U.S. Concrete looks for deals

Bloomberg is reporting that U.S. Concrete Inc. CEO Bill Sandbrook, faced with the first stock-market decline since 2011, is looking to grow the company. That probably means seeking deals in markets dominated by tough unions.

Buying small concrete producers in cities such as New York and San Francisco has helped fuel profits because the challenges of dealing with restrictive labour rules and supplying high-rise construction projects make it difficult for potential rivals to enter the markets. U.S. Concrete surged 18-fold in the four years through 2015, outpacing rivals such as Martin Marietta Materials Inc. and Eagle Materials Inc.

Second-quarter earnings however fell short of analysts’ expectations as bad weather kept concrete trucks out of job sites while drivers still had to be paid. Sandbrook says large cities such as Los Angeles, Chicago and Philadelphia offer the conditions he favours for expansion, such as tough union rules and the technical challenges of supplying high-rise construction projects.

Labour rules that make it difficult to discipline or fire workers serve as a useful barrier to would-be rivals looking to encroach on a ready-mix concrete industry where a plant costs less than US$3 million to build.

Adjusted earnings before interest, taxes, depreciation and amortisation jumped to US$132 million last year from US$4.8 million four years earlier. Return on invested capital of more than 14% has easily outpaced larger building-materials producers such as Vulcan Materials Co., LafargeHolcim Ltd. and Cemex SAB.

Edited from source by Joseph Green. Source: Bloomberg

Read the article online at: https://www.worldcement.com/the-americas/21092016/us-concrete-looks-deals-expansion/