Martin Marietta Reports Record Fourth-Quarter and Full-Year Results; Sees Strong Momentum Carrying into 2017 and Beyond
Fourth-Quarter Net Sales Up 14% with Gross Profit up 22%
Full-Year Aggregates Product Line Pricing Up 7.3%
Magnesia Specialties Record Full-Year Gross Margin of 37.6% (Excl.
Full-Year Consolidated Gross Margin Expands 330 Basis Points (Excl.
Record Full-Year EBITDA of
2017 Outlook Reflects Durable Economic Recovery with Increasing Demand and Solid Pricing
For the fourth quarter of 2016, Martin Marietta achieved net sales of
For the full year, net sales were
As demonstrated by our fourth-quarter and full-year results, we continue to capitalize on the economic recovery occurring in virtually all of our segments and geographies. We delivered record net sales, gross profit, net earnings and earnings per diluted share for both the fourth quarter and full year - building on the record results delivered in 2015 and the first three quarters of 2016. Looking ahead, we expect continued and accelerating growth in all three of the Company's primary construction end-uses, and our leading market positions will allow us to continue benefitting from these opportunities in 2017 and beyond. We are highly confident that a durable, multi-year construction recovery is now underway, consistent with third-party forecasts.
We are encouraged by the emerging bipartisan dialogue in
Every business across our enterprise continues to make meaningful
contributions to the Company's enhanced profitability.
Our financial results reflect the improving economic environment as well
as operational excellence. Our record results, coupled with our
significant share price appreciation, led to increased performance-based
incentive compensation. As a result, both fourth-quarter and full-year
earnings per diluted share reflect increased incentive compensation
expense that reduced earnings per share by
Full-year aggregates product line volume growth of nearly one-and-a-half
percent reflects increases in both nonresidential and residential
demand. Importantly, these results were achieved despite some notable
hindrances during the year, including
Steady domestic employment growth remains a stimulus for construction
activity. For the trailing 12-months ended
We expect infrastructure demand to be meaningfully and positively
impacted by the
We remain focused on returning capital to shareholders through both
share repurchases and cash dividends. Consistent with our stated capital
allocation priorities, we have returned nearly
By almost any meaningful measure, 2016 was a remarkable year. Record financial performance delivered a 64 percent total shareholder return, the ninth best in the S&P 500. We continue to focus not only on the operations of the Company, but on the best practices needed to make Martin Marietta not just the best aggregates company, but rather one of the world's best companies. Our Company performance, coupled with the achievement of key strategic goals, not only delivered results in 2016, but established an enhanced solid foundation for continued performance and delivery of shareholder value.
Looking to the year ahead, we expect our key profit drivers - pricing, volume and cost - to remain positive. As a result, we are beginning 2017 with the strongest profitability and cash generation outlook we have ever seen. Our expectation for continued momentum in 2017 and beyond is underpinned by our highly skilled employees, who maintain a relentless commitment to industry-leading safety standards. Our enduring performance is evidence that Martin Marietta is strategically aligned with premier market positions to further increase long-term shareholder value.
NOTABLE ITEMS FOR THE FOURTH-QUARTER AND FULL-YEAR ENDED
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(All growth and margin comparisons are versus the prior-year period) |
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Quarter-ended |
Full-Year ended |
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2016 | 2015 | 2016 | 2015 | |||||||
Consolidated net sales |
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% growth | 13.9% | 9.4% | ||||||||
Consolidated gross profit |
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% growth | 21.8% | 25.9% | ||||||||
Consolidated gross profit margin (excluding freight and delivery revenues) |
25.3% | 23.7% | 25.4% | 22.1% | ||||||
margin expansion | 160 bps | 330 bps | ||||||||
Earnings from operations |
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% growth | 13.2% | 39.2% | ||||||||
EBITDA 1 |
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% growth | 12.4% | 29.4% | ||||||||
EBITDA margin as a % of net sales | 25.8% | 26.2% | 27.2% | 23.0% | ||||||
margin expansion |
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420 bps | ||||||||
Earnings per diluted share |
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% growth | 23.0% | 54.5% | ||||||||
1 Earnings Before Interest, Income Taxes, Depreciation, Depletion and Amortization (EBITDA). See page 19 for a reconciliation to net earnings. |
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OPERATING RESULTS (All comparisons are versus the prior-year period unless noted otherwise)
Aggregates Business
For the full year, shipments to the infrastructure market comprised 39
percent of aggregates product line volumes. As expected, infrastructure
construction activity saw little benefit in 2016 from passage of the
FAST Act. This, coupled with project delays, primarily in
The nonresidential market represented 32 percent of full-year aggregates
product line shipments and increased 3.0 percent as compared with 2015.
The
The residential market accounted for 21 percent of aggregates product
line shipments for the year. Volumes to this segment increased 21.6
percent, driven by continued strength in housing. The
The
Overall, aggregates product line shipments increased 0.4 percent and 1.4
percent for the fourth-quarter and full-year 2016, respectively. The
full-year increase reflects a 6.5 percent improvement in the
Full-year aggregates product line pricing increased in all reportable
groups. The overall price improvement of 7.3 percent was in line with
management's expectations and led by a 10.6 percent increase in the
The aggregates product line's gross margin (excluding freight and delivery revenues) was 26.9 percent, an increase of 230 basis points, driven primarily by broad-based pricing growth and diligent cost control.
The ready mixed concrete product line benefitted from strong demand, higher pricing and improved operating conditions. Inclusive of the operations acquired during the year, ready mixed concrete volumes increased 26.6 percent and average selling price increased 8.3 percent. The business leveraged sales growth into a 450-basis-point improvement in gross margin (excluding freight and delivery revenues).
Cement Business
The Cement business generated
For the full year, cement kiln maintenance costs of
Magnesia Specialties Business
Magnesia Specialties delivered record performance during the year and
generated net sales of
CONSOLIDATED OPERATING RESULTS
Selling, general and administrative (SG&A) expenses for full-year 2016
were 6.9 percent of net sales, reflective of the increase in
performance-based incentive compensation. Other operating income, net,
for full-year 2016 was
The estimated effective income tax rate was 30 percent, in line with management's expectations.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for 2016 was
Property, plant and equipment additions for the year were
At
COMMITMENT TO INCREASING SHAREHOLDER VALUE
The Company is authorized to execute a share repurchase program under which it may acquire up to 20 million shares of its outstanding common stock. Repurchases are expected to be carried out through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share purchase transactions or any combination of such methods. The Company expects to complete the repurchase program over the next several years, though the actual timing of completion will be based on an ongoing assessment of the capital needs of the business, the market price of the Company's common stock and general market conditions. Share repurchases will be undertaken based on then-current business and market factors; therefore, the actual return of capital in any single quarter may vary. The repurchase program may be modified, suspended or discontinued by the Company at any time without prior notice.
In the fourth quarter, the Company repurchased 344,300 shares, returning
FULL-YEAR 2017 OUTLOOK
The Company is encouraged by positive trends in the markets it serves and its ability to execute its strategic business plans. Notably:
- For the public sector, continued growth is expected in 2017 as new monies begin to flow into the system. FAST Act projects should accelerate through the year, supported by ongoing projects funded through the Transportation Infrastructure Finance and Innovation Act (TIFIA). Additionally, state initiatives to finance infrastructure projects, including the state and local ballot initiatives passed over the past 24 months, are expected to grow and continue to play an expanded role in public-sector activity.
-
Nonresidential construction is expected to modestly increase in both
the heavy industrial and commercial sectors. The Dodge Momentum Index
is at its highest level since 2009, which signals continued growth.
Additional energy-related economic activity, including follow-on
public and private construction activity, will be mixed. While
$47 billion of new energy-related projects are scheduled to start in 2017 and 2018, the certainty and timing of commencement will affect nonresidential growth. - Residential construction is expected to continue growing, driven by employment gains, historically low levels of construction activity over the previous several years, low mortgage rates, significant lot absorption and higher multi-family rental rates.
Based on these trends and expectations, including a return to more normal weather patterns, the Company anticipates the following for the full year:
-
Aggregates end-use markets compared with 2016 levels are as follows:
- Infrastructure market to increase mid-single digits.
- Nonresidential market to increase in the low- to mid-single digits.
- Residential market to increase in the mid- to high-single digits.
-
ChemRock /Rail market to remain stable.
2017 GUIDANCE |
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Low |
High |
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Consolidated Results |
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Consolidated net sales 1 |
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Consolidated gross profit |
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SG&A |
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Interest expense |
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Estimated tax rate (excluding discrete events) | 30% | 30% | ||
Capital Expenditures |
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EBITDA |
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Aggregates Product Line |
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Volume (total tons) 2 | 165.0M | 167.0M | ||
% growth 2 | 4.0% | 5.5% | ||
Average selling price per ton |
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% growth | 5.0% | 7.0% | ||
Net sales |
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Gross profit |
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Aggregates-related downstream operations |
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Net sales |
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Gross profit |
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Cement |
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Net sales |
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Gross profit |
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Magnesia Specialties |
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Net sales |
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Gross profit |
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1 Consolidated net sales reflect the
elimination of |
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2 Represents total aggregates volumes, which includes approximately 11.6 million internal tons. Volume growth ranges are in comparison to total volumes of 158.6 million tons for 2016, which includes 10.4 million internal tons. |
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RISKS TO OUTLOOK
The 2017 outlook includes management's assessment of the likelihood of certain risks and uncertainties that will affect performance, including but not limited to: both price and volume; the United States Congress' inability to reach agreement among themselves or with the current Administration on policy issues, including the nature, extent and/or timing of infrastructure funding, that impact the federal budget; the termination, capping and/or reduction of state gasoline tax(es) or other state revenue related to infrastructure construction; the volatility in the commencement of infrastructure projects; a reduction in defense spending, and the subsequent impact on construction activity on or near military bases; a decline in nonresidential construction; a further decline in energy-related construction activity resulting from a sustained period of low global oil prices or changes in oil production patterns in response to this decline and certain regulatory or other economic factors; a slowdown in the residential construction recovery; a reduction in economic activity in the Company's Midwest states resulting from reduced funding levels provided by the Agricultural Act of 2014 and a sustained reduction in capital investment by the railroads; an increase in the cost of compliance with governmental laws, rules and regulations; construction labor shortages; and unexpected equipment failures, unscheduled maintenance, industrial accident or other prolonged and/or significant disruption to its cement and/or its Magnesia Specialties production facilities. The Magnesia Specialties business essentially runs at capacity; therefore, any unplanned changes in costs or realignment of customers introduce volatility to the earnings of this segment. Cement is subject to cyclical supply and demand and price fluctuations.
The Company's principal business serves customers in aggregates-related construction markets. This concentration could increase the risk of potential losses on customer receivables; however, payment bonds normally posted on public projects, together with lien rights on private projects, mitigate the risk of uncollectible receivables. The level of aggregates demand in the Company's end-use markets, production levels and the management of production costs will affect the operating leverage of the Aggregates business and, therefore, profitability. Production costs in the Aggregates business are also sensitive to energy and raw material prices, both directly and indirectly. Diesel fuel and other consumables change production costs directly through consumption or indirectly by increased energy-related input costs, such as steel, explosives, tires and conveyor belts. Fluctuating diesel fuel pricing also affects transportation costs, primarily through fuel surcharges in the Company's long-haul distribution network. The Cement business is also energy intensive and fluctuation in the price of coal affects costs. The Magnesia Specialties business is sensitive to changes in domestic steel capacity utilization as well as the absolute price and fluctuation in the cost of natural gas.
Transportation in the Company's long-haul network, particularly the
supply of rail cars and locomotive power and condition of rail
infrastructure to move trains, affects the Company's efficient
transportation of aggregate into certain markets, most notably
All of the Company's businesses are also subject to weather-related
risks that can significantly affect production schedules and
profitability. The first and fourth quarters are most adversely affected
by winter weather. Hurricane activity in the
Risks to the outlook also include shipment declines resulting from economic events beyond the Company's control. In addition to the impact on nonresidential and residential construction, the Company is exposed to risk in its estimated outlook from interest cost related to its variable-rate debt.
The Company's future performance is also exposed to risks from tax reform at the federal and state levels.
CONFERENCE CALL INFORMATION
The Company will discuss its fourth-quarter and full-year 2016 earnings
results on a conference call and an online web simulcast today (
Martin Marietta, an American-based company and a member of the S&P 500
Index, is a leading supplier of aggregates and heavy building materials,
with operations spanning 26 states,
If you are interested in
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Unaudited Statements of Earnings | |||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||||
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2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Net sales | $ | 889.0 | $ | 780.8 | $ | 3,576.8 | $ | 3,268.1 | |||||||||||||
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59.8 | 63.8 | 242.0 | 271.5 | |||||||||||||||||
Total revenues | 948.8 | 844.6 | 3,818.8 | 3,539.6 | |||||||||||||||||
Cost of sales | 663.9 | 596.0 | 2,667.8 | 2,546.3 | |||||||||||||||||
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59.8 | 63.8 | 242.0 | 271.5 | |||||||||||||||||
Total cost of revenues | 723.7 | 659.8 | 2,909.8 | 2,817.8 | |||||||||||||||||
Gross profit | 225.1 | 184.8 | 909.0 | 721.8 | |||||||||||||||||
Selling, general and administrative expenses | 70.3 | 57.1 | 248.0 | 218.2 | |||||||||||||||||
Acquisition-related expenses, net | - | 2.7 | 1.7 | 8.5 | |||||||||||||||||
Other operating (income) and expenses, net | (0.7 | ) | (12.4 | ) | (8.0 | ) | 15.7 | ||||||||||||||
Earnings from operations | 155.5 | 137.4 | 667.3 | 479.4 | |||||||||||||||||
Interest expense | 20.8 | 18.9 | 81.7 | 76.3 | |||||||||||||||||
Other nonoperating income, net | (1.7 | ) | (4.0 | ) | (21.4 | ) | (10.7 | ) | |||||||||||||
Earnings before taxes on income | 136.4 | 122.5 | 607.0 | 413.8 | |||||||||||||||||
Income tax expense | 37.6 | 39.3 | 181.6 | 124.9 | |||||||||||||||||
Consolidated net earnings | 98.8 | 83.2 | 425.4 | 288.9 | |||||||||||||||||
Less: Net (loss) earnings attributable to noncontrolling interests | (0.1 | ) | - | - | 0.1 | ||||||||||||||||
Net earnings attributable to |
$ | 98.9 | $ | 83.2 | $ | 425.4 | $ | 288.8 | |||||||||||||
Net earnings per common share attributable to common shareholders: | |||||||||||||||||||||
Basic | $ | 1.56 | $ | 1.27 | $ | 6.66 | $ | 4.31 | |||||||||||||
Diluted | $ | 1.55 | $ | 1.26 | $ | 6.63 | $ | 4.29 | |||||||||||||
Dividends per common share | $ | 0.42 | $ | 0.40 | $ | 1.64 | $ | 1.60 | |||||||||||||
Average number of common shares outstanding: | |||||||||||||||||||||
Basic | 63.3 | 65.5 | 63.6 | 66.8 | |||||||||||||||||
Diluted | 63.5 | 65.7 | 63.9 | 67.0 |
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Unaudited Financial Highlights | |||||||||||||||||||||
(In millions) | |||||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||||
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2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Net sales: | |||||||||||||||||||||
Aggregates Business: | |||||||||||||||||||||
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$ | 237.0 | $ | 219.1 | $ | 945.1 | $ | 851.9 | |||||||||||||
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74.4 | 70.7 | 304.5 | 285.3 | |||||||||||||||||
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466.0 | 379.8 | 1,847.2 | 1,535.8 | |||||||||||||||||
Total Aggregates Business | 777.4 | 669.6 | 3,096.8 | 2,673.0 | |||||||||||||||||
Cement | 85.4 | 83.6 | 364.4 | 455.4 | |||||||||||||||||
Magnesia Specialties | 59.4 | 51.0 | 238.0 | 227.5 | |||||||||||||||||
Less: Intersegment sales | (33.2 | ) | (23.4 | ) | (122.4 | ) | (87.8 | ) | |||||||||||||
Total | $ | 889.0 | $ | 780.8 | $ | 3,576.8 | $ | 3,268.1 | |||||||||||||
Gross profit (loss): | |||||||||||||||||||||
Aggregates Business: | |||||||||||||||||||||
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$ | 82.2 | $ | 71.9 | $ | 305.8 | $ | 256.6 | |||||||||||||
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15.3 | 10.1 | 57.1 | 34.2 | |||||||||||||||||
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78.4 | 58.7 | 344.6 | 255.0 | |||||||||||||||||
Total Aggregates Business | 175.9 | 140.7 | 707.5 | 545.8 | |||||||||||||||||
Cement | 26.7 | 15.8 | 120.1 | 103.5 | |||||||||||||||||
Magnesia Specialties | 22.0 | 17.9 | 89.5 | 78.7 | |||||||||||||||||
Corporate | 0.5 | 10.4 | (8.1 | ) | (6.2 | ) | |||||||||||||||
Total | $ | 225.1 | $ | 184.8 | $ | 909.0 | $ | 721.8 | |||||||||||||
Selling, general and administrative expenses: | |||||||||||||||||||||
Aggregates Business: | |||||||||||||||||||||
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$ | 13.6 | $ | 13.4 | $ | 53.0 | $ | 52.6 | |||||||||||||
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4.6 | 5.2 | 17.3 | 18.5 | |||||||||||||||||
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20.5 | 18.3 | 71.6 | 66.6 | |||||||||||||||||
Total Aggregates Business | 38.7 | 36.9 | 141.9 | 137.7 | |||||||||||||||||
Cement | 6.3 | 6.5 | 24.8 | 26.6 | |||||||||||||||||
Magnesia Specialties | 2.5 | 2.4 | 9.7 | 9.5 | |||||||||||||||||
Corporate | 22.8 | 11.3 | 71.6 | 44.4 | |||||||||||||||||
Total | $ | 70.3 | $ | 57.1 | $ | 248.0 | $ | 218.2 | |||||||||||||
Earnings (Loss) from operations: | |||||||||||||||||||||
Aggregates Business: | |||||||||||||||||||||
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$ | 70.5 | $ | 58.5 | $ | 257.3 | $ | 206.8 | |||||||||||||
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11.0 | 5.6 | 41.4 | 16.4 | |||||||||||||||||
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57.4 | 54.5 | 277.3 | 205.7 | |||||||||||||||||
Total Aggregates Business | 138.9 | 118.6 | 576.0 | 428.9 | |||||||||||||||||
Cement | 21.6 | 10.4 | 99.4 | 47.8 | |||||||||||||||||
Magnesia Specialties | 18.9 | 15.3 | 79.1 | 68.9 | |||||||||||||||||
Corporate | (23.9 | ) | (6.9 | ) | (87.2 | ) | (66.2 | ) | |||||||||||||
Total | $ | 155.5 | $ | 137.4 | $ | 667.3 | $ | 479.4 |
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Unaudited Financial Highlights | |||||||||||||||||
(In millions) | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
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2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net sales by product line: | |||||||||||||||||
Aggregates Business: | |||||||||||||||||
Aggregates | $ | 501.2 | $ | 474.0 | $ | 2,060.9 | $ | 1,896.1 | |||||||||
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237.1 | 169.0 | 902.6 | 656.5 | |||||||||||||
Asphalt and Paving | 89.7 | 65.6 | 341.4 | 283.6 | |||||||||||||
Less: Interproduct sales | (50.6 | ) | (39.0 | ) | (208.1 | ) | (163.2 | ) | |||||||||
Total Aggregates Business | 777.4 | 669.6 | 3,096.8 | 2,673.0 | |||||||||||||
Cement Business | 85.4 | 83.6 | 364.4 | 455.4 | |||||||||||||
Magnesia Specialties Business | 59.4 | 51.0 | 238.0 | 227.5 | |||||||||||||
Less: Intersegment sales | (33.2 | ) | (23.4 | ) | (122.4 | ) | (87.8 | ) | |||||||||
Total | $ | 889.0 | $ | 780.8 | $ | 3,576.8 | $ | 3,268.1 | |||||||||
Gross profit (loss) by product line: | |||||||||||||||||
Aggregates Business: | |||||||||||||||||
Aggregates | $ | 136.3 | $ | 122.2 | $ | 554.8 | $ | 467.0 | |||||||||
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23.1 | 8.0 | 99.1 | 43.0 | |||||||||||||
Asphalt and Paving | 16.5 | 10.5 | 53.6 | 35.8 | |||||||||||||
Total Aggregates Business | 175.9 | 140.7 | 707.5 | 545.8 | |||||||||||||
Cement Business | 26.7 | 15.8 | 120.1 | 103.5 | |||||||||||||
Magnesia Specialties Business | 22.0 | 17.9 | 89.5 | 78.7 | |||||||||||||
Corporate | 0.5 | 10.4 | (8.1 | ) | (6.2 | ) | |||||||||||
Total | $ | 225.1 | $ | 184.8 | $ | 909.0 | $ | 721.8 | |||||||||
The following presents 2015 cement product line metrics for the
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2015 - Three Months Ended | |||||||||||||||||
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Shipment tons (000s) | 376 | 367 | 328 | ||||||||||||||
Net sales | $ | 32.5 | $ | 33.9 | $ | 30.0 | |||||||||||
Gross (loss) profit | $ | (4.0 | ) | $ | 3.7 | $ | 3.4 |
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Balance Sheet Data | |||||||||
(In millions) | |||||||||
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2016 | 2015 | ||||||||
(Unaudited) | (Audited) | ||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 50.0 | $ | 168.4 | |||||
Accounts receivable, net | 457.9 | 410.9 | |||||||
Inventories, net | 521.6 | 469.1 | |||||||
Other current assets | 56.9 | 33.2 | |||||||
Property, plant and equipment, net | 3,423.4 | 3,156.0 | |||||||
Intangible assets, net | 2,670.7 | 2,578.8 | |||||||
Other noncurrent assets | 120.4 | 141.2 | |||||||
Total assets | $ | 7,300.9 | $ | 6,957.6 | |||||
LIABILITIES AND EQUITY | |||||||||
Current maturities of long-term debt and short-term facilities | $ | 180.0 | $ | 18.7 | |||||
Other current liabilities | 366.6 | 348.0 | |||||||
Long-term debt (excluding current maturities) | 1,506.2 | 1,550.1 | |||||||
Other noncurrent liabilities | 1,105.5 | 980.6 | |||||||
Total equity | 4,142.6 | 4,060.2 | |||||||
Total liabilities and equity | $ | 7,300.9 | $ | 6,957.6 |
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Unaudited Statements of Cash Flows | |||||||||||
(In millions) | |||||||||||
For the year ended | |||||||||||
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2016 | 2015 | ||||||||||
Operating activities: | |||||||||||
Consolidated net earnings | $ | 425.4 | $ | 288.9 | |||||||
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities: | |||||||||||
Depreciation, depletion and amortization | 285.3 | 263.6 | |||||||||
Stock-based compensation expense | 20.5 | 13.6 | |||||||||
Loss on divestitures and sales of assets | 0.4 | 14.1 | |||||||||
Deferred income taxes | 67.1 | 85.2 | |||||||||
Excess tax benefits from stock-based compensation | (6.8 | ) | - | ||||||||
Other items, net | (17.7 | ) | (5.9 | ) | |||||||
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||||||
Accounts receivable, net | (25.1 | ) | 12.3 | ||||||||
Inventories, net | (47.4 | ) | (21.5 | ) | |||||||
Accounts payable | (8.1 | ) | (40.1 | ) | |||||||
Other assets and liabilities, net | (14.9 | ) | (37.0 | ) | |||||||
Net cash provided by operating activities | 678.7 | 573.2 | |||||||||
Investing activities: | |||||||||||
Additions to property, plant and equipment | (387.3 | ) | (318.2 | ) | |||||||
Acquisitions, net | (178.8 | ) | (43.2 | ) | |||||||
Cash received in acquisition | 4.3 | - | |||||||||
Proceeds from divestitures and sales of assets | 6.5 | 448.1 | |||||||||
Repayments from affiliate | - | 1.8 | |||||||||
Payment of railcar construction advances | (82.9 | ) | (25.2 | ) | |||||||
Reimbursement of railcar construction advances | 82.9 | 25.2 | |||||||||
Net cash (used for) provided by investing activities | (555.3 | ) | 88.5 | ||||||||
Financing activities: | |||||||||||
Borrowings of long-term debt | 560.0 | 230.0 | |||||||||
Repayments of long-term debt | (449.3 | ) | (244.7 | ) | |||||||
Debt issue costs | (2.3 | ) | - | ||||||||
Payments on capital leases | (3.4 | ) | (6.6 | ) | |||||||
Change in bank overdraft | (10.3 | ) | 10.0 | ||||||||
Repurchases of common stock | (259.2 | ) | (520.0 | ) | |||||||
Dividends paid | (105.0 | ) | (107.5 | ) | |||||||
Excess tax benefits from stock-based compensation | 6.8 | - | |||||||||
Issuances of common stock | 21.3 | 37.1 | |||||||||
Distributions to owners of noncontrolling interests | (0.4 | ) | (0.3 | ) | |||||||
Net cash used for financing activities | (241.8 | ) | (602.0 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (118.4 | ) | 59.7 | ||||||||
Cash and cash equivalents, beginning of period | 168.4 | 108.7 | |||||||||
Cash and cash equivalents, end of period | $ | 50.0 | $ | 168.4 |
|
|||||||||||||||||
Unaudited Operational Highlights | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
|
|
||||||||||||||||
Volume | Pricing | Volume | Pricing | ||||||||||||||
Volume/Pricing Variance (1) | |||||||||||||||||
Aggregates Product Line: | |||||||||||||||||
|
4.9 | % | 3.6 | % | 6.5 | % | 4.3 | % | |||||||||
|
(2.5 | %) | 7.8 | % | (0.4 | %) | 7.1 | % | |||||||||
|
(3.6 | %) | 7.1 | % | (3.2 | %) | 10.6 | % | |||||||||
Total Aggregates Product Line (2) | 0.4 | % | 5.6 | % | 1.4 | % | 7.3 | % | |||||||||
Three Months Ended | Year Ended | ||||||||||||||||
|
|
||||||||||||||||
Shipments (tons in thousands) | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Aggregates Product Line: | |||||||||||||||||
|
18,250 | 17,398 | 73,060 | 68,611 | |||||||||||||
|
4,594 | 4,710 | 19,396 | 19,479 | |||||||||||||
|
15,324 | 15,893 | 66,170 | 68,332 | |||||||||||||
Total Aggregates Product Line (2) | 38,168 | 38,001 | 158,626 | 156,422 | |||||||||||||
(1) Volume/pricing variances reflect the percentage increase (decrease) from the comparable period in the prior year. | |||||||||||||||||
(2) Total aggregates product line includes acquisitions from the date of acquisition and divestitures through the date of disposal. | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Shipments (in thousands) | |||||||||||||||||
Aggregates tons - external customers | 35,658 | 35,868 | 148,198 | 147,197 | |||||||||||||
Internal aggregates tons used in other product lines | 2,510 | 2,133 | 10,428 | 9,225 | |||||||||||||
Total aggregates tons | 38,168 | 38,001 | 158,626 | 156,422 | |||||||||||||
Asphalt tons - external customers | 268 | 178 | 1,023 | 1,220 | |||||||||||||
Internal asphalt tons used in road paving business | 534 | 401 | 2,131 | 1,697 | |||||||||||||
Total asphalt tons | 802 | 579 | 3,154 | 2,917 | |||||||||||||
|
2,220 | 1,618 | 8,490 | 6,707 | |||||||||||||
Cement tons - external customers | 496 | 569 | 2,331 | 3,667 | |||||||||||||
Internal cement tons used in other product lines | 314 | 233 | 1,194 | 891 | |||||||||||||
|
810 | 802 | 3,525 | 4,558 | |||||||||||||
Average unit sales price by product line (including internal sales): | |||||||||||||||||
Aggregates (per ton) | $ | 13.03 | $ | 12.34 | $ | 12.88 | $ | 12.00 | |||||||||
Asphalt (per ton) | $ | 38.21 | $ | 41.64 | $ | 39.20 | $ | 42.57 | |||||||||
|
$ | 104.84 | $ | 102.59 | $ | 104.26 | $ | 96.28 | |||||||||
Cement (per ton) | $ | 103.94 | $ | 102.44 | $ | 101.96 | $ | 98.35 |
|
|||||||||||||||||
Non-GAAP Financial Measures | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
Gross margin as a percentage of net sales represent a non-GAAP
measure. The Company presents this ratio calculated based on net
sales, as it is consistent with the basis by which management
reviews the Company's operating results. Further, management
believes it is consistent with the basis by which investors analyze
the Company's operating results, given that freight and delivery
revenues and costs represent pass-throughs and have no profit
markup. Gross margin calculated as a percentage of total revenues
represents the most directly comparable financial measure calculated
in accordance with generally accepted accounting principles
("GAAP"). The following tables present the calculations of gross
margin for the three months and year ended |
|||||||||||||||||
Consolidated Gross Margin in Accordance with Generally Accepted Accounting Principles | Three Months Ended | Year Ended | |||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 225.1 | $ | 184.8 | $ | 909.0 | $ | 721.8 | |||||||||
Total revenues | $ | 948.8 | $ | 844.6 | $ | 3,818.8 | $ | 3,539.6 | |||||||||
Gross margin | 23.7 | % | 21.9 | % | 23.8 | % | 20.4 | % | |||||||||
Consolidated Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Year Ended | |||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 225.1 | $ | 184.8 | $ | 909.0 | $ | 721.8 | |||||||||
Total revenues | $ | 948.8 | $ | 844.6 | $ | 3,818.8 | $ | 3,539.6 | |||||||||
Less: |
(59.8 | ) | (63.8 | ) | (242.0 | ) | (271.5 | ) | |||||||||
Net sales | $ | 889.0 | $ | 780.8 | $ | 3,576.8 | $ | 3,268.1 | |||||||||
Gross margin excluding freight and delivery revenues | 25.3 | % | 23.7 | % | 25.4 | % | 22.1 | % | |||||||||
Aggregates Business Gross Margin in Accordance with Generally Accepted Accounting Principles | Three Months Ended | Year Ended | |||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 175.9 | $ | 140.7 | $ | 707.5 | $ | 545.8 | |||||||||
Total revenues | $ | 830.0 | $ | 725.3 | $ | 3,308.3 | $ | 2,905.7 | |||||||||
Gross margin | 21.2 | % | 19.4 | % | 21.4 | % | 18.8 | % | |||||||||
Aggregates Business Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Year Ended | |||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 175.9 | $ | 140.7 | $ | 707.5 | $ | 545.8 | |||||||||
Total revenues | $ | 830.0 | $ | 725.3 | $ | 3,308.3 | $ | 2,905.7 | |||||||||
Less: |
(52.6 | ) | (55.7 | ) | (211.5 | ) | (232.7 | ) | |||||||||
Net sales | $ | 777.4 | $ | 669.6 | $ | 3,096.8 | $ | 2,673.0 | |||||||||
Gross margin excluding freight and delivery revenues | 22.6 | % | 21.0 | % | 22.8 | % | 20.4 | % | |||||||||
Magnesia Specialties Business Gross Margin in Accordance with Generally Accepted Accounting Principles |
Three Months Ended | Year Ended | |||||||||||||||
|
|
|
|||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 22.0 | $ | 17.9 | $ | 89.5 | $ | 78.7 | |||||||||
Total revenues | $ | 64.1 | $ | 55.4 | $ | 257.1 | $ | 245.9 | |||||||||
Gross margin | 34.3 | % | 32.3 | % | 34.8 | % | 32.0 | % | |||||||||
Magnesia Specialties Business Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Year Ended | |||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 22.0 | $ | 17.9 | $ | 89.5 | $ | 78.7 | |||||||||
Total revenues | $ | 64.1 | $ | 55.4 | $ | 257.1 | $ | 245.9 | |||||||||
Less: |
(4.7 | ) | (4.4 | ) | (19.1 | ) | (18.4 | ) | |||||||||
Net sales | $ | 59.4 | $ | 51.0 | $ | 238.0 | $ | 227.5 | |||||||||
Gross margin excluding freight and delivery revenues | 37.0 | % | 35.1 | % | 37.6 | % | 34.6 | % | |||||||||
Aggregates Product Line Gross Margin in Accordance with Generally Accepted Accounting Principles | Three Months Ended | Year Ended | |||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 136.3 | $ | 122.2 | $ | 554.8 | $ | 467.0 | |||||||||
Total revenues | $ |
552.2 |
$ |
528.4 |
$ |
2,267.6 |
$ |
2,120.2 |
|||||||||
Gross margin |
24.7 |
% |
23.1 |
% |
24.5 |
% |
22.0 |
% | |||||||||
Aggregates Product Line Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Year Ended | |||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 136.3 | $ | 122.2 | $ | 554.8 | $ | 467.0 | |||||||||
Total revenues | $ |
552.2 |
$ |
528.4 |
$ |
2,267.6 |
$ |
2,120.2 |
|||||||||
Less: |
(51.0 |
) |
(54.4 |
) |
(206.7 |
) |
(224.1 |
) | |||||||||
Net sales | $ |
501.2 |
$ | 474.0 | $ | 2,060.9 | $ | 1,896.1 | |||||||||
Gross margin excluding freight and delivery revenues | 27.2 | % | 25.8 | % | 26.9 | % | 24.6 | % |
|
|||||||||||||||||||||
Non-GAAP Financial Measures (continued) | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Ready Mixed Concrete Product Line Gross Margin in Accordance with Generally Accepted Accounting Principles |
Three Months Ended | Year Ended | |||||||||||||||||||
|
|
|
|||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Gross profit | $ | 23.1 | $ | 8.0 | $ | 99.1 | $ | 43.0 | |||||||||||||
Total revenues | $ | 237.3 | $ | 169.3 | $ | 903.8 | $ | 657.8 | |||||||||||||
Gross margin | 9.7 | % | 4.7 | % | 11.0 | % | 6.5 | % | |||||||||||||
Ready Mixed Concrete Product Line Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Year Ended | |||||||||||||||||||
|
|
||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Gross profit | $ | 23.1 | $ | 8.0 | $ | 99.1 | $ | 43.0 | |||||||||||||
Total revenues | $ | 237.3 | $ | 169.3 | $ | 903.8 | $ | 657.8 | |||||||||||||
Less: |
(0.2 | ) | (0.3 | ) | (1.2 | ) | (1.3 | ) | |||||||||||||
Net sales | $ | 237.1 | $ | 169.0 | $ | 902.6 | $ | 656.5 | |||||||||||||
Gross margin excluding freight and delivery revenues | 9.7 | % | 4.7 | % | 11.0 | % | 6.5 | % | |||||||||||||
Cement Business Gross Margin in Accordance with Generally Accepted Accounting Principles | Three Months Ended | Year Ended | |||||||||||||||||||
|
|
||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Gross profit | $ | 26.7 | $ | 15.8 | $ | 120.1 | $ | 103.5 | |||||||||||||
Total revenues | $ | 87.9 | $ | 87.3 | $ | 375.8 | $ | 475.7 | |||||||||||||
Gross margin | 30.4 | % | 18.1 | % | 32.0 | % | 21.8 | % | |||||||||||||
Cement Business Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Year Ended | |||||||||||||||||||
|
|
||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Gross profit | $ | 26.7 | $ | 15.8 | $ | 120.1 | $ | 103.5 | |||||||||||||
Total revenues | $ | 87.9 | $ | 87.3 | $ | 375.8 | $ | 475.7 | |||||||||||||
Less: |
(2.5 | ) | (3.7 | ) | (11.4 | ) | (20.3 | ) | |||||||||||||
Net sales | $ | 85.4 | $ | 83.6 | $ | 364.4 | $ | 455.4 | |||||||||||||
Gross margin excluding freight and delivery revenues | 31.3 | % | 18.9 | % | 33.0 | % | 22.7 | % | |||||||||||||
Cement Business, California Business |
Three Months Ended | Year Ended | |||||||||||||||||||
|
|
|
|||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Total revenues | $ | - | $ | - | $ | - | $ | 99.9 | |||||||||||||
Net sales | $ | - | $ | - | $ | - | $ | 96.4 | |||||||||||||
Gross profit | $ | - | $ | - | $ | - | $ | 3.1 | |||||||||||||
Cement Business, Excluding California Business, Gross Margin in Accordance with Generally Accepted Accounting Principles |
Three Months Ended | Year Ended | |||||||||||||||||||
|
|
|
|||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Gross profit | $ | 26.7 | $ | 15.8 | $ | 120.1 | $ | 100.4 | |||||||||||||
Total revenues | $ | 87.9 | $ | 87.3 | $ | 375.8 | $ | 375.8 | |||||||||||||
Gross margin | 30.4 | % | 18.1 | % | 32.0 | % | 26.7 | % | |||||||||||||
Cement Business, Excluding California Business, Gross Margin Excluding Freight and Delivery Revenues |
Three Months Ended | Year Ended | |||||||||||||||||||
|
|
|
|||||||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||||||||
Gross profit | $ | 26.7 | $ | 15.8 | $ | 120.1 | $ | 100.4 | |||||||||||||
Total revenues | $ | 87.9 | $ | 87.3 | $ | 375.8 | $ | 375.8 | |||||||||||||
Less: |
(2.5 | ) | (3.7 | ) | (11.4 | ) | (16.8 | ) | |||||||||||||
Net sales | $ | 85.4 | $ | 83.6 | $ | 364.4 | $ | 359.0 | |||||||||||||
Gross margin excluding freight and delivery revenues | 31.3 | % | 18.9 | % | 33.0 | % | 28.0 | % | |||||||||||||
Cement Business Shipments (in 000s) | Three Months Ended | Year Ended | |||||||||||||||||||
|
|
||||||||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||||||||
Cement tons | 810 | 802 | 3,525 | 4,558 | |||||||||||||||||
Less: |
- | - | - | (1,071 | ) | ||||||||||||||||
Cement tons excluding |
810 | 802 | 3,525 | 3,487 | |||||||||||||||||
Variance | 1.0 | % | 1.1 | % |
|
|||||||||||||||||
Non-GAAP Financial Measures (continued) | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
The ratio of Consolidated Debt-to-Consolidated EBITDA, as defined,
for the trailing-12 months is a covenant under the Company's
revolving credit facility, term loan facility and accounts
receivable securitization facility. Under the terms of these
agreements, as amended, the Company's ratio of Consolidated
Debt-to-Consolidated EBITDA as defined, for the trailing-12 months
cannot exceed 3.50 times as of |
|||||||||||||||||
The following presents the calculation of Consolidated
Debt-to-Consolidated EBITDA, as defined, for the trailing-12 months
at |
|||||||||||||||||
Twelve Month Period | |||||||||||||||||
|
|||||||||||||||||
|
|||||||||||||||||
Earnings from continuing operations attributable to |
|
||||||||||||||||
Add back: | |||||||||||||||||
Interest expense | 81.7 | ||||||||||||||||
Income tax expense | 181.6 | ||||||||||||||||
Depreciation, depletion and amortization expense | 282.9 | ||||||||||||||||
Stock-based compensation expense | 20.5 | ||||||||||||||||
Deduct: | |||||||||||||||||
Interest income | (0.6 | ) | |||||||||||||||
Nonrecurring gains on divestitures and acquisition-related expenses, net | (5.1 | ) | |||||||||||||||
Consolidated EBITDA, as defined |
|
||||||||||||||||
Consolidated Debt, including debt for which the Company is a
co-borrower, at |
|
||||||||||||||||
Consolidated Debt-to-Consolidated EBITDA, as defined, at |
1.73 times | ||||||||||||||||
EBITDA is a widely accepted financial indicator of a company's
ability to service and/or incur indebtedness. EBITDA is not defined
by generally accepted accounting principles and, as such, should not
be construed as an alternative to net earnings or operating cash
flow. For further information on EBITDA, refer to the Company's
website at www.martinmarietta.com. EBITDA is as follows for the
three months and year ended |
|||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Consolidated Earnings Before Interest, Income Taxes, Depreciation, Depletion and Amortization (EBITDA) | $ | 229.7 | $ | 204.4 | $ | 971.6 | $ | 750.7 | |||||||||
A Reconciliation of Net Earnings (Loss) Attributable to |
|||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net Earnings Attributable to |
$ | 98.9 | $ | 83.2 | $ | 425.4 | $ | 288.8 | |||||||||
Add back: | |||||||||||||||||
Interest Expense | 20.8 | 18.9 | 81.7 | 76.3 | |||||||||||||
Taxes on Income | 37.6 | 39.3 | 181.6 | 124.9 | |||||||||||||
Depreciation, Depletion and Amortization Expense | 72.4 | 63.0 | 282.9 | 260.7 | |||||||||||||
Consolidated EBITDA | $ | 229.7 | $ | 204.4 | $ | 971.6 | $ | 750.7 | |||||||||
|
$ | 889.0 | $ | 780.8 | $ | 3,576.8 | $ | 3,268.1 | |||||||||
EBITDA margin as percentage of net sales | 25.8 | % | 26.2 | % | 27.2 | % | 23.0 | % | |||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170214005742/en/
Executive Vice President and Chief Financial
Officer
www.martinmarietta.com
or
Investor
Contact:
Director,
Investor Relations
Elisabeth.eisleben@martinmarietta.com
Source:
News Provided by Acquire Media