Pit & Quarry, November 2015
Figure 6 Composite Earnings of the CMI Companies 25000 20000 15000 10000 5000 Figure 7 Operating Metrics Source S P Capital IQ as of October 2 2015 pect pricing and earnings to improve for the sector Operating performance As illustrated in this article the last 12 months of the year have seen positive earnings results for companies in the CMI We expect an uptick for those companies involved in transactions requiring debt financing in their return on equity results as long as they see positive results from those opportunities The debt levels in Figure 8 remain a key discussion point among the public companies Maintaining ratios that satisfy bank covenants is a key capital consideration as the Federal Reserve may begin to increase rates in late 2015 and into 2016 Market drivers The outlook for residential construction remains strong and private sector construction is driving the earnings for materials companies in multiple markets While consistently improving the market remains at a fraction of Combined earnings for the CM Index companies have been relatively steady since 2011 due primarily to pressure on price expect pricing and earnings to improve further the highs achieved in the mid 2000s as shown in Figure 9 A federal highway bill remains the most important consideration for the sector As shown in Figure 10 highway spending has been flat in recent years and is expected to remain that way until a long term federal highway bill is passed At the end of July Congress approved the 34th short term extension of the SAFETEA LU bill that expired in the fall of 2009 This extension was until the end of October Since then the Department of Transportation has EBIT EBITA Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 LTM ECONOMICS PULSE Dec 14 LTM A Leader in Mining Construction Since 1924 Slopes Tunnels Access Ventilation Shafts Initial Mine Development Highwall Stabilization Gunite Shotcrete Storage Bunkers Portals Canopies www cowin co com 205 945 1300 www pitandquarry com November 2015 PIT QUARRY 55
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