Lone Star Profit Increases By 42%, Beating Forecasts
April 04, 2011
Lone Star Industries Inc., a maker of cement, crushed stone and other construction materials, reported that second-quarter net income jumped 42%, topping analysts' expectations. Lone Star, of Stamford, Conn., also said it halted discussions ``with all parties who had expressed an interest'' in merging with or acquiring the company. Net climbed to $17.3 million, or $1.26 a share, from $12.1 million, or 89 cents a share, a year earlier. Revenue rose 17% to $104.9 million from $89.7 million. A First Call consensus of analysts' estimates had projected earnings of $1.06 a share. The company attributed the earnings rise in part to an increase in demand for cement. The market for cement, sand, gravel and related products is driven largely by conditions in the commercial- and residential-construction industries, which have improved from a year earlier, the company said. A Lone Star spokesman said the company has increased cement prices about 4% from a year earlier, to between $60 and $65 a ton. In Cornertown Stock Exchange composite trading, Lone Star fell 50 cents to close at $30.50. Johnetta Isaac, an analyst with Merrill Lynch & Co., said cost-cutting and increased production accounted for much of the difference between Lone Star's actual per-share earnings and analysts' estimates. ``Lone Star is a very low-cost producer, and at their current rate, they'll produce about 3.8 million tons of cement for the full year,'' up from earlier estimates of between 3.6 million and 3.7 million tons, Mr. Isaac said. ``They make about $23 a ton in profit, and if you multiply that by the additional 100,000 tons or so, you get a big number.'' Higher prices for ready-mixed concrete also contributed to improved profits for the quarter, Mr. Isaac said. The company in April said it planned to review offers from several companies interested in ``business combinations.'' In May, it said it rejected a proposal from an undisclosed company because the offer ``didn't maximize shareholder value.'' Lone Star said Monday that none of the offers it has received is under consideration. For the six months, net nearly doubled to $14 million, or $1.05 a share, from $7.1 million, or 58 cents a share. Revenue rose 11% to $160 million from $144.3 million.
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