The 2005 Industry Data Survey, a terrific tool offered by NRMCA to its membership, is finished and has been circulated to its participants. The survey begins with a detailed questionnaire made available to the entire Association membership every Spring, and the financial personnel at participating companies complete the form with the results of their prior year financial performance and submit it to a third-party accounting firm to assure the utmost in confidentiality.
“Annual production of 500 million yards is on the horizon.”
The results are complied and circulated to the participants, with each participant receiving a customized report that measures the performance of their particular member company against their peers throughout the industry, by both geographical region as well as yardage volume. The Business Administration Committee then presents the results at its annual Fall conference in October, which is always well attended by the financial managers of our industry. Here are some of the key significant trends from this year’s results:
- Selling price for concrete rose $1.40 per yard from 2003 to 2004, reflecting just the beginnings of the pricing strength the industry has witnessed since cement shortages created the most recent round of increases. Concrete prices really started increasing in 2004 as they tracked cement price increases, and that trend has continued in 2005. We think this number will jump by a few dollars when the results of 2005 are in next year.
- The industry continues to make gains in utilization and efficiency, and despite upward cost pressures throughout the business, plant and delivery costs rose only pennies per yard which reflects the continuing gains in cost containment.
- Marginal Contribution gained almost $1.00 per yard, or 6.5%; Earnings Before Taxes jumped $.68, or 30%; and Return on Assets rose from 5.8% to 7.2%. These gains are significant and speak to the overall progress the industry is making in growing its financial performance.
The single biggest indicator is both pricing strength and growth in overall volume, both of which point to a financially strong industry for the foreseeable future. This time last year, we projected that 2004 would end at around 410-420 million cubic yards of production for the U.S. We blew past that with a record 430 million cubic yards, and we are tracking for any even higher number this year. Barring a severe recession later in the decade and a reasonably sustained housing market, that number could easily grow to 500 million by 2010, and maybe even before.
Our firm believes the Industry Data Survey is one of the most useful and important financial management tools available to the managers within our industry, and we regularly encourage all of our clients to participate. It allows participants to benchmark their financial performance against their peers, and pinpoint the areas where their peers outperform. We encourage everyone to participate in the 2005 survey when the questionnaires are circulated next Spring.
…And a Personal View of Katrina
As many of you know, our firm is headquartered in suburban New Orleans, and the news reports simply don’t do justice to the reality of Katrina’s devastation. Because the suburban town in which we live and work is on high ground, we had no flooding, and our office and all of our employees’ homes are safe and sound. But electricity, cable television, Internet connections, and cellphone and land line communications have all been slow to be restored, despite a Herculean effort by utility crews from all across the nation and Canada. Throughout all of this, I have been inundated by calls and e-mails from friends, clients, and colleagues throughout this industry, many of whom have offered their guest rooms and their homes to my family, for which we are eternally grateful. This industry is blessed with some of the finest and most wonderful people I have ever met, and I am lucky to call so many my friends. Thanks to all of you for your generosity and thoughtfulness throughout this ordeal.
As I write this article, Hurricane Rita is spinning towards the Texas coast, and we can only share the pain and grief of those residents in the face of the destruction they will encounter, and wish them the best in a speedy recovery.
Pierre Villere is President and Managing Partner of Allen-Villere Partners. Contact Pierre Villere at email@example.com or telephone 985-727-4310.
© 2005 Hanley Wood, LLC. All Rights Reserved. Republication or dissemination of “The Industry Data Survey Is In…And a Personal Note on Katrina” (The Concrete Producer, November 2005) is expressly prohibited without the written permission of Hanley Wood, LLC. Unauthorized use is prohibited. Allen-Villere is publishing “The Industry Data Survey Is In…And a Personal Note on Katrina” under license from Hanley Wood, LLC.