Quarterly Earnings Per Diluted Share of
$0.77, Up 67%; Fourth-Quarter Net Sales Increase of 8% Leads to
Gross Margin Expansion of 380 Basis Points
Aggregates Product Line Pricing Growth in
All Reportable Segments; Specialty Products Posts Quarterly Records
for Net Sales and Earnings from Operations
Martin Marietta Materials, Inc. (NYSE:MLM) today reported its
results for the fourth quarter and year ended December 31,
2013.
Ward Nye, President and CEO of Martin Marietta Materials,
stated: “We are pleased to finish a successful 2013 with a solid
fourth quarter. Strong performance by our Aggregates and Specialty
Products businesses contributed to quarterly earnings per diluted
share of $0.77, a 67% increase over the prior-year quarter. Our
nonresidential and residential aggregates product line shipments
experienced double-digit volume growth as a result of focused
execution and our efforts to position the Company to benefit from
the continued recovery in private-sector construction. The
Aggregates business also achieved pricing growth in each reportable
segment. When coupled with disciplined management of our cost
profile and record performance by our Specialty Products business,
this led to an incremental consolidated gross margin (excluding
freight and delivery revenues) for the quarter of 69%. Notably, our
consolidated gross margin (excluding freight and delivery revenues)
expanded 380 basis points.
“The Aggregates business reported a 3.4% quarterly increase in
aggregates product line pricing and notable growth in both pricing
and volume in the ready mixed concrete product line, which led to a
7% increase in net sales and a 250-basis-point improvement in gross
margin (excluding freight and delivery revenues). Aggregates
product line shipments were down slightly compared with the
prior-year quarter, as volume growth in the private-sector was
offset by decreased shipments to the public-sector. Net sales for
the Specialty Products business increased 15%, reflecting the
Woodville, Ohio kiln expansion in the dolomitic lime business,
marketing initiatives in the chemicals business and sound pricing
gains in key product lines.
“As we begin 2014, we are encouraged by numerous macro-economic
indicators, including employment growth, which suggest increased
construction activity going forward. We expect private-sector
construction to benefit from significant shale energy projects,
improvements in general nonresidential construction and further
recovery in the housing market. Additionally, we also foresee some
modest growth in public sector projects. Following years of
underinvestment at the federal level, growth in state-level
infrastructure funding initiatives should stimulate public-sector
activity. In summary, we believe we are well positioned to capture
these opportunities across our markets and build on the momentum
created throughout 2013,” Nye said.
NOTABLE ITEMS FOR THE QUARTER (ALL COMPARISONS ARE VERSUS THE
PRIOR-YEAR FOURTH QUARTER)
- Earnings per diluted share of $0.77
compared with $0.46
- Consolidated net sales of $491.4
million compared with $456.0 million
- Aggregates product line pricing
increase of 3.4%; volume decline of 0.4%
- Specialty Products record net sales of
$58.1 million and record earnings from operations of $20.4
million
- Consolidated gross margin (excluding
freight and delivery revenues) of 20.6%, up 380 basis points
- Consolidated selling, general and
administrative expenses (SG&A) decreased 70 basis points as a
percentage of net sales
- Consolidated earnings from operations
of $62.8 million compared with $40.2 million
NOTABLE ITEMS FOR THE YEAR (ALL COMPARISONS ARE VERSUS
2012)
- Earnings per diluted share of $2.61
compared with $1.83 (2012 includes business development expenses of
$0.46 per diluted share)
- Net sales of $1.943 billion compared
with $1.833 billion
- Aggregates product line pricing up
3.0%; volume flat
- Specialty Products record net sales of
$225.6 million and record earnings from operations of $73.5
million
- Consolidated gross margin (excluding
freight and delivery revenues) of 18.7%, up 90 basis points
- Consolidated SG&A up 10 basis
points as a percentage of net sales
- Consolidated earnings from operations
of $218.0 million compared with $156.2 million
MANAGEMENT COMMENTARY (ALL COMPARISONS, UNLESS NOTED, ARE
VERSUS THE PRIOR-YEAR FOURTH QUARTER)
Nye continued, “The private sector continues to drive
construction growth. Looking closely at our fourth-quarter results,
the nonresidential market, which comprised 33% of fourth-quarter
aggregates product line shipments and increased 11%, was a major
contributor. We saw notable growth in both commercial construction
and the energy sector as we continue to benefit from the investment
in shale energy. Looking forward, we anticipate additional
opportunities as developmental activity moves into downstream
projects.
“The residential market achieved volume growth of 21% and
accounted for 15% of our quarterly shipments, in line with
historical levels. Housing permits and starts, key indicators for
residential construction activity, continue to meaningfully improve
on a year-over-year basis. Housing starts for the year were up 18%
over 2012, and the rate of starts significantly exceeded
completions. The ChemRock/Rail market, which represented 10% of
aggregates volumes, decreased 12%, partially as a result of a
reduction in agricultural lime shipments due to wetter and colder
weather and lower ballast volumes. Shipments to the infrastructure
end-use market, which represented the remaining 42% of our
aggregates product line, decreased 10%, driven by the completion of
several large road projects in Indiana and Iowa and poor weather in
Texas.
“The Federal government shutdown in October, as well as
questions concerning future government spending policy negatively
affected public-sector demand. There is continued uncertainty in
long-term funding beyond the September 2014 expiration of the
Moving Ahead for Progress in the 21st Century Act, or MAP-21.
However, we remain encouraged by the anticipated impact of the
Transportation Infrastructure Finance and Innovation Act (TIFIA)
component of MAP-21 which has the ability to leverage up to $50
billion in financing for transportation projects of either national
or regional significance. While awards continue to move at a slower
pace versus earlier expectations, we still expect TIFIA to benefit
several of our major markets – namely Texas, North Carolina and
Florida – in 2014 and likely more notably in 2015.
“Not surprisingly, we are seeing growth in state-level funding
initiatives as states and municipalities are taking actions to
address their infrastructure needs in this period of federal
funding uncertainty. For example, Texas, in addition to filing
applications for nearly $7 billion in funding assistance under
TIFIA, has a November ballot initiative that, if passed, would
provide an additional $1 billion in funding for highway projects.
Additionally, San Antonio recently announced an $825 million
highway initiative that will include the area’s first toll-road
project. Colorado passed legislation to allocate $450 million for
emergency road repairs following flood damage incurred in
September, of which $110 million will be provided by the U.S.
Department of Transportation. In Georgia, three regions within the
state are collecting a special-purpose local option sales tax
earmarked for transportation improvements. We expect projects
funded by this tax to accelerate during 2014. Anecdotally, these
examples demonstrate why we believe infrastructure spending on
local levels will continue to grow.
“We were successful in extending our pricing momentum in the
Aggregates business with each of our reportable segments reporting
growth. Pricing improvement was strongest in the Mid-America Group,
where a 5.2% increase was led by our North Carolina operations.
Importantly, for each quarter of 2013, all reportable segments
achieved aggregates product line pricing improvement, enabling us
to achieve an overall annual increase of 3.0%. For the quarter, the
ready mixed concrete business achieved pricing growth of 9.8% while
the asphalt product line reported a decrease of 4.8%.
“SG&A expenses were 7.6% of net sales, a decrease of
70-basis-points. On an absolute basis, SG&A expenses declined
$0.5 million. Consolidated earnings from operations were $62.8
million, an improvement of 56%.
“Specialty Products continued its strong performance and
generated record fourth-quarter net sales of $58.1 million. We
controlled production costs and increased the business’ gross
margin (excluding freight and delivery revenues) by 360 basis
points. Fourth-quarter earnings from operations were a record $20.4
million, an increase of 29%.
LIQUIDITY AND CAPITAL RESOURCES
“Cash provided by operating activities for full-year 2013 was
$309.0 million compared with $222.7 million in 2012. The
improvement is attributable to earnings growth, due in part to the
absence of significant business development costs incurred during
2012.
“During the quarter, we renegotiated our revolving line of
credit and term loan and extended the expiration of these
facilities to 2018.
“At December 31, 2013, our ratio of consolidated debt to
consolidated EBITDA, as defined in our senior credit facility, for
the trailing twelve months was 2.67 times, in compliance with our
covenant.
2014 OUTLOOK
“We are encouraged by various positive trends in our business
and markets – especially in employment and private-sector
construction. Nonresidential construction is expected to grow in
both the heavy industrial and commercial sectors. Shale development
and related follow-on public and private construction activities
are anticipated to remain strong. Further, the commercial building
sector is expected to benefit from improved market fundamentals,
such as higher occupancies and rents, strengthened property values
and increased real estate lending. Based on these factors, we
anticipate that the nonresidential end-use market will increase in
the mid-to-high single digits. Residential construction should
continue to grow, driven by historically low mortgage rates, rising
housing prices and total annual housing starts, which are expected
to exceed one million units for the first time since 2007. We
believe these trends will lead to double-digit volume growth in
residential end-use shipments. For the public sector, authorized
highway funding from MAP-21 should increase slightly compared with
2013. Additionally, state initiatives to finance infrastructure
projects are expected to grow and continue to play a more critical
role in public-sector activity. Based on these trends and
expectations, we expect aggregates shipments to the infrastructure
end-use market to increase slightly. Finally, our ChemRock/Rail
end-use market is expected to have low single-digit growth compared
with 2013.
“Cumulatively, we anticipate aggregates product line shipments
will be up 4% to 5% compared with 2013 levels. We currently expect
aggregates product line pricing will increase 3% to 5% for the year
compared with 2013. 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
aggregates product line direct production cost per ton will
decrease slightly compared with 2013.
“We expect our vertically integrated businesses to generate
between $385 million and $405 million of net sales and $40 million
to $45 million of gross profit.
“SG&A expenses as a percentage of net sales are expected to
decline compared with 2013, driven in part by $7.9 million of
nonrecurring costs related primarily to the 2013 completion of our
information systems upgrade, as well as, lower pension costs.
“Net sales for the Specialty Products segment are expected to be
between $225 million and $235 million, generating $85 million to
$90 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 2013. Our effective tax rate is expected to approximate 29%,
excluding discrete events. Capital expenditures are forecast at
$155 million.”
RISKS TO OUTLOOK
The 2014 outlook include management’s assessment of the
likelihood of certain risk factors that will affect performance.
The most significant risks to the Corporation’s 2014 performance
will be Congress’ actions and timing surrounding the expiration of
MAP-21 in September and uncertainty over the funding mechanism for
the Highway Trust Fund. Further, additional government shutdown(s)
and the impact of The Patient Protection and Affordable Care Act
may further erode consumer confidence, which may negatively impact
investment in construction projects. 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. 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 and raw
material 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 the supply of 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.
The Corporation’s future performance is also exposed to risks
from tax reform at the federal and state levels.
CONFERENCE CALL INFORMATION
The Company will discuss its fourth-quarter 2013 earnings
results on a conference call and online web simulcast today
(January 28, 2014). The live broadcast of the Martin Marietta
Materials, Inc. conference call will begin at 8:30 a.m. Eastern
Time today. An online replay will be available approximately two
hours following the conclusion of the live broadcast. A link to
these events will be available at the Corporation’s website.
For those investors without online web access, the conference
call may also be accessed by calling (866) 610-1072, confirmation
number 51412630. For international participants, the call can be
accessed by calling (973) 935-2840 and using the same confirmation
number.
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,
Congress’ actions and timing surrounding the expiration of MAP-21
in September and uncertainty over the funding mechanism for the
Highway Trust Fund; 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,
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 a 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, and with respect to
the Specialty Products business, natural gas; 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.
Cautionary Statements Regarding Forward-Looking
Statements
Certain statements in this communication regarding the proposed
acquisition of TXI by Martin Marietta, the expected timetable for
completing the transaction, benefits and synergies of the
transaction, future opportunities for the combined company and
products and any other statements regarding Martin Marietta’s and
TXI’s future expectations, beliefs, plans, objectives, financial
conditions, assumptions or future events or performance that are
not historical facts are “forward-looking” statements made within
the meaning of Section 21E of the Securities Exchange Act of 1934.
These statements are often, but not always, made through the use of
words or phrases such as “may”, “believe,” “anticipate,” “could”,
“should,” “intend,” “plan,” “will,” “expect(s),” “estimate(s),”
“project(s),” “forecast(s)”, “positioned,” “strategy,” “outlook”
and similar expressions. All such forward-looking statements
involve estimates and assumptions that are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from the results expressed in the statements.
Among the key factors that could cause actual results to differ
materially from those projected in the forward-looking statements
are the following: the parties’ ability to consummate the
transaction; the conditions to the completion of the transaction,
including the receipt of approval of both Martin Marietta’s
shareholders and TXI’s stockholders; the regulatory approvals
required for the transaction not being obtained on the terms
expected or on the anticipated schedule; the parties’ ability to
meet expectations regarding the timing, completion and accounting
and tax treatments of the transaction; the possibility that the
parties may be unable to achieve expected synergies and operating
efficiencies in connection with the transaction within the expected
time-frames or at all and to successfully integrate TXI’s
operations into those of Martin Marietta; the integration of TXI’s
operations into those of Martin Marietta being more difficult,
time-consuming or costly than expected; operating costs, customer
loss and business disruption (including, without limitation,
difficulties in maintaining relationships with employees,
customers, clients or suppliers) being greater than expected
following the transaction; the retention of certain key employees
of TXI being difficult; Martin Marietta’s and TXI’s ability to
adapt its services to changes in technology or the marketplace;
Martin Marietta’s and TXI’s ability to maintain and grow its
relationship with its customers; levels of construction spending in
the markets; a decline in defense spending and the commercial
component of the nonresidential construction market and the
subsequent impact on construction activity; a slowdown in
residential construction recovery; unfavorable weather conditions;
a widespread decline in aggregates pricing; changes in the cost of
raw materials, fuel and energy and the availability and cost of
construction equipment in the United States; the timing and amount
of federal, state and local transportation and infrastructure
funding; the ability of states and/or other entities to finance
approved projects either with tax revenues or alternative financing
structures; and changes to and the impact of the laws, rules and
regulations (including environmental laws, rules and regulations)
that regulate Martin Marietta’s and TXI’s operations. Additional
information concerning these and other factors can be found in
Martin Marietta’s and TXI’s filings with the Securities and
Exchange Commission, including Martin Marietta’s and TXI’s most
recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K. Martin Marietta and TXI assume no
obligation to update or revise publicly the information in this
communication, whether as a result of new information, future
events or otherwise, except as otherwise required by law. Readers
are cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof.
Additional Information and Where to Find It
In connection with the proposed transaction between Martin
Marietta and TXI, Martin Marietta and TXI intend to file relevant
materials with the Securities and Exchange Commission, including a
Martin Marietta registration statement on Form S-4 that will
include a joint proxy statement of Martin Marietta and TXI that
also constitutes a prospectus of Martin Marietta. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT MARTIN MARIETTA, TXI AND THE PROPOSED TRANSACTION. The joint
proxy statement/prospectus and other documents relating to the
proposed transaction (when they are available) can be obtained free
of charge from the SEC’s website at www.sec.gov. These documents
(when they are available) can also be obtained free of charge from
Martin Marietta upon written request to the Corporate Secretary at
Martin Marietta Materials, Inc., 2710 Wycliff Road, Raleigh, NC
27607, telephone number (919) 783-4540 or from Martin Marietta’s
website, http://ir.martinmarietta.com or from TXI upon written
request to TXI at Investor Relations, Texas Industries, Inc., 1503
LBJ Freeway, Suite 400, Dallas, Texas 75234, telephone number (972)
647-6700 or from TXI’s website,
http://investorrelations.txi.com.
Participants in Solicitation
This communication is not a solicitation of a proxy from any
investor or securityholder. However, Martin Marietta, TXI and
certain of their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies in
connection with the proposed transaction under the rules of the
SEC. Information regarding Martin Marietta’s directors and
executive officers may be found in its Annual Report for the year
ended December 31, 2012 on Form 10-K filed with the SEC on February
2, 2013 and the definitive proxy statement relating to its 2013
Annual Meeting of Shareholders filed with the SEC on April 16,
2013. Information regarding TXI’s directors and executive officers
may be found in its Annual Report for the year ended May 31, 2013
on Form 10-K filed with the SEC on July 22, 2013 and the definitive
proxy statement relating to its 2013 Annual Meeting of Shareholders
filed with the SEC on August 23, 2013. These documents can be
obtained free of charge from the sources indicated above.
Additional information regarding the interests of these
participants will also be included in the joint proxy
statement/prospectus when it becomes available.
Non-Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
MARTIN MARIETTA
MATERIALS, INC. Unaudited Statements of Earnings (In
millions, except per share amounts)
Three Months
Ended Year Ended December 31, December 31,
2013 2012
2013 2012 Net sales $ 491.4 $
456.0 $ 1,943.2 $ 1,833.0 Freight and delivery revenues 53.6
46.2 212.3 198.9
Total revenues 545.0 502.2
2,155.5 2,031.9 Cost of sales 390.4
379.3 1,579.2 1,505.9 Freight and delivery costs 53.6
46.2 212.3 198.9 Total
cost of revenues 444.0 425.5
1,791.5 1,704.8 Gross profit 101.0 76.7 364.0
327.1 Selling, general and administrative expenses 37.5 38.0
150.1 138.4 Business development costs - - 0.7 35.1 Other operating
income, net 0.7 (1.5 ) (4.8 )
(2.6 ) Earnings from operations 62.8 40.2 218.0 156.2
Interest expense 12.8 13.4 53.5 53.3 Other nonoperating expenses
and (income), net 0.1 (0.1 ) 0.3
(1.2 ) Earnings from continuing operations before taxes on
income 49.9 26.9 164.2 104.1 Income tax expense 14.4
5.0 44.0 17.4 Earnings
from continuing operations 35.5 21.9 120.2 86.7 Loss on
discontinued operations, net of related tax benefit of $0.2, $0.3,
$0.4 and $0.8, respectively (0.3 ) (0.2 ) (0.8
) (1.2 ) Consolidated net earnings 35.2 21.7 119.4
85.5 Less: Net (loss) earnings attributable to noncontrolling
interests (0.8 ) 0.2 (1.9 ) 1.0
Net earnings attributable to Martin Marietta
Materials, Inc. $ 36.0 $ 21.5 $ 121.3 $ 84.5
Net earnings (loss) attributable to Martin Marietta
Materials, Inc. per common share: Basic from continuing operations
attributable to common shareholders $ 0.79 $ 0.47 $ 2.64 $ 1.86
Discontinued operations attributable to common shareholders
(0.01 ) - (0.02 ) (0.03 ) $ 0.78
$ 0.47 $ 2.62 $ 1.83 Diluted from
continuing operations attributable to common shareholders $ 0.78 $
0.46 $ 2.63 $ 1.86 Discontinued operations attributable to common
shareholders (0.01 ) - (0.02 )
(0.03 ) $ 0.77 $ 0.46 $ 2.61 $ 1.83
Cash dividends per common share $ 0.40 $ 0.40
$ 1.60 $ 1.60 Weighted-average common shares
outstanding: Basic 46.3 45.9
46.2 45.8 Diluted 46.4
46.1 46.3 46.0
MARTIN MARIETTA MATERIALS,
INC. Unaudited Financial Highlights (In millions)
Three Months Ended Year Ended December 31,
December 31, 2013 2012
2013 2012 Net
sales: Aggregates Business: Mid-America Group $ 169.5 $ 165.5 $
678.5 $ 658.9 Southeast Group 55.0 55.2 226.4 226.2 West Group
208.8 184.7 812.7
745.6 Total Aggregates Business 433.3 405.4 1,717.6 1,630.7
Specialty Products 58.1 50.6
225.6 202.3 Total $ 491.4 $ 456.0
$ 1,943.2 $ 1,833.0 Gross profit
(loss): Aggregates Business: Mid-America Group $ 55.2 $ 48.4 $
191.7 $ 180.1 Southeast Group (0.6 ) (6.4 ) (3.5 ) (6.0 ) West
Group 23.6 20.8 93.5
81.3 Total Aggregates Business 78.2 62.8 281.7 255.4
Specialty Products 22.9 18.2 83.7 77.2 Corporate (0.1 )
(4.3 ) (1.4 ) (5.5 ) Total $ 101.0 $
76.7 $ 364.0 $ 327.1 Selling, general
and administrative expenses: Aggregates Business: Mid-America Group
$ 12.5 $ 13.1 $ 50.0 $ 53.0 Southeast Group 4.7 4.5 18.1 18.2 West
Group 12.2 11.7 46.6
45.2 Total Aggregates Business 29.4 29.3 114.7 116.4
Specialty Products 2.6 2.4 10.2 9.3 Corporate 5.5
6.3 25.2 12.7 Total $
37.5 $ 38.0 $ 150.1 $ 138.4
Earnings (Loss) from operations: Aggregates Business: Mid-America
Group $ 44.6 $ 36.4 $ 146.9 $ 131.4 Southeast Group (4.9 ) (10.5 )
(19.8 ) (25.5 ) West Group 12.1 9.7
50.5 38.9 Total Aggregates Business
51.8 35.6 177.6 144.8 Specialty Products 20.4 15.8 73.5 68.5
Corporate (9.4 ) (11.2 ) (33.1 ) (57.1
) Total $ 62.8 $ 40.2 $ 218.0 $ 156.2
MARTIN MARIETTA
MATERIALS, INC. Unaudited Financial Highlights (In
millions)
Three Months Ended Year Ended
December 31, December 31, 2013
2012 2013
2012 Net sales by product line: Aggregates
Business: Aggregates $ 331.2 $ 318.4 $ 1,347.5 $ 1,304.0 Asphalt
14.0 18.2 66.2 79.8 Ready Mixed Concrete 42.7 31.8 146.1 110.5 Road
Paving 45.4 37.0 157.8
136.4 Total Aggregates Business 433.3 405.4 1,717.6
1,630.7 Specialty Products Business 58.1
50.6 225.6 202.3
Total $ 491.4 $ 456.0 $ 1,943.2 $
1,833.0 Gross profit (loss) by product line:
Aggregates Business: Aggregates $ 69.9 $ 57.7 $ 259.1 $ 240.6
Asphalt 3.2 3.0 12.9 12.1 Ready Mixed Concrete 3.4 (0.3 ) 8.3 0.1
Road Paving 1.7 2.4 1.4
2.6 Total Aggregates Business 78.2 62.8 281.7 255.4
Specialty Products Business 22.9 18.2 83.7 77.2 Corporate
(0.1 ) (4.3 ) (1.4 ) (5.5 ) Total $ 101.0
$ 76.7 $ 364.0 $ 327.1
Depreciation $ 40.5 $ 41.4 $ 162.7 $ 166.9 Depletion 1.8 1.6 5.7
5.0 Amortization 1.4 1.2 5.4
5.3 $ 43.7 $ 44.2 $ 173.8
$ 177.2
MARTIN
MARIETTA MATERIALS, INC. Balance Sheet Data (In
millions)
December 31, December 31,
2013 2012 (Unaudited) (Audited) ASSETS Cash
and cash equivalents $ 42.4 $ 25.4 Accounts receivable, net 245.4
224.1 Inventories, net 347.3 332.3 Other current assets 120.3 118.6
Property, plant and equipment, net 1,799.2 1,753.2 Intangible
assets, net 665.2 666.6 Other noncurrent assets 40.0 40.7 Total
assets $ 3,259.8 $ 3,160.9 LIABILITIES AND EQUITY
Current maturities of long-term debt and short-term facilities $
12.4 $ 5.7 Other current liabilities 198.1 167.6 Long-term debt
(excluding current maturities) 1,018.5 1,042.2 Other noncurrent
liabilities 455.9 495.1 Total equity 1,574.9 1,450.3
Total liabilities and equity $ 3,259.8 $ 3,160.9
MARTIN MARIETTA MATERIALS, INC.
Unaudited Statements of Cash Flows (In millions)
Year Ended December 31, 2013
2012 Operating activities: Consolidated net
earnings $ 119.4 $ 85.5 Adjustments to reconcile consolidated net
earnings to net cash provided by operating activities:
Depreciation, depletion and amortization 173.8 177.2 Stock-based
compensation expense 7.0 7.8 Gains on divestitures and sales of
assets (2.3 ) (1.0 ) Deferred income taxes 24.1 13.9 Excess tax
benefits from stock-based compensation (2.4 ) (0.8 )
Other items, net
(0.4 ) 2.2
Changes in operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net (22.5 ) (20.3 ) Inventories, net (11.6 )
(9.6 ) Accounts payable 20.1 (8.7 ) Other assets and liabilities,
net 3.8 (23.5 ) Net cash provided by
operating activities 309.0 222.7
Investing activities: Additions to property, plant and equipment
(155.2 ) (151.0 ) Acquisitions, net (64.5 ) (0.2 ) Proceeds from
divestitures and sales of assets 8.5 10.0 Loan to affiliate
(3.4 ) (2.0 ) Net cash used for investing activities
(214.6 ) (143.2 ) Financing activities:
Borrowings of long-term debt 604.4 181.0 Repayments of long-term
debt (621.1 ) (193.7 ) Payments on capital leases (0.1 ) - Change
in bank overdraft 2.5 - Dividends paid (74.2 ) (73.8 ) Debt issue
costs (2.1 ) (0.6 ) Issuances of common stock 11.7 7.0 Excess tax
benefits from stock-based compensation 2.4 0.8 Distributions to
owners of noncontrolling interests (0.9 ) (0.8 )
Net cash used for financing activities (77.4 )
(80.1 ) Net increase (decrease) in cash and cash equivalents
17.0 (0.6 ) Cash and cash equivalents, beginning of period
25.4 26.0 Cash and cash equivalents,
end of period $ 42.4 $ 25.4
MARTIN MARIETTA
MATERIALS, INC. Unaudited Operational Highlights
Three Months Ended Year Ended December 31,
December 31, Volume Pricing Volume
Pricing Volume/Pricing Variance (1)
Heritage Aggregates Product Line: (2) Mid-America
Group (2.8%) 5.2% (0.4%) 3.2% Southeast Group (8.2%) 0.4% (5.6%)
1.9% West Group 2.7% 3.6% 1.2% 3.9% Heritage Aggregates Operations
(1.4%) 3.3% (0.5%) 2.9% Aggregates Product Line (3) (0.4%) 3.4%
0.1% 3.0%
Three Months Ended Year Ended
December 31, December 31, Shipments (tons in
thousands)
2013 2012 2013 2012
Heritage Aggregates Product Line: (2) Mid-America
Group 14,538 14,965 58,925 59,180 Southeast Group 3,870 4,215
16,575 17,549 West Group 12,716 12,381 52,204 51,563 Heritage
Aggregates Operations 31,124 31,561 127,704 128,292 Acquisitions
324 - 726 - Divestitures (4) - - 3 39 Aggregates Product Line (3)
31,448 31,561 128,433 128,331
(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, 2013 2012
2013 2012 Unit Shipments by Product Line (in
thousands): Aggregates tons - external customers 30,274
30,493 123,792 123,873 Internal aggregates tons used in other
product lines 1,174 1,068 4,641 4,458 Total aggregates tons 31,448
31,561 128,433 128,331 Asphalt tons - external
customers 288 333 1,361 1,662 Internal asphalt tons used in road
paving business 471 395 1,728 1,598 Total asphalt tons 759 728
3,089 3,260 Ready Mixed Concrete - cubic yards 481
419 1,742 1,481
Average unit sales price by product line
(including internal sales): Aggregates $10.67/ton
$10.32/ton $10.63/ton $10.33/ton Asphalt $42.03/ton $44.13/ton
$42.09/ton $41.57/ton Ready Mixed Concrete $86.73/cubic yard
$78.98/cubic yard $83.73/cubic yard $77.24/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
months and year ended December 31, 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 Three Months Ended Year Ended
Accounting Principles December 31, December
31, 2013 2012
2013 2012 Gross profit $
101.0 $ 76.7 $ 364.0 $ 327.1 Total
revenues $ 545.0 $ 502.2 $ 2,155.5 $ 2,031.9
Gross margin 18.5 % 15.3 % 16.9 %
16.1 %
Three Months Ended Year Ended
December 31, December 31, Gross Margin Excluding
Freight and Delivery Revenues 2013
2012 2013 2012
Gross profit $ 101.0 $ 76.7 $ 364.0
$ 327.1 Total revenues $ 545.0 $ 502.2 $ 2,155.5 $
2,031.9 Less: Freight and delivery revenues (53.6 )
(46.2 ) (212.3 ) (198.9 ) Net sales $ 491.4 $
456.0 $ 1,943.2 $ 1,833.0 Gross margin
excluding freight and delivery revenues 20.6 % 16.8 %
18.7 % 17.8 %
Operating Margin in
Accordance with Generally Accepted Three Months Ended
Year Ended Accounting Principles December 31,
December 31, 2013 2012
2013 2012 Earnings
from operations $ 62.8 $ 40.2 $ 218.0 $ 156.2
Total revenues $ 545.0 $ 502.2 $ 2,155.5
$ 2,031.9 Operating margin 11.5 % 8.0 %
10.1 % 7.7 %
Three Months Ended Year
Ended Operating Margin Excluding Freight and Delivery
Revenues December 31, December 31,
2013 2012 2013
2012 Earnings from operations $ 62.8
$ 40.2 $ 218.0 $ 156.2 Total revenues $
545.0 $ 502.2 $ 2,155.5 $ 2,031.9 Less: Freight and delivery
revenues (53.6 ) (46.2 ) (212.3 )
(198.9 ) Net sales $ 491.4 $ 456.0 $ 1,943.2 $
1,833.0 Operating margin excluding freight and delivery
revenues 12.8 % 8.8 % 11.2 % 8.5 %
The presentation of incremental consolidated gross margin
(excluding freight and delivery revenues) is a non-GAAP financial
measure. Management presents this measure, as it believes it helps
demonstrate the impact of incremental sales on gross margin due to
the significant amount of fixed production costs. The following
presents the calculation of the incremental consolidated gross
margin (excluding freight and delivery revenues) for the quarter
ended December 31, 2013:
Consolidated net sales for the quarter ended
December 31, 2013 $ 491.4 Consolidated net sales for the quarter
ended December 31, 2012 456.0 Incremental
consolidated net sales $ 35.4 Consolidated gross
profit for the quarter ended December 31, 2013 $ 101.0 Consolidated
gross profit for the quarter ended December 31, 2012 76.7
Incremental consolidated gross profit $ 24.3
Incremental consolidated gross margin (excluding freight and
delivery revenues) 69 %
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
trade 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 December 31, 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 December 31, 2013. For supporting calculations, refer to
Corporation's website at
www.martinmarietta.com.
Twelve-Month Period
January 1, 2013 to
December 31, 2013
Earnings from continuing operations
attributable to Martin Marietta Materials, Inc.
$
122.1
Add back: Interest expense 53.5 Income tax expense 43.9
Depreciation, depletion and amortization expense 168.7 Stock-based
compensation expense 7.0 Deduct: Interest income (0.4 )
Consolidated EBITDA, as defined $ 394.8
Consolidated Debt, including debt
guaranteed by the Corporation, at December 31, 2013
$
1,053.3
Less: Unrestricted cash and cash equivalents in excess of $50 at
December 31, 2013 - Consolidated Net Debt, as
defined, at December 31, 2013 $ 1,053.3 Consolidated
Debt-to-Consolidated EBITDA, as defined, at December 31, 2013 for
the trailing twelve-month EBITDA 2.67 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 months and year ended December
31, 2013 and 2012.
Three Months Ended Year
Ended December 31, December 31,
2013 2012 2013
2012 Earnings Before Interest, Income Taxes,
Depreciation, Depletion and Amortization (EBITDA) $ 106.3 $ 83.4 $
390.2 $ 329.9
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, 2013
2012 2013 2012 Net Earnings
Attributable to Martin Marietta Materials, Inc. $ 36.0 $ 21.5 $
121.3 $ 84.5 Add back: Interest Expense 12.8 13.4 53.5 53.3 Income
Tax Expense for Controlling Interests 14.3 4.7 43.5 16.6
Depreciation, Depletion and Amortization Expense 43.2
43.8 171.9 175.5 EBITDA $ 106.3 $ 83.4 $ 390.2 $
329.9
Martin Marietta Materials, Inc.Anne H. Lloyd,
919-783-4660Executive Vice President and ChiefFinancial
Officerwww.martinmarietta.com
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