UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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) August 1, 2005
Martin Marietta Materials, Inc.
North Carolina
| 1-12744 | 56-1848578 | |
| (Commission File Number) | (IRS Employer Identification No.) | |
| 2710 Wycliff Road, Raleigh, North Carolina | 27607 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(919) 781-4550
Not Applicable
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On August 1, 2005, the Corporation announced financial results for the second quarter and six months ended June 30, 2005. The press release, dated August 1, 2005, is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
On August 1, 2005, the Corporation announced financial results for the second quarter and six months ended June 30, 2005. The press release, dated August 1, 2005, is furnished as Exhibit 99.1 to this report and is incorporated by reference herein. Additional information about the quarter, and the Corporation’s use of non-GAAP financial measures, which is available on the Corporation’s Web site at www.martinmarietta.com by clicking the heading “Financials”, in the “Investors” section and then clicking the quick link “Non-GAAP Financial Measures”, is furnished as Exhibit 99.2 to this report and is incorporated by reference herein.
The Corporation will host an online Web simulcast of its first-quarter ended 2005 earnings conference call on Monday, August 1, 2005. The live broadcast of the Corporation’s conference call will begin at 2 p.m., Eastern Time, on August 1, 2005. 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 Corporation’s Web site at www.martinmarietta.com. For those investors without online web access, the conference call may also be accessed by calling 913-981-5532 confirmation number 2438580. Additional information about the Corporation’s use of non-GAAP financial measures, as well as certain other financial or statistical information the Corporation may present at the conference call, will be provided on the Corporation’s Web site.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
| 99.1 | Press Release dated August 1, 2005, announcing financial results for the second quarter and six months ended June 30, 2005. | |||
| 99.2 | Additional information about Non-GAAP Financial Measures available on the Corporation’s Web site. | |||
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) |
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Date: August 1, 2005
|
By: | /s/ Anne H. Lloyd | ||
| Anne H. Lloyd, Vice President and Chief Financial Officer |
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EXHIBIT INDEX
| Exhibit No. | Description | |
99.1
|
Press Release dated August 1, 2005, announcing financial results for the second quarter and six months ended June 30, 2005. | |
99.2
|
Additional information about Non-GAAP Financial Measures available on the Corporation’s Web site. |
FOR IMMEDIATE RELEASE
|
Contact: | Anne H. Lloyd | ||
| Vice President, Chief Financial | ||||
| Officer and Chief Accounting Officer | ||||
| (919) 783-4660 | ||||
| www.martinmarietta.com |
ANNOUNCES SECOND-QUARTER RESULTS
| • | Earnings per diluted share of $1.30, up 41% | ||
| • | Net sales of $479.1 million, up 18% | ||
| • | Heritage aggregates pricing and volume, both up 8% | ||
| • | Aggregates operating margin of 21.5%, up 250 basis points | ||
| • | Closure of an aggregates plant and write down of composites inventory reduced earnings $0.05 per share | ||
| • | Tax reform in Ohio increased earnings $0.02 per share | ||
| • | SG&A 6.7% of net sales, versus 8.0% in prior year quarter | ||
| • | Increasing expected 2005 earnings range to $3.35 to $3.55 from $2.90 to $3.25 per diluted share | ||
| • | Repurchased 599,200 shares of common stock |
Stephen P. Zelnak, Jr., Chairman and CEO of Martin Marietta Materials, stated, “We had an outstanding second quarter that produced record results. In our Aggregates business, we experienced an increase in demand and strong pricing, which, coupled with cost control, led to a 250-basis-point improvement in our aggregates segment’s operating margin. Shipments and pricing were particularly strong across the Southwest and the Southeast, as demand increased from all end-use construction sectors. The positive quarterly results were achieved in spite of increased pressures from rising diesel fuel prices, higher costs for repair and supply parts, higher wages and benefits, and the closure of an Ohio-based aggregates plant. Further, the quarter was favorably affected by the 2004 divestiture of nonstrategic asphalt operations and recent divestitures in the road paving business.
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August 1, 2005
“The outlook for the Aggregates business for the remainder of 2005 is positive. Based on our most current analysis, we expect aggregates shipments volume to increase 4% to 6% and aggregates pricing to increase 5.5% to 7%. The Magnesia Specialties business is expected to generate between $19 million and $22 million in pretax earnings. The Structural Composites business is expected to incur a pretax loss of between $10 million and $12 million in 2005, inclusive of the inventory write down recorded in the second quarter.
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August 1, 2005
Net sales for the quarter were $479.1 million, an 18% increase over the $407.2 million recorded in second quarter of 2004. Earnings from operations for the second quarter of 2005 were $98.2 million compared with $74.4 million in 2004. Net earnings of $61.5 million, or $1.30 per diluted share, represented a quarterly record and increased 37% versus 2004 second-quarter net earnings of $44.7 million, or $0.92 per diluted share. Net earnings were negatively affected by a $1.4 million closure charge on an aggregates plant and a $2.0 million inventory write down in Structural Composites, both pretax. This was partially offset by a $1.2 million nonrecurring tax benefit.
Net sales for the Aggregates segment for the second quarter were $448.4 million, an 18% increase over 2004 second-quarter sales of $378.6 million. Aggregates volume at heritage locations was up 7.8% while pricing increased 8.3%. Inclusive of acquisitions and divestitures, aggregates shipments increased 9.2% and aggregates pricing increased 8.2%. The division’s earnings from operations for the quarter were $96.3 million in 2005 versus $71.8 million in the year-earlier period. Year-to-date net sales were $757.9 million versus $650.0 million in 2004. Earnings from operations on a year-to-date basis were $112.9 million in 2005 compared with $75.0 million in 2004. For the six-month period ended June 30, 2005, heritage aggregates volume increased 7.6%, while pricing was up 7.2%. Inclusive of acquisitions and divestitures, aggregates shipments increased 8.3% while average selling price increased 7.3%.
The Company will host an online Web simulcast of its second-quarter 2005 earnings conference call later today (August 1, 2005). The live broadcast of Martin Marietta Materials’ conference call will begin at 2 p.m. Eastern Time. 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 Web site: www.martinmarietta.com.
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August 1, 2005
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August 1, 2005
Unaudited Statements of Earnings
(In millions, except per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Net sales |
$ | 479.1 | $ | 407.2 | $ | 819.1 | $ | 705.0 | ||||||||
Freight and delivery revenues |
67.3 | 55.1 | 119.2 | 97.4 | ||||||||||||
Total revenues |
546.4 | 462.3 | 938.3 | 802.4 | ||||||||||||
Cost of sales |
351.2 | 301.2 | 642.1 | 563.2 | ||||||||||||
Freight and delivery costs |
67.3 | 55.1 | 119.2 | 97.4 | ||||||||||||
Cost of revenues |
418.5 | 356.3 | 761.3 | 660.6 | ||||||||||||
Gross profit |
127.9 | 106.0 | 177.0 | 141.8 | ||||||||||||
Selling, general and administrative expenses |
31.9 | 32.8 | 63.8 | 64.4 | ||||||||||||
Research and development |
0.2 | 0.2 | 0.3 | 0.3 | ||||||||||||
Other operating (income) and expenses, net |
(2.4 | ) | (1.4 | ) | (4.2 | ) | (1.7 | ) | ||||||||
Earnings from operations |
98.2 | 74.4 | 117.1 | 78.8 | ||||||||||||
Interest expense |
10.7 | 10.7 | 21.5 | 21.0 | ||||||||||||
Other nonoperating (income) and expenses, net |
1.1 | (0.3 | ) | (1.3 | ) | (0.6 | ) | |||||||||
Earnings before taxes on income |
86.4 | 64.0 | 96.9 | 58.4 | ||||||||||||
Income tax expense |
24.8 | 19.0 | 27.0 | 17.3 | ||||||||||||
Earnings from continuing operations |
61.6 | 45.0 | 69.9 | 41.1 | ||||||||||||
Discontinued operations: |
||||||||||||||||
Loss on discontinued operations, net of related tax benefit
of $0.0, $0.1, $0.5 and $1.2, respectively |
(0.1 | ) | (0.3 | ) | (1.4 | ) | (2.9 | ) | ||||||||
Net Earnings |
$ | 61.5 | $ | 44.7 | $ | 68.5 | $ | 38.2 | ||||||||
Net earnings per share: |
||||||||||||||||
Basic from continuing operations |
$ | 1.32 | $ | 0.94 | $ | 1.49 | $ | 0.85 | ||||||||
Discontinued operations |
— | (0.01 | ) | (0.03 | ) | (0.06 | ) | |||||||||
| $ | 1.32 | $ | 0.93 | $ | 1.46 | $ | 0.79 | |||||||||
Diluted from continuing operations |
$ | 1.30 | $ | 0.93 | $ | 1.47 | $ | 0.84 | ||||||||
Discontinued operations |
— | (0.01 | ) | (0.03 | ) | (0.06 | ) | |||||||||
| $ | 1.30 | $ | 0.92 | $ | 1.44 | $ | 0.78 | |||||||||
Dividends per share |
$ | 0.20 | $ | 0.18 | $ | 0.40 | $ | 0.36 | ||||||||
Average number of shares outstanding: |
||||||||||||||||
Basic |
46.6 | 48.2 | 46.8 | 48.3 | ||||||||||||
Diluted |
47.2 | 48.6 | 47.5 | 48.7 | ||||||||||||
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August 1, 2005
Unaudited Financial Highlights
(In millions)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Net sales: |
||||||||||||||||
Aggregates |
$ | 448.4 | $ | 378.6 | $ | 757.9 | $ | 650.0 | ||||||||
Specialty Products |
30.7 | 28.6 | 61.2 | 55.0 | ||||||||||||
Total |
$ | 479.1 | $ | 407.2 | $ | 819.1 | $ | 705.0 | ||||||||
Gross profit: |
||||||||||||||||
Aggregates |
$ | 123.2 | $ | 100.4 | $ | 166.9 | $ | 132.0 | ||||||||
Specialty Products |
4.7 | 5.6 | 10.1 | 9.8 | ||||||||||||
Total |
$ | 127.9 | $ | 106.0 | $ | 177.0 | $ | 141.8 | ||||||||
Selling, general, and administrative expenses: |
||||||||||||||||
Aggregates |
$ | 29.1 | $ | 30.2 | $ | 58.2 | $ | 59.2 | ||||||||
Specialty Products |
2.8 | 2.6 | 5.6 | 5.2 | ||||||||||||
Total |
$ | 31.9 | $ | 32.8 | $ | 63.8 | $ | 64.4 | ||||||||
Other
operating (income) and expenses, net: |
||||||||||||||||
Aggregates |
$ | (2.3 | ) | $ | (1.6 | ) | $ | (4.2 | ) | $ | (2.2 | ) | ||||
Specialty Products |
(0.1 | ) | 0.2 | — | 0.5 | |||||||||||
Total |
$ | (2.4 | ) | $ | (1.4 | ) | $ | (4.2 | ) | $ | (1.7 | ) | ||||
Earnings from operations: |
||||||||||||||||
Aggregates |
$ | 96.3 | $ | 71.8 | $ | 112.9 | $ | 75.0 | ||||||||
Specialty Products |
1.9 | 2.6 | 4.2 | 3.8 | ||||||||||||
Total |
$ | 98.2 | $ | 74.4 | $ | 117.1 | $ | 78.8 | ||||||||
| |
||||||||||||||||
Depreciation |
$ | 32.1 | $ | 30.3 | $ | 63.1 | $ | 61.2 | ||||||||
Depletion |
1.2 | 1.5 | 2.1 | 2.8 | ||||||||||||
Amortization |
1.1 | 1.4 | 2.5 | 2.8 | ||||||||||||
| $ | 34.4 | $ | 33.2 | $ | 67.7 | $ | 66.8 | |||||||||
Earnings Before Interest, Income Taxes, Depreciation,
Depletion and Amortization (EBITDA) (1) |
$ | 131.4 | $ | 107.6 | $ | 184.2 | $ | 142.1 | ||||||||
| (1) | 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 income or operating cash flow. For further information on EBITDA, refer to the Corporation’s Web site at www.martinmarietta.com. |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Net Cash Provided by Operating Activities |
$ | 78.7 | $ | 68.5 | $ | 108.7 | $ | 51.9 | ||||||||
Changes in operating assets and liabilities, net of
effects of acquisitions and divestitures |
13.8 | 11.7 | 26.1 | 56.5 | ||||||||||||
Other items, net |
3.3 | (2.2 | ) | 1.4 | (3.4 | ) | ||||||||||
Income tax expense |
24.9 | 18.9 | 26.5 | 16.1 | ||||||||||||
Interest expense |
10.7 | 10.7 | 21.5 | 21.0 | ||||||||||||
EBITDA |
$ | 131.4 | $ | 107.6 | $ | 184.2 | $ | 142.1 | ||||||||
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August 1, 2005
Balance Sheet Data
(In millions)
| June 30, | December 31, | June 30, | ||||||||||
| 2005 | 2004 | 2004 | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
ASSETS |
||||||||||||
Cash and cash equivalents |
$ | 81.4 | $ | 161.6 | $ | 85.8 | ||||||
Investments |
10.0 | — | — | |||||||||
Accounts receivable, net |
282.8 | 219.6 | 256.7 | |||||||||
Inventories, net |
217.0 | 209.3 | 228.7 | |||||||||
Other current assets |
33.1 | 33.8 | 40.0 | |||||||||
Property, plant and equipment, net |
1,123.5 | 1,065.2 | 1,041.1 | |||||||||
Other noncurrent assets |
68.8 | 80.3 | 56.1 | |||||||||
Intangible assets, net |
589.7 | 586.1 | 598.9 | |||||||||
Total assets |
$ | 2,406.3 | $ | 2,355.9 | $ | 2,307.3 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
Current maturities of long-term debt |
$ | 0.9 | $ | 1.0 | $ | 1.0 | ||||||
Other current liabilities |
228.6 | 202.8 | 205.5 | |||||||||
Long-term debt (excluding current maturities) |
711.5 | 713.7 | 713.2 | |||||||||
Other noncurrent liabilities |
326.8 | 285.0 | 259.5 | |||||||||
Shareholders’ equity |
1,138.5 | 1,153.4 | 1,128.1 | |||||||||
Total liabilities and
shareholders’ equity |
$ | 2,406.3 | $ | 2,355.9 | $ | 2,307.3 | ||||||
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August 1, 2005
Unaudited Statements of Cash Flows
(In millions)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2005 | 2004 | |||||||
Net earnings |
$ | 68.5 | $ | 38.2 | ||||
Adjustments to reconcile net earnings to cash provided by operating activities: |
||||||||
Depreciation, depletion and amortization |
67.7 | 66.8 | ||||||
Gains on sales of assets |
(0.4 | ) | (3.6 | ) | ||||
Other items, net |
0.1 | (0.9 | ) | |||||
Deferred income taxes |
(1.1 | ) | 7.9 | |||||
Changes in operating assets and
liabilities: |
||||||||
Accounts receivable, net |
(63.3 | ) | (25.2 | ) | ||||
Inventories, net |
(5.5 | ) | (17.6 | ) | ||||
Accounts payable |
13.7 | 0.9 | ||||||
Other assets and liabilities, net |
29.0 | (14.6 | ) | |||||
Net cash provided by operating activities |
108.7 | 51.9 | ||||||
Investing activities: |
||||||||
Additions to property, plant and
equipment |
(101.3 | ) | (70.3 | ) | ||||
Acquisitions, net |
(4.1 | ) | (5.6 | ) | ||||
Proceeds from divestitures of assets |
20.9 | 26.1 | ||||||
Other investing activities, net |
(10.0 | ) | — | |||||
Net cash used for investing activities |
(94.5 | ) | (49.8 | ) | ||||
| |
||||||||
Financing activities: |
||||||||
Repayments of long-term debt |
(0.4 | ) | (0.7 | ) | ||||
Change in bank overdraft |
(4.3 | ) | (0.3 | ) | ||||
Dividends paid |
(18.7 | ) | (17.3 | ) | ||||
Repurchases of common stock |
(81.1 | ) | (25.0 | ) | ||||
Issuance of common stock |
10.1 | 1.9 | ||||||
Net cash used for financing activities |
(94.4 | ) | (41.4 | ) | ||||
Net decrease in cash and cash equivalents |
(80.2 | ) | (39.3 | ) | ||||
Cash and cash equivalents, beginning of period |
161.6 | 125.1 | ||||||
Cash and cash equivalents, end of period |
$ | 81.4 | $ | 85.8 | ||||
Page 9
August 1, 2005
Unaudited Operational Highlights
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2005 | June 30, 2005 | |||||||||||||||
| Volume | Pricing | Volume | Pricing | |||||||||||||
Volume/Pricing Variance (1) |
||||||||||||||||
Heritage Aggregates Operations
(2) |
7.8 | % | 8.3 | % | 7.6 | % | 7.2 | % | ||||||||
Aggregates Division (3) |
9.2 | % | 8.2 | % | 8.3 | % | 7.3 | % | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Shipments (tons in thousands) |
||||||||||||||||
Heritage Aggregates Operations
(2) |
55,411 | 51,404 | 94,197 | 87,571 | ||||||||||||
Acquisitions |
1,206 | — | 1,863 | — | ||||||||||||
Divestitures (4) |
37 | 467 | 70 | 1,180 | ||||||||||||
Aggregates Division (3) |
56,654 | 51,871 | 96,130 | 88,751 | ||||||||||||
| (1) | Volume/pricing variances reflect the percentage increase (decrease) from the comparable period in the prior year. | |
| (2) | Heritage Aggregates operations exclude acquisitions that have not been included in prior-year operations for a full year and divestitures. | |
| (3) | Aggregates division includes all acquisitions from the date of acquisition and divestitures through the date of disposal. | |
| (4) | Divestitures include the tons related to divested operations up to the date of divestiture. |
Exhibit 99.2
Additional Information about Non-GAAP Financial Measures Available on the Corporation’s Web site
From time to time management may publicly disclose certain “non-GAAP financial measures” in the course of our financial presentations, earnings releases, earnings conference calls, and otherwise. For these purposes, the SEC defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial position, or cash flows that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with GAAP in financial statements, and vice versa for measures that include amounts, or is subject to adjustments that effectively include amounts, that are excluded from the most directly comparable measure so calculated and presented. For these purposes, “GAAP” refers to generally accepted accounting principles in the United States.
Non-GAAP financial measures disclosed by management are provided as additional information to investors in order to provide them with an alternative method for assessing our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies.
Pursuant to the requirements of Regulation G, whenever we refer to a non-GAAP financial measure, we will also generally present, on this Web site, the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference with such comparable GAAP financial measure.
One such non-GAAP financial measure we may present from time to time is Earnings before Interest, Income Taxes, Depreciation, Depletion and Amortization (“EBITDA”). EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net earnings (loss), operating earnings (loss), cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. However, the Corporation’s management believes that EBITDA may provide additional information with respect to the Corporation’s performance or ability to meet its future debt service, capital expenditures and working capital requirements. Because EBITDA excludes some, but not all, items that affect net earnings and may vary among companies, the EBITDA presented by Martin Marietta Materials may not be comparable to similarly titled measures of other companies. Martin Marietta Materials calculates EBITDA as:
| Net earnings (loss) before interest expense, income tax expense (benefit) and depreciation, depletion and amortization expense. EBITDA is also before the cumulative effect of a change in accounting principle, if applicable. |
The following tables present Martin Marietta Materials’ reconciliations between net income and net cash provided by operating activities to EBITDA for the years 1994 to 2004, quarterly and year-to-date periods in 2004 and 2005 (see Web site for tables).
Another non-GAAP financial measure we may present from time to time is Free Cash Flow. Martin Marietta Materials calculates Free Cash Flow as:
| Net cash provided by operating activities less capital expenditures and dividends paid. Proceeds from divestitures of assets are then added to determine Free Cash Flow. |
The following table reconciles net cash provided by operating activities to free cash flow for the years 2000 to 2004 (see Web site for table).