UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) May 8, 2018

 

Martin Marietta Materials, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

(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:

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

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

 

 

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On May 8, 2018, the Company announced financial results for the first quarter ended March 31, 2018.  The press release, dated May 8, 2018, is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

 

 

On May 8, 2018, the Company announced financial results for the first quarter ended March 31, 2018.  The press release, dated May 8, 2018, is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.  Additional information about the quarter, and the Company’s use of non-GAAP financial measures, which is available on the Company’s website at www.martinmarietta.com by clicking the heading “Financials”, in the “Investors” section and then clicking the quick link “Non-GAAP Financial Measures”.

The Company will host an online web simulcast of its first-quarter 2018 earnings conference call on Tuesday, May 8, 2018.  The live broadcast of the Company’s conference call will begin at 10:00 a.m., Eastern Time, on May 8, 2018.  An online replay will be available approximately two hours following the conclusion of the live broadcast and will continue for one year.  A link to these events will be available at the Company’s website at www.martinmarietta.com. For those investors without online web access, the conference call may also be accessed by calling 970-315-0423, confirmation number 5287057.  Additional information about the Company’s use of non-GAAP financial measures, as well as certain other financial or statistical information the Company may present at the conference call, will be provided on the Company’s website.

 

 

(d) Exhibits

 

 

 

 

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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.

 

 

 

 

 

EXHIBIT 99.1

 

 

 

 

 

MARTIN MARIETTA REPORTS FIRST QUARTER 2018 RESULTS

 

First-Quarter Results and Business Trends Consistent with Management’s Expectations

 

Pricing Momentum Continues Across All Products and Segments

 

Mid-America Group Posts 4.9% Price Increase

 

Magnesia Specialties Business Posts Record Revenues

 

Company Increases 2018 Guidance to Reflect Contribution from Bluegrass Materials Acquisition

RALEIGH, N.C. (May 8, 2018) – Martin Marietta Materials, Inc. (NYSE:MLM) today reported results for the first quarter ended March 31, 2018.  

 

Highlights Include the Following Results:

Ward Nye, Chairman, President and CEO of Martin Marietta, stated, “As we start the year, we are encouraged by ongoing customer optimism and our first-quarter results, both of which are consistent with our expectations.  Additionally, while we remain on track to achieve our original 2018 guidance, we are updating and increasing that outlook to reflect the contribution we expect from our acquisition of Bluegrass Materials Company.  

“We remain confident that underlying market fundamentals, including positive employment and population trends across our geographic footprint, will stimulate continued growth in private construction activity and provide an impetus for additional infrastructure demand as the current broad-based recovery continues. Underlying demand trends, coupled with continued pricing growth for all products and segments, reinforce our

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full-year 2018 outlook as construction activity accelerates during the balance of the year. Importantly, throughout the quarter, we saw strong shipment volumes on days not impacted by typical winter weather.  

“Our confidence is bolstered by the recent completion of our acquisition of Bluegrass and the addition of a talented group of new employees to the Martin Marietta team.  The acquisition, the second largest in our history, strengthens our aggregates-led position in high-growth southeastern and Mid-Atlantic regions, particularly in Georgia and Maryland, and is consistent with our long-term strategic growth plan.  We worked collaboratively with the U.S. Department of Justice (DOJ) as it completed its review of the transaction and, as expected, the two quarries required to be divested do not impact the overall value or strategic rationale for the transaction.  I want to thank our collective employees for their contributions to successfully completing this acquisition.  Working together, we will expeditiously deliver significant value from our enhanced business profile.  As we integrate the Bluegrass operations and realize synergies, we remain committed to world-class safety standards, diligent cost discipline, operational excellence, customer service and prudent capital allocation. ”

Mr. Nye concluded, “We believe the United States is in the midst of a steady, multi-year construction recovery.  Our leading positions in attractive, high-growth markets allow us to benefit from anticipated increased demand for both public and private construction activity in 2018 and beyond.  Long term, we remain focused on elevating Martin Marietta from an aggregates industry leader to a globally recognized world-class organization, allowing us to further enhance shareholder value.”

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Operating Results

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

 

 

 

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Building Materials Business

Aggregates

As contemplated in the Company’s guidance entering the year, first-quarter aggregates shipments returned to levels more in-line with historical trends and patterns.  Winter weather traditionally limits the ability of outdoor contractors to perform work during the winter months.  Accordingly, first-quarter operating results compare unfavorably to the first quarters of 2017 and 2016, when the Company benefitted from back-to-back unseasonably favorable weather conditions.  For the quarter, aggregates product revenues decreased 5.8 percent, reflecting a 7.9 percent decline in shipments.  Aggregates pricing improved 2.3 percent.  

The Mid-America Group generated aggregates pricing growth of 4.9 percent, driven by continued price discipline and favorable product mix.  Pricing improved 2.2 percent for the Southeast Group as winter weather and poor railroad performance constrained long-haul shipments to distribution yards in Florida and Georgia.  Product mix, reduced commercial rail-shipped volumes and various competitive dynamics in portions of Texas offset robust pricing growth in Colorado, resulting in a modest price increase for the West Group.   Traditional cold and wet conditions, coupled with railroad inefficiencies, also contributed to the 12.4 percent shipment decline for the Southeast Group and the 4.7 percent decline for the West Group.  Mid-America Group shipments decreased 9.9 percent.

First-quarter aggregates shipments by end use are as follows:

Infrastructure Market

Nonresidential Market

Residential Market

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ChemRock/Rail Market

Aggregates product gross margin was 12.5 percent, consistent with expectations, reflecting reduced operating leverage and increased diesel costs.  

Cement

Cement product revenues for the first quarter decreased 4.7 percent as pricing growth of 4.2 percent was offset by an 8.8 percent volume decline. First-quarter shipments reflect abnormal precipitation in February, particularly in Dallas/Fort Worth and extended maintenance outages at the Midlothian plant.  These factors adversely impacted shipment and production levels and contributed to the 630-basis-point reduction in product gross margin to 26.6 percent.  

Downstream businesses

Ready mixed concrete shipments decreased 2.3 percent, driven primarily by more typical winter weather in Colorado.  Overall, ready mixed concrete prices increased 0.5 percent for the quarter.  Average selling prices in Colorado improved 4.3 percent; however, seasonality, lower energy-sector shipments and geographic mix, limited Texas ready mixed concrete pricing opportunities.  A return to more normal winter weather in Colorado contributed to the 30.7 percent decrease in asphalt shipments, while, rising raw material costs allowed for favorable pricing during the quarter.  

Magnesia Specialties Business

Magnesia Specialties first-quarter products and services revenues increased slightly to a record $64.9 million.  Lower contract services and maintenance costs contributed to a 230-basis-point expansion of product gross margin to 38.6 percent for the first quarter.  

Consolidated

The estimated effective income tax rate of 19.7 percent for first quarter 2018 reflects the permanent reduction in the federal corporate tax rate provided for by the Tax Cuts and Jobs Act of 2017 (2017 Tax Act).

 

Liquidity and Capital Resources

Cash provided by operating activities was $105.0 million in 2018 compared with $73.9 million in 2017.

Cash paid for property, plant and equipment additions during the first quarter was $96.3 million.  The Company expects capital expenditures for full-year 2018 to range from $450 million to $500 million as it continues to prudently deploy capital into the business.

 

 

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At March 31, 2018, the Company’s ratio of consolidated net debt-to-consolidated EBITDA, as defined in the applicable credit agreement, for the trailing-12 months was 1.62 times.  The ratio excludes the debt obtained to fund, in part, the Bluegrass Materials acquisition.  

 

In April 2018, the Company repaid $300 million of maturing bonds and amended its trade receivable facility to increase the facility limit to $400 million.

 

Bluegrass Acquisition

As previously announced, the Company completed its acquisition of Bluegrass, the largest privately-held, pure-play aggregates business in the United States, on April 27, 2018.  Furthermore, the Company reached an agreement with the DOJ, which was submitted to the United States District Court for the District of Columbia as a proposed court order.  The agreement, embodied in the proposed order, resolves all competition issues with respect to the acquisition.  Under the terms of the agreement with the DOJ, Martin Marietta divested its Forsyth aggregates quarry north of Atlanta, Georgia, and will divest Bluegrass’ Beaver Creek aggregates quarry in western Maryland.

Martin Marietta expects to realize annual synergies of approximately $15 million within twelve months of the transaction’s close date.  Excluding acquisition-related expenses, the acquisition is also expected to be accretive to earnings per share and cash flow within the first full year of ownership.

Commitment to Enhance Long-Term Shareholder Value

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

The Company has returned $1.2 billion to shareholders, in the form of dividend payments and share repurchases, since announcing a repurchase authorization in February 2015 to acquire up to 20 million shares of its outstanding common stock.  At March 31, 2018, 14.7 million shares remain under the current repurchase authorization and 62.9 million shares of Martin Marietta common stock were outstanding.   

Outlook for 2018

Martin Marietta remains optimistic about its near-term and long-term outlooks given its continued ability to successfully execute its strategic business plan and the largely positive trends in the markets it serves.  The Company expects growth in all three primary construction end-use markets as the current broad-based recovery continues on a steady and extended basis. Notably:

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2018 Guidance

Management has updated its full-year 2018 guidance to reflect the completion of the Bluegrass acquisition.  Absent the impact of the acquired Bluegrass operations, the Company’s full-year 2018 guidance remains unchanged from the guidance provided in February 2018.  Additionally, Martin Marietta’s 2018 outlook excludes any benefit from a potential increase in federal infrastructure funding.  

Specifically:

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

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Non-GAAP Financial Information

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

Conference Call Information

The Company will discuss its first-quarter 2018 earnings results on a conference call and an online web simulcast today May 8, 2018.  The live broadcast of the Martin Marietta conference call will begin at 10:00 a.m. Eastern Time today.  An online replay will be available approximately two hours following the conclusion of the live broadcast.  A link to these events will be available at the Company’s website.  Additionally, the Company has posted supplemental information related to its first-quarter performance on its website. For those investors without online web access, the conference call may also be accessed by calling (970) 315-0423, confirmation number 5287057.

About Martin Marietta

Martin Marietta, a member of the S&P 500 Index, is an American-based company and a leading supplier of building materials, including aggregates, cement, ready mixed concrete, and asphalt. Through a network of operations spanning 27 states, Canada and The Bahamas, dedicated Martin Marietta teams supply the resources necessary for building the solid foundations on which our communities thrive. Martin Marietta's Magnesia Specialties business provides a full range of magnesium oxide, magnesium hydroxide and dolomitic lime products.  For more information, visit www.martinmarietta.com or www.magnesiaspecialties.com.

Investor Contact:  

Suzanne Osberg

Vice President, Investor Relations

(919) 783-4691

Suzanne.Osberg@martinmarietta.com

 

MLM-E.

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

Investors are cautioned that all statements in this press release that relate to the future involve risks and uncertainties, and are based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results.  These statements, which are forward-looking statements under the Private Securities Litigation Reform Act of 1995, give the investor the Company’s expectations or forecasts of future events.  You can identify these statements by the fact that they do not relate only to historical or current facts.  They may use words such as “anticipate”, “expect”, “should”, “believe”, “will”, and other words of similar meaning in connection with future events or future operating or financial performance.  Any or all of our forward-looking statements here and in other publications may turn out to be wrong.

The Company’s outlook is subject to various risks and uncertainties, and is based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results. Factors that the Company currently believes could cause actual results to differ materially from the forward-looking statements in this press release (including the outlook) include, but are not limited to: , the performance of the United States economy, including shipment declines resulting from economic events beyond the Company’s control; widespread decline in aggregates pricing, including a decline in aggregates volume negatively affecting aggregates price; the history of both cement and ready mixed concrete being subject to significant changes in supply, demand and price fluctuations; the termination, capping and/or reduction or suspension of the federal and/or state gasoline tax(es) or other revenue related to infrastructure construction; the level and timing of federal,  state or local transportation funding, most particularly in Texas, North Carolina, Iowa, Colorado, Georgia and Maryland, including a significant change in the funding patterns for federal, state and/or local infrastructure projects or the United States Congress’ inability to reach agreement among themselves or with the current Administration on policy issues that impact the federal budget; the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures; levels of construction spending in the markets the Company serves, volatility in the commencement of infrastructure projects and other funding pressures that impact profitability; a reduction in defense spending, and the subsequent impact on construction activity on or near military bases; a decline in the commercial component of the nonresidential construction market, notably office and retail space; a decline in energy-related construction activity  resulting from a sustained period of low global oil prices or changes in oil production patterns in response to this decline, particularly in Texas; a slowdown in residential construction recovery; unfavorable weather conditions, particularly Atlantic Ocean and Gulf Coast hurricane activity, the late start to spring or the early onset of winter and the impact of a drought or excessive rainfall in the markets served by the Company, any of which can significantly affect production schedules, volumes and profitability; the volatility of fuel costs, particularly diesel fuel, and the impact on the cost, or the availability generally, of other consumables, namely steel, explosives, tires and conveyor belts, and with respect to the Company’s Magnesia Specialties business, natural gas; continued increases in the cost of other repair and supply parts; construction labor shortages and/or supply‐chain challenges; unexpected equipment failures, unscheduled maintenance, industrial accident or other prolonged and/or significant disruption to production facilities; increasing governmental regulation, including environmental laws; transportation availability or a sustained reduction in capital investment by the railroads, notably the availability of railcars, locomotive power and the condition of rail infrastructure to move trains to supply the Company’s Texas, Colorado, Florida, North Carolina and the Gulf Coast markets, including the movement of essential dolomitic lime for magnesia chemicals to the Company’s plant in Manistee, Michigan and its customers; increased transportation costs, including increases from higher or fluctuating passed-through energy costs or fuel surcharges, and other costs to comply with tightening regulations, as well as higher volumes of rail and water shipments; availability of trucks and licensed drivers for transport of the Company’s materials; availability and cost of construction equipment in the United States; weakening in the steel industry markets served by the Company’s dolomitic lime products;  a trade dispute with one or more nations impacting the U.S. economy, including the impact of tariffs on the steel industry; unplanned changes in costs or realignment of customers that introduce volatility to earnings, including that of the Magnesia Specialties business that is running at capacity; proper functioning of information technology and automated operating systems to manage or support operations; inflation and its effect on both production and interest costs;  the concentration of customers in construction markets and the increased risk of potential losses on customer receivables; the impact of the level of demand in the Company’s end-use markets, production levels and management of production costs on the operating leverage and therefore profitability of the Company;  the possibility that the expected synergies from acquisitions (including the acquisition of Bluegrass) will not be realized or will not be realized within the expected time period, including achieving anticipated profitability to maintain compliance with the Company’s leverage ratio debt covenant; changes in tax laws, the interpretation of such laws and/or administrative practices that would increase the Company’s tax rate;  violation of the Company’s debt covenant if price and/or volumes return to previous levels of instability; downward pressure on the Company’s common stock price and its impact on goodwill impairment evaluations; reduction of the Company’s credit rating to non-investment grade resulting from strategic acquisitions; and other risk factors listed from time to time found in the Company’s filings with the SEC.  Other factors besides those listed here may also adversely affect the Company, and may be material to the Company.  The Company assumes no obligation to update any such forward-looking statements.

You should consider these forward-looking statements in light of risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2017, our Current Report on Form 8-K filed on March 16, 2018 and other periodic filings made with the SEC.  All of our forward-looking statements should be considered in light of these factors.  In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements.

 

 

 

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