Martin Marietta Reports Record Second Quarter Earnings Per Diluted Share of $2.25, an 18% Increase
Company Also Sets Records for Consolidated
Aggregates Product Line Pricing Improves 4 Percent, Led by Double-Digit Gain in
Cement Volumes Increase 8 Percent; Pricing Growth of 5 Percent
Magnesia Specialties Achieves Record
Reaffirms Full-Year 2017 Guidance;
Expects to Close Bluegrass Materials Acquisition in Fourth Quarter
Quarterly 2017 Highlights Include the Following
Second-Quarter Records:
(All comparisons are versus prior-year second quarter)
- Consolidated net sales of
$996.3 million increased 8.8% compared with$915.4 million - Building Materials net sales of
$931.7 million compared with$856.6 million , an increase of 8.8%, and Magnesia Specialties net sales of$64.6 million compared with$58.8 million , an increase of 9.7% - Consolidated gross profit of
$274.1 million compared with$247.4 million , an increase of 10.8% - Consolidated earnings from operations of
$212.9 million compared with$190.8 million , an increase of 11.5% - Earnings per diluted share of
$2.25 compared with$1.90 , an increase of 18.4% - EBITDA of
$292.3 million compared with$266.5 million , an increase of 9.7%
"Consistent with the long-term nature of our business and in alignment with our strategic plan, we recently announced an agreement to acquire
Mr. Nye's CEO Earnings Commentary and Market Perspective can be found on the investor relations portion of the Company's website.
NOTABLE ITEMS FOR THE SECOND-QUARTER ENDED
(All growth and margin comparisons are versus the prior-year period)
Three-months ended | Six-months ended | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Consolidated net sales | |||||||||||||
% variance | 8.8 | % | 8.4 | % | |||||||||
Consolidated gross profit | |||||||||||||
% variance | 10.8 | % | 7.3 | % | |||||||||
Consolidated gross profit margin (excluding freight and delivery revenues) | 27.5 | % | 27.0 | % | 23.6 | % | 23.8 | % | |||||
margin variance | 50 bps | (20 bps) | |||||||||||
Earnings from operations | |||||||||||||
% variance | 11.5 | % | 4.7 | % | |||||||||
EBITDA 1 | |||||||||||||
% variance | 9.7 | % | 5.0 | % | |||||||||
EBITDA margin as a % of net sales | 29.3 | % | 29.1 | % | 24.6 | % | 25.4 | % | |||||
margin variance | 20 bps | (80 bps) | |||||||||||
Earnings per diluted share | $ | 2.25 | $ | 1.90 | $ | 2.91 | $ | 2.60 | |||||
% variance | 18.4 | % | 11.9 | % |
1 See appendix for a reconciliation to net earnings.
Operating Results
(All comparisons are versus the prior-year period unless noted otherwise)
Building Materials Business
In the second quarter of 2017, net sales for the
Aggregates product line shipments increased 2.0 percent compared with the second quarter of 2016. Volume growth was led by the West Group's increase of 3.6 percent followed by 2.0 percent growth in the
Gross margin (excluding freight and delivery revenues) for the
Infrastructure Market Highlights
- For the quarter, shipments to the infrastructure market were relatively flat and comprised 41 percent of second-quarter aggregates product line volumes, which remains below the Company's five-year average. This is attributable to continued under-investment in the nation's infrastructure and greater private-sector nonresidential and residential investments
Nonresidential Market Highlights
- The nonresidential market represented 32 percent of second-quarter aggregates product line shipments. The light nonresidential market, which consists primarily of office and retail construction, increased 3.4 percent for the quarter; however, heavy nonresidential activity, which includes industrial building as well as energy and energy-related construction, was relatively flat, resulting in a 1.6 percent increase in overall nonresidential shipments.
The Southeast Group reported strong industrial construction growth. However, in-line with management's expectations, theWest Group reported a decline in nonresidential shipments due to the completion of several large energy-related projects in 2016 that were not immediately replaced in the first half of 2017.
Residential Market Highlights
- The residential market accounted for 20 percent of aggregates product line shipments for the second quarter.
- Volumes to this segment increased 14.8 percent, driven by continued strength in housing across the Company's geographic footprint.
Texas ,Florida ,North Carolina ,Georgia andSouth Carolina , key geographies for theBuilding Materials business, comprised five of the top ten states for single family housing starts as ofMay 2017 . Additionally, on the metro-level,Dallas ,Tampa ,Austin ,Houston ,Atlanta ,Charlotte ,Raleigh andOrlando comprised the top eight for single family unit starts.
The
Magnesia Specialties Business
For the second quarter of 2017, net sales for the Magnesia Specialties business were
Steel capacity utilization increased to approximately 74.4 percent in 2017, compared with the prior-year utilization rate of approximately 72.4 percent.
Consolidated Operating Results
Selling, general and administrative (SG&A)
expenses were 6.9 percent of net sales, reflective of a higher second-quarter accrual rate in performance-based incentive compensation compared with the prior-year quarter. Earnings from operations for the second quarter were
The estimated effective income tax rate was 26.8 percent for the second quarter 2017, reflecting a 154-basis-point benefit from excess tax benefits associated with option exercises and vesting of stock-based compensation awards. Effective
Liquidity and Capital Resources
Cash provided by operating activities for the six-months ended
Property, plant and equipment additions for the six-months ended
At
Capital Allocation Priorities Remain Unchanged
Martin Marietta is dedicated to maintaining disciplined capital allocation to further enhance shareholder value. The Company's unchanged capital allocation priorities include:
- The right acquisitions that enable the successful execution of the Company's strategic growth plan
- Organic capital investment
- Return of cash to shareholders through:
- A meaningful and sustainable dividend; and
- Share repurchases
In keeping with these stated capital allocation priorities, the Company recently announced an agreement to acquire Bluegrass for
The Board of Directors of Martin Marietta previously authorized a share repurchase program under which the Company may acquire up to 20 million shares of its outstanding common stock. Since announcing its repurchase authorization in February of 2015, the Company has repurchased 5.4 million shares and, including the payment of dividends, returned
Full-Year 2017 Outlook
The Company is encouraged by largely positive trends in the markets it serves and its ability to execute its strategic business plans. Notably:
- Public sector growth is expected to continue in 2017 as new monies flow into the system. Fixing America's Surface Transportation, or FAST, Act projects should accelerate through the year, supported by ongoing activity funded through the Transportation Infrastructure Finance and Innovation Act (TIFIA). Additionally, state and local initiatives that support infrastructure funding, including gas tax increases and other 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 near its highest level since 2009, signaling continued growth. Additional energy-related economic activity, including follow-on public and private construction, will be mixed. While the majority of the
$61.5 billion of new energy-related projects are scheduled to start in 2018, earlier commencement may provide additional growth in 2017. - Residential construction is expected to continue growing, particularly in key Martin Marietta markets, driven by employment gains, historically low levels of construction activity over the previous years, low mortgage rates, higher lot development, and higher multi-family rental rates.
Based on these trends and expectations, including a return to more normal weather patterns, the Company anticipates achieving the following for the full year, exclusive of any impact from the pending acquisition of Bluegrass:
- Aggregates product line 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 | ||||||||
Low | High | |||||||
Consolidated Results | ||||||||
Consolidated net sales 1 | $ 3.75B | $ 3.95B | ||||||
Consolidated gross profit | $ 1.0B | $ 1.1B | ||||||
SG&A | $ 255M | $ 265M | ||||||
Interest expense | $ 85M | $ 90M | ||||||
Estimated tax rate (excluding discrete events) | 30 | % | 30 | % | ||||
Capital expenditures | $ 450M | $ 500M | ||||||
EBITDA | $ 1.05B | $ 1.13B | ||||||
Building Materials Business | ||||||||
Aggregates Product Line | ||||||||
Volume (total tons) 2 | 165M | 167M | ||||||
% growth 2 | 4.0 | % | 5.5 | % | ||||
Average selling price per ton | $ | 13.50 | $ | 13.75 | ||||
% growth | 5.0 | % | 7.0 | % | ||||
Net sales | $ 2.2B | $ 2.3B | ||||||
Gross profit | $ 660M | $ 725M | ||||||
Cement Product Line | ||||||||
Net sales | ||||||||
Gross profit | ||||||||
| ||||||||
Net sales | $ 1.325B | $ 1.400B | ||||||
Gross profit | ||||||||
Magnesia Specialties Business | ||||||||
Net sales | $ 235M | $ 240M | ||||||
Gross profit | $ 85M | $ 90M |
1 2017 consolidated net sales exclude
2 Represents 2017 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 as reported for the full year 2016, which includes 10.4 million internal tons.
Risks to Outlook
The 2017 outlook includes management's assessment of the likelihood of certain risks and uncertainties that may affect performance, including but not limited to: both price and volume, and a recurrence of widespread decline in aggregates volume negatively affecting aggregates price; the termination, capping and/or reduction of the federal and/or state gasoline tax(es) or other revenue related to infrastructure construction; a significant change in the funding patterns for traditional federal, state and/or local infrastructure projects; the United States Congress' inability to reach agreement among themselves or with the current Administration on policy issues that impact the federal budget; 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/or supply-chain challenges; 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. Further, increased highway construction funding pressures resulting from either federal or state issues can affect profitability. If these negatively affect transportation budgets more than in the past, construction spending could be reduced. Cement is subject to cyclical supply and demand and price fluctuations. 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.
The Company's principal business serves customers in 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 demand in the Company's end-use markets, production levels and the management of production costs will affect the operating leverage of the
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 aggregates products in 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 credit markets and the availability of and interest cost related to its 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 second-quarter 2017 earnings results on a conference call and an online web simulcast today (
Martin Marietta, a member of the S&P 500 Index, is an American-based company and a leading supplier of building materials, including aggregates, cement, ready mixed concrete, and asphalt. Through a network of operations spanning 26 states,
If you are interested in
Investors are cautioned that all statements in this press release that relate to the future involve risks and uncertainties, and are based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results. Forward-looking statements give the investor the Company's expectations or forecasts of future events. You can identify these statements by the fact that they do not relate only to historical or current facts. They may use words such as "anticipate," "expect," "should be," "believe," "will," and other words of similar meaning in connection with future events or future operating or financial performance. Any or all of our forward-looking statements here and in other publications may turn out to be wrong.
Factors that the Company currently believes could cause actual results to differ materially from the forward-looking statements in this press release include, the performance of
Unaudited Statements of Earnings | ||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales | $ | 996.3 | $ | 915.4 | $ | 1,788.0 | $ | 1,649.4 | ||||||||
Freight and delivery revenues | 67.2 | 61.9 | 119.4 | 116.6 | ||||||||||||
Total revenues | 1,063.5 | 977.3 | 1,907.4 | 1,766.0 | ||||||||||||
Cost of sales | 722.2 | 668.0 | 1,366.8 | 1,256.7 | ||||||||||||
Freight and delivery costs | 67.2 | 61.9 | 119.4 | 116.6 | ||||||||||||
Total cost of revenues | 789.4 | 729.9 | 1,486.2 | 1,373.3 | ||||||||||||
Gross profit | 274.1 | 247.4 | 421.2 | 392.7 | ||||||||||||
Selling, general and administrative expenses | 68.4 | 59.8 | 137.9 | 118.1 | ||||||||||||
Acquisition-related expenses, net | 2.0 | 0.2 | 2.0 | 0.6 | ||||||||||||
Other operating income, net | (9.2 | ) | (3.4 | ) | (8.7 | ) | (2.9 | ) | ||||||||
Earnings from operations | 212.9 | 190.8 | 290.0 | 276.9 | ||||||||||||
Interest expense | 24.0 | 20.3 | 44.9 | 40.3 | ||||||||||||
Other nonoperating income, net | (5.4 | ) | (5.0 | ) | (5.9 | ) | (3.7 | ) | ||||||||
Earnings before taxes on income | 194.3 | 175.5 | 251.0 | 240.3 | ||||||||||||
Taxes on income | 52.0 | 53.4 | 66.5 | 73.1 | ||||||||||||
Consolidated net earnings | 142.3 | 122.1 | 184.5 | 167.2 | ||||||||||||
Less: Net (loss) earnings attributable to noncontrolling interests | - | - | (0.1 | ) | 0.2 | |||||||||||
Net earnings attributable to | $ | 142.3 | $ | 122.1 | $ | 184.6 | $ | 167.0 | ||||||||
Net earnings per common share attributable to common shareholders: | ||||||||||||||||
Basic | $ | 2.26 | $ | 1.91 | $ | 2.92 | $ | 2.61 | ||||||||
Diluted | $ | 2.25 | $ | 1.90 | $ | 2.91 | $ | 2.60 | ||||||||
Dividends per common share | $ | 0.42 | $ | 0.40 | $ | 0.84 | $ | 0.80 | ||||||||
Average number of common shares outstanding: | ||||||||||||||||
Basic | 62.9 | 63.5 | 63.0 | 63.8 | ||||||||||||
Diluted | 63.1 | 63.8 | 63.2 | 64.1 | ||||||||||||
Unaudited Financial Highlights | ||||||||||||||||
(In millions) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales: | ||||||||||||||||
Building Materials Business: | ||||||||||||||||
$ | 269.8 | $ | 259.0 | $ | 447.2 | $ | 432.3 | |||||||||
88.5 | 82.7 | 175.2 | 150.0 | |||||||||||||
573.4 | 514.9 | 1,037.8 | 948.7 | |||||||||||||
Total | 931.7 | 856.6 | 1,660.2 | 1,531.0 | ||||||||||||
Magnesia Specialties | 64.6 | 58.8 | 127.8 | 118.4 | ||||||||||||
Total | $ | 996.3 | $ | 915.4 | $ | 1,788.0 | $ | 1,649.4 | ||||||||
Gross profit (loss): | ||||||||||||||||
Building Materials Business: | ||||||||||||||||
$ | 98.6 | $ | 92.8 | $ | 124.8 | $ | 120.4 | |||||||||
18.9 | 15.6 | 33.2 | 25.9 | |||||||||||||
132.7 | 118.9 | 217.3 | 207.2 | |||||||||||||
Total | 250.2 | 227.3 | 375.3 | 353.5 | ||||||||||||
Magnesia Specialties | 23.6 | 21.7 | 45.9 | 44.7 | ||||||||||||
Corporate | 0.3 | (1.6 | ) | - | (5.5 | ) | ||||||||||
Total | $ | 274.1 | $ | 247.4 | $ | 421.2 | $ | 392.7 | ||||||||
Selling, general and administrative expenses: | ||||||||||||||||
Building Materials Business: | ||||||||||||||||
$ | 13.7 | $ | 13.4 | $ | 27.3 | $ | 26.4 | |||||||||
4.5 | 4.5 | 8.8 | 8.4 | |||||||||||||
25.9 | 23.6 | 50.9 | 46.5 | |||||||||||||
Total | 44.1 | 41.5 | 87.0 | 81.3 | ||||||||||||
Magnesia Specialties | 2.4 | 2.4 | 4.8 | 4.8 | ||||||||||||
Corporate | 21.9 | 15.9 | 46.1 | 32.0 | ||||||||||||
Total | $ | 68.4 | $ | 59.8 | $ | 137.9 | $ | 118.1 | ||||||||
Earnings (Loss) from operations: | ||||||||||||||||
Building Materials Business: | ||||||||||||||||
$ | 85.4 | $ | 80.8 | $ | 98.7 | $ | 95.5 | |||||||||
14.3 | 11.6 | 24.5 | 18.6 | |||||||||||||
West Group | 112.5 | 99.4 | 173.7 | 165.2 | ||||||||||||
Total | 212.2 | 191.8 | 296.9 | 279.3 | ||||||||||||
Magnesia Specialties | 21.1 | 19.3 | 41.0 | 39.9 | ||||||||||||
Corporate | (20.4 | ) | (20.3 | ) | (47.9 | ) | (42.3 | ) | ||||||||
Total | $ | 212.9 | $ | 190.8 | $ | 290.0 | $ | 276.9 | ||||||||
Unaudited Financial Highlights | ||||||||||||||||
(In millions) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales by product line: | ||||||||||||||||
Building Materials Business: | ||||||||||||||||
Aggregates | $ | 578.4 | $ | 547.3 | $ | 1,029.8 | $ | 978.2 | ||||||||
241.9 | 214.9 | 464.3 | 401.8 | |||||||||||||
Cement | 99.0 | 87.4 | 192.7 | 184.3 | ||||||||||||
Asphalt and Paving | 112.0 | 88.1 | 138.6 | 101.9 | ||||||||||||
Less: Interproduct sales | (99.6 | ) | (81.1 | ) | (165.2 | ) | (135.2 | ) | ||||||||
Total | 931.7 | 856.6 | 1,660.2 | 1,531.0 | ||||||||||||
Magnesia Specialties Business | 64.6 | 58.8 | 127.8 | 118.4 | ||||||||||||
Total | $ | 996.3 | $ | 915.4 | $ | 1,788.0 | $ | 1,649.4 | ||||||||
Gross profit (loss) by product line: | ||||||||||||||||
Building Materials Business: | ||||||||||||||||
Aggregates | $ | 173.5 | $ | 165.0 | $ | 252.8 | $ | 247.1 | ||||||||
26.9 | 25.3 | 46.7 | 43.2 | |||||||||||||
Cement | 29.4 | 24.1 | 60.3 | 56.6 | ||||||||||||
Asphalt and Paving | 20.4 | 12.9 | 15.5 | 6.6 | ||||||||||||
Total | 250.2 | 227.3 | 375.3 | 353.5 | ||||||||||||
Magnesia Specialties Business | 23.6 | 21.7 | 45.9 | 44.7 | ||||||||||||
Corporate | 0.3 | (1.6 | ) | - | (5.5 | ) | ||||||||||
Total | $ | 274.1 | $ | 247.4 | $ | 421.2 | $ | 392.7 | ||||||||
Balance Sheet Data | ||||||||||
(In millions) | ||||||||||
2017 | 2016 | 2016 | ||||||||
(Unaudited) | (Audited) | (Unaudited) | ||||||||
ASSETS | ||||||||||
Cash and cash equivalents | $ | 36.7 | $ | 50.0 | $ | 28.6 | ||||
Accounts receivable, net | 570.6 | 457.9 | 534.5 | |||||||
Inventories, net | 549.9 | 521.6 | 504.9 | |||||||
Other current assets | 87.1 | 56.9 | 53.9 | |||||||
Property, plant and equipment, net | 3,505.3 | 3,423.4 | 3,322.2 | |||||||
Intangible assets, net | 2,663.3 | 2,670.7 | 2,643.5 | |||||||
Other noncurrent assets | 103.0 | 120.4 | 145.7 | |||||||
Total assets | $ | 7,515.9 | $ | 7,300.9 | $ | 7,233.3 | ||||
LIABILITIES AND EQUITY | ||||||||||
Current maturities of long-term debt and short-term facilities | $ | 140.0 | $ | 180.0 | $ | 238.2 | ||||
Other current liabilities | 394.3 | 366.6 | 363.4 | |||||||
Long-term debt (excluding current maturities) | 1,641.9 | 1,506.2 | 1,541.1 | |||||||
Other noncurrent liabilities | 1,139.2 | 1,105.5 | 1,074.1 | |||||||
Total equity | 4,200.5 | 4,142.6 | 4,016.5 | |||||||
Total liabilities and equity | $ | 7,515.9 | $ | 7,300.9 | $ | 7,233.3 | ||||
Unaudited Statements of Cash Flows | |||||||||
(In millions) | |||||||||
Six Months Ended | |||||||||
2017 | 2016 | ||||||||
Operating activities: | |||||||||
Consolidated net earnings | $ | 184.5 | $ | 167.2 | |||||
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities: | |||||||||
Depreciation, depletion and amortization | 146.1 | 139.6 | |||||||
Stock-based compensation expense | 17.7 | 12.8 | |||||||
Gain on divestitures and sales of assets | (17.5 | ) | (0.3 | ) | |||||
Deferred income taxes | 2.5 | 34.4 | |||||||
Other items, net | (4.4 | ) | (5.8 | ) | |||||
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||||
Accounts receivable, net | (112.7 | ) | (117.5 | ) | |||||
Inventories, net | (28.2 | ) | (33.1 | ) | |||||
Accounts payable | 11.7 | 32.5 | |||||||
Other assets and liabilities, net | 29.9 | (20.0 | ) | ||||||
Net cash provided by operating activities | 229.6 | 209.8 | |||||||
Investing activities: | |||||||||
Additions to property, plant and equipment | (216.1 | ) | (210.5 | ) | |||||
Acquisitions, net | (2.2 | ) | (123.0 | ) | |||||
Cash received in acquisition | - | 3.4 | |||||||
Proceeds from divestitures and sales of assets | 32.1 | 4.5 | |||||||
Payment of railcar construction advances | (40.9 | ) | - | ||||||
Reimbursement of railcar construction advances | 40.9 | - | |||||||
Net cash used for investing activities | (186.2 | ) | (325.6 | ) | |||||
Financing activities: | |||||||||
Borrowings of long-term debt | 941.2 | 280.0 | |||||||
Repayments of long-term debt | (845.0 | ) | (70.4 | ) | |||||
Payments on capital leases | (1.8 | ) | (1.6 | ) | |||||
Debt issue costs | (1.1 | ) | - | ||||||
Change in bank overdraft | 3.8 | (3.1 | ) | ||||||
Contributions by noncontrolling interest to joint venture | 0.2 | - | |||||||
Repurchases of common stock | (100.0 | ) | (190.0 | ) | |||||
Dividends paid | (53.1 | ) | (51.5 | ) | |||||
Issuances of common stock | 7.9 | 18.1 | |||||||
Shares withheld for employees' income tax obligations | (8.8 | ) | (5.5 | ) | |||||
Net cash used for financing activities | (56.7 | ) | (24.0 | ) | |||||
Net decrease in cash and cash equivalents | (13.3 | ) | (139.8 | ) | |||||
Cash and cash equivalents, beginning of period | 50.0 | 168.4 | |||||||
Cash and cash equivalents, end of period | $ | 36.7 | $ | 28.6 | |||||
Unaudited Operational Highlights | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
Volume | Pricing | Volume | Pricing | ||||||||||||||
Volume/Pricing Variance (1) | |||||||||||||||||
2.0 | % | 2.4 | % | 0.6 | % | 3.2 | % | ||||||||||
(3.2 | %) | 10.6 | % | 5.5 | % | 10.5 | % | ||||||||||
3.6 | % | 3.4 | % | 0.1 | % | 3.0 | % | ||||||||||
Total Aggregates Product Line (2) | 2.0 | % | 3.8 | % | 1.0 | % | 4.4 | % | |||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
Shipments (tons in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||||
20,513 | 20,116 | 33,251 | 33,054 | ||||||||||||||
5,203 | 5,375 | 10,231 | 9,693 | ||||||||||||||
17,707 | 17,091 | 32,552 | 32,515 | ||||||||||||||
Total Aggregates Product Line (2) | 43,423 | 42,582 | 76,034 | 75,262 | |||||||||||||
(1) Volume/pricing variances reflect the percentage increase (decrease) from the comparable period in the prior year. | |||||||||||||||||
(2) Aggregates product line includes acquisitions from the date of acquisition and divestitures through the date of disposal. | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Shipments (in thousands) | |||||||||||||||||
Aggregates tons - external customers | 40,411 | 39,895 | 70,829 | 70,655 | |||||||||||||
Internal aggregates tons used in other product lines | 3,012 | 2,687 | 5,205 | 4,607 | |||||||||||||
Total aggregates tons | 43,423 | 42,582 | 76,034 | 75,262 | |||||||||||||
2,226 | 1,997 | 4,282 | 3,783 | ||||||||||||||
Cement tons - external customers | 620 | 578 | 1,226 | 1,263 | |||||||||||||
Internal cement tons used in other product lines | 302 | 276 | 601 | 548 | |||||||||||||
922 | 854 | 1,827 | 1,811 | ||||||||||||||
Asphalt tons - external customers | 325 | 263 | 478 | 343 | |||||||||||||
Internal asphalt tons used in road paving business | 662 | 584 | 786 | 649 | |||||||||||||
Total asphalt tons | 987 | 847 | 1,264 | 992 | |||||||||||||
Average unit sales price by product line (including internal sales): | |||||||||||||||||
Aggregates (per ton) | $ | 13.24 | $ | 12.76 | $ | 13.45 | $ | 12.88 | |||||||||
$ | 106.90 | $ | 105.37 | $ | 106.39 | $ | 103.99 | ||||||||||
Cement (per ton) | $ | 106.31 | $ | 101.04 | $ | 104.44 | $ | 100.51 | |||||||||
Asphalt (per ton) | $ | 42.48 | $ | 38.25 | $ | 41.49 | $ | 38.89 | |||||||||
Non-GAAP Financial Measures | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
Gross margin as a percentage of net sales represents 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 and six months ended | |||||||||||||||||
Consolidated Gross Margin in Accordance with Generally Accepted Accounting Principles | Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gross profit | $ | 274.1 | $ | 247.4 | $ | 421.2 | $ | 392.7 | |||||||||
Total revenues | $ | 1,063.5 | $ | 977.3 | $ | 1,907.4 | $ | 1,766.0 | |||||||||
Gross margin | 25.8 | % | 25.3 | % | 22.1 | % | 22.2 | % | |||||||||
Consolidated Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gross profit | $ | 274.1 | $ | 247.4 | $ | 421.2 | $ | 392.7 | |||||||||
Total revenues | $ | 1,063.5 | $ | 977.3 | $ | 1,907.4 | $ | 1,766.0 | |||||||||
Less: Freight and delivery revenues | (67.2 | ) | (61.9 | ) | (119.4 | ) | (116.6 | ) | |||||||||
Net sales | $ | 996.3 | $ | 915.4 | $ | 1,788.0 | $ | 1,649.4 | |||||||||
Gross margin excluding freight and delivery revenues | 27.5 | % | 27.0 | % | 23.6 | % | 23.8 | % | |||||||||
Building Materials Business Gross Margin in Accordance with Generally Accepted Accounting Principles | Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gross profit | $ | 250.2 | $ | 227.3 | $ | 375.3 | $ | 353.5 | |||||||||
Total revenues | $ | 993.5 | $ | 913.7 | $ | 1,768.8 | $ | 1,638.2 | |||||||||
Gross margin | 25.2 | % | 24.9 | % | 21.2 | % | 21.6 | % | |||||||||
Building Materials Business Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gross profit | $ | 250.2 | $ | 227.3 | $ | 375.3 | $ | 353.5 | |||||||||
Total revenues | $ | 993.5 | $ | 913.7 | $ | 1,768.8 | $ | 1,638.2 | |||||||||
Less: Freight and delivery revenues | (61.8 | ) | (57.1 | ) | (108.6 | ) | (107.2 | ) | |||||||||
Net sales | $ | 931.7 | $ | 856.6 | $ | 1,660.2 | $ | 1,531.0 | |||||||||
Gross margin excluding freight and delivery revenues | 26.8 | % | 26.5 | % | 22.6 | % | 23.1 | % | |||||||||
Southeast Group Gross Margin in Accordance with Generally Accepted Accounting Principles | Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gross profit | $ | 18.9 | $ | 15.6 | $ | 33.2 | $ | 25.9 | |||||||||
Total revenues | $ | 92.3 | $ | 87.6 | $ | 182.6 | $ | 159.3 | |||||||||
Gross margin | 20.5 | % | 17.8 | % | 18.2 | % | 16.3 | % | |||||||||
Southeast Group Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gross profit | $ | 18.9 | $ | 15.6 | $ | 33.2 | $ | 25.9 | |||||||||
Total revenues | $ | 92.3 | $ | 87.6 | $ | 182.6 | $ | 159.3 | |||||||||
Less: Freight and delivery revenues | (3.8 | ) | (4.9 | ) | (7.4 | ) | (9.3 | ) | |||||||||
Net sales | $ | 88.5 | $ | 82.7 | $ | 175.2 | $ | 150.0 | |||||||||
Gross margin excluding freight and delivery revenues | 21.3 | % | 18.9 | % | 19.0 | % | 17.3 | % | |||||||||
Magnesia Specialties Business Gross Margin in Accordance with Generally Accepted Accounting Principles | Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gross profit | $ | 23.6 | $ | 21.7 | $ | 45.9 | $ | 44.7 | |||||||||
Total revenues | $ | 70.0 | $ | 63.6 | $ | 138.6 | $ | 127.8 | |||||||||
Gross margin | 33.7 | % | 34.1 | % | 33.1 | % | 35.0 | % | |||||||||
Magnesia Specialties Business Product Line Gross Margin Excluding Freight and Delivery Revenues | Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gross profit | $ | 23.6 | $ | 21.7 | $ | 45.9 | $ | 44.7 | |||||||||
Total revenues | $ | 70.0 | $ | 63.6 | $ | 138.6 | $ | 127.8 | |||||||||
Less: Freight and delivery revenues | (5.4 | ) | (4.8 | ) | (10.8 | ) | (9.4 | ) | |||||||||
Net sales | $ | 64.6 | $ | 58.8 | $ | 127.8 | $ | 118.4 | |||||||||
Gross margin excluding freight and delivery revenues | 36.6 | % | 36.9 | % | 35.9 | % | 37.8 | % | |||||||||
| ||||||||||||||||
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 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 by the Company's Credit Agreement, at | ||||||||||||||||
Twelve-Month Period | ||||||||||||||||
Earnings from continuing operations attributable to | $ | 443.0 | ||||||||||||||
Add back: | ||||||||||||||||
Interest expense | 86.2 | |||||||||||||||
Income tax expense | 175.0 | |||||||||||||||
Depreciation, depletion and amortization expense | 288.2 | |||||||||||||||
Stock-based compensation expense | 25.4 | |||||||||||||||
Deduct: | ||||||||||||||||
Interest income | (0.3 | ) | ||||||||||||||
Nonrecurring gains on divestitures, net | (5.9 | ) | ||||||||||||||
Consolidated EBITDA, as defined by the Company's Credit Agreement | $ | 1,011.6 | ||||||||||||||
Consolidated Net Debt, as defined and including debt for which the Company is a co-borrower, at | $ | 1,800.2 | ||||||||||||||
Consolidated Debt-to-Consolidated EBITDA, as defined by the Company's Credit Agreement, | ||||||||||||||||
at | 1.78 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 and six months ended | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Consolidated Earnings Before Interest, Income Taxes, Depreciation, Depletion and Amortization (EBITDA) | $ | 292.3 | $ | 266.5 | $ | 440.0 | $ | 419.1 | ||||||||
A Reconciliation of Net Earnings Attributable to | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net Earnings Attributable to | $ | 142.3 | $ | 122.1 | $ | 184.6 | $ | 167.0 | ||||||||
Add back: | ||||||||||||||||
Interest Expense | 24.0 | 20.3 | 44.9 | 40.3 | ||||||||||||
Taxes on Income | 52.0 | 53.4 | 66.5 | 73.1 | ||||||||||||
Depreciation, Depletion and Amortization Expense | 74.0 | 70.7 | 144.0 | 138.7 | ||||||||||||
Consolidated EBITDA | $ | 292.3 | $ | 266.5 | $ | 440.0 | $ | 419.1 | ||||||||
$ | 996.3 | $ | 915.4 | $ | 1,788.0 | $ | 1,649.4 | |||||||||
EBITDA margin as percentage of net sales | 29.3 | % | 29.1 | % | 24.6 | % | 25.4 | % | ||||||||
Investor Contact:Source:Elisabeth L. Eisleben Director, Investor Relations (919) 510-4776 Elisabeth.Eisleben@martinmarietta.com
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