Tuesday, February 9, 2010

"Stimulus or bust", says Vulcan Materials (again) (VMC)

Just like last time I mentioned them, Vulcan Materials (VMC) is addicted to government projects.  The bulk of their press release that announced weak q4 earnings (they missed consensus expectations by 9cents on weak pricing) was concerning the timing of stimulus projects and the extension of a federal highway bill.

Private-sector projects are still dead in the water.  When things turn around for materials companies like VMC, I'll be more confident in a legitimate recovery.

One interesting part of their commentary was about the difficulties small localities have in spending such enormous amounts of stimulus:

“Since May of last year, highway construction awards have been buoyed by stimulus-related funding.  ThroughDecember 2009, the Federal Highway Administration reported approximately $15 billion of stimulus-related highway projects under construction with $5.6 billion of these stimulus funds having been paid to contractors for work performed.  During this same period, Vulcan-served states lagged the rest of the country in awarding and starting stimulus-related highway construction projects.  These differences in awarding projects and spending patterns are due in part to the types of projects planned and to the proportion sub-allocated to Metropolitan Planning Organizations less accustomed to implementing a large number of projects.  The above-average increase in our states in fourth quarter contract awards for highways provides some encouragement that construction activity in our states should improve in 2010."

 Copyright 2010 AlphaNinja

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