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) July 26, 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 July 26, 2018, the Company announced financial results for the second quarter ended June 30, 2018.  The press release, dated July 26, 2018, is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

 

 

On July 26, 2018, the Company announced financial results for the second quarter ended June 30, 2018.  The press release, dated July 26, 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 second-quarter 2018 earnings conference call on Tuesday, July 26, 2018.  The live broadcast of the Company’s conference call will begin at 10:00 a.m., Eastern Time, on July 26, 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 2498539.  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 RECORD RESULTS

FOR THE SECOND QUARTER 2018

 

COMPANY ACHIEVED RECORD REVENUES,
PROFITS AND DILUTED EARNINGS PER SHARE IN THE SECOND QUARTER

 

Heritage Aggregates Pricing Increased 4 Percent and Shipments Increased 3 Percent

 

Acquired Operations Contributed to 13 Percent Growth in Total Revenues

 

Cement Product Gross Margin Expanded 680 Basis Points

 

Magnesia Specialties Business Posted Record Revenues

 

Company Expects Continued, Multi-Year Construction Recovery; Raises 2018 Guidance

RALEIGH, N.C. (July 26, 2018) – Martin Marietta Materials, Inc. (NYSE:MLM) today reported record results for the second quarter ended June 30, 2018.  

Highlights Include the Following:

 

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Ward Nye, Chairman, President and CEO of Martin Marietta, stated, “Our record-setting second-quarter results, which were driven by increased shipments, pricing improvements and growth initiatives, extend Martin Marietta’s lengthy track record of operational excellence, disciplined execution of our strategic plan and shareholder value creation. Underlying product demand and customer backlogs remain strong across our markets, with notable growth in Texas, North Carolina, Georgia and Iowa. In addition, our cement operations benefitted from the combination of strong demand and a tight supply environment, resulting in double-digit volume growth and a 680-basis-point improvement in product gross margin for the quarter.  

“We are also pleased with the performance of our acquired Bluegrass Materials (Bluegrass) operations, which contributed $42 million in product revenues at anticipated margins comparable to our Mid-Atlantic and Southeast operations. This strategic acquisition is accretive to our shareholders and positions us to meaningfully enhance future performance as the eastern United States recovers from below mid-cycle aggregates demand.  We are also on track to achieve our stated synergies.  Additionally, in the second half of June, we enhanced the scale of our Midwest business by acquiring several Omaha, Nebraska-based sand and gravel operations and a permitted greenfield site, adding approximately 30 million tons of aggregates reserves. These value-enhancing transactions demonstrate our ability to prudently deploy capital to drive significant value for our shareholders, customers and other stakeholders.”

Mr. Nye concluded, “We believe the United States is in the midst of a construction recovery that will continue through the remainder of 2018 and beyond.  Consistent with our forecasts at the beginning of the year, we expect construction activity to accelerate during the second half of this year, with faster growth in our key geographies due to these regions’ attractive economic drivers and population trends.  We remain confident about Martin Marietta’s near-and long-term growth trajectory and expect 2018 to be another record year, as evidenced by our decision to raise our 2018 EBITDA guidance.  We expect the disciplined execution of our strategic plan will continue to create shareholder value as we elevate Martin Marietta from an aggregates industry leader to a globally recognized world-class organization.”

Mr. Nye’s CEO Commentary and Market Perspective can be found on the Investor Relations section of the Company’s website.

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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

During the quarter, aggregates shipments to the Company’s three primary end-use markets increased, demonstrating the breadth of the overall construction recovery. However, the limited availability of transportation and tight contractor labor markets pose challenges for more efficient throughput. Specifically, suboptimal railroad performance, limited truck availability and contractor capacity limitations, including their notable employee shortages, muted the Company’s overall second-quarter volume growth. That said, as capital and increased wages flow into the construction sector, the Company expects these temporary bottlenecks will abate, allowing supply and demand to reach equilibrium.  

Inclusive of acquired operations, aggregates product revenues increased 15.1 percent for the quarter, reflecting volume growth of 11.3 percent and pricing growth of 3.5 percent. Heritage volume and pricing improved 3.4 percent and 4.4 percent, respectively.  

 

 

Martin Marietta’s second-quarter heritage aggregates shipments by end use are as follows (all comparisons are versus the prior-year quarter on a heritage basis):

Infrastructure Market

 

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Nonresidential Market

 

Residential Market

 

ChemRock/Rail Market

 

Aggregates product gross margin was 29.8 percent, inclusive of a $10.2 million negative impact on cost of sales related to selling acquired inventory that was marked up to fair value as part of acquisition accounting.  Excluding this impact, adjusted aggregates product gross margin was 31.4 percent, an improvement of 150 basis points over the prior-year quarter.

Cement

Second-quarter cement product revenues increased 14.4 percent and gross profit increased 40.6 percent. Shipments and pricing improved 11.6 percent and 2.6 percent, respectively, reflecting the strong underlying market conditions throughout Texas. These factors, coupled with increased production efficiencies, led to a product gross margin of 36.5 percent.  

Downstream businesses

Ready mixed concrete shipments increased 15.0 percent, driven primarily by strong construction activity in Texas, particularly in the Dallas/Fort Worth market. Overall, second-quarter ready mixed concrete prices decreased slightly, with lower energy-sector shipments and product mix in Texas offsetting the solid pricing gains in Dallas/Fort Worth and the nearly 6.0 percent pricing growth in Colorado. Project delays contributed to the 6.0 percent decrease in hot mixed asphalt shipments, while rising raw material costs allowed for favorable pricing during the quarter.  

Magnesia Specialties Business

Magnesia Specialties product revenues increased 3.7 percent to a record $68.2 million with growth in both the chemicals and lime businesses. Higher costs for energy and contract services contributed to a 120-basis-point reduction of second-quarter product gross margin to 36.5 percent.  

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Consolidated

Other operating income, net, includes $16.9 million of gains on the sale of surplus land and $7.7 million, net, of litigation and related settlements.

 

During the quarter, Martin Marietta divested its heritage Forsyth aggregates quarry north of Atlanta, Georgia, and the legacy Bluegrass Beaver Creek aggregates quarry in western Maryland pursuant to the Company’s agreement with the United States Department of Justice to obtain regulatory approval for the Bluegrass acquisition. The gain on the Forsyth quarry divestiture is included in acquisition-related expenses, net, on the consolidated statements of earnings, and there was no gain or loss on the Beaver Creek divestiture. Excluding acquisition-related expenses, net, and the negative impact on cost of sales related to selling acquired inventory that was marked up to fair value as part of acquisition accounting, adjusted earnings from operations were $286.2 million, a 33.2 percent improvement from the prior-year quarter

 

Liquidity and Capital Resources

Cash provided by operating activities for the six months ended June 30 was $238.0 million in 2018 compared with $229.3 million in 2017.

Cash paid for property, plant and equipment additions for the six months ended June 30, 2018 was $188.3 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.

At June 30, 2018, the Company’s ratio of consolidated net debt-to-consolidated EBITDA, as defined in the applicable credit agreement, for the trailing twelve months was 2.75 times. The Company expects to be within its target leverage ratio of 2.0X to 2.5X by the end of 2018.  

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 value-enhancing acquisitions that promote the successful execution of the Company’s strategic growth plan, organic capital investment, and the return of cash to shareholders through a meaningful and sustainable dividend and share repurchases.

The Company has returned $1.3 billion to shareholders, in the form of dividend payments and share repurchases, since announcing a 20 million share repurchase authorization in February 2015. At June 30, 2018, 14.7 million shares remain under the current repurchase authorization and 63.0 million shares of Martin Marietta common stock were outstanding.   

Outlook for 2018

Martin Marietta remains confident about its near-term and long-term outlooks given the disciplined execution of its strategic business plan and the underlying market fundamentals, including positive employment and population trends, across its geographic footprint. The Company expects growth in all three primary construction end-use markets as the current broad-based construction recovery continues on an extended basis. Notably:

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2018 Guidance

Management has increased both the low end and the high end of its full-year 2018 adjusted EBITDA guidance range by $25.0 million to reflect current trends and expectations, including the other operating income, net, recognized during the second quarter.

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 second-quarter 2018 earnings results on a conference call and an online web simulcast today (July 26, 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 second-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 2498539.

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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