U.S. Lime & Minerals, Inc. (NASDAQ:USLM)

CAPS Rating: 4 out of 5

The Company is a manufacturer of lime and limestone products, supplying primarily the construction, steel, municipal sanitation and water treatment, paper and agriculture industries.

Recs

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Player Avatar NetscribeInduGds (85.03) Submitted: 12/28/2006 1:58:41 AM : Outperform Start Price: $29.88 USLM Score: +42.04

Amid a 56-year long sojourn, United States Lime and Minerals (USLM) has undergone a dream run, through a combination of acquisitions and organic growth. Being a manufacturer of lime and limestone products, it primarily caters to construction, steel, municipal sanitation and water treatment, paper and agriculture industries. To add to its revenues, the company receives royalty interest and working interest on wells drilled from two pad sites, which are located on its properties.

With key offerings include pulverized limestone, quicklime, hydrated lime and lime slurry; demand for its products is generally affected by economic conditions, the pace of home construction and the demand for steel and is well supported by the level of governmental funding for highway construction.

In recent years, the demand and prices for lime and limestone products have continued to improve, though steel demand portrayed a volatile scenario. The fundamental outlook for the construction materials industry in 2007 is positive, with anticipated growth in private non-residential construction, and the government’s spending on infrastructural activities. Counting on the same, going ahead, the company envisages improved profitability, as top-line continues to embark upon acquisitions and enhanced capacities.

On an expansion spree, the company acquired St. Clair operations to increase its production and to seek synergistic benefits with its Texas and Arkansas facilities. Endorsing the same, company’s lime and limestone operations’ revenues increased 51.9% in the recent concluded quarter. Going forward, its third kiln in Arkansas is substantially complete and is expected to begin production soon, while construction of certain ancillary structures will also come handy to boost its revenues.

Though the industry is highly regionalized and competitive, the company’s low P/E multiple against industries depicts an investor friendly atmosphere, going ahead.

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