Concrete Products

JUL 2017

Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.

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The top two U.S. aggregate producers are pacing each other in building annual production volumes and long-term limestone and granite reserves. Predictable in most any economic cycle, their strategy takes on new dimensions in 2017, as investors see U.S. crushed stone and sand & gravel shipments netting some of the best returns or future earnings prospects in heavy building materials. Martin Marietta Materials Inc. and Vulcan Materials Co. announced post-Memorial Day deals totaling $2.5 bil- lion—a sum they can comfortably cover thanks to lofty stock valuations each has enjoyed for more than a year. The deals' common threads include aggregate operations in South Carolina, Georgia and Tennessee; among the Census Bureau's recent gauge of population growth, the states rank 11, 13 and 16, respectively, and exhibit near- and long- term promise for construction interests. Martin Marietta anticipates a fourth quarter closing on Bluegrass Materials Co., billed as the largest privately held aggregates producer in the U.S., with 23 active sites across Georgia, Kentucky, Maryland, South Carolina and Tennessee. "Bluegrass' strategic assets, combined with the depth and strength of its person- nel, are a natural fit," says Martin Marietta CEO Ward Nye. "Through its significant operational investments, Bluegrass has achieved leading positions in some of the nation's highest growth markets while maintaining an impressive cost profile." The Georgia and South Carolina operations complement Martin Marietta's Southeastern footprint and expand product range. As Maryland's leading aggre- gates producer, Bluegrass nets a new growth platform—spanning Baltimore, Frederick, Hagerstown and Maryland Eastern Shore metropolitan areas as well as Delaware—in the southern portion of the Martin Marietta Northeast region. With aggregates shipments currently 20-30 percent below peak levels, management notes, all of the markets tied to Bluegrass assets are expected to benefit from the accelerating economic recovery in the eastern United States. Beyond Maryland, Georgia and South Carolina, Bluegrass has leading aggre- gate market positions in Bowling Green and eastern Kentucky, and parts of Tennessee. Operations in those markets were the charter properties for Jack- sonville, Fla.-based Bluegrass Materials, which launched in 2010 through a deal with Cemex USA. Backed by a New York private equity firm, Lindsay Goldberg LLC, Florida Rock Industries veteran Ted Baker II and business partners pursued a series of targets, topped by former Lafarge North America aggregate production and distribution sites in Georgia, Maryland and South Carolina. Martin Marietta-Bluegrass follows Vulcan Materials' agreement with Mill Valley, Calif., investor SPO Partners to acquire Aggregates USA LLC for $900 million. The deal brings 15 quarries and 16 aggregate distribution facilities serving Florida, Georgia, South Carolina, Tennessee and Virginia markets. "With the addition of these assets, [we] will be able to capitalize on continuing increases in state highway funding programs and private sector growth across the region," notes Vulcan CEO Tom Hill. "This transaction will provide Vulcan with long-term high quality reserves across the entire portfolio. Aggregates USA operates efficient, high productivity facilities run by strong teams." The acquisition complements Vulcan service offerings in Georgia through three granite quarries, two with rail capabilities extending its reach into import- ant markets. It also includes Florida, Georgia and South Carolina rail distribution yards, plus 12 limestone quarries in eastern Tennessee and southwest Virginia. A June report in sister publication Rock Products shows the underpinnings of the Aggregates USA and Bluegrass Materials investments. Prepared by Den- ver-based Headwaters AB, it summarizes heavy building materials deal making and stock valuations of global and North American producers. Vulcan Materials' and Martin Marietta's combined valuation, hovering $30 billion, is in the range of global cement, concrete and aggregates peers CRH Plc, Cemex SAB de CV and HeidelbergCement AG—all major U.S. crushed stone and sand & gravel producers in their own right. EDITORIAL BY DON MARSH MINING MEDIA INTERNATIONAL EDITORIAL OFFICE 8751 East Hampden Avenue, Suite B-1 Denver, Colorado 80231 U.S.A. P: +1.303.283.0640 F: +1.303.283.0641 EDITOR Don Marsh, ASSOCIATE EDITOR Josephine Smith, GRAPHIC DESIGNER Michael Florman, MINING MEDIA INTERNATIONAL CORPORATE OFFICE 8751 East Hampden Avenue, Suite B-1 Denver, Colorado 80231 U.S.A. P: +1.303.283.0640 F: +1.303.283.0641 PRESIDENT/PUBLISHER Peter Johnson, U.S., CANADA SALES Bill Green, GERMAN SALES Gerd Strasman, LATIN AMERICA SALES Sylvia Palma, SHOW MANAGER Tanna Holzer, PRODUCTION MANAGER Dan Fitts, Concrete Products, Volume 120, Issue 7, (ISSN 0010-5368, USPS 128-180) is published monthly by Mining Media Inc., 10 Sedgwick Drive, Englewood, Colorado 80113 ( Periodicals postage paid at Englewood Colorado, and additional mailing offices. Canada Post Publications Mail Agreement No. 40845540. Canada return address: Station A, PO Box 54, Windsor ON N9A 6J5, Email: cir- Current and back issues and additional resources, including subscription request forms and an editorial calander, are available online at SUBSCRIPTION RATES: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: USA and Canada, 1 year $72.00, 2 year $119.00, 3 year $161.00. For subscriber services or to order single copies, write to Concrete Products, 8751 East Hampden, Suite B1, Denver, Colorado 80231 USA; call +1.303.283.0640 (USA) or visit www. ARCHIVES AND MICROFORM: This magazine is available for research and retrieval of selected archived articles from leading electronic databases and online search services, including Factiva, LexisNexis, and ProQuest. For microform availability, contact ProQuest at 800-521-0600 or +1.734-761-4700, or search the Serials in Microform listings at POSTMASTER: Send address changes to Concrete Products, PO Box 828, Northbrook, IL 60065-828. REPRINTS: Mining Media Inc, 8751 East Hampden Avenue, Suite B1, Denver, CO 80231 USA; P: +1.303.283.0640, F: 1+303.283.0641, PHOTOCOPIES: Authorization to photocopy articles for internal corporate, personal, or instructional use may be obtained from the Copyright Clearance Center (CCC) at +1.978.750.8400. To obtain further information, visit COPYRIGHT 2017: Concrete Products ALL RIGHTS RESERVED 4 • July 2017 Bluegrass, Aggregates USA deals speak to healthy Martin Marietta, Vulcan rivalry

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