-----------------
Record Fourth-Quarter Net Sales and
Profitability;
Quarterly Earnings per Diluted Share of
$1.26 – Up 34 Percent;
Quarterly Heritage Aggregates Business Gross
Margin Expands 330 Basis Points;
Quarterly Consolidated Gross Margin Expands
250 Basis Points
-----------------
Record Full-Year Net Sales and
Profitability;
Full-Year Consolidated Adjusted EBITDA
Growth of 30 Percent;
Full-Year Consolidated Heritage Martin
Marietta Business Incremental Gross Margin of 75 Percent
-----------------
2016 Outlook Reflects Solid Underlying
Demand and Pricing
Martin Marietta Materials, Inc. (NYSE:MLM) today reported its
results for the fourth-quarter and year-ended December 31,
2015.
Ward Nye, Chairman, President and CEO of Martin Marietta,
stated: “Our fourth-quarter performance established quarterly
records for Martin Marietta’s net sales and profitability, driven
by strong pricing, disciplined execution of our strategic plan and
steady growth in general construction activity. Notably, all
segments in the aggregates business delivered increased net sales
and gross profit, while expanding gross profit margin. We exceeded
our incremental gross margin target for heritage Martin Marietta
businesses, as well as on a consolidated basis. The West Group led
gross profit margin (excluding freight and delivery revenues)
expansion with a 630-basis-point improvement, largely the result of
strong pricing and realized synergies from the TXI acquisition.
Importantly, we achieved these consolidated results despite
heightened and sustained adverse weather trends that constrained
both shipments and efficient production.
“The National Oceanic and Atmospheric Administration (NOAA) has
tracked precipitation levels for 121-years, and the fourth quarter
was the wettest, at both the national level and in our key states
of Texas, North Carolina and South Carolina, in their history.
Similarly, Iowa and Georgia experienced their second and third
wettest recorded periods, respectively. These conditions
significantly constrained construction and related activity, which
led to lower-than-expected shipment and production volumes during
the quarter. However, our unrelenting focus on operational
excellence and cost discipline, coupled with strong pricing in the
Aggregates business, led to attractive margin expansion and
earnings growth.
“For the full-year 2015, we achieved record net sales and
profitability, expanded consolidated gross profit margin (excluding
freight and delivery revenues) by 260 basis points, and exceeded
both incremental margin targets for the consolidated heritage
businesses and acquisition synergy targets ahead of the expected
timeline. In addition, we invested strategic capital in our
business, completed several bolt-on acquisitions and returned
nearly $630 million to shareholders through dividends and share
repurchases.
“We continue to execute against our strategic objective of
securing and solidifying leading market positions in
economically-diverse, high-growth areas. To that end, in November
2015, and last week, we closed two acquisitions near Colorado
Springs, Colorado that complement our position in metro-Denver and
northern Colorado, collectively the Front Range. The Front Range
runs north-south along the Interstate 25 corridor, and over 80
percent of Colorado’s population lives in this area. These two
businesses add nearly one billion tons of aggregates reserves and
will serve as a high-quality source of construction aggregates to a
market transitioning from rapidly depleting alluvial reserves.
Coupled with our existing operations, these transactions secured an
estimated 100 years of aggregates reserves in the Front Range.
“Our outlook for 2016 reflects growing underlying demand and
strong pricing across our entire geographic footprint. National
employment growth, a stimulus for construction activity, remained
robust throughout 2015, surpassing the pre-recession peak by nearly
five million jobs. These job gains, in addition to substantial
contractor backlogs resulting from historic rainfall in 2015,
should fuel growth and further recovery of the U.S. construction
industry.”
Mr. Nye continued, “In addition to job growth, positive private
sector construction activity and favorable population dynamics in
our key markets, we now have a multi-year federal highway bill for
the first time in a decade. The five-year, $305 billion Fixing
America’s Surface Transportation Act, or FAST Act, provides the
funding certainty states have needed to commit to much-needed
longer-term projects to improve America’s transportation network.
We believe the FAST Act, coupled with state-level funding
initiatives in four of our top five states, namely Texas, North
Carolina, Georgia and Iowa, will drive large, multi-year,
aggregate-intensive construction projects. Further, it is also
likely we will see meaningful projects in rural areas of those
states that have been infrastructure-starved during the last decade
and will now be better able to develop new avenues for growth and
commerce. We are well positioned, through our leading market
positions and strong foundation, to capitalize on these
opportunities and enhance long-term shareholder value.”
NOTABLE ITEMS FOR THE FOURTH-QUARTER
AND FULL-YEAR ENDED DECEMBER 31, 2015
Quarter-ended December 31, Year-ended
December 31, 2015 2014
2015 2014 Consolidated net sales $
780.8M $ 779.5M $ 3.3B $ 2.7B % growth
0.2% 22.0% Consolidated gross
profit $ 184.8M $ 165.3M $ 721.8M $
522.4M % growth 11.8% 38.2%
Consolidated gross profit margin
(excluding freight and delivery revenues)
23.7% 21.2% 22.1% 19.5% margin
expansion 250 bps 260 bps
Aggregates volume (total tons) 38,001 37,350
156,422 146,050 % growth 1.7%
7.1% Aggregates price per ton $12.34
$11.38 $12.00 $11.12 % growth 8.4%
8.0% Heritage aggregates
business net sales $ 522.1M $ 483.4M $ 2.1B
$ 1.9B % growth 8.0% 8.2%
Heritage aggregates business gross profit $ 130.4M
$ 105.1M $ 497.1M $ 366.6M % growth
24.1% 35.6%
Heritage aggregates business gross profit
margin (excluding freight and delivery revenues)
25.0% 21.7% 23.8% 19.0% margin growth
330 bps 480 bps
Heritage aggregates volume (external tons) 33,137
32,389 135,497 132,523 % growth 2.3%
2.2% Heritage aggregates price per ton
$12.21 $11.30 $11.88 $11.07 % growth
8.0% 7.3%
Consolidated adjusted earnings from operations 1 $ 123.5M
$ 118.6M $ 495.4M $ 368.7M % growth
4.1% 34.4% Consolidated
adjusted EBITDA 1
$ 190.5M
$ 188.3 M
$ 766.7M
$ 590.8M
% growth 1.2% 29.8%
Earnings per diluted share
$1.26
$0.94
$4.29
$2.71
% growth 34.0% 58.3%
Adjusted earnings per diluted share 1
$1.15
$0.94
$4.50
$3.74
% growth 22.3% 20.3%
1 See page 24 for a reconciliation to as
reported consolidated earnings from operations, consolidated EBITDA
and earnings per diluted share.
OPERATING RESULTS (All comparisons are versus the
prior-year period, unless noted otherwise)
Aggregates Business
Aggregates Shipments
by End-Use
Quarter-ended December 31,2015 % of
total sales % change Infrastructure 42%
2% Nonresidential 32% -6% Residential
18% 20% ChemRock/Rail 8% -
Year-ended December 31,2015 % of total sales
% change Infrastructure 41% 5%
Nonresidential 32% 3% Residential 17%
20% ChemRock/Rail 10% 9%
For the full year, shipments to the infrastructure market
increased five percent in 2015. The growth reflects state-level
funding initiatives positively impacting Texas, Iowa, Georgia and
Florida. Major infrastructure activity is accelerating at the
state-level and, when combined with the FAST Act, will likely
increase the rate of infrastructure growth, the duration of the
projects and the mix of aggregate-intensive new construction for
2016 and beyond. As one example, shortly after passage of state
funding initiatives, the North Carolina Department of
Transportation announced an accelerated schedule for 90 highway
projects already included in the state’s strategic transportation
improvement plan.
The nonresidential market represented 32 percent of
fourth-quarter and full-year aggregate product line shipments and
increased three percent for full-year 2015. Light nonresidential
construction increased approximately 27 percent for the year,
following growth in residential demand and driven by construction
activity across all geographies, offsetting a reduction in direct
energy shipments into the shale fields. For the year, we shipped
3.6 million tons to the shale fields compared with 7.5 million tons
in 2014.
The residential end-use market aggregates product line shipments
increased 20 percent for the full-year 2015, reflecting the
continued steady recovery of residential investment. Florida,
Colorado and North Carolina each rank in the top-ten states in
housing starts. At the metro-level, particular strength is seen in
Dallas/Fort Worth, Texas illustrating the resilience and diversity
of the Texas economy. In addition, strength is seen in Atlanta,
Georgia, indicative of the continuing recovery in the Southeastern
United States. Aggregate product line shipments to the
ChemRock/Rail market increased nine percent in 2015.
Heritage aggregates product line shipments increased two percent
for both the fourth-quarter and full-year 2015. Geographically,
heritage aggregates product line shipment gains were led by volume
growth in the Southeast Group, where increasing demand throughout
Georgia and Central Florida drove a 6.5 percent increase in
shipments for the full year. Aggregates product line shipments in
the Mid-America Group for 2015 increased five percent. West Group
shipments declined by three percent for the year 2015, driven
largely by historic rainfall in Texas and Oklahoma, a reduction in
shale energy volumes, and the required divestitures related to the
TXI acquisition in the third quarter of 2014.
Heritage aggregates product line pricing increased in each
reportable group in both the fourth-quarter and full-year 2015, led
by the West Group’s 12 percent improvement for the quarter and 11
percent improvement for the full year.
The heritage ready mixed concrete product line reported robust
pricing and volume improvements in 2015. The Company leveraged a
five percent volume increase and a ten percent price increase to
expand gross margin (excluding freight and delivery revenues) by
220 basis points. The acquired ready mixed concrete business
pricing increased nearly 11 percent, reflective of both underlying
demand and the expiration of certain TXI project commitments
included in 2014 results. Ready mixed concrete shipments increased
to 4.6 million cubic yards, but fell below expectations,
principally due to adverse Texas weather conditions.
On a consolidated basis, full-year total production cost per ton
shipped for the aggregates product line increased 1.5 percent. The
cost per ton reflects lower energy costs offset by higher operating
expenses associated with poor weather, most visible in lower
productivity per man hour.
Incremental gross margin (excluding freight and delivery
revenues) for the heritage aggregates business exceeded targeted
objectives for both the fourth-quarter and full-year 2015. The
incremental gross margin of 82 percent for the full-year 2015 was
led by growth in both the West Group and the Southeast Group, which
achieved incremental gross margin of 135 percent and 78 percent,
respectively. The heritage Aggregates business gross margin
(excluding freight and delivery revenues) was 23.8 percent for the
full-year 2015, an increase of 480 basis points.
Magnesia Specialties Business
Magnesia Specialties business net sales were negatively affected
by a slowdown in the steel industry and declined $9 million, or
four percent, for the year. Steel capacity utilization was
approximately 71 percent for the year, down from 78 percent for
2014. The business generated $228 million in net sales and a 35
percent gross profit margin (excluding freight and delivery
revenues) for the full-year 2015.
Cement Business
With the sale of the California cement business in September
2015, fourth-quarter results are not comparable with the prior-year
period. Cement shipment volume and net sales declined 371,000 tons
and $32 million, respectively, for the quarter related to the
California divestiture.
While 2015 volumes are not comparable due to the California
disposition, the Company is encouraged by the continued resilience
in the Texas markets, with increasing demand driven by solid
population and employment growth. The Portland Cement Association
(PCA) forecasts modest demand growth in Texas in 2016, followed by
stronger growth in 2017, all underscoring a continued favorable
supply/demand imbalance over the next several years.
The remaining cement business continues to benefit from
significant pricing improvement throughout Texas, although
fourth-quarter volumes were adversely affected by weather
conditions. Average selling prices were up ten percent, reflective
of the impact from the expiration of legacy TXI cement contracts
with below-market pricing in addition to the sale of the lower
average priced California cement operations. The business generated
$60 million of net sales in the quarter and $22 million in earnings
before interest, taxes and depreciation, depletion and amortization
(EBITDA), a 37 percent EBITDA margin. For the year, the cement
business generated $368 million in net sales and delivered a 28
percent gross profit margin (excluding freight and delivery
revenues), a 310-basis-point improvement over the prior year. For
the full year, EBITDA for the business increased to $101
million.
Consolidated Operating Results
SG&A expenses for full-year 2015 were 6.7 percent of net
sales, and 7.3 percent in the fourth quarter. The increase of 40
basis points for the full year, and 90 basis points for the fourth
quarter, reflects higher pension expense, increased incentive
compensation costs (related to performance against strategic,
financial and operating objectives) and continued investment in
information systems improvements.
Other operating expenses, net, for the full-year was $15.7
million in 2015 compared with other operating income of $4.6
million in the prior-year. The decrease is due to the $24.3
million pre-tax loss on the sale of California cement operations,
partially offset by the $13.1 million pre-tax gain on the
divestiture of the San Antonio asphalt operations. Full-year
earnings from operations were $479.4 million in 2015 compared with
$314.9 million in 2014.
The Company’s effective income tax rate for full-year 2015 was
30 percent, in line with the Company’s guidance. Cash taxes for the
full year were $46 million, which reflects consideration of
deferred income taxes and the utilization of an estimated $476
million of net operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for 2015 was $573.2
million compared with $381.7 million in 2014, principally
attributable to higher earnings before depreciation, depletion and
amortization expense and the absence of TXI transaction costs
incurred in 2014.
Capital investment for the full-year 2015 was $318 million,
which includes $78 million related to the new Medina limestone
quarry near San Antonio. The rail-connected quarry became
operational on January 1, 2016 and ships aggregates products to
South Texas, including Houston, and will be an important source of
high-quality Department of Transportation specification
aggregates.
At December 31, 2015, the ratio of consolidated net debt to
consolidated EBITDA, as defined, for the trailing twelve months was
1.9 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; therefore, 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 1,698,000 shares of
its common stock for $262 million. For the full-year 2015, the
Company repurchased 3,285,000 shares of its common stock for $520
million. As of December 31, 2015, there were 64.5 million shares of
Martin Marietta common stock outstanding.
“I am very pleased with our 2015 performance and achievements,
notwithstanding the extraordinary weather challenges that
temporarily suppressed our growth trajectory. The backlog of
construction projects, coupled with meaningful state department of
transportation initiatives and passage of the FAST Act should
provide substantial growth opportunities in 2016 and beyond. We
remain committed to our core pillars – world-class safety, ethical
conduct, our people, sustainability, operational excellence, cost
discipline and customer satisfaction – with the goal of continuing
to reward our shareholders for their investment in Martin
Marietta,” concluded Mr. Nye.
FULL-YEAR 2016 OUTLOOK
“Based on current forecasts and indications of market activity,
we remain positive about the outlook of our business in 2016.
Aggregates product line pricing is expected to increase from six to
eight percent. Volume growth is expected to continue with an
increase of five to seven percent. These gains in aggregates,
coupled with pricing improvements across the downstream and cement
businesses together with our cost discipline and strategic growth
initiatives, are expected to drive increased earnings for the
year,” said Mr. Nye.
The Company also expects 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 is near its highest level since 2009 and
signals continued growth.
- Energy-related economic activity,
including follow-on public and private construction activities in
its primary markets, will be mixed with overall strength in
downstream activity more than offsetting the decline in
shale-related volumes.
- Residential construction is expected to
continue to grow, driven by positive employment gains, historically
low levels of construction activity over the previous several
years, low mortgage rates, significant lot absorption, and higher
multi-family rental rates.
- For the public sector, modest growth is
expected in 2016 as new monies begin to flow into the system,
particularly in the second half of the year. Additionally, state
initiatives to finance infrastructure projects, including support
from the Transportation Infrastructure Finance and Innovation Act
(TIFIA), are expected to grow and continue to play an expanded role
in public-sector activity.
Based on these trends and expectations, the Company anticipates
the following for full-year 2016:
- Aggregates end-use markets compared to
2015 levels are as follows:
- Infrastructure market to increase
mid-single digits.
- Nonresidential market to increase in
the high-single digits.
- Residential market to experience a
double-digit increase.
- ChemRock/Rail market to remain
relatively flat to modestly down.
2016 GUIDANCE
Low
High
Consolidated
Results
Consolidated net sales $ 3.5B $ 3.7B Consolidated
gross profit $ 875M $ 925M SG&A $
220M $ 220M Interest expense $ 80M $ 80M
Estimated tax rate (excluding discrete events) 30.0%
30.0% Capital Expenditures $ 350M $ 350M
EBITDA $ 930M $ 980M
Aggregates
Product Line
Volume (total tons) 1 164.0M 167.0M % growth 1
5% 7%
Volume (external tons)
154.5M
157.5M
% growth 5% 7% Average selling price per ton
$12.75
$13.00
% growth 6% 8% Net sales $ 1.95B
$ 2.05B Gross profit $ 570M $ 600M Direct
production cost per ton shipped
$7.35
$7.50
Aggregates-related downstream
operations
Net sales $ 1.0B $ 1.1B Gross profit $ 100M
$ 105M
Cement
Volume (external tons) 2.8M 2.9M % growth 2 8%
11% Average selling price per ton $110.00
$112.00 % growth 2 8% 10% Net sales $
310M $ 325M Gross profit $ 125M $ 135M
Magnesia
Specialties
Net sales $ 235M $ 240M Gross profit $ 80M
$ 85M
1 Represents 2016 total aggregate volumes,
which includes approximately 9.5 million internal tons. Volume
growth ranges are in comparison to total volumes of 156.4 million
tons as reported for the full-year 2015, which includes 9.2 million
internal tons.
2 2016 cement volume and price growth ranges are provided
for Texas cement. The 2015 comparable excludes the sales of $98
million and volumes of 1.1 million tons related to the California
cement operations, which were sold in the third quarter of 2015.
See page 23 for quarterly and full-year 2015 operational results
for the California cement operations.
RISKS TO OUTLOOK
The 2016 outlook includes management’s assessment of the
likelihood of certain risks and uncertainties that will affect
performance, including but 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
further 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 its
cement and/or magnesia specialties production facilities; and the
possibility that certain remaining synergies and operating
efficiencies in connection with the TXI acquisition will not be
fully 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 rail cars 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
rail cars 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.
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.
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 fourth-quarter and full-year 2015
earnings results on a conference call and online web simulcast
today (February 9, 2016). 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
fourth-quarter and full-year 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
30142033.
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 26 states, Canada and
the Bahamas. 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 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 the
Corporation’s 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, 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 being
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 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 further 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 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;
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 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 of trucks and licensed drivers for transport of the
Corporation’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 Corporation’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 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.
MLM-E
MARTIN
MARIETTA MATERIALS, INC. Unaudited Statements of
Earnings (In millions, except per share amounts)
Three Months Ended Year Ended December 31,
December 31, 2015 2014 2015 2014
Net sales $ 780.8 $ 779.5 $ 3,268.1 $ 2,679.1 Freight and delivery
revenues 63.8 76.8 271.5
278.9 Total revenues 844.6 856.3
3,539.6 2,958.0 Cost of sales
596.0 614.2 2,546.3 2,156.7 Freight and delivery costs 63.8
76.8 271.5 278.9
Total cost of revenues 659.8 691.0
2,817.8 2,435.6 Gross profit 184.8
165.3 721.8 522.4 Selling, general and administrative expenses 57.1
50.0 218.2 169.2 Acquisition-related expenses, net 2.7 1.7 8.5 42.9
Other operating (income) and expenses, net (12.4 )
(5.0 ) 15.7 (4.6 ) Earnings from operations
137.4 118.6 479.4 314.9 Interest expense 18.9 21.1 76.3 66.1 Other
nonoperating income, net (4.0 ) (1.7 ) (10.7 )
(0.4 ) Earnings from continuing operations before taxes on
income 122.5 99.2 413.8 249.2 Income tax expense 39.3
35.3 124.9 94.9 Earnings
from continuing operations 83.2 63.9 288.9 154.3 Earnings on
discontinued operations, net of related tax expense of $0.0
- 0.1 - -
Consolidated net earnings 83.2 64.0 288.9 154.3 Less: Net earnings
(loss) attributable to noncontrolling interests -
- 0.1 (1.3 ) Net earnings
attributable to Martin Marietta Materials, Inc. $ 83.2 $
64.0 $ 288.8 $ 155.6 Net earnings per
common share: Basic from continuing operations attributable to
common shareholders $ 1.27 $ 0.95 $ 4.31 $ 2.73 Discontinued
operations attributable to common shareholders -
- - - $ 1.27 $
0.95 $ 4.31 $ 2.73 Diluted from
continuing operations attributable to common shareholders $ 1.26 $
0.94 $ 4.29 $ 2.71 Discontinued operations attributable to common
shareholders - - -
- $ 1.26 $ 0.94 $ 4.29 $ 2.71
Dividends per common share $ 0.40 $ 0.40 $
1.60 $ 1.60 Average number of common shares
outstanding: Basic 65.5 67.3
66.8 56.9 Diluted 65.7
67.6 67.0 57.1
MARTIN MARIETTA MATERIALS, INC. Unaudited Financial
Highlights (In millions)
Three Months Ended Year Ended
December 31, December 31, 2015 2014
2015 2014 Net sales: Aggregates Business: Mid-America
Group $ 219.1 $ 201.0 $ 851.9 $ 770.5 Southeast Group 70.8 60.8
285.3 255.0 West Group 379.8 359.5
1,535.8 1,207.9 Total Aggregates
Business 669.7 621.3 2,673.0 2,233.4 Cement 60.1 100.0 367.6 209.6
Magnesia Specialties 51.0 58.2
227.5 236.1 Total $ 780.8 $ 779.5
$ 3,268.1 $ 2,679.1 Gross profit
(loss): Aggregates Business: Mid-America Group $ 71.9 $ 66.9 $
256.6 $ 216.9 Southeast Group 10.1 5.8 34.2 10.6 West Group
58.7 39.0 255.0 155.7
Total Aggregates Business 140.7 111.7 545.8 383.2 Cement
15.8 28.3 103.5 52.5 Magnesia Specialties 17.9 22.4 78.7 84.6
Corporate 10.4 2.9 (6.2 )
2.1 Total $ 184.8 $ 165.3 $ 721.8 $
522.4 Selling, general and administrative expenses:
Aggregates Business: Mid-America Group $ 13.4 $ 13.1 $ 52.6 $ 52.2
Southeast Group 5.2 4.6 18.5 17.8 West Group 18.3
14.3 66.6 50.1 Total
Aggregates Business 36.9 32.0 137.7 120.1 Cement 6.5 6.5 26.6 12.7
Magnesia Specialties 2.4 2.5 9.5 9.8 Corporate 11.3
9.0 44.4 26.6 Total $
57.1 $ 50.0 $ 218.2 $ 169.2
Earnings (Loss) from operations: Aggregates Business: Mid-America
Group $ 58.5 $ 55.5 $ 206.8 $ 172.2 Southeast Group 5.6 1.8 16.4
(5.3 ) West Group 1 54.5 28.1
205.7 153.2 Total Aggregates Business 118.6
85.4 428.9 320.1 Cement 2 10.4 22.5 47.8 40.8 Magnesia Specialties
15.3 19.8 68.9 74.8 Corporate (6.9 ) (9.1 )
(66.2 ) (120.8 ) Total $ 137.4 $ 118.6 $ 479.4
$ 314.9 (1) West results for the year ended
December 31, 2014 reflect $41.1 million of nonrecurring earnings,
net. (2) Cement results for the year ended December 31, 2015
reflect $29.1 million, respectively, for the loss on the sale of
the California cement business and related expenses.
MARTIN MARIETTA MATERIALS, INC. Unaudited Financial
Highlights (In millions)
Three Months Ended Year Ended
December 31, December 31, 2015 2014
2015 2014 Net sales by product line: Heritage:
Aggregates Business: Aggregates $ 412.7 $ 374.6 $ 1,642.9 $ 1,502.5
Asphalt 9.6 16.3 64.9 76.3 Ready Mixed Concrete 58.5 49.2 224.1
196.0 Road Paving 41.3 43.3
158.6 156.6 Total Aggregates Business 522.1
483.4 2,090.5 1,931.4 Magnesia Specialties Business 51.0 58.2 227.5
236.1 Acquisition: Aggregates Business: Aggregates 37.2 30.7 150.8
67.5 Ready Mixed Concrete 110.4 107.2
431.7 234.5 Total Aggregates Business
147.6 137.9 582.5 302.0 Cement Business 60.1
100.0 367.6 209.6 Total $ 780.8
$ 779.5 $ 3,268.1 $ 2,679.1
Gross profit (loss) by product line: Heritage: Aggregates Business:
Aggregates $ 111.2 $ 91.8 $ 427.0 $ 321.0 Asphalt 4.5 2.8 18.2 13.6
Ready Mixed Concrete 8.7 6.7 34.3 25.6 Road Paving 6.0
3.8 17.6 6.4 Total
Aggregates Business 130.4 105.1 497.1 366.6 Magnesia Specialties
Business 17.9 22.4 78.7 84.6 Corporate 7.1 3.7 (7.7 ) 3.4
Acquisition: Aggregates Business: Aggregates 11.0 2.8 40.0 3.1
Ready Mixed Concrete (0.7 ) 3.8 8.7
13.5 Total Aggregates Business 10.3 6.6 48.7
16.6 Cement Business 15.8 28.3 103.5 52.5 Corporate 3.3
(0.8 ) 1.5 (1.3 ) Total $ 184.8
$ 165.3 $ 721.8 $ 522.4
Depreciation $ 55.9 $ 59.5 $ 232.5 $ 200.2 Depletion 3.8 4.7 14.4
11.0 Amortization 4.0 4.5 16.7
11.5 $ 63.7 $ 68.7 $ 263.6
$ 222.7
MARTIN MARIETTA MATERIALS,
INC. Unaudited Financial Highlights (Dollars in
millions)
Three Months Ended December 31,
Heritage
MartinMarietta(1)
AcquiredOperations(2)
NonrecurringTransactionItems(3)
Consolidated 2015 2015 2015 2015
Net sales $ 573.1 $ 207.7 $ - $ 780.8 Freight and delivery revenues
53.8 10.0 - 63.8
Total revenues 626.9 217.7 -
844.6 Cost of sales 417.7 178.3 - 596.0 Freight and
delivery costs 53.8 10.0 -
63.8 Total cost of revenues 471.5 188.3
- 659.8 Gross profit 155.4 29.4
- 184.8 Selling, general and administrative expenses(4) 43.5 13.6 -
57.1 Acquisition-related expenses, net - - 2.7 2.7 Other operating
expenses and (income), net 2.8 (1.3 ) (13.9 )
(12.4 ) Earnings from operations $ 109.1 $ 17.1 $
11.2 $ 137.4 (1) Heritage Martin Marietta is
consolidated 2015 results excluding the operating results of
acquired TXI locations and three small acquisitions closed during
2015, acquisition-related expenses, net, and the gain on
divestitures of businesses. (2) Acquired operations reflect
operating results of acquired TXI locations and three small
acquisitions closed in 2015. (3) Nonrecurring transaction items are
primarily integration expenses related to the TXI acquisition and
the gain on a business divestiture. (4) Selling, general and
administrative expenses for acquired operations include the
allocation of $4.5 million of Corporate overhead.
Three
Months Ended December 31,
Heritage MartinMarietta
Heritage MartinMarietta
Variance(5)
-Favorable
2015 2014 (Unfavorable) Net sales $ 573.1 $
541.6 $ 31.5 Freight and delivery revenues 53.8 63.3
(9.5 ) Total revenues 626.9 604.9
22.0 Cost of sales 417.7 410.4 (7.3 ) Freight
and delivery costs 53.8 63.3 9.5
Total cost of revenues 471.5 473.7 2.2
Gross profit 155.4 131.2 24.2 Selling, general and
administrative expenses 43.5 38.4 (5.1 ) Other operating expenses
and (income), net 2.8 (3.9 ) (6.7 )
Earnings from operations, excluding
acquisition-related expenses, net
$ 109.1 $ 96.7 $ 12.4 (5) The variance
reflects the change between Heritage Martin Marietta 2015 and
Heritage Martin Marietta 2014.
MARTIN MARIETTA
MATERIALS, INC. Unaudited Financial Highlights (Dollars
in millions)
Year Ended December 31,
Heritage
MartinMarietta(1)
AcquiredOperations(2)
NonrecurringTransactionItems(3)
Consolidated 2015 2015 2015 2015
Net sales $ 2,318.0 $ 950.1 $ - $ 3,268.1 Freight and delivery
revenues 225.7 45.8 -
271.5 Total revenues 2,543.7 995.9 -
3,539.6 Cost of sales 1,749.9 796.4 - 2,546.3 Freight
and delivery costs 225.7 45.8 -
271.5 Total cost of revenues 1,975.6 842.2
- 2,817.8 Gross profit 568.1 153.7 -
721.8 Selling, general and administrative expenses(4) 165.8 52.4 -
218.2 Acquisition-related expenses, net - 8.5 8.5 Other operating
expenses and (income), net 1.0 (1.3 ) 16.0
15.7 Earnings (Loss) from operations $ 401.3 $ 102.6
$ (24.5 ) $ 479.4 (1) Heritage Martin Marietta is
consolidated 2015 results excluding the operating results of
acquired TXI locations and three small acquisitions closed during
2015, acquisition-related expenses, net, and gains and losses on
divestitures of businesses. (2) Acquired operations reflect
operating results of acquired TXI locations and three small
acquisitions closed in 2015. (3) Nonrecurring transaction items are
primarily integration expenses related to the TXI acquisition and
gains and losses on divestitures of businesses. (4) Selling,
general and administrative expenses for acquired operations include
the allocation of $18.0 million of Corporate overhead.
Year Ended December 31,
Heritage MartinMarietta
Heritage MartinMarietta
Variance(5)
-Favorable
2015 2014 (Unfavorable) Net sales $ 2,318.0 $
2,167.5 $ 150.5 Freight and delivery revenues 225.7
250.8 (25.1 ) Total revenues 2,543.7
2,418.3 125.4 Cost of sales 1,749.9 1,712.9
(37.0 ) Freight and delivery costs 225.7 250.8
25.1 Total cost of revenues 1,975.6
1,963.7 (11.9 ) Gross profit 568.1 454.6 113.5
Selling, general and administrative expenses 165.8 141.8 (24.0 )
Other operating expenses and (income), net 1.0 (1.1 )
(2.1 ) Earnings from operations, excluding
acquisition-related expenses, net $ 401.3 $ 313.9 $ 87.4
(5) The variance reflects the change between Heritage
Martin Marietta 2015 and Heritage Martin Marietta 2014.
MARTIN MARIETTA MATERIALS, INC. Unaudited
Financial Highlights - West Group (Dollars in millions)
Three Months Ended
December 31, Heritage West
AcquiredOperations
West
2015(1)
2015(2) 2015 Net sales $ 232.9 $ 146.9 $ 379.8
Freight and delivery revenues 26.0 6.2 32.2
Total revenues 258.9 153.1 412.0 Cost of sales
184.3 136.8 321.1 Freight and delivery costs 26.0 6.2
32.2 Total cost of revenues 210.3 143.0
353.3 Gross profit $ 48.6 $ 10.1 $ 58.7 (1) Heritage West
2015 results reflect the 2015 West results less the operating
results of acquired TXI locations and two other small acquisitions.
(2) Acquired operations reflect the operating results for all
acquired TXI aggregates and ready mixed concrete operations
reported in the West Group and two small acquisitions closed in
2015.
Three Months Ended December 31,
Heritage West Heritage West
Variance(3)
-Favorable
2015 2014 (Unfavorable) Net sales $ 232.9 $
221.5 $ 11.4 Freight and delivery revenues 26.0 32.4
(6.4) Total revenues 258.9 253.9 5.0
Cost of sales 184.3 189.1 4.8 Freight and delivery costs
26.0 32.4 6.4 Total cost of revenues 210.3
221.5 11.2 Gross profit $ 48.6 $ 32.4 $ 16.2
(3) The variance reflects the change between Heritage West 2015 and
Heritage West 2014.
MARTIN MARIETTA MATERIALS,
INC. Unaudited Financial Highlights - West Group
(Dollars in millions)
Year Ended December 31, Heritage West
AcquiredOperations
West 2015(1) 2015(2) 2015
Net sales $ 956.0 $ 579.8 $ 1,535.8 Freight and delivery revenues
114.1 25.1 139.2 Total revenues 1,070.1
604.9 1,675.0 Cost of sales 749.3 531.5
1,280.8 Freight and delivery costs 114.1 25.1
139.2 Total cost of revenues 863.4 556.6
1,420.0 Gross profit $ 206.7 $ 48.3 $ 255.0 (1) Heritage
West 2015 results reflect the 2015 West results less the operating
results of acquired TXI locations and two other small acquisitions.
(2) Acquired operations reflect the operating results for all
acquired TXI aggregates and ready mixed concrete operations
reported in the West Group and two small acquisitions closed in
2015.
Year Ended December 31, Heritage
West Heritage West
Variance(3)
-Favorable
2015 2014 (Unfavorable) Net sales $ 956.0 $
905.9 $ 50.1 Freight and delivery revenues 114.1
133.1 (19.0) Total revenues 1,070.1 1,039.0
31.1 Cost of sales 749.3 766.9 17.6 Freight and
delivery costs 114.1 133.1 19.0 Total cost of
revenues 863.4 900.0 36.6 Gross profit $ 206.7
$ 139.0 $ 67.7 (3) The variance reflects the change between
Heritage West 2015 and Heritage West 2014.
MARTIN
MARIETTA MATERIALS, INC. Balance Sheet Data (In
millions)
December 31,
December 31, 2015 2014 (Unaudited) (Audited)
ASSETS Cash and cash equivalents $ 168.4 $ 108.7 Accounts
receivable, net 410.9 421.0 Inventories, net 469.1 484.9 Other
current assets 33.7 29.6 Property, plant and equipment, net 3,156.0
3,402.8 Intangible assets, net 2,578.8 2,664.0 Other noncurrent
assets 144.8 108.8 Total assets
$
6,961.7
$
7,219.8
LIABILITIES AND EQUITY Current maturities of
long-term debt $ 19.2 $ 14.3 Other current liabilities 348.0 382.3
Long-term debt (excluding current maturities) 1,553.6 1,571.1 Other
noncurrent liabilities 980.7 899.4 Total equity 4,060.2
4,352.7 Total liabilities and equity $ 6,961.7 $ 7,219.8
MARTIN MARIETTA MATERIALS, INC. Unaudited
Statements of Cash Flows (In millions)
Year
Ended December 31, 2015 2014
Operating activities: Consolidated net earnings $ 288.9 $ 154.3
Adjustments to reconcile consolidated net earnings to net cash
provided by operating activities: Depreciation, depletion and
amortization 263.6 222.7 Stock-based compensation expense 13.6 9.0
Loss (gain) on divestitures and sales of assets 14.1 (52.3 )
Deferred income taxes 85.2 50.3 Excess tax benefits from
stock-based compensation - (2.5 ) Other items, net (5.9 ) 4.9
Changes in operating assets and liabilities, net of effects of
acquisitions and divestitures: Accounts receivable, net 12.3 (16.7
) Inventories, net (21.5 ) (12.0 ) Accounts payable (40.1 ) 5.3
Other assets and liabilities, net (37.0 ) 18.7
Net cash provided by operating activities 573.2
381.7 Investing activities: Additions to
property, plant and equipment (318.2 ) (232.2 ) Acquisitions, net
(43.2 ) (0.2 ) Cash received in acquisition - 59.9 Proceeds from
divestitures and sales of assets 448.1 122.0 Repayments from
affiliate 1.8 1.2 Payment of railcar construction advances (25.2 )
(14.5 ) Reimbursement of railcar construction advances 25.2
14.5 Net cash provided by (used for) investing
activities 88.5 (49.3 ) Financing
activities: Borrowings of long-term debt 230.0 868.8 Repayments of
long-term debt (244.7 ) (1,057.3 ) Payments on capital leases (6.6
) (3.1 ) Debt issue costs - (2.8 ) Change in bank overdraft 10.0
(2.3 ) Repurchase of common stock (520.0 ) - Dividends paid (107.5
) (91.3 ) Purchase of remaining interest in existing subsidiaries -
(19.5 ) Distributions to owners of noncontrolling interests (0.3 )
(0.8 ) Excess tax benefits from stock-based compensation - 2.5
Issuances of common stock 37.1 39.7 Net
cash used for financing activities (602.0 ) (266.1 )
Net increase in cash and cash equivalents 59.7 66.3 Cash and
cash equivalents, beginning of period 108.7
42.4 Cash and cash equivalents, end of period $ 168.4
$ 108.7
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 3.2 % 4.9 % 5.2 % 4.7 % Southeast
Group 8.1 % 7.8 % 6.5 % 5.4 % West Group (2.0 %) 11.9 % (3.0 %)
10.8 % Heritage Aggregates Operations 1.9 % 8.0 % 2.1 % 7.3 %
Aggregates Product Line (3) 1.7 % 8.4 % 7.1 % 8.0 %
Three
Months Ended Year Ended December 31, December
31, Shipments (tons in thousands)
2015
2014 2015 2014 Heritage Aggregates Product
Line: (2) Mid-America Group 17,332 16,800 68,324 64,959
Southeast Group 4,710 4,358 19,479 18,289 West Group 12,408
12,665 53,212 54,873
Heritage Aggregates Operations 34,450 33,823 141,015 138,121
Acquisitions 3,551 3,527 15,407
7,929 Aggregates Product Line (3)
38,001 37,350 156,422
146,050 (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 Year
Ended December 31, December 31, 2015
2014 2015 2014 Heritage: Aggregates
tons - external customers 33,137 32,389 135,497 132,523 Internal
aggregates tons used in other product lines 1,313
1,434 5,518 5,598 Total
aggregates tons 34,450 33,823
141,015 138,121 Asphalt tons - external
customers 178 326 1,220 1,508 Internal asphalt tons used in road
paving business 401 460 1,697
1,807 Total asphalt tons 579
786 2,917 3,315
Ready Mixed Concrete - cubic yards 545 493
2,133 2,033
Acquisitions: Aggregates tons - external customers 2,731
2,541 11,700 5,699 Internal aggregates tons used in other product
lines 820 986 3,707
2,230 Total aggregates tons 3,551
3,527 15,407 7,929
Ready Mixed Concrete - cubic yards 1,073 1,280
4,574 2,746 Cement tons -
external customers 569 1,048 3,667 2,318 Internal cement tons used
in other product lines 233 252
891 506 Total Cement tons 802
1,300 4,558 2,824
Average unit sales price by product line (including internal
sales): Heritage: Aggregates (per ton) $ 12.21 $
11.30 $ 11.88 $ 11.07 Asphalt (per ton) $
41.64 $ 39.90 $ 42.57 $ 41.26 Ready
Mixed Concrete (per cubic yard) $ 103.84 $ 96.02 $
102.20 $ 93.27
Acquisitions: Aggregates
(per ton) $ 14.08 $ 12.13 $ 13.55 $ 11.96
Ready Mixed Concrete (per cubic yard) $ 101.96 $
82.74 $ 93.52 $ 84.53 Cement (per ton) $
102.44 $ 93.02 $ 98.35 $ 89.21
MARTIN MARIETTA MATERIALS, INC. Non-GAAP Financial
Measures and Other Information (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 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 months and year ended December 31, 2015 and
2014, in accordance with GAAP and reconciliations of the ratios as
percentages of total revenues to percentages of net sales:
Consolidated Gross Margin in Accordance
with Generally Accepted Accounting Principles
Three Months Ended Year Ended
December 31, December 31, 2015 2014
2015 2014 Gross profit $ 184.8 $ 165.3
$ 721.8 $ 522.4 Total revenues $ 844.6 $ 856.3
$ 3,539.6 $ 2,958.0 Gross margin 21.9 %
19.3 % 20.4 % 17.7 %
Three Months
Ended Year Ended Consolidated Gross Margin Excluding
Freight and Delivery Revenues December 31, December
31, 2015 2014 2015 2014 Gross
profit $ 184.8 $ 165.3 $ 721.8 $ 522.4
Total revenues $ 844.6 $ 856.3 $ 3,539.6 $ 2,958.0 Less: Freight
and delivery revenues (63.8 ) (76.8 ) (271.5 )
(278.9 ) Net sales $ 780.8 $ 779.5 $ 3,268.1
$ 2,679.1 Gross margin excluding freight and delivery
revenues 23.7 % 21.2 % 22.1 % 19.5 %
Consolidated Operating Margin in
Accordance with Generally Accepted Accounting Principles
Three Months Ended Year Ended
December 31, December 31, 2015 2014
2015 2014 Earnings from operations $ 137.4 $
118.6 $ 479.4 $ 314.9 Total revenues $ 844.6
$ 856.3 $ 3,539.6 $ 2,958.0 Operating
margin 16.3 % 13.9 % 13.5 % 10.6 %
Three Months Ended Year Ended Consolidated
Operating Margin Excluding Freight and Delivery Revenues
December 31, December 31, 2015 2014
2015 2014 Earnings from operations $ 137.4 $
118.6 $ 479.4 $ 314.9 Total revenues $ 844.6 $
856.3 $ 3,539.6 $ 2,958.0 Less: Freight and delivery revenues
(63.8 ) (76.8 ) (271.5 ) (278.9 ) Net
sales $ 780.8 $ 779.5 $ 3,268.1 $ 2,679.1
Operating margin excluding freight and delivery revenues
17.6 % 15.2 % 14.7 % 11.8 %
Cement Business Gross Margin in
Accordance with Generally Accepted Accounting Principles
Three Months Ended Year Ended
December 31, December 31, 2015 2014
2015 2014 Gross profit $ 15.8 $ 28.3 $
103.5 $ 52.5 Total revenues $ 63.8 $ 106.0
$ 387.9 $ 221.8 Gross margin 24.8 %
26.7 % 26.7 % 23.7 %
Three Months
Ended Year Ended Cement Business Gross Margin
Excluding Freight and Delivery Revenues December 31,
December 31, 2015 2014 2015 2014
Gross profit $ 15.8 $ 28.3 $ 103.5 $ 52.5
Total revenues $ 63.8 $ 106.0 $ 387.9 $ 221.8 Less: Freight
and delivery revenues (3.7 ) (6.0 ) (20.3 )
(12.2 ) Net sales $ 60.1 $ 100.0 $ 367.6
$ 209.6 Gross margin excluding freight and delivery
revenues 26.3 % 28.3 % 28.1 % 25.0 %
California Cement 2015 Metrics (divested on
September 30, 2015) Three Months Ended
Nine MonthsEnded
March 31 June 30 September 30 September
30 Shipment tons (000s) 376 367
328 1,071 Net sales $ 32.5
$ 33.9 $ 30.0 $ 96.4 Gross (loss)
profit $ (4.0 ) $ 3.7 $ 3.4 $ 3.1
MARTIN MARIETTA MATERIALS, INC. Non-GAAP Financial
Measures (continued) (Dollars, other than per share amounts, in
millions)
The Company presents the consolidated adjusted earnings from
operations, adjusted earnings per diluted share and consolidated
adjusted earnings before interest, income taxes, depreciation,
depletion and amortization (EBITDA). These non-GAAP measures
exclude the impacts of (1) the loss on the sale of the California
cement operations in 2015; (2) the gain on the sale of the San
Antonio asphalt operations in 2015; (3) the impact of TXI
acquisition-related expenses, net, in 2014; and (4) the impact of
selling acquired inventory from TXI due to markup to fair value in
2014. The non-GAAP measures are presented for investors and
analysts to evaluate and forecast the Company's ongoing financial
results by excluding nonrecurring items. The following shows the
reconciliation of these non-GAAP measures to the nearest measure in
accordance with generally accepted accounting principles (GAAP).
Three Months Ended Year Ended Consolidated
Adjusted Earnings from Operations December 31,
December 31, 2015 2014 2015 2014
Consolidated earnings from operations in accordance with generally
accepted accounting principles $ 137.4 $ 118.6 $ 479.4 $ 314.9 Loss
on sale of California cement operations (0.8 ) - 29.1 - Gain on
sale of San Antonio asphalt operations (13.1 ) - (13.1 ) - TXI
acquisition-related expenses, net - - - 42.7 Impact of selling
acquired inventory from TXI due to markup to fair value -
- - 11.1 Adjusted
consolidated earnings from operations $ 123.5 $ 118.6
$ 495.4 $ 368.7
Three Months
Ended Year Ended Adjusted Earnings Per Diluted
Share December 31, December 31, 2015
2014 2015 2014 Earnings per diluted share in
accordance with generally accepted accounting principles $ 1.26 $
0.94 $ 4.29 $ 2.71 Loss on sale of California cement operations
(0.01 ) - 0.31 - Gain on sale of San Antonio asphalt operations
(0.10 ) - (0.10 ) - TXI acquisition-related expenses, net - - -
0.91 Impact of selling acquired inventory from TXI due to markup to
fair value - - -
0.12 Adjusted earnings per diluted share $ 1.15 $
0.94 $ 4.50 $ 3.74
Three
Months Ended Year Ended Consolidated Adjusted
EBITDA December 31, December 31, 2015
2014 2015 2014 Consolidated net earnings
attributable to Martin Marietta $ 83.2 $ 64.0 $ 288.8 $ 155.6
Interest expense 18.9 21.1 76.3 66.1 Taxes on income 39.3 35.3
124.9 94.9 Depreciation, depletion and amortization 63.0
67.9 260.7 220.4
Consolidated EBITDA 204.4 188.3 750.7 537.0 Pretax loss on sale of
California cement operations (0.8 ) - 29.1 - Pretax gain on sale of
San Antonio asphalt operations (13.1 ) - (13.1 ) - TXI
acquisition-related expenses, net - - - 42.7 Impact of selling
acquired inventory from TXI due to markup to fair value -
- - 11.1
Consolidated adjusted EBITDA $ 190.5 $ 188.3 $ 766.7
$ 590.8
Three Months Ended
Year Ended Cement Business EBITDA December 31,
December 31, 2015 2014 2015 2014
Pretax earnings $ 10.4 $ 22.4 $ 47.8 $ 40.7 Interest expense - 0.1
0.1 0.1 Depreciation, depletion and amortization 11.5
15.2 53.6 30.6 Cement
Business EBITDA $ 21.9 $ 37.7 $ 101.5 $ 71.4
Cement Sales $ 60.1 $ 100.0 $ 367.6
$ 209.6 Cement EBITDA margin 36 % 38 %
28 % 34 %
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 Company
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
consolidated business, heritage Aggregates business, heritage
Southeast Group and heritage West Group for the year ended December
31, 2015:
Heritage Consolidated Business Net
sales for the year ended December 31, 2015 $ 2,318.0 Net sales for
the year ended December 31, 2014 2,167.5 Incremental
net sales $ 150.5 Gross Profit for the year ended
December 31, 2015 $ 568.1 Gross Profit for the year ended December
31, 2014 454.6 Incremental gross profit $ 113.5
Heritage consolidated business incremental gross
margin (excluding freight and delivery revenues) for the year ended
December 31, 2015 75 %
Heritage Aggregates
Business Net sales for the year ended December 31, 2015 $
2,090.5 Net sales for the year ended December 31, 2014
1,931.4 Incremental net sales $ 159.1 Gross
Profit for the year ended December 31, 2015 $ 497.1 Gross Profit
for the year ended December 31, 2014 366.6
Incremental gross profit $ 130.5 Heritage Aggregates
business incremental gross margin (excluding freight and delivery
revenues) for the year ended December 31, 2015 82 %
Heritage Southeast Group Net sales for the year ended
December 31, 2015 $ 285.3 Net sales for the year ended December 31,
2014 255.0 Incremental net sales $ 30.3
Gross Profit for the year ended December 31, 2015 $ 34.2 Gross
Profit for the year ended December 31, 2014 10.7
Incremental gross profit $ 23.5 Heritage Southeast
Group incremental gross margin (excluding freight and delivery
revenues) for the year ended December 31, 2015 78 %
Heritage West Group Net sales for the year ended
December 31, 2015 $ 956.0 Net sales for the year ended December 31,
2014 905.9 Incremental net sales $ 50.1
Gross Profit for the year ended December 31, 2015 $ 206.7 Gross
Profit for the year ended December 31, 2014 139.0
Incremental gross profit $ 67.7 Heritage West Group
gross margin (excluding freight and delivery revenues) for the year
ended December 31, 2015 135 %
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 December 31, 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 December 31, 2015. For supporting
calculations, refer to Company's website at
www.martinmarietta.com.
Twelve Month PeriodJanuary 1, 2015
toDecember 31, 2015 Earnings from continuing operations
attributable to Martin Marietta Materials, Inc. $ 288.8 Add back:
Interest expense 76.3 Income tax expense 124.8 Depreciation,
depletion and amortization expense 260.8 Stock-based compensation
expense 13.6 Nonrecurring expenses (acquisition-related expenses,
net loss on divestitures and other noncash related charges) 21.9
Deduct: Interest income (0.3 ) Consolidated EBITDA,
as defined $ 785.9 Consolidated Net Debt, including
debt for which the Company is a co-borrower, at December 31, 2015 $
1,480.1
Consolidated Debt-to-Consolidated EBITDA,
as defined, at December 31, 2015 for the trailing twelve month
EBITDA
1.88 times
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160209006039/en/
Martin Marietta Materials, Inc.Anne H. Lloyd,
919-783-4660Executive Vice President and Chief Financial
Officerwww.martinmarietta.comorInvestor Contact:Elisabeth Eisleben,
919-510-4776Director, Investor
RelationsElisabeth.eisleben@martinmarietta.com
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