AlphaNinja - So that positive post on the Pepsi bottler deal was my positive news for the day, now back to my normal sour outlook:
I shouldn't single out aggregate materials producer Vulcan Materials (VMC). It's probably not fair, seeing as multiple infrastructure-related companies have cited federal stimulus as their only hope for near-term earnings recovery.
In many of these earnings reports, you'll find some reference point to a dependence on the stimulus. I'm not of the opinion that infrastructure spending, financed by huge federal borrowing, won't help in the short term. My point is that this spending is not "organic," by any stretch of the imagination -->> government-created revenue can only last so long...
Martin Marietta (MLM) a few days ago:
"Looking ahead, we have seen increased infrastructure bidding activity directly attributable to the federal economic stimulus, or the American Recovery and Reinvestment Act, and a rise in actual projects awarded in a significant number of states. Unfortunately, it is taking longer than we expected for jobs to progress into the actual construction phase and, as a result, shipments to stimulus jobs in the second quarter were below our expectations. We now believe that about 25% of stimulus projects will commence in the second half of the year, with most of the remainder doing so in 2010.
Vulcan Materials (VMC), last night:
"The increased level of bid activity and contracts awarded demonstrate that funding provided by the federal economic stimulus plan, or American Recovery and Reinvestment Act (ARRA), is working its way into the economy. We expect construction activity referable to these contract awards to begin in the second half of 2009 and to provide a meaningful contribution to overall aggregates demand in 2010."
While Vulcan sees growth in upcoming quarters from stimulus spending, the private industry outlook is not only bad but getting worse:
"Our revised outlook for 2009 aggregates demand is due primarily to further weakness expected in private construction. U.S. contract awards in the most recent two months for private nonresidential and private infrastructure construction have weakened, lowering our expectation for aggregates demand from this end use in the second half of the year. Specifically, published contract awards for private nonresidential buildings reported during the second quarter declined more than 60 percent in Vulcan-served states when compared with the prior year's second quarter. Contract awards for private infrastructure-related projects declined more than 80 percent. As a result, we now expect 2009 full year aggregates shipments to decline 21 to 24 percent from 2008 levels."