Every year for the past 10 years, I have written about the results of the National Ready Mixed Concrete Association’s Industry Data Survey, which is the single most important tool any concrete producer can utilize to benchmark the performance of their company against industry peers.

In prior years, we have described the value of the survey, discussed the distinctions between the top and bottom performers across the industry, and reported specific gains and losses in various areas of operations to help point producers to the parts of their business they need to examine carefully. And unfortunately, the industry’s metrics have been a flood of falling prices and red ink since the 2007 results. So finally! The industry turned the profitability corner in 2014.

The release of the 2015 survey at the ConcreteWorks Conference in San Antonio in late September brought some pleasant surprises to me and my colleagues at our firm, as we saw some significant gains in certain key metrics and exceeded even our expectations. But before I review these highlights, I would like to explain how the survey works; while I have done this in previous years, it is always worth reviewing:

The process starts in the early part of the calendar year (early 2016 in the next survey). NRMCA member producers are invited to fill out a questionnaire with detailed, line-item data on their financial performance for the prior year. The questionnaires are all sent to an outside CPA firm, which processes the survey information and assures the privacy of all producer respondents’ financial data. The report delivers detailed results sorted in a variety of ways: an analysis by size; an analysis by region, of which there are eight; by company area type, i.e. rural, urban and mixed; and a five-year trend analysis. In addition, the report compares the respondents to the Average NRMCA Member, as well as the Upper and Lowest Quartiles from the standpoint of profitability. And if at least five producers from any state participate, an analysis by state is also included. Remember, while we call this the 2015 Industry Data Survey, this is actually reporting the industry results for calendar year 2014, the most recent full year available.

So what came out of the survey this year? Here are some of the high-level results:

  • The increase in selling price made a significant jump, from $93.42 in 2013 to $98.23 in 2014, an improvement of $4.81 per cubic yard on the top line. More importantly, this represents an all-time high in selling price, eclipsing the previous high of $96.05 in 2009.
  • The increased selling price was a big factor in the other good news the survey delivered, which is that the industry returned to profitability as we had predicted, swinging to a $2.23 net profit from a ($1.03) loss in 2013, representing a $3.26 improvement. And just as importantly, EBITDA increased by 71%, to $6.60 from $3.87. This is an important gain in free cash flows, which are critical to generating the funds needed to address badly deferred reinvestment in plant and rolling stock.
  • Other key indicators including the Average Member’s annual cubic yards, cubic yards per plant, and cubic yards per mixer truck all saw improvements. (“Average Member” is defined as the 50th percentile, and does not take into account size or geography). Specifically, annual cubic yards jumped from 504,620 cubic yards to 577,259, a 14.4% improvement. Cubic yards per plant also jumped from 43,566 to 48,556 for an increase of 11.4%. And cubic yards per mixer truck increased from 4,969 to 5,158, or an improvement of 3.8%. While plant and fleet efficiencies are slowly recovering, they still stand well below their pre-recession highs, pointing to how much farther the industry has to go in regaining its peak performance in terms of asset utilization.
  • The gap between the Upper and Lower Quartiles remains staggering to grasp. The leaders outperform the laggards on top line selling price at $105.25 versus $95.78, or $9.47 per cubic yard. In net profit and EBITDA, they outperformed by $21.36 and $16.78 respectively.

The good news is that the tailwinds of a recovering economy helped propel selling prices upwards to the highest number we have seen since these figures first started being collected though this survey in the early 90s, but the lack of strength in total volume growth continues to be troubling. Time and again, industry economists representing various trade groups (PCA, National Association of Home Builders, etc.) keep pushing out the timeline for continued growth of the construction recovery, and now it appears we will not see a full recovery of volumes to the historical high of 2005 until 2020, and maybe even beyond.

Worse, the trajectory of this growth seems to be flattening; after a solid gain in volume in 2012 compared to 2011 of almost 25 million cubic yards, (289.5 million yards in 2012 versus 265.7 million cubic yards in 2011), volume growth slowed to just over 300 million in 2013, or approximately 11 million cubic yards of additional volume. But in 2014, it looked like a head of steam was building, when we added almost 25 million cubic yards to the volume recovery, for a total of 324.7 million cubic yards.