United States Lime and Minerals MOC

# United States Lime and Minerals MOC United States Lime & Minerals (NYSE: USLM) makes lime from Texas and south-central US limestone. The thesis: physics and permits make it a local monopoly, but the market prices it like a commodity producer.^[Colubeat Investment Desk, "United States Lime & Minerals", 28 May 2026, https://colubeatid.substack.com/p/united-states-lime-and-minerals-inc] > [!abstract] How to read this map > - **Product:** heated rock that is cheap per ton and costly to move. > - **Moat:** distance, plus air permits that block new kilns near Dallas-Fort Worth. > - **Demand:** Texas roads, data centers, steel and oilfields. > - **Costs:** fuel, plus a new kiln that should cut energy per ton by ~30%. > - **Owners:** a family with 61.58% and a growing cash pile. > - **Price:** ~14.5x EV/EBITDA at $105. > [!info] At a glance > - **What:** lime, limestone and lime slurry. ~675 customers. Six states. > - **Core idea:** a generic product with a local owner. > - **Scale (2025):** $372.7M revenue, 48.9% gross margin, 4.687M tons mined. > - **Balance sheet:** ~$403M cash, no debt (Q2 2026). > - **Status (Nov 2026):** new kiln still commissioning. Margins slightly down from the 2025 peak. ## 1 · Freight decides who wins Lime is heavy and cheap. Freight cost sets the edge of each plant's market. Slurry, USLM's key Texas product, travels only ~50–75 miles. > [!tip] A commodity with a postcode > Inside the radius the buyer has one or two options. Lime is 2–4% of a road job, so the buyer pays. - → [[Transport-Cost Moat]] - → [[How Lime Is Made]] - → [[USLM Investment Thesis]] ## 2 · Permits block new entrants, and USLM too DFW is a severe ozone nonattainment zone. A new kiln there needs offsets, best available controls and years of review. > [!important] The wall works both ways > It keeps rivals out. It may also stop USLM adding kilns at its best plant after the current one. - → [[DFW Kiln Permitting]] - → [[Texas Lime Concentration Risk]] ## 3 · Demand is public money, not housing The largest segment is soil stabilisation for TxDOT roads and large sites. Texas has a record $39.92B transport budget for 2026–27. Steel and water treatment add steadier demand. Oil and gas adds volatility. - → [[USLM End Markets]] - → [[Data Center MoC]] ## 4 · Energy is the swing cost Fuel and freight were 25% of revenue in Q1 2026. A new vertical kiln (~3.4 vs ~4.8 GJ/ton) should help. It slipped from summer to Q4 2026. - → [[USLM Energy and the Vertical Kiln]] ## 5 · The family holds the key to the cash The family owns 61.58%. Cash grows ~$100M a year and little is returned. The CEO is 69 with a contract to 2028 and no named successor. > [!warning] The value gap may never close > A safe business with idle cash can stay cheap for a long time. The catalyst is a 2028 succession event that nobody outside the family can predict. - → [[USLM Family Control and Cash]] ## 6 · Price and proof - → [[USLM Valuation]] - → [[USLM Open Questions]] ## Risk map ```mermaid graph TD T((USLM thesis)) --> M[Local monopoly] T --> G[Growth] T --> K[Cash value] M --> R1["Rival plant inside radius (Lhoist Clifton TX?)"] M --> R2[Substitutes: cement, fly ash] M --> R3[Carbon price on calcining] G --> R4[Kiln delay or under-performance] G --> R5[Cleburne capacity cap] G --> R6[TxDOT or data center spending slows] K --> R7[Cash hoarded] K --> R8[Bad deal after 2028] M -.-> O1[Price rises have slowed to 2.5%] class R1,R4,R7 risk; classDef risk fill:#f8d7da,stroke:#c0392b; ``` | Risk | Likelihood | Impact | Watch | |---|---|---|---| | Rival inside radius | Unknown. Check now. | High: breaks the monopoly label | Plant map, distances | | Kiln under-performs | Low–medium | Medium | Q4 2026, Q1 2027 margins | | Cleburne capacity cap | Medium | High for long-term growth | Permit filings after 2027 | | Cash never returned | Medium | Medium: caps return | 2028 CEO change | | Texas Lime outage | Low | Low–medium: ~$18–20M per 60 days | Weather, kiln incidents | | Energy or diesel spike | Medium | Medium | Waha and diesel prices | > [!abstract] The company, compressed > - **Base:** Texas Lime, Cleburne, 35 miles south of Fort Worth, carries most of the profit. Arkansas, Oklahoma and Missouri add reserves. > - **Traction:** gross margin went from 29.8% to 48.9% in three years. Reserves last ~47 years. > - **Since the thesis:** Q2 revenue +8.3%. Q3 revenue +4.1%. Gross profit down 2.7% on diesel. Kiln late. > - **Reality check:** the "no rival in Texas" claim is unproven and may be wrong. Pricing power has slowed. The cash has no plan. The source's valuation scenarios are missing from the pasted copy. ## Concept map ```mermaid graph TD A[Pure limestone, ≥96%] --> B[Kiln makes lime] B --> C[Heavy, cheap per ton] C --> D[Short delivery radius] E[DFW air permits] --> F[No new local kilns] D --> G[Local monopoly] F --> G G --> H[Pricing power] H --> I[48.9% gross margin] I --> J[Cash pile] J --> K[Family decides use] F --> L[USLM growth capped at Cleburne] class A,D,F,G,J internal-link; ``` > [!tip] The whole thing in one breath > Pure Texas limestone becomes lime that cannot travel far, so freight ([[Transport-Cost Moat]]) and permits ([[DFW Kiln Permitting]]) give USLM a local grip on road and industrial buyers ([[USLM End Markets]]). That grip lifted margins and fills a cash pile that a controlling family ([[USLM Family Control and Cash]]) may or may not release. The bet works if no rival sits inside the radius and the cash is used well ([[USLM Open Questions]]). ## Related - [[Commodities]] - [[Defensibility Principles MOC]] - [[Technical Moat Assessment Framework]] - [[Acquisition-Driven Compounders MOC]] - [[Investing Discipline]] - [[Industries Benefiting from Data Center Set Ups]] ---- tags: #investing links: [[Maps of Content (MOCs)]] [[Investing Learnings]] [[Data Center MoC]]