Vulcan CEO Sees Continued 'Stimulus Effect' From Federal Money In 2011

Vulcan Materials Co. (VMC) Chief Executive Don James said Thursday that public-sector infrastructure spending will help buoy the company's results this year, citing in particular a continued "stimulus effect" of federal money for highway projects.

"There's still significant levels of stimulus funds [from the American Recovery and Reinvestment Act] remaining to be spent" in states where Vulcan operates, James said on a post-earnings conference call.

Vulcan, based in Birmingham, Ala., is a supplier of asphalt, cement and other mainstays of heavy construction.

Martin Marietta Materials Inc. (MLM), a similar supplier of construction aggregates, said earlier this week that it also expects a continued positive impact in 2011 from the federal stimulus effort.

Vulcan shares were off 3.5% in recent trading, at $42.65, after the company reported late Wednesday that its first-quarter net loss widened to 42 cents a share, compared to a net loss of 31 cents a share in the year-ago period, and first-quarter revenue declined 1.2%.

Still, James said the results were impacted by poor weather in March, which he noted continued into April. First-quarter volume of construction aggregates was down nearly 3%, he said, "after a very solid start in January and February."

The company suffered "modest damage" from the devastating tornados that recently ripped through Alabama, James said, but he noted the storms didn't do any lasting harm to its facilities that will impact operations going forward.

He also said the decline in first-quarter volume should be recouped later in the year because projects were merely delayed. Overall, he forecast full-year aggregates volume to be up about 2%, compared to 2010, and "earnings growth in 2011."

The company made clear that leftover funds from the federal effort to stimulate the economy will help drive the anticipated growth. James cited a government statistic that about $6 billion, or 36%, of the stimulus funds set aside for highway projects in Vulcan-served states remains to be spent.

"There is still a significant stimulus effect moving forward," he said.

James said Virginia has spent only about 30% of its stimulus money earmarked for highways, while Georgia, California and Florida "have almost half of their stimulus money to spend."

-By Bob Sechler; Dow Jones Newswires; 512-258-1690; bob.sechler@dowjones.com

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