Martin Marietta Reports Second Quarter 2019 Results
Aggregates Shipments Increased 10 Percent
Pricing Momentum Continued with Gains Across All Building Materials Product Lines
Magnesia Specialties Business Posted Quarterly Records for Revenues and Profitability
Company Raises Full-Year Guidance
Highlights include:
Quarter Ended June 30, | |||||||
($ in thousands, except per share) | 2019 | 2018 | |||||
Total revenues 1 | $ | 1,279,468 | $ | 1,202,403 | |||
Products and services revenues 2 | $ | 1,196,135 | $ | 1,128,777 | |||
Building Materials business | $ | 1,125,756 | $ | 1,060,620 | |||
Magnesia Specialties business | $ | 70,379 | $ | 68,157 | |||
Gross profit | $ | 356,867 | $ | 315,917 | |||
Adjusted gross profit 3 | $ | 356,867 | $ | 326,084 | |||
Earnings from operations | $ | 285,882 | $ | 263,953 | |||
Adjusted earnings from operations 4 | $ | 285,882 | $ | 286,246 | |||
Net earnings attributable to Martin Marietta | $ | 189,475 | $ | 185,377 | |||
Adjusted EBITDA 5 | $ | 378,467 | $ | 376,096 | |||
Earnings per diluted share 6 | $ | 3.01 | $ | 2.92 |
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 | 2018 second-quarter 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 | 2018 second-quarter adjusted earnings from operations exclude 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 acquisition-related expenses, net. 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. | |
6 | 2019 second-quarter earnings per diluted shares includes a charge of $0.19 per diluted share for a prior-period error that overstated equity earnings from a nonconsolidated affiliate. 2018 second-quarter earnings per diluted share includes a charge of $0.12 per diluted share for the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting and a charge of $0.21 per diluted share for acquisition-related expenses, net. Second-quarter 2018 also includes nonrecurring gains on the sale of surplus land and favorable litigation settlements which contributed $0.29 per diluted share. | |
“Construction activity in our Top 10 states is outpacing the nation as a whole, as evidenced by recent trends in total construction starts. Importantly, aggregates shipments to our three primary end-use markets increased for a second consecutive quarter, demonstrating the breadth of overall demand in our key regions. Attractive underlying market fundamentals, including notable employment gains, population growth and superior state fiscal health, across our geographic footprint should continue to bolster private-sector construction demand. We expect infrastructure projects to accelerate during the second half of the year, supported by meaningful increases in public lettings and contract awards in our key states, notably
Mr. Nye concluded, “Throughout our 25-year history as a public company, Martin Marietta has established a proven record of responsibly managing and growing our business to create long-term shareholder value. Going forward, we will continue to build upon our successful approach of price discipline, strategic geographic positioning and prudent capital allocation. We remain committed to the disciplined execution of our strategic plan and the world-class attributes of our business – including safety, ethics, cost oversight and operational excellence – to drive continued profitability growth in 2019 and beyond.”
Mr. Nye’s CEO Commentary may be found on the Investor Relations section of the Company’s website.
Second-Quarter Operating Results
(All comparisons are versus the prior-year quarter unless noted otherwise)
Quarter ended June 30, 2019 | |||||||||
($ in thousands) | Revenues | Gross profit (loss) | Gross margin | ||||||
Building Materials business: | |||||||||
Products and services: | |||||||||
Aggregates | $ | 757,802 | $ | 251,422 | 33.2 | % | |||
Cement | 112,350 | 42,229 | 37.6 | % | |||||
Ready mixed concrete | 241,178 | 19,014 | 7.9 | % | |||||
Asphalt and paving | 82,198 | 15,742 | 19.2 | % | |||||
Less: interproduct revenues | (67,772 | ) | - | - | |||||
Products and services | 1,125,756 | 328,407 | 29.2 | % | |||||
Freight | 77,473 | 227 | NM | ||||||
Total Building Materials business | 1,203,229 | 328,634 | 27.3 | % | |||||
Magnesia Specialties business: | |||||||||
Products and services | 70,379 | 29,212 | 41.5 | % | |||||
Freight | 5,860 | (1,174 | ) | NM | |||||
Total Magnesia Specialties business | 76,239 | 28,038 | 36.8 | % | |||||
Corporate | - | 195 | NM | ||||||
Total | $ | 1,279,468 | $ | 356,867 | 27.9 | % |
Quarter ended June 30, 2018 | |||||||||
($ in thousands) | Revenues | Gross profit (loss) | Gross margin | ||||||
Building Materials business: | |||||||||
Products and services: | |||||||||
Aggregates | $ | 666,966 | $ | 198,705 | 29.8 | % | |||
Cement | 113,148 | 41,305 | 36.5 | % | |||||
Ready mixed concrete | 277,202 | 29,952 | 10.8 | % | |||||
Asphalt and paving | 81,482 | 18,347 | 22.5 | % | |||||
Less: interproduct revenues | (78,178 | ) | - | - | |||||
Products and services | 1,060,620 | 288,309 | 27.2 | % | |||||
Freight | 68,821 | 598 | NM | ||||||
Total Building Materials business | 1,129,441 | 288,907 | 25.6 | % | |||||
Magnesia Specialties business: | |||||||||
Products and services | 68,157 | 24,870 | 36.5 | % | |||||
Freight | 4,805 | (1,028 | ) | NM | |||||
Total Magnesia Specialties business | 72,962 | 23,842 | 32.7 | % | |||||
Corporate | - | 3,168 | NM | ||||||
Total | $ | 1,202,403 | $ | 315,917 | 26.3 | % | |||
Building Materials Business
Second-quarter operating results reflect strong underlying product demand, most notably in
Aggregates
Second-quarter aggregates volume and pricing improved 9.9 percent and 3.4 percent, respectively. Same-store aggregates volume and pricing improved 6.1 percent and 4.1 percent, respectively.
- Shipments for the
Mid-America Group operations increased 15.9 percent, or 10.2 percent on a same-store basis, supported by infrastructure and commercial projects. Additionally, the Midwest Division benefited from shipments related to emergency flood repairs. Pricing improved 1.6 percent, or 3.0 percent on a same-store basis.
- Shipments for the
Southeast Group operations increased 12.7 percent, or 5.4 percent on a same-store basis, reflecting the strength of theNorth Georgia andFlorida markets. Pricing improved 7.3 percent, or 8.3 percent on a same-store basis, driven by solid gains inNorth Georgia and a higher percentage of long-haul shipments.
West Group shipments increased 1.1 percent despite unfavorable weather that contributed to project delays.West Group pricing increased 3.4 percent.
Martin Marietta’s second-quarter aggregates shipments by end use are as follows (all comparisons are versus the prior-year quarter):
Infrastructure Market
- Aggregates shipments to the infrastructure market increased 2 percent as contractors continued to advance transportation-related projects. Following more than a decade of underinvestment, management believes infrastructure demand is poised for meaningful growth. Funding provided by the Fixing America’s Surface Transportation Act (FAST Act), combined with numerous state and local transportation initiatives, has recently accelerated lettings and contract awards in key states, including
Texas ,Colorado ,Iowa andMaryland . For the quarter, the infrastructure market represented 37 percent of aggregates shipments, which is below the Company’s most recent ten-year average of 46 percent.
Nonresidential Market
- Aggregates shipments to the nonresidential market increased 25 percent, driven by gains in commercial and heavy industrial construction activity. The Company continued to benefit from robust distribution center, warehouse, data center and wind energy projects in key geographies, including
Texas , the Carolinas,Georgia andIowa , as well as the early phases of several large energy-sector projects along theGulf Coast . The nonresidential market represented 37 percent of second-quarter aggregates shipments.
Residential Market
- Aggregates shipments to the residential market increased modestly, as ongoing homebuilding activity in the Carolinas,
Georgia andFlorida was offset by weather-related delays inTexas . 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, low interest rates and efficient permitting. On a national level, housing starts remain below the 50-year annual average of 1.5 million despite notable population gains. The residential market accounted for 21 percent of second-quarter aggregates shipments.
ChemRock/Rail Market
- The ChemRock/Rail market accounted for the remaining 5 percent of second-quarter aggregates shipments. Volumes to this end use increased 11 percent, driven by improved ballast shipments to the western Class I railroads for emergency flood repairs.
Aggregates product gross margin increased 340 basis points to 33.2 percent, reflecting improved operating leverage from increased shipment and production levels and the absence of the
Cement
Second-quarter cement product revenues decreased slightly, as pricing growth of 4.6 percent was offset by a 4.9 percent volume decline resulting from extreme
Downstream businesses
Ready mixed concrete shipments decreased 15.5 percent, driven by unfavorable weather conditions in
Magnesia Specialties Business
Magnesia Specialties product revenues increased 3.3 percent to a record
Consolidated
During the second quarter ended
For the quarter ended
Liquidity and Capital Resources
Cash provided by operating activities for the six months ended
Cash paid for property, plant and equipment additions for the six months ended
At
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.
The Company has returned
Full-Year Outlook
Martin Marietta’s geographic footprint has attractive underlying market fundamentals, including notable employment gains, population growth and superior state fiscal health – all attributes promoting steady and sustainable construction growth. Supported by robust underlying demand and third-party forecasts, Martin Marietta is raising its full-year guidance based on its belief that the current construction cycle will continue for the foreseeable future and expand further this year for each of the Company’s three primary construction end-use markets. Notably:
- Infrastructure construction, particularly for aggregates-intensive highways and streets, should benefit from recent accelerations in state lettings and contract awards in key Martin Marietta states, continued FAST Act funding, and regulatory reform that allows for reduced permitting time for large projects. Importantly, states will continue to play an expanded role in infrastructure investment. Incremental funding at the state and local levels, through bond issuances, toll roads and tax initiatives, should grow at faster near-term rates than federal funding. Martin Marietta’s top ten states –
Texas ,Colorado ,North Carolina ,Georgia ,Iowa ,Florida ,South Carolina ,Indiana ,Maryland andNebraska – accounted for 85 percent of total Building Materials’ revenues in 2018 and have all introduced incremental transportation funding measures within the last five years. Third-party forecasts also predict increased infrastructure investment this year and beyond.
- Nonresidential construction should increase in both the commercial and heavy industrial sectors for the next several years across many of the Company’s key markets. Both the Architectural Billings Index and Dodge Momentum Index indicate healthy commercial construction activity throughout the year. Continued federal regulatory approvals should notably contribute to increased heavy building materials consumption from the next wave of large energy-sector projects, particularly along the
Gulf Coast . Construction activity for these projects has begun in earnest and is expected to continue for several years.
- Residential construction should continue to grow within Martin Marietta’s geographic footprint, particularly as mortgage rates remain attractive and homebuilders are beginning to address the need for more affordable homes. The Company’s leading positions in southeastern and southwestern states offer superior opportunities for gains in both multi- and single-family housing, driven by a multitude of factors, such as available land, an overall business-friendly environment and fewer regulatory barriers. The Company believes that permits represent the best indicator of future housing construction. Martin Marietta’s top ten states outpaced the nation in housing unit permit growth for the trailing twelve months ended May 2019 for all three residential categories: total, multi-family and single-family. Continued strength in residential construction supports future infrastructure and nonresidential activity.
Based on current trends and expectations, management has raised its full-year guidance as follows:
- Aggregates shipments by end-use market compared with 2018 levels are as follows:
- Infrastructure shipments to increase in the high-single digits.
- Nonresidential shipments to experience a double-digit increase.
- Residential shipments to increase in the mid-single digits.
- ChemRock/Rail shipments to be up slightly.
2019 GUIDANCE | |||||||
($ and tons in thousands, except per ton) | Low * | High * | |||||
Consolidated | |||||||
Total revenues 1 | $ | 4,535,000 | $ | 4,730,000 | |||
Products and services revenues | $ | 4,255,000 | $ | 4,430,000 | |||
Freight revenues | $ | 280,000 | $ | 300,000 | |||
Gross profit | $ | 1,130,000 | $ | 1,235,000 | |||
Selling, general and administrative expenses (SG&A) | $ | 290,000 | $ | 300,000 | |||
Interest expense | $ | 130,000 | $ | 140,000 | |||
Estimated tax rate (excluding discrete events) | 20 | % | 22 | % | |||
Net earnings attributable to Martin Marietta | $ | 530,000 | $ | 640,000 | |||
Adjusted EBITDA 2 | $ | 1,200,000 | $ | 1,315,000 | |||
Capital expenditures | $ | 350,000 | $ | 400,000 | |||
Building Materials Business | |||||||
Aggregates | |||||||
Volume (total tons) 3 | 185,000 | 188,000 | |||||
% growth 3 | 8.0 | % | 10.0 | % | |||
Average selling price per ton (ASP) | $ | 14.15 | $ | 14.40 | |||
% growth 4 | 3.0 | % | 5.0 | % | |||
Total revenues | $ | 2,865,000 | $ | 2,960,000 | |||
Products and services revenues | $ | 2,625,000 | $ | 2,700,000 | |||
Freight revenues | $ | 240,000 | $ | 260,000 | |||
Gross profit | $ | 780,000 | $ | 840,000 | |||
Cement | |||||||
Total revenues | $ | 435,000 | $ | 465,000 | |||
Products and services revenues | $ | 415,000 | $ | 445,000 | |||
Freight revenues | $ | 20,000 | $ | 20,000 | |||
Gross profit | $ | 135,000 | $ | 155,000 | |||
Ready Mixed Concrete and Asphalt and Paving | |||||||
Products and services revenues | $ | 1,205,000 | $ | 1,275,000 | |||
Gross profit | $ | 120,000 | $ | 140,000 | |||
Magnesia Specialties Business | |||||||
Total revenues | $ | 290,000 | $ | 300,000 | |||
Products and services revenues | $ | 270,000 | $ | 280,000 | |||
Freight revenues | $ | 20,000 | $ | 20,000 | |||
Gross profit | $ | 100,000 | $ | 105,000 |
* | Guidance range represents the low end and high end of the respective line items provided above. | |
1 | 2019 consolidated total revenues exclude $260 million to $270 million related to estimated interproduct sales. | |
2 | Adjusted EBITDA is a non-GAAP financial measure. See Appendix to this earnings release for a reconciliation to net earnings attributable to Martin Marietta. | |
3 | Represents total aggregates volumes, which includes approximately 9.6 million internal tons. Volume growth ranges are in comparison with total volumes of 170.8 million tons for the full year 2018, which included 10.6 million internal tons. | |
4 | ASP growth range is in comparison with ASP of $13.71 per ton for the full year 2018. | |
Same-Store Information
This earnings release contains certain information on a same-store basis. When providing certain results in comparison with prior periods, the Company may exclude the operating results of recently acquired businesses that do not have comparable results in the periods being discussed. This approach allows management and investors to evaluate the performance of the Company’s operations on a comparable basis without the effects of acquisition activity. The Company’s same-store information may not be comparable with similar measures used by other companies.
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 second-quarter 2019 earnings results on a conference call and an online web simulcast today (
About Martin Marietta
Martin Marietta, a member of the
Investor Contact:
Vice President, Investor Relations
(919) 783-4691
Suzanne.Osberg@martinmarietta.com
MLM-E.
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. 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
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
MARTIN MARIETTA MATERIALS, INC. | |||||||||||||||
Unaudited Statements of Earnings | |||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Products and services revenues | $ | 1,196,135 | $ | 1,128,777 | $ | 2,074,440 | $ | 1,882,082 | |||||||
Freight revenues | 83,333 | 73,626 | 143,983 | 122,325 | |||||||||||
Total revenues | 1,279,468 | 1,202,403 | 2,218,423 | 2,004,407 | |||||||||||
Cost of revenues - products and services | 838,322 | 812,430 | 1,572,490 | 1,454,049 | |||||||||||
Cost of revenues - freight | 84,279 | 74,056 | 146,159 | 124,049 | |||||||||||
Total cost of revenues | 922,601 | 886,486 | 1,718,649 | 1,578,098 | |||||||||||
Gross Profit | 356,867 | 315,917 | 499,774 | 426,309 | |||||||||||
Selling general & administrative expenses | 72,382 | 71,070 | 150,674 | 141,191 | |||||||||||
Acquisition-related expenses, net | 47 | 12,126 | 191 | 12,836 | |||||||||||
Other operating income, net | (1,444 | ) | (31,232 | ) | (6,194 | ) | (30,752 | ) | |||||||
Earnings from operations | 285,882 | 263,953 | 355,103 | 303,034 | |||||||||||
Interest expense | 33,297 | 32,971 | 66,245 | 68,059 | |||||||||||
Other nonoperating expense and (income), net | 13,226 | (7,122 | ) | 11,663 | (15,626 | ) | |||||||||
Earnings before income tax expense | 239,359 | 238,104 | 277,195 | 250,601 | |||||||||||
Income tax expense | 49,890 | 52,601 | 44,899 | 55,058 | |||||||||||
Consolidated net earnings | 189,469 | 185,503 | 232,296 | 195,543 | |||||||||||
Less: Net (loss) earnings attributable to noncontrolling interests |
(6 | ) | 126 | (32 | ) | 143 | |||||||||
Net Earnings Attributable to Martin Marietta Materials, Inc. | $ | 189,475 | $ | 185,377 | $ | 232,328 | $ | 195,400 | |||||||
Net earnings per common share attributable to common shareholders: |
|||||||||||||||
Basic | $ | 3.02 | $ | 2.94 | $ | 3.71 | $ | 3.10 | |||||||
Diluted | $ | 3.01 | $ | 2.92 | $ | 3.69 | $ | 3.08 | |||||||
Dividends per common share | $ | 0.48 | $ | 0.44 | $ | 0.96 | $ | 0.88 | |||||||
Average number of common shares outstanding: | |||||||||||||||
Basic | 62,563 | 63,021 | 62,574 | 62,989 | |||||||||||
Diluted | 62,720 | 63,285 | 62,749 | 63,253 | |||||||||||
MARTIN MARIETTA MATERIALS, INC. | |||||||||||||||
Unaudited Financial Highlights | |||||||||||||||
(In thousands) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Total revenues: | |||||||||||||||
Building Materials Business: | |||||||||||||||
Mid-America Group | $ | 415,327 | $ | 350,592 | $ | 664,140 | $ | 529,373 | |||||||
Southeast Group | 137,024 | 112,963 | 256,262 | 193,202 | |||||||||||
West Group | 650,878 | 665,886 | 1,147,708 | 1,139,608 | |||||||||||
Total Building Materials Business | 1,203,229 | 1,129,441 | 2,068,110 | 1,862,183 | |||||||||||
Magnesia Specialties | 76,239 | 72,962 | 150,313 | 142,224 | |||||||||||
Total | $ | 1,279,468 | $ | 1,202,403 | $ | 2,218,423 | $ | 2,004,407 | |||||||
Gross profit (loss): | |||||||||||||||
Building Materials Business: | |||||||||||||||
Mid-America Group | $ | 155,775 | $ | 120,874 | $ | 201,006 | $ | 139,129 | |||||||
Southeast Group | 37,761 | 19,980 | 64,005 | 26,147 | |||||||||||
West Group | 135,098 | 148,053 | 181,462 | 208,250 | |||||||||||
Total Building Materials Business | 328,634 | 288,907 | 446,473 | 373,526 | |||||||||||
Magnesia Specialties | 28,038 | 23,842 | 53,580 | 47,730 | |||||||||||
Corporate | 195 | 3,168 | (279 | ) | 5,053 | ||||||||||
Total | $ | 356,867 | $ | 315,917 | $ | 499,774 | $ | 426,309 | |||||||
Selling, general and administrative expenses: | |||||||||||||||
Building Materials Business: | |||||||||||||||
Mid-America Group | $ | 15,542 | $ | 14,016 | $ | 31,135 | $ | 27,146 | |||||||
Southeast Group | 5,376 | 4,833 | 10,753 | 9,249 | |||||||||||
West Group | 27,717 | 27,161 | 56,995 | 53,293 | |||||||||||
Total Building Materials Business | 48,635 | 46,010 | 98,883 | 89,688 | |||||||||||
Magnesia Specialties | 2,796 | 2,505 | 5,662 | 5,107 | |||||||||||
Corporate | 20,951 | 22,555 | 46,129 | 46,396 | |||||||||||
Total | $ | 72,382 | $ | 71,070 | $ | 150,674 | $ | 141,191 | |||||||
Earnings (Loss) from operations: | |||||||||||||||
Building Materials Business: | |||||||||||||||
Mid-America Group | $ | 141,678 | $ | 108,709 | $ | 172,633 | $ | 114,876 | |||||||
Southeast Group | 32,688 | 32,052 | 53,822 | 34,093 | |||||||||||
West Group | 110,223 | 122,844 | 130,158 | 157,796 | |||||||||||
Total Building Materials Business | 284,589 | 263,605 | 356,613 | 306,765 | |||||||||||
Magnesia Specialties | 25,219 | 21,329 | 47,862 | 42,565 | |||||||||||
Corporate | (23,926 | ) | (20,981 | ) | (49,372 | ) | (46,296 | ) | |||||||
Total | $ | 285,882 | $ | 263,953 | $ | 355,103 | $ | 303,034 | |||||||
MARTIN MARIETTA MATERIALS, INC. | |||||||||||||||
Unaudited Financial Highlights (Continued) | |||||||||||||||
(In thousands) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Total revenues: | |||||||||||||||
Building Materials business products and services: | |||||||||||||||
Aggregates | $ | 757,802 | $ | 666,966 | $ | 1,302,750 | $ | 1,094,139 | |||||||
Cement | 112,350 | 113,148 | 211,367 | 202,331 | |||||||||||
Ready Mixed Concrete | 241,178 | 277,202 | 452,335 | 495,738 | |||||||||||
Asphalt and paving | 82,198 | 81,482 | 94,570 | 95,692 | |||||||||||
Less: Interproduct sales | (67,772 | ) | (78,178 | ) | (126,135 | ) | (138,843 | ) | |||||||
Subtotal | 1,125,756 | 1,060,620 | 1,934,887 | 1,749,057 | |||||||||||
Freight | 77,473 | 68,821 | 133,223 | 113,126 | |||||||||||
Total Building Materials Business | 1,203,229 | 1,129,441 | 2,068,110 | 1,862,183 | |||||||||||
Magnesia Specialties business: | |||||||||||||||
Products and services | 70,379 | 68,157 | 139,553 | 133,025 | |||||||||||
Freight | 5,860 | 4,805 | 10,760 | 9,199 | |||||||||||
Total Magnesia Specialties Business | 76,239 | 72,962 | 150,313 | 142,224 | |||||||||||
Consolidated total revenues | $ | 1,279,468 | $ | 1,202,403 | $ | 2,218,423 | $ | 2,004,407 | |||||||
Gross profit (loss): | |||||||||||||||
Building Materials business products and services: | |||||||||||||||
Aggregates | $ | 251,422 | $ | 198,705 | $ | 349,482 | $ | 252,246 | |||||||
Cement | 42,229 | 41,305 | 56,007 | 65,038 | |||||||||||
Ready Mixed Concrete | 19,014 | 29,952 | 33,506 | 45,593 | |||||||||||
Asphalt and paving | 15,742 | 18,347 | 7,415 | 10,169 | |||||||||||
Subtotal | 328,407 | 288,309 | 446,410 | 373,046 | |||||||||||
Freight | 227 | 598 | 63 | 480 | |||||||||||
Total Building Materials Business | 328,634 | 288,907 | 446,473 | 373,526 | |||||||||||
Magnesia Specialties business: | |||||||||||||||
Products and services | 29,212 | 24,870 | 55,819 | 49,933 | |||||||||||
Freight | (1,174 | ) | (1,028 | ) | (2,239 | ) | (2,203 | ) | |||||||
Total Magnesia Specialties Business | 28,038 | 23,842 | 53,580 | 47,730 | |||||||||||
Corporate | 195 | 3,168 | (279 | ) | 5,053 | ||||||||||
Consolidated gross profit | $ | 356,867 | $ | 315,917 | $ | 499,774 | $ | 426,309 | |||||||
MARTIN MARIETTA MATERIALS, INC. | ||||||
Balance Sheet Data | ||||||
(In thousands) | ||||||
June 30, | December 31, | |||||
2019 | 2018 | |||||
(Unaudited) | (Audited) | |||||
ASSETS | ||||||
Cash and cash equivalents | $ | 53,595 | $ | 44,892 | ||
Accounts receivable, net | 710,605 | 523,276 | ||||
Inventories, net | 646,342 | 663,035 | ||||
Other current assets | 122,579 | 134,613 | ||||
Property, plant and equipment, net | 5,132,682 | 5,157,229 | ||||
Intangible assets, net | 2,888,144 | 2,900,400 | ||||
Operating lease right-of-use assets | 487,360 | - | ||||
Other noncurrent assets | 122,350 | 127,974 | ||||
Total assets | $ | 10,163,657 | $ | 9,551,419 | ||
LIABILITIES AND EQUITY | ||||||
Current maturities of long-term debt and short-term facilities | $ | 385,043 | $ | 390,042 | ||
Other current liabilities | 437,173 | 396,708 | ||||
Long-term debt (excluding current maturities) | 2,732,018 | 2,730,439 | ||||
Other noncurrent liabilities | 1,512,153 | 1,084,818 | ||||
Total equity | 5,097,270 | 4,949,412 | ||||
Total liabilities and equity | $ | 10,163,657 | $ | 9,551,419 | ||
MARTIN MARIETTA MATERIALS, INC. | |||||||
Unaudited Statements of Cash Flows | |||||||
(In thousands) | |||||||
Six Months Ended | |||||||
June 30, | |||||||
2019 | 2018 | ||||||
Operating activities: | |||||||
Consolidated net earnings | $ | 232,296 | $ | 195,543 | |||
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities: | |||||||
Depreciation, depletion and amortization | 181,986 | 163,545 | |||||
Stock-based compensation expense | 22,250 | 17,098 | |||||
Gains on divestitures and sales of assets | (3,927 | ) | (33,527 | ) | |||
Deferred income taxes | (6,393 | ) | 14,986 | ||||
Other items, net | 14,892 | (4,757 | ) | ||||
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||
Accounts receivable, net | (187,076 | ) | (157,603 | ) | |||
Inventories, net | 15,744 | (7,133 | ) | ||||
Accounts payable | 36,614 | 44,266 | |||||
Other assets and liabilities, net | 27,345 | 5,615 | |||||
Net cash provided by operating activities | 333,731 | 238,033 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (207,452 | ) | (188,270 | ) | |||
Acquisitions, net | - | (1,645,698 | ) | ||||
Proceeds from divestitures and sales of assets | 5,997 | 58,213 | |||||
Investments in life insurance contracts, net | 527 | 424 | |||||
Payment of railcar construction advances | - | (28,306 | ) | ||||
Reimbursement of railcar construction advances | - | 28,306 | |||||
Other investing activities, net | (957 | ) | - | ||||
Net cash used for investing activities | (201,885 | ) | (1,775,331 | ) | |||
Financing activities: | |||||||
Borrowings of long-term debt | 165,000 | 665,000 | |||||
Repayments of long-term debt | (170,028 | ) | (475,025 | ) | |||
Payments on financing leases | (1,820 | ) | - | ||||
Payments on capital leases | - | (1,725 | ) | ||||
Debt issue costs | - | (3,194 | ) | ||||
Payments of deferred acquisition consideration | - | (1,426 | ) | ||||
Dividends paid | (60,615 | ) | (55,795 | ) | |||
Repurchase of common stock | (50,000 | ) | - | ||||
Proceeds from exercise of stock options | 7,094 | 6,943 | |||||
Shares withheld for employees' income tax obligations | (12,174 | ) | (10,065 | ) | |||
Distributions to owners of noncontrolling interest | (600 | ) | - | ||||
Net cash (used for) provided by financing activities | (123,143 | ) | 124,713 | ||||
Net increase (decrease) in cash and cash equivalents | 8,703 | (1,412,585 | ) | ||||
Cash and cash equivalents, beginning of period | 44,892 | 1,446,364 | |||||
Cash and cash equivalents, end of period | $ | 53,595 | $ | 33,779 | |||
MARTIN MARIETTA MATERIALS, INC. | |||||||||||||||
Unaudited Operational Highlights | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2019 | June 30, 2019 | ||||||||||||||
Volume | Pricing | Volume | Pricing | ||||||||||||
Volume/Pricing Variance (1) | |||||||||||||||
Mid-America Group | 15.9 | % | 1.6 | % | 23.2 | % | 0.6 | % | |||||||
Southeast Group | 12.7 | % | 7.3 | % | 25.8 | % | 5.2 | % | |||||||
West Group | 1.1 | % | 3.4 | % | 3.5 | % | 3.2 | % | |||||||
Total Aggregates Product Line (2) | 9.9 | % | 3.4 | % | 15.4 | % | 3.0 | % | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
Shipments (tons in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Mid-America Group | 27,624 | 23,843 | 43,491 | 35,315 | |||||||||||
Southeast Group | 7,228 | 6,411 | 13,610 | 10,816 | |||||||||||
West Group | 18,301 | 18,106 | 33,432 | 32,303 | |||||||||||
Total Aggregates Product Line (2) | 53,153 | 48,360 | 90,533 | 78,434 | |||||||||||
(1) Volume/pricing variances reflect the percentage increase 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 | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Shipments (in thousands) | |||||||||||||||
Aggregates tons - external customers | 50,491 | 45,231 | 85,841 | 73,162 | |||||||||||
Internal aggregates tons used in other product lines | 2,662 | 3,129 | 4,692 | 5,272 | |||||||||||
Total aggregates tons | 53,153 | 48,360 | 90,533 | 78,434 | |||||||||||
Cement tons - external customers | 689 | 653 | 1,278 | 1,180 | |||||||||||
Internal cement tons used in other product lines | 289 | 375 | 585 | 673 | |||||||||||
Total cement tons | 978 | 1,028 | 1,863 | 1,853 | |||||||||||
Ready Mixed Concrete - cubic yards | 2,162 | 2,559 | 4,094 | 4,567 | |||||||||||
Asphalt tons - external customers | 218 | 252 | 265 | 313 | |||||||||||
Internal asphalt tons used in road paving business | 596 | 635 | 647 | 711 | |||||||||||
Total asphalt tons | 814 | 887 | 912 | 1,024 | |||||||||||
Average unit sales price by product line (including internal sales): |
|||||||||||||||
Aggregates (per ton) | $ | 14.18 | $ | 13.72 | $ | 14.28 | $ | 13.86 | |||||||
Cement (per ton) | $ | 114.17 | $ | 109.11 | $ | 112.63 | $ | 108.10 | |||||||
Ready Mixed Concrete (per cubic yard) | $ | 109.36 | $ | 106.65 | $ | 108.17 | $ | 106.51 | |||||||
Asphalt (per ton) | $ | 47.22 | $ | 44.89 | $ | 47.08 | $ | 44.80 | |||||||
MARTIN MARIETTA MATERIALS, INC. | |||||||||||||
Non-GAAP Financial Measures | |||||||||||||
(Dollars in thousands) | |||||||||||||
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 June 30, 2019, with certain exceptions related to qualifying acquisitions, as defined. | |||||||||||||
The following presents the calculation of Consolidated Debt-to-Consolidated EBITDA, as defined by the Company's Credit Agreement, at June 30, 2019, for the trailing-12 months EBITDA. For supporting calculations, refer to the Company's website at www.martinmarietta.com. | |||||||||||||
Twelve Month Period | |||||||||||||
July 1, 2018 to | |||||||||||||
June 30, 2019 | |||||||||||||
Earnings from continuing operations attributable to Martin Marietta Materials, Inc. | $ | 506,926 | |||||||||||
Add back: | |||||||||||||
Interest expense | 95,494 | ||||||||||||
Income tax expense | 135,255 | ||||||||||||
Depreciation, depletion and amortization expense and noncash nonconsolidated equity affiliate adjustment | 371,191 | ||||||||||||
Stock-based compensation expense | 34,405 | ||||||||||||
Acquisition-related expenses, net | 9,082 | ||||||||||||
Noncash portion of asset and portfolio rationalization charge | 16,970 | ||||||||||||
Deduct: | |||||||||||||
Interest income | (480 | ) | |||||||||||
Consolidated EBITDA, as defined by the Company's Credit Agreement | $ | 1,168,843 | |||||||||||
Consolidated Debt, as defined and including debt for which the Company is a co-borrower, at June 30, 2019 | $ | 3,129,756 | |||||||||||
Consolidated Debt-to-Consolidated EBITDA, as defined by the Company's Credit Agreement, at June 30, 2019, for the trailing-12 months EBITDA | 2.68 times | ||||||||||||
Earnings before interest, income taxes, depreciation, depletion and amortization, the noncash earnings/loss from nonconsolidated equity affiliates, the impact of Bluegrass acquisition-related expenses, net, and the impact of selling acquired inventory after the markup to fair value as part of acquisition accounting (Adjusted EBITDA) is a financial indicator of a company's ability to service and/or incur indebtedness. Adjusted 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 Adjusted EBITDA, refer to the Company's website at www.martinmarietta.com. Consolidated Adjusted EBITDA is as follows: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2019 | 2018(1) | 2019 | 2018(1) | ||||||||||
Consolidated Adjusted EBITDA | $ | 378,467 | $ | 376,096 | $ | 536,698 | $ | 497,363 | |||||
A Reconciliation of Net Earnings Attributable to Martin Marietta to Consolidated Adjusted EBITDA is as follows: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2019 | 2018(1) | 2019 | 2018(1) | ||||||||||
Net Earnings Attributable to Martin Marietta | $ | 189,475 | $ | 185,377 | $ | 232,328 | $ | 195,400 | |||||
Add back: | |||||||||||||
Interest Expense | 33,199 | 32,971 | 66,045 | 68,059 | |||||||||
Income Tax Expense for Controlling Interests | 49,878 | 52,581 | 44,876 | 55,018 | |||||||||
Depreciation, Depletion and Amortization and Earnings/Loss from Nonconsolidated Equity Affiliates |
105,915 | 82,874 | 193,449 | 155,883 | |||||||||
Bluegrass Acquisition-Related Expenses, Net | - | 12,126 | - | 12,836 | |||||||||
Impact of selling acquired inventory after markup to fair value as part of acquisition accounting |
- | 10,167 | - | 10,167 | |||||||||
Consolidated Adjusted EBITDA | $ | 378,467 | $ | 376,096 | $ | 536,698 | $ | 497,363 | |||||
(1) The Company modified the calculation of Adjusted EBITDA in 2019. 2018 amounts have been calculated consistently with the 2019 presentation. | |||||||||||||
The following is a reconciliation of the GAAP measure to the 2019 Adjusted EBITDA guidance: | |||||||||||||
Low Point of Range | High Point of Range | ||||||||||||
Net Earnings Attributable to Martin Marietta | $ | 530,000 | $ | 640,000 | |||||||||
Add back: | |||||||||||||
Interest Expense | 140,000 | 130,000 | |||||||||||
Taxes on Income | 150,000 | 165,000 | |||||||||||
Depreciation, Depletion and Amortization Expense and Earnings/Loss from Nonconsolidated Equity Affiliates | 380,000 | 380,000 | |||||||||||
Adjusted EBITDA | $ | 1,200,000 | $ | 1,315,000 | |||||||||
Adjusted consolidated gross profit and adjusted consolidated earnings from operations for the three months ended June 30, 2018, exclude the impact of selling acquired inventory after the markup to fair value as part of acquisition accounting and exclude the impact of acquisition-related expenses, net. Adjusted consolidated gross profit and adjusted consolidated earnings from operations are non-GAAP financial measures. Management presents these measures for investors and analysts to evaluate and forecast the Company's financial results, as the impact of selling acquired inventory after the markup to fair value and acquisition related expenses, net, are nonrecurring. | |||||||||||||
The following is a reconciliation of the GAAP measure to adjusted gross profit and adjusted earnings from operations for the quarter ended June 30, 2018: | |||||||||||||
Gross profit as reported | $ | 315,917 | |||||||||||
Impact of selling acquired inventory after the markup to fair value as part of acquisition accounting | 10,167 | ||||||||||||
Adjusted gross profit | $ | 326,084 | |||||||||||
Earnings from operations as reported | $ | 263,953 | |||||||||||
Impact of selling acquired inventory after the markup to fair value as part of acquisition accounting | 10,167 | ||||||||||||
Acquisition-related expenses, net | 12,126 | ||||||||||||
Adjusted earnings from operations | $ | 286,246 | |||||||||||
Source: Martin Marietta Materials, Inc.