Martin Marietta Materials, Inc. (NYSE:MLM) today announced its
results for the fourth quarter and year ended December 31,
2010.
Ward Nye, President and CEO of Martin Marietta Materials,
stated, “Our 2010 performance further distinguishes Martin Marietta
as a premier performer among building materials companies. Despite
the difficult environment in which we were operating, the earnings
power created from our steadfast focus on fundamentals, including
stringent cost controls and prudent management of our assets,
enabled us to deliver fourth-quarter earnings of $0.32 per diluted
share and full-year earnings of $2.10 per diluted share. Our
fourth-quarter earnings were driven by a 14% increase in heritage
aggregates shipments, led by our West Group. Our Specialty Products
segment also continued to deliver record performance, with record
net sales, gross profit and operating earnings for both the fourth
quarter and full year. As a result of what we accomplished in 2010,
we see ourselves as well-positioned to carry this momentum into
2011 and 2012.”
NOTABLE ITEMS FOR THE QUARTER (ALL COMPARISONS ARE VERSUS THE
PRIOR-YEAR QUARTER)
- Earnings per diluted share of $0.32
compared with a loss of $0.07 per diluted share
- Net sales increased to $368.8 million
compared with $327.8 million
- Heritage aggregates product line volume
up 14.4%
- Heritage aggregates product line
pricing down 3.1%; geographic and project mix account for 160 basis
points of the decline
- Specialty Products record
fourth-quarter earnings from operations of $10.5 million
- Selling, general and administrative
expenses down 40 basis points as a percentage of net sales, despite
absorbing a $2.4 million charge related to the payment of
retirement benefits
- Consolidated operating margin
(excluding freight and delivery revenues) of 9.4%, up 500 basis
points
NOTABLE ITEMS FOR THE YEAR (ALL COMPARISONS ARE VERSUS
2009)
- Earnings per diluted share of $2.10
compared with $1.91 per diluted share
- Net sales increased to $1.551 billion
compared with $1.497 billion
- Heritage aggregates product line volume
up 5.3%
- Heritage aggregates product line
pricing down 3.4%
- Specialty Products record earnings from
operations of $50.6 million compared with $35.7 million
- Selling, general and administrative
expenses down 70 basis points as a percentage of net sales
- Consolidated operating margin
(excluding freight and delivery revenues) of 12.7%, up 20 basis
points
MANAGEMENT COMMENTARY
Nye continued, “Our financial results in October and November
provide further validation of our previously stated view that
volume recovery, combined with our lean operating cost structure,
will lead to profit margin increase even without price increases.
To illustrate, the incremental operating margin (excluding freight
and delivery revenues) in our Aggregates business for the months of
October and November was 62%. This improvement was achieved despite
the headwind from rising energy costs.
“Favorable weather conditions extended the construction season
through November in most of our markets and were also a factor in
our quarterly volume increase. During the quarter, we experienced
double-digit increases in aggregates shipments in each of our
end-use markets. Infrastructure, our largest end-use market, had
volume growth of 13% compared with the prior-year quarter and was
supported by an increase in state transportation spending, somewhat
tempered by continuing delays in projects funded by the American
Recovery and Reinvestment Act (“ARRA” or “Stimulus”). The
nonresidential end-use market also had growth of 13% compared with
the prior-year quarter. This market continues to benefit from
energy sector activity, as aggregates are essential to build access
roads and drilling pads for numerous oil and gas projects underway
in the southwestern United States. Our ChemRock/Rail end-use market
experienced a 25% volume increase compared with the prior-year
quarter, fueled by railroad expansion activity in certain markets
and increased agricultural lime shipments. The residential end-use
market had a volume increase of 14% compared with the prior-year
quarter.
“The rate of pricing decline remained relatively stable through
2010. Overall heritage aggregates product line pricing decreased
3.1% compared with the prior-year quarter and 3.4% compared with
the prior year. Still, two previously reported pricing trends
continued in the fourth quarter. First, competitive pressures,
particularly in our Mideast Group, negatively affected pricing on
certain construction jobs. For example, pricing on Stimulus-related
projects during the quarter was approximately 6% below our company
average. However, we continue to expect negative pricing pressure
to ease as our end markets recover or attain levels of sustained
stability. Second, geographic mix, coupled with the effect of
project mix, accounted for approximately half of the fourth quarter
average selling price decline. While our West Group experienced a
26% increase in quarterly shipments, it also had a lower average
selling price compared with our Mideast and Southeast Groups.
“Our Specialty Products business benefitted from continued
strong demand in both the steel industry and the magnesia chemicals
product lines. The Specialty Products business’ fourth-quarter
record net sales of $44.4 million increased 17.8% compared
with the prior-year quarter. Record earnings from operations of
$10.5 million grew 9.2% compared with the prior-year quarter and
reflect increased product demand and our continued focus on cost
control programs, partially offset by higher energy costs.
“These results reflect our continued commitment to cost control,
including selling, general and administrative expenses, as well as
safety, productivity and customer service. Energy expenses
significantly affected production costs and increased $7.2 million,
or 22.1%, compared with the prior-year quarter, which reduced net
earnings by nearly $0.10 per diluted share. Despite these
significantly higher energy costs, our aggregates product line cost
per ton decreased 4.6% for the quarter, reflecting the leverage
gained from higher production. Further, we achieved greater
operating efficiencies, as measured by tons produced per working
man hour, which increased 16% over the prior-year quarter. For the
full year, energy costs increased $25.5 million, or 19.6%,
reducing net earnings by $0.34 per diluted share. For the quarter,
selling, general and administrative expenses as a percentage of net
sales decreased 40 basis points, despite absorbing $2.4 million of
expense related to required payments under certain retirement
plans. For the full year, SG&A expenses decreased 70 basis
points to 8.6% of net sales.
“Other operating income and expenses, net, was an expense of
$1.2 million for the fourth quarter of 2010 compared with an
expense of $12.7 million in the prior-year quarter. In 2009, we
recorded a reserve of $11.9 million related to a pending civil
action that was resolved in the second quarter of 2010.
“The overall effective tax rate for the quarter was 15.2%
compared with 32.1% in the prior-year period. The quarterly rate
benefitted from the deduction related to income from domestic
production activities under the American Jobs Creation Act of 2004.
For full year 2010, the overall effective tax rate was 22.9%.
LIQUIDITY AND CAPITAL RESOURCES
“In 2010 we remained financially disciplined through attentive
management of our balance sheet, liquidity and cash flow
generation. Cash from operating activities for the full year was
$269.8 million compared with $318.4 million for 2009.
“During the year we funded over $179 million in capital
investments in both acquisitions and organic growth projects. We
reviewed numerous possible acquisitions and completed the purchase
of both a sand and gravel business near Charlotte, North Carolina,
as well as an aggregates distribution facility at Port Canaveral,
Florida. Further, to complement our Port Canaveral acquisition, we
added an aggregates import facility at Port Manatee on Florida’s
west coast.
“Capital investment in our heritage operations prior to the
current recession continues to position us for strong performance
in an economic recovery. Capital expenditures of $135.9 million for
the year, compared with $139.2 million for 2009, were in line with
our previous guidance. We can continue to safely and appropriately
reduce maintenance capital investment while providing opportunities
to allocate capital in a manner that maximizes long-term
shareholder value.
“As expected, our sales increase led to a use of cash for
working capital during the year. Cash used to finance accounts
receivable was partially offset by an improvement in working
capital provided from inventory and accounts payable. Days sales
outstanding was 47 days, essentially flat with 2009. Operating cash
was also used to settle the previously mentioned legal contingency
for $7 million.
“During 2010, we reduced debt by repaying $218 million of
Floating Rate Senior Notes. At December 31, 2010, we had
total outstanding debt of $1.031 billion, of which $248.7 million
was classified as current, including $242 million of Notes that
mature in April 2011. We ended the year with $70 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 December 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-months was 2.7 times.
2011 OUTLOOK
“While a variety of factors make it difficult to form a complete
perspective for 2011, there are a range of considerations informing
our thinking at this time. A noteworthy consideration will be the
rate at which states spend available Stimulus funds for
infrastructure projects in our key markets. At present, we operate
under a Congressional continuing resolution that extended the Safe,
Accountable, Flexible and Efficient Transportation Equity Act – A
Legacy for Users (SAFETEA-LU) through March 4, 2011. While
Congressional Democrats and Republicans broadly agree that
investing in infrastructure is a key governmental priority, we
believe another Congressional continuing resolution of SAFETEA-LU
is likely for 2011. However, reauthorized infrastructure
legislation at the Federal and State levels could be accelerated as
Congress, the President and local authorities focus on
infrastructure as an efficient means of jobs creation and
investment in the foundational backbone of America’s economic
growth.
“Our outlook for aggregates shipments is generally consistent
with McGraw-Hill Construction’s published view. We expect that
state spending on infrastructure should remain steady and 30% of
ARRA infrastructure funds are expected to be spent in 2011. That
said, uncertainty in long-term federal funding could negatively
affect infrastructure spending. Taking a conservative posture, our
outlook is based upon the expectation that the infrastructure
end-use market will be flat to slightly down; we anticipate a
modest 2011 volume recovery in the commercial component of our
nonresidential end-use market. However, natural gas prices and the
timing of lease commitments for oil and natural gas companies will
be significant in the continuation of certain energy sector
activity in 2011. Considering the notable aggregates shipments to
the energy sector in 2010, we expect the rate of growth in the
heavy industrial component of our nonresidential end-use market to
moderate in 2011 compared with the double-digit growth rate in
2010. Overall, we expect nonresidential end-use shipments to
increase in the mid-single digit range in 2011 and the rate of
improvement in the residential end-use market to grow while
ChemRock/Rail shipments are expected to be stable in 2011.
Cumulatively, we expect flat to a 3% improvement in overall
aggregates volume in 2011.
“Volume increases in specific markets in 2010 are likely to lead
to price increases. While these increases may not be uniform
throughout our portfolio, we expect 2011 aggregates pricing will
range from flat to a 2% increase.
“Aggregates production cost per ton in 2011 is expected to range
from flat to a slight decrease compared with 2010. We expect the
Specialty Products segment to contribute $50 million to $52 million
in pretax earnings for 2011, as 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.
“Selling, general and administrative expenses should be lower in
2011, primarily due to lower pension expense. Interest expense
should be approximately $60 million in 2011, or $8 million lower
than 2010, resulting from the expected refinancing of $242 million
of our 6.875% Senior Notes and the renegotiation of our outstanding
credit facilities during the first quarter. Our effective tax rate
is expected to be 28%. Capital expenditures are forecast at $175
million for 2011, which includes nearly $75 million for selective
high-quality growth projects.”
RISKS TO OUTLOOK
The 2011 estimated outlook includes management’s assessment of
the likelihood of certain risk factors that will affect
performance. The most significant risk to 2011 performance will be,
as previously noted, the strength of the United States economy and
its impact on construction activity.
Other risks related to the Corporation’s future performance
include, but are not limited to: (i) both price and volume and
include a continued widespread decline in aggregates pricing; (ii)
a greater-than-expected decline in infrastructure construction as a
result of continued delays in traditional federal, ARRA, state
and/or local infrastructure projects and continued lack of clarity
regarding the timing and amount of the federal highway bill; (iii)
a decline in nonresidential construction; (iv) a slowdown in the
residential construction recovery; or (v) some combination thereof.
Further, increased highway construction funding pressures resulting
from either federal or state issues can affect profitability.
Currently, nearly all states are experiencing some funding-level
pressures driven by lower tax revenues. If these pressures extend
to the transportation budgets in a greater degree than in the past,
construction spending could be negatively affected. North Carolina
and Texas are among the states experiencing these general
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 normally posted on public projects, together
with lien rights on private projects, 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, such as, steel,
explosives, tires and conveyor belts. Fluctuating diesel pricing
also affects transportation costs, primarily through fuel
surcharges in the Corporation’s long-haul distribution network. Our
estimated outlook does not include significant increases in diesel
costs during 2011.
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. The Aggregates business
is also subject to weather-related risks that can significantly
affect production schedules and profitability. The first and fourth
quarters are most adversely affected by winter weather.
Risks to the 2011 outlook include volume decline as a result of
economic events beyond the Corporation’s control. In addition to
the impact on nonresidential and residential construction, the
Corporation is exposed to risk in its estimated outlook from credit
markets and the availability of and interest cost related to its
debt.
CONSOLIDATED FINANCIAL HIGHLIGHTS
Net sales for the quarter were $368.8 million, a 12.5% increase
versus the $327.8 million recorded in the fourth quarter of 2009.
Earnings from operations for the fourth quarter of 2010 were $34.7
million compared with $14.5 million in 2009. Net earnings
attributable to Martin Marietta Materials were $14.8 million, or
$0.32 per diluted share, versus 2009 fourth-quarter net loss
attributable to Martin Marietta Materials of $3.2 million, or $0.07
per diluted share.
Net sales for 2010 were $1.551 billion compared with $1.497
billion in 2009. Full-year earnings from operations were $196.4
million for 2010 versus $187.6 million in 2009. 2010 net
earnings attributable to Martin Marietta Materials were $97.0
million, or $2.10 per diluted share, compared with 2009 net
earnings attributable to Martin Marietta Materials of $85.5
million, or $1.91 per diluted share.
BUSINESS FINANCIAL HIGHLIGHTS
Net sales for the Aggregates business during the fourth quarter
of 2010 were $324.4 million compared with 2009 fourth-quarter sales
of $290.1 million. Aggregates volume at heritage locations was up
14.4%, while pricing decreased 3.1%. Earnings from operations for
the 2010 fourth quarter were $31.8 million versus $9.0 million
in the year-earlier period. For the year, net sales for the
Aggregates business were $1.375 billion versus $1.353 billion in
2009. Earnings from operations for 2010 were $166.6 million
compared with $177.0 million in 2009. For the year, heritage
aggregates volume increased 5.3%, while pricing decreased 3.4%.
Specialty Products’ fourth-quarter net sales of $44.4 million
increased 17.8% from prior-year net sales of $37.7 million.
Earnings from operations for the fourth quarter were $10.5 million
compared with $9.6 million in the year-earlier period. For
2010, net sales were $176.4 million and earnings from operations
were $50.6 million compared with net sales of $143.7 million
and earnings from operations of $35.7 million for 2009.
CONFERENCE CALL INFORMATION
The Company will host an online web simulcast of its fourth
quarter 2010 earnings conference call later today (February 8,
2011). The live broadcast of the Martin Marietta Materials, Inc.
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 38563324.
Martin Marietta Materials, Inc. is the nation’s second largest
producer of construction aggregates and a producer of
magnesia-based chemicals and dolomitic lime. For more information
about Martin Marietta Materials, Inc., refer to the Corporation’s
website at www.martinmarietta.com.
If you are interested in Martin Marietta Materials, Inc. stock,
management recommends that, at a minimum, you read the
Corporation’s current annual report and Forms 10-K, 10-Q and 8-K
reports to the SEC over the past year. The Corporation’s recent
proxy statement for the annual meeting of shareholders also
contains important information. These and other materials that have
been filed with the SEC are accessible through the Corporation’s
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 55%
of 2010 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 component of the
nonresidential construction market, notably office and retail
space, and a 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 and other costs to comply with tightening
regulations as well as 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; ability to successfully integrate
acquisitions quickly and in a cost-effective manner and achieve
anticipated profitability to maintain compliance with the
Corporation’s leverage ratio debt covenant; 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.
MARTIN MARIETTA MATERIALS, INC. Unaudited
Statements of Earnings (In millions, except per share amounts)
Three Months Ended Year Ended December 31,
December 31, 2010 2009 2010 2009
Net sales $ 368.8 $ 327.8 $ 1,550.9 $ 1,496.6 Freight and delivery
revenues 59.2 46.9 232.0
206.0 Total revenues 428.0 374.7
1,782.9 1,702.6 Cost of sales 298.0
268.1 1,228.9 1,158.9 Freight and delivery costs 59.2
46.9 232.0 206.0 Total cost of
revenues 357.2 315.0 1,460.9
1,364.9 Gross profit 70.8 59.7 322.0 337.7
Selling, general and administrative expenses 34.9 32.5 133.2 139.4
Research and development - - 0.2 0.4 Other operating (income) and
expenses, net 1.2 12.7 (7.8 )
10.3 Earnings from operations 34.7 14.5 196.4 187.6
Interest expense 16.9 18.1 68.5 73.5 Other nonoperating (income)
and expenses, net - 0.4 0.2
(1.2 ) Earnings (Loss) from continuing operations before
taxes on income 17.8 (4.0 ) 127.7 115.3 Income tax expense
(benefit) 2.7 (1.3 ) 29.2 27.4
Earnings (Loss) from continuing operations 15.1 (2.7 ) 98.5
87.9 Gain (Loss) on discontinued operations, net of related
tax expense (benefit) of $0.0, $(0.1), $0.1 and $0.2, respectively
0.1 (0.2 ) 0.2 0.3
Consolidated net earnings (loss) 15.2 (2.9 ) 98.7 88.2 Less: Net
earnings attributable to noncontrolling interests 0.4
0.3 1.7 2.7 Net earnings
(loss) attributable to Martin Marietta Materials, Inc. $ 14.8 $
(3.2 ) $ 97.0 $ 85.5 Net earnings (loss) per
common share: Basic from continuing operations attributable to
common shareholders $ 0.32 $ (0.07 ) $ 2.11 $ 1.91 Discontinued
operations attributable to common shareholders - -
- 0.01 $ 0.32 $ (0.07 ) $ 2.11
$ 1.92 Diluted from continuing operations
attributable to common shareholders $ 0.32 $ (0.07 ) $ 2.10 $ 1.90
Discontinued operations attributable to common shareholders
- - - 0.01 $ 0.32 $ (0.07
) $ 2.10 $ 1.91 Dividends per common share $
0.40 $ 0.40 $ 1.60 $ 1.60 Average
number of common shares outstanding: Basic 45.5 44.9
45.5 44.0 Diluted 45.7
44.9 45.7 44.2
MARTIN MARIETTA MATERIALS, INC. Unaudited
Financial Highlights (In millions)
Three Months Ended
Year Ended December 31, December 31,
2010 2009 2010 2009 Net sales:
Aggregates Business: Mideast Group $ 101.5 $ 100.9 $ 450.0 $ 438.5
Southeast Group 77.9 74.7 329.3 350.1 West Group 145.0
114.5 595.2 564.3
Total Aggregates Business 324.4 290.1 1,374.5 1,352.9 Specialty
Products 44.4 37.7 176.4
143.7 Total $ 368.8 $ 327.8 $ 1,550.9
$ 1,496.6 Gross profit (loss): Aggregates
Business: Mideast Group $ 25.0 $ 27.2 $ 133.1 $ 139.0 Southeast
Group 3.3 4.0 22.6 45.6 West Group 31.2 17.3
108.9 111.2 Total Aggregates
Business 59.5 48.5 264.6 295.8 Specialty Products 13.4 12.2 61.7
45.6 Corporate (2.1 ) (1.0 ) (4.3 )
(3.7 ) Total $ 70.8 $ 59.7 $ 322.0 $ 337.7
Selling, general and administrative expenses:
Aggregates Business: Mideast Group $ 10.6 $ 11.2 $ 41.7 $ 44.2
Southeast Group 6.7 6.6 25.7 26.9 West Group 11.0
10.5 42.9 42.0 Total
Aggregates Business 28.3 28.3 110.3 113.1 Specialty Products 2.9
2.4 11.0 9.4 Corporate 3.7 1.8
11.9 16.9 Total $ 34.9 $ 32.5 $
133.2 $ 139.4 Earnings (Loss) from operations:
Aggregates Business: Mideast Group $ 13.6 $ 15.9 $ 93.9 $ 95.1
Southeast Group (3.0 ) (2.5 ) (3.1 ) 20.5 West Group 21.2
(4.4 ) 75.8 61.4 Total
Aggregates Business 31.8 9.0 166.6 177.0 Specialty Products 10.5
9.6 50.6 35.7 Corporate (7.6 ) (4.1 ) (20.8 )
(25.1 ) Total $ 34.7 $ 14.5 $ 196.4 $
187.6 Depreciation $ 43.7 $ 44.2 $ 174.1 $ 172.0
Depletion 1.1 1.0 4.3 4.0 Amortization 0.8 0.9
3.1 3.4 $ 45.6 $ 46.1
$ 181.5 $ 179.4
MARTIN
MARIETTA MATERIALS, INC. Balance Sheet Data (In
millions)
December 31,
December 31, 2010 2009 (Unaudited) (Audited)
ASSETS Cash and cash equivalents $ 70.3 $ 263.6 Accounts
receivable, net 183.4 162.8 Inventories, net 331.9 332.6 Other
current assets 110.6 97.9 Property, plant and equipment, net
1,687.8 1,692.9 Intangible assets, net 644.1 636.7 Other noncurrent
assets 46.6 52.8 Total assets $ 3,074.7 $ 3,239.3
LIABILITIES AND EQUITY Current maturities of long-term debt and
short-term facilities $ 248.7 $ 226.1 Other current liabilities
136.8 147.5 Long-term debt (excluding current maturities) 782.0
1,023.5 Other noncurrent liabilities 438.9 435.8 Total equity
1,468.3 1,406.4 Total liabilities and equity $
3,074.7 $ 3,239.3
MARTIN MARIETTA MATERIALS,
INC. Unaudited Statements of Cash Flows (In millions)
Year Ended December
31, 2010 2009 Operating activities:
Consolidated net earnings $ 98.7 $ 88.2 Adjustments to reconcile
consolidated net earnings to net cash provided by operating
activities: Depreciation, depletion and amortization 181.5 179.4
Stock-based compensation expense 14.7 20.6 Excess tax benefits from
stock-based compensation transactions (1.3 ) (0.5 ) (Gains) Losses
on divestitures and sales of assets (4.5 ) 2.1 Deferred income
taxes 1.7 8.6
Other items, net
4.6 (1.0 )
Changes in operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net (20.5 ) 48.5 Inventories, net 1.2 (12.5 )
Accounts payable 8.2 (10.5 ) Other assets and liabilities, net
(14.5 ) (4.5 ) Net cash provided by operating
activities 269.8 318.4 Investing
activities: Additions to property, plant and equipment (135.9 )
(139.2 ) Acquisitions, net (43.3 ) (49.6 ) Proceeds from
divestitures and sales of assets 5.0 7.8 Railcar construction
advances (9.0 ) (8.7 ) Repayment of railcar construction advances
9.0 8.7 Loan to affiliate - (4.0 ) Net
cash used for investing activities (174.2 ) (185.0 )
Financing activities: Borrowings of long-term debt 200.0
330.0 Repayments of long-term debt and payments on capital lease
obligations (420.0 ) (236.1 ) Net repayments on short-term
facilities - (200.0 ) Change in bank overdraft 0.4 (2.9 ) Dividends
paid (73.6 ) (71.2 ) Debt issue costs (0.1 ) (2.4 ) Issuances of
common stock 3.1 294.2 Excess tax benefits from stock-based
compensation transactions 1.3 0.5 Purchase of subsidiary shares
from noncontrolling interest - (17.1 ) Distributions to owners of
noncontrolling interests - (2.6 ) Net
cash (used for) provided by financing activities (288.9 )
92.4 Net (decrease) increase in cash and cash
equivalents (193.3 ) 225.8 Cash and cash equivalents, beginning of
period 263.6 37.8 Cash and cash
equivalents, end of period $ 70.3 $ 263.6
MARTIN MARIETTA MATERIALS, INC. Unaudited
Operational Highlights
Three Months Ended Year
Ended December 31, 2010 December 31, 2010
Volume Pricing Volume Pricing
Volume/Pricing Variance (1) Heritage Aggregates
Product Line: (2) Mideast Group 5.4 % (5.6 %) 8.0 % (5.3
%) Southeast Group 5.9 % (1.7 %) (3.7 %) (2.0 %) West Group 26.0 %
1.2 % 8.5 % (1.9 %) Heritage Aggregates Operations 14.4 % (3.1 %)
5.3 % (3.4 %) Aggregates Product Line (3) 14.6 % (3.1 %) 5.4 % (3.4
%)
Three Months Ended Year Ended December
31, December 31, Shipments (tons in thousands)
2010 2009 2010 2009 Heritage
Aggregates Product Line: (2) Mideast Group 9,279 8,803
40,257 37,265 Southeast Group 6,936 6,548 29,289 30,417 West Group
14,545 11,544 60,380 55,674 Heritage
Aggregates Operations 30,760 26,895 129,926 123,356 Acquisitions 33
- 33 - Divestitures (4) 31 10 48 45
Aggregates Product Line (3) 30,824 26,905 130,007
123,401 (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.
MARTIN MARIETTA MATERIALS, INC.
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 markup. 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 and years ended December 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 Year Ended
Gross Margin in Accordance with
Generally Accepted Accounting Principles
December 31, December 31, 2010 2009
2010 2009 Gross profit $ 70.8 $ 59.7 $ 322.0 $ 337.7
Total revenues $ 428.0 $ 374.7 $ 1,782.9 $ 1,702.6 Gross margin
16.6% 15.9% 18.1% 19.8%
Three Months Ended Year
Ended Gross Margin Excluding Freight and Delivery
Revenues December 31, December 31, 2010
2009 2010 2009 Gross profit $ 70.8 $ 59.7 $
322.0 $ 337.7 Total revenues $ 428.0 $ 374.7 $ 1,782.9 $ 1,702.6
Less: Freight and delivery revenues (59.2) (46.9) (232.0) (206.0)
Net sales $ 368.8 $ 327.8 $ 1,550.9 $ 1,496.6 Gross margin
excluding freight and delivery revenues 19.2% 18.2% 20.8% 22.6%
Three Months Ended Year Ended
Operating Margin in Accordance with
Generally Accepted Accounting Principles
December 31, December 31, 2010 2009
2010 2009 Earnings from operations $ 34.7 $ 14.5 $
196.4 $ 187.6 Total revenues $ 428.0 $ 374.7 $ 1,782.9 $ 1,702.6
Operating margin 8.1% 3.9% 11.0% 11.0%
Three Months
Ended Year Ended Operating Margin Excluding Freight
and Delivery Revenues December 31, December 31,
2010 2009 2010 2009 Earnings from
operations $ 34.7 $ 14.5 $ 196.4 $ 187.6 Total revenues $ 428.0 $
374.7 $ 1,782.9 $ 1,702.6 Less: Freight and delivery revenues
(59.2) (46.9) (232.0) (206.0) Net sales $ 368.8 $ 327.8 $ 1,550.9 $
1,496.6 Operating margin excluding freight and delivery revenues
9.4% 4.4% 12.7% 12.5%
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 3.50 to 1.00 as of
December 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 December 31, 2010.
For supporting calculations, refer to
Corporation's website at
www.martinmarietta.com.
Twelve-Month Period
January 1, 2010 to
December 31, 2010
Earnings from continuing operations attributable to Martin Marietta
Materials, Inc. $ 96.8 Add back: Interest expense 68.5 Income tax
expense 29.2 Depreciation, depletion and amortization expense 176.6
Stock-based compensation expense 14.7 Deduct: Interest income
(1.1 ) Consolidated EBITDA, as defined $ 384.7
Consolidated Debt, including debt guaranteed by the Corporation, at
December 31, 2010 $ 1,049.0
Consolidated Debt-to-Consolidated EBITDA,
as defined, at December 31, 2010 for the trailing twelve-month
EBITDA
2.73 times
MARTIN MARIETTA
MATERIALS, INC. Non-GAAP Financial Measures (continued)
(Dollars in millions)
Three Months Ended Year Ended
December 31, December 31, 2010 2009
2010 2009
Earnings Before Interest, Income Taxes,
Depreciation, Depletion and Amortization (EBITDA) (1)
$ 79.6 $ 59.2 $ 374.7 $ 364.1
(1) EBITDA is a widely accepted financial
indicator of a company's ability to service and/or incur
indebtedness. EBITDA is not defined by generally accepted
accounting principles and, as such, should not be construed as an
alternative to net earnings or operating cash flow. For further
information on EBITDA, refer to the Corporation's website at
www.martinmarietta.com.
A reconciliation of Net Earnings Attributable to Martin
Marietta Materials, Inc. to EBITDA is as follows:
Three
Months Ended Year Ended December 31, December
31, 2010 2009 2010 2009 Net
Earnings (Loss) Attributable to Martin Marietta Materials, Inc. $
14.8 $ (3.2 ) $ 97.0 $ 85.5 Add back: Interest Expense 16.9 18.1
68.5 73.5 Income Tax Expense (Benefit) for Controlling Interests
2.7 (1.4 ) 29.3 27.4 Depreciation, Depletion and Amortization
Expense 45.2 45.7 179.9 177.7
EBITDA $ 79.6 $ 59.2 $ 374.7 $ 364.1
The presentation of incremental operating
margin excluding freight and delivery revenues for the Aggregates
business for the months of October and November 2010 is a non-GAAP
financial measure. The Corporation presents this measure as it
believes it helps demonstrate the impact of incremental net sales
on operating margin due to the significant amount of fixed
production costs. The following presents the calculation of the
incremental operating margin excluding freight and delivery
revenues for the Aggregates business for the months of October and
November 2010:
Aggregates business net sales for October and
November 2010 $ 245.4 Aggregates business net sales for October and
November 2009 215.2 Incremental net sales for the
Aggregates business for October and November 2010 $ 30.2
Aggregates business earnings from operations for October and
November 2010 $ 42.8 Aggregates business earnings from operations
for October and November 2009 24.2 Incremental
earnings from operations for the Aggregates business for October
and November 2010 $ 18.6 Incremental operating margin
excluding freight and delivery revenues for the Aggregates business
for the months of October and November 2010 61.6 %
MLM-E
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