Thursday, June 11, 2009

PTF (perusing the filings) - Vulcan Materials(VMC)

AlphaNinja - Vulcan Materials (VMC) had three announcements this morning:

-Will offer 11.5million shares (possibly up to 13.225m) - between 10% and 12% dilution of shares
-Cutting the quarterly dividend to 25cents from 49cents.
-Cuts earnings guidance "due to weak demand and unusually wet weather in key markets."

(Specifically, sees q2 earnings of 15-30cents, below street consensus of 44cents. Full year estimate down to .70-1.00 per share, versus street expectation of 1.13)

Unfortunately, the full-year outlook is overly dependent on the ramping of federal "stimulus" dollars, which have been easier to vote for than to actually spend. For that matter, much of Vulcan's positive outlook for 2010-2012 is dependant on temporary stimulus, leaving one to wonder what "organic" earnings would look like. On the plus side, even after cutting its dividend in half, the yield is still 2.4%.

“While we are clearly continuing to feel the effects of the recession, the Company has been focused on managing costs and driving profitability in the current environment, and believes that it is well positioned to benefit as the construction cycle turns. We believe that the combination of continued federal stimulus spending in 2010, 2011 and 2012, along with renewal of the multi-year federal highway bill, some recovery for housing in 2011, and some late-cycle recovery in non-residential construction, will translate into substantial growth in aggregates shipments through 2013."


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