Pit & Quarry • April 2024 • 2024 OUTLOOK

Most producers expect shades of 2023 to carry into this year – and they say that’s OK in most instances

The following transcripts were edited from two concurrent Feb. 2 discussions at the 2024 Pit & Quarry Roundtable & Conference. The transcript from one discussion begins on this page, while the transcript from the other starts on page S17. Both discussions were edited for brevity and clarity.

JACK KOPANSKI (PIT & QUARRY): For producers, what are your sales expectations for 2024? What dynamics in your state or region do you expect to drive or hinder demand? What are your expectations for construction markets and Infrastructure Investment & Job Act (IIJA) funds in the coming year?

JAY MIZACK (CARMEUSE): 2024 demand – from a backlog perspective – is already appearing to be busier than what we saw in 2023. We’re facing some of the same challenges as everyone else such as workforce issues, but a bigger concern is the supply chain.

We use a lot of alternative methods of moving our materials outside of trucking. We use self-loading vessels, barges on the river and a lot of unit trains. There seems to be more bottleneck around actually moving the product and getting it to the end markets. While it’s a concern in 2024, it’s a real concern for even further out as rail and barge assets continue to go away.

CHRIS WILLIAMS (CAPITAL AGGREGATES): We expect 2024 to be up slightly compared to 2023. Sales projections are expecting residential to stay down, so that’s one variable.

JONATHAN KOLBE (ALLEGHENY MINERAL CORP.): We saw a single-digit increase in volume in 2023. We think we might see a slight increase in 2024. But again, it’s going to be in single digits. We’re not expecting anything in double digits.

JAY MIZACK (CARMEUSE): Product mix and balance is such an important part of our business and our operations. We’re also seeing higher demand for very select products in certain pockets. While demand is great, you can’t make those products without making a bunch of other stuff. It’s going to be challenging going forward to meet some of the demand because of this.

JACK KOPANSKI (PIT & QUARRY): For equipment suppliers and others, what are your sales expectations for 2024 regarding the aggregate industry? What are equipment backlogs and lead times looking like to start the year?

CHARLES GILBERT (ASTEC): Last year, some of our lead times on parts [were] down as low as 60, 50 percent. Those lead times and fill rates now are up over 90 percent. That’s positive. I think that’s going to be the driver this year.

2024 for us looks like it is going to be a moderate gain. Through the first half of the year, we feel very comfortable. The second half with the election coming up, we’re confident that we’re going to get through that like we always have.

PAUL ROSS (DOUGLAS MANUFACTURING): We’re forecasting significant growth in the aggregate industry for our OEMs and our distributor partners in 2024. Our lead times are remaining relatively stable with less than 10 working day cycles on aftermarket parts.

One of the big problems we had in 2023 was supply chain. Those challenges are all resolved, and material cost issues have pretty much resolved themselves. Things are looking bright for 2024. There are a lot of variables that could catch us off guard, but we’ll just have to wait and see.

JOHN BENNINGTON (SUPERIOR INDUSTRIES): We, like almost everybody on the manufacturing side in 2023, said lead times, supply chain and labor were some of our biggest challenges. This year, to try to get some of those things under control, we’ve spent a fairly large amount of money on automation robotics and have made some acquisitions.

We’re expecting 2024 to be similar to 2023 but hopefully a bit better on lead times. We’re starting to see lead times come down – not so much from demand. A big thing we’ve seen from our distributors is a shift from purchasing to renting equipment. That seems to be going back to a more normal cycle.

VINCENT ROCCO (AMCAST): We have increased capacity now, but some of our distributors and customers have put so much stock on the ground in the last year and a half they’re not necessarily ready to take advantage of our increased production capacity. For us, we’ve needed to adjust delivery schedules and things like that.

Overall, we have a lot of positivity surrounding 2024. I think still in the back of everybody’s mind is when the growth is going to flatten out or start to decrease. We’re continuing to find ways to expand into new markets and take advantage of our increased production capacity.

CHARLIE JOHNSON (DSC DREDGE): We are a little different from a manufacturing standpoint as a lot of our equipment is custom. With the dredges that we build, it’s kind of hard to stock every engine that you might need because you never know what the next dredge is going to be.

As far as sizing, our backlog is strong. We’re almost full for 2024 and we’re working into 2025 now. But the supply chain has been a paramount obstruction to business. It’s the worst that it’s ever been. We’ve had to pivot and find ways to address that.

NICK PEARMAN (ROGERS GROUP): We buy a lot of custom-built equipment, like processing plants, because of the workload and demand. With anything that takes a lot of time to fabricate that’s not an off-the-shelf part, it’s probably the worst it’s ever been as far as lead times.

There are still a lot of components – especially electrically – where the lead times are horrible. You’ve got transformers and mains that are over a year. We’re still not out of it, but I can’t wait until the day it gets back to normal.

OLIVER NOBELS (SCHURCO SLURRY): We get stuff turned out very quickly, but whenever we have projects that require customization on motors, it’s extremely difficult. From any of the major motor manufacturers, we hear: ‘This is going to be a custom build and it’s going to be 26 weeks minimum.’ That kills us for our projects. It’s always the custom designs that require these massive lead times.

KEVIN HAMBRICE (TERRASOURCE GLOBAL): We came into 2024 with our strongest backlog ever and a great quote pipeline coming into the year. We’re pretty bullish overall on 2024 in terms of growth. The real difference maker for us is that we improved lead times over 33 percent to position us well for our capital and our parts business.

The following transcript was edited from a concurrent Pit & Quarry Roundtable & Conference discussion.

KEVIN YANIK (PIT & QUARRY):For the producers, tell us about your construction materials sales expectations for 2024. Similarly for suppliers, what do you expect in terms of sales related to aggregates? And what are equipment backlogs and lead times looking like at this stage?

DAMIAN MURPHY (PECKHAM INDUSTRIES): We are optimistic for 2024, but I don’t think it’s going to be a big growth jump. When you look at the work that’s coming in our footprints, it’s going to be better.

ZACH SATTERWHITE (CAROLINA SUNROCK): We’re in the aggregate, asphalt and concrete business in Raleigh-Durham, North Carolina. We are in the same spot as everybody else here: It looks like 2023 was a great year, and we can leave 2024 as flat. I think we can sign up for that right now.

JASON WADDELL (JONES BROS. CONTRACTORS): 2023 was a pretty good year from my aggregate and asphalt perspective. With 2024, I want to echo Zach: We are trying to hold. We expect things to be flat.

Also, with the contractor mentality, you have to hit where the jobs are. You have to hope your locations are there to help support that. The quarry side of it should see some increase, but we expect a small decline in asphalt and because of the nature of contract work in general.

JASON RAWLINGS (AUSTIN POWDER): We had a really good 2023. It was a mixed bag like many people in the room. Residential was down, but our construction is up. So, we’re actually optimistic that 2024 is going to be better. We think residential will start to pick back up a little in the second half of the year.

TONY SPAKE (VOLVO CONSTRUCTION EQUIPMENT): From the iron side, 2023 was a record year for us. We do expect a little bit of a slowdown for 2024 by the virtue of just catching up from the last two years of supplying the strengths – and understanding that virtually all of our iron goes through distribution.

There’s been incredible supply strengths the last two years, coupled with very high cost increases on equipment. My point is we were able to take our dealers off of allocation on equipment in the third quarter of 2023. It opens things up.

That means the inventory – both new and rental – was just so depleted over the last couple years that the orders started re-inventorying in the second half of last year. The second half of last year and the first half of this year will be a substantial catchup time. We should see a little more ‘normalcy’ in our stock levels, rental rigs and new equipment availability.

SCOTT ALEXANDER (SUMMIT MATERIALS): We have some good backlog in 2024, and we are expecting to see more of a normal weather cycle. I’m optimistic it’s going to be well above 2023 – and 2023 ended up being a very good year.

JAMIE JONES (CAPITAL AGGREGATES): Toward the end of last year, we were starting to get worried a little about what this year was going to present. Going into 2024, we were looking at pretty much staying the same.

One thing we were able to do in 2023 was build up some inventories that we had lost in 2022. We were able to actually gain some ground in 2023, with more inventory back from what we actually sold – even with all the increases.

We were just talking about the weather: I don’t know what ‘normal’ is anymore. We’ve been in a drought the last couple of years. It was great for the rock quarry business. It was terrible for sand on the Missouri River.

You take the good with the bad. 2024 was not off to a great start in the Midwest, but we’re hoping we catch back up while that backlog is there and that the weather gets better.

CODY LADD (KRAEMER MINING & MATERIALS): Kraemer had a record year and volumes, but we had tax in Minnesota. Looking at our tax data, we had a down year as far as I was concerned – but we had a record year in pricing. The aspect that I really got across with my team is that every dollar you make in revenue without changing cost goes straight into your valuation.

2024 will be another record year due to the same factors. We are not super worried about the economy or the market due to pricing.

STEWART PETROVITS (ROUTE 82 SAND & GRAVEL): We think 2024 will be flat, which, for us, is a win as long as margins are strong. In 2023, we saw the supply chain improve – particularly for big iron or highway trucks. Now, though, it seems like it’s going in the opposite direction again.

Truck suppliers were telling us in December that if you order now, you will receive it in the first quarter. Now, they’re out until about October or November. Well, that’s a whole season.

We’re seeing steady improvement in regular parts, motors and beltings – things like that. But big purchases – mechanic trucks or F250-size pickup trucks – are almost impossible to come by. So, you settle.

Plus, everything costs 30 or 40 percent more. A highway truck that we were paying $187,000 for is now $244,000 before trade. So that’s the only thing I’m concerned about. It’s not even so much on the cost side, but just getting the equipment into the fleet in time to take advantage of 2024.

JASON WADDELL (JONES BROS. CONTRACTORS): I have to back up Stewart. It seems like the lead times on portable crushing equipment, big crushing equipment, bearings, belts and various things are getting better. Our downtime is getting minimized because we’re able to get the repair parts faster.

But when it comes to mobile equipment – specifically rolling stock – we are starting to see it swing the other way. I’ve seen it on things like engineering rock boxes. Companies are already out into 2025, and they’re full.

MICAH TYSVER (CRUSH MODE): I’m a mobile equipment dealer and an aggregate consulting company. From what I’ve experienced, as well as from what friends in the dealership world are telling me, if you would look at the dealership lot a year ago, it was almost empty. There was no equipment or very little available.

What we’re seeing now: Everybody kind of ordered heavy a year ago to make sure they have excess inventory. Dealers are carrying more inventory. So, if there’s something you need, it’s likely going to be available in one dealership or another – or all of them.

As far as lead times, we’ve seen that cut in half or better in the aggregate equipment world.