Monday, October 29, 2007

Vulcan falls far short of expectations

I’ve been waiting for Vulcan [ VMC ] to report earnings as they are MLM’s most direct, national competitor. The numbers are out and they, like TXI, EXP, and RMIX, were not good. Their performance, similar to what I expect of MLM, continued to be among the best of the construction suppliers, but not what wall street was expecting and worthy of a healthy P/E ratio.
Revenue was down 3% to $905M. Analysts had been expecting $952M, Residential construction continued to be a drag and commercial and infrastructure couldn’t take up the slack as all major product lines had lower shipments. The bright spot was gross profit as margin was up to 33% from 32%. The result of the lower volumes was flat net income of $1.38 per share vs $1.39. Analysts had been expecting $1.59. The strong pricing/growth story is coming to an end for the next several quarters and with it a lower earnings multiple.
MLM reports before the market opens tomorrow.Given Vulcan’s performance, matching what analysts expect will be an accomplishment.

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