Martin Marietta Materials, Inc. (NYSE:MLM) today announced
results for the fourth quarter and year ended December 31,
2012.
Ward Nye, President and CEO of Martin Marietta Materials,
stated, “We were pleased that 2012 concluded the same way it
started – with growth in both heritage aggregates product line
shipments and average selling price. Notably, heritage volume
growth in the fourth quarter was achieved in each of our reportable
groups, leading to an overall increase of 5.0%. Underlying this
improvement was expansion in our nonresidential and residential
end-use markets, continuing trends we have experienced throughout
the year. Our Colorado operations acquired in December 2011 also
provided an important contribution to the quarter. Additionally, we
see tangible signs that the infrastructure end-use market is poised
to benefit from the Moving Ahead for Progress in the 21st Century
Act, or MAP-21, as well as other federal- and state-sponsored
funding initiatives. Our 2012 results and trends, coupled with
external indicators, have provided optimism that our momentum will
continue in 2013.”
NOTABLE ITEMS FOR THE QUARTER (UNLESS NOTED, ALL COMPARISONS
ARE WITH THE PRIOR-YEAR FOURTH QUARTER)
- Earnings per diluted share of $0.46
compared with $0.32
- Consolidated net sales of $457.9
million compared with $374.7 million
- Heritage aggregates product line volume
increased 5.0%; pricing increased 1.0%
- Specialty Products net sales of $50.6
million and earnings from operations of $15.8 million
- Consolidated selling, general and
administrative expenses (SG&A) decreased 20 basis points as a
percentage of net sales despite absorbing a $3.3 million charge for
restructuring initiatives
- Consolidated earnings from operations
of $40.0 million compared with $20.7 million; 2011 results included
$15.1 million of business development expenses
NOTABLE ITEMS FOR THE YEAR (ALL COMPARISONS ARE VERSUS
2011)
- Adjusted earnings per diluted share
(excluding business development expenses of $0.46 and $0.25 per
diluted share in 2012 and 2011, respectively) of $2.29 compared
with $2.03
- Earnings per diluted share of $1.83
compared with $1.78
- Net sales of $1.839 billion compared
with $1.520 billion
- Heritage aggregates product line volume
up 2.9%; pricing up 2.5%
- Specialty Products record net sales of
$202.2 million and record earnings from operations of $68.5 million
compared with $200.6 million and $66.3 million, respectively
- SG&A expenses down 70 basis points
as a percentage of net sales
MANAGEMENT COMMENTARY (UNLESS NOTED, ALL COMPARISONS ARE WITH
THE PRIOR-YEAR FOURTH QUARTER)
Nye continued, “Heritage aggregates product line volume growth
reflects a 13% increase in shipments in both the nonresidential and
residential end-use markets. The nonresidential market is our
second largest aggregates product line end use, comprising 31% of
quarterly shipments. Volume growth was notable in the energy
sector, as well as the commercial construction sector, which we
believe is beginning to benefit from six consecutive quarters of
improvement in the residential end-use market. Generally, growth in
the commercial component of nonresidential construction follows the
residential construction market with a 12- to 18-month lag.
“The infrastructure market represents approximately half of our
aggregates product line volumes and increased 1.5% for the quarter.
We were encouraged by the 91% increase in highway obligations
during the quarter compared with the prior-year period. While the
rate of improvement will moderate as the fiscal year progresses, we
believe this is an early indicator for increased infrastructure
construction activity in 2013. We also continue to monitor
applications for funding provided by the Transportation
Infrastructure Finance and Innovation Act (TIFIA), which provides
$1.75 billion of federal credit assistance over the next two years
for nationally or regionally significant surface transportation
projects. Each dollar of federal funds can provide up to $10 in
TIFIA credit assistance and, on an overall basis, TIFIA can
leverage $30 billion to $50 billion in new transportation
infrastructure investment. Several of our key states, including
Texas, North Carolina and Virginia, have applied for TIFIA monies,
which are expected to be awarded in early 2013. Construction
activity related to TIFIA projects could begin as early as second
half 2013, but more likely will have a greater impact on 2014
through 2016 construction activity.
“We continue to see significant state-level programs aimed at
increasing funding for infrastructure projects. Recently, the state
of Colorado passed a measure potentially increasing annual
infrastructure funding by $300 million for the next five years.
Texas, Iowa and Florida have also approved programs to provide
additional funding for key initiatives. Additionally, the governor
of Virginia proposed a transportation funding overhaul that could
have provided more than $3 billion for highways, rail and transit
systems in the next five years. The plan was approved by the
Virginia House of Delegates but was effectively tabled by the State
Senate. Not surprisingly, the increase in highway contract awards
in Colorado, Virginia and Iowa is significantly outpacing the
national average.
“Our ChemRock/Rail end-use market accounted for 12% of quarterly
aggregates product line shipments and experienced a 3% decline in
heritage shipments compared with the prior-year quarter. In
addition to being compared with a strong prior-year quarter, this
reduction reflects lower ballast shipments that continue to be
affected by a decline in coal traffic on the railroads. This was
partially offset by increased agricultural lime shipments in our
Midwest Division, which reaped the benefits of favorable weather
during the quarter. On an annual basis, while ballast shipments
were lower compared with 2011, volumes for 2012 were in line with
the five-year historical average.
“Geographically, energy-sector shipments and strength in both
residential and nonresidential end-use markets led to an 8.7%
increase in heritage aggregates product line shipments in the West
Group. The Mideast and Southeast Groups had heritage volume growth
of 1.2% and 1.7%, respectively. Once again, aggregates shipment
levels varied by market, with notable strength in Texas, Florida,
Indiana and Charlotte, North Carolina. On the contrary, shipment
weakness was noted in the Ohio and Kansas City markets, which
experienced reductions in state infrastructure projects; Virginia,
where several large nonresidential projects were completed earlier
in the year; and West Virginia, which saw a decline in sales of
asphalt stone.
“Our overall heritage aggregates product line average selling
price increased 1.0%, reflecting expansions in all of our
reportable groups. This growth was led by the 2.9% increase in our
Southeast Group, which was due to pricing increases and product
mix. Our West Group achieved a 1.3% increase in pricing, while our
Mideast Group improved 0.5%.
“Heritage aggregates product line production increased 6% to
meet shipment activity. Our operations personnel leveraged
efficiencies gained through higher production volumes and reduced
our heritage cost per ton by 2%.
“Specialty Products continued its strong performance and, for
the quarter, net sales were $50.6 million and earnings from
operations were $15.8 million, or 31.3% of net sales. For the full
year, this business established new records for net sales and
earnings from operations, which were $202.2 million and $68.5
million, respectively. On November 1, our new dolomitic lime kiln
at the Woodville, Ohio, facility became operational and contributed
$3 million of net sales for the fourth quarter. Going forward, the
new kiln is expected to provide annual net sales, ranging from $22
million to $25 million with margins comparable to existing
operations.
“Consolidated gross margin (excluding freight and delivery
revenues) for the quarter was 16.7%, a 200-basis-point decline
compared with the prior-year quarter. Consolidated gross margin,
excluding freight and delivery revenues and our increased exposure
to vertical integration – ready mixed concrete, hot mixed asphalt
and related paving operations in Arkansas, Colorado and Texas –
would have been 19.4%. This adjusted gross margin (excluding
freight and delivery revenues) represents a 270-basis-point
increase compared with the reported consolidated gross margin
(excluding freight and delivery revenues). The Mideast and West
Groups each leveraged volume and pricing improvements in the
aggregates product line to expand their gross margins. These gains
were offset by a decline in our Southeast Group profitability,
which reflects the continued under absorption of fixed costs, as
well as increased freight costs.
“Consolidated SG&A as a percentage of net sales was 8.3%, an
improvement of 20 basis points compared with the prior-year
quarter. On an absolute basis, SG&A increased $6.3 million,
which was due to a $3.3 million charge for restructuring
initiatives, overhead incurred at our Denver operations and costs
related to an information systems upgrade expected to be completed
by the fall of 2013.
LIQUIDITY AND CAPITAL RESOURCES
“Cash provided by operating activities for full year 2012 was
$222.7 million compared with $259.1 million for 2011. Cash provided
by operating activities for 2012 would have been $283.7 million,
excluding cash outlays of $38 million for business development
expenses and a net $23 million required to finance working capital
for our Colorado operations. We used our significant cash flow to
make timely but prudent capital investments, maintain dividend
payments and reduce our outstanding debt by $12 million. During the
year, we invested $151.0 million of capital into our business,
including $33 million related to the new kiln.
“At December 31, 2012, our ratio of consolidated debt to
consolidated EBITDA, as defined, for the trailing twelve months was
3.21 times. At December 31, 2012, the maximum ratio is 3.75 times
per our covenant. The maximum ratio is 3.75 times through June 30,
2013, before returning to a maximum of 3.50 times on September 30,
2013.
2013 OUTLOOK
“We expect that in 2013, there will be significantly stronger
new construction activity across the country, and we are well
positioned to capitalize on this opportunity. We are encouraged by
various positive trends in our business and markets, especially as
MAP-21 and other programs are implemented. For 2013, we currently
expect shipments to the infrastructure end-use market to increase
in the mid-single digits, driven by the impact of MAP-21, TIFIA and
state-sponsored programs. We anticipate the nonresidential end-use
market to increase in the high-single digits given that the
Architecture Billings Index, a leading economic indicator for
nonresidential construction spending activity, is reflecting the
strongest growth in billings at architecture firms since the end of
2007. Residential construction is experiencing a level of growth
not seen since late 2005 with seasonally adjusted starts ahead of
any period since 2008. We believe this trend in housing starts will
continue and our residential end-use market will experience
double-digit volume growth. Finally, we expect our ChemRock/Rail
end-use market to be flat compared with 2012. Cumulatively, we
anticipate heritage aggregates product line shipments will increase
4% to 6%. As a reminder, we experienced moderate weather in the
first five months of 2012, which allowed an earlier-than-normal
start to the construction season in many of our markets. If we
experience more typical winter weather in 2013, the quarterly
pattern of aggregates shipments and earnings will differ versus
2012. In particular, 2013 first-quarter results will be compared
with a strong quarter in 2012.
“We currently expect heritage aggregates product line pricing
will increase 2% to 4% in 2013. A variety of factors beyond our
direct control may continue to exert pressure on our volumes and
our forecasted pricing increase is not expected to be uniform
across the company.
“We expect our vertically integrated businesses to generate
between $350 million and $375 million of net sales and $20 million
to $22 million of gross profit.
“Increased production should lead to a slight reduction in
aggregates product line direct production costs per ton compared
with 2012. SG&A expenses as a percentage of net sales are
expected to decline slightly.
“Net sales for the Specialty Products segment should be between
$220 million and $230 million, generating $81 million to $85
million of gross profit. Steel utilization and natural gas prices
are two key factors for this segment.
“Interest expense is expected to remain relatively flat. Our
effective tax rate is expected to approximate 26%, excluding
discrete events. Capital expenditures are forecast at $155
million.”
RISKS TO OUTLOOK
The 2013 outlook includes management’s assessment of the
likelihood of certain risk factors that will affect performance.
The most significant risk to the Corporation’s performance will be
the United States economy and its impact on construction activity.
While both MAP-21 and TIFIA credit assistance are excluded from
federal budget sequester and the U.S. debt ceiling limit, the
ultimate resolution of these issues may have a significant impact
on the economy and, consequently, construction activity. Other
risks related to the Corporation’s future performance include, but
are not limited to, both price and volume and include a recurrence
of widespread decline in aggregates volume negatively affecting
aggregates price; the termination, capping and/or reduction of the
federal and/or state gasoline tax(es) or other revenue related to
infrastructure construction; a significant change in the funding
patterns for traditional federal, state and/or local infrastructure
projects; a reduction in defense spending, and the subsequent
impact on construction activity on or near military bases,
particularly if sequestration of budget programs occurs; a decline
in nonresidential construction, a decline in energy-related
drilling activity resulting from certain regulatory or economic
factors, a slowdown in the residential construction recovery, or
some combination thereof; and a continued reduction in
ChemRock/Rail shipments resulting from declining coal traffic on
the railroads. Further, increased highway construction funding
pressures resulting from either federal or state issues can affect
profitability. Currently, nearly all states have general fund
budget issues driven by lower tax revenues. If these negatively
affect transportation budgets more than in the past, construction
spending could be reduced. North Carolina and Texas, states
disproportionately affecting the Corporation’s revenue and
profitability, are among the states experiencing these fiscal
pressures, although recent statistics indicate that transportation
budgets and tax revenues are increasing.
The Corporation’s principal business serves customers in
aggregates-related construction 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 fuel and other consumables
change production costs directly through consumption or indirectly
by increased energy-related input costs, such as, steel,
explosives, tires and conveyor belts. Fluctuating diesel fuel
pricing also affects transportation costs, primarily through fuel
surcharges in the Corporation’s long-haul distribution network. The
Specialty Products business is sensitive to changes in domestic
steel capacity utilization and the absolute price and fluctuations
in the cost of natural gas. However, due to recent technology
developments allowing the harvesting of abundant natural gas
supplies in the U.S., natural gas prices have stabilized.
Transportation in the Corporation’s long-haul network,
particularly rail cars and locomotive power to move trains, affects
our ability to efficiently transport material into certain markets,
most notably Texas, Florida and the Gulf Coast. The availability of
trucks to transport our product, particularly in markets
experiencing increased demand due to energy sector activity, is
also a risk. 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, and the operations in the
Denver, Colorado, market increase the Corporation’s exposure to
winter weather. Hurricane activity in the Atlantic Ocean and Gulf
Coast generally is most active during the third and fourth
quarters.
Risks to the outlook include shipment declines 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.
CONFERENCE CALL INFORMATION
The Company will host an online web simulcast of its fourth
quarter 2012 earnings conference call later today (February 12,
2013). 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 96829448.
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 Securities and Exchange Commission (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 to historical
or current facts. They may use words such as "anticipate,"
"expect," "should be," "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.
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 and the resolution of
the debt ceiling and sequestration issues; widespread decline in
aggregates pricing; the termination, capping and/or reduction of
the federal and/or state gasoline tax(es) or other revenue related
to infrastructure construction; 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 Texas, Iowa, Colorado and
Georgia; 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; a reduction in defense spending, and the
subsequent impact on construction activity on or near military
bases, particularly if sequestration of budget programs occurs; a
decline in the commercial component of the nonresidential
construction market, notably office and retail space; a slowdown in
residential construction recovery; 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 or
excessive rainfall 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 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;
availability and cost of construction equipment in the United
States; 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
Corporation’s debt covenant if price and/or volumes return to
previous levels of instability; downward pressure on the
Corporation’s common stock price and its impact on goodwill
impairment evaluations; reduction of the Corporation’s credit
rating to non-investment grade resulting from strategic
acquisitions; and other risk factors listed from time to time found
in the Corporation’s filings with the SEC. 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, 2012
2011 2012 2011
Net sales $ 457.9 $ 374.7 $ 1,838.7 $ 1,519.9 Freight and
delivery revenues 46.2 46.3
198.9 193.9 Total revenues 504.1
421.0 2,037.6 1,713.8
Cost of sales 381.5 304.8 1,512.8 1,217.9 Freight and
delivery costs 46.2 46.3 198.9
193.9 Total cost of revenues 427.7
351.1 1,711.7 1,411.8
Gross profit 76.4 69.9 325.9 302.0 Selling, general
and administrative expenses 38.0 31.7 138.4 124.1 Business
development costs - 15.1 35.1 18.6 Other operating (income) and
expenses, net (1.6 ) 2.4 (2.6 )
(1.7 ) Earnings from operations 40.0 20.7 155.0 161.0
Interest expense 13.4 13.3 53.3 58.6 Other nonoperating (income)
and expenses, net - (0.4 ) (1.2 )
1.8 Earnings from continuing operations before taxes
on income 26.6 7.8 102.9 100.6 Income tax expense (benefit)
4.8 (1.2 ) 16.9 21.0
Earnings from continuing operations 21.8 9.0 86.0 79.6
(Loss) Gain on discontinued operations,
net of related tax expense (benefit) of $(0.1), $4.1, $(0.3) and
$2.2, respectively
(0.1 ) 6.1 (0.5 ) 4.0
Consolidated net earnings 21.7 15.1 85.5 83.6 Less: Net
earnings attributable to noncontrolling interests 0.2
0.3 1.0 1.2 Net
earnings attributable to Martin Marietta Materials, Inc. $ 21.5
$ 14.8 $ 84.5 $ 82.4 Net
earnings (loss) per common share: Basic from continuing operations
attributable to common shareholders $ 0.47 $ 0.19 $ 1.84 $ 1.70
Discontinued operations attributable to common shareholders
- 0.13 (0.01 ) 0.09 $
0.47 $ 0.32 $ 1.83 $ 1.79
Diluted from continuing operations attributable to common
shareholders $ 0.46 $ 0.19 $ 1.84 $ 1.69 Discontinued operations
attributable to common shareholders - 0.13
(0.01 ) 0.09 $ 0.46 $ 0.32
$ 1.83 $ 1.78 Cash dividends per common
share $ 0.40 $ 0.40 $ 1.60 $ 1.60
Average number of common shares outstanding: Basic
45.9 45.7 45.8 45.7
Diluted 46.1 45.8 46.0
45.8
MARTIN MARIETTA MATERIALS, INC.
Unaudited Financial Highlights (In millions)
Three Months Ended Year Ended
December 31, December 31, 2012
2011 2012
2011 Net sales: Aggregates Business: Mideast Group $
101.7 $ 100.2 $ 406.6 $ 395.5 Southeast Group 69.1 65.9 282.2 283.3
West Group 236.5 157.1 947.7
640.5 Total Aggregates Business 407.3 323.2
1,636.5 1,319.3 Specialty Products 50.6 51.5
202.2 200.6 Total $ 457.9
$ 374.7 $ 1,838.7 $ 1,519.9 Gross
profit (loss): Aggregates Business: Mideast Group $ 28.8 $ 26.7 $
108.9 $ 104.2 Southeast Group (2.5 ) 3.9 10.7 21.0 West Group
36.2 22.1 134.5
104.8 Total Aggregates Business 62.5 52.7 254.1 230.0
Specialty Products 18.2 18.6 77.2 75.4 Corporate (4.3 )
(1.4 ) (5.4 ) (3.4 ) Total $ 76.4 $
69.9 $ 325.9 $ 302.0 Selling, general
and administrative expenses: Aggregates Business: Mideast Group $
8.9 $ 9.9 $ 36.9 $ 37.7 Southeast Group 5.7 6.5 22.8 26.9 West
Group 14.7 11.9 56.7
43.9 Total Aggregates Business 29.3 28.3 116.4 108.5
Specialty Products 2.4 2.3 9.3 9.2 Corporate 6.3
1.1 12.7 6.4 Total $ 38.0
$ 31.7 $ 138.4 $ 124.1 Earnings
(Loss) from operations: Aggregates Business: Mideast Group $ 20.7 $
16.5 $ 75.0 $ 69.7 Southeast Group (7.9 ) (3.8 ) (13.5 ) (5.9 )
West Group 22.5 10.4 82.0
63.6 Total Aggregates Business 35.3 23.1 143.5 127.4
Specialty Products 15.8 16.3 68.5 66.3 Corporate (11.1 )
(18.7 ) (57.0 ) (32.7 ) Total $ 40.0 $
20.7 $ 155.0 $ 161.0
MARTIN MARIETTA
MATERIALS, INC. Unaudited Financial Highlights (In
millions)
Three Months
Ended Year Ended December 31, December 31,
2012 2011
2012 2011 Net sales by product
line: Aggregates Business: Aggregates $ 318.4 $ 296.8 $ 1,304.0 $
1,213.6 Asphalt 18.2 10.2 79.8 47.3 Ready Mixed Concrete 33.7 10.3
116.3 33.0 Road Paving 37.0 5.9
136.4 25.4 Total Aggregates Business
407.3 323.2 1,636.5
1,319.3 Specialty Products Business: Magnesia-Based
Chemicals 35.0 37.3 142.9 142.6 Dolomitic Lime 15.3 13.8 57.6 56.6
Other 0.3 0.4 1.7
1.4 Total Specialty Products Business 50.6
51.5 202.2 200.6 Total $
457.9 $ 374.7 $ 1,838.7 $ 1,519.9
Gross profit by product line: Aggregates Business:
Aggregates $ 57.7 $ 53.2 $ 240.6 $ 223.3 Asphalt 3.0 0.2 12.1 5.8
Ready Mixed Concrete (0.6 ) (0.4 ) (1.2 ) (0.2 ) Road Paving
2.4 (0.3 ) 2.6 1.1 Total
Aggregates Business 62.5 52.7
254.1 230.0 Specialty Products Business:
Magnesia-Based Chemicals 12.7 13.4 54.5 50.7 Dolomitic Lime 5.2 4.9
22.3 24.5 Other 0.3 0.3 0.4
0.2 Total Specialty Products Business
18.2 18.6 77.2 75.4
Corporate (4.3 ) (1.4 ) (5.4 )
(3.4 ) Total $ 76.4 $ 69.9 $ 325.9 $ 302.0
Depreciation $ 41.4 $ 41.5 $ 166.9 $ 166.2 Depletion
1.6 1.2 5.0 3.8 Amortization 1.2 1.0
5.3 3.4 $ 44.2 $ 43.7 $
177.2 $ 173.4
MARTIN MARIETTA MATERIALS, INC.
Balance Sheet Data (In millions)
December 31,
December 31, 2012 2011
(Unaudited) (Audited) ASSETS Cash and cash equivalents $ 25.4 $
26.0 Accounts receivable, net 224.1 203.7 Inventories, net 332.3
322.6 Other current assets 118.6 105.6 Property, plant and
equipment, net 1,753.2 1,774.3 Intangible assets, net 666.6 670.8
Other noncurrent assets 40.7 44.8 Total assets $ 3,160.9 $ 3,147.8
LIABILITIES AND EQUITY Current maturities of
long-term debt and short-term facilities $ 5.7 $ 7.2 Other current
liabilities 167.6 166.5 Long-term debt (excluding current
maturities) 1,042.2 1,052.9 Other noncurrent liabilities 495.1
472.3 Total equity 1,450.3 1,448.9 Total liabilities
and equity $ 3,160.9 $ 3,147.8
MARTIN MARIETTA MATERIALS,
INC. Unaudited Statements of Cash Flows (In millions)
Year Ended December 31 2012
2011 Operating activities:
Consolidated net earnings $ 85.5 $ 83.6 Adjustments to reconcile
consolidated net earnings to net cash provided by operating
activities: Depreciation, depletion and amortization 177.2 173.4
Stock-based compensation expense 7.8 11.5 Gains on divestitures and
sales of assets (1.0 ) (15.5 ) Deferred income taxes 13.9 11.3
Excess tax benefits from stock-based compensation (0.8 ) -
Other items, net
2.2 1.6
Changes in operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net (20.3 ) (19.4 ) Inventories, net (9.6 )
(5.1 ) Accounts payable (8.7 ) 30.4 Other assets and liabilities,
net (23.5 ) (12.7 ) Net cash provided by
operating activities 222.7 259.1
Investing activities: Additions to property, plant and equipment
(151.0 ) (155.4 ) Acquisitions, net (0.2 ) (91.6 ) Proceeds from
divestitures and sales of assets 10.0 8.1 Loan to affiliate
(2.0 ) - Net cash used for investing
activities (143.2 ) (238.9 ) Financing
activities: Borrowings of long-term debt 181.0 495.0 Repayments of
long-term debt (193.7 ) (470.5 ) Change in bank overdraft - (2.1 )
Dividends paid (73.8 ) (73.6 ) Debt issue costs (0.6 ) (3.3 )
Issuances of common stock 7.0 1.4 Purchase of remaining interest in
existing subsidiaries - (10.4 ) Distributions to owners of
noncontrolling interests (0.8 ) (1.0 ) Excess tax benefits from
stock-based compensation 0.8 -
Net cash used for financing activities (80.1 ) (64.5
) Net decrease in cash and cash equivalents (0.6 ) (44.3 )
Cash and cash equivalents, beginning of period 26.0
70.3 Cash and cash equivalents, end of period
$ 25.4 $ 26.0
MARTIN MARIETTA MATERIALS, INC.
Unaudited Operational Highlights Three Months
Ended Year Ended December 31, 2012 December
31, 2012 Volume Pricing Volume
Pricing Volume/Pricing Variance (1)
Heritage Aggregates Product Line: (2) Mideast Group
1.2 % 0.5 % 1.8 % 0.7 % Southeast Group 1.7 % 2.9 % (4.2 %) 3.8 %
West Group 8.7 % 1.3 % 6.2 % 4.2 % Heritage Aggregates Operations
5.0 % 1.0 % 2.9 % 2.5 % Aggregates Product Line (3) 5.4 % (0.3 %)
2.6 % 0.8 %
Three Months Ended Year Ended
December 31, December 31, Shipments (tons in
thousands)
2012 2011 2012
2011 Heritage Aggregates Product Line:
(2) Mideast Group 9,174 9,065 36,135 35,480 Southeast Group
5,261 5,173 21,674 22,627 West Group 15,435 14,200
64,297 60,554 Heritage Aggregates Operations 29,870
28,438 122,106 118,661 Acquisitions 1,690 150 6,186 150
Divestitures (4) 1 1,352 39 6,263
Aggregates Product Line (3) 31,561 29,940 128,331
125,074 (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.
Three Months Ended Year Ended December
31, December 31, 2012 2011
2012 2011 Unit Shipments by Product
Line: Aggregates tons - external customers 30,493 29,429
123,873 122,857 Internal aggregates tons used in other product
lines 1,068 511 4,458 2,217 Total aggregates tons 31,561 29,940
128,331 125,074 Ready Mixed Concrete - cubic yards
419 148 1,481 502 Asphalt tons - external customers
333 268 1,662 1,262 Internal asphalt tons used in road paving
business 395 36 1,598 183 Total asphalt tons 728 304 3,260 1,445
Average unit sales price by product line
(including internal sales): Aggregates $ 10.32 $ 10.36 $
10.33 $ 10.24 Ready Mixed Concrete $ 78.98 $ 69.21 $ 77.24 $ 65.37
Asphalt $ 44.13 $ 40.53 $ 41.57 $ 39.24
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, 2012, and 2011, in accordance
with GAAP and reconciliations of the ratios as percentages of total
revenues to percentages of net sales:
Gross Margin in Accordance with Generally
Accepted Three Months Ended Year Ended
Accounting Principles December 31, December
31, 2012 2011
2012 2011 Gross profit $ 76.4
$ 69.9 $ 325.9 $ 302.0 Total revenues $
504.1 $ 421.0 $ 2,037.6 $ 1,713.8 Gross
margin 15.2 % 16.6 % 16.0 % 17.6 %
Three Months Ended Year Ended December
31, December 31, Gross Margin Excluding Freight and
Delivery Revenues 2012 2011
2012 2011
Gross profit $ 76.4 $ 69.9 $ 325.9 $ 302.0
Total revenues $ 504.1 $ 421.0 $ 2,037.6 $ 1,713.8 Less:
Freight and delivery revenues (46.2 ) (46.3 )
(198.9 ) (193.9 ) Net sales $ 457.9 $ 374.7 $
1,838.7 $ 1,519.9 Gross margin excluding freight and
delivery revenues 16.7 % 18.7 % 17.7 %
19.9 %
Operating Margin in Accordance with Generally
Accepted Three Months Ended Year Ended
Accounting Principles December 31, December
31, 2012 2011
2012 2011 Earnings from
operations $ 40.0 $ 20.7 $ 155.0 $ 161.0
Total revenues $ 504.1 $ 421.0 $ 2,037.6
$ 1,713.8 Operating margin 7.9 % 4.9 %
7.6 % 9.4 %
Three Months Ended Year
Ended Operating Margin Excluding Freight and Delivery
Revenues December 31, December 31,
2012 2011 2012
2011 Earnings from operations $ 40.0
$ 20.7 $ 155.0 $ 161.0 Total revenues $
504.1 $ 421.0 $ 2,037.6 $ 1,713.8 Less: Freight and delivery
revenues (46.2 ) (46.3 ) (198.9 )
(193.9 ) Net sales $ 457.9 $ 374.7 $ 1,838.7 $
1,519.9 Operating margin excluding freight and delivery
revenues 8.7 % 5.5 % 8.4 % 10.6 %
Consolidated gross margin excluding
freight and delivery revenues and excluding the effect of
vertically integrated businesses represents a non-GAAP financial
measure. Management presents this measure to provide more
information for investors and analysts to use when forecasting
gross margin for the aggregates product line.
The following reconciles consolidated
total revenues and consolidated gross profit in accordance with
generally accepted accounting principles to consolidated net sales
and consolidated gross profit, both excluding the impact of
vertically integrated businesses. These adjusted amounts are then
used to calculate consolidated gross margin excluding freight and
delivery revenues and excluding the impact of vertically integrated
businesses:
Three Months Ended December 31, 2012
Consolidated total revenues $ 504.1 Less: Freight and
delivery revenues 46.2 Less: Net sales for vertically integrated
businesses 88.9 Consolidated net sales excluding net
sales at vertically integrated businesses $ 369.0
Consolidated gross profit $ 76.4 Gross profit for vertically
integrated businesses 4.8 Consolidated gross profit
excluding gross profit at vertically integrated businesses $ 71.6
Consolidated gross margin excluding
freight and delivery revenues and excluding impact of vertically
integrated businesses
19.4 %
MARTIN MARIETTA MATERIALS, INC.
Non-GAAP Financial Measures (continued) (Dollars, other than
earnings per share amounts, and number of shares in millions)
Earnings per diluted share excluding the
impact of business development expenses and net cash provided by
operating activities excluding the impact of business development
expenses and the impact of financing working capital for Colorado
operations represent non-GAAP financial measures. Management
presents these measures to provide more consistent information for
investors and analysts to use when comparing earnings per diluted
share for the years ended December 31, 2012 and 2011, and net cash
provided by operating activities for the year ended December 31,
2012, with the respective prior periods and when forecasting future
operating results and cash flows.
The following presents the calculation
of the earnings per diluted share impact of business development
expenses and reconciles earnings per diluted share in accordance
with generally accepted accounting principles to earnings per
diluted share excluding the impact of business development
expenses:
Year Ended December 31, 2012
2011 Business development expenses $ 35.1 $ 18.6 Income tax
benefit 13.9 7.2 After-tax impact of business
development expenses $ 21.2 $ 11.4 Diluted average number of common
shares outstanding 46.0 45.8 Earnings per diluted
share impact of business development expenses $ 0.46 $ 0.25
The following reconciles earnings per
diluted share in accordance with generally accepted accounting
principles to earnings per diluted share excluding the impact of
business development expenses:
Year Ended December 31, 2012
2011 Earnings per diluted share in accordance with generally
accepted accounting principles $ 1.83 $ 1.78 Add back: Earnings per
diluted share impact of business development expenses 0.46
0.25 Earnings per diluted share excluding the impact of
business development expenses $ 2.29 $ 2.03
The following reconciles net cash
provided by operating activities in accordance with generally
accepted accounting principles to net cash provided by operating
activities excluding the impact of business development expenses
and the impact of financing working capital for Colorado
operations:
Year Ended December 31, 2012 Net cash provided
by operating activities in accordance with generally accepted
accounting principles $ 222.7 Add back: Impact of business
development expenses on operating cash flow 38.0 Impact of
financing working capital for Colorado operations 23.0 Net
cash provided by operating activities excluding the impact of
business development expenses $ 283.7
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. EBITDA is as follows for the
three months and year ended December 31, 2012, and 2011.
Three Months Ended Year Ended
December 31, December 31, 2012
2011 2012 2011
Earnings Before Interest, Income Taxes, Depreciation, Depletion and
Amortization (EBITDA) $ 83.4 $ 74.4 $ 329.9 $ 335.9
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,
2012 2011 2012
2011 Net Earnings Attributable to Martin Marietta Materials,
Inc. $ 21.5 $ 14.8 $ 84.5 $ 82.4 Add back: Interest Expense 13.4
13.3 53.3 58.6 Income Tax Expense for Controlling Interests 4.7 3.0
16.6 23.1 Depreciation, Depletion and Amortization Expense
43.8 43.3 175.5 171.8 EBITDA $ 83.4 $ 74.4 $
329.9 $ 335.9
MARTIN MARIETTA MATERIALS, INC. 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 revolving credit
facility, term loan facility and accounts receivable securitization
facility. Under the terms of these agreements, as amended, the
Corporation's ratio of Consolidated Debt-to-Consolidated EBITDA as
defined, for the trailing twelve months can not exceed 3.75 times
as of December 31, 2012, 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, 2012.
For supporting calculations, refer to
Corporation's website at
www.martinmarietta.com.
Twelve-Month Period January 1, 2012 to December
31, 2012 Earnings from continuing operations attributable to
Martin Marietta Materials, Inc. $ 84.9 Add back: Interest expense
53.3 Income tax expense 16.8 Depreciation, depletion and
amortization expense 172.7 Stock-based compensation expense 7.8
Deduct: Interest income (0.4 ) Consolidated EBITDA, as
defined $ 335.1 Consolidated Debt, including debt
guaranteed by the Corporation, at December 31, 2012 $ 1,074.3 Less:
Unrestricted cash and cash equivalents in excess of $50 at December
31, 2012 - Consolidated Net Debt, as defined, at
December 31, 2012 $ 1,074.3
Consolidated Debt-to-Consolidated EBITDA,
as defined, at December 31, 2012 for the trailing twelve-month
EBITDA
3.21 times
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