Martin Marietta Materials, Inc. (NYSE:MLM) today announced its
results for the second quarter and six months ended June 30,
2013.
Ward Nye, President and CEO of Martin Marietta Materials,
stated: “We are pleased to report higher second-quarter net sales
and gross margin compared with the prior-year quarter, which is
particularly rewarding in light of excessive rainfall in most of
our key markets.”
The Company reported a net sales increase of 4%, driven by
pricing growth in all Aggregates business product lines and a new
quarterly net sales record achieved by the Specialty Products
business. Net earnings increased 12%, despite being constrained by
the impact of wet weather, particularly in the midwestern and
southeastern United States. For example, the state of Iowa had the
wettest second quarter in over a century, and many Georgia markets
had rainfall during the quarter equivalent to more than double the
average levels, including Augusta, which reported its wettest month
in weather history in June. While it’s difficult to isolate all of
the quarter’s weather impact, the Company knows the effect was at
least three-fold. First, with respect to potential lost sales, the
Company estimates that the precipitation reduced shipment volumes
between 1.5 million and 1.7 million tons, lowering net earnings by
up to $0.11 per diluted share. Second, though more difficult to
estimate than the sales component, throughput challenges created by
wet weather significantly reduced operational productivity.
Finally, lower production volumes led to an underabsorption of
fixed costs.
“While weather conditions will always have an impact on our
short-term results, we have demonstrated that over the long term,
the focused execution of our strategic plan enables us to
outperform our peers and deliver shareholder value. The second
quarter results also show our ability to manage through
weather-related disruptions, which did not prevent us from
performing well. More importantly and for the longer term, we are
well positioned to leverage a strengthening business environment
for our products. To that end, we continue to see positive
indicators of construction activity, including double-digit growth
on a year-to-date basis in the private-sector construction market.
Historically, increases in private-sector construction have led to
growth in public-sector construction. We anticipate this trend will
continue and remain well-positioned to serve these opportunities,”
Nye said.
Notable Items (all comparisons, unless noted, are versus the
prior-year second quarter)
- Earnings per diluted share of $0.89
compared with $0.80 (prior-year quarter includes a $0.12 per
diluted share charge for business development costs)
- Consolidated net sales of $508.7
million compared with $491.2 million
- Aggregates product line pricing up
1.7%; aggregates product line volume down 1.6%
- Consolidated gross profit margin of
21.0%, up 20 basis points
- Specialty Products record net sales of
$56.6 million, generating earnings from operations of $18.7
million
- Consolidated selling, general and
administrative (“SG&A”) expenses of $37.8 million, up 20 basis
points as a percentage of net sales
- Consolidated earnings from operations
of $69.4 million compared with $59.2 million (prior-year quarter
includes $9.2 million of business development costs)
MANAGEMENT COMMENTARY (ALL COMPARISONS, UNLESS NOTED, ARE
VERSUS THE PRIOR-YEAR SECOND QUARTER)
Nye continued, “During the quarter, pricing momentum in the
aggregates product line continued with each of our reportable
groups achieving increases. The West Group reported a 2.8%
improvement, reflecting price increases implemented over the past
year. The Mid-America and Southeast Groups reported average selling
price increases of 1.9% and 0.4%, respectively, in the aggregates
product line. Based on results through the first half of the year,
we reaffirm our full-year pricing guidance of up 2% to 4% for the
aggregates product line. Mid-year pricing increases that were
recently implemented provide further support for continued pricing
momentum. Our vertically integrated businesses also achieved
pricing growth, with the ready mixed concrete and asphalt product
lines reporting increases of 8.3% and 4.3%, respectively.
“Through the first half of the year, growth in construction
activity has been concentrated in the private sector, which, on a
year-to-date basis through May, reported a 12% increase in the
value of construction put in place. Consistent with this trend, our
private-sector markets reported volume growth over the prior-year
quarter. The nonresidential market, which represented approximately
30% of second-quarter aggregates shipments, increased 7%. This
growth was attributable to commercial construction, namely office
and retail, and was partially offset by a decline in shipments to
the energy sector due to a modest slowdown in shale oil field
activity. The residential construction market continues to recover;
housing starts are up more than 10% over the prior year and housing
completions are up 20%. Shipments to the residential market
increased 4% and accounted for 13% of second-quarter aggregates
shipments, representing a more normalized and balanced percentage
of our overall product sales. Our expectation is for further
increases in residential volumes as the housing market continues to
move toward a more sustainable equilibrium. Finally, the
ChemRock/Rail end use market, approximately 10% of second-quarter
aggregates shipments, increased 2%.
“The infrastructure market comprised the remaining 47% of
second-quarter aggregates shipments. Lower government spending and
wet weather contributed to an 8% decline in quarterly volumes to
this end use market and a 1.6% overall shipment decline for the
Aggregates business. However, given the ongoing recovery of the
U.S. economy that is reflected by the current employment growth, we
remain optimistic for increased future public-sector construction
activity. Similar to the pattern experienced in Texas over the last
few years, growth in the residential sector within our company’s
geographic areas is expected to stimulate growth in the
nonresidential and infrastructure markets that will be necessary to
serve an expanding economy and increased population. We see early
signs of this cycle developing in both Colorado and Georgia. We are
also encouraged by states’ recent initiatives to address
long-neglected infrastructure needs. For example, the South
Carolina Department of Transportation recently increased its budget
by $500 million for repairs of existing roads, and the Indiana
Department of Transportation approved up to an additional $415
million annually for construction of new roads and expansion of
major highways. Additionally, Texas is expected to initiate work on
several large highway projects in the second half of the year in
connection with its increased state Department of Transportation
budget. Texas is also one of the most proactive states in
applications for funding under the Transportation Infrastructure
Finance and Innovation Act, or TIFIA, a program with the ability to
leverage up to $50 billion in financing for transportation projects
of either national or regional significance. A number of TIFIA
awards are currently expected to be announced later this year.
Consistent with our previous viewpoint, given the timing of the
initial awards, any meaningful impact of TIFIA is not expected
prior to 2014.
“Our operations personnel continued their focus on cost control,
as evidenced by a 20-basis-point expansion of our consolidated
gross margin (excluding freight and delivery revenues), despite
weather constraints that resulted in shipment and production
reductions. The Mid-America Group, led by the performance of the
Mid-Atlantic Division, which includes Virginia, North Carolina, and
South Carolina, achieved a 150-basis-point improvement in gross
margin (excluding freight and delivery revenues). The Mid-Atlantic
Division leveraged a 10% increase in aggregates product line
shipments into an incremental gross margin (excluding freight and
delivery revenues) exceeding our publicly stated expectations.
“SG&A expenses were 7.4% of net sales, a 20-basis-point
increase compared with the prior-year quarter. On an absolute
basis, SG&A expenses increased $2.5 million, largely related to
costs associated with our planned information systems upgrade.
“Specialty Products continued its strong performance and
generated second-quarter net sales of $56.6 million, reflecting
growth in both the dolomitic lime and chemicals product lines.
Sales of dolomitic lime include the contribution from the Woodville
kiln that became operational during the fourth quarter of 2012,
partially offset by the impact of a 4% decrease in steel production
compared with the prior-year quarter. Earnings from operations of
$18.7 million were up 7% over the prior-year quarter, but were
negatively affected by higher natural gas costs.
LIQUIDITY AND CAPITAL RESOURCES
“Cash provided by operating activities for the first six months
of 2013 was $48.5 million compared with $27.7 million in 2012. The
improvement is attributable to the absence of significant business
development costs incurred 2012.
“At June 30, 2013, our ratio of consolidated debt to
consolidated EBITDA, as defined, for the trailing twelve months was
3.17 times, in compliance with our covenant. The current maximum
ratio of 3.75 times steps back to 3.50 times at September 30,
2013.
“In April, we established a new one-year $150 million trade
receivable securitization facility, which replaced a $100 million
facility that expired by its terms. The new credit facility
provides for borrowings based on our trade receivables balance.
Borrowings bear interest at one-month LIBOR plus 60 basis
points.
“Earlier this month, we completed an acquisition of three
aggregates quarries in the greater Atlanta, Georgia area. This
transaction adds over 800 million tons of permitted aggregates
reserves, which enhances our long-term position in this market. The
integration of these locations is complete, and we look forward to
the contributions from these quarries and our new employees.
2013 OUTLOOK
“As noted above, we are encouraged by various positive trends in
our business and markets – especially in private sector employment
and construction. We anticipate volumes to the nonresidential
end-use market to increase in the mid-single digits given that the
Architecture Billings Index, or ABI, a leading economic indicator
for nonresidential construction spending activity, remains at a
strong level. 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. By contrast, the
weather-related slowdown in aggregates shipments experienced in the
first half of the year, coupled with a delay in large
infrastructure projects moving through the public letting cycle,
leads us to expect aggregates shipments to the infrastructure
end-use market to be down in the mid-single digits for the full
year. Our ChemRock/Rail end-use market is expected to be flat
compared with 2012. Cumulatively, we anticipate aggregates product
line shipments will increase 1% to 3%.
“We currently expect aggregates product line pricing will
increase 2% to 4% for the full year. 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.
“Aggregates product line direct production costs per ton should
be flat with 2012. SG&A expenses, excluding costs in 2013 and
2012 related to the information systems upgrade, as a percentage of
net sales are expected to decline slightly.
“Net sales for the Specialty Products segment are expected to 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 the Moving Ahead for Progress in the 21st Century Act,
or MAP-21, and TIFIA credit assistance are excluded from the
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. The
Federal sequester that went into effect in March did not appear to
have a significant impact on the broader economy in the first half
of the year. While transportation investment is mostly exempt from
spending cuts, the impact of sequester may become more apparent
during the second half of the year. 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; 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 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. If these
negatively affect transportation budgets more than in the past,
construction spending could be reduced. North Carolina, a state
that disproportionately affects the Corporation’s revenue and
profitability, is among the states experiencing these fiscal
pressures, although recent statistics indicate that transportation
and tax revenues are increasing. The Specialty Products business
essentially runs at capacity; therefore any unplanned changes in
costs or realignment of customers introduce volatility to the
earnings of this segment.
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.
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 and drivers 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. 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
second-quarter 2013 earnings conference call later today (July 30,
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 16650987.
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 and
impact 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; a decline in the
commercial component of the nonresidential construction market,
notably office and retail space; a continued slowdown in
energy-related drilling activity; 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 Six Months
Ended June 30, June 30, 2013 2012
2013 2012 Net sales $ 508.7 $ 491.2 $ 853.8 $ 841.7
Freight and delivery revenues 54.0 54.5
93.9 98.0 Total revenues 562.7
545.7 947.7 939.7
Cost of sales 401.9 389.1 734.4 715.8 Freight and delivery
costs 54.0 54.5 93.9
98.0 Total cost of revenues 455.9
443.6 828.3 813.8 Gross
profit 106.8 102.1 119.4 125.9 Selling, general and
administrative expenses 37.8 35.3 75.5 68.3 Business development
costs 0.3 9.2 0.6 35.1 Other operating (income) and expenses, net
(0.7 ) (1.6 ) (2.6 ) (1.4 ) Earnings
from operations 69.4 59.2 45.9 23.9 Interest expense 13.6
13.3 27.1 26.7 Other nonoperating (income) and expenses, net
(0.5 ) (0.1 ) 0.1 (1.9 ) Earnings
(loss) from continuing operations before taxes on income 56.3 46.0
18.7 (0.9 ) Income tax expense (benefit) 15.0
8.5 6.6 (1.3 )
Earnings from continuing operations
41.3 37.5 12.1 0.4
Gain (loss) on discontinued operations,
net of related tax expense (benefit) of $0.1, $0.0, $0.1 and
$(0.1), respectively
0.3 0.3 0.1 (0.3 ) Consolidated net earnings 41.6 37.8 12.2
0.1 Less: Net earnings (loss) attributable to noncontrolling
interests 0.3 1.0 (1.3 )
0.1 Net earnings attributable to Martin Marietta
Materials, Inc. $ 41.3 $ 36.8 $ 13.5 $ -
Net earnings (loss) per common share: Basic from
continuing operations attributable to common shareholders $ 0.88 $
0.79 $ 0.29 $ 0.01 Discontinued operations attributable to common
shareholders 0.01 0.01 -
(0.01 ) $ 0.89 $ 0.80 $ 0.29 $ -
Diluted from continuing operations attributable to common
shareholders $ 0.88 $ 0.79 $ 0.29 $ 0.01 Discontinued operations
attributable to common shareholders 0.01 0.01
- (0.01 ) $ 0.89 $ 0.80 $
0.29 $ - Dividends per common share $ 0.40
$ 0.40 $ 0.80 $ 0.80 Average
number of common shares outstanding: Basic 46.1
45.8 46.1 45.8 Diluted
46.3 45.9 46.2
45.8
MARTIN MARIETTA
MATERIALS, INC. Unaudited Financial Highlights (In
millions)
Three Months Ended Six Months Ended
June 30, June 30, 2013 2012 2013
2012 Net sales: Aggregates Business: Mid-America Group $
186.4 $ 184.7 $ 292.6 $ 299.3 Southeast Group 55.3 58.8 106.6 114.0
West Group 210.4 197.2 342.8
326.2 Total Aggregates Business 452.1 440.7
742.0 739.5 Specialty Products 56.6 50.5
111.8 102.2 Total $ 508.7
$ 491.2 $ 853.8 $ 841.7 Gross profit
(loss): Aggregates Business: Mid-America Group $ 59.6 $ 56.2 $ 59.5
$ 63.2 Southeast Group (0.6 ) (0.9 ) (5.5 ) (0.7 ) West Group
26.2 26.5 26.2
25.9 Total Aggregates Business 85.2 81.8 80.2 88.4 Specialty
Products 21.3 19.9 40.9 39.3 Corporate 0.3 0.4
(1.7 ) (1.8 ) Total $ 106.8 $ 102.1
$ 119.4 $ 125.9 Selling, general and
administrative expenses: Aggregates Business: Mid-America Group $
12.7 $ 13.8 $ 24.9 $ 27.0 Southeast Group 4.5 4.5 9.0 9.4 West
Group 11.2 11.0 22.9
22.2 Total Aggregates Business 28.4 29.3 56.8 58.6
Specialty Products 2.5 2.2 5.0 4.7 Corporate 6.9
3.8 13.7 5.0 Total $ 37.8
$ 35.3 $ 75.5 $ 68.3 Earnings
(Loss) from operations: Aggregates Business: Mid-America Group $
47.0 $ 43.8 $ 35.9 $ 38.6 Southeast Group (5.2 ) (5.6 ) (13.5 )
(11.5 ) West Group 16.9 17.4 5.6
5.0 Total Aggregates Business 58.7 55.6 28.0
32.1 Specialty Products 18.7 17.5 35.8 35.7 Corporate (8.0 )
(13.9 ) (17.9 ) (43.9 ) Total $ 69.4 $
59.2 $ 45.9 $ 23.9
MARTIN MARIETTA MATERIALS, INC. Unaudited
Financial Highlights (In millions)
Three Months
Ended Six Months Ended June 30, June 30,
2013 2012 2013 2012 Net sales by
product line: Aggregates Business: Aggregates $ 357.2 $ 356.8 $
605.0 $ 614.1 Asphalt 18.8 20.2 28.5 32.8 Ready Mixed Concrete 36.7
29.3 64.0 49.5 Road Paving 39.4 34.4
44.5 43.1 Total Aggregates Business 452.1
440.7 742.0 739.5 Specialty Products Business 56.6
50.5 111.8 102.2 Total $ 508.7
$ 491.2 $ 853.8 $ 841.7 Gross profit
(loss) by product line: Aggregates Business: Aggregates $ 78.9 $
76.9 $ 81.0 $ 88.3 Asphalt 4.9 3.4 2.4 2.7 Ready Mixed Concrete 1.6
0.7 1.3 (0.5 ) Road Paving (0.2 ) 0.8 (4.5 )
(2.1 ) Total Aggregates Business 85.2 81.8 80.2 88.4
Specialty Products Business 21.3 19.9 40.9 39.3 Corporate
0.3 0.4 (1.7 ) (1.8 ) Total $ 106.8
$ 102.1 $ 119.4 $ 125.9
Depreciation $ 40.3 $ 41.7 $ 81.1 $ 84.0 Depletion 1.3 1.3 2.3 1.9
Amortization 1.3 1.3 2.6
2.8 $ 42.9 $ 44.3 $ 86.0 $ 88.7
MARTIN MARIETTA MATERIALS, INC.
Balance Sheet Data (In millions)
June 30,
December 31, June 30, 2013 2012
2012 (Unaudited) (Audited) (Unaudited) ASSETS Cash and cash
equivalents $ 43.7 $ 25.4 $ 41.4 Accounts receivable, net 287.5
224.1 275.4 Inventories, net 348.9 332.3 332.0 Other current assets
126.4 118.6 111.5 Property, plant and equipment, net 1,717.4
1,753.2 1,753.8 Intangible assets, net 665.0 666.6 671.1 Other
noncurrent assets 42.2 40.7 41.3 Total assets $ 3,231.1 $ 3,160.9 $
3,226.5 LIABILITIES AND EQUITY Current maturities of
long-term debt and short-term facilities $ 6.2 $ 5.7 $ 7.2 Other
current liabilities 186.3 167.6 191.9 Long-term debt (excluding
current maturities) 1,087.2 1,042.2 1,137.1 Other noncurrent
liabilities 510.7 495.1 473.5 Total equity 1,440.7
1,450.3 1,416.8 Total liabilities and equity $ 3,231.1 $
3,160.9 $ 3,226.5
MARTIN MARIETTA
MATERIALS, INC. Unaudited Statements of Cash Flows (In
millions)
Six Months Ended June 30, 2013
2012 Operating activities: Consolidated net earnings $ 12.2
$ 0.1 Adjustments to reconcile consolidated net earnings to net
cash provided by operating activities: Depreciation, depletion and
amortization 86.0 88.7 Stock-based compensation expense 4.0 4.6
Gains on divestitures and sales of assets (0.4 ) (0.8 ) Deferred
income taxes 9.3 6.8 Excess tax benefits from stock-based
compensation (2.3 ) - Changes in operating assets and
liabilities:Other items, net 0.3 1.4 Changes in operating assets
and liabilities:Changes in operating assets and liabilities, net of
effects of acquisitions and divestitures: Accounts receivable, net
(65.2 ) (71.7 ) Inventories, net (15.8 ) (9.4 ) Accounts payable
16.4 21.0 Other assets and liabilities, net 4.0
(13.0 ) Net cash provided by operating activities
48.5 27.7 Investing activities:
Additions to property, plant and equipment (50.0 ) (66.3 )
Acquisitions, net (3.2 ) (0.1 ) Proceeds from divestitures and
sales of assets 1.8 4.0 Net cash
used for investing activities (51.4 ) (62.4 )
Financing activities: Borrowings of long-term debt 295.5 171.0
Repayments of long-term debt (250.2 ) (87.1 ) Change in bank
overdraft - 3.4 Dividends paid (37.1 ) (36.9 ) Debt issue costs
(0.5 ) (0.3 ) Issuances of common stock 11.2 0.8 Excess tax
benefits from stock-based compensation 2.3 - Distributions to
owners of noncontrolling interests - (0.8 )
Net cash provided by financing activities 21.2
50.1 Net increase in cash and cash equivalents
18.3 15.4 Cash and cash equivalents, beginning of period
25.4 26.0 Cash and cash equivalents,
end of period $ 43.7 $ 41.4
MARTIN MARIETTA MATERIALS, INC. Unaudited
Operational Highlights Three Months Ended Six
Months Ended
June 30, 2013
June 30, 2013 Volume Pricing Volume
Pricing Volume/Pricing Variance (1)
Heritage Aggregates Product Line: (2) Mid-America
Group (1.2%) 1.9% (4.8%) 2.5% Southeast Group (6.7%) 0.4% (9.4%)
3.0% West Group (0.5%) 2.8% (2.6%) 5.3% Heritage Aggregates
Operations (1.6%) 1.8% (4.6%) 3.2% Aggregates Product Line (3)
(1.6%) 1.7% (4.6%) 3.3%
Three Months Ended Six
Months Ended June 30, June 30, Shipments
(tons in thousands)
2013 2012 2013 2012
Heritage Aggregates Product Line: (2) Mid-America
Group 16,573 16,774 25,215 26,474 Southeast Group 4,273 4,579 8,093
8,935 West Group 13,703 13,767 24,020 24,654 Heritage Aggregates
Operations 34,549 35,120 57,328 60,063 Acquisitions 24 - 24 -
Divestitures (4) 1 10 2 33 Aggregates Product Line (3) 34,574
35,130 57,354 60,096 (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 Six
Months Ended June 30, June 30, 2013
2012 2013 2012 Unit Shipments by Product
Line (in thousands): Aggregates tons - external
customers 33,286 33,906 55,407 58,125 Internal aggregates tons used
in other product lines 1,288 1,224 1,947 1,971 Total aggregates
tons 34,574 35,130 57,354 60,096 Asphalt tons -
external customers 382 468 608 791 Internal asphalt tons used in
road paving business 461 399 496 486 Total asphalt tons 843 867
1,104 1,277 Ready Mixed Concrete - cubic yards 436
377 765 644
Average unit sales price by product line
(including internal sales): Aggregates $10.48/ton
$10.31/ton $10.67/ton $10.34/ton Asphalt $42.55/ton $40.80/ton
$42.51/ton $40.58/ton Ready Mixed Concrete $82.29/cubic yard
$76.01/cubic yard $82.04/cubic yard $75.62/cubic yard
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 and
six months ended June 30, 2013 and 2012, 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 Accounting Principles
Three Months Ended Six Months Ended
June 30, June 30, 2013 2012 2013
2012 Gross profit $ 106.8 $ 102.1 $ 119.4
$ 125.9 Total revenues $ 562.7 $ 545.7
$ 947.7 $ 939.7 Gross margin 19.0 %
18.7 % 12.6 % 13.4 %
Three Months Ended
Six Months Ended June 30, June 30, Gross
Margin Excluding Freight and Delivery Revenues 2013
2012 2013 2012 Gross profit $ 106.8
$ 102.1 $ 119.4 $ 125.9 Total revenues
$ 562.7 $ 545.7 $ 947.7 $ 939.7 Less: Freight and delivery revenues
(54.0 ) (54.5 ) (93.9 ) (98.0 ) Net
sales $ 508.7 $ 491.2 $ 853.8 $ 841.7
Gross margin excluding freight and delivery revenues 21.0 %
20.8 % 14.0 % 15.0 %
Operating Margin in Accordance with
Generally Accepted Accounting Principles
Three Months Ended Six Months Ended
June 30, June 30, 2013 2012 2013
2012 Earnings from operations $ 69.4 $ 59.2 $
45.9 $ 23.9 Total revenues $ 562.7 $ 545.7
$ 947.7 $ 939.7 Operating margin 12.3 %
10.9 % 4.8 % 2.5 %
Three Months
Ended Six Months Ended Operating Margin Excluding
Freight and Delivery Revenues June 30, June 30,
2013 2012 2013 2012 Earnings from
operations $ 69.4 $ 59.2 $ 45.9 $ 23.9
Total revenues $ 562.7 $ 545.7 $ 947.7 $ 939.7 Less: Freight and
delivery revenues (54.0 ) (54.5 ) (93.9 )
(98.0 ) Net sales $ 508.7 $ 491.2 $ 853.8
$ 841.7 Operating margin excluding freight and
delivery revenues 13.6 % 12.1 % 5.4 %
2.8 %
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 and six months ended June 30, 2013 and 2012.
Three Months Ended Six Months Ended June
30, June 30, 2013 2012 2013
2012 Earnings Before Interest, Income Taxes, Depreciation,
Depletion and Amortization (EBITDA) $ 112.5 $ 102.5 $
132.3 $ 113.1
A Reconciliation of
Net Earnings Attributable to Martin Marietta Materials, Inc. to
EBITDA is as follows: Three Months Ended Six
Months Ended June 30, June 30, 2013
2012 2013 2012 Net Earnings Attributable to
Martin Marietta Materials, Inc. $ 41.3 $ 36.8 $ 13.5 $ - Add back:
Interest Expense 13.6 13.3 27.1 26.7 Income Tax Expense for
Controlling Interests 15.1 8.6 6.6 (1.4 ) Depreciation, Depletion
and Amortization Expense 42.5 43.8
85.1 87.8 EBITDA $ 112.5 $ 102.5
$ 132.3 $ 113.1
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 June 30, 2013, 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 June 30, 2013.
For supporting calculations, refer to
Corporation's website at
www.martinmarietta.com.
Twelve-Month Period
July 1, 2012 to
June 30, 2013
Earnings from continuing operations attributable to Martin Marietta
Materials, Inc. $ 97.9 Add back: Interest expense 53.7 Income tax
expense 24.7 Depreciation, depletion and amortization expense 170.0
Stock-based compensation expense 7.2 Deduct: Interest income
(0.3 ) Consolidated EBITDA, as defined $ 353.2
Consolidated Debt, including debt guaranteed by the Corporation, at
June 30, 2013 $ 1,117.8 Less: Unrestricted cash and cash
equivalents in excess of $50 at June 30, 2013 -
Consolidated Net Debt, as defined, at June 30, 2013 $ 1,117.8
Consolidated Debt-to-Consolidated EBITDA,
as defined, at June 30, 2013 for the trailing twelve-month
EBITDA
3.17 times
MLM-E
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