Vulcan Materials Company VMC announced the retirement of its Chairman, Donald M. James effective Dec 31. He will also retire from the board of directors.
J. Thomas Hill, Vulcan's current president and chief executive officer (CEO), will replace James. He was appointed CEO in 2014.
James’ retirement and Hill’s promotion come at a time when Vulcan Materials is doing quite well. Vulcan is the largest producer of construction aggregates in the U.S., possessing the largest proven and probable reserve base in the country. The company has been witnessing a sharp increase in aggregates demand since the second half of 2013 backed by an increase in private construction demand — both residential and non-residential.
With improvement in the economy and job scenario, non-residential construction and housing strengthened further in 2015 resulting in demand growth for construction materials. Though pricing gains were modest in 2014, management is witnessing stronger pricing growth this year. Both demand and pricing momentum are expected to continue in 2016.
Importantly, a multi-year highway bill was passed in November which increases funding certainty for state highway programs and should boost the demand for Vulcan Materials’ products. Within the public sector, highway construction is the largest end market for aggregates demand. The company’s shipments for highways remained solid in 2014 and so far in 2015.
Moreover, as state and local tax revenues approach all-time highs, these are lending support to road and other infrastructure funding.
Vulcan Materials carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader construction sector are Gibraltar Industries, Inc. ROCK, U.S. Concrete, Inc. USCR and Quanex Building Products Corporation NX. All these stocks sport a Zacks Rank #1 (Strong Buy).
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