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JUPITER, Fla. (May 20, 2019) – Inlet Capital Group, LLC (“Inlet Capital”) is pleased to announce the sale of Coral Rock Quarry (“Coral Rock”) to Southern Rock Manufacturing, LLC (“SRM”). Inlet Capital served as strategic advisor to AC Magnum Coral, LLC (“AC Magnum”) during the transaction, which closed on May 16, 2019.

Located in Punta Gorda, Fla., Coral Rock is an approximate 1,700-acre property underlain by an estimated 25M tons of limestone reserves. Coral Rock has a long history as a regional supplier of limestone, sand and fill products to southwest Florida, but operations had been temporarily suspended. Coral Rock is expected to resume operations in the near future.  

SRM is an affiliate of Smyrna Ready Mix, one of the largest privately held ready mix producers in the southeast, providing high-quality concrete to Florida, Georgia, Kentucky, Indiana, Ohio, Texas, and Tennessee. Headquartered in Nashville, Tenn., SRM maintains a network of nearly 100 operating facilities, providing ready mix concrete, material hauling, concrete pumping and other services to customers throughout its served markets. 

Inlet Capital provides strategy consulting and transaction advisory services exclusively to the construction materials industry. Founded and managed by industry insiders, the firm offers in-depth insight, practical solutions and efficient execution to its clients throughout the United States.

JUPITER, Fla. (January 11, 2019) – Inlet Capital Group, LLC (“Inlet Capital”) is pleased to announce the sale of the ready mix concrete assets of AS Materials Ocala, LLC (“All Star”) to Smyrna Ready Mix, LLC (“SRM”).  Inlet Capital served as the exclusive financial advisor to All Star on the transaction, which closed on December 21, 2018.

Headquartered in Ocala, Fla., All Star is a privately held provider of construction aggregates, ready mixed concrete and concrete block in north and central Florida. The sale represents the latest milestone in All Star’s longstanding strategic plan, which will transform the company into an aggregates pure play, enabling All Star to focus on its current quarries and pending mine development opportunities.

Smyrna Ready Mix is one of the largest privately held ready mix producers in the southeast, providing high-quality concrete to Florida, Georgia, Kentucky, Indiana, Ohio, Texas and Tennessee. Headquartered in Nashville, Tenn., SRM maintains a network of nearly 100 operating facilities, providing ready mix concrete, material hauling, concrete pumping and other services to customers throughout its served markets.

Inlet Capital provides strategy consulting and transaction advisory services exclusively to the construction materials industry. Founded and managed by industry insiders, the firm offers in-depth insight, practical solutions, and efficient execution to its clients throughout the United States.

JUPITER, Fla., October 12, 2017 – Inlet Capital Group today announced the sale of the asphalt assets of Magnum Group Holdings, LLC, to Ranger Construction Industries, Inc. Inlet Capital Group served as the exclusive financial advisor to Magnum on the transaction, which closed on September 26, 2017.

Headquartered in Ocala, Fla., Magnum is a privately held provider of construction aggregates, ready mixed concrete, concrete block, hot mix asphalt and site construction services in north, central, and southwest Florida. The sale represents the completion of Magnum’s efforts to exit its non-core asphalt and construction businesses, enabling the company to fully focus on its core materials businesses.

Ranger Construction is one of Florida’s leading heavy/highway contractors, providing high-quality road construction services since the 1940s. Headquartered in West Palm Beach, Ranger Construction operates throughout the state as a contractor, subcontractor and design-build partner. Ranger also operates a network of quality controlled, environmentally friendly, FDOT-certified asphalt production facilities, serving central and southeast Florida.

Inlet Capital provides strategy consulting and transaction advisory services exclusively to the construction materials and mining industries. Founded and managed by industry insiders, the firm offers in-depth insight, practical solutions and efficient execution to its clients throughout the United States.

Martin Marietta and U.S. Concrete Garner Different Market Reaction for Similar Performance

High valuations demand higher performance

During the week of November 1, construction materials industry leaders U.S. Concrete and Martin Marietta released their 3Q 2015 earnings reports. Each company delivered strong growth in both revenue and earnings, but the market response to each’s results could not have been more different.  While U.S. Concrete shares realized a 9 percent increase in pre-market trading following its earnings release, Martin Marietta’s stock dropped 8.5 percent following its announcement.

The discrepancy in market reaction directly correlates with market expectations. Martin Marietta did not deliver weak results. It grew revenue 7.9 percent and its earnings increased 119 percent year-over-year. However, what Martin Marietta failed to deliver was performance on par with its lofty valuation.

At the time of Martin Marietta’s earnings announcement, its enterprise value totaled nearly 15 times EBITDA. To use a term preferred by CNBC’s Jim Cramer, Martin Marietta’s shares were “priced for perfection,” which the company did not deliver. Further, the company reduced its earnings guidance for 2015 and 2016, stoking fear that the aggregates industry was seeing a broad slowdown and was yet another sign of a slowing economy. As a result, Martin Marietta’s shares dropped precipitously, and the share prices of most other construction materials companies were dragged down with it.

Conversely, when U.S. Concrete announced similarly strong results—49.4 percent revenue growth and 85.8 percent earnings growth year-over-year—the market responded favorably. The reason: U.S. Concrete’s performance exceeded analyst expectations.

U.S. Concrete’s enterprise value totaled approximately 12 times EBITDA at the time of the announcement, which is still high by historical standards but not as lofty as Martin Marietta’s.

Surely U.S. Concrete benefited from reduced expectations set by Martin Marietta’s results and guidance, which drove more pronounced share price gains in reaction to the earnings beat. U.S. Concrete also benefited from its geographic footprint, with operations focused in markets that showed continued strength and limited exposure to regions within the U.S. showing some weakness (notably those regions in which the economy is very energy dependent). In addition, the company got a large boost from the success of its continued acquisition program.

Still, the most important factor that drove favorable market reaction to U.S. Concrete’s earnings announcement is the fact that its valuation heading into earnings season was low relative to that of Martin Marietta, and analyst expectations were correspondingly low.

U.S. Concrete and Martin Marietta are both solid companies, led by talented management teams that are delivering strong revenue and earnings growth. Yet their respective share prices went in different directions when reporting similar performance. The reason is simple. One was priced too high, the other not high enough.  Valuation will ultimately revert back to the mean. Sure, it is great to be “priced for perfection,” but it is important for companies and shareholders to understand that performing to perfection is rarely sustainable. In the end, market expectations drive results, and when performance does not align with expectations the market will adjust and correct.

Inlet Capital Group Advises U.S. Concrete on Sale of Precast Concrete Operation

JUPITER, FL (June 3, 2015) – Inlet Capital Group announced today that it served as the exclusive financial advisor to U.S. Concrete, Inc. (“U.S. Concrete”) in the divestiture of the U.S. Concrete Precast Group (“USCPG” or the “Company”) to Architectural Precast Innovations, Inc. (“API”). The sale represents the completion of U.S. Concrete’s efforts to exit non-core precast businesses. The transaction was led by Greg Dayko, who oversees the firm’s strategy consulting and transaction advisory practices.

Headquartered in Middleburg, Pennsylvania, USCPG is a premier provider of highly customized architectural precast in Pennsylvania, New Jersey, New York, Connecticut and Maryland. With an operating history of more than 50 years, the Company is a trusted supplier of custom architectural products to the residential, commercial and infrastructure construction sectors, with schools, apartments, office buildings, parking garages and bridges among many end uses. USCPG is the first acquisition by API, which was formed by private investors with more than 50 years of collective experience in the architectural precast and building products industries.

“We are pleased to have had the opportunity to work with U.S. Concrete on this transaction,” said Dayko. “We believe U.S. Concrete’s exit from precast will sharpen its focus on core ready-mixed concrete and aggregate operations.”

U.S. Concrete serves the construction industry in several major markets in the United States through its two business segments: ready-mixed concrete and aggregate products. It operates 140 ready-mixed concrete plants, 16 volumetric ready-mixed concrete facilities and 10 producing aggregates facilities. During 2014, U.S. Concrete sold approximately 5.7 million cubic yards of ready-mixed concrete and approximately 4.7 million tons of aggregates.

Inlet Capital Group, LLC provides strategy consulting and transaction advisory services exclusively to the construction materials and mining industries. Founded and managed by industry insiders, the firm offers in-depth insight, practical solutions and efficient execution to its clients throughout the United States.

Inlet Capital Group wants to help you stay informed of the economic impact of COVID-19 and how it is changing the business landscape. If you have any questions about the consequences for your business or how to access relief, contact us or visit the SBA or Fed websites.