Record Net Sales and Operating Earnings,
Despite Record Rainfall
Heritage Consolidated Gross Margin Expands
350 Basis Points
Aggregates Product Line Volume Up 8% and
Pricing Up 9%
Company Repurchases $100 Million of Common
Stock
Company Increases TXI Synergy
Guidance
Company Announces Agreement to Sell
California Cement Operations
Martin Marietta Materials, Inc. (NYSE:MLM) today reported its
results for the second quarter ended June 30, 2015.
Ward Nye, Chairman, President and CEO of Martin Marietta,
stated: “Second-quarter results reflect continued strong
performance. Among other things, each heritage aggregates business
reportable segment significantly improved gross profits, generating
an incremental gross margin contribution in line with, or
exceeding, our stated objectives. This result was achieved despite
historic levels of rainfall throughout the United States, and
notably in Texas. According to the National Oceanic and Atmospheric
Administration (NOAA), the United States experienced the second
wettest second quarter in more than a century. The NOAA further
indicated that Texas reported its wettest second quarter and first
six months of the year for the 121 years this data has been
tracked. These highly unusual factors resulted in nearly $100
million in deferred net sales across all product lines which
lowered gross profit by an estimated $27 million. Additionally,
precipitation reduced production and operating leverage, which
negatively affected gross profit by an estimated additional $8
million to $13 million. Nevertheless, strong pricing, operational
excellence and our stringent cost discipline, coupled with
continued slow-but-steady economic recovery in the southeastern
United States, contributed to a 100-basis-point expansion of
consolidated gross margin (excluding freight and delivery
fees).
“As we look at the remainder of 2015 and into 2016, contractor
backlogs and other macro-economic indicators underscore the pent-up
demand for our products, and that should allow us to capture
delayed shipments in future quarters. Job growth on a national
level continues to be a strong catalyst for construction activity
and, during the trailing-12 months ended June 2015, the U.S. added
almost three million jobs. Employment growth in 2015 is at its
highest rate since 2005. Texas ranks second in the nation in job
growth and has added almost one million jobs during the last three
years. This coincides with all major Texas metropolitan areas
reporting their highest growth rate in overall economic activity in
more than 30 years. Texas continues to lead the nation in
nonresidential starts with $33 billion during the trailing-12
months ended June 30, 2015. In a July 9, 2015, report on Houston
Economic Indicators, the Federal Reserve Bank of Dallas noted
‘strong improvement in job growth‘, led by retail, administrative,
employment services and ambulatory health businesses. Further, the
report stated that the Houston region’s ‘refining, petrochemicals
and service industries are managing to offset oil-producer woes.’
Additionally, the Texas Department of Transportation’s fiscal year
2015 lettings budget of nearly $7.5 billion reflects the
acceleration of major project activities and augments a multi-year
backlog. We believe we are well positioned to capitalize on these
opportunities throughout Texas.
“Our commitment to cost discipline continues to generate
benefits for our shareholders. Delivering on our stated objectives,
we recently completed the remaining systems integration of the TXI
business and increased our guidance for overall annual synergies
from the TXI transaction to $120 million by the end of 2016. I want
to thank our employees for their diligence throughout the
integration process. By working closely together across divisions
and teams, we were able to increase our original synergy target by
more than 70 percent, demonstrating Martin Marietta’s commitment to
operational and functional excellence throughout the
organization.
“We are pleased to announce that we entered into a definitive
agreement to sell our California cement business for $420 million.
The sale, which is subject to regulatory approval under the
Hart-Scott-Rodino Act and customary conditions, is expected to
close in the third quarter of 2015. While we believe the California
cement plant is one of the most up-to-date plants in the region, it
is not in close proximity to other core Martin Marietta assets and,
unlike other marketplace competitors, is not vertically integrated
with ready mixed concrete production. After careful evaluation, we
determined a divestiture is the best avenue to maximize shareholder
value. We expect to use the proceeds from the sale to repurchase
additional shares of our stock under the authorization announced in
January and commenced during the second quarter.”
Mr. Nye continued, “We look forward to the second half of the
year. Assuming normal levels of precipitation, we expect
exceptional performance from our businesses in response to strong
demand that was delayed during the first half of the year. We
believe our strong foundation of assets, geographic positioning and
world-class employees, coupled with an unrelenting commitment to
controlling costs and maintaining industry-leading safety
standards, will lead to enhanced long-term shareholder value.”
NOTABLE ITEMS FOR THE QUARTER (ALL COMPARISONS ARE VERSUS THE
PRIOR-YEAR SECOND QUARTER)
- Consolidated net sales of $850.2
million compared with $601.9 million, an increase of
41%
- Aggregates product line volume increase
of 7.8%; aggregates product line price increase of 8.5%
- Heritage aggregates product line volume
increase of 0.7%, excluding shipments from 2014 divestitures from
prior-year quarter; reported heritage volume decrease of 1.9%
- Heritage aggregates product line price
increase of 7.6%
- Cement business net sales of $100.4
million, gross profit of $30.4 million and EBITDA of $37.8
million
- Magnesia Specialties net sales
of $60.5 million and earnings from operations of $18.8
million
- Heritage consolidated gross margin
(excluding freight and delivery revenues) of 26.0%, up 350 basis
points; consolidated gross margin (excluding freight and delivery
revenues) of 23.5%, up 100 basis points
- Consolidated selling, general and
administrative expenses (SG&A) of $56.8 million, or 6.7% of net
sales
- Consolidated earnings from operations
of $137.0 million compared with $96.2 million (which includes
$5.3 million of business development expenses related to the TXI
acquisition)
- Earnings per diluted share of $1.22
compared with $1.27 (which includes a $0.07 per diluted share
charge for business development expenses related to the TXI
acquisition)
- Rainfall lowered second quarter 2015
earnings per diluted share by an estimated $0.32 to $0.36
QUARTERLY OPERATING RESULTS (ALL COMPARISONS ARE VERSUS THE
PRIOR-YEAR SECOND QUARTER UNLESS NOTED OTHERWISE)
Aggregates Business
Heritage aggregates product line shipments increased 0.7%,
excluding shipments from the third-quarter 2014 divestiture of
three operations from the prior-year quarter. The divestiture
included an Oklahoma quarry and two Dallas, Texas rail-located
distribution yards and was required by the Department of Justice in
connection with the closing of the TXI acquisition. Shipments from
these divested locations continue to be reported in heritage
volumes in the prior-year quarter. Aggregates product line
shipments in the Southeast Group increased 6.0%, and the
Mid-America Group achieved an increase of 2.3%. Wet weather had the
most significant impact in the West Group, where volumes decreased
3.2%, excluding shipments from the divested operations from the
prior-year quarter. The reported variance for the West Group was a
9.4% decline, which reflects an estimated 2.2 million tons of
shipments deferred due to rainfall. Iowa also experienced
significant precipitation during the second quarter which deferred
an estimated 500,000 tons of shipments.
Heritage aggregates product line shipments to the infrastructure
market comprised 43% of quarterly volumes and decreased 4%. The
Mid-America and Southeast Group each achieved an increase of 2%,
which was offset by the impact of rainfall in the West Group. In
addition to Texas, major project activity is accelerating in North
Carolina, Georgia and Florida. Infrastructure investments are being
driven by state initiatives and public private partnerships while
federal funding continues to be provided under a Congressional
continuing resolution. The provisions of the Moving Ahead for
Progress in the 21st Century, or MAP-21, have been extended through
October 29, 2015. Management continues to anticipate the U.S.
Congress working towards passage of a new multi-year bill later
this year.
The nonresidential market represented 32% of quarterly heritage
aggregates product line shipments and decreased 3%. Light
nonresidential, which includes the commercial sector, increased 23%
and was offset by a decline in heavy nonresidential, which includes
the industrial and energy sectors. Activity varies significantly by
state, with growth in nonresidential starts for the last twelve
months strongest in Texas; however, weather constrained activity
during the second quarter. Louisiana, Florida and Georgia have also
reported significant increases in nonresidential projects. The
overall growth in light nonresidential shipments illustrates
economic diversity and the ability of other nonresidential projects
to replace energy-related shipments currently displaced by volatile
oil prices. Notwithstanding, the Company continues to expect
energy-related activity to remain strong, supported by more than
$100 billion of planned projects along the Gulf Coast, including a
significant portion in Texas.
The residential end-use market accounted for 16% of quarterly
heritage aggregates product line shipments, and volumes within this
market increased 4%. Nationally, residential starts are up 8% for
the trailing-12 months through June 2015. Florida and Georgia
achieved double-digit growth and, along with Texas, were each
ranked in the top five states for the same period. The
ChemRock/Rail market accounted for the remaining 9% of heritage
aggregates product line volumes. Volumes to this end use decreased
slightly, primarily related to excessive rainfall in Colorado and
Iowa.
Heritage aggregates product line pricing grew in all reportable
groups, led by the 10.7% increase in the West Group. Improvement
was notable in South Texas and Colorado. The Mid-America Group and
Southeast Group reported increases of 5.7% and 2.4%, respectively.
The Corporation announced mid-year price increases in certain
markets.
As noted above, the particularly wet weather throughout several
of our operating areas not only affected our sales, but also
adversely affected aggregates product line production and resulted
in lower operating leverage. As a result, total production cost per
ton shipped increased 3%. Lower energy costs continue to benefit
the cost structure.
The heritage aggregates product line leveraged a 7.6% increase
in average selling price to expand its gross margin (excluding
freight and delivery revenues) 540 basis points. The legacy TXI
aggregates product line operations experienced significant amounts
of rainfall that negatively affected shipments and margins. In
total, acquired aggregates product line operations, which include
legacy TXI quarries and two small acquisitions completed during the
first quarter, had net sales of $36.1 million and a gross margin
(excluding freight and delivery revenues) of 21.7%.
The heritage ready mixed concrete product line reported a 10%
increase in average selling price. However, weather-driven lower
shipments limited the improvement in gross margin (excluding
freight and delivery revenues) to 50 basis points. For the quarter,
the legacy TXI ready mixed concrete operations contributed $98
million of net sales. The hot mixed asphalt product line reported a
slight increase in average selling price and $19 million of net
sales.
The heritage Aggregates business gross margin (excluding freight
and delivery revenues) was 26.0%, an increase of 530 basis points.
The Southeast Group, which benefitted from recovery in Georgia and
improved performance by offshore operations, led with an increase
of 810 basis points. Incremental margin for the heritage aggregates
business was 214%, with each group exceeding the Company’s stated
goal.
Magnesia Specialties Business
Magnesia Specialties continued to deliver strong performance and
generated second-quarter net sales of $60.5 million and a gross
margin (excluding freight and delivery revenues) of 35.1%. Net
sales reflect lower domestic steel production, which is down almost
8% year-to-date versus the comparable period of 2014.
Second-quarter earnings from operations were $18.8 million compared
with $21.0 million, with the decrease primarily driven by increased
maintenance costs in 2015.
Cement Business
The Cement business is benefitting from continued strength in
Texas markets, where demand exceeds local supply. The Portland
Cement Association, or PCA, forecasts continued favorable
supply/demand imbalance in Texas over the next several years.
Further, PCA currently forecasts growth each year through 2019. For
the quarter, the business generated $100.4 million of net sales and
$30.4 million of gross profit. The business announced a price
increase effective April 1, 2015. However, there is a lag time
before the full impact is realized. Second-quarter operating
results were negatively affected by wet weather in Texas, which
delayed some shipments. The business incurred $5.9 million in
planned cement kiln maintenance costs, which are expected to be
heaviest in the fourth quarter.
CONSOLIDATED OPERATING RESULTS
Consolidated SG&A was 6.7% of net sales compared with 6.1%
in the prior-year quarter. The increase reflects the impact of
weather-deferred net sales and higher pension expenses. The Company
incurred acquisition-related expenses of $2.1 million, which is in
line with the expected run rate for the next few quarters. Earnings
from operations for the quarter were $137.0 million compared with
$96.2 million in the prior-year period.
Excluding discrete events, the 2015 estimated effective income
tax rate for the year-to-date period was 31%, consistent with
annual guidance. For the year, the Company expects to utilize the
maximum allowable net operating loss carryforwards of $363 million,
which were acquired with TXI.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for the first six months
of the year was $127.1 million in 2015 compared with $70.4 million
in 2014. The increase is principally attributable to higher
earnings before depreciation, depletion and amortization expense,
partially offset by higher cash payments in 2015, for 2014
taxes.
Capital investment for the first six months of 2015 was $128.0
million, which includes $38 million related to the new Medina
limestone quarry outside of San Antonio. The Medina quarry is rail
connected and will be able to ship aggregates products to South
Texas, including Houston. The project is on budget and on schedule
to be completed later this year.
At June 30, 2015, the ratio of consolidated debt to consolidated
EBITDA, as defined, for the trailing-12 months was 2.4 times, in
compliance with the Company’s leverage covenant.
SHARE REPURCHASE PROGRAM
The Company is authorized to execute a share repurchase program
under which it may acquire up to 20 million shares of its
outstanding common stock. Repurchases are expected to be carried
out through a variety of methods, which may include open market
purchases, privately negotiated transactions, block trades,
accelerated share purchase transactions, or any combination of such
methods. The Company expects to complete the repurchase program
over the next several years, though the actual timing of completion
will be based on an ongoing assessment of the capital needs of the
business, the market price of the Company’s common stock and
general market conditions. Share repurchases will be executed based
on then-current business and market factors, so the actual return
of capital in any single quarter may vary. The repurchase program
may be modified, suspended or discontinued by the Board at any time
without prior notice.
During the quarter, the Company repurchased 670,000 shares of
its common stock for $100 million.
FULL-YEAR OUTLOOK
The Company is encouraged by positive trends in its business and
markets, notably:
- Nonresidential construction is expected
to increase in both the heavy industrial and commercial sectors.
The Dodge Momentum Index remains high and signals continued
growth.
- Energy-related economic activity,
including follow-on public and private construction activities in
the Company’s primary markets, is anticipated to remain
strong.
- Residential construction is expected to
continue to grow, driven by historically low levels of construction
activity over the previous several years, employment gains, low
mortgage rates, significant lot absorption, higher multi-family
rental rates and rising housing prices.
- For the public sector, authorized
highway funding from MAP-21 should remain stable compared with
2014. Additionally, state initiatives to finance infrastructure
projects, including support from TIFIA, are expected to grow and
continue to play an expanded role in public-sector activity.
The significant amount of rainfall during the first half of the
year coupled with capacity constraints is expected to delay a
portion of weather-delayed shipments into 2016. Based on this
expectation and external trends, the Company anticipates the
following for the full year, which reflects the pending sale of the
California cement operations:
- Aggregates end-use markets compared to
2014 levels are as follows:
- Infrastructure market to be relatively
flat.
- Nonresidential market to increase in
the high-single digits.
- Residential market to experience a
double-digit increase.
- ChemRock/Rail market to remain
relatively flat.
- Aggregates product line shipments to
increase by 7% to 10% compared with 2014 levels.
- Heritage aggregates shipments to
increase 3% to 5%
- Aggregates product line pricing to
increase by 7% to 9% compared with 2014.
- Aggregates product line production cost
per ton shipped to decline slightly.
- Aggregates-related downstream product
lines to generate between $875 million and $925 million of net
sales and $65 million to $70 million of gross profit.
- Net sales for the Cement segment to be
between $375 million and $400 million, generating $110 million to
$120 million of gross profit.
- Net sales for the Magnesia Specialties
segment to be between $240 million and $250 million, generating $85
million to $90 million of gross profit.
- SG&A expenses as a percentage of
net sales to be less than 6.0%, despite an $18 million increase in
heritage pension costs that resulted from a lower discount
rate.
- Interest expense to approximate $75
million to $80 million.
- Estimated effective income tax rate to
approximate 31%, excluding discrete events.
- Consolidated EBITDA to range from $810
million to $850 million.
- Capital expenditures to approximate
$330 million, including $35 million of synergy-related capital and
$80 million for the Medina limestone quarry.
Mr. Nye concluded, “We look forward to capturing the shipments
delayed to the balance of this year and into 2016. We believe the
economy is in a construction-centric phase and our solid foundation
has positioned us to deliver substantial value to shareholders. We
will continue to focus on achieving world-class safety standards,
leveraging our balance sheet strength and financial flexibility,
all while responsibly investing in our business and returning
significant value to our shareholders through both financial
performance and our share repurchase program.”
RISKS TO OUTLOOK
The full-year outlook includes management’s assessment of the
likelihood of certain risks and uncertainties that will affect
performance. The most significant risks to the Company’s
performance will be Congress’ actions and timing surrounding
federal highway funding and uncertainty over the funding mechanism
for the Highway Trust Fund. Congress recently extended federal
highway funding through continuing resolution through October 29,
2015. Additionally, all of the Company’s businesses are 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. Further, a decline in
consumer confidence may negatively impact investment in
construction projects. While both MAP-21 and TIFIA credit
assistance are excluded from the U.S. debt ceiling limit, this
issue may have a significant impact on the economy and,
consequently, construction activity. Other risks and uncertainties
related to the Company’s future performance include, but are not
limited to: both price and volume, and 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 a sustained period of low global oil prices
or changes in oil production patterns in response to this decline
and certain regulatory or other economic factors; a slowdown in the
residential construction recovery, or some combination thereof; a
reduction in economic activity in the Company’s Midwest states
resulting from reduced funding levels provided by the Agricultural
Act of 2014 and a reduction in capital investment by the railroads;
an increase in the cost of compliance with governmental laws and
regulations; unexpected equipment failures, unscheduled
maintenance, industrial accident or other prolonged and/or
significant disruption to our cement production facilities; and the
possibility that certain expected synergies and operating
efficiencies in connection with the TXI acquisition are not
realized within the expected time-frames or at all. 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. Cement is subject to
cyclical supply and demand and price fluctuations. The Magnesia
Specialties business essentially runs at capacity; therefore any
unplanned changes in costs or realignment of customers introduce
volatility to the earnings of this segment.
The Company’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
Company’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 Company’s long-haul distribution
network. The Cement business is also energy intensive and
fluctuations in the price of coal affects costs. The Magnesia
Specialties 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 Company’s long-haul network, particularly
the supply of railcars and locomotive power and condition of rail
infrastructure to move trains, affects the Company’s ability to
efficiently transport aggregate into certain markets, most notably
Texas, Florida and the Gulf Coast. In addition, availability of
railcars and locomotives affects the Company’s ability to move
dolomitic lime, a key raw material for magnesia chemicals, to both
the Company’s plant in Manistee, Michigan, and customers. The
availability of trucks, drivers and railcars to transport the
Company’s product, particularly in markets experiencing high growth
and increased demand, is also a risk and pressures the associated
costs.
Risks to the outlook also include shipment declines as a result
of economic events beyond the Company’s control. In addition to the
impact on nonresidential and residential construction, the Company
is exposed to risk in its estimated outlook from credit markets and
the availability of and interest cost related to its debt.
The Company’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 second-quarter earnings results on
a conference call and online web simulcast today (August 4, 2015).
The live broadcast of the Martin Marietta conference call will
begin at 2:00 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
Company’s website. Additionally, the Company has posted
supplemental financial information related to its second-quarter
performance on its website.
For those investors without online web access, the conference
call may also be accessed by calling (970) 315-0423,
confirmation number 87666083.
ABOUT MARTIN MARIETTA
Martin Marietta, an American-based company and a member of the
S&P 500 Index, is a leading supplier of aggregates and heavy
building materials, with operations spanning 32 states, Canada and
the Caribbean. Dedicated teams at Martin Marietta supply the
resources for the roads, sidewalks and foundations on which we
live. Martin Marietta's Magnesia Specialties business provides a
full range of magnesium oxide, magnesium hydroxide and dolomitic
lime products. For more information, visit www.martinmarietta.com
or www.magnesiaspecialties.com.
If you are interested in Martin Marietta stock, management
recommends that, at a minimum, you read the Company’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
Company’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 Company’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 Company’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 Company 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 Company 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 federal highway funding 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 history of both cement and ready
mixed concrete, to be subject to significant changes in supply,
demand and price; 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 Texas, North
Carolina, 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 Company 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, particularly in Texas; a slowdown in residential
construction recovery; a reduction in construction activity and
related 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 Company; 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 Magnesia Specialties and Cement businesses,
natural gas; continued increases in the cost of other repair and
supply parts; unexpected equipment failures, unscheduled
maintenance, industrial accident or other prolonged and/or
significant disruption to cement production facilities; increasing
governmental regulation, including environmental laws;
transportation availability, notably the availability of railcars
and locomotive power to move trains to supply the Company’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 of trucks and
licensed drivers for transport of the Company’s materials,
particularly in areas with significant energy-related activity,
such as Texas and Colorado; availability and cost of construction
equipment in the United States; weakening in the steel industry
markets served by the Company’s dolomitic lime products; proper
functioning of information technology and automated operating
systems to manage or support operations; 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
Company’s leverage ratio debt covenant; changes in tax laws, the
interpretation of such laws and/or administrative practices that
would increase the Company’s tax rate; violation of the Company’s
debt covenant if price and/or volumes return to previous levels of
instability; downward pressure on the Company’s common stock price
and its impact on goodwill impairment evaluations; reduction of the
Company’s credit rating to non-investment grade resulting from
strategic acquisitions; and other risk factors listed from time to
time found in the Company’s filings with the SEC. Other factors
besides those listed here may also adversely affect the Company,
and may be material to the Company. The Company 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, 2015 2014 2015
2014 Net sales $ 850.2 $ 601.9 $ 1,482.1 $
981.6 Freight and delivery revenues 71.2 67.3
130.6 116.2 Total revenues
921.4 669.2 1,612.7
1,097.8 Cost of sales 650.0 466.3 1,207.7
820.2 Freight and delivery costs 71.2 67.3
130.6 116.2 Total cost of
revenues 721.2 533.6 1,338.3
936.4 Gross profit 200.2 135.6 274.4 161.4
Selling, general and administrative expenses 56.8 36.6 106.2
70.8 Acquisition-related expenses 2.1 5.3 3.7 15.1 Other operating
expenses and (income), net 4.3 (2.5 )
1.9 (4.8 ) Earnings from operations 137.0 96.2 162.6
80.3 Interest expense 19.1 12.9 38.4 25.1 Other nonoperating
(income) and expenses, net (3.0 ) (0.3 ) (2.1
) 3.2 Earnings from continuing operations before
taxes on income 120.9 83.6 126.3 52.0 Income tax expense
38.9 23.9 38.1 15.4
Earnings from continuing operations 82.0 59.7 88.2 36.6
Loss on discontinued operations, net of
related tax benefit of $0.0, $0.0, $0.0 and $(0.1),
respectively
- (0.1 ) - (0.1 ) -
Consolidated net earnings 82.0 59.6 88.2 36.5 Less: Net earnings
(loss) attributable to noncontrolling interests 0.1
0.1 0.1 (1.4 ) Net
earnings attributable to Martin Marietta Materials, Inc. $ 81.9
$ 59.5 $ 88.1 $ 37.9 Net
earnings per common share: Basic from continuing operations
attributable to common shareholders $ 1.23 $ 1.28 $ 1.30 $ 0.81
Discontinued operations attributable to common shareholders
- - - - $ 1.23
$ 1.28 $ 1.30 $ 0.81 Diluted
from continuing operations attributable to common shareholders $
1.22 $ 1.27 $ 1.30 $ 0.81 Discontinued operations attributable to
common shareholders - - -
- $ 1.22 $ 1.27 $ 1.30 $ 0.81
Dividends per common share $ 0.40 $ 0.40
$ 0.80 $ 0.80 Average number of common
shares outstanding: Basic 67.4 46.4
67.4 46.4 Diluted 67.6
46.5 67.7 46.5
MARTIN MARIETTA MATERIALS, INC. Unaudited
Financial Highlights (In millions)
Three Months Ended Six Months Ended
June 30, June 30, 2015
2014 2015 2014 Net sales:
Aggregates Business: Mid-America Group $ 237.4 $ 218.7 $ 367.0 $
325.2 Southeast Group 76.4 70.7 136.3 126.1 West Group 375.5
250.6 662.6 411.0
Total Aggregates Business 689.3 540.0 1,165.9 862.3 Cement 100.4 -
197.0 - Magnesia Specialties 60.5 61.9
119.2 119.3 Total $ 850.2 $
601.9 $ 1,482.1 $ 981.6 Gross profit
(loss): Aggregates Business: Mid-America Group $ 80.2 $ 68.6 $ 87.3
$ 67.0 Southeast Group 9.5 3.0 12.6 0.2 West Group 64.8
40.1 93.3 52.1
Total Aggregates Business 154.5 111.7 193.2 119.3 Cement 30.4 -
49.4 - Magnesia Specialties 21.2 23.4 41.4 42.1 Corporate
(5.9 ) 0.5 (9.6 ) - Total $
200.2 $ 135.6 $ 274.4 $ 161.4
Selling, general and administrative expenses: Aggregates Business:
Mid-America Group $ 13.3 $ 13.2 $ 26.2 $ 26.1 Southeast Group 4.5
4.6 8.8 8.8 West Group 16.1 10.7
31.8 21.7 Total Aggregates Business 33.9 28.5
66.8 56.6 Cement 6.6 - 13.3 - Magnesia Specialties 2.4 2.5 4.8 4.9
Corporate 13.9 5.6 21.3
9.3 Total $ 56.8 $ 36.6 $ 106.2
$ 70.8 Earnings (Loss) from operations: Aggregates
Business: Mid-America Group $ 66.9 $ 57.3 $ 62.7 $ 45.5 Southeast
Group 4.8 (1.3 ) 3.2 (7.4 ) West Group 49.2
30.9 63.7 33.0 Total Aggregates
Business 120.9 86.9 129.6 71.1 Cement 22.5 - 34.7 - Magnesia
Specialties 18.8 21.0 36.5 37.3 Corporate (25.2 )
(11.7 ) (38.2 ) (28.1 ) Total $ 137.0 $ 96.2
$ 162.6 $ 80.3
MARTIN
MARIETTA MATERIALS, INC. Unaudited Financial Highlights
(In millions)
Three Months Ended
Six Months Ended June 30, June
30, 2015 2014 2015
2014 Net sales by product line: Heritage:
Aggregates Business: Aggregates $ 445.4 $ 422.0 $ 745.7 $ 685.9
Asphalt 18.9 22.6 28.5 33.0 Ready Mixed Concrete 51.9 52.4 93.0
90.4 Road Paving 39.1 43.0 46.3
53.0 Total Aggregates Business 555.3 540.0
913.5 862.3 Magnesia Specialties Business 60.5 61.9 119.2 119.3
Acquisition: Aggregates Business: Aggregates 36.1 - 68.1 - Ready
Mixed Concrete 97.9 - 184.3
- Total Aggregates Business 134.0 - 252.4 -
Cement Business 100.4 - 197.0
- Total $ 850.2 $ 601.9 $
1,482.1 $ 981.6 Gross profit (loss) by product
line: Heritage: Aggregates Business: Aggregates $ 129.4 $ 100.1 $
163.9 $ 110.2 Asphalt 4.3 4.9 2.8 3.4 Ready Mixed Concrete 7.2 7.0
12.4 9.9 Road Paving 3.6 (0.3 ) 0.3
(4.2 ) Total Aggregates Business 144.5 111.7 179.4
119.3 Magnesia Specialties Business 21.2 23.4 41.4 42.1 Corporate
(5.5 ) 0.5 (8.3 ) - Acquisition: Aggregates Business: Aggregates
7.8 - 14.7 - Ready Mixed Concrete 2.2 -
(0.9 ) - Total Aggregates Business 10.0 - 13.8
- Cement Business 30.4 - 49.4 - Corporate (0.4 ) -
(1.3 ) - Total $ 200.2 $ 135.6
$ 274.4 $ 161.4 Depreciation $
60.0 $ 40.9 $ 119.8 $ 80.9 Depletion 3.4 1.6 6.5 2.7 Amortization
4.3 1.2 8.7 2.5
$ 67.7 $ 43.7 $ 135.0 $ 86.1
MARTIN MARIETTA MATERIALS, INC. Unaudited
Financial Highlights (Dollars in millions)
Three Months Ended June 30
HeritageMartinMarietta(1)
AcquiredOperations(2)
NonrecurringTXITransactionItems(3)
Consolidated 2015 2015
2015 2015 Net sales $ 615.8 $ 234.4 $ - $
850.2 Freight and delivery revenues 59.2 12.0
- 71.2 Total revenues 675.0 246.4
- 921.4 Cost of sales 455.6 194.4 -
650.0 Freight and delivery costs 59.2 12.0 -
71.2 Total cost of revenues 514.8 206.4
- 721.2 Gross profit 160.2 40.0 - 200.2
Selling, general and administrative expenses(4) 44.0 12.8 - 56.8
Acquisition-related expenses, net - - 2.1 2.1 Other operating
expense, net 2.1 2.2 - 4.3
Earnings (Loss) from operations $ 114.1 $ 25.0 $ (2.1 ) $ 137.0
(1) Heritage Martin Marietta is consolidated 2015 results
excluding the operating results of acquired TXI locations and two
small acquisitions closed in the first quarter of 2015 and
nonrecurring items directly attributable to the TXI
acquisition.
(2) Acquired operations reflect operating results of acquired
TXI locations and two small acquisitions closed in the first
quarter of 2015.
(3) Nonrecurring TXI transaction items are attributable to the
TXI acquisition and reflect integration expenses.
(4) Selling, general and administrative expenses for acquired
operations include the allocation of $4.5 million of Corporate
overhead.
Three Months Ended June 30
HeritageMartinMarietta
HeritageMartinMarietta
Variance(5)
-Favorable(Unfavorable)
2015 2014 Net sales $ 615.8 $ 601.9 $ 13.9
Freight and delivery revenues 59.2 67.3
(8.1 ) Total revenues 675.0 669.2 5.8
Cost of sales 455.6 466.3 10.7 Freight and delivery
costs 59.2 67.3 8.1 Total cost
of revenues 514.8 533.6 18.8
Gross profit 160.2 135.6 24.6 Selling, general and
administrative expenses 44.0 36.6 (7.4 ) Other operating expenses
and (income), net 2.1 (2.5 ) (4.6 )
Earnings from operations, excluding
acquisition-related expenses, net(6)
$ 114.1 $ 101.5 $ 12.6
(5) The variance reflects the change between Heritage Martin
Marietta 2015 and Heritage Martin Marietta 2014.
(6) Acquisition-related expenses, net, were $2.1 million and
$5.3 million for the quarters ended June 30, 2015 and 2014,
respectively.
MARTIN MARIETTA MATERIALS, INC. Unaudited
Financial Highlights (Dollars in millions)
Six Months Ended June 30
HeritageMartinMarietta(1)
AcquiredOperations(2)
NonrecurringTXITransactionItems(3)
Consolidated 2015 2015
2015 2015 Net sales $ 1,032.7 $ 449.4 $ - $ 1,482.1
Freight and delivery revenues 107.7 22.9
- 130.6 Total revenues 1,140.4
472.3 - 1,612.7 Cost of sales
820.2 387.5 - 1,207.7 Freight and delivery costs 107.7
22.9 - 130.6 Total cost of
revenues 927.9 410.4 -
1,338.3 Gross profit 212.5 61.9 - 274.4 Selling, general and
administrative expenses(4) 80.7 25.5 - 106.2 Acquisition-related
expenses, net - - 3.7 3.7 Other operating (income) and expenses,
net (0.4 ) 2.3 - 1.9 Earnings
(Loss) from operations $ 132.2 $ 34.1 $ (3.7 ) $ 162.6
(1) Heritage Martin Marietta is consolidated 2015 results
excluding the operating results of acquired TXI locations and
nonrecurring items directly attributable to the TXI
acquisition.
(2) Acquired operations reflect operating results of acquired
TXI locations and two small acquisitions closed in the first
quarter of 2015.
(3) Nonrecurring TXI transaction items are attributable to the
TXI acquisition and reflect acquisition related expenses, net.
(4) Selling, general and administrative expenses for acquired
operations include the allocation of $9.0 million of Corporate
overhead.
Six Months Ended June 30
HeritageMartinMarietta
HeritageMartinMarietta
Variance(5)
-Favorable(Unfavorable)
2015 2014 Net sales $ 1,032.7 $ 981.6 $ 51.1
Freight and delivery revenues 107.7 116.2
(8.5 ) Total revenues 1,140.4
1,097.8 42.6 Cost of sales 820.2 820.2
- Freight and delivery costs 107.7 116.2
8.5 Total cost of revenues 927.9
936.4 8.5 Gross profit 212.5 161.4 51.1
Selling, general and administrative expenses 80.7 70.8 (9.9
) Other operating income, net (0.4 ) (4.8 )
(4.4 ) Earnings from operations, excluding acquisition-related
expenses, net(6) $ 132.2 $ 95.4 $ 36.8
(5) The variance reflects the change between Heritage Martin
Marietta 2015 and Heritage Martin Marietta 2014.
(6) Acquisition-related expenses, net, were $3.7 million and
$15.1 million for the six months ended June 30, 2015 and 2014,
respectively.
MARTIN MARIETTA MATERIALS, INC. Unaudited
Financial Highlights - West Group (Dollars in millions)
Three Months Ended June 30
Heritage West
AcquiredOperations
West
2015(1)
2015(2)
2015 Net sales $ 242.3 $ 133.2 $ 375.5 Freight and delivery
revenues 29.3 6.4 35.7 Total
revenues 271.6 139.6 411.2
Cost of sales 187.6 123.1 310.7 Freight and delivery costs
29.3 6.4 35.7 Total cost of
revenues 216.9 129.5 346.4 Gross
profit $ 54.7 $ 10.1 $ 64.8
(1) Heritage West 2015 results reflect the 2015 West results
less the operating results of acquired TXI locations.
(2) Acquired operations reflect the operating results for all
acquired TXI aggregates and ready mixed concrete operations
reported in the West Group and one small acquisition closed in the
first quarter of 2015.
Three Months Ended June
30 Heritage West West
Variance(3)
-Favorable(Unfavorable)
2015 2014 Net sales $ 242.3 $ 250.6 $ (8.3 )
Freight and delivery revenues 29.3 36.2 (6.9 )
Total revenues 271.6 286.8 (15.2 ) Cost
of sales 187.6 210.5 22.9 Freight and delivery costs 29.3
36.2 6.9 Total cost of revenues 216.9
246.7 29.8 Gross profit $ 54.7 $ 40.1 $ 14.6
(3) The variance reflects the change between Heritage West 2015
and West 2014.
MARTIN MARIETTA MATERIALS, INC. Unaudited
Financial Highlights - West Group (Dollars in millions)
Six Months Ended June 30
Heritage West
AcquiredOperations
West
2015(1)
2015(2)
2015 Net sales $ 411.2 $ 251.4 $ 662.6 Freight and delivery
revenues 57.5 11.7 69.2 Total
revenues 468.7 263.1 731.8
Cost of sales 332.0 237.3 569.3 Freight and delivery costs
57.5 11.7 69.2 Total cost of
revenues 389.5 249.0 638.5 Gross
profit $ 79.2 $ 14.1 $ 93.3
(1) Heritage West 2015 results reflect the 2015 West results
less the operating results of acquired TXI locations.
(2) Acquired operations reflect the operating results for all
acquired TXI aggregates and ready mixed concrete operations
reported in the West Group.
Six Months Ended June 30 Heritage
West West
Variance(3)
-Favorable(Unfavorable)
2015 2014 Net sales $ 411.2 $ 411.0 $ 0.2
Freight and delivery revenues 57.5 66.6 (9.1 )
Total revenues 468.7 477.6 (8.9 ) Cost
of sales 332.0 358.9 26.9 Freight and delivery costs 57.5
66.6 9.1 Total cost of revenues 389.5
425.5 36.0 Gross profit $ 79.2 $ 52.1 $ 27.1
(3) The variance reflects the change between Heritage West 2015
and West 2014.
MARTIN MARIETTA MATERIALS, INC. Balance Sheet
Data (In millions)
June 30, December 31, June 30,
2015 2014 2014 (Unaudited) (Audited)
(Unaudited) ASSETS Cash and cash equivalents $ 44.2 $ 108.7 $ 34.3
Accounts receivable, net 497.5 421.0 343.8 Inventories, net 479.9
484.9 348.2 Other current assets 743.7 274.2 150.4 Property, plant
and equipment, net 3,049.5 3,402.8 1,775.4 Intangible assets, net
2,580.8 2,664.0 663.5 Other noncurrent assets 104.1 108.8 40.4
Total assets $ 7,499.7 $ 7,464.4 $ 3,356.0
LIABILITIES AND EQUITY Current maturities of long-term debt and
short-term facilities $ 16.0 $ 14.3 $ 12.4 Other current
liabilities 347.8 382.3 232.3 Long-term debt (excluding current
maturities) 1,642.0 1,571.1 1,072.4 Other noncurrent liabilities
1,183.5 1,144.0 471.9 Total equity 4,310.4 4,352.7
1,567.0 Total liabilities and equity $ 7,499.7 $ 7,464.4 $
3,356.0
MARTIN MARIETTA MATERIALS, INC.
Unaudited Statements of Cash
Flows (In millions)
Six Months Ended June 30,
2015 2014 Operating activities: Consolidated net
earnings $ 88.1 $ 36.5 Adjustments to reconcile consolidated net
earnings to net cash provided by operating activities:
Depreciation, depletion and amortization 135.0 86.1 Stock-based
compensation expense 7.5 4.4 Gains on divestitures and sales of
assets (0.9 ) (1.7 ) Deferred income taxes 33.9 (6.4 ) Excess tax
benefits from stock-based compensation (0.1 ) (1.9 ) Other items,
net (0.2 ) 3.2 Changes in operating assets and liabilities, net of
effects of acquisitions and divestitures: Accounts receivable, net
(76.1 ) (98.9 ) Inventories, net (27.6 ) (4.3 ) Accounts payable
(3.4 ) 35.8 Other assets and liabilities, net (29.1 )
17.6 Net cash provided by operating activities
127.1 70.4 Investing activities:
Additions to property, plant and equipment (128.0 ) (84.7 )
Acquisitions, net (10.7 ) (0.1 ) Proceeds from divestitures and
sales of assets 2.0 2.1 Repayments from affiliate 1.8 0.5 Payment
of railcar construction advances (25.2 ) (14.5 ) Reimbursement of
railcar construction advances 25.2 14.5
Net cash used for investing activities (134.9 )
(82.2 ) Borrowings of long-term debt 80.0
100.0 Repayments of long-term debt (8.2 ) (46.4 ) Payments on
capital leases (1.8 ) (1.0 ) Debt issue costs - (0.9 ) Change in
bank overdraft (0.2 ) (2.5 ) Purchase of common stock (100.0 ) -
Dividends paid (54.3 ) (37.3 ) Purchase of remaining interest in
existing subsidiaries - (19.6 ) Excess tax benefits from
stock-based compensation 0.1 1.9 Issuances of common stock
27.7 9.5 Net cash (used for) provided
by financing activities (56.7 ) 3.7 Net
decrease in cash and cash equivalents (64.5 ) (8.1 ) Cash and cash
equivalents, beginning of period 108.7 42.4
Cash and cash equivalents, end of period $ 44.2
$ 34.3
MARTIN MARIETTA MATERIALS, INC.
Unaudited Operational
Highlights
Three Months Ended Six Months Ended June
30, 2015 June 30, 2015 Volume
Pricing Volume Pricing
Volume/Pricing Variance (1) Heritage Aggregates
Product Line: (2) Mid-America Group 2.3 % 5.7 % 7.3 %
4.9 % Southeast Group 6.0 % 2.4 % 4.3 % 4.0 % West Group (9.4 %)
10.7 % (8.0 %) 13.7 % Heritage Aggregates Operations (1.9 %) 7.6 %
0.3 % 8.7 % Aggregates Product Line (3) 7.8 % 8.5 % 11.5 % 9.7 %
Three Months Ended Six Months Ended June
30, June 30, Shipments (tons in thousands)
2015 2014 2015 2014 Heritage
Aggregates Product Line: (2) Mid-America Group 19,048
18,626 29,149 27,176 Southeast Group 5,274 4,976 9,364 8,977 West
Group 13,919 15,372 25,251 27,440
Heritage Aggregates Operations 38,241 38,974 63,764 63,593
Acquisitions 3,762 - 7,075 - Aggregates
Product Line (3) 42,003 38,974 70,839 63,593
(1) Volume/pricing variances reflect the percentage increase
(decrease) from the comparable period in the prior year.
(2) Heritage Aggregates Product Line and Heritage Aggregates
Operations exclude volume and pricing data for acquisitions that
have not been included in prior-year operations for a full calendar
year.
(3) Aggregates Product Line includes acquisitions from the date
of acquisition and divestitures through the date of disposal.
Three Months Ended Six Months Ended June
30, June 30, 2015 2014 2015
2014 Heritage: Aggregates tons - external customers
36,847 37,417 61,479 61,136 Internal aggregates tons used in other
product lines 1,394 1,557 2,285 2,457
Total aggregates tons 38,241 38,974 63,764
63,593 Asphalt tons - external customers 356 458 569
706 Internal asphalt tons used in road paving business 456
492 513 570 Total asphalt tons 812
950 1,082 1,276 Ready Mixed Concrete -
cubic yards 498 552 897 959
Acquisitions:
Aggregates tons - external customers 2,804 - 5,304 - Internal
aggregates tons used in other product lines 958 -
1,771 - Total aggregates tons 3,762 -
7,075 - Ready Mixed Concrete - cubic yards
1,115 - 2,080 - Cement
tons-external customers 994 - 2,019 - Internal cement tons used in
other product lines 209 - 401 - Total
Cement tons 1,203 - 2,420 -
Average unit sales price by product line (including
internal sales): Heritage: Aggregates (per ton) $ 11.83
$ 11.00 $ 11.88 $ 10.93 Asphalt (per ton) $ 42.20 $ 42.06 $ 42.56 $
42.11 Ready Mixed Concrete (per cubic yard) $ 101.54 $ 92.23 $
100.35 $ 90.97
Acquisitions:
Aggregates (per ton) $ 13.52 $ - $ 13.42 $ - Ready Mixed Concrete
(per cubic yard) $ 86.80 $ - $ 87.70 $ - Cement (per ton) $ 98.86 $
- $ 96.16 $ -
MARTIN MARIETTA MATERIALS,
INC.Non-GAAP Financial Measures(Dollars, except per
share amounts, in millions)
Gross margin as a percentage of net sales and operating margin
as a percentage of net sales represent non-GAAP measures. The
Company presents these ratios calculated based on net sales, as it
is consistent with the basis by which management reviews the
Company's operating results. Further, management believes it is
consistent with the basis by which investors analyze the Company'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, 2015 and 2014, 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 EndedJune
30,
Six Months EndedJune 30,
2015 2014 2015 2014 Gross profit $
200.2 $ 135.6 $ 274.4 $ 161.4 Total
revenues $ 921.4 $ 669.2 $ 1,612.7 $ 1,097.8
Gross margin 21.7 % 20.3 % 17.0 %
14.7 %
Three Months Ended Six Months
Ended Gross Margin Excluding Freight and Delivery
Revenues June 30, June 30, 2015
2014 2015 2014 Gross profit $ 200.2 $
135.6 $ 274.4 $ 161.4 Total revenues $ 921.4 $
669.2 $ 1,612.7 $ 1,097.8 Less: Freight and delivery revenues
(71.2 ) (67.3 ) (130.6 ) (116.2 ) Net
sales $ 850.2 $ 601.9 $ 1,482.1 $ 981.6
Gross margin excluding freight and delivery revenues 23.5 %
22.5 % 18.5 % 16.4 %
Operating Margin in Accordance with
Generally Accepted Accounting Principles
Three Months EndedJune 30, Six Months
EndedJune 30, 2015 2014 2015
2014 Earnings from operations $ 137.0 $ 96.2 $
162.6 $ 80.3 Total revenues $ 921.4 $ 669.2
$ 1,612.7 $ 1,097.8 Operating margin
14.9 % 14.4 % 10.1 % 7.3 %
Three
Months Ended Six Months Ended Operating Margin
Excluding Freight and Delivery Revenues June 30, June
30, 2015 2014 2015 2014 Earnings
from operations $ 137.0 $ 96.2 $ 162.6 $ 80.3
Total revenues $ 921.4 $ 669.2 $ 1,612.7 $ 1,097.8 Less:
Freight and delivery revenues (71.2 ) (67.3 )
(130.6 ) (116.2 ) Net sales $ 850.2 $ 601.9 $
1,482.1 $ 981.6 Operating margin excluding freight
and delivery revenues 16.1 % 16.0 % 11.0 %
8.2 %
The Company presents the earnings per diluted share impact of
acquisition-related expenses, net, related to the TXI acquisition,
which represents a non-GAAP measure.
It is presented for investors and analysts to evaluate and
forecast the Company's ongoing financial results, as
acquisition-related expenses related to TXI are nonrecurring.
The following shows the calculation of the impact of
acquisition-related expenses, net, related to the combination with
TXI on earnings per diluted share for the quarter ended June 30,
2014:
Acquisition-related expenses, net, related to
the business combination with TXI $ 5.3 Income tax benefit
(2.1 ) After-tax impact of acquisition-related expenses, net,
related to the business combination with TXI $ 3.2 Diluted
average number of common shares outstanding 46.5
Per diluted share impact of
acquisition-related expenses, net, related to the business
combination with TXI
$ (0.07 )
The Company presents the change in heritage aggregates product
line shipments for the West Group and the Aggregates business
excluding shipments from the three operations that were divested in
the third quarter of 2014 from the quarter ended June 30, 2014.
These non-GAAP measures are presented for investors and analysts to
have a more comparable analysis of shipment trends based on the
operations owned by the Company for the quarter ended June 30,
2015. The following shows the calculation of the heritage
aggregates product line shipments for the West Group and the
Aggregates business for the quarter ended June 30, 2014, excluding
shipments from the operations divested in the third quarter of 2014
(tons in thousands).
West Group Aggregates Business
Reported heritage aggregates product line shipments for quarter
ended June 30, 2014 15,372 38,974 Less: aggregates product line
shipments for three operations divested in third quarter of 2014
(998 ) (998 ) Adjusted heritage aggregates product line shipments
for quarter ended June 30, 2014 14,374 37,976
Reported heritage aggregates product line shipments for quarter
ended June 30, 2015 13,919 38,241 Change in 2015
heritage aggregates product line shipments from adjusted heritage
aggregates product line shipments for quarter ended June 30, 2014
(3.2 %) 0.7 %
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-12 months is a covenant under the
Company's revolving credit facility, term loan facility and
accounts receivable securitization facility. Under the terms of
these agreements, as amended, the Company's ratio of Consolidated
Debt-to-Consolidated EBITDA as defined, for the trailing-12 months
can not exceed 3.50 times as of June 30, 2015, 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-12 months
at June 30, 2015.
For supporting calculations, refer to Company's website
at www.martinmarietta.com.
Twelve-Month Period July 1, 2014
to June 30, 2015 Earnings from continuing operations
attributable to Martin Marietta Materials, Inc. $ 205.7 Add back:
Interest expense 79.3 Income tax expense 117.4 Depreciation,
depletion and amortization expense 267.6 Stock-based compensation
expense 12.1 TXI acquisition-related expenses, net, 31.3 Deduct:
Interest income (0.3 ) Consolidated EBITDA, as defined $
713.1 Consolidated Debt, including debt for which the
Company is a co-borrower, at June 30, 2015 $ 1,683.7
Consolidated Debt-to-Consolidated EBITDA,
as defined, at June 30, 2015 for the trailing twelve-month
EBITDA
2.36 times
A reconciliation of earnings before taxes on income to EBITDA
for the Cement business for the three- and six-months ended June
30, 2015 is as follows:
Three Months Ended
Six Months Ended Earnings Before Taxes On Income $ 22.4 $
34.7 Add back: Interest Expense 0.1 0.1 Depreciation, Depletion and
Amortization Expense 15.3 30.6 EBITDA $ 37.8 $ 65.4
MARTIN MARIETTA MATERIALS,
INC.Non-GAAP Financial Measures (continued)(Dollars in
millions)
Incremental gross margin (excluding freight and delivery
revenues) is a non-GAAP measure. The Corporation presents this
metric to enhance analysts' and investors' understanding of the
impact of increased sales on profitability. The following shows the
calculation of incremental gross margin (excluding freight and
delivery revenues) for the heritage Aggregates business for the
quarter ended June 30, 2015:
Heritage Aggregates business net sales for the
quarter ended June 30, 2015 $ 555.3 Heritage Aggregates business
net sales for the quarter ended June 30, 2014 540.0
Incremental net sales $ 15.3 Heritage Aggregates
business gross profit for the quarter ended June 30, 2015 $ 144.5
Heritage Aggregates business gross profit for the quarter ended
June 30, 2014 111.7 Incremental gross profit $ 32.8
Incremental gross margin (excluding freight and
delivery revenues) for the quarter ended June 30, 2015 214 %
MLM-E
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150804005953/en/
Martin Marietta Materials, Inc.Anne H. Lloyd,
919-783-4660Executive Vice President and Chief Financial
Officerwww.martinmarietta.com
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