch.
In today’s zero-sum culture, in which it often seems there must be a loser for there to be a winner, win-win seems like a quaint relic from a bygone era. But is it? The first half of 2021 has seen a flurry of large transactions that attracted headlines throughout the industry. From a distance, some of these certainly appear to fit the zero-sum mold. But what about Vulcan’s pending acquisition of U.S. Concrete? Is there a clear winner?
If your goal is to be a green producer, effective mine planning is a necessity. A traditional mine plan includes technical and geologic details that enable efficient extraction of the deposit; a green mine plan goes a step further, optimizing the use of the entire property. In total, end use planning, mine planning, and excavation monitoring allows a green operator to maximize recovery, reduce the impact of land consumption, and recycle the property. These should be the goals of every green producer.
News that Vulcan is acquiring U.S. Concrete in a deal valued at nearly $2 billion is further evidence of positive industry sentiment. It is also another example of an industry leader leveraging its strong balance sheet to improve its strategic position and establish platforms for future growth.
Over the past several weeks, industry companies released their results for the first quarter of 2021. Not only did most organizations report record results, but the accompanying commentary reflected strong balance sheets, recovering markets, and markedly optimistic views for the balance of 2021 and beyond. Read here for what this means for acquisitions activity in the industry.
As we move into a post-COVID era with regular reminders of Green New Deals, electric cars, solar power, wind farms, sustainability reports, net zero carbon goals, and the like, our performance conversations are changing. The idea of “green” is becoming a larger and larger topic in the business. Consider what being “green” really means. Does it not refer to a clean and efficient use of resources? Maximizing valued output and minimizing consumption and non-valued outputs? A green producer is just a great producer...and they should be celebrated.
Replacing reserves with greenfield developments or acquiring existing aggregate operations is important to the long-term viability of your aggregates business. Unfortunately, we see many cases in which projects are crippled or doomed because fatal flaws with the geology are missed or ignored. In the aggregates industry, we cannot mitigate all the risks. The true nature of the geology is hidden below the ground, and the information needed to move forward with confidence costs time and money. But it is worth it. A well-planned geologic investigation, conducted by a professional who is experienced in aggregates, can identify critical risk factors that could threaten the success of the project...and ultimately save you millions of dollars.
Martin Marietta's announced acquisition of Lehigh Hanson’s west region business offers two takeaways: one, the valuation multiple is high even by today’s elevated standards; and two, forward-looking optimism is abundant in the industry at present.
The Client was a premier provider of high-quality hydraulic fracturing sand in the United States. Initially launched with a single production facility, the Company grew quickly, developing a portfolio of assets that included two production facilities, 150 million tons of reserves, and 9 distribution terminals. Seeking to continue this impressive growth, the Company developed a pipeline of new projects and engaged Inlet Capital Group to explore financing options.
The Client was a financial sponsor with no previous experience in the construction materials industry. The Client had invested in a greenfield Quarry in Florida prior to the severe market downturn that accompanied the Great Recession. The Quarry had not achieved its proforma projections through the downturn and further struggled to find its footing even as the economy gained momentum. The Client had lost confidence in management and engaged Inlet Capital Group to develop and implement a recovery plan.