UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 28,
2008
Martin Marietta Materials, Inc.
(Exact Name of Registrant as Specified in Its Charter)
North Carolina (State or Other Jurisdiction of Incorporation)
| 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
(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:
| 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 7.01. | Regulation FD. |
This filing amends the Form 8-K that was filed earlier today.
On October 28, 2008, the Corporation issued a press release announcing financial results for the
third quarter and nine months ended September 30, 2008. The press release contained a
typographical error on page 3 when the Corporation reported that on October 24, 2008, Moody’s
downgraded the Corporation’s long-term rating from Baa3 to Baa1. The Corporation is correcting the
error by reporting that on October 24, 2008, Moody’s downgraded the Corporation’s long-term rating
from Baa1 to Baa3.
The Corporation has reissued its press release dated October 28, 2008 correcting the error. The
corrected press release is furnished as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| 99.1 | Press Release dated October 28, 2008, announcing financial results for the third quarter and
nine months ended September 30, 2008. |
EXHIBIT INDEX
| Exhibit No. | Description | |||
| 99.1 | Press Release dated October 28, 2008, announcing financial results for the third quarter and
nine months ended September 30, 2008. |
|||
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: October 28, 2008 | By: | /s/ Anne H. Lloyd | ||
| Anne H. Lloyd, | ||||
| Senior Vice President and Chief Financial Officer | ||||
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
|
Contact: | Anne H. Lloyd Senior Vice President, Chief Financial Officer and Treasurer (919) 783-4660 www.martinmarietta.com |
MARTIN MARIETTA MATERIALS, INC.
ANNOUNCES THIRD-QUARTER RESULTS
ANNOUNCES THIRD-QUARTER RESULTS
RALEIGH, North Carolina (October 28, 2008) — Martin Marietta Materials, Inc. (NYSE:MLM), today
announced results for the third quarter and nine months ended September 30, 2008. Notable items
were:
| • | Earnings per diluted share of $1.58 compared with $2.13 in the prior-year quarter |
||
| • | Cost of petroleum-based products increased $16 million, reducing earnings by $0.23
per diluted share |
||
| • | Heritage aggregates product line pricing up 8% and volume down 13% |
||
| • | Consolidated net sales of $526 million, down 3% compared with the prior-year
quarter |
||
| • | Record Specialty Products’ net sales, up 18% from prior-year quarter |
||
| • | Credit Agreement amendment increased debt-to-trailing-12-month EBITDA covenant to
3.25 times |
Management Commentary
Stephen P. Zelnak, Jr., Chairman and CEO of Martin Marietta Materials, stated, “We are very pleased with our third-quarter results as they highlight our ability to adapt our business to successfully address the most challenging economic times in the Corporation’s history. Aggregates volumes declined for the tenth consecutive quarter, diesel fuel and natural gas costs escalated 47% during the quarter, and adverse weather conditions in the wake of Tropical Storm Fay and Hurricanes Gustav, Hannah and Ike had a negative impact on operations not only in the Gulf Coast region, but also in the Southeast and Central United States as the storm systems moved inland. Nevertheless, our management team and employees again balanced the productive capacity of our operations to market demand and aggressively addressed controllable costs.
Stephen P. Zelnak, Jr., Chairman and CEO of Martin Marietta Materials, stated, “We are very pleased with our third-quarter results as they highlight our ability to adapt our business to successfully address the most challenging economic times in the Corporation’s history. Aggregates volumes declined for the tenth consecutive quarter, diesel fuel and natural gas costs escalated 47% during the quarter, and adverse weather conditions in the wake of Tropical Storm Fay and Hurricanes Gustav, Hannah and Ike had a negative impact on operations not only in the Gulf Coast region, but also in the Southeast and Central United States as the storm systems moved inland. Nevertheless, our management team and employees again balanced the productive capacity of our operations to market demand and aggressively addressed controllable costs.
“We continued to achieve sustainable pricing growth within all groups of the aggregates business
with heritage aggregates pricing up 8% for the quarter. With the exception of Iowa and Arkansas,
the difficult economic environment caused aggregates volumes to fall in all of our states with the
overall volume in the heritage aggregates business declining 13%. The strong farm economy, coupled
with increased alternative energy construction in Iowa and energy
expansion projects in Arkansas, East Texas
and Northwest Louisiana, supported volume growth in these areas. Infrastructure and commercial
construction demand remains challenging, most notably from the lack of credit availability, which
has stalled overall construction activity. Our West Group experienced its first quarterly volume
decline of the year, reflecting the impact of the hurricanes as well as weakness in construction
activity. We estimate that the third-quarter hurricane season caused our West Group to reduce shipments by
0.8 million tons and, when coupled with lost sales and increased production costs from
storms in the Mideast and Southeast Groups, adverse weather lowered profitability of the Aggregates
business by approximately $6 million, or $0.08 per diluted share.
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MLM Reports Third-Quarter Results
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October 28, 2008
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October 28, 2008
“Although petroleum-based energy prices are beginning to decline, increased energy costs continued
to have a negative impact on both costs and sales in the past quarter. Liquid asphalt, used in the
production of hot-mix asphalt products, increased approximately 128% over the prior year with
average pricing approaching $800 per ton at peak. Our customers, and oftentimes end users, cannot
react quickly enough to these escalating costs and, when possible, have chosen to defer work in
anticipation of future potential cost reductions. The rise in the cost of petroleum-based products
resulted in additional production costs of $16 million, or $0.23 per diluted share, for the
quarter.
“Selling, general and administrative expenses of $37.7 million included a settlement charge of $2.6
million for payment of vested benefits provided by the Corporation’s SERP (Supplemental Excess
Retirement Plan). Selling, general and administrative expense, excluding this charge, was $35.1
million compared with $36.4 million in the prior-year period, reflecting our continued focus on
cost management.
“During the year, we have been evaluating a number of strategic initiatives in our ongoing efforts
to enhance our business and create shareholder value. Related to these undertakings, we incurred
$3 million in non-recurring expenses during the third quarter for professional fees paid to
advisors. These expenses are included in other operating income and expenses, net. The
combination of the SERP and strategic initiatives expenses reduced earnings by $0.08 per diluted
share.
“On a positive note, the State of Florida has recently launched the “Accelerate Florida” initiative
aimed at advancing start dates on $1.4 billion in road construction funding to create jobs and
stimulate the state’s weakening construction economy. The Florida Department of Transportation
announced that these projects will employ 39,000 people and generate $7.84 billion in economic
benefits, a $5.60 return on each state dollar invested. Martin Marietta is uniquely positioned to
provide high-quality granite construction aggregates into the Florida infrastructure market from
our offshore quarry in Nova Scotia and interior fall line quarries in
Georgia and South Carolina. Our new plant in Augusta, Georgia, will begin operations in the fourth quarter of 2008
versus the prior forecast of second quarter 2009. The earlier completion of this project, which
increases aggregates capacity from 2 million tons to 6 million tons annually, is enabling us to
engage in marketing discussions with major Florida customers in advance of the infrastructure
acceleration.
“Our Specialty Products business continues to perform exceptionally well. The United States’ steel
market has remained positive, leading to increased dolomitic lime demand. Similarly, we’ve
experienced increased demand for magnesia-based chemicals products used in a number of
environmental applications as well as for our heat-resistant products. The business delivered
record third-quarter net sales of $46.4 million, an increase of 18% compared with the prior-year
quarter, with earnings from operations of $8.6 million, or approximately 19% of net sales.
Liquidity And Capital Resources
“Our business continues to generate solid cash flows even in a weak economy. For the nine months ended September 30, 2008, net cash provided by operating activities was $271 million, down $2 million versus the comparable prior-year period, in spite of a $55 million decline in net earnings during the same period. Control of working capital and lower cash taxes, resulting from lower pretax earnings and higher benefits from bonus depreciation deductions, have contributed to maintaining our cash flows. We ended the quarter with $14 million in cash, no outstanding commercial paper balance, $323 million available under our revolving credit agreement and debt-to-trailing-12-month EBITDA of 2.49 times, within our targeted range of 2.0 to 2.5 times.
“Our business continues to generate solid cash flows even in a weak economy. For the nine months ended September 30, 2008, net cash provided by operating activities was $271 million, down $2 million versus the comparable prior-year period, in spite of a $55 million decline in net earnings during the same period. Control of working capital and lower cash taxes, resulting from lower pretax earnings and higher benefits from bonus depreciation deductions, have contributed to maintaining our cash flows. We ended the quarter with $14 million in cash, no outstanding commercial paper balance, $323 million available under our revolving credit agreement and debt-to-trailing-12-month EBITDA of 2.49 times, within our targeted range of 2.0 to 2.5 times.
“On October 24, 2008, we amended our credit agreement to provide for an increase in our leverage
covenant to 3.25 times debt-to-trailing-12-month EBITDA. In exchange for the covenant
modification, the Corporation agreed to an increase in the drawn facility fee under a pricing grid
tied to long-term debt rating, currently LIBOR plus 225 basis points.
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October 28, 2008
“Moody’s and Standard & Poor’s have continued to view our industry with concern for the near term,
so it was not unexpected that the agencies placed the Corporation on a negative credit watch.
Further, on October 24, 2008, Moody’s downgraded the
Corporation’s long-term rating from Baa1 to
Baa3, and downgraded our commercial paper rating to P-3 from P-2 with a stable outlook. While we
understand that the agencies are taking a suitably cautious approach in gauging the effect of the
current economic downturn on the Corporation’s ability to generate sufficient cash flow, we are
comfortable with our leverage covenant and we have liquidity available to refinance the $200
million, 5.875% Senior Notes due December 1, 2008. In addition, based on discussions with our bank
group, we expect to have continued access to the public credit markets, although at a higher cost of debt when compared with our 5.9% weighted
average interest rate at September 30, 2008. However, given the dynamic, unpredictable state of the credit
markets, accessing the availability under our credit facility remains an option. We continue to
believe that we have sufficient liquidity from the cash flows generated in the operation of the
business, from our ability to reduce levels of capital expenditures — expected to be no more than
$185 million in 2009, and from our ability to execute against an aggressive cost-reduction plan.
2008 Outlook
“Over the past 45 to 60 days, the lack of available business credit has stalled construction activity and further affected demand for our products. Construction projects underway have had credit effectively pulled, and new projects are subject to increasingly tighter lending standards. The unpredictable state of the economy, energy inflation, credit market uncertainty and lagging construction demand make forecasting increasingly difficult. That said, pricing continues to remain positive, even in this challenging climate. Accordingly, we reaffirm our 6% to 8% range for the rate of heritage aggregates price increases in 2008. However, with the pressure on volumes, we now expect our aggregates shipments to be down 11% to 12% for the year. We continue to expect record sales and pretax earnings of $36 million to $38 million from our Specialty Products segment. Based on these factors, we expect net earnings for 2008 to be in the range of $4.25 to $4.65 per diluted share.
“Over the past 45 to 60 days, the lack of available business credit has stalled construction activity and further affected demand for our products. Construction projects underway have had credit effectively pulled, and new projects are subject to increasingly tighter lending standards. The unpredictable state of the economy, energy inflation, credit market uncertainty and lagging construction demand make forecasting increasingly difficult. That said, pricing continues to remain positive, even in this challenging climate. Accordingly, we reaffirm our 6% to 8% range for the rate of heritage aggregates price increases in 2008. However, with the pressure on volumes, we now expect our aggregates shipments to be down 11% to 12% for the year. We continue to expect record sales and pretax earnings of $36 million to $38 million from our Specialty Products segment. Based on these factors, we expect net earnings for 2008 to be in the range of $4.25 to $4.65 per diluted share.
“We are beginning to develop our preliminary views on 2009 as we complete our regional operating
plans and would characterize the upcoming year as a period of stabilization with the first half
subject to continued aggregates volume pressure. We currently expect modest price increases,
stabilizing aggregates demand and a deflationary cost environment, as it relates to energy costs.
While we are taking a very conservative view in our 2009 planning, it is becoming more likely that
the federal government will create a new economic stimulus package, and it appears that both federal and
state governments will look toward making increased investment in road construction and other
infrastructure as a jobs-creation tool. We will provide our full guidance for 2009 when we release
annual earnings for 2008 early next year and have more information about government spending on
infrastructure projects.”
Risks To Earnings Expectations
The 2008 estimated earnings range includes management’s assessment of the likelihood of certain risk factors that will affect performance within the range. The most significant risk to 2008 earnings, whether within or outside current earnings expectations, continues to be the performance of the United States economy, the uncertainty and availability of credit markets and the effect on construction activity.
The 2008 estimated earnings range includes management’s assessment of the likelihood of certain risk factors that will affect performance within the range. The most significant risk to 2008 earnings, whether within or outside current earnings expectations, continues to be the performance of the United States economy, the uncertainty and availability of credit markets and the effect on construction activity.
Risks to the earnings range are primarily volume related and include a greater-than-expected drop
in demand as a result of the continued decline in residential
construction, continued decline in commercial
construction, delays in infrastructure projects, or some combination thereof. Further, increased
highway construction funding pressures as a result of either federal or state issues can affect
profitability. Currently, North Carolina, Georgia, Texas, and South Carolina are experiencing
state-level funding pressures, and these states may
disproportionately affect profitability. The price of liquid asphalt
is a significant cost component in the production of hot-mix asphalt
products and can cause road builders and commercial contractors to
delay or defer work in anticipation of liquid asphalt cost changes. The
level of aggregates demand in the Corporation’s end-
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October 28, 2008
use markets, production levels and the
management of production costs will affect the operating leverage of the Aggregates business and,
therefore, profitability. Production costs in the aggregates business are also sensitive to energy
prices, the costs of repair and supply parts, and the start-up expenses for large-scale plant projects. The continued rising
cost of diesel and other fuels increases production costs, either directly through consumption or
indirectly through the higher cost of energy-related consumables, namely steel, explosives, tires
and conveyor belts. Sustained periods of diesel fuel cost at the current level will continue to
have a negative impact on profitability. The Aggregates business is also subject to
weather-related risks that can significantly affect production schedules and profitability.
Hurricane activity in the Atlantic Ocean and Gulf Coast generally is most active during the third
and fourth quarters. Opportunities to reach the upper end of the earnings range depend on the
aggregates product line demand exceeding expectations triggered by a
significant reduction in liquid asphalt prices and/or increased
credit availability, and continued
decline in energy-related costs.
Risks to earnings outside of the range include a change in volume beyond current expectations as a
result of economic events outside of the Corporation’s control. In addition to the impact of
residential and commercial construction, the Corporation is exposed to risk in its earnings
expectations from tightening credit markets and the availability of and interest cost related to
its short- and intermediate-term financing. The Corporation’s commercial paper program is rated A-2
by Standards & Poor’s and P-3 by Moody’s.
Consolidated Financial Highlights
Net sales for the quarter were $526.2 million, a 3% decrease versus the $544.4 million recorded in the third quarter of 2007. Earnings from operations for the third quarter of 2008 were $115.0 million compared with $136.9 million in 2007. Net earnings were $66.3 million, or $1.58 per diluted share, versus 2007 third-quarter net earnings of $90.3 million, or $2.13 per diluted share.
Net sales for the quarter were $526.2 million, a 3% decrease versus the $544.4 million recorded in the third quarter of 2007. Earnings from operations for the third quarter of 2008 were $115.0 million compared with $136.9 million in 2007. Net earnings were $66.3 million, or $1.58 per diluted share, versus 2007 third-quarter net earnings of $90.3 million, or $2.13 per diluted share.
Net sales for the first nine months of 2008 were $1.449 billion compared with $1.484 billion for
the year-earlier period. Year-to-date earnings from operations were $262.7 million in 2008 versus
$331.0 million in 2007. The Corporation posted an after-tax gain on discontinued operations of
$5.1 million in 2008 compared with $1.3 million in 2007. For the nine-month period ended September
30, net earnings were $151.0 million, or $3.60 per diluted share, in 2008 compared with net
earnings of $206.2 million, or $4.73 per diluted share, in 2007.
Business Financial Highlights
Net sales for the Aggregates business for the third quarter were $479.8 million compared with 2007 third-quarter sales of $505.2 million. Aggregates pricing at heritage locations was up 7.5%, while volume decreased 13.3%. Including acquisitions and divestitures, aggregates pricing increased 7.8% and aggregates volume declined 12.4%. Earnings from operations for the quarter were $112.4 million in 2008 versus $134.1 million in the year-earlier period. Year-to-date net sales for the Aggregates business were $1.314 billion versus $1.366 billion in 2007. Earnings from operations on a year-to-date basis were $262.7 million in 2008 compared with $333.1 million in 2007. For the nine-month period ended September 30, 2008, heritage aggregates pricing increased 6.0%, while volume was down 10.5%. Including acquisitions and divestitures, aggregates average selling price increased 6.2%, while volume declined 10.0%.
Net sales for the Aggregates business for the third quarter were $479.8 million compared with 2007 third-quarter sales of $505.2 million. Aggregates pricing at heritage locations was up 7.5%, while volume decreased 13.3%. Including acquisitions and divestitures, aggregates pricing increased 7.8% and aggregates volume declined 12.4%. Earnings from operations for the quarter were $112.4 million in 2008 versus $134.1 million in the year-earlier period. Year-to-date net sales for the Aggregates business were $1.314 billion versus $1.366 billion in 2007. Earnings from operations on a year-to-date basis were $262.7 million in 2008 compared with $333.1 million in 2007. For the nine-month period ended September 30, 2008, heritage aggregates pricing increased 6.0%, while volume was down 10.5%. Including acquisitions and divestitures, aggregates average selling price increased 6.2%, while volume declined 10.0%.
Specialty Products’ third-quarter net sales of $46.4 million increased 18.1% over prior-year net
sales of $39.2 million. Earnings from operations for the third quarter were $8.6 million compared
with $9.0 million in the year-earlier period. For the first nine months of 2008, net sales were
$134.5 million and earnings from operations were $27.5 million compared with net sales of $117.5
million and earnings from operations of $24.5 million for the first nine months of 2008.
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Conference Call Information
The Corporation will host an online Web simulcast of its third-quarter 2008 earnings conference call later today (October 28, 2008). The live broadcast of Martin Marietta Materials’ conference call will begin at 2:00 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 Corporation’s Web site: www.martinmarietta.com.
The Corporation will host an online Web simulcast of its third-quarter 2008 earnings conference call later today (October 28, 2008). The live broadcast of Martin Marietta Materials’ conference call will begin at 2:00 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 Corporation’s Web site: www.martinmarietta.com.
For those investors without online web access, the conference call may also be accessed by calling
719-325-4748, confirmation number 8860430.
Martin Marietta Materials is a leading producer of construction aggregates and a producer of
magnesia-based chemicals and dolomitic lime. For more information about Martin Marietta Materials,
refer to the Corporation’s Web site at www.martinmarietta.com.
If you are interested in Martin Marietta Materials, Inc. stock, management recommends that, at a
minimum, you read the Corporation’s current annual report and Forms 10-K, 10-Q and 8-K reports to
the SEC over the past year. The Corporation’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 Corporation’s Web site at www.martinmarietta.com
and are also available at the SEC’s Web site at www.sec.gov. You may also write or call
the Corporation’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 Corporation believes in
good faith are reasonable but which may be materially different from actual results.
Forward-looking statements give the investor our expectations or forecasts of future events. You
can identify these statements by the fact that they do not relate only historical or current
facts. They may use words such as “anticipate,” “expect,” “should be,” “believe,” and other words
of similar meaning in connection with future events or future operating or financial performance.
Any or all of our forward-looking statements here and in other publications may turn out to be
wrong.
Factors that the Corporation currently believes could cause actual results to differ materially
from the forward-looking statements in this press release include, but are not limited to the level
and timing of federal and state transportation funding, particularly
in North Carolina, Texas and Georgia,
three of the Corporation’s largest and most profitable states, and in South Carolina, the
Corporation’s fifth largest state as measured by 2007 Aggregates business’ net sales; levels of
construction spending in the markets the Corporation serves; the severity and duration of a
continued decline in the residential construction market; the impact
of limited credit availability on commercial construction;
unfavorable weather conditions, including hurricane activity; the ability to recognize quantifiable
savings from internal expansion projects; the ability to successfully integrate acquisitions
quickly and in a cost-effective manner; the volatility of fuel costs, most notably diesel fuel,
liquid asphalt and natural gas; continued increases in the cost of repair and supply parts;
logistical issues and costs, notably barge availability on the Mississippi River system and the
availability of railcars and locomotive power to move trains to supply the Corporation’s Texas and
Gulf Coast markets; continued strength in the steel industry markets served by the Corporation’s
dolomitic lime products; availability of funds for financing and
increases in interest costs; the impact of the Corporation’s
credit ratings on capital structure and financing costs; and other risk factors listed from time to time found in the
Corporation’s filings with the Securities and Exchange Commission. Other factors besides those
listed here may also adversely affect the Corporation, and may be material to the Corporation. The
Corporation assumes no obligation to update any such forward-looking statements.
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MARTIN MARIETTA MATERIALS, INC.
Unaudited Statements of Earnings
(In millions, except per share amounts)
Unaudited Statements of Earnings
(In millions, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Net sales |
$ | 526.2 | $ | 544.4 | $ | 1,448.9 | $ | 1,484.0 | ||||||||
Freight and delivery revenues |
73.1 | 71.0 | 199.7 | 178.4 | ||||||||||||
Total revenues |
599.3 | 615.4 | 1,648.6 | 1,662.4 | ||||||||||||
Cost of sales |
374.6 | 377.1 | 1,082.7 | 1,044.9 | ||||||||||||
Freight and delivery costs |
73.1 | 71.0 | 199.7 | 178.4 | ||||||||||||
Cost of revenues |
447.7 | 448.1 | 1,282.4 | 1,223.3 | ||||||||||||
Gross profit |
151.6 | 167.3 | 366.2 | 439.1 | ||||||||||||
Selling, general and administrative expenses |
37.7 | 36.4 | 117.5 | 119.0 | ||||||||||||
Research and development |
0.1 | 0.2 | 0.5 | 0.6 | ||||||||||||
Other operating (income) and expenses, net |
(1.2 | ) | (6.2 | ) | (14.5 | ) | (11.5 | ) | ||||||||
Earnings from operations |
115.0 | 136.9 | 262.7 | 331.0 | ||||||||||||
Interest expense |
19.5 | 17.2 | 54.6 | 45.1 | ||||||||||||
Other nonoperating (income) and expenses, net |
2.9 | (1.2 | ) | 3.0 | (5.1 | ) | ||||||||||
Earnings before taxes on income |
92.6 | 120.9 | 205.1 | 291.0 | ||||||||||||
Income tax expense |
26.1 | 31.1 | 59.2 | 86.1 | ||||||||||||
Earnings from continuing operations |
66.5 | 89.8 | 145.9 | 204.9 | ||||||||||||
Discontinued operations: |
||||||||||||||||
(Loss) Gain on discontinued operations, net of related tax
expense of $1.8, $0.5, $5.4 and $1.1, respectively |
(0.2 | ) | 0.5 | 5.1 | 1.3 | |||||||||||
Net Earnings |
$ | 66.3 | $ | 90.3 | $ | 151.0 | $ | 206.2 | ||||||||
Net earnings per share: |
||||||||||||||||
Basic from continuing operations |
$ | 1.60 | $ | 2.15 | $ | 3.53 | $ | 4.77 | ||||||||
Discontinued operations |
— | 0.01 | 0.12 | 0.03 | ||||||||||||
| $ | 1.60 | $ | 2.16 | $ | 3.65 | $ | 4.80 | |||||||||
Diluted from continuing operations |
$ | 1.58 | $ | 2.12 | $ | 3.48 | $ | 4.70 | ||||||||
Discontinued operations |
— | 0.01 | 0.12 | 0.03 | ||||||||||||
| $ | 1.58 | $ | 2.13 | $ | 3.60 | $ | 4.73 | |||||||||
Dividends per share |
$ | 0.40 | $ | 0.345 | $ | 1.09 | $ | 0.895 | ||||||||
Average number of shares outstanding: |
||||||||||||||||
Basic |
41.4 | 41.8 | 41.3 | 42.9 | ||||||||||||
Diluted |
41.9 | 42.5 | 41.9 | 43.6 | ||||||||||||
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MARTIN MARIETTA MATERIALS, INC.
Unaudited Financial Highlights
(In millions)
Unaudited Financial Highlights
(In millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Net sales: |
||||||||||||||||
Aggregates Business: |
||||||||||||||||
Mideast Group |
$ | 167.7 | $ | 193.3 | $ | 455.3 | $ | 524.7 | ||||||||
Southeast Group |
119.1 | 117.4 | 343.9 | 346.8 | ||||||||||||
West Group |
193.0 | 194.5 | 515.2 | 495.0 | ||||||||||||
Total Aggregates Business |
479.8 | 505.2 | 1,314.4 | 1,366.5 | ||||||||||||
Specialty Products |
46.4 | 39.2 | 134.5 | 117.5 | ||||||||||||
Total |
$ | 526.2 | $ | 544.4 | $ | 1,448.9 | $ | 1,484.0 | ||||||||
Gross profit: |
||||||||||||||||
Aggregates Business: |
||||||||||||||||
Mideast Group |
$ | 70.9 | $ | 79.1 | $ | 174.9 | $ | 220.9 | ||||||||
Southeast Group |
22.0 | 25.3 | 57.4 | 86.0 | ||||||||||||
West Group |
49.2 | 51.3 | 102.1 | 101.0 | ||||||||||||
Total Aggregates Business |
142.1 | 155.7 | 334.4 | 407.9 | ||||||||||||
Specialty Products |
10.9 | 11.7 | 35.1 | 32.8 | ||||||||||||
Corporate |
(1.4 | ) | (0.1 | ) | (3.3 | ) | (1.6 | ) | ||||||||
Total |
$ | 151.6 | $ | 167.3 | $ | 366.2 | $ | 439.1 | ||||||||
Selling, general, and administrative expenses: |
||||||||||||||||
Aggregates Business: |
||||||||||||||||
Mideast Group |
$ | 11.1 | $ | 10.9 | $ | 34.2 | $ | 34.2 | ||||||||
Southeast Group |
6.4 | 6.4 | 19.6 | 19.1 | ||||||||||||
West Group |
11.1 | 11.5 | 33.5 | 34.5 | ||||||||||||
Total Aggregates Business |
28.6 | 28.8 | 87.3 | 87.8 | ||||||||||||
Specialty Products |
2.5 | 2.6 | 7.6 | 7.9 | ||||||||||||
Corporate |
6.6 | 5.0 | 22.6 | 23.3 | ||||||||||||
Total |
$ | 37.7 | $ | 36.4 | $ | 117.5 | $ | 119.0 | ||||||||
Earnings (Loss) from operations: |
||||||||||||||||
Aggregates Business: |
||||||||||||||||
Mideast Group |
$ | 60.9 | $ | 68.6 | $ | 154.5 | $ | 188.9 | ||||||||
Southeast Group |
13.1 | 19.9 | 36.0 | 68.8 | ||||||||||||
West Group |
38.4 | 45.6 | 72.2 | 75.4 | ||||||||||||
Total Aggregates Business |
112.4 | 134.1 | 262.7 | 333.1 | ||||||||||||
Specialty Products |
8.6 | 9.0 | 27.5 | 24.5 | ||||||||||||
Corporate |
(6.0 | ) | (6.2 | ) | (27.5 | ) | (26.6 | ) | ||||||||
Total |
$ | 115.0 | $ | 136.9 | $ | 262.7 | $ | 331.0 | ||||||||
Depreciation |
$ | 41.7 | $ | 35.7 | $ | 120.0 | $ | 105.5 | ||||||||
Depletion |
1.5 | 1.3 | 3.3 | 3.4 | ||||||||||||
Amortization |
0.8 | 0.7 | 2.4 | 2.2 | ||||||||||||
| $ | 44.0 | $ | 37.7 | $ | 125.7 | $ | 111.1 | |||||||||
-MORE-
MLM Reports Third-Quarter Results
Page 8
October 28, 2008
Page 8
October 28, 2008
MARTIN MARIETTA MATERIALS, INC.
Balance Sheet Data
(In millions)
Balance Sheet Data
(In millions)
| September 30, | December 31, | September 30, | ||||||||||
| 2008 | 2007 | 2007 | ||||||||||
| (Unaudited) | (Audited) | (Unaudited) | ||||||||||
ASSETS |
||||||||||||
Cash and cash equivalents |
$ | 13.9 | $ | 20.0 | $ | 26.4 | ||||||
Accounts receivable, net |
300.4 | 245.8 | 312.3 | |||||||||
Inventories, net |
305.6 | 286.9 | 285.3 | |||||||||
Other current assets |
53.8 | 73.3 | 66.9 | |||||||||
Property, plant and equipment, net |
1,718.4 | 1,433.6 | 1,405.7 | |||||||||
Other noncurrent assets |
43.5 | 40.1 | 40.9 | |||||||||
Intangible assets, net |
628.0 | 584.1 | 584.5 | |||||||||
Total assets |
$ | 3,063.6 | $ | 2,683.8 | $ | 2,722.0 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
Current maturities of long-term debt and commercial paper |
$ | 203.5 | $ | 276.1 | $ | 78.1 | ||||||
Other current liabilities |
221.1 | 230.5 | 238.5 | |||||||||
Long-term debt (excluding current maturities) |
1,152.7 | 848.2 | 1,050.7 | |||||||||
Other noncurrent liabilities |
411.1 | 383.0 | 367.4 | |||||||||
Shareholders’ equity |
1,075.2 | 946.0 | 987.3 | |||||||||
Total liabilities and shareholders’ equity |
$ | 3,063.6 | $ | 2,683.8 | $ | 2,722.0 | ||||||
-MORE-
MLM Reports Third-Quarter Results
Page 9
October 28, 2008
Page 9
October 28, 2008
MARTIN MARIETTA MATERIALS, INC.
Unaudited Statements of Cash Flows
(In millions)
Unaudited Statements of Cash Flows
(In millions)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2008 | 2007 | |||||||
Net earnings |
$ | 151.0 | $ | 206.2 | ||||
Adjustments to reconcile net earnings to cash provided by operating activities: |
||||||||
Depreciation, depletion and amortization |
125.7 | 111.1 | ||||||
Share-based compensation expense |
17.6 | 16.4 | ||||||
Excess tax benefits from share-based compensation |
(3.8 | ) | (20.2 | ) | ||||
Gains on divestitures and sales of assets |
(29.4 | ) | (9.2 | ) | ||||
Deferred income taxes |
26.0 | 1.7 | ||||||
Other items, net |
1.1 | (2.6 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable, net |
(53.4 | ) | (70.3 | ) | ||||
Inventories, net |
(12.7 | ) | (29.8 | ) | ||||
Accounts payable |
10.5 | 6.8 | ||||||
Other assets and liabilities, net |
38.4 | 62.7 | ||||||
Net cash provided by operating activities |
271.0 | 272.8 | ||||||
Investing activities: |
||||||||
Additions to property, plant and equipment |
(223.8 | ) | (196.9 | ) | ||||
Acquisitions, net |
(218.4 | ) | (12.2 | ) | ||||
Proceeds from divestitures and sales of assets |
19.3 | 17.0 | ||||||
Railcar construction advances |
(7.3 | ) | — | |||||
Repayment of railcar construction advances |
7.3 | — | ||||||
Net cash used for investing activities |
(422.9 | ) | (192.1 | ) | ||||
Financing activities: |
||||||||
Borrowings of long-term debt |
297.8 | 472.0 | ||||||
Repayments of long-term debt and payments on capital lease obligations |
(4.1 | ) | (125.5 | ) | ||||
Net borrowings (repayments) of commercial paper and overnight loan |
(72.0 | ) | 75.5 | |||||
Termination of interest rate swaps |
(11.1 | ) | — | |||||
Debt issue costs |
(1.1 | ) | (0.8 | ) | ||||
Change in bank overdraft |
(0.7 | ) | (8.3 | ) | ||||
Dividends paid |
(45.7 | ) | (39.0 | ) | ||||
Repurchases of common stock |
(24.0 | ) | (495.2 | ) | ||||
Issuances of common stock |
2.9 | 14.5 | ||||||
Excess tax benefits from share-based compensation |
3.8 | 20.2 | ||||||
Net cash provided by (used for) financing activities |
145.8 | (86.6 | ) | |||||
Net decrease in cash and cash equivalents |
(6.1 | ) | (5.9 | ) | ||||
Cash and cash equivalents, beginning of period |
20.0 | 32.3 | ||||||
Cash and cash equivalents, end of period |
$ | 13.9 | $ | 26.4 | ||||
-MORE-
MLM Reports Third-Quarter Results
Page 10
October 28, 2008
Page 10
October 28, 2008
MARTIN MARIETTA MATERIALS, INC.
Unaudited Operational Highlights
Unaudited Operational Highlights
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2008 | September 30, 2008 | |||||||||||||||
| Volume | Pricing | Volume | Pricing | |||||||||||||
Volume/Pricing Variance (1) |
||||||||||||||||
Heritage Aggregates Product Line: (2) |
||||||||||||||||
Mideast Group |
(21.1 | %) | 9.9 | % | (22.2 | %) | 11.4 | % | ||||||||
Southeast Group |
(14.6 | %) | 8.7 | % | (11.8 | %) | 6.5 | % | ||||||||
West Group |
(5.4 | %) | 6.7 | % | 1.6 | % | 3.8 | % | ||||||||
Heritage Aggregates Operations |
(13.3 | %) | 7.5 | % | (10.5 | %) | 6.0 | % | ||||||||
Aggregates Product Line (3) |
(12.4 | %) | 7.8 | % | (10.0 | %) | 6.2 | % | ||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| Shipments (tons in thousands) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Heritage Aggregates Product Line: (2) |
||||||||||||||||
Mideast Group |
15,185 | 19,254 | 39,919 | 51,279 | ||||||||||||
Southeast Group |
9,454 | 11,066 | 28,568 | 32,382 | ||||||||||||
West Group |
19,773 | 20,902 | 53,394 | 52,543 | ||||||||||||
Heritage Aggregates Operations |
44,412 | 51,222 | 121,881 | 136,204 | ||||||||||||
Acquisitions |
911 | — | 1,841 | — | ||||||||||||
Divestitures (4) |
123 | 656 | 589 | 1,995 | ||||||||||||
Aggregates Product Line (3) |
45,446 | 51,878 | 124,311 | 138,199 | ||||||||||||
| (1) | Volume/pricing variances reflect the percentage increase (decrease) from the comparable period in the prior year. | |
| (2) | Heritage Aggregates product line excludes volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and divestitures. | |
| (3) | Aggregates product line includes all acquisitions from the date of acquisition and divestitures through the date of disposal. | |
| (4) | Divestitures include the tons related to divested aggregates product line operations up to the date of divestiture. |
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MLM Reports Third-Quarter Results
Page 11
October 28, 2008
Page 11
October 28, 2008
MARTIN MARIETTA MATERIALS, INC.
Non-GAAP Financial Measures
(In millions)
Non-GAAP Financial Measures
(In millions)
Gross margin as a percentage of net sales and operating margin as a percentage of net sales
represent non-GAAP measures. The Corporation presents these ratios calculated based on net sales,
as it is consistent with the basis by which management reviews the Corporation’s operating results.
Further, management believes it is consistent with the basis by which investors analyze the
Corporation’s operating results given that freight and delivery revenues and costs represent
pass-throughs and have no profit mark-up. Gross margin and operating margin calculated as
percentages of total revenues represent the most directly comparable financial measures calculated
in accordance with generally accepted accounting principles (“GAAP”). The following tables present
the calculations of gross margin and operating margin for the three and nine months ended September
30, 2008 and 2007, in accordance with GAAP and reconciliations of the ratios as percentages of
total revenues to percentages of net sales:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Gross Margin in Accordance with Generally Accepted
Accounting Principles |
||||||||||||||||
Gross profit |
$ | 151.6 | $ | 167.3 | $ | 366.2 | $ | 439.1 | ||||||||
Total revenues |
$ | 599.3 | $ | 615.4 | $ | 1,648.6 | $ | 1,662.4 | ||||||||
Gross margin |
25.3 | % | 27.2 | % | 22.2 | % | 26.4 | % | ||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Gross Margin Excluding Freight and Delivery Revenues |
||||||||||||||||
Gross profit |
$ | 151.6 | $ | 167.3 | $ | 366.2 | $ | 439.1 | ||||||||
Total revenues |
$ | 599.3 | $ | 615.4 | $ | 1,648.6 | $ | 1,662.4 | ||||||||
Less: Freight and delivery revenues |
(73.1 | ) | (71.0 | ) | (199.7 | ) | (178.4 | ) | ||||||||
Net sales |
$ | 526.2 | $ | 544.4 | $ | 1,448.9 | $ | 1,484.0 | ||||||||
Gross margin excluding freight and delivery revenues |
28.8 | % | 30.7 | % | 25.3 | % | 29.6 | % | ||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Operating Margin in Accordance with Generally Accepted
Accounting Principles |
||||||||||||||||
Earnings from operations |
$ | 115.0 | $ | 136.9 | $ | 262.7 | $ | 331.0 | ||||||||
Total revenues |
$ | 599.3 | $ | 615.4 | $ | 1,648.6 | $ | 1,662.4 | ||||||||
Operating margin |
19.2 | % | 22.2 | % | 15.9 | % | 19.9 | % | ||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Operating Margin Excluding Freight and Delivery Revenues |
||||||||||||||||
Earnings from operations |
$ | 115.0 | $ | 136.9 | $ | 262.7 | $ | 331.0 | ||||||||
Total revenues |
$ | 599.3 | $ | 615.4 | $ | 1,648.6 | $ | 1,662.4 | ||||||||
Less: Freight and delivery revenues |
(73.1 | ) | (71.0 | ) | (199.7 | ) | (178.4 | ) | ||||||||
Net sales |
$ | 526.2 | $ | 544.4 | $ | 1,448.9 | $ | 1,484.0 | ||||||||
Operating margin excluding freight and delivery revenues |
21.8 | % | 25.1 | % | 18.1 | % | 22.3 | % | ||||||||
-MORE-
MLM Reports Third-Quarter Results
Page 12
October 28, 2008
Page 12
October 28, 2008
MARTIN MARIETTA MATERIALS, INC.
Non-GAAP Financial Measures (continued)
(Dollars in millions)
Non-GAAP Financial Measures (continued)
(Dollars in millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Earnings Before Interest, Income
Taxes, Depreciation,
Depletion and
Amortization
(EBITDA) (1) |
$ | 157.3 | $ | 176.7 | $ | 394.9 | $ | 449.6 | ||||||||
| (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. |
A reconciliation of Net Cash Provided by Operating Activities to EBITDA is as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Net Cash Provided by Operating Activities |
$ | 145.9 | $ | 132.8 | $ | 271.0 | $ | 272.8 | ||||||||
Changes in operating assets and liabilities, net of
effects of acquisitions and divestitures |
(27.0 | ) | (11.9 | ) | 17.2 | 30.6 | ||||||||||
Other items, net |
(9.0 | ) | 7.1 | (12.5 | ) | 13.9 | ||||||||||
Income tax expense |
27.9 | 31.5 | 64.6 | 87.2 | ||||||||||||
Interest expense |
19.5 | 17.2 | 54.6 | 45.1 | ||||||||||||
EBITDA |
$ | 157.3 | $ | 176.7 | $ | 394.9 | $ | 449.6 | ||||||||
The ratio of Consolidated Debt-to-Consolidated EBITDA, as defined, for the trailing twelve months
is a covenant under the Corporation’s $325,000,000 five-year revolving credit agreement. Under the
agreement, the Corporation’s ratio of Consolidated Debt-to-Consolidated EBITDA, as defined, for the
trailing twelve months can not exceed 2.75 to 1.00 as of the end of any fiscal quarter, with
certain exceptions related to qualifying acquisitions, as defined.
The following presents the calculation of Consolidated Debt-to-Consolidated EBITDA, as defined, for
the trailing twelve months at September 30, 2008. For supporting calculations, refer to
Corporation’s Web site at www.martinmarietta.com.
| Twelve-Month Period | ||||
| October 1, 2007 to | ||||
| September 30, 2008 | ||||
Net earnings |
$ | 201.4 | ||
Add back: |
||||
Interest expense |
70.4 | |||
Income tax expense |
89.2 | |||
Depreciation, depletion and amortization expense |
163.1 | |||
Stock-based compensation expense |
20.9 | |||
Deduct: |
||||
Interest income |
(0.9 | ) | ||
Consolidated EBITDA, as defined |
$ | 544.1 | ||
Consolidated Debt at September 30, 2008 |
$ | 1,356.2 | ||
Consolidated Debt-to-Consolidated EBITDA, as defined,
at September 30, 2008 for the trailing twelve-month EBITDA |
2.49 | |||
-END-