Company Delivers Double-Digit Revenue and
Earnings GrowthEarnings Per Diluted Share of $1.54, Up 13%;
Consolidated Net Sales Increase 12%Aggregates Volume and
Pricing Growth in All Reportable SegmentsSpecialty Products
Posts Third-Quarter Record Net Sales and Earnings from
Operations
Martin Marietta Materials, Inc. (NYSE:MLM) today announced its
results for the third quarter and nine months ended September 30,
2013.
Ward Nye, President and CEO of Martin Marietta Materials,
stated: “We are pleased to report a double-digit increase in both
revenues and earnings in the third quarter of 2013. Our performance
was driven largely by the ongoing recovery in private-sector
construction activity, as well as solid execution of our long-term
strategic plans and diligent management of our cost structure. I am
especially proud of the fact that our Company achieved these strong
results despite the continued public-sector construction headwinds.
The combination of a 12% increase in consolidated net sales over
the prior-year quarter and our ongoing focus on controlling costs
resulted in a 13% increase in earnings per diluted share. These
results reflect new third-quarter records for both net sales and
earnings from operations in the Specialty Products business, as
well as volume and pricing growth in the aggregates product
line.”
The Aggregates business experienced volume and pricing increases
from all reportable segments and pricing growth in all product
lines. An 8.1% increase in aggregates product line shipments led to
increased operating leverage, as illustrated by a 220-basis-point
improvement in the Aggregates business’ operating margin (excluding
freight and delivery revenues). The Specialty Products business
benefitted from strong dolomitic lime sales, including the capacity
expansion from the recently completed kiln in Ohio, which led to a
13% increase in the segment’s net sales.
“We are encouraged by significant improvements in our markets
and believe, as do most third-party forecasters, that significant
upside potential remains in both the residential and nonresidential
construction segments. Additionally, our Aggregates business will
benefit from the current boom in shale gas production, as well as
planned follow-on development. We are confident that these trends
bode especially well for our business,” Nye said.
Notable Items (all comparisons, unless noted, are versus the
prior-year third quarter)
- Earnings per diluted share of $1.54
compared with $1.36
- Record consolidated net sales of $600.5
million compared with $537.5 million
- Aggregates product line volume up 8.1%;
aggregates product line pricing up 2.3%
- Consolidated gross margin (excluding
freight and delivery revenues) of 23.8%, up 70 basis points
- Specialty Products third-quarter record
net sales of $55.8 million and earnings from operations of $17.3
million
- Consolidated selling, general and
administrative (“SG&A”) expenses of $37.1 million, or 6.2% of
net sales
- Consolidated earnings from operations
of $108.8 million compared with $91.5 million
- Acquired and successfully integrated
three aggregates quarries in Atlanta, Georgia
MANAGEMENT COMMENTARY (ALL COMPARISONS, UNLESS NOTED, ARE
VERSUS THE PRIOR-YEAR THIRD QUARTER)
Nye continued, “Each of the Aggregates business’ reportable
segments posted aggregates product line volume growth, led by an
8.1% increase in the Mid-America Group. Consistent with trends
noted earlier in the year, private-sector construction generated
this growth. The nonresidential market, which comprised 30% of
third-quarter aggregates shipments, increased 19% and growth was
notable in both commercial construction and the energy sector. The
residential market achieved volume growth of 15% and accounted for
13% of our quarterly shipments. Housing permits and starts, key
indicators for residential construction activity, continue to have
strong year-over-year improvement, which should help sustain the
recovery in this market. The ChemRock/Rail market, 11% of
aggregates volumes, reported higher ballast shipments and increased
13% over the prior-year quarter.
“Shipments to the infrastructure end-use market, which
represented the remaining 46% of our aggregates product line
business, were essentially flat with the prior-year quarter.
Federal budget and deficit disputes and the uncertainty over future
highway funding levels beyond the September 2014 expiration of the
Moving Ahead for Progress in the 21st Century Act, or MAP-21, have
contributed to the reluctance of many states and municipalities to
commit to large-scale projects. Additionally, while awards under
the Transportation Infrastructure Finance and Innovation Act
(TIFIA) component of MAP-21 have the ability to leverage up to $50
billion in financing for transportation projects of either national
or regional significance, they continue to move at a slower pace
versus earlier expectations with only two projects being awarded.
While we still expect TIFIA to benefit several of our major markets
– namely Texas, North Carolina and Florida – we do not expect any
meaningful impact before the second half of 2014, and more notably
in 2015.
“Despite federal-level funding delays and concerns, we are
encouraged by states’ recognition of the importance of sustained
infrastructure investment. We have seen year-over-year growth in
highway contract awards and construction employment in several of
our key states, including Texas, Georgia, Colorado and Virginia. In
Georgia, three regions in the southern part of the state began
collecting a special-purpose local option sales tax on January 1,
2013. These monies are earmarked for transportation improvements,
and we expect the pace of projects funded by this tax to accelerate
as we move into 2014. Additionally, we anticipate a significant
reconstruction effort in Colorado as a result of the recent
flooding. We are well-positioned to work with the local Colorado
communities to repair and/or replace hundreds of miles of
washed-out roads and the significant number of destroyed homes,
businesses and bridges.
“Pricing momentum in the Aggregates business continued with each
of our product lines reporting growth. Importantly, for the third
quarter in a row, each of our reportable segments achieved pricing
improvement in the aggregates product line, enabling us to achieve
an overall increase of 2.3%. Our vertically integrated businesses
also achieved pricing growth, with the ready mixed concrete and
asphalt product lines reporting increases of 7.0% and 1.6%,
respectively.
“We were pleased to leverage our sales growth into a
70-basis-point expansion of consolidated gross margin (excluding
freight and delivery revenues). In fact, we achieved gross margin
improvement in each of our Aggregates business’ three reportable
segments, with the Southeast and West Groups each reporting a
200-basis-point expansion. Growth in the Mid-America Group was led
by the Mid-Atlantic Division, which once again leveraged an
increase in aggregates shipments into an incremental gross margin
(excluding freight and delivery revenues) exceeding our publicly
stated expectations.
“SG&A expenses were 6.2% of net sales, a 20-basis-point
increase compared with the prior-year quarter. On an absolute
basis, SG&A expenses increased $5.0 million, in part due to
higher pension and an information systems upgrade we successfully
completed in October. Our implementation team did an outstanding
job on this multi-year project while maintaining disciplined focus
on their recurring responsibilities.
“In July, we completed an acquisition of three aggregates
quarries in the greater Atlanta, Georgia, area. This transaction
added 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.
“Specialty Products continued its strong performance and
generated record third-quarter net sales of $55.8 million, a 13%
increase over the prior-year quarter. Sales growth was attributable
to the dolomitic lime product line, reflecting the contribution
from the Woodville kiln that became operational during the fourth
quarter of 2012. While margins were negatively affected by a
planned kiln outage for maintenance and higher coal costs, the
business generated a third-quarter record $17.3 million in earnings
from operations.
LIQUIDITY AND CAPITAL RESOURCES
“Cash provided by operating activities for the first nine months
of 2013 was $165.6 million compared with $122.0 million in 2012.
The improvement is attributable to the absence of significant
business development costs incurred 2012.
“At September 30, 2013, our ratio of consolidated debt to
consolidated EBITDA, as defined, for the trailing twelve months was
3.06 times, in compliance with our covenant.
FULL-YEAR 2013 AND PRELIMINARY 2014 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 in 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 and has shown consistent growth over the last year.
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 high
single-digit volume growth. By contrast, the weather-related
slowdown in aggregates shipments experienced in the first half of
the year, coupled with the hesitancy created by the uncertainty of
future federal highway funding levels, 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, dependent on fourth-quarter weather, we
anticipate aggregates product line shipments will be flat to
slightly up as compared with 2012 levels. We currently expect
aggregates product line pricing will increase 2% to 4% for the full
year compared with 2012. A variety of factors beyond our direct
control may continue to exert pressure on our volumes, and our
forecasted pricing increase will not be uniform across the
company.
“We expect our vertically integrated businesses to generate
between $335 million and $355 million of net sales and $18 million
to $20 million of gross profit.
“Aggregates product line direct production costs per ton should
be up slightly compared 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 remain relatively flat
compared with 2012.
“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 compared
with 2012. Our effective tax rate is expected to approximate 26%,
excluding discrete events. Capital expenditures are forecast at
$155 million.
“We have started framing a preliminary 2014 outlook for our
end-use markets and, while the current environment in Washington,
D.C., reduces clarity, we have formed an initial view based on our
internal observations in conjunction with McGraw Hill
Construction’s recent economic forecast. We currently expect
shipments to the infrastructure end-use market to increase
slightly. We anticipate our nonresidential end-use market to
increase in the mid-to-high single digits, led by strength in the
commercial component and energy sector. We believe the recent
positive 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 up low single
digits compared with 2013.”
RISKS TO OUTLOOK
The full-year 2013 and preliminary 2014 outlook include
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 transportation investment is
mostly exempt from spending cuts, the impact of sequester may
increase in future periods. While both 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. In addition, the prolonged government
shutdown may further erode consumer confidence, which may
negatively impact investment in construction projects. 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 the uncertainty as to the timing and
funding levels of the domestic farm bill and 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
third-quarter 2013 earnings conference call later today (November
7, 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 94574659.
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 slowdown in energy-related
drilling activity; a slowdown in residential construction recovery;
a reduction in shipments due to decline in funding under the
domestic farm bill; 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 Nine Months
Ended September 30, September 30, 2013
2012 2013 2012 Net sales $ 600.5 $ 537.5 $
1,451.8 $ 1,376.9 Freight and delivery revenues 64.8
54.8 158.7 152.7 Total
revenues 665.3 592.3 1,610.5
1,529.6 Cost of sales 457.4 413.5
1,188.9 1,126.5 Freight and delivery costs 64.8
54.8 158.7 152.7 Total
cost of revenues 522.2 468.3
1,347.6 1,279.2 Gross profit 143.1 124.0 262.9
250.4 Selling, general and administrative expenses 37.1 32.1
112.6 100.4 Business development costs 0.1 - 0.7 35.1 Other
operating (income) and expenses, net (2.9 ) 0.4
(5.6 ) (1.0 ) Earnings from operations 108.8
91.5 155.2 115.9 Interest expense 13.5 13.2 40.6 40.0 Other
nonoperating expenses and (income), net 0.1
0.6 0.3 (1.4 ) Earnings from continuing
operations before taxes on income 95.2 77.7 114.3 77.3 Income tax
expense 22.9 13.7 29.6
12.5 Earnings from continuing operations 72.3 64.0
84.7 64.8
Loss on discontinued operations, net of
related tax benefit of $0.2, $0.4, $0.3 and $0.5, respectively
(0.3 ) (0.3 ) (0.4 ) (1.0 ) Consolidated net earnings 72.0
63.7 84.3 63.8 Less: Net earnings (loss) attributable to
noncontrolling interests 0.2 0.8
(1.0 ) 0.9 Net earnings attributable to Martin
Marietta Materials, Inc. $ 71.8 $ 62.9 $ 85.3
$ 62.9 Net earnings (loss) attributable to Martin
Marietta Materials, Inc. per common share: Basic from continuing
operations attributable to common shareholders $ 1.56 $ 1.37 $ 1.85
$ 1.39 Discontinued operations attributable to common shareholders
(0.01 ) (0.01 ) (0.01 ) (0.02 ) $ 1.55
$ 1.36 $ 1.84 $ 1.37 Diluted
from continuing operations attributable to common shareholders $
1.55 $ 1.37 $ 1.85 $ 1.38 Discontinued operations attributable to
common shareholders (0.01 ) (0.01 ) (0.01 )
(0.02 ) $ 1.54 $ 1.36 $ 1.84 $ 1.36
Cash dividends per common share $ 0.40 $ 0.40
$ 1.20 $ 1.20 Weighted-average common
shares outstanding: Basic 46.2 45.9
46.1 45.8 Diluted 46.3
46.0 46.3 45.9
MARTIN
MARIETTA MATERIALS, INC. Unaudited Financial Highlights
(In millions)
Three Months Ended Nine Months
Ended September 30, September 30, 2013
2012 2013 2012 Net sales: Aggregates Business:
Mid-America Group $ 216.4 $ 194.2 $ 509.0 $ 493.5 Southeast Group
64.9 57.0 171.5 171.0 West Group 263.4 236.9
603.8 560.8 Total Aggregates
Business 544.7 488.1 1,284.3 1,225.3 Specialty Products 55.8
49.4 167.5 151.6
Total $ 600.5 $ 537.5 $ 1,451.8 $ 1,376.9
Gross profit (loss): Aggregates Business: Mid-America
Group $ 77.0 $ 68.4 $ 136.6 $ 131.7 Southeast Group 2.6 1.1 (2.9 )
0.3 West Group 43.3 34.1 69.9
60.5 Total Aggregates Business 122.9 103.6
203.6 192.5 Specialty Products 19.9 19.7 60.8 59.1 Corporate
0.3 0.7 (1.5 ) (1.2 ) Total $
143.1 $ 124.0 $ 262.9 $ 250.4
Selling, general and administrative expenses: Aggregates Business:
Mid-America Group $ 12.5 $ 12.9 $ 37.4 $ 39.9 Southeast Group 4.4
4.3 13.4 13.7 West Group 11.5 11.2
34.5 33.5 Total Aggregates Business
28.4 28.4 85.3 87.1 Specialty Products 2.6 2.2 7.6 6.9 Corporate
6.1 1.5 19.7 6.4
Total $ 37.1 $ 32.1 $ 112.6 $ 100.4
Earnings (Loss) from operations: Aggregates Business:
Mid-America Group $ 66.4 $ 56.4 $ 102.3 $ 95.0 Southeast Group (1.4
) (3.5 ) (14.9 ) (15.0 ) West Group 32.3 23.7
38.4 29.2 Total Aggregates
Business 97.3 76.6 125.8 109.2 Specialty Products 17.3 17.0 53.1
52.7 Corporate (5.8 ) (2.1 ) (23.7 )
(46.0 ) Total $ 108.8 $ 91.5 $ 155.2 $ 115.9
MARTIN MARIETTA
MATERIALS, INC. Unaudited Financial Highlights (In
millions)
Three Months Ended Nine Months Ended
September 30, September 30, 2013 2012
2013 2012 Net sales by product line:
Aggregates Business: Aggregates $ 411.2 $ 371.4 $ 1,016.3 $ 985.6
Asphalt 23.8 28.9 52.2 61.7 Ready Mixed Concrete 41.8 31.5 103.4
78.7 Road Paving 67.9 56.3 112.4
99.3 Total Aggregates Business 544.7 488.1 1,284.3 1,225.3
Specialty Products Business 55.8 49.4 167.5
151.6 Total $ 600.5 $ 537.5 $ 1,451.8 $
1,376.9 Gross profit (loss) by product line:
Aggregates Business: Aggregates $ 108.2 $ 94.5 $ 189.2 $ 182.9
Asphalt 7.3 6.3 9.8 9.0 Ready Mixed Concrete 3.1 0.5 4.9 0.4 Road
Paving 4.3 2.3 (0.3 ) 0.2 Total
Aggregates Business 122.9 103.6 203.6 192.5 Specialty Products
Business 19.9 19.7 60.8 59.1 Corporate 0.3 0.7
(1.5 ) (1.2 ) Total $ 143.1 $ 124.0 $ 262.9 $ 250.4
Depreciation $ 41.0 $ 41.5 $ 122.1 $ 125.5
Depletion 1.7 1.5 3.9 3.5 Amortization 1.4 1.2
4.1 4.0 $ 44.1 $ 44.2 $ 130.1 $ 133.0
MARTIN MARIETTA MATERIALS,
INC. Balance Sheet Data (In millions)
September 30, December 31, September 30,
2013 2012 2012 (Unaudited) (Audited)
(Unaudited) ASSETS Cash and cash equivalents $ 57.2 $ 25.4 $ 35.4
Accounts receivable, net 331.0 224.1 296.9 Inventories, net 350.4
332.3 335.1 Other current assets 107.1 118.6 117.7 Property, plant
and equipment, net 1,782.6 1,753.2 1,750.9 Intangible assets, net
665.7 666.6 667.3 Other noncurrent assets 43.1 40.7 39.9 Total
assets $ 3,337.1 $ 3,160.9 $ 3,243.2 LIABILITIES AND
EQUITY Current maturities of long-term debt and short-term
facilities $ 6.2 $ 5.7 $ 6.7 Other current liabilities 220.2 167.6
210.4 Long-term debt (excluding current maturities) 1,107.2 1,042.2
1,092.1 Other noncurrent liabilities 504.6 495.1 464.0 Total equity
1,498.9 1,450.3 1,470.0 Total liabilities and
equity $ 3,337.1 $ 3,160.9 $ 3,243.2
MARTIN
MARIETTA MATERIALS, INC. Unaudited Statements of Cash
Flows (In millions)
Nine Months Ended September
30, 2013 2012 Operating activities: Consolidated
net earnings $ 84.3 $ 63.8 Adjustments to reconcile consolidated
net earnings to net cash provided by operating activities:
Depreciation, depletion and amortization 130.1 133.0 Stock-based
compensation expense 5.4 5.9 Gains on divestitures and sales of
assets (1.0 ) (0.9 ) Deferred income taxes 19.2 11.6 Excess tax
benefits from stock-based compensation (2.0 ) - Changes in
operating assets and liabilities: (0.8 ) 2.3 Changes in operating
assets and liabilities: Accounts receivable, net (108.1 ) (93.2 )
Inventories, net (14.8 ) (12.5 ) Accounts payable 27.7 7.1 Other
assets and liabilities, net 25.6 4.9
Net cash provided by operating activities 165.6
122.0 Investing activities: Additions
to property, plant and equipment (102.3 ) (105.9 ) Acquisitions,
net (64.4 ) (0.1 ) Proceeds from divestitures and sales of assets
3.1 7.8 Loan to affiliate (3.4 ) - Net
cash used for investing activities (167.0 ) (98.2 )
Financing activities: Borrowings of long-term debt 355.5
181.0 Repayments of long-term debt (290.2 ) (142.6 ) Change in bank
overdraft 10.4 0.1 Dividends paid (55.6 ) (55.3 ) Debt issue costs
(0.5 ) (0.3 ) Issuances of common stock 11.6 3.5 Excess tax
benefits from stock-based compensation 2.0 - Distributions to
owners of noncontrolling interests - (0.8 )
Net cash provided by (used for) financing activities
33.2 (14.4 ) Net increase in cash and cash
equivalents 31.8 9.4 Cash and cash equivalents, beginning of period
25.4 26.0 Cash and cash
equivalents, end of period $ 57.2 $ 35.4
MARTIN MARIETTA MATERIALS, INC. Unaudited
Operational Highlights Three Months Ended Nine
Months Ended September 30, 2013 September 30,
2013 Volume Pricing Volume Pricing
Volume/Pricing Variance (1) Heritage Aggregates
Product Line: (2) Mid-America Group 8.1 % 2.8 % 0.4 %
2.6 % Southeast Group 4.8 % 1.3 % (4.7 %) 2.4 % West Group 6.5 %
1.7 % 0.8 % 3.9 % Heritage Aggregates Operations 7.0 % 2.2 % (0.2
%) 2.8 % Aggregates Product Line (3) 8.1 % 2.3 % 0.2 % 2.9 %
Three Months Ended Nine Months Ended September
30, September 30, Shipments (tons in thousands)
2013 2012 2013 2012 Heritage
Aggregates Product Line: (2) Mid-America Group 19,172
17,742 44,387 44,216 Southeast Group 4,612 4,399 12,705 13,334 West
Group 15,468 14,528 39,489 39,183
Heritage Aggregates Operations 39,252 36,669 96,581 96,733
Acquisitions 379 - 402 - Divestitures (4) - 5 3
36 Aggregates Product Line (3) 39,631 36,674
96,986 96,769 (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 Nine Months
Ended September 30, September 30, 2013
2012 2013 2012 Unit Shipments by Product
Line (in thousands): Aggregates tons - external
customers 38,109 35,254 93,516 93,380 Internal aggregates tons used
in other product lines 1,522 1,420 3,470 3,389
Total aggregates tons 39,631 36,674 96,986
96,769 Asphalt tons - external
customers 464 538 1,072 1,329 Internal asphalt tons used in road
paving business 761 717 1,257 1,203
Total asphalt tons 1,225 1,255 2,329 2,532
Ready Mixed Concrete - cubic yards 496
418 1,261 1,062
Average unit sales
price by product line (including internal sales):
Aggregates $10.55/ton $10.32/ton $10.62/ton $10.33/ton Asphalt
$41.76/ton $41.11/ton $42.11/ton $40.84/ton Ready Mixed Concrete
$83.44/cubic yard $77.99/cubic yard $82.59/cubic yard $76.55/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 nine months ended September 30, 2013 and
2012, in accordance with GAAP and reconciliations of the ratios as
percentages of total revenues to percentages of net sales:
CONSOLIDATED Gross Margin in Accordance
with Generally Accepted Three Months Ended Nine
Months Ended Accounting Principles September 30,
September 30, 2013 2012 2013
2012 Gross profit $ 143.1 $ 124.0 $ 262.9
$ 250.4 Total revenues $ 665.3 $ 592.3
$ 1,610.5 $ 1,529.6 Gross margin 21.5 %
20.9 % 16.3 % 16.4 %
Three Months Ended
Nine Months Ended September 30, September 30,
Gross Margin Excluding Freight and Delivery Revenues
2013 2012 2013 2012 Gross profit
$ 143.1 $ 124.0 $ 262.9 $ 250.4 Total
revenues $ 665.3 $ 592.3 $ 1,610.5 $ 1,529.6 Less: Freight and
delivery revenues (64.8 ) (54.8 ) (158.7 )
(152.7 ) Net sales $ 600.5 $ 537.5 $ 1,451.8
$ 1,376.9 Gross margin excluding freight and delivery
revenues 23.8 % 23.1 % 18.1 % 18.2 %
Operating Margin in Accordance with Generally
Accepted Three Months Ended Nine Months Ended
Accounting Principles September 30, September
30, 2013 2012 2013 2012 Earnings
from operations $ 108.8 $ 91.5 $ 155.2 $ 115.9
Total revenues $ 665.3 $ 592.3 $ 1,610.5
$ 1,529.6 Operating margin 16.4 % 15.5
% 9.6 % 7.6 %
Three Months Ended
Nine Months Ended Operating Margin Excluding Freight and
Delivery Revenues September 30, September 30,
2013 2012 2013 2012 Earnings from
operations $ 108.8 $ 91.5 $ 155.2 $ 115.9
Total revenues $ 665.3 $ 592.3 $ 1,610.5 $ 1,529.6 Less:
Freight and delivery revenues (64.8 ) (54.8 )
(158.7 ) (152.7 ) Net sales $ 600.5 $ 537.5 $
1,451.8 $ 1,376.9 Operating margin excluding freight
and delivery revenues 18.1 % 17.0 % 10.7 %
8.4 %
AGGREGATES BUSINESS
Operating Margin in Accordance with Generally Accepted
Three Months Ended Nine Months Ended Accounting
Principles September 30, September 30,
Earnings from operations $ 97.3 $ 76.6 $ 125.8
$ 109.2 Total revenues $ 604.7 $ 538.2 $
1,428.4 $ 1,364.0 Operating margin 16.1 %
14.2 % 8.8 % 8.0 %
Three Months
Ended Nine Months Ended Operating Margin Excluding
Freight and Delivery Revenues September 30, September
30, Earnings from operations $ 97.3 $ 76.6
$ 125.8 $ 109.2 Total revenues $ 604.7 $ 538.2 $
1,428.4 $ 1,364.0 Less: Freight and delivery revenues (60.0
) (50.1 ) (144.1 ) (138.7 ) Net sales $ 544.7
$ 488.1 $ 1,284.3 $ 1,225.3 Operating
margin excluding freight and delivery revenues 17.9 %
15.7 % 9.8 % 8.9 %
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 3.50 times
as of September 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 September 30, 2013. For supporting
calculations, refer to Corporation's website at
www.martinmarietta.com.
Twelve-Month Period October 1, 2012 to September
30, 2013 Earnings from continuing operations attributable to
Martin Marietta Materials, Inc. $ 106.8 Add back: Interest expense
54.0 Income tax expense 33.9 Depreciation, depletion and
amortization expense 169.6 Stock-based compensation expense 7.2
Deduct: Interest income (0.3 ) Consolidated EBITDA, as
defined $ 371.2 Consolidated Debt, including debt
guaranteed by the Corporation, at September 30, 2013 $ 1,135.3
Less: Unrestricted cash and cash equivalents in excess of $50 at
September 30, 2013 - Consolidated Net Debt, as
defined, at September 30, 2013 $ 1,135.3
Consolidated Debt-to-Consolidated EBITDA,
as defined, at September 30, 2013 for the trailing twelve-month
EBITDA
3.06 times
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 nine months ended September 30, 2013 and 2012.
Three Months Ended Nine Months
Ended September 30, September 30, 2013
2012 2013 2012 Earnings Before
Interest, Income Taxes, Depreciation, Depletion and Amortization
(EBITDA) $ 151.6 $ 133.3 $ 283.9 $ 246.4
A
Reconciliation of Net Earnings Attributable to Martin Marietta
Materials, Inc. to EBITDA is as follows: Three Months
Ended Nine Months Ended September 30,
September 30, 2013 2012 2013
2012 Net Earnings Attributable to Martin Marietta Materials,
Inc. $ 71.8 $ 62.9 $ 85.3 $ 62.9 Add back: Interest Expense 13.5
13.2 40.6 40.0 Income Tax Expense for Controlling Interests 22.7
13.3 29.4 11.9 Depreciation, Depletion and Amortization Expense
43.6 43.9 128.6 131.6 EBITDA $ 151.6 $
133.3 $ 283.9 $ 246.4
MLM-E
Martin Marietta Materials, Inc.Anne H. Lloyd,
919-783-4660Executive Vice President and ChiefFinancial
Officerwww.martinmarietta.com
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