mlm-8k_20181106.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) November 6, 2018

 

Martin Marietta Materials, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

North Carolina

 

1-12744

 

56-1848578

(State or Other Jurisdiction
of Incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

2710 Wycliff Road, Raleigh, North Carolina

 

27607

(Address of Principal Executive Offices)

 

(Zip Code)

(919) 781-4550

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 


 

 

Item 2.02

Results of Operations and Financial Condition.

On November 6, 2018, the Company announced financial results for the third quarter ended September 30, 2018.  The press release, dated November 6, 2018, is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

 

 

Item 7.01

Regulation FD Disclosure.

On November 6, 2018, the Company announced financial results for the third quarter ended September 30, 2018.  The press release, dated November 6, 2018, is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.  Additional information about the quarter, and the Company’s use of non-GAAP financial measures, which is available on the Company’s website at www.martinmarietta.com by clicking the heading “Financials”, in the “Investors” section and then clicking the quick link “Non-GAAP Financial Measures”.

The Company will host an online web simulcast of its third-quarter 2018 earnings conference call on Tuesday, November 6, 2018.  The live broadcast of the Company’s conference call will begin at 2:00 p.m., Eastern Time, on November 6, 2018.  An online replay will be available approximately two hours following the conclusion of the live broadcast and will continue for one year.  A link to these events will be available at the Company’s website at www.martinmarietta.com. For those investors without online web access, the conference call may also be accessed by calling 970-315-0423, confirmation number 1547199.  Additional information about the Company’s use of non-GAAP financial measures, as well as certain other financial or statistical information the Company may present at the conference call, will be provided on the Company’s website.

 

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

99.1

 

Press Release dated November 6, 2018, announcing financial results for the third quarter ended September 30, 2018.

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

MARTIN MARIETTA MATERIALS, INC.

 

 

 

 

 

(Registrant)

 

Date: November 6, 2018

 

 

By:

 

/s/ James A. J. Nickolas

 

 

 

 

 

James A. J. Nickolas,

 

 

 

 

 

Sr. Vice President and Chief Financial Officer

 

 

 

mlm-ex991_6.htm

EXHIBIT 99.1

 

 

 

 

MARTIN MARIETTA REPORTS THIRD QUARTER 2018 RESULTS

 

COMPANY ACHIEVED RECORD THIRD-QUARTER REVENUES,

GROSS PROFIT AND EARNINGS PER DILUTED SHARE

 

Double-Digit-Growth in Consolidated Revenues, Gross Profit and Net Earnings

 

Shipments and Pricing Increased for Aggregates, Cement and Ready Mixed Concrete

 

Cement Product Gross Margin Expanded 210 Basis Points

 

Magnesia Specialties Business Posted Record Revenues and Gross Profit

 

2018 Guidance Updated to Reflect Impact of Weather-Related Events

RALEIGH, N.C. (November 6, 2018) – Martin Marietta Materials, Inc. (NYSE:MLM) today reported results for the third quarter ended September 30, 2018.  

Highlights Include the Following:

Quarter Ended September 30,

 

($ in thousands, except per share)

2018

 

2017

 

Total revenues 1

$

1,219,640

 

$

1,087,732

 

Products and services revenues 2

$

1,142,218

 

$

1,022,487

 

Building Materials business products and services revenues

$

1,073,853

 

$

962,598

 

Magnesia Specialties business products and services revenues

$

68,365

 

$

59,889

 

Gross profit

$

312,984

 

$

291,678

 

Adjusted gross profit 3

$

321,333

 

$

291,678

 

Earnings from operations

$

240,662

 

$

226,964

 

Adjusted earnings from operations 4

$

256,213

 

$

228,278

 

Net earnings attributable to Martin Marietta

$

180,221

 

$

151,546

 

Adjusted EBITDA 5

$

348,984

 

$

303,276

 

Earnings per diluted share

$

2.85

 

$

2.39

 

 

 

1

Total revenues include the sales of products and services to customers (net of any discounts or allowances) and freight revenues.

 

2

Products and services revenues include the sales of aggregates, cement, ready mixed concrete, asphalt and Magnesia Specialties products, and paving services to customers, and exclude related freight revenues.

 

3

Adjusted gross profit excludes an increase in cost of revenues from the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting.  See appendix to this earnings release for a reconciliation to reported gross profit under generally accepted accounting principles (GAAP).

 

4

Adjusted earnings from operations exclude acquisition-related expenses, net; an increase in cost of revenues from the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting; and a restructuring charge.  See appendix to this earnings release for a reconciliation to reported earnings from operations under GAAP.

 

5

Adjusted EBITDA is a non-GAAP financial measure.  See appendix to this earnings release for a reconciliation to net earnings attributable to Martin Marietta.

- MORE -

 


 

 

Ward Nye, Chairman, President and CEO of Martin Marietta, stated, “Our record third-quarter results demonstrate Martin Marietta’s strong execution as we capitalized on the improving strength of the current construction cycle while successfully managing through near-term challenges. Aggregates, cement and ready mixed concrete shipments meaningfully accelerated in July and August under normal operating conditions.  Pricing also improved, highlighting robust product demand across our geographic footprint. In September, extraordinary weather challenges, including record Texas rainfall and devastation from Hurricane Florence, mostly in the Carolinas, adversely impacted our third quarter. As a result, Texas, our largest state by revenues, and North Carolina, our third-largest state by revenues and leading state by unit profitability, were disproportionately negatively affected during the industry’s busiest and most profitable period. Despite these short-term disruptions, we remain on track to once again deliver record revenues and EBITDA (Earnings Before Interest, Taxes, and Depreciation and Amortization) for the full year, and we are well-positioned to continue our growth trajectory in 2019.  

“We believe the ongoing construction cycle will continue to promote sustainable and steady growth for the foreseeable future, fueled by strong underlying demand and the long-awaited arrival of increased public-sector activity.  A compelling need for greater infrastructure investment exists to address much-needed maintenance and improvements, support economic growth and rebuild from weather events. We are encouraged by the recent and ongoing actions state and local governments are taking to secure additional funding for transportation projects. Indeed, Martin Marietta is poised to benefit from an acceleration in public lettings and contract awards in key states such as Texas, Colorado, North Carolina, Georgia and Florida. We are prepared to meet these future market demands. Important catalysts to do so will come from increased contractor capacity and logistics improvements. While getting better, these bottlenecks have nonetheless contributed to project delays and constrained construction growth in recent years. That said, these factors are also extending the construction cycle and promoting steady growth.”

Mr. Nye concluded, “Assessing these macroeconomic factors holistically and applying them to Martin Marietta, we anticipate increased private-sector demand, improving infrastructure construction activity and favorable pricing trends throughout 2019. We expect our key states to benefit from continued, favorable construction growth due to their attractive economic drivers and population trends. Our strategic geographic footprint, leading market positions, disciplined execution of our strategic plan and world-class attributes across our business - including safety, efficiency and operational excellence - firmly position Martin Marietta for both further growth and shareholder value creation.”


- MORE -

 


 

 

Operating Results

(All comparisons are versus the prior-year quarter unless noted otherwise)

 

Quarter ended September 30, 2018

 

($ in thousands)

Revenues

 

Gross profit (loss)

 

Gross margin

 

Building Materials business:

 

 

 

 

 

 

 

 

 

   Products and services:

 

 

 

 

 

 

 

 

 

Aggregates

$

687,800

 

$

209,082

 

 

30.4

%

Cement

 

98,223

 

 

32,543

 

 

33.1

%

Ready mixed concrete

 

254,686

 

 

20,632

 

 

8.1

%

Asphalt and paving

 

99,983

 

 

25,606

 

 

25.6

%

Less:  interproduct revenues

 

(66,839

)

-

 

-

 

   Products and services

 

1,073,853

 

 

287,863

 

 

26.8

%

   Freight

 

72,264

 

 

(47

)

NM

 

Total Building Materials business

 

1,146,117

 

 

287,816

 

 

25.1

%

Magnesia Specialties business:

 

 

 

 

 

 

 

 

 

   Products and services

 

68,365

 

 

26,823

 

 

39.2

%

   Freight

 

5,158

 

 

(1,076

)

NM

 

Total Magnesia Specialties business

 

73,523

 

 

25,747

 

 

35.0

%

Corporate

 

-

 

 

(579

)

NM

 

Total

$

1,219,640

 

$

312,984

 

 

25.7

%

 

Quarter ended September 30, 2017

 

($ in thousands)

Revenues

 

Gross profit (loss)

 

Gross margin

 

Building Materials business:

 

 

 

 

 

 

 

 

 

   Products and services:

 

 

 

 

 

 

 

 

 

Aggregates

$

590,312

 

$

187,065

 

 

31.7

%

Cement

 

88,470

 

 

27,459

 

 

31.0

%

Ready mixed concrete

 

240,222

 

 

23,913

 

 

10.0

%

Asphalt and paving

 

110,973

 

 

28,873

 

 

26.0

%

Less:  interproduct revenues

 

(67,379

)

 

-

 

 

-

 

   Products and services

 

962,598

 

 

267,310

 

 

27.8

%

   Freight

 

61,229

 

 

1,012

 

NM

 

Total Building Materials business

 

1,023,827

 

 

268,322

 

 

26.2

%

Magnesia Specialties business:

 

 

 

 

 

 

 

 

 

   Products and services

 

59,889

 

 

21,272

 

 

35.5

%

   Freight

 

4,016

 

 

(1,362

)

NM

 

Total Magnesia Specialties business

 

63,905

 

 

19,910

 

 

31.2

%

Corporate

 

-

 

 

3,446

 

NM

 

Total

$

1,087,732

 

$

291,678

 

 

26.8

%

 


- MORE -

 


 

 

Building Materials Business

Aggregates

Volume growth accelerated during the quarter’s first two months, reflecting strong underlying product demand, most notably in Texas, North Carolina, Georgia and Iowa. Despite clear market strength, extreme weather temporarily hindered construction activity. Record precipitation in Texas, compounded by disruptions from Hurricane Florence in the Carolinas, adversely impacted September’s aggregates shipment, production and overall efficiency levels.

Heritage aggregates volume and pricing improved 3.8 percent and 2.9 percent, respectively, excluding the third-quarter 2017 shipments from the Company’s Forsyth, Georgia, quarry that was divested in April 2018.  

 

Shipments for the Mid-America Group heritage operations increased 5.4 percent, driven by several large public and private construction projects in North Carolina and windfarm activity in Iowa. This growth was partially offset by disruptions from Hurricane Florence. Weather and product mix limited heritage pricing gains to 2.8 percent.

 

 

Shipments for the Southeast Group heritage operations increased 11.9 percent, excluding third-quarter 2017 shipments from the Forsyth, Georgia, quarry that was divested in April 2018.  This improvement was driven by strong construction activity in North Georgia and improving long-haul shipments from Florida distribution yards. Product mix of the Group’s offshore shipments muted heritage pricing growth to 1.7 percent.  

 

 

West Group shipments declined slightly, driven by record precipitation in September in Dallas/Fort Worth and San Antonio, as well as project delays in Colorado. Notably, the Southwest Division achieved double-digit volume growth heading into September, underscoring the region’s healthy construction market. West Group pricing improved 3.1 percent, reflecting robust pricing in Colorado that was partially offset by product mix and a lower percentage of higher-priced rail-shipped volumes in Texas.

Martin Marietta’s third-quarter heritage aggregates shipments by end use are as follows (all comparisons are versus the prior-year quarter):

Infrastructure Market

 

Aggregates shipments to the infrastructure market were flat as large public projects in North Carolina and Texas were weather delayed. The Company remains encouraged by the recent acceleration of state lettings and contract awards. As state Departments of Transportation (DOTs) and contractors continue to address labor constraints, and the broader industry benefits from further regulatory reform, management remains confident that infrastructure demand will continue to improve driven by funding provided by the Fixing America’s Surface Transportation Act (FAST Act) and numerous state and local transportation initiatives. While some contractors are reporting longer lag times between contract awards and project commencement, public construction projects, once awarded, are seen through to completion. Thus, delays from weather or other factors typically serve to extend the duration of the construction cycle for the Company’s single largest end-use market. Aggregates shipments to the infrastructure market comprised 41 percent of third-quarter aggregates volumes. On a year-to-date basis, the infrastructure market represented 39 percent of aggregates shipments, remaining below the Company’s most recent five-year average of 43 percent.

 

- MORE -

 


 

Nonresidential Market

 

 

Aggregates shipments to the nonresidential market increased 5 percent, driven by both commercial and heavy industrial construction activity. Looking ahead, ongoing energy-sector project approvals, supported by higher oil prices, underpin management’s expectation that the next wave of these large projects, particularly along the Gulf Coast, will contribute to increased aggregates demand for the next several years. The nonresidential market represented 33 percent of third-quarter aggregates shipments.    

Residential Market

 

 

Aggregates shipments to the residential market increased 7 percent. Florida, Texas, Colorado, North Carolina, South Carolina and Georgia, six of the Company’s key states, ranked in the top ten nationally for growth in single-family housing unit starts for the trailing twelve months ended August 31, 2018. The residential construction outlook across the Company’s geographic footprint remains positive for both single- and multi-family housing, driven by favorable demographics, job growth, land availability and efficient permitting. The residential market accounted for 20 percent of third-quarter aggregates shipments.

ChemRock/Rail Market

 

 

The ChemRock/Rail market accounted for the remaining 6 percent of third-quarter aggregates shipments. Shipments to this sector increased 6 percent, reflecting improved ballast shipments for the Midwest and Rocky Mountain Divisions.  

Aggregates product gross margin was 30.4 percent, inclusive of an $8.3 million negative impact on cost of revenues related to selling acquired inventory after its markup to fair value as part of acquisition accounting.  Excluding this impact, adjusted aggregates product gross margin was 31.6 percent.

 

Acquired operations shipped 5.1 million tons despite Maryland’s wettest third quarter in history.  Selling prices for acquired operations are 10 percent to 15 percent below the corporate average.  Synergy realization is progressing ahead of plan.

Cement

Third-quarter cement shipments and pricing improved 7.6 percent and 3.3 percent, respectively. Both of the Company’s cement operations reported double-digit volume growth prior to September’s record rainfall, underscoring strong Texas demand. These factors, combined with increased production efficiencies, led to a 210-basis-point expansion in product gross margin to 33.1 percent.  

Downstream businesses

Ready mixed concrete shipments increased 3.3 percent, with solid gains throughout the Rocky Mountain and Southwest Divisions, despite September’s record rainfall in Texas. Ready mixed concrete selling prices increased 2.7 percent. Project delays and permitting issues contributed to the 9.1 percent decrease in hot mixed asphalt shipments.  Asphalt pricing was essentially flat.  

 

 

 

- MORE -

 


 

Magnesia Specialties Business

Magnesia Specialties product revenues increased 14.2 percent to a record $68.4 million with growth in both the chemicals and lime businesses. Operating efficiencies, together with lower unit energy costs, contributed to a 370-basis-point expansion in third-quarter product gross margin to 39.2 percent.  

Consolidated

Other operating expenses, net, included a $7.1 million restructuring charge related to the Company’s Southwest ready mixed concrete business. This primarily consists of asset impairment and related severance charges, as various ready mixed concrete locations are consolidated. These actions are anticipated to improve the long-term profitability of the Southwest ready mixed concrete business.

 

Liquidity and Capital Resources

Cash provided by operating activities for the nine months ended September 30, 2018 was $441.5 million compared with $418.1 million in the first nine months of 2017.

Cash paid for property, plant and equipment additions for the nine months ended September 30, 2018 was $262.2 million. The Company expects capital expenditures of $375 million for full-year 2018 as it continues to prudently deploy capital into the business.

During the third quarter of 2018, the Company contributed $150.0 million to its qualified defined benefit retirement plan and repurchased 305 thousand shares of its common stock for $60.4 million. Additionally, the Company extended the maturity date of its $400 million trade receivable facility to September 25, 2019.

At September 30, 2018, the Company’s ratio of consolidated net debt-to-consolidated EBITDA, as defined in the applicable credit agreement, for the trailing twelve months was 2.72 times. The Company expects to be modestly above its target leverage ratio of 2.0X to 2.5X by the end of 2018.  

Commitment to Enhance Long-Term Shareholder Value

Martin Marietta is dedicated to disciplined capital allocation that preserves the Company’s financial flexibility and further enhances shareholder value. The Company’s capital allocation priorities remain unchanged and include value-enhancing acquisitions that promote the successful execution of the Company’s strategic growth plan, organic capital investment, and the return of cash to shareholders through a meaningful and sustainable dividend and share repurchases.

In August 2018, the Company increased its quarterly cash dividend by 9 percent. Additionally, the Company repurchased 305 thousand shares of common stock pursuant to its share repurchase authorization. The Company has now returned $1.3 billion to shareholders, in the form of dividend payments and share repurchases, since announcing a 20 million share repurchase authorization in February 2015. At September 30, 2018, 14.4 million shares remained under the current repurchase authorization and 62.7 million shares of Martin Marietta common stock were outstanding.   

 

 

 

- MORE -

 


 

Outlook for 2018

Management has updated its full-year 2018 guidance to reflect current trends and expectations, including the impact of extraordinary weather-related events encountered during the third quarter.

Specifically:  

 

Heritage aggregates average selling price is expected to increase in a range of 3 percent to 4 percent.

 

Heritage aggregates volume is expected to be flat to up 1 percent and expected shipments by end-use market, both compared with 2017 levels and excluding shipments of the Company’s Forsyth, Georgia, quarry that was divested in April 2018, are as follows:

 

Infrastructure shipments to be relatively flat.

 

Nonresidential shipments to increase in the low- to mid-single digits.

 

Residential shipments to increase in the high-single digits.

 

ChemRock/Rail shipments to decrease.


- MORE -

 


 

2018 GUIDANCE

 

($ and tons in thousands, except per ton)

Low *

 

 

High *

 

Consolidated

 

 

 

 

 

 

 

Total revenues 1

$

4,135,000

 

 

$

4,255,000

 

   Products and services revenues

$

3,855,000

 

 

$

3,985,000

 

   Freight revenues

$

250,000

 

 

$

270,000

 

Gross profit

$

960,000

 

 

$

1,000,000

 

Adjusted gross profit 2

$

980,000

 

 

$

1,020,000

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses (SG&A)

$

280,000

 

 

$

285,000

 

Interest expense

$

135,000

 

 

$

140,000

 

Estimated tax rate (excluding discrete events)

 

20

%

 

 

20

%

Net earnings attributable to Martin Marietta

$

460,000

 

 

$

505,000

 

Adjusted EBITDA 3

$

1,100,000

 

 

$

1,145,000

 

Capital expenditures

$

375,000

 

 

$

375,000

 

 

 

 

 

 

 

 

 

Building Materials Business

 

 

 

 

 

 

 

Aggregates

 

 

 

 

 

 

 

      Volume (total tons) 4

 

167,000

 

 

 

170,000

 

    % growth 4

 

6.0

%

 

 

8.0

%

      Average selling price per ton (ASP)

$

13.75

 

 

$

13.85

 

    % growth 5

 

2.0

%

 

 

3.0

%

      Total revenues

$

2,530,000

 

 

$

2,600,000

 

         Products and services revenues

$

2,320,000

 

 

$

2,370,000

 

         Freight revenues

$

210,000

 

 

$

230,000

 

      Gross profit

$

620,000

 

 

$

640,000

 

      Adjusted gross profit 2

$

640,000

 

 

$

660,000

 

 

 

 

 

 

 

 

 

Cement

 

 

 

 

 

 

 

      Total revenues

$

390,000

 

 

$

405,000

 

         Products and services revenues

$

375,000

 

 

$

390,000

 

         Freight revenues

$

15,000

 

 

$

15,000

 

      Gross profit

$

120,000

 

 

$

130,000

 

 

 

 

 

 

 

 

 

Ready Mixed Concrete and Asphalt and Paving

 

 

 

 

 

 

 

      Products and services revenues

$

1,205,000

 

 

$

1,235,000

 

      Gross profit

$

125,000

 

 

$

130,000

 

 

 

 

 

 

 

 

 

Magnesia Specialties Business

 

 

 

 

 

 

 

      Total revenues

$

280,000

 

 

$

285,000

 

         Products and services revenues

$

255,000

 

 

$

260,000

 

         Freight revenues

$

25,000

 

 

$

25,000

 

      Gross profit

$

95,000

 

 

$

100,000

 

*  Guidance range represents the low end and high end of the respective line items provided above.

 

1

2018 consolidated total revenues exclude $270 million related to estimated interproduct sales.

 

 

2

Adjusted gross profit is a non-GAAP financial measure and in each case excludes a $20 million increase in costs of revenues from the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting.

 

- MORE -

 


 

 

3

Adjusted EBITDA is a non-GAAP financial measure.  See appendix to this earnings release for a reconciliation to net earnings attributable to Martin Marietta.

 

 

4

Represents 2018 total aggregates volumes, which includes approximately 10.7 million internal tons. Volume growth ranges are in comparison with total volumes of 157.7 million tons reported for the full year 2017, which included 10.9 million internal tons and 0.9 million tons from the Company’s Forsyth, Georgia, quarry that was divested in April 2018.

 

 

5

ASP growth range is in comparison with ASP of $13.46 per ton reported for the full year 2017.  The 2% to 3% ASP growth shown above reflects the inclusion of legacy Bluegrass Materials pricing which is below the heritage corporate average.

 

 

Preliminary View of 2019

Management’s preliminary view of 2019 anticipates mid-single-digit growth in both aggregates pricing and shipments.

Supported by third-party forecasts, Martin Marietta believes the current construction cycle will continue to expand at a steady pace in 2019 for each of its three primary construction end-use markets. Notably:

 

Infrastructure construction activity should benefit from the funding provided by the FAST Act as state DOTs and contractors continue to address labor constraints and the benefits of further regulatory reform emerge. Additionally, state and local initiatives that support infrastructure funding, including gas tax increases, bond programs and other ballot initiatives, continue to garner voter approval at historically attractive levels and will play an expanded role in public-sector activity. Third-party forecasts support increased infrastructure investment in 2019 and beyond, particularly for aggregates-intensive highways and streets.

 

Nonresidential construction activity should increase in both the commercial and heavy industrial sectors for the next several years across many of the Company’s key markets as supported by third-party forecasts. Continued federal regulatory approvals, supported by higher oil prices, should notably contribute to increased aggregates consumption from the next wave of energy-sector projects, particularly along the Gulf Coast. Construction activity for these projects is expected to begin in earnest in 2019 and beyond.  

 

Residential construction should continue to grow. Management believes a shortage of single-family housing units exists, particularly for entry-level homes; a need the homebuilding industry is now beginning to address. Martin Marietta’s leading positions in southeastern and southwestern states offer superior opportunities for gains in single-family housing driven by a multitude of factors, such as affordable land, lower taxes and fewer regulatory barriers. Residential housing starts of 1.2 million units for the trailing twelve months ended September 2018 remain below the 50-year average of 1.5 million annual starts. Continued strength in residential construction supports future infrastructure and nonresidential activity.

Martin Marietta remains confident in its near- and long-term outlooks given the disciplined execution of its strategic plan and its attractive geographic footprint. Throughout the Company’s portfolio, underlying market fundamentals, including employment, population growth and state fiscal health, are robust and the Company’s markets show no signs of either a slowdown or being overbuilt.  

 


- MORE -

 


 

 

Non-GAAP Financial Information

This earnings release contains financial measures that have not been prepared in accordance with GAAP.  Reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the accompanying appendix to this earnings release.  

Conference Call Information

The Company will discuss its third-quarter 2018 earnings results on a conference call and an online web simulcast today (November 6, 2018). The live broadcast of the Martin Marietta conference call will begin at 2:00 p.m. Eastern Time today. An online replay will be available approximately two hours following the conclusion of the live broadcast. A link to these events will be available at the Company’s website. Additionally, the Company has posted supplemental information related to its third-quarter performance on its website. For those investors without online web access, the conference call may also be accessed by calling (970) 315-0423, confirmation number 1547199.

About Martin Marietta

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 27 states, Canada and The Bahamas, dedicated Martin Marietta teams supply the resources necessary for building the solid foundations on which our communities thrive. Martin Marietta’s Magnesia Specialties business provides a full range of magnesium oxide, magnesium hydroxide and dolomitic lime products. For more information, visit www.martinmarietta.com or www.magnesiaspecialties.com.

Investor Contact:  

Suzanne Osberg

Vice President, Investor Relations

(919) 783-4691

Suzanne.Osberg@martinmarietta.com

 

MLM-E.


- MORE -

 


 

 

If you are interested in Martin Marietta Materials, Inc. stock, management recommends that, at a minimum, you read the Company’s current annual report and Forms 10-K, 10-Q and 8-K reports to the Securities and Exchange Commission (SEC) over the past year.  The Company’s recent proxy statement for the annual meeting of shareholders also contains important information.  These and other materials that have been filed with the SEC are accessible through the Company’s website at www.martinmarietta.com and are also available at the SEC’s website at www.sec.gov.  You may also write or call the Company’s Corporate Secretary, who will provide copies of such reports.

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.  These statements, which are forward-looking statements under the Private Securities Litigation Reform Act of 1995, 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”, “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.

The Company’s outlook is subject to various risks and uncertainties, and is based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results. Factors that the Company currently believes could cause actual results to differ materially from the forward-looking statements in this press release (including the outlook) include, but are not limited to: the performance of the United States economy; shipment declines resulting from economic events beyond the Company’s control; a widespread decline in aggregates pricing, including a decline in aggregates volume negatively affecting aggregates price; the history of both cement and ready mixed concrete being subject to significant changes in supply, demand and price fluctuations; the termination, capping and/or reduction or suspension of the federal and/or state gasoline tax(es) or other revenue related to infrastructure construction; the level and timing of federal, state or local transportation or infrastructure projects funding, most particularly in Texas, North Carolina, Iowa, Colorado, Georgia and Maryland; the United States Congress’ inability to reach agreement among themselves or with the current Administration on policy issues that impact the federal budget; the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures; levels of construction spending in the markets the Company serves; a reduction in defense spending, and the subsequent impact on construction activity on or near military bases; a decline in the commercial component of the nonresidential construction market, notably office and retail space; a 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, particularly in Texas; a slowdown in residential construction recovery; unfavorable weather conditions, particularly Atlantic Ocean and Gulf Coast hurricane activity, the late start to spring or the early onset of winter and the impact of a drought or excessive rainfall in the markets served by the Company, any of which can significantly affect production schedules, volumes and profitability; the volatility of fuel costs, particularly diesel fuel, and the impact on the cost, or the availability generally, of other consumables, namely steel, explosives, tires and conveyor belts, and with respect to the Company’s Magnesia Specialties business, natural gas; continued increases in the cost of other repair and supply parts; construction labor shortages and/or supply‐chain challenges; unexpected equipment failures, unscheduled maintenance, industrial accident or other prolonged and/or significant disruption to production facilities; increasing governmental regulation, including environmental laws; transportation availability or a sustained reduction in capital investment by the railroads, notably the availability of railcars, locomotive power and the condition of rail infrastructure to move trains to supply the Company’s Texas, Colorado, Florida, North Carolina and the Gulf Coast markets, including the movement of essential dolomitic lime for magnesia chemicals to the Company’s plant in Manistee, Michigan and its customers; increased transportation costs, including increases from higher or fluctuating passed-through energy costs or fuel surcharges, and other costs to comply with tightening regulations, as well as higher volumes of rail and water shipments; availability of trucks and licensed drivers for transport of the Company’s materials; availability and cost of construction equipment in the United States; weakening in the steel industry markets served by the Company’s dolomitic lime products;  a trade dispute with one or more nations impacting the U.S. economy, including the impact of tariffs on the steel industry; unplanned changes in costs or realignment of customers that introduce volatility to earnings, including that of the Magnesia Specialties business that is running at capacity; proper functioning of information technology and automated operating systems to manage or support operations; inflation and its effect on both production and interest costs; the concentration of customers in construction markets and the increased risk of potential losses on customer receivables; the impact of the level of demand in the Company’s end-use markets, production levels and management of production costs on the operating leverage and therefore profitability of the Company;  the possibility that the expected synergies from acquisitions (including the acquisition of Bluegrass) will not be realized or will not be realized within the expected time period, including achieving anticipated profitability to maintain compliance with the Company’s leverage ratio debt covenant; changes in tax laws, the interpretation of such laws and/or administrative practices that would increase the Company’s tax rate;  violation of the Company’s debt covenant if price and/or volumes return to previous levels of instability; continued downward pressure on the Company’s common stock price and its impact on goodwill impairment evaluations; reduction of the Company’s credit rating to non-investment grade resulting from strategic acquisitions; and other risk factors listed from time to time found in the Company’s filings with the SEC.  

You should consider these forward-looking statements in light of risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2017, our Current Report on Form 8-K filed on March 16, 2018 and other periodic filings made with the SEC.  All of our forward-looking statements should be considered in light of these factors.  In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements, or adversely affect or be material to the Company.  The Company assumes no obligation to update any such forward-looking statements.

 

 

 

- MORE -

 


Appendix

 

MARTIN MARIETTA MATERIALS, INC.

 

Unaudited Statements of Earnings

 

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Products and services revenues

 

$

1,142,218

 

 

$

1,022,487

 

 

$

3,024,300

 

 

$

2,811,646

 

Freight revenues

 

 

77,422

 

 

 

65,245

 

 

 

199,747

 

 

 

183,470

 

Total revenues

 

 

1,219,640

 

 

 

1,087,732

 

 

 

3,224,047

 

 

 

2,995,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues - products and services

 

 

828,110

 

 

 

730,459

 

 

 

2,282,159

 

 

 

2,097,272

 

Cost of revenues - freight

 

 

78,546

 

 

 

65,595

 

 

 

202,595

 

 

 

185,006

 

Total cost of revenues

 

 

906,656

 

 

 

796,054

 

 

 

2,484,754

 

 

 

2,282,278

 

Gross Profit

 

 

312,984

 

 

 

291,678

 

 

 

739,293

 

 

 

712,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling general & administrative expenses

 

 

68,441

 

 

 

57,219

 

 

 

209,632

 

 

 

195,127

 

Acquisition-related expenses, net

 

 

89

 

 

 

1,314

 

 

 

12,925

 

 

 

3,319

 

Other operating expenses and (income), net

 

 

3,792

 

 

 

6,181

 

 

 

(26,960

)

 

 

(2,575

)

Earnings from operations

 

 

240,662

 

 

 

226,964

 

 

 

543,696

 

 

 

516,967

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

35,468

 

 

 

23,141

 

 

 

103,526

 

 

 

68,037

 

Other nonoperating income, net

 

 

(4,248

)

 

 

(479

)

 

 

(19,873

)

 

 

(6,434

)

Earnings before income tax expense

 

 

209,442

 

 

 

204,302

 

 

 

460,043

 

 

 

455,364

 

Income tax expense

 

 

29,089

 

 

 

52,763

 

 

 

84,147

 

 

 

119,277

 

Consolidated net earnings

 

 

180,353

 

 

 

151,539

 

 

 

375,896

 

 

 

336,087

 

Less: Net earnings attributable to noncontrolling interests

 

 

132

 

 

 

(7

)

 

 

275

 

 

 

(72

)

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

$

180,221

 

 

$

151,546

 

 

$

375,621

 

 

$

336,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per common share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.86

 

 

$

2.40

 

 

$

5.95

 

 

$

5.33

 

Diluted

 

$

2.85

 

 

$

2.39

 

 

$

5.93

 

 

$

5.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share

 

$

0.48

 

 

$

0.44

 

 

$

1.36

 

 

$

1.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

 

62,932

 

 

 

62,896

 

 

 

62,970

 

 

 

62,940

 

     Diluted

 

 

63,167

 

 

 

63,158

 

 

 

63,224

 

 

 

63,218

 

 

 

- MORE -

 


Appendix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MARTIN MARIETTA MATERIALS, INC.

 

Unaudited Financial Highlights

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid-America Group

 

$

377,005

 

 

$

308,472

 

 

$

906,377

 

 

$

788,390

 

Southeast Group

 

 

125,547

 

 

 

94,843

 

 

 

318,749

 

 

 

277,474

 

West Group

 

 

643,565

 

 

 

620,512

 

 

 

1,783,174

 

 

 

1,726,742

 

Total Building Materials Business

 

 

1,146,117

 

 

 

1,023,827

 

 

 

3,008,300

 

 

 

2,792,606

 

Magnesia Specialties

 

 

73,523

 

 

 

63,905

 

 

 

215,747

 

 

 

202,510

 

Total

 

$

1,219,640

 

 

$

1,087,732

 

 

$

3,224,047

 

 

$

2,995,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid-America Group

 

$

131,331

 

 

$

117,957

 

 

$

270,461

 

 

$

242,778

 

Southeast Group

 

 

30,783

 

 

 

18,371

 

 

 

56,933

 

 

 

51,623

 

West Group

 

 

125,702

 

 

 

131,994

 

 

 

333,949

 

 

 

349,267

 

Total Building Materials Business

 

 

287,816

 

 

 

268,322

 

 

 

661,343

 

 

 

643,668

 

Magnesia Specialties

 

 

25,747

 

 

 

19,910

 

 

 

73,476

 

 

 

65,849

 

Corporate

 

 

(579

)

 

 

3,446

 

 

 

4,474

 

 

 

3,321

 

Total

 

$

312,984

 

 

$

291,678

 

 

$

739,293

 

 

$

712,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid-America Group

 

$

14,113

 

 

$

12,671

 

 

$

41,260

 

 

$

39,934

 

Southeast Group

 

 

4,440

 

 

 

4,097

 

 

 

13,689

 

 

 

12,896

 

West Group

 

 

26,600

 

 

 

24,716

 

 

 

79,892

 

 

 

75,665

 

Total Building Materials Business

 

 

45,153

 

 

 

41,484

 

 

 

134,841

 

 

 

128,495

 

Magnesia Specialties

 

 

2,404

 

 

 

2,329

 

 

 

7,512

 

 

 

7,146

 

Corporate

 

 

20,884

 

 

 

13,406

 

 

 

67,279

 

 

 

59,486

 

Total

 

$

68,441

 

 

$

57,219

 

 

$

209,632

 

 

$

195,127

 

 

- MORE -

 


Appendix

 

MARTIN MARIETTA MATERIALS, INC.

 

Unaudited Financial Highlights (Continued)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid-America Group

 

$

120,344

 

 

$

106,235

 

 

$

235,221

 

 

$

204,939

 

Southeast Group

 

 

26,372

 

 

 

17,882

 

 

 

60,464

 

 

 

42,331

 

West Group

 

 

92,090

 

 

 

96,522

 

 

 

249,885

 

 

 

270,246

 

Total Building Materials Business

 

 

238,806

 

 

 

220,639

 

 

 

545,570

 

 

 

517,516

 

Magnesia Specialties

 

 

23,301

 

 

 

17,590

 

 

 

65,867

 

 

 

58,589

 

Corporate

 

 

(21,445

)

 

 

(11,265

)

 

 

(67,741

)

 

 

(59,138

)

Total

 

$

240,662

 

 

$

226,964

 

 

$

543,696

 

 

$

516,967

 

 

- MORE -

 


Appendix

 

MARTIN MARIETTA MATERIALS, INC.

 

Unaudited Financial Highlights (Continued)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials business products and services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

687,800

 

 

$

590,312

 

 

$

1,778,124

 

 

$

1,619,282

 

Cement

 

 

98,223

 

 

 

88,470

 

 

 

300,554

 

 

 

280,961

 

Ready Mixed Concrete

 

 

254,686

 

 

 

240,222

 

 

 

750,424

 

 

 

704,471

 

Asphalt and paving

 

 

99,983

 

 

 

110,973

 

 

 

199,489

 

 

 

215,652

 

Less:  Interproduct sales

 

 

(66,839

)

 

 

(67,379

)

 

 

(205,681

)

 

 

(198,638

)

Subtotal

 

 

1,073,853

 

 

 

962,598

 

 

 

2,822,910

 

 

 

2,621,728

 

Freight

 

 

72,264

 

 

 

61,229

 

 

 

185,390

 

 

 

170,878

 

Total Building Materials Business

 

 

1,146,117

 

 

 

1,023,827

 

 

 

3,008,300

 

 

 

2,792,606

 

Magnesia Specialties business: