UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 4, 2010
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 2.02 Results of Operations and Financial Condition.
On May 4, 2010, the Corporation announced financial results for the first quarter ended March 31,
2010. The press release, dated May 4, 2010, is furnished as Exhibit 99.1 to this report and is
incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
On May 4, 2010, the Corporation announced financial results for the first quarter ended March 31,
2010. The press release, dated May 4, 2010, 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”.
The Corporation will host an online Web simulcast of its first-quarter 2010 earnings conference
call on Tuesday, May 4, 2010. The live broadcast of the Corporation’s conference call will begin
at 2:00 p.m., Eastern Time, on May 4, 2010. 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 970-315-0423, confirmation number
69254308. 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 May 4, 2010, announcing financial results for the first quarter ended
March 31, 2010. |
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: May 4, 2010 | By: | /s/ Anne H. Lloyd | ||
| Anne H. Lloyd, Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
| Exhibit No. | Description | |
99.1
|
Press Release dated May 4, 2010, announcing financial results for the first quarter ended March 31, 2010. |
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
|
Contact: | Anne H. Lloyd Executive Vice President, Chief Financial Officer and Treasurer (919) 783-4660 www.martinmarietta.com |
MARTIN MARIETTA MATERIALS, INC. ANNOUNCES
FIRST QUARTER RESULTS
FIRST QUARTER RESULTS
RALEIGH, North Carolina (May 4, 2010) — Martin Marietta Materials, Inc. (NYSE:MLM) today announced
results for the first quarter ended March 31, 2010. Notable items were:
| • | Net sales of $296 million compared with $330 million for the 2009 first quarter |
||
| • | Heritage aggregates product line volume down 12% for the quarter; up 9% for the month of
March |
||
| • | Heritage aggregates product line pricing down 3% |
||
| • | Record Specialty Products operating margin (excluding freight and delivery revenues) of
26.9%, up 780 basis points |
||
| • | Loss from operations of $13 million compared with earnings from operations of $11 million
for the prior-year quarter |
||
| • | Loss per diluted share of $0.54 compared with a loss per diluted share of $0.14 for the
prior-year quarter |
||
| • | Acquired deep-water port operation located at Port Canaveral, Florida |
Management Commentary
Ward Nye, President and CEO of Martin Marietta Materials, stated, “This was a predictably difficult first quarter as we expected any benefits that would flow from the American Recovery and Reinvestment Act (“ARRA” or “Stimulus”) would not occur during the early part of 2010. This proved to be the case, but, I am pleased to report that heritage aggregates product line volume increased 9% for the month of March. This marks the first month of volume growth compared with the prior-year month in the past several years. Perhaps more importantly, this volume trend continued through April with double-digit volume increases for the month, marking the first back-to-back months of volume growth since February and March 2006. This improvement in shipments coincided with the initiation of the construction season and is being largely fueled by infrastructure projects funded by Stimulus as money is reaching the states, and projects are beginning.
Ward Nye, President and CEO of Martin Marietta Materials, stated, “This was a predictably difficult first quarter as we expected any benefits that would flow from the American Recovery and Reinvestment Act (“ARRA” or “Stimulus”) would not occur during the early part of 2010. This proved to be the case, but, I am pleased to report that heritage aggregates product line volume increased 9% for the month of March. This marks the first month of volume growth compared with the prior-year month in the past several years. Perhaps more importantly, this volume trend continued through April with double-digit volume increases for the month, marking the first back-to-back months of volume growth since February and March 2006. This improvement in shipments coincided with the initiation of the construction season and is being largely fueled by infrastructure projects funded by Stimulus as money is reaching the states, and projects are beginning.
“Looking at the quarter, heritage aggregates product line volume was down 12% compared with the
prior-year period. This was not a surprise as historically the first quarter is the weakest and
most volatile quarter for our Aggregates business. Still, this quarter’s volatility was
particularly exacerbated by unprecedented precipitation and cold temperatures during January and
February, including snowfalls in even our most southern markets. While it is difficult to quantify
the shipments lost due specifically to weather, the impact is evident given that heritage
aggregates shipments for the quarter were at the lowest level since 1999 despite March’s 9%
shipment increase.
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MLM Announces First Quarter 2010 Results
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“Overall heritage aggregates product line pricing decreased 3% compared with the prior-year
quarter. Consistent with recent trends, pricing varied significantly by market and ranged from an
increase of 12% to a decrease of 30%. While the effect of weather was more acutely evident in the
quarter’s volume profile, it also contributed to the wide range of price fluctuation as it affected
the timing of re-opening quarries closed for the winter, placed varying hardships on certain
long-haul markets, and inevitably delayed the initiation of new construction. As in 2009, two of
the hardest hit geographic areas in terms of quarterly volume and pricing decline were our Florida
and River markets. In addition, we are seeing pricing pressure in a growing number of geographic
areas; however, this is consistent with our view of a more challenging pricing environment in 2010
due not only to competitive forces but also the impact of both geographic and product mix. That
said, the historically low level of aggregates shipments and
customary first-quarter volatility
make it difficult to use first-quarter pricing trends as a meaningful projection for the balance of
the year.
“Our Specialty Products business contributed significantly to our first-quarter results, expanding
its operating margin (excluding freight and delivery revenues) 780 basis points to 26.9% for the
quarter. This business segment had volume growth in all product lines. Notably, in March, we had
the largest shipping month for dolomitic lime in recent history which eclipsed the previous monthly
shipment record established in April 2008. The Specialty Products business has continued to focus
on operational efficiency initiatives, which, along with increased shipments and capacity
utilization, drove its record quarterly profitability. Earnings from operations of $11.2 million
increased $4.9 million compared with the prior-year quarter.
“Our results also reflected our ability to control costs. Our operating team continued its focus on
cost containment, and, consequently, our consolidated cost of sales
decreased $5.3 million, or 2%,
for the quarter. With the exception of depreciation, which increased $2.8 million, or 7%, and
energy costs, which increased $4.2 million, or 15%, we again reduced our cost of sales in every
significant category. The increase in energy costs was driven in large part by diesel expense.
For the first quarter, we paid $2.03 per gallon for diesel, a 59% increase as compared with the
prior-year quarter.
“Selling, general and administrative expenses declined $3.6 million compared with the prior-year
quarter. Our objective is to hold SG&A expenses flat with 2009, excluding required payments under
certain retirement plans. For the first quarter 2010, we reported a loss from operations of $12.9
million compared with earnings from operations of $10.9 million in the first quarter 2009.
“The overall effective tax rate for the quarter was 17% compared with 25% for the first quarter
2009. The 2010 effective tax rate includes the effect of a charge of approximately $2.8 million
resulting from the recently-enacted Patient Protection and Affordable Care Act (the “Act”). The
charge relates to the change in the tax treatment of Medicare Part D reimbursements we receive
related to our retiree medical benefit plan. We expect the overall effective tax rate for the
full year to be approximately 28%.
Liquidity And Capital Resources
“In addition to our cost control efforts, we remained strictly attentive to our balance sheet, liquidity, and cash flow generation. Capital investment in organic growth in advance of the current recession has positioned our operations for strong performance in an economic recovery. Our base of highly efficient, cost-effective operating assets allows us to appropriately reduce maintenance-capital investment and provides opportunities to allocate capital in a manner that maximizes our long-term shareholder value. Capital expenditures and acquisitions were $25.0 million and $28.0 million, respectively, for the first three months of 2010. The $25.0 million of capital expenditures represents a $15.3 million reduction compared with capital spending for the first three months of 2009, and a $45 million reduction from a historical quarterly rate of capital spend of $70.0 million. During the quarter, we completed the acquisition of a deep-water port operation located at Port Canaveral in Florida. This facility is currently the only developed deep-water aggregates import terminal located on the central east coast of Florida. From this location, we can ship product into the greater Orlando
“In addition to our cost control efforts, we remained strictly attentive to our balance sheet, liquidity, and cash flow generation. Capital investment in organic growth in advance of the current recession has positioned our operations for strong performance in an economic recovery. Our base of highly efficient, cost-effective operating assets allows us to appropriately reduce maintenance-capital investment and provides opportunities to allocate capital in a manner that maximizes our long-term shareholder value. Capital expenditures and acquisitions were $25.0 million and $28.0 million, respectively, for the first three months of 2010. The $25.0 million of capital expenditures represents a $15.3 million reduction compared with capital spending for the first three months of 2009, and a $45 million reduction from a historical quarterly rate of capital spend of $70.0 million. During the quarter, we completed the acquisition of a deep-water port operation located at Port Canaveral in Florida. This facility is currently the only developed deep-water aggregates import terminal located on the central east coast of Florida. From this location, we can ship product into the greater Orlando
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MLM Announces First Quarter 2010 Results
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May 4, 2010
area,
the second-largest aggregates-consuming area in Florida. This acquisition
will complement our existing long-haul rail network and make a positive contribution to
profitability in this and future years.
“Cash provided by operating activities for the first quarter of 2010 was $27.1 million as
compared with $64.8 million in 2009, with a $39.3 million build in accounts receivable during the
current quarter resulting from increased sales occurring in the last two weeks of March. We
currently expect this trend to continue through the balance of the year.
“We ended the quarter with $221.0 million in cash and cash equivalents, available borrowings of
$323 million on our revolving credit agreement and available borrowings of $100 million on our
secured accounts receivable credit facility. At March 31, 2010, our ratio of consolidated debt to
consolidated earnings before interest expense, tax expense, and depreciation, depletion and
amortization expense (EBITDA), as defined, for the trailing twelve-month EBITDA was 3.37 times.
However, in April 2010, we settled our obligation related to the Floating Rate Senior Notes through
the use of cash and short-term financing, reducing total debt by $143 million. At April 30, 2010,
we had total outstanding debt of $1.106 billion, including $75 million of borrowings outstanding on
our secured accounts receivable credit facility. Accordingly, we have available borrowings of $25
million on our secured accounts receivable credit facility and $323 million on our revolving credit
agreement. Assuming the total amount of outstanding debt at April 30, 2010, $1.106 billion, was
outstanding at March 31, 2010, our proforma ratio of consolidated debt to consolidated EBITDA, as
defined, for the trailing twelve-month EBITDA would have been 2.99 times at March 31, 2010.
2010 Outlook
“Our current view of the Corporation’s markets in 2010 continues to be framed by the expectation of greater stability in overall aggregates demand. Evidence of that stability was reflected in March and April aggregates shipments. We expect volumes sold to the infrastructure construction market to increase as recipients of ARRA funds initiate the projects on which the monies have been obligated. While over 80% of ARRA infrastructure money in our top five states was obligated in 2009, less than 15% was actually spent. We also believe recent Congressional actions relative to the year-end 2010 extension of the Safe, Accountable, Flexible and Efficient Transportation Equity Act — A Legacy for Users (SAFETEA-LU), the federal highway bill that expired September 30, 2009, will bolster state-level confidence, reduce budget pressures and allow state Departments of Transportation to progress longer-term construction projects to the bid and award stage. We continue to closely monitor progress relative to the federal highway bill reauthorization as we believe this reauthorization is critical to 2011 aggregates demand. We expect to see a moderate increase in aggregates volume to the residential construction market, although this increase will be from an historically low base. We also anticipate steady growth for our ChemRock/Rail products. These three end-use markets cumulatively comprised 75% of our 2009 aggregates volumes. Commercial, or non-residential, construction represents the balance of our aggregates volume. As previously stated, we expect a decline in these volumes in 2010. While we have not yet seen evidence in our customer’s backlog, the heavy industrial component of commercial construction may have an opportunity to expand in the second half of 2010 as developers take advantage of low construction costs and credit availability. Considering all these factors, we expect a modest increase in aggregates volume in 2010. However, if the decline in commercial construction is greater than anticipated, volumes may be flat with the prior year.
“Our current view of the Corporation’s markets in 2010 continues to be framed by the expectation of greater stability in overall aggregates demand. Evidence of that stability was reflected in March and April aggregates shipments. We expect volumes sold to the infrastructure construction market to increase as recipients of ARRA funds initiate the projects on which the monies have been obligated. While over 80% of ARRA infrastructure money in our top five states was obligated in 2009, less than 15% was actually spent. We also believe recent Congressional actions relative to the year-end 2010 extension of the Safe, Accountable, Flexible and Efficient Transportation Equity Act — A Legacy for Users (SAFETEA-LU), the federal highway bill that expired September 30, 2009, will bolster state-level confidence, reduce budget pressures and allow state Departments of Transportation to progress longer-term construction projects to the bid and award stage. We continue to closely monitor progress relative to the federal highway bill reauthorization as we believe this reauthorization is critical to 2011 aggregates demand. We expect to see a moderate increase in aggregates volume to the residential construction market, although this increase will be from an historically low base. We also anticipate steady growth for our ChemRock/Rail products. These three end-use markets cumulatively comprised 75% of our 2009 aggregates volumes. Commercial, or non-residential, construction represents the balance of our aggregates volume. As previously stated, we expect a decline in these volumes in 2010. While we have not yet seen evidence in our customer’s backlog, the heavy industrial component of commercial construction may have an opportunity to expand in the second half of 2010 as developers take advantage of low construction costs and credit availability. Considering all these factors, we expect a modest increase in aggregates volume in 2010. However, if the decline in commercial construction is greater than anticipated, volumes may be flat with the prior year.
“Aggregates production cost per ton
is expected to remain flat in 2010, with increased production
volume offset by a modest increase in the overall cost environment. Energy costs, primarily
diesel fuel consumed by off-road mobile quarry equipment, are assumed to increase slightly as
compared with 2009. Our Specialty Products business should continue to expand its profitability in
2010, as even modest economic recovery drives industrial demand for magnesia-based chemicals
products and continued demand for environmental applications is driven by the United States’ focus
on green technology and innovation.
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MLM Announces First Quarter 2010 Results
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May 4, 2010
“Based on our current economic view, we expect aggregates volume growth of 2% to 4% and aggregates
pricing to range from flat to an increase of 2% compared with prior year, which should lead to
increased aggregates sales and improved gross margin and profitability in 2010. We expect the
Specialty Products segment to contribute $40 million to $42 million in pretax earnings for 2010.
Interest expense should be approximately $70 million in 2010. Capital expenditures are forecast at
$160 million for 2010. Consistent with first-quarter results, we expect that there will be an
increased use of cash for working capital, most notably accounts receivable, as revenues grow.”
Risks To Earnings Expectations
The 2010 estimated outlook includes management’s assessment of the likelihood of certain risk factors that will affect performance. The most significant risk to 2010 performance will be, as previously noted, the strength of the United States economy and its impact on construction activity. Our 2010 outlook is based on the expectation that the United States economy will stabilize and positive economic growth will commence in the second half of the year.
The 2010 estimated outlook includes management’s assessment of the likelihood of certain risk factors that will affect performance. The most significant risk to 2010 performance will be, as previously noted, the strength of the United States economy and its impact on construction activity. Our 2010 outlook is based on the expectation that the United States economy will stabilize and positive economic growth will commence in the second half of the year.
Risks to the Corporation’s future performance are related to both price and volume and include a
widespread decline in aggregates pricing, a greater-than-expected drop in demand as a result of the
continued delays in federal ARRA and state infrastructure projects, a continued decline in
commercial construction, a further decline in residential construction, or some combination
thereof. Further, increased highway construction funding pressures as a result of either federal
or state issues can affect profitability. Currently, nearly all states are experiencing
state-level funding pressures driven by lower tax revenues and an inability to finance approved
projects. North Carolina and Texas are among the states experiencing these pressures, and these
states disproportionately affect revenue and profitability.
The Corporation’s principal business serves customers in construction aggregates-related markets.
This concentration could increase the risk of potential losses on customer receivables; however,
payment bonds posted by the Corporation’s customers can help to mitigate the risk of uncollectible
receivables. The level of aggregates demand in the Corporation’s end-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, both directly and indirectly. Diesel and other fuels change production
costs directly through consumption or indirectly in the increased cost of energy-related
consumables, namely steel, explosives, tires and conveyor belts. Changing diesel costs also affect
transportation costs, primarily through fuel surcharges in the Corporation’s long-haul distribution
network. The Corporation’s earnings expectations do not include rapidly increasing diesel costs or
sustained periods of increased diesel fuel cost during 2010.
The availability of transportation in the Corporation’s long-haul network, particularly the
availability of barges on the Mississippi River system and the availability of rail cars and
locomotive power to move trains, affects the Corporation’s ability to efficiently transport
material into certain markets, most notably Texas, Florida and the Gulf Coast region. 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.
Risks to the 2010 outlook 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 on commercial and
residential 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 debt. If volumes
decline worse than expected, the Corporation is exposed to greater risk in its earnings, including
its debt covenant, as the pressure of operating leverage increases disproportionately.
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MLM Announces First Quarter 2010 Results
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May 4, 2010
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May 4, 2010
Consolidated Financial Highlights
Net sales for the quarter were $295.6 million, a 10.4% decrease versus the $329.8 million recorded in the first quarter of 2009. The loss from operations for the first quarter of 2010 was $12.9 million compared with earnings from operations of $10.9 million in 2009. The net loss attributable to the Corporation was $24.2 million, or $0.54 per diluted share, versus $5.8 million, or $0.14 per diluted share, in the first quarter of 2009.
Net sales for the quarter were $295.6 million, a 10.4% decrease versus the $329.8 million recorded in the first quarter of 2009. The loss from operations for the first quarter of 2010 was $12.9 million compared with earnings from operations of $10.9 million in 2009. The net loss attributable to the Corporation was $24.2 million, or $0.54 per diluted share, versus $5.8 million, or $0.14 per diluted share, in the first quarter of 2009.
Business Financial Highlights
Net sales for the Aggregates business for the first quarter of 2010 were $253.8 million compared with 2009 first-quarter sales of $296.7 million. Aggregates pricing at heritage locations was down 3.1% and volume decreased 11.9%. Including acquisitions and divestitures, aggregates pricing decreased 3.1% and aggregates volume declined 11.1%. The loss from operations for the quarter was $19.3 million in 2010 versus earnings from operations of $13.4 million in the year-earlier period.
Net sales for the Aggregates business for the first quarter of 2010 were $253.8 million compared with 2009 first-quarter sales of $296.7 million. Aggregates pricing at heritage locations was down 3.1% and volume decreased 11.9%. Including acquisitions and divestitures, aggregates pricing decreased 3.1% and aggregates volume declined 11.1%. The loss from operations for the quarter was $19.3 million in 2010 versus earnings from operations of $13.4 million in the year-earlier period.
Specialty
Products’ first-quarter net sales of $41.8 million increased 25.8% from prior-year net
sales of $33.1 million. Earnings from operations for the first quarter were $11.2 million compared
with $6.3 million in the year-earlier period.
Conference Call Information
The Company will host an online web simulcast of its first quarter 2010 earnings conference call later today (May 4, 2010). The live broadcast of Martin Marietta Materials, Inc.’s conference call will begin at 2 p.m. Eastern Time today. An online replay will be available approximately two hours following the conclusion of the live broadcast. A link to these events will be available at the Corporation’s website.
The Company will host an online web simulcast of its first quarter 2010 earnings conference call later today (May 4, 2010). The live broadcast of Martin Marietta Materials, Inc.’s conference call will begin at 2 p.m. Eastern Time today. An online replay will be available approximately two hours following the conclusion of the live broadcast. A link to these events will be available at the Corporation’s website.
For those investors without online web access, the conference call may also be accessed by calling
(970) 315-0423, confirmation number 69254308.
For more information about Martin Marietta Materials, Inc., refer to the Corporation’s website at
www.martinmarietta.com.
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MLM Announces First Quarter 2010 Results
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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 website at www.martinmarietta.com and
are also available at the SEC’s website at www.sec.gov. You may also write or call the
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
performance of the United States economy; widespread decline in aggregates pricing; the level and
timing of federal and state transportation funding, including federal stimulus projects and most
particularly in North Carolina, one of the Corporation’s largest and most profitable states, and
Georgia, Texas, Iowa and Louisiana, which when coupled with North Carolina, represented 56% of 2009
net sales of the Aggregates business; the ability of states and/or other entities to finance
approved projects either with tax revenues or alternative financing structures; levels of
construction spending in the markets the Corporation serves; the severity of a continued decline in
the commercial construction market, notably office and retail space, and the continued decline in
residential construction; unfavorable weather conditions, particularly Atlantic Ocean hurricane
activity, the late start to spring or the early onset of winter and the impact of a drought in the
markets served by the Corporation; the volatility of fuel costs, particularly diesel fuel, and the
impact on the cost of other consumables, namely steel, explosives, tires and conveyor belts;
continued increases in the cost of other repair and supply parts; transportation availability,
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, Florida and Gulf Coast markets;
increased transportation costs, including increases from higher passed-through energy costs and
higher volumes of rail and water shipments; weakening in the steel industry markets served by the
Corporation’s dolomitic lime products; inflation and its effect on both production and interest
costs; changes in tax laws, the interpretation of such laws and/or administrative practices that
would increase the Corporation’s tax rate; violation of the debt covenant if price and/or volumes
decline worse than expected; downward pressure on the Corporation’s common stock price and its
impact on goodwill impairment evaluations; 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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Announces First Quarter 2010 Results
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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 | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
Net sales |
$ | 295.6 | $ | 329.8 | ||||
Freight and delivery revenues |
45.3 | 44.7 | ||||||
Total revenues |
340.9 | 374.5 | ||||||
Cost of sales |
276.0 | 281.3 | ||||||
Freight and delivery costs |
45.3 | 44.7 | ||||||
Total cost of revenues |
321.3 | 326.0 | ||||||
Gross profit |
19.6 | 48.5 | ||||||
Selling, general and administrative expenses |
33.6 | 37.2 | ||||||
Research and development |
— | 0.1 | ||||||
Other operating (income) and expenses, net |
(1.1 | ) | 0.3 | |||||
(Loss) Earnings from operations |
(12.9 | ) | 10.9 | |||||
Interest expense |
17.6 | 18.5 | ||||||
Other nonoperating (income) and expenses, net |
(0.6 | ) | 1.0 | |||||
Loss from continuing operations before taxes on income |
(29.9 | ) | (8.6 | ) | ||||
Income tax benefit |
(5.0 | ) | (2.2 | ) | ||||
Loss from continuing operations |
(24.9 | ) | (6.4 | ) | ||||
Gain on discontinued operations, net of related tax expense
of $0.0 and $0.0, respectively |
0.1 | — | ||||||
Consolidated net loss |
(24.8 | ) | (6.4 | ) | ||||
Less: Net loss attributable to noncontrolling interests |
(0.6 | ) | (0.6 | ) | ||||
Net loss attributable to Martin Marietta Materials, Inc. |
$ | (24.2 | ) | $ | (5.8 | ) | ||
Net loss per common share: |
||||||||
Basic from continuing operations attributable to common shareholders |
$ | (0.54 | ) | $ | (0.14 | ) | ||
Discontinued operations attributable to common shareholders |
— | — | ||||||
| $ | (0.54 | ) | $ | (0.14 | ) | |||
Diluted from continuing operations attributable to common shareholders |
$ | (0.54 | ) | $ | (0.14 | ) | ||
Discontinued operations attributable to common shareholders |
— | — | ||||||
| $ | (0.54 | ) | $ | (0.14 | ) | |||
Dividends per common share |
$ | 0.40 | $ | 0.40 | ||||
Average number of common shares outstanding: |
||||||||
Basic |
45.4 | 41.9 | ||||||
Diluted |
45.4 | 41.9 | ||||||
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Announces First Quarter 2010 Results
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MARTIN MARIETTA MATERIALS, INC.
Unaudited Financial Highlights
(In millions)
Unaudited Financial Highlights
(In millions)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
Net sales: |
||||||||
Aggregates Business: |
||||||||
Mideast Group |
$ | 83.3 | $ | 81.9 | ||||
Southeast Group |
68.1 | 95.3 | ||||||
West Group |
102.4 | 119.5 | ||||||
Total Aggregates Business |
253.8 | 296.7 | ||||||
Specialty Products |
41.8 | 33.1 | ||||||
Total |
$ | 295.6 | $ | 329.8 | ||||
Gross profit: |
||||||||
Aggregates Business: |
||||||||
Mideast Group |
$ | 11.8 | $ | 16.0 | ||||
Southeast Group |
(2.9 | ) | 14.9 | |||||
West Group |
(2.9 | ) | 10.7 | |||||
Total Aggregates Business |
6.0 | 41.6 | ||||||
Specialty Products |
14.1 | 8.7 | ||||||
Corporate |
(0.5 | ) | (1.8 | ) | ||||
Total |
$ | 19.6 | $ | 48.5 | ||||
Selling, general and administrative expenses: |
||||||||
Aggregates Business: |
||||||||
Mideast Group |
$ | 10.4 | $ | 11.2 | ||||
Southeast Group |
6.4 | 6.5 | ||||||
West Group |
10.7 | 10.7 | ||||||
Total Aggregates Business |
27.5 | 28.4 | ||||||
Specialty Products |
2.9 | 2.4 | ||||||
Corporate |
3.2 | 6.4 | ||||||
Total |
$ | 33.6 | $ | 37.2 | ||||
Earnings (Loss) from operations: |
||||||||
Aggregates Business: |
||||||||
Mideast Group |
$ | 2.1 | $ | 5.2 | ||||
Southeast Group |
(9.1 | ) | 8.2 | |||||
West Group |
(12.3 | ) | — | |||||
Total Aggregates Business |
(19.3 | ) | 13.4 | |||||
Specialty Products |
11.2 | 6.3 | ||||||
Corporate |
(4.8 | ) | (8.8 | ) | ||||
Total |
$ | (12.9 | ) | $ | 10.9 | |||
Depreciation |
$ | 43.5 | $ | 41.2 | ||||
Depletion |
0.6 | 0.7 | ||||||
Amortization |
0.9 | 0.7 | ||||||
| $ | 45.0 | $ | 42.6 | |||||
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MLM
Announces First Quarter 2010 Results
Page 9
May 4, 2010
Page 9
May 4, 2010
MARTIN MARIETTA MATERIALS, INC.
Balance Sheet Data
(In millions)
Balance Sheet Data
(In millions)
| March 31, | December 31, | March 31, | ||||||||||
| 2010 | 2009 | 2009 | ||||||||||
| (Unaudited) | (Audited) | (Unaudited) | ||||||||||
ASSETS |
||||||||||||
Cash and cash equivalents |
$ | 221.0 | $ | 263.6 | $ | 222.0 | ||||||
Accounts receivable, net |
202.1 | 162.8 | 206.8 | |||||||||
Inventories, net |
322.0 | 332.6 | 324.9 | |||||||||
Other current assets |
109.6 | 97.9 | 138.2 | |||||||||
Property, plant and equipment, net |
1,695.0 | 1,692.9 | 1,683.7 | |||||||||
Intangible assets, net |
643.1 | 636.7 | 637.3 | |||||||||
Other noncurrent assets |
52.1 | 52.8 | 40.2 | |||||||||
Total assets |
$ | 3,244.9 | $ | 3,239.3 | $ | 3,253.1 | ||||||
LIABILITIES AND EQUITY |
||||||||||||
Current maturities of long-term debt and short-term facilities |
$ | 219.6 | $ | 226.1 | $ | 181.9 | ||||||
Other current liabilities |
175.7 | 147.5 | 165.8 | |||||||||
Long-term debt (excluding current maturities) |
1,029.6 | 1,023.5 | 1,152.1 | |||||||||
Other noncurrent liabilities |
447.1 | 435.8 | 469.1 | |||||||||
Total equity |
1,372.9 | 1,406.4 | 1,284.2 | |||||||||
Total liabilities and equity |
$ | 3,244.9 | $ | 3,239.3 | $ | 3,253.1 | ||||||
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MLM
Announces First Quarter 2010 Results
Page 10
May 4, 2010
Page 10
May 4, 2010
MARTIN MARIETTA MATERIALS, INC.
Unaudited Statements of Cash Flows
(In millions)
Unaudited Statements of Cash Flows
(In millions)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
Operating activities: |
||||||||
Consolidated net loss |
$ | (24.8 | ) | $ | (6.4 | ) | ||
Adjustments to reconcile consolidated net loss to net cash provided by operating activities: |
||||||||
Depreciation, depletion and amortization |
45.0 | 42.6 | ||||||
Stock-based compensation expense |
3.9 | 5.1 | ||||||
Excess tax benefits from stock-based compensation transactions |
(0.1 | ) | (0.1 | ) | ||||
(Gains) Losses on divestitures and sales of assets |
(1.1 | ) | 0.8 | |||||
Deferred income taxes |
0.9 | 0.8 | ||||||
Other items, net |
0.3 | 0.7 | ||||||
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: |
||||||||
Accounts receivable, net |
(39.3 | ) | 4.8 | |||||
Inventories, net |
10.7 | (6.9 | ) | |||||
Accounts payable |
15.1 | 14.4 | ||||||
Other assets and liabilities, net |
16.5 | 9.0 | ||||||
Net cash provided by operating activities |
27.1 | 64.8 | ||||||
Investing activities: |
||||||||
Additions to property, plant and equipment |
(25.0 | ) | (40.3 | ) | ||||
Acquisitions, net |
(28.0 | ) | (1.5 | ) | ||||
Proceeds from divestitures and sales of assets |
1.5 | 5.0 | ||||||
Net cash used for investing activities |
(51.5 | ) | (36.8 | ) | ||||
Financing activities: |
||||||||
Borrowings of long-term debt |
50.0 | — | ||||||
Repayments of long-term debt and payments on capital lease obligations |
(50.5 | ) | (1.1 | ) | ||||
Net repayments on short-term facilities |
— | (20.0 | ) | |||||
Change in bank overdraft |
0.5 | (0.2 | ) | |||||
Dividends paid |
(18.4 | ) | (16.8 | ) | ||||
Debt issue costs |
(0.1 | ) | — | |||||
Issuances of common stock |
0.2 | 195.2 | ||||||
Excess tax benefits from stock-based compensation transactions |
0.1 | 0.1 | ||||||
Distributions to owners of noncontrolling interests |
— | (1.0 | ) | |||||
Net cash (used for) provided by financing activities |
(18.2 | ) | 156.2 | |||||
Net (decrease) increase in cash and cash equivalents |
(42.6 | ) | 184.2 | |||||
Cash and cash equivalents, beginning of period |
263.6 | 37.8 | ||||||
Cash and cash equivalents, end of period |
$ | 221.0 | $ | 222.0 | ||||
-MORE-
MLM
Announces First Quarter 2010 Results
Page 11
May 4, 2010
Page 11
May 4, 2010
MARTIN MARIETTA MATERIALS, INC.
Unaudited Operational Highlights
Unaudited Operational Highlights
| Three Months Ended | ||||||||
| March 31, 2010 | ||||||||
| Volume | Pricing | |||||||
Volume/Pricing Variance (1) |
||||||||
Heritage Aggregates Product Line: (2) |
||||||||
Mideast Group |
3.3 | % | (1.3 | %) | ||||
Southeast Group |
(23.1 | %) | (6.5 | %) | ||||
West Group |
(13.0 | %) | (2.9 | %) | ||||
Heritage Aggregates Operations |
(11.9 | %) | (3.1 | %) | ||||
Aggregates Product Line (3) |
(11.1 | %) | (3.1 | %) | ||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
Shipments (tons in thousands) |
||||||||
Heritage Aggregates Product Line: (2) |
||||||||
Mideast Group |
6,905 | 6,681 | ||||||
Southeast Group |
6,122 | 7,961 | ||||||
West Group |
10,220 | 11,744 | ||||||
Heritage Aggregates Operations |
23,247 | 26,386 | ||||||
Acquisitions |
226 | — | ||||||
Divestitures (4) |
3 | 14 | ||||||
Aggregates Product Line (3) |
23,476 | 26,400 | ||||||
| (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. |
-MORE-
MLM
Announces First Quarter 2010 Results
Page 12
May 4, 2010
Page 12
May 4, 2010
MARTIN MARIETTA MATERIALS, INC.
Non-GAAP Financial Measures
(Dollars in millions)
Non-GAAP Financial Measures
(Dollars 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
months ended March 31, 2010 and 2009 in accordance with GAAP and reconciliations of the ratios as
percentages of total revenues to percentages of net sales:
| Three Months Ended | ||||||||
| Gross Margin in Accordance with Generally Accepted | March 31, | |||||||
| Accounting Principles | 2010 | 2009 | ||||||
Gross profit |
$ | 19.6 | $ | 48.5 | ||||
Total revenues |
$ | 340.9 | $ | 374.5 | ||||
Gross margin |
5.8 | % | 13.0 | % | ||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| Gross Margin Excluding Freight and Delivery Revenues | 2010 | 2009 | ||||||
Gross profit |
$ | 19.6 | $ | 48.5 | ||||
Total revenues |
$ | 340.9 | $ | 374.5 | ||||
Less: Freight and delivery revenues |
(45.3 | ) | (44.7 | ) | ||||
Net sales |
$ | 295.6 | $ | 329.8 | ||||
Gross margin excluding freight and delivery revenues |
6.6 | % | 14.7 | % | ||||
| Three Months Ended | ||||||||
| Operating Margin in Accordance with Generally Accepted | March 31, | |||||||
| Accounting Principles | 2010 | 2009 | ||||||
(Loss) Earnings from operations |
$ | (12.9 | ) | $ | 10.9 | |||
Total revenues |
$ | 340.9 | $ | 374.5 | ||||
Operating margin |
(3.8 | %) | 2.9 | % | ||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| Operating Margin Excluding Freight and Delivery Revenues | 2010 | 2009 | ||||||
(Loss) Earnings from operations |
$ | (12.9 | ) | $ | 10.9 | |||
Total revenues |
$ | 340.9 | $ | 374.5 | ||||
Less: Freight and delivery revenues |
(45.3 | ) | (44.7 | ) | ||||
Net sales |
$ | 295.6 | $ | 329.8 | ||||
Operating margin excluding freight and delivery revenues |
(4.4 | %) | 3.3 | % | ||||
-MORE-
MLM
Announces First Quarter 2010 Results
Page 13
May 4, 2010
Page 13
May 4, 2010
MARTIN MARIETTA MATERIALS, INC.
Non-GAAP Financial Measures (continued)
(Dollars in millions)
Non-GAAP Financial Measures (continued)
(Dollars in millions)
The ratio of Consolidated Debt-to-Consolidated EBITDA, as defined, for the trailing twelve months
is a covenant under the Corporation’s $325 million 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 3.75 to 1.00 as of March 31, 2010, 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 March 31, 2010. For supporting calculations, refer to Corporation’s
website at www.martinmarietta.com.
| Twelve-Month Period | ||||
| April 1, 2009 to | ||||
| March 31, 2010 | ||||
Earnings from continuing operations attributable to Martin Marietta Materials, Inc. |
$ | 67.6 | ||
Add back: |
||||
Interest expense |
72.6 | |||
Income tax expense |
24.4 | |||
Depreciation, depletion and amortization expense |
176.3 | |||
Stock-based compensation expense |
19.4 | |||
Unusual, nonrecurring, noncash charge for legal reserve |
11.9 | |||
Deduct: |
||||
Interest income |
(1.7 | ) | ||
Consolidated EBITDA, as defined |
$ | 370.5 | ||
Consolidated Debt at March 31, 2010 |
$ | 1,249.2 | ||
Consolidated Debt-to-Consolidated EBITDA, as defined,
at March 31, 2010 for the trailing twelve-month EBITDA |
3.37x | |||
The following presents the calculation of proforma Consolidated Debt-to-Consolidated EBITDA, as
defined, for the trailing-twelve months at March 31, 2010, assuming the total amount of
outstanding debt at April 30, 2010 was outstanding at March 31, 2010. For supporting
calculations, refer to Corporation’s website at www.martinmarietta.com.
| Twelve-Month Period | ||||
| April 1, 2009 to | ||||
| March 31, 2010 | ||||
Earnings from continuing operations attributable to Martin Marietta Materials, Inc. |
$ | 67.6 | ||
Add back: |
||||
Interest expense |
72.6 | |||
Income tax expense |
24.4 | |||
Depreciation, depletion and amortization expense |
176.3 | |||
Stock-based compensation expense |
19.4 | |||
Unusual, nonrecurring, noncash charge for legal reserve |
11.9 | |||
Deduct: |
||||
Interest income |
(1.7 | ) | ||
Consolidated EBITDA, as defined |
$ | 370.5 | ||
Proforma Consolidated Debt at March 31, 2010 |
$ | 1,106.0 | ||
Proforma Consolidated Debt-to-Consolidated EBITDA, as defined,
at March 31, 2010 for the trailing twelve-month EBITDA |
2.99x | |||
-MORE-
MLM
Announces First Quarter 2010 Results
Page 14
May 4, 2010
Page 14
May 4, 2010
MARTIN MARIETTA MATERIALS, INC.
Non-GAAP Financial Measures (continued)
(Dollars in millions)
Non-GAAP Financial Measures (continued)
(Dollars in millions)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
Earnings Before Interest, Income Taxes, Depreciation, |
||||||||
Depletion and Amortization (EBITDA) (1) |
$ | 33.0 | $ | 52.9 | ||||
| (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 earnings or operating cash flow. For further information on EBITDA, refer to the Corporation’s website at www.martinmarietta.com. |
A reconciliation of Net Loss Attributable to Martin Marietta Materials, Inc. to EBITDA is as follows:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
Net Loss Attributable to Martin Marietta Materials, Inc. |
$ | (24.2 | ) | $ | (5.8 | ) | ||
Add back: |
||||||||
Interest Expense |
17.6 | 18.5 | ||||||
Income Tax Benefit for Controlling Interests |
(4.9 | ) | (2.1 | ) | ||||
Depreciation, Depletion and Amortization Expense |
44.5 | 42.3 | ||||||
EBITDA |
$ | 33.0 | $ | 52.9 | ||||
-END-