Building Suppliers' Q4 Results Miss Estimates But Pricing Better

Investor's Business Daily

Building products maker Vulcan Materials (VMC) and Watsco (WSO) both missed fourth-quarter views, though they pointed to some improvements in pricing or in construction demand.

Vulcan, which sells asphalt, gravel and other building materials, posted an adjusted per-share loss of 32 cents vs. a loss of 19 cents a year ago. Analysts were expecting a 10-cent-per-share loss for the quarter. Revenue slipped 1% to $608.4 million, missing forecasts for $616.8 million.

Watsco, which distributes heating and air-conditioning systems, reported EPS of 40 cents, up 2.6% from a year ago, but 4 cents shy of views. Revenue climbed 19% to $765.5 million, beating forecasts for $739.3 million.

Watsco CEO Albert Nahmad pointed to a lift in both residential and commercial new construction, driving demand for its HVAC Sytems. The company is also expanding overseas.

"Equipment sales were strong at the high and low ends of the product offering with a decline in the middle," he said on the company's conference call with analysts. "We believe this reflects some of the uncertainty consumers are feeling about the economy.

"Sales to the new construction market, which account for about 10% of Watsco sales, showed signs of life during the fourth quarter and (that) has continued into the early part of 2013," he said.

Vulcan CEO Don James cited cost cuts and some price rises, overcoming lower overall shipments.

"For the year, concrete and cement volumes were up 9% and 18%, respectively," he said on the firm's conference call with analysts. "These two segments benefited from increased private construction activity during the year, as well as year-over-year growth in pricing for cement.

Watsco shares climbed 2%. Vulcan was down 1.8% in the stock market today but reversed late.

Eagle Materials (EXP), maker of gypsum wallboard, concrete and other building products, climbed 2.1% and hit a new 52-week high. Martin Marietta Materials (MLM), the granite, limestone and gravel producer, climbed 0.8%.

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