-----------------
Record Net Sales and Net Earnings
Consolidated Gross Margin Expands 790 Basis
Points
First-Quarter Earnings Per Diluted Share of
$0.69
Aggregates Product Line Volume Up 13% and
Pricing Up 8%
Magnesia Specialties Record Results
-----------------
Company Raises Full–Year EBITDA Guidance to
$1.00 Billion to $1.05 Billion
-----------------
Martin Marietta Materials, Inc. (NYSE:MLM) today reported record
results for the first quarter ended March 31, 2016.
Ward Nye, Chairman, President and CEO of Martin Marietta,
stated: “We are especially pleased to report a record first quarter
even as we are only in the early-stage of recovery in broadly-based
construction activity. Our ability to perform so well without the
benefit of consistent macroeconomic support reflects positively on
Martin Marietta’s disciplined execution against our strategic
priorities. Our results also are indicative of our strict adherence
to maintaining a relentless strategic and tactical focus on our
leading operating positions in economically-diverse, high-growth
geographies, and improving market conditions throughout the vast
majority of our business. This enabled us to achieve a
790-basis-point expansion in gross margin (excluding freight and
delivery revenues). First-quarter results were supported by several
years of slow, but steady job growth, and evident in the
double-digit aggregates product line volume growth, strong price
increases and improved profitability of both our aggregates-related
downstream businesses and Cement business. Our year-over-year
comparisons further underscore the continued steady economic
recovery in our business, much of which was masked in 2015 by
historic levels of rainfall.
“In the first quarter of 2016, our aggregates product line
volume grew over 13 percent and pricing increased over 8 percent.
The Mid-America Group led with a 28 percent increase in aggregates
product line shipments, resulting from the start of several large,
principally state-funded highway projects across North Carolina and
South Carolina, and increased residential and non-residential
construction activity, across a broad spectrum of end-use demand.
The West Group reported a 5 percent increase in volumes and an 11
percent increase in pricing. Of particular note, North Texas
aggregates product line volumes and pricing increased 28 percent
and 12 percent, respectively, for the quarter. The Dallas-Fort
Worth Metroplex is the fastest growing area in Texas, and one of
the top nationally for both job growth and residential
construction. Further, the Texas Department of Transportation
forecasts an $8 billion fiscal year infrastructure construction
plan, which, together with the North Texas Tollway Authority and
the Harris County Tollway Authority, should lead to further growth
in customer backlogs. Our leading Texas market positions will allow
us to capitalize on these opportunities for the balance of the
year, and, indeed, for years to come.”
Mr. Nye continued, “Our first-quarter consolidated results
reflect a nearly 70 percent incremental gross margin (excluding
freight and delivery revenues), exceeding our internal expectations
as we entered 2016. Accordingly, we are increasing our full-year
EBITDA guidance to a range of $1.00 billion to $1.05 billion driven
by our anticipated margin expansion in nearly every line of
business. On the strength of both the quarter and our customers'
backlogs, we have also increased our aggregate product line volume
growth to six percent to eight percent, as we expect continued
positive employment growth in our key markets and normal weather
patterns. We further anticipate an environment where our operations
can safely run more efficiently and the benefits of strategic and
operational excellence initiatives, including acquisition
integration, all coalesce to deliver increasing shareholder
value.”
NOTABLE ITEMS FOR THE QUARTER (ALL
COMPARISONS ARE VERSUS THE PRIOR-YEAR FIRST QUARTER)
Quarter-ended March 31,
2016 2015 Consolidated net sales
$ 734.0M $ 631.9 M % growth
16.2 % Consolidated gross profit $
144.6M $ 74.3 M % growth 94.8 %
Consolidated gross profit margin (excluding
freight and delivery revenues)
19.7
%
11.8
%
margin expansion 790 bps Earnings from
operations $ 83.8M $ 25.6M % growth
227.6 % EBITDA 1 $ 152.6M
$ 91.2M % growth 67.3 %
Earnings per diluted share $ 0.69 $ 0.07
Aggregates: Volume (total
tons) 32,665 28,836 %
growth 13.3 % Average selling price per
ton $ 13.04 $ 12.06 % growth
8.1 % Aggregates business net sales $
604.6M $ 476.5M % growth 26.9 %
Aggregates business gross profit $ 93.0M
$ 38.7 M % growth 140.2 %
Aggregates business gross profit margin (excluding freight
and delivery revenues) 15.4 %
8.1
%
margin expansion 730 bps
Cement: 2
Volume (total tons)
957,000 841,000 % growth
13.8 % Average selling price per ton $ 100.04
$ 96.58 % growth 3.6 %
1
See page 20 for a reconciliation to net
earnings.
2
Cement volume, price per ton and growth
reflect Texas cement operations. The first quarter 2015 cement
volume and price per ton exclude net sales of $32.5 million and
shipment volumes of 376 thousand tons related to the California
cement operations which were sold in the third quarter of 2015.
QUARTERLY OPERATING RESULTS (ALL COMPARISONS ARE VERSUS THE
PRIOR-YEAR FIRST QUARTER UNLESS NOTED OTHERWISE)
Aggregates Business
Aggregates Shipments
by End-Use
Quarter-ended March 31, 2016 % of
total sales % growth Infrastructure 39 %
13 % Nonresidential 33 % 14 % Residential
18 % 20 % ChemRock / Rail 10 % 1 %
Aggregates product line shipments reflect growth in all end-use
markets. Shipments to the infrastructure market comprised 39
percent of quarterly volumes and increased 13 percent. Growth was
driven by large projects in North Carolina and the southeast, two
areas that passed legislation in 2015 increasing near and long-term
state infrastructure spending.
The nonresidential market represented 33 percent of quarterly
aggregates product line shipments and increased 14 percent. The
Mid-America Group led with a 50 percent increase in heavy
nonresidential and 25 percent increase in light nonresidential.
Notably, an improving economy is driving business investment in,
for example, industrial warehouse and distribution facilities,
which have been dormant in much of the Mid-America Group’s markets
over the past several years. The West Group saw a slight increase
in nonresidential activity as the diversified Texas economy
generated a broad range of projects replacing energy-related shale
shipments currently displaced by volatile oil prices.
The residential market accounted for 18 percent of quarterly
aggregates product line shipments. Volumes to this segment
increased 20 percent as the housing recovery continues and expands,
particularly in the southeastern portion of the country. Housing
activity in the United States generally remains well below historic
averages. That said, housing permits, starts and completions are
all up more than ten percent for the trailing-twelve months ended
March 2016. Notably, during the first quarter, North Carolina,
Iowa, Florida and South Carolina all reported double-digit growth
in housing starts. The ChemRock/Rail market accounted for the
remaining 10 percent of aggregates product line volumes and
increased slightly.
Overall, aggregates product line shipments increased 13.3
percent. Geographically, growth was led by the Mid-America Group,
which increased 27.8 percent. The Southeast and West Groups
achieved an increase of 5.6 percent and 5.4 percent,
respectively.
Aggregates product line pricing improvement of 8.1 percent
reflects growth in all reportable groups, led by the 11.3 percent
increase in the West Group. In addition to North Texas,
double-digit pricing growth was also achieved in Central Texas,
South Texas and Colorado markets. The Southeast Group and
Mid-America Group reported increases of 7.3 percent and 4.3
percent, respectively.
The ready mixed concrete product line benefitted from strong
demand and much improved operating conditions driving a reported
31.0 percent increase in shipments and an 11.7 percent increase in
average selling price, resulting in a 46.4 percent increase in net
sales and an 810-basis-point improvement in gross margin (excluding
freight and delivery revenues). The Aggregates business gross
margin (excluding freight and delivery revenues) was 15.4 percent,
an increase of 730 basis points, which was driven by strength in
economic recovery in the southeastern portion of the United States,
including North Carolina and South Carolina.
Cement Business
The Cement business benefitted from strong demand and better
weather in Texas and, for the quarter, generated $69.9 million of
net sales and $32.6 million of gross profit. Cement shipments
increased 13.8 percent coupled with a 3.6 percent improvement in
pricing (excluding the impact of the California cement operations
sold in 2015). The quarterly gross margin (excluding freight and
delivery revenues) of 46.6 percent compared very favorably to the
prior-year quarter’s 35.9 percent (excluding the impact of the
California cement operations sold in 2015), which was partly aided
by favorable energy costs. The business announced price increases
beginning April 1, 2016. However, there is a lag time before the
full impact of the price increases is realized.
The Cement business is benefitting from broad based strength in
Texas markets, where demand exceeds local supply. The Portland
Cement Association, or PCA, forecasts continued supply/demand
imbalance in Texas over the next several years. The business
incurred $5.6 million in planned cement kiln maintenance costs,
which are expected to be heaviest in the third quarter.
Magnesia Specialties Business
Magnesia Specialties continued to deliver strong performance and
generated first-quarter record net sales of $59.5 million. Gross
margin (excluding freight and delivery revenues) in the quarter
expanded 430 basis points to a record 38.6 percent. First-quarter
earnings from operations were $20.6 million compared with $17.8
million.
CONSOLIDATED OPERATING RESULTS
Consolidated SG&A was 8.2 percent of net sales compared with
7.8 percent in the prior-year quarter. The increase of 40 basis
points reflects increased incentive compensation costs and
continued investment in information systems improvements. Earnings
from operations for the quarter were $83.8 million compared with
$25.6 million in the prior-year period.
The estimated effective income tax rate for the quarter was 30
percent, in line with annual guidance. For the year, the Company
expects to fully utilize the $33 million remaining net operating
loss carryforwards acquired with TXI.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for the first quarter was
$67.0 million in 2016 compared with $35.1 million in 2015. The
increase is principally attributable to higher earnings before
depreciation, depletion and amortization expense.
At March 31, 2016, the ratio of consolidated debt to
consolidated EBITDA, as defined, for the trailing-twelve months was
2.1 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 undertaken
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 Company at any time without prior notice.
During the quarter, the Company repurchased 1,028,000 shares of
its common stock for $150 million. As of March 31, 2016, there were
63.5 million shares of Martin Marietta common stock outstanding and
15.7 million shares remaining under the current repurchase
authorization.
FULL-YEAR OUTLOOK
The Company is encouraged by positive trends in the markets it
serves and its ability to execute its strategic business plans.
Notably:
- 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 TIFIA (Transportation Infrastructure Finance and Innovation
Act), are expected to grow and continue to play an expanded role in
public-sector activity.
- 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. Additionally, energy-related economic
activity, including follow-on public and private construction
activities in its primary markets, will be mixed with overall
strength in large downstream construction projects more than
offsetting declines in shale exploration-related volumes.
- Residential construction is expected to
continue to experience good growth metrics, 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.
Based on these trends and expectations, the Company anticipates
the following for the full year:
- Aggregates end-use markets compared to
2015 levels are as follows:
- Infrastructure market to increase
mid-to-high 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 $ 945M $ 1.0B SG&A
$ 220M $ 220M Interest expense $
80M $ 80M Estimated tax rate (excluding
discrete events) 30.0 % 30.0 % Capital
Expenditures $ 350M $ 350M
EBITDA $ 1.00B $ 1.05B
Aggregates
Product Line
Volume (total tons) 1 165.5M
168.5M % growth 1 6 % 8 %
Volume (external tons) 156.0M
159.0M % growth 6 % 8 % Average
selling price per ton $ 12.75 $ 13.00 %
growth 6 % 8 % Net sales
$ 1.95B $ 2.05B Gross profit $ 620M $
655M Direct production cost per ton shipped $
7.35 $ 7.50
Aggregates-related downstream
operations
Net sales $ 1.00B $ 1.10B Gross profit $ 110M
$ 115M
Cement
Volume (external tons) 2.8M 2.9M
% growth 2 8 % 11 % Average
selling price per ton $ 107.00 $ 109.00
% growth 2 6 % 8 % Net sales
$ 300M $ 320M Gross profit $
130M $ 140M
Magnesia
Specialties
Net sales $ 235M $ 240M Gross profit
$ 85M $ 90M
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 $96 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 18 for quarterly 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; and
unexpected equipment failures, unscheduled maintenance, industrial
accident or other prolonged and/or significant disruption to its
cement production facilities. 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 first quarter 2016 earnings results
on a conference call and an online web simulcast today (May 5,
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 first-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 96798143.
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 or suspension 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 March
31, 2016 2015 Net sales $ 734.0 $ 631.9 Freight
and delivery revenues 54.8 59.5 Total
revenues 788.8 691.4 Cost of
sales 589.4 557.6 Freight and delivery costs 54.8
59.5 Total cost of revenues 644.2
617.1 Gross profit 144.6 74.3 Selling, general
and administrative expenses 59.9 49.5 Acquisition-related expenses,
net 0.4 1.6 Other operating expenses and (income), net 0.5
(2.4 ) Earnings from operations 83.8 25.6
Interest expense 20.0 19.3 Other nonoperating (income) and
expenses, net (1.0 ) 0.9 Earnings before taxes
on income 64.8 5.4 Income tax expense (benefit) 19.7
(0.8 ) Consolidated net earnings 45.1 6.2 Less: Net earnings
attributable to noncontrolling interests 0.1
0.1 Net earnings attributable to Martin Marietta
Materials, Inc. $ 45.0 $ 6.1 Net
earnings per common share attributable to common shareholders:
Basic $ 0.70 $ 0.07 Diluted $ 0.69 $ 0.07
Dividends per common share $ 0.40 $ 0.40
Average number of common shares outstanding: Basic
64.2 67.4 Diluted 64.4
67.7
MARTIN MARIETTA MATERIALS,
INC. Unaudited Financial Highlights (In millions)
Three Months Ended March 31,
2016 2015 Net sales: Aggregates Business: Mid-America
Group $ 173.4 $ 129.7 Southeast Group 67.3 59.7 West Group
363.9 287.1 Total Aggregates Business 604.6
476.5 Cement 69.9 96.6 Magnesia Specialties 59.5
58.8 Total $ 734.0 $ 631.9 Gross
profit (loss): Aggregates Business: Mid-America Group $ 27.4 $ 7.1
Southeast Group 10.3 3.1 West Group 55.3 28.5
Total Aggregates Business 93.0 38.7 Cement 32.6 19.0
Magnesia Specialties 23.0 20.2 Corporate (4.0 ) (3.6
) Total $ 144.6 74.3 Selling, general
and administrative expenses: Aggregates Business: Mid-America Group
$ 13.1 $ 12.9 Southeast Group 3.9 4.3 West Group 16.9
15.7 Total Aggregates Business 33.9 32.9 Cement 6.3
6.7 Magnesia Specialties 2.3 2.4 Corporate 17.4
7.5 Total $ 59.9 $ 49.5 Earnings
(Loss) from operations: Aggregates Business: Mid-America Group $
14.4 $ (4.2 ) Southeast Group 7.0 (1.5 ) West Group 38.8
14.5 Total Aggregates Business 60.2 8.8 Cement
26.3 12.2 Magnesia Specialties 20.6 17.8 Corporate (23.3 )
(13.2 ) Total $ 83.8 $ 25.6
MARTIN MARIETTA MATERIALS, INC. Unaudited Financial
Highlights (In millions)
Three
Months Ended March 31, 2016 2015
Net sales by product line: Heritage: Aggregates Business:
Aggregates $ 404.1 $ 332.2 Asphalt 3.6 9.6 Ready Mixed Concrete
184.1 127.6 Road Paving 7.5 7.1 Total
Aggregates Business 599.3 476.5 Cement Business 69.9 96.6 Magnesia
Specialties Business 59.5 58.8 Acquisition: Aggregates Business:
Aggregates 2.4 - Asphalt 0.2 - Ready Mixed Concrete 2.7
- Total Aggregates Business 5.3
- Total $ 734.0 $ 631.9 Gross
profit (loss) by product line: Heritage: Aggregates Business:
Aggregates $ 82.3 $ 41.4 Asphalt (2.1 ) (1.5 ) Ready Mixed Concrete
18.0 2.1 Road Paving (3.9 ) (3.3 ) Total Aggregates
Business 94.3 38.7 Cement Business 32.6 19.0 Magnesia Specialties
Business 23.0 20.2 Corporate (4.0 ) (3.6 ) Acquisition: Aggregates
Business: Aggregates (1.2 ) - Asphalt (0.2 ) - Ready Mixed Concrete
0.1 - Total Aggregates Business
(1.3 ) - Total $ 144.6 $ 74.3
Depreciation $ 61.4 $ 59.8 Depletion 3.2 3.1 Amortization
3.8 4.4 $ 68.4 $ 67.3
MARTIN MARIETTA MATERIALS, INC. Balance
Sheet Data (In millions)
March 31, December 31, March 31,
2016 2015 2015 (Unaudited) (Audited)
(Unaudited) ASSETS Cash and cash equivalents $ 27.2 $ 168.4 $ 56.4
Accounts receivable, net 448.0 410.9 381.4 Inventories, net 485.4
469.1 505.0 Other current assets 37.7 33.2 103.0 Property, plant
and equipment, net 3,263.0 3,156.0 3,365.1 Intangible assets, net
2,654.7 2,578.8 2,663.4 Other noncurrent assets 142.3 141.2 103.0
Total assets $ 7,058.3 $ 6,957.6 $ 7,177.3
LIABILITIES AND EQUITY Current maturities of long-term debt and
short-term facilities $ 177.4 $ 18.7 $ 13.9 Other current
liabilities 314.7 348.0 329.1 Long-term debt (excluding current
maturities) 1,575.3 1,550.1 1,562.2 Other noncurrent liabilities
1,045.3 980.6 929.9 Total equity 3,945.6 4,060.2
4,342.2 Total liabilities and equity $ 7,058.3 $ 6,957.6 $
7,177.3
MARTIN MARIETTA MATERIALS, INC.
Unaudited Statements of Cash Flows (In millions)
Three Months Ended March 31,
2016 2015 Operating activities:
Consolidated net earnings $ 45.1 $ 6.2 Adjustments to reconcile
consolidated net earnings to net cash provided by operating
activities: Depreciation, depletion and amortization 68.4 67.3
Stock-based compensation expense 7.2 2.9 Gains on divestitures and
sales of assets (0.1 ) (1.6 ) Deferred income taxes 18.0 27.8
Excess tax benefits from stock-based compensation (1.3 ) (0.1 )
Other items, net (2.0 ) 1.1 Changes in operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net (29.7 ) 40.0 Inventories, net (13.5 )
(19.1 ) Accounts payable 9.2 (20.3 ) Other assets and liabilities,
net (34.3 ) (69.1 ) Net cash provided by
operating activities 67.0 35.1
Investing activities: Additions to property, plant and equipment
(94.2 ) (56.1 ) Acquisitions, net (123.0 ) (10.6 ) Cash received in
acquisition 3.4 - Proceeds from divestitures and sales of assets
3.4 1.5 Repayments from affiliate - 1.8
Net cash used for investing activities (210.4 )
(63.4 ) Financing activities: Borrowings of long-term
debt 210.0 - Repayments of long-term debt (26.4 ) (4.7 ) Payments
on capital leases (0.8 ) (0.8 ) Change in bank overdraft (10.2 )
(0.2 ) Repurchases of common stock (150.0 ) - Dividends paid (25.8
) (28.4 ) Excess tax benefits from stock-based compensation 1.3 0.1
Issuances of common stock 4.1 10.0
Net cash provided by (used for) financing activities
2.2 (24.0 ) Net decrease in cash and cash
equivalents (141.2 ) (52.3 ) Cash and cash equivalents, beginning
of period 168.4 108.7 Cash and
cash equivalents, end of period $ 27.2 $ 56.4
MARTIN MARIETTA MATERIALS, INC. Unaudited
Operational Highlights Three
Months Ended March 31, 2016 Volume Pricing
Volume/Pricing Variance (1) Heritage Aggregates
Product Line: (2) Mid-America Group 27.8 % 4.3 %
Southeast Group 5.6 % 7.3 % West Group 4.4 % 11.3 % Heritage
Aggregates Operations 12.8 % 8.1 % Aggregates Product Line (3) 13.3
% 8.1 %
Three Months Ended March 31,
Shipments (tons in thousands)
2016 2015
Heritage Aggregates Product Line: (2) Mid-America
Group 12,922 10,110 Southeast Group 4,318 4,090 West Group
15,279 14,636 Heritage Aggregates Operations
32,519 28,836 Acquisitions 146 -
Aggregates Product Line (3) 32,665 28,836
(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 the comparable period.
(3) Aggregates Product Line includes acquisitions from the
date of acquisition and divestitures through the date of disposal.
Three Months Ended March 31, 2016
2015 Heritage (in thousands) Aggregates tons -
external customers 30,603 27,132 Internal aggregates tons used in
other product lines 1,916 1,704 Total
aggregates tons 32,519 28,836
Asphalt tons - external customers 69 213 Internal asphalt tons used
in road paving business 65 57 Total
asphalt tons 134 270 Ready Mixed
Concrete - cubic yards 1,763 1,363
Cement tons - external customers 685 1,025 Internal cement
tons used in other product lines 272 192
Total Cement tons 957 1,217
Acquisitions (in thousands) Aggregates tons -
external customers 141 - Internal aggregates tons used in other
product lines 5 - Total aggregates tons
146 - Total asphalt tons -
external customers 11 - Ready
Mixed Concrete - cubic yards 23 -
Average unit sales price by product line (including
internal sales): Heritage: Aggregates (per ton) $ 13.04
$ 12.06 Asphalt (per ton) $ 42.85 $ 43.65
Ready Mixed Concrete (per cubic yard) $ 102.28 $
91.72 Cement (per ton) $ 100.04 $ 93.41
Acquisitions: Aggregates (per ton) $ 12.50 $ -
Asphalt (per ton) $ 39.95 $ - Ready Mixed Concrete
(per cubic yard) $ 115.84 $ -
MARTIN MARIETTA MATERIALS, INC.
Non-GAAP Financial Measures
(Dollars in millions)
Gross margin as a percentage of net sales
and operating margin as a percentage of net sales represent
non-GAAP measures. The 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 ended March 31, 2016 and 2015, in
accordance with GAAP and reconciliations of the ratios as
percentages of total revenues to percentages of net sales:
Three Months Ended Consolidated Gross
Margin in Accordance with Generally Accepted Accounting
Principles March 31, 2016
2015 Gross profit $ 144.6 $ 74.3 Total
revenues $ 788.8 $ 691.4 Gross margin 18.3 %
10.7 %
Three Months Ended Consolidated
Gross Margin Excluding Freight and Delivery Revenues March
31, 2016 2015 Gross profit $ 144.6 $ 74.3
Total revenues $ 788.8 $ 691.4 Less: Freight and delivery
revenues (54.8 ) (59.5 ) Net sales $ 734.0 $
631.9 Gross margin excluding freight and delivery revenues
19.7 % 11.8 %
Three Months Ended
Consolidated Operating Margin in Accordance with Generally
Accepted Accounting Principles March 31, 2016
2015 Earnings from operations $ 83.8 $ 25.6
Total revenues $ 788.8 $ 691.4 Operating margin
10.6 % 3.7 %
Three Months Ended
Consolidated Operating Margin Excluding Freight and Delivery
Revenues March 31, 2016 2015 Earnings from
operations $ 83.8 $ 25.6 Total revenues $ 788.8 $
691.4 Less: Freight and delivery revenues (54.8 )
(59.5 ) Net sales $ 734.0 $ 631.9 Operating margin
excluding freight and delivery revenues 11.4 % 4.1 %
MARTIN MARIETTA MATERIALS, INC. Non-GAAP
Financial Measures (continued) (Dollars in millions)
Three Months Ended
Aggregates Business Gross Margin in Accordance with Generally
Accepted Accounting Principles March 31, 2016
2015 Gross profit $ 93.0 $ 38.7 Total revenues
$ 651.0 $ 526.1 Gross margin 14.3 % 7.4
%
Three Months Ended Aggregates Business Gross
Margin Excluding Freight and Delivery Revenues March 31,
2016 2015 Gross profit $ 93.0 $ 38.7
Total revenues $ 651.0 $ 526.1 Less: Freight and delivery revenues
(46.4 ) (49.5 ) Net sales $ 604.6 $ 476.6
Gross margin excluding freight and delivery revenues
15.4 % 8.1 %
Three Months Ended
Cement Business Gross Margin in Accordance with Generally
Accepted Accounting Principles March 31, 2016
2015 Gross profit $ 32.6 $ 19.0 Total revenues
$ 73.6 $ 102.1 Gross margin 44.3 % 18.6
%
Three Months Ended Cement Business Gross Margin
Excluding Freight and Delivery Revenues March 31,
2016 2015 Gross profit $ 32.6 $ 19.0
Total revenues $ 73.6 $ 102.1 Less: Freight and delivery revenues
(3.7 ) (5.5 ) Net sales $ 69.9 $ 96.6
Gross margin excluding freight and delivery revenues 46.6 %
19.7 %
Three Months Ended Cement
Business, excluding California cement operations, Gross Margin in
Accordance with Generally Accepted Accounting Principles
March 31, 2015 Gross profit $ 23.0 Total
revenues $ 65.3 Gross margin 35.2 %
Three
Months Ended Cement Business, excluding California cement
operations, Gross Margin Excluding Freight and Delivery
Revenues March 31, 2015 Gross profit $ 23.0
Total revenues $ 65.3 Less: Freight and delivery revenues
(1.2 ) Net sales $ 64.1 Gross margin excluding
freight and delivery revenues 35.9 %
California
cement operations 2015 Metrics (divested on September 30, 2015)
2015 - Three Months Ended March 31 June 30
September 30 Shipment tons (000s) 376
367 328 Net sales $ 32.5 $ 33.9
$ 30.0 Gross (loss) profit $ (4.0 ) $ 3.7 $
3.4
MARTIN MARIETTA MATERIALS, INC.
Non-GAAP Financial Measures (continued) (Dollars in
millions)
Three Months Ended
Magnesia Specialties Gross Margin in Accordance with Generally
Accepted Accounting Principles March 31, 2016
2015 Gross profit $ 23.0 $ 20.2 Total revenues
$ 64.2 $ 63.2 Gross margin 35.8 % 32.0
%
Three Months Ended Magnesia Specialties Gross
Margin Excluding Freight and Delivery Revenues March 31,
2016 2015 Gross profit $ 23.0 $ 20.2
Total revenues $ 64.2 $ 63.2 Less: Freight and delivery revenues
(4.7 ) (4.4 ) Net sales $ 59.5 $ 58.8
Gross margin excluding freight and delivery revenues 38.6 %
34.3 %
Three Months Ended Ready
Mixed Concrete Product Line Gross Margin in Accordance with
Generally Accepted Accounting Principles March 31,
2016 2015 Gross profit $ 18.1 $ 2.1
Total revenues $ 187.1 $ 127.9 Gross margin
9.7 % 1.6 %
Three Months Ended Ready Mixed
Concrete Product Line Gross Margin Excluding Freight and Delivery
Revenues March 31, 2016 2015 Gross profit
$ 18.1 $ 2.1 Total revenues $ 187.1 $ 127.8 Less:
Freight and delivery revenues (0.3 ) (0.2 ) Net sales
$ 186.8 $ 127.6 Gross margin excluding freight and
delivery revenues 9.7 % 1.6 %
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 cannot exceed 3.50 times as of March 31,
2016, 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 March 31, 2016. For supporting calculations,
refer to Company’s website at
www.martinmarietta.com.
Twelve-Month Period April 1, 2015 to
March 31, 2016 Earnings from continuing operations
attributable to Martin Marietta Materials, Inc. $ 327.7 Add back:
Interest expense 77.0 Income tax expense 145.3 Depreciation,
depletion and amortization expense 262.5 Stock-based compensation
expense 17.9 20.6 Deduct: Interest income (0.6 )
Consolidated EBITDA, as defined $ 850.4 Consolidated
Debt, including debt for which the Company is a co-borrower, at
March 31, 2016 $ 1,777.1
Consolidated Debt-to-Consolidated EBITDA,
as defined, at March 31, 2016, for the trailing twelve-month
EBITDA
2.09 times
EBITDA is a widely accepted financial
indicator of a company’s ability to service and/or incur
indebtedness. EBITDA is not defined by generally accepted
accounting principles and, as such, should not be construed as an
alternative to net earnings or operating cash flow. For further
information on EBITDA, refer to the Company’s website at
www.martinmarietta.com. EBITDA is as follows for the
three months ended March 31, 2016 and 2015.
Three Months Ended March 31,
2016 2015 Consolidated Earnings Before
Interest, Income Taxes, Depreciation, Depletion and Amortization
(EBITDA) $ 152.6 $ 91.2
Three Months
Ended March 31, 2016 2015 Net Earnings
Attributable to Martin Marietta Materials, Inc. $ 45.0 $ 6.1 Add
back: Interest Expense 20.0 19.3 Taxes on Income 19.7 (0.8 )
Depreciation, Depletion and Amortization Expense 67.9
66.6 Consolidated EBITDA $ 152.6 $ 91.2
MARTIN MARIETTA MATERIALS, INC. Non-GAAP Financial
Measures (continued) (Dollars in millions)
Incremental consolidated 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 net sales on
profitability. Due to the significant amount of fixed costs, gross
margin (excluding freight and delivery revenues) typically
increases at a disproportionate rate in periods of increased
shipments. The following shows the calculation of incremental
consolidated gross margin (excluding freight and delivery revenues)
for the quarter ended March 31, 2016:
Consolidated net sales for the quarter ended March
31, 2016 $ 734.0 Consolidated net sales for the quarter ended March
31, 2015 631.9 Incremental net sales $ 102.1
Consolidated gross profit for the quarter ended March 31,
2016 $ 144.6 Consolidated gross profit for the quarter ended March
31, 2015 74.3 Incremental gross profit $ 70.3
Incremental consolidated gross margin (excluding freight and
delivery revenues) for the quarter ended March 31, 2016 69 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160505005811/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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