-----------------
Record Net Sales, Gross Profit and Net
Earnings
Consolidated Gross Margin (Excluding Freight
and Delivery Revenues) Expands 340 Basis Points
Earnings per Diluted Share Increases
56%
Aggregates Product Line Pricing Up
7%
-----------------
Martin Marietta Materials, Inc. (NYSE:MLM) today reported
results for the second quarter ended June 30, 2016.
Ward Nye, Chairman, President and CEO of Martin Marietta,
stated: “We are pleased to deliver top-line and bottom-line growth
with record net sales, gross profit and net earnings in the
quarter. Net sales increased nearly 8 percent (12 percent excluding
net sales attributable to the California cement business divested
in the third quarter 2015). Gross profit and net earnings increased
23 percent and 49 percent, respectively. Diluted earnings per share
of $1.90 increased 56 percent when compared with the comparable
prior-year period. The record results for the quarter reflect our
continued ability to capitalize on improving economic conditions
across our markets, coupled with our disciplined approach to cost
management and operational excellence.
“Aggregates product line pricing growth and cost discipline led
to a 340-basis-point increase in our consolidated gross margin
(excluding freight and delivery revenues). This gross margin
expansion was achieved despite record or near-record rainfall and
its attendant effects in many of our key markets, notably Texas,
North Carolina and Colorado. Importantly, for every $1.00 increase
in net sales, gross profit increased $0.71, which demonstrates the
business’ strong operating leverage with economic growth. The
economic improvements we see across our geographic footprint,
including both strong employment growth and population dynamics,
together with robust public and private construction activity,
further reinforces our positive outlook for a sustained
construction-centric recovery during the next several years.
“Domestic job growth remains a strong catalyst for construction
activity and, during the trailing-12 months ended June 2016, the
United States added nearly two and one half million jobs. The
southeastern United States’ steady economic recovery is gaining
momentum with North Carolina, Georgia and Florida all ranked in the
top ten states nationally for employment growth. For the second
quarter, these market conditions, among others, helped drive
aggregates product line volume growth of 4.9 percent in the
Mid-America Group, primarily due to increased private construction
activity across North Carolina and South Carolina. Demand in the
Mid-America Group was constrained by heavy rainfall during the
first two months of the quarter. In fact, for April and May,
aggregate volume was down 1.3 percent; however, volume growth of
nearly 16 percent in June more than offset the early quarter
weather deficit. Volume growth for the Southeast Group was 1.9
percent, benefitting from increasing public-sector demand in
Georgia and Florida, while increases were partially impacted by a
reduction in ballast shipments.
“Aggregate shipments in the West Group were hindered by
extremely wet weather in Texas throughout the majority of the
second quarter. As previously predicted by the National Oceanic and
Atmospheric Administration, the El Niño effect, which began in the
spring of 2015, concluded at the end of May 2016. In addition, the
reduction of shale-related shipments compared with the prior-year
quarter and lower ballast shipments due to decreased rail demand
further impacted the West Group’s second quarter results. While
some construction activity was temporarily displaced, contractor
backlogs reveal pent-up aggregate demand. Further, the Dallas-Fort
Worth Metroplex continues to be one of the nation’s fastest growing
areas, benefitting from strong population and employment
trends."
Mr. Nye continued, “We remain highly optimistic as we look
towards the second half of the year and well beyond. Our team is
poised to capitalize on increasing demand, and we expect
exceptional performance from all of our businesses. We remain
steadfast in our commitment to enhance long-term shareholder value
by continuing to build on our proven track record of disciplined
and strategic geographic positioning and by benefitting from our
world-class employees endowed with a relentless dedication to
controlling costs while maintaining industry-leading safety
standards.”
NOTABLE ITEMS FOR THE SECOND
QUARTER (All growth and margin comparisons are versus the
prior-year period)
Quarter-ended June
30, Six-months ended June 30,
2016 2015
2016 2015 Consolidated net sales
$ 915.4M $ 850.2M $ 1.649B
$ 1.482B % growth 7.7%
11.3% Consolidated gross profit
$ 246.7M $ 200.2M $ 391.3M
$ 274.4M % growth 23.3%
42.6%
Consolidated gross profit margin
(excluding freight and delivery revenues)
26.9% 23.5% 23.7%
18.5% margin expansion 340 bps
520 bps Earnings from operations
$ 187.7M $ 137.0M $ 271.5M
$ 162.6M % growth 37.1%
67.0% EBITDA 1 $ 266.5M
$ 206.9M $ 419.1M $ 298.1M %
growth 28.8% 40.6%
EBITDA margin as a % of net sales 29.1%
24.3% 25.4% 20.1% margin
expansion 480 bps
530 bps Earnings per diluted share
$1.90 $1.22 $2.60 $1.30 % growth
55.7% 100.0%
Aggregates Product Line:
Net sales
$ 516.3M
$ 481.6M
$ 922.7M $ 813.8M % growth
7.2% 13.4%
Gross profit $ 164.4M $ 137.3M
$ 245.4M $ 178.7M % growth 19.7%
37.4% Gross profit margin
(excluding freight and delivery revenues) 31.8%
28.5% 26.6% 22.0% margin
expansion 330 bps
460 bps
Aggregates-related downstream
operations:
Net sales $ 280.5M
$ 207.8M $ 478.6M $ 352.1M % growth
35.0% 35.9%
Gross profit $ 38.2M $ 17.2M
$ 50.1M $ 14.5M % growth 121.5%
244.5% Gross
profit margin (excluding freight and delivery revenues)
13.6% 8.3% 10.5% 4.1%
margin expansion 530 bps
640 bps
Cement 2:
Net sales $ 59.8M $ 66.2M
$ 129.6M $ 129.7M % growth (9.7%)
- Gross profit
$ 24.0M $ 27.0M $ 56.6M
$ 50.0M % growth (11.1%)
13.0% Gross profit margin (excluding
freight and delivery revenues) 40.1% 40.8%
43.6% 38.6% margin expansion
(70 bps) 500 bps
Magnesia Specialties:
Net sales
$ 58.8M $ 60.4M $ 118.4M
$ 119.2M % growth (2.6%)
(0.7%) Gross profit $ 21.7M
$ 21.2M
$ 44.7M
$ 41.4M % growth 2.2%
7.9% Gross profit margin (excluding
freight and delivery revenues) 36.8% 35.1%
37.7% 34.7% margin expansion
170 bps 300 bps
1 See page 20 for a reconciliation to net
earnings.
2 Cement results reflect Texas cement
operations. For comparability purposes, the quarter and six-months
ended June 30, 2015 exclude net sales and gross profit related to
the California cement business, which was sold in the third quarter
of 2015. Details of the California cement results can be found on
pages 13 and 19.
QUARTERLY OPERATING RESULTS (All
comparisons are versus the prior-year quarter unless noted
otherwise)
Aggregates Business
Aggregates Product
Line Shipments by End-Use
Quarter-ended June 30, 2016 Six
months-ended June 30, 2016 % of total
% growth % of total
% growth Infrastructure 43%
1.3% 41% 8.8%
Nonresidential 33% 2.8%
33% 7.3% Residential 17%
10.8% 18% 14.0% ChemRock / Rail
7% (21.1%) 8%
(18.6%)
Aggregates product line shipments to the infrastructure market
comprised 43 percent of quarterly volumes and increased 1.3
percent. Growth was led by the Southeast Group, which increased 8.9
percent. The Mid-America and West Groups were impacted by
significant rainfall and project delays in April and May, which
deferred shipments and led to flat public-sector volumes. Growth in
the Southeast Group was primarily attributable to large projects in
Georgia, a state that is benefitting from legislation passed in
2015 increasing near- and long-term state infrastructure
spending.
The nonresidential market represented 33 percent of quarterly
aggregates product line shipments and increased 2.8 percent. The
Mid-America Group achieved a 13.7 percent increase, followed by an
increase of 1.6 percent in the Southeast Group. Notably, a broader
improving economy is driving business investment in office and
retail development, which are experiencing a rebound in markets not
seen in the past several years. The West Group noted a decline in
nonresidential activity, primarily related to weather deferrals and
further reductions in shale energy demand.
The residential market accounted for 17 percent of quarterly
aggregates product line shipments. Volumes to this segment
increased 10.8 percent, due to the continued and expanding housing
recovery, notably in the southeastern region of the country. While
housing activity in the United States generally remains well below
historic averages, strong growth in permits, starts and completions
among the Company’s top states reflects steady momentum in housing
construction and indicates additional future gains from increased
residential investment. In fact, Dallas and Atlanta, key Martin
Marietta markets, are ranked first and second in the country,
respectively, in permits growth. Further, during the second
quarter, North Carolina, Iowa, Florida and South Carolina all
reported double-digit growth in housing starts. The ChemRock/Rail
market accounted for the remaining 7 percent of aggregates product
line volumes. The volume decline in this segment principally
reflects reduced ballast shipments driven by reduced coal demand,
which impacts transportation and results in lower capital and
maintenance activity by railroads.
Overall, aggregates product line shipments increased 1.3
percent. Geographically, growth was led by the Mid-America Group,
which increased 4.9 percent, while the Southeast Group achieved a
1.9 percent increase. This growth offset the weather-impacted
decline in the West Group.
Aggregates product line pricing improvement of 6.8 percent
reflects growth in all reportable groups, led by a 10.0 percent
increase in the West Group. The Southeast Group and Mid-America
Group reported increases of 6.2 percent and 4.2 percent,
respectively.
The ready mixed concrete product line continued to benefit from
strong demand, better pricing and improved operating conditions,
driving a 23.7 percent increase in shipments and a 15.4 percent
increase in average selling price. In addition, these factors
helped drive a 43.5 percent increase in net sales and a
560-basis-point improvement in gross margin (excluding freight and
delivery revenues).
The Aggregates business’ gross margin (excluding freight and
delivery revenues) was 25.4 percent, an increase of 300 basis
points, driven largely by broad-based economic recovery, including
growth in the southeastern United States.
Cement Business
The Cement business was slowed by wet weather in Texas,
constraining shipments during the second quarter. Nonetheless,
excluding the impact of the California cement business sold in
2015, cement shipments increased 2.2 percent in the quarter while
pricing was down slightly, ahead of price increases taking effect
in July and planned for October.
The business generated $59.8 million of net sales and $24.0
million of gross profit. For the quarter, gross profit margin
(excluding freight and delivery revenues) in the Cement business
was 40.1 percent, which was relatively flat compared with the
second quarter of 2015 (excluding the results of the California
cement business). Planned cement kiln maintenance costs of $5.7
million were incurred during the quarter and are expected to be
$2.0 million and $7.8 million in the third and fourth quarter,
respectively.
The Company sees broad-based strength in Texas markets, where
cement demand exceeds local supply. The Portland Cement
Association, or PCA, forecasts continued supply/demand imbalance in
Texas over the next several years.
Magnesia Specialties Business
Magnesia Specialties delivered strong performance and generated
second-quarter net sales of $58.8 million, with notable
contributions from the magnesia-based chemicals product line. Gross
margin (excluding freight and delivery revenues) in the quarter
expanded 170 basis points to 36.8 percent. Second-quarter earnings
from operations were $19.2 million compared with $18.8 million in
the prior-year quarter.
CONSOLIDATED OPERATING RESULTS
SG&A was 6.7 percent of net sales, flat compared with the
prior-year quarter. Earnings from operations for the quarter were
$187.7 million compared with $137.0 million in the prior-year
period, an increase of 37 percent.
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 six months
of the year was $203.4 million in 2016 compared with $127.1 million
in 2015. The increase is principally attributable to higher
earnings before depreciation, depletion and amortization
expense.
At June 30, 2016, the ratio of consolidated debt to consolidated
EBITDA, as defined, for the trailing-12 months was 1.98 times, in
compliance with the Company’s leverage covenant and in line with
the Company’s target range.
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 215,000 shares of
its common stock for $40.0 million. The Company has repurchased 4.5
million shares and, including the continued payment of a $1.60
annual dividend per share, returned $869 million to shareholders
since announcing its repurchase authorization in February of 2015.
As of June 30, 2016, there were 63.8 million shares of Martin
Marietta common stock outstanding and 15.5 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, continued 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.
- 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, providing a
counterbalance to 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, including a return to
normal weather patterns, the Company anticipates achieving the
following for the full year:
- Aggregates end-use markets compared
with 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 experience a
modest decrease.
2016 GUIDANCE
Low
High
Consolidated
Results
Consolidated net sales $ 3.5B $
3.7B Consolidated gross profit $ 945M
$ 1.0B SG&A $ 225M
$ 230M 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 $104.00
$106.00 % growth 2 2% 4% Net
sales $ 290M $ 310M Gross profit
$ 130M $ 140M
Magnesia
Specialties
Net sales $ 235M $ 240M Gross
profit $ 85M $ 90M
1 Represents 2016 total aggregates
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 for Texas cement. The 2015 comparable excludes net sales
of $96 million and shipments of 1.1 million tons related to the
California cement business, which was sold in the third quarter of
2015. See pages 13 and 19 for quarterly 2015 operational
results for the California cement business.
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; the volatility in the
commencement of 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 construction 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 sustained reduction in capital investment by the railroads; an
increase in the cost of compliance with governmental laws, rules
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, 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
fluctuation in the price of coal affects costs. The Magnesia
Specialties business is sensitive to changes in domestic steel
capacity utilization as well as the absolute price and fluctuation
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 efficient
transportation of aggregate into certain markets, most notably
Texas, Colorado, Florida and the Gulf Coast. In addition,
availability of rail cars and locomotives affects the Company’s
movement of essential dolomitic lime 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 resulting
from economic events beyond the Company’s control. In addition to
the impact on nonresidential and residential construction, the
Company is exposed to risk in its estimated outlook from credit
markets and the availability of and interest cost related to its
debt.
The Company’s future performance is also exposed to risks from
tax reform at the federal and state levels.
CONFERENCE CALL INFORMATION
The Company will discuss its second quarter 2016 earnings
results on a conference call and an online web simulcast today
(August 2, 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
second-quarter performance on its website. For those investors
without online web access, the conference call may also be accessed
by calling (970) 315-0423, confirmation number 52423114.
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 construction 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.
MARTIN MARIETTA MATERIALS, INC. Unaudited Statements of
Earnings (In millions, except per share amounts)
Three Months Ended Six Months Ended June 30,
June 30, 2016 2015
2016 2015 Net sales $ 915.4 $ 850.2 $ 1,649.4
$ 1,482.1 Freight and delivery revenues 61.9 71.2
116.6 130.6 Total revenues 977.3 921.4
1,766.0 1,612.7 Cost of sales 668.7 650.0 1,258.1
1,207.7 Freight and delivery costs 61.9 71.2
116.6 130.6 Total cost of revenues 730.6 721.2
1,374.7 1,338.3 Gross profit 246.7 200.2 391.3 274.4
Selling, general and administrative expenses 61.5 56.8 121.4 106.2
Acquisition-related expenses, net 0.9 2.1 1.3 3.7 Other operating
(income) and expenses, net (3.4) 4.3 (2.9)
1.9 Earnings from operations 187.7 137.0 271.5 162.6
Interest expense 20.3 19.1 40.3 38.4 Other nonoperating income, net
(8.1) (3.0) (9.1) (2.1) Earnings from
continuing operations before taxes on income 175.5 120.9 240.3
126.3 Income tax expense 53.4 38.9 73.1
38.1 Consolidated net earnings 122.1 82.0 167.2 88.2 Less: Net
earnings attributable to noncontrolling interests -
0.1 0.2 0.1 Net earnings attributable to Martin
Marietta Materials, Inc. $ 122.1 $ 81.9 $ 167.0 $ 88.1 Net
earnings per common share attributable to common shareholders:
Basic $ 1.91 $ 1.23 $ 2.61 $ 1.30 Diluted $ 1.90 $ 1.22 $ 2.60 $
1.30 Dividends per common share $ 0.40 $ 0.40 $ 0.80 $ 0.80
Average number of common shares outstanding: Basic
63.5 67.4 63.8 67.4 Diluted 63.8
67.6 64.1 67.7
MARTIN MARIETTA MATERIALS,
INC. Unaudited Financial Highlights (In millions)
Three Months
Ended Six Months Ended June 30, June 30,
2016 2015
2016 2015 Net sales: Aggregates
Business: Mid-America Group $ 259.0 $ 237.4 $ 432.4 $ 367.1
Southeast Group 82.7 76.5 150.0 136.2 West Group 455.1
375.5 819.0 662.6
Total Aggregates Business 796.8 689.4 1,401.4 1,165.9 Cement 59.8
100.4 129.6 197.0 Magnesia Specialties 58.8
60.4 118.4 119.2 Total $ 915.4
$ 850.2 $ 1,649.4 $ 1,482.1
Gross profit (loss): Aggregates Business: Mid-America Group $ 92.6
$ 80.2 $ 120.0 $ 87.3 Southeast Group 15.5 9.5 25.9 12.6 West Group
94.4 64.8 149.6
93.3 Total Aggregates Business 202.5 154.5 295.5 193.2
Cement 24.0 30.4 56.6 49.4 Magnesia Specialties 21.7 21.2 44.7 41.4
Corporate (1.5 ) (5.9 ) (5.5 ) (9.6 )
Total $ 246.7 $ 200.2 $ 391.3 $ 274.4
Selling, general and administrative expenses: Aggregates
Business: Mid-America Group $ 13.4 $ 13.3 $ 26.6 $ 26.2 Southeast
Group 4.6 4.5 8.4 8.8 West Group 17.6 16.1
34.5 31.8 Total Aggregates
Business 35.6 33.9 69.5 66.8 Cement 6.1 6.6 12.4 13.3 Magnesia
Specialties 2.5 2.4 4.8 4.8 Corporate 17.3
13.9 34.7 21.3 Total $ 61.5
$ 56.8 $ 121.4 $ 106.2 Earnings
(Loss) from operations: Aggregates Business: Mid-America Group $
80.6 $ 66.9 $ 95.0 $ 62.7 Southeast Group 11.5 4.8 18.5 3.3 West
Group 77.4 49.2 116.2
63.7 Total Aggregates Business 169.5 120.9 229.7
129.7 Cement 21.3 22.5 47.6 34.7 Magnesia Specialties 19.2 18.8
39.8 36.5 Corporate (22.3 ) (25.2 ) (45.6 )
(38.3 ) Total $ 187.7 $ 137.0 $ 271.5 $
162.6
MARTIN MARIETTA MATERIALS, INC.
Unaudited Financial Highlights (In millions)
Three Months Ended
Six Months Ended June 30, June 30,
2016 2015 2016
2015 Net sales by product line:
Heritage: Aggregates Business: Aggregates $ 511.6 $ 481.6 $ 915.7 $
813.8 Ready Mixed Concrete 208.5 149.8 392.5 277.3 Asphalt and
Paving 65.0 58.0 76.1
74.8 Total Aggregates Business 785.1 689.4 1,384.3
1,165.9 Cement Business 59.8 100.4 129.6 197.0 Magnesia Specialties
Business 58.8 60.4 118.4 119.2 Acquisition: Aggregates Business:
Aggregates 4.7 - 7.1 - Ready Mixed Concrete 6.4 - 9.1 - Asphalt and
Paving 0.6 - 0.9 -
Total Aggregates Business 11.7 -
17.1 - Total $ 915.4 $ 850.2
$ 1,649.4 $ 1,482.1 Gross profit (loss)
by product line: Heritage: Aggregates Business: Aggregates $ 165.2
$ 137.3 $ 247.5 $ 178.7 Ready Mixed Concrete 24.8 9.3 42.8 11.4
Asphalt and Paving 12.6 7.9 6.6
3.1 Total Aggregates Business 202.6 154.5
296.9 193.2 Cement Business 24.0 30.4 56.6 49.4 Magnesia
Specialties Business 21.7 21.2 44.7 41.4 Corporate (1.5 ) (5.9 )
(5.5 ) (9.6 ) Acquisition: Aggregates Business: Aggregates (0.8 ) -
(2.0 ) - Ready Mixed Concrete 0.5 - 0.6 - Asphalt and Paving
0.2 - - - Total
Aggregates Business (0.1 ) - (1.4 )
- Total $ 246.7 $ 200.2 $ 391.3
$ 274.4 The following presents 2015 cement
product line metrics for the California cement business prior to
the September 30, 2015 divestiture:
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. Balance Sheet Data (In millions)
June
30, December 31, June 30, 2016
2015 2015 (Unaudited) (Audited)
(Unaudited) ASSETS Cash and cash equivalents $ 28.6 $ 168.4 $ 44.2
Accounts receivable, net 534.5 410.9 497.5 Inventories, net 504.9
469.1 479.9 Other current assets 53.9 33.2 508.5 Property, plant
and equipment, net 3,322.2 3,156.0 3,049.5 Intangible assets, net
2,643.5 2,578.8 2,580.8 Other noncurrent assets 145.7
141.2 100.0 Total assets
$
7,233.3
$
6,957.6
$
7,260.4
LIABILITIES AND EQUITY Current maturities of
long-term debt and short-term facilities $ 238.2 $ 18.7 $ 15.4
Other current liabilities 363.4 348.0 347.9 Long-term debt
(excluding current maturities) 1,541.1 1,550.1 1,637.9 Other
noncurrent liabilities 1,074.1 980.6 948.8 Total equity
4,016.5 4,060.2 4,310.4 Total liabilities and equity
$ 7,233.3 $ 6,957.6 $ 7,260.4
MARTIN MARIETTA MATERIALS,
INC. Unaudited Statements of Cash Flows (In millions)
Six Months Ended June 30,
2016 2015
Operating activities: Consolidated net earnings $ 167.2 $ 88.2
Adjustments to reconcile consolidated net earnings to net cash
provided by operating activities: Depreciation, depletion and
amortization 139.6 135.0 Stock-based compensation expense 12.8 7.5
Gain on divestitures and sales of assets (0.3 ) (0.9 ) Deferred
income taxes 34.4 33.9 Excess tax benefits from stock-based
compensation (3.9 ) (0.1 ) Other items, net (5.8 ) (0.3 ) Changes
in operating assets and liabilities, net of effects of acquisitions
and divestitures: Accounts receivable, net (117.5 ) (76.1 )
Inventories, net (33.1 ) (27.6 ) Accounts payable 32.5 (3.4 ) Other
assets and liabilities, net (22.5 ) (29.1 ) Net cash
provided by operating activities 203.4 127.1
Investing activities: Additions to property, plant
and equipment (210.5 ) (128.0 ) Acquisitions, net (123.0 ) (10.7 )
Cash received in acquisition 3.4 - Proceeds from divestitures and
sales of assets 4.5 2.0 Repayments from affiliate - 1.8 Payment of
railcar construction advances - (25.2 ) Reimbursement of railcar
construction advances - 25.2 Net cash
used for investing activities (325.6 ) (134.9 )
Financing activities: Borrowings of long-term debt 280.0
80.0 Repayments of long-term debt (70.4 ) (8.2 ) Payments on
capital leases (1.6 ) (1.8 ) Change in bank overdraft (3.1 ) (0.2 )
Repurchases of common stock (190.0 ) (100.0 ) Dividends paid (51.5
) (54.3 ) Excess tax benefits from stock-based compensation 3.9 0.1
Issuances of common stock 15.1 27.7 Net
cash used for financing activities (17.6 ) (56.7 )
Net decrease in cash and cash equivalents (139.8 ) (64.5 )
Cash and cash equivalents, beginning of period 168.4
108.7 Cash and cash equivalents, end of period $ 28.6
$ 44.2
MARTIN MARIETTA MATERIALS, INC.
Unaudited Operational Highlights
Three Months Ended Six Months
Ended June 30, 2016 June 30, 2016 Volume
Pricing Volume Pricing Volume/Pricing
Variance (1)
Heritage Aggregates Product Line:
(2)
Mid-America Group 4.9 % 4.2 % 12.8 % 4.4 % Southeast Group 1.9 %
6.2 % 3.5 % 6.7 %
West Group (3)
(5.0 %) 10.4 % (0.8 %) 10.8 % Heritage Aggregates Operations 0.4 %
7.0 % 5.4 % 7.5 %
Aggregates Product Line (4)
1.3 % 6.8 % 6.2 % 7.4 %
Three Months Ended Six
Months Ended June 30, June 30, Shipments
(tons in thousands)
2016 2015
2016 2015
Heritage Aggregates Product Line: (2) Mid-America
Group 20,088 19,144 33,010 29,255 Southeast Group 5,375 5,274 9,693
9,364 West Group 16,700 17,585
31,978 32,220 Heritage Aggregates Operations
42,163 42,003 74,681 70,839 Acquisitions 391 -
537 –
Aggregates Product Line (4)
42,554 42,003 75,218
70,839 (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) Including the recently acquired
Colorado operations in the current-year periods, the volume
variances are (2.8%) and 0.9% for the three- and six-months ended
June 30, 2016, respectively, and the pricing variances are 10.0%
and 10.7% for the three- and six-months ended June 30, 2016,
respectively.
(4) Aggregates Product Line includes
acquisitions from the date of acquisition and divestitures through
the date of disposal.
Three Months Ended Six Months Ended June
30, June 30, 2016
2015 2016 2015
Heritage (in thousands) Aggregates tons - external
customers 39,557 39,651 70,160 66,783 Internal aggregates tons used
in other product lines 2,606 2,352
4,521 4,056 Total aggregates tons
42,163 42,003 74,681
70,839 Asphalt tons - external customers 250
356 319 569 Internal asphalt tons used in road paving business
469 456 534 513
Total asphalt tons 719 812
853 1,082 Ready Mixed Concrete -
cubic yards 1,942 1,613 3,705
2,977 Cement tons - external customers
578 994 1,263 2,019 Internal cement tons used in other product
lines 276 209 548
401 Total Cement tons 854 1,203
1,811 2,420
Acquisitions
(in thousands) Aggregates tons - external customers 310 - 451 –
Internal aggregates tons used in other product lines 81
- 86 – Total
aggregates tons 391 - 537
– Asphalt tons - external customers 13 - 24 -
Internal asphalt tons used in road paving business 115
- 115 - Total
asphalt tons 128 - 139
- Ready Mixed Concrete - cubic yards 55
- 78 –
Average unit sales price by product line (including internal
sales): Heritage: Aggregates (per ton) $ 12.78 $
11.94 $ 12.89 $ 11.99 Asphalt (per ton) $
37.20 $ 42.20 $ 38.09 $ 42.56 Ready
Mixed Concrete (per cubic yard) $ 105.16 $ 91.35 $
103.79 $ 91.52 Cement (per ton) $ 101.04 $
98.86 $ 100.51 $ 96.16
Acquisitions: Aggregates (per ton) $ 10.21 $ -
$ 10.84 $ - Asphalt (per ton) $ 44.13 $ -
$ 43.79 $ - Ready Mixed Concrete (per cubic
yard) $ 112.86 $ - $ 113.74 $ -
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 and six months ended June 30, 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 Six Months Ended Consolidated
Gross Margin in Accordance with Generally Accepted Accounting
Principles June 30, June 30, 2016
2015 2016
2015 Gross profit $ 246.7 $ 200.2 $
391.3 $ 274.4 Total revenues $ 977.3 $ 921.4
$ 1,766.0 $ 1,612.7 Gross margin 25.2 %
21.7 % 22.2 % 17.0 %
Three Months
Ended Six Months Ended Consolidated Gross Margin
Excluding Freight and Delivery Revenues June 30, June
30, 2016 2015
2016 2015 Gross profit $ 246.7
$ 200.2 $ 391.3 $ 274.4 Total revenues
$ 977.3 $ 921.4 $ 1,766.0 $ 1,612.7 Less: Freight and delivery
revenues (61.9 ) (71.2 ) (116.6 )
(130.6 ) Net sales $ 915.4 $ 850.2 $ 1,649.4 $
1,482.1 Gross margin excluding freight and delivery revenues
26.9 % 23.5 % 23.7 % 18.5 %
Three Months Ended Six Months Ended Consolidated
Operating Margin in Accordance with Generally Accepted Accounting
Principles June 30, June 30, 2016
2015 2016
2015 Earnings from operations $ 187.7 $ 137.0
$ 271.5 $ 162.6 Total revenues $ 977.3
$ 921.4 $ 1,766.0 $ 1,612.7 Operating margin
19.2 % 14.9 % 15.4 % 10.1 %
Three Months Ended Six Months Ended Consolidated
Operating Margin Excluding Freight and Delivery Revenues
June 30, June 30, 2016
2015 2016 2015
Earnings from operations $ 187.7 $ 137.0 $
271.5 $ 162.6 Total revenues $ 977.3 $ 921.4 $
1,766.0 $ 1,612.7 Less: Freight and delivery revenues (61.9
) (71.2 ) (116.6 ) (130.6 ) Net sales $ 915.4
$ 850.2 $ 1,649.4 $ 1,482.1 Operating
margin excluding freight and delivery revenues 20.5 %
16.1 % 16.5 % 11.0 %
Three Months Ended
Six Months Ended Aggregates Business Gross Margin in
Accordance with Generally Accepted Accounting Principles
June 30, June 30, 2016
2015 2016 2015
Gross profit $ 202.5 $ 154.5 $ 295.5 $
193.2 Total revenues $ 851.2 $ 750.4 $ 1,502.2
$ 1,276.4 Gross margin 23.8 % 20.6 %
19.7 % 15.1 %
Three Months Ended Six
Months Ended Aggregates Business Gross Margin Excluding
Freight and Delivery Revenues June 30, June 30,
2016 2015
2016 2015 Gross profit $ 202.5
$ 154.5 $ 295.5 $ 193.2 Total revenues
$ 851.2 $ 750.4 $ 1,502.2 $ 1,276.4 Less: Freight and delivery
revenues (54.4 ) (61.0 ) (100.8 )
(110.5 ) Net sales $ 796.8 $ 689.4 $ 1,401.4 $
1,165.9 Gross margin excluding freight and delivery revenues
25.4 % 22.4 % 21.1 % 16.6 %
Three Months Ended Six Months Ended Aggregates
Product Line Gross Margin in Accordance with Generally Accepted
Accounting Principles June 30, June 30,
2016 2015 2016
2015 Gross profit $ 164.4 $
137.3 $ 245.4 $ 178.7 Total revenues $ 565.8
$ 536.8 $ 1,013.8 $ 914.8 Gross margin
29.0 % 25.6 % 24.2 % 19.5 %
Three Months Ended Six Months Ended Aggregates
Product Line Gross Margin Excluding Freight and Delivery
Revenues June 30, June 30, 2016
2015 2016
2015 Gross profit $ 164.4 $ 137.3 $
245.4 $ 178.7 Total revenues $ 565.8 $ 536.8 $
1,013.8 $ 914.8 Less: Freight and delivery revenues (49.5 )
(55.2 ) (91.1 ) (101.0 ) Net sales $ 516.3
$ 481.6 $ 922.7 $ 813.8 Gross margin
excluding freight and delivery revenues 31.8 % 28.5 %
26.6 % 22.0 %
MARTIN MARIETTA MATERIALS,
INC. Non-GAAP Financial Measures (continued) (Dollars in
millions)
Three Months Ended Six Months Ended
June 30, June 30,
Ready Mixed Concrete Product Line Gross
Margin in Accordance with Generally Accepted Accounting
Principles
2016 2015
2016 2015 Gross profit $ 25.3
$ 9.3 $ 43.4 $ 11.4 Total revenues $
215.3 $ 150.1 $ 402.4 $ 278.1 Gross
margin 11.8 % 6.2 % 10.8 % 4.1 %
Three Months Ended Six Months Ended Ready Mixed
Concrete Product Line Gross Margin Excluding Freight and Delivery
Revenues June 30, June 30, 2016
2015 2016
2015 Gross profit $ 25.3 $ 9.3 $ 43.4
$ 11.4 Total revenues $ 215.3 $ 150.1 $ 402.4 $ 278.1
Less: Freight and delivery revenues (0.4 ) (0.3 )
(0.7 ) (0.5 ) Net sales $ 214.9 $ 149.8
$ 401.7 $ 277.6 Gross margin excluding freight and
delivery revenues 11.8 % 6.2 % 10.8 %
4.1 %
Three Months Ended Six Months Ended
June 30, June 30,
Aggregates-Related Downstream
Operations Gross Margin in Accordance with Generally Accepted
Accounting Principles
2016 2015
2016 2015 Gross profit $ 38.2
$ 17.2 $ 50.1 $ 14.5 Total revenues $
285.4 $ 213.6 $ 488.3 $ 361.7 Gross
margin 13.4 % 8.1 % 10.3 % 4.0 %
Three Months Ended Six Months Ended
Aggregates-Related Downstream Operations Gross Margin Excluding
Freight and Delivery Revenues June 30, June 30,
2016 2015
2016 2015 Gross profit $ 38.2
$ 17.2 $ 50.1 $ 14.5 Total revenues $
285.4 $ 213.6 $ 488.3 $ 361.7 Less: Freight and delivery revenues
(4.9 ) (5.8 ) (9.7 ) (9.6 ) Net sales $
280.5 $ 207.8 $ 478.6 $ 352.1 Gross
margin excluding freight and delivery revenues 13.6 %
8.3 % 10.5 % 4.1 %
Three Months Ended
Six Months Ended Cement Business Gross Margin in
Accordance with Generally Accepted Accounting Principles
June 30, June 30, 2016
2015 2016 2015
Gross profit $ 24.0 $ 30.4 $ 56.6 $
49.4 Total revenues $ 62.5 $ 105.9 $ 136.0
$ 208.0 Gross margin 38.4 % 28.7 %
41.6 % 23.8 %
Three Months Ended Six
Months Ended Cement Business Gross Margin Excluding Freight
and Delivery Revenues June 30, June 30,
2016 2015 2016
2015 Gross profit $ 24.0 $ 30.4
$ 56.6 $ 49.4 Total revenues $ 62.5 $ 105.9 $
136.0 $ 208.0 Less: Freight and delivery revenues (2.7 )
(5.5 ) (6.4 ) (11.0 ) Net sales $ 59.8
$ 100.4 $ 129.6 $ 197.0 Gross margin excluding
freight and delivery revenues 40.1 % 30.3 %
43.6 % 25.1 %
Three Months Ended Six Months
Ended
June 30, June 30,
Cement Business, Excluding California
Business, Gross Margin in Accordance with Generally Accepted
Accounting Principles
2016 2015
2016 2015 Gross profit $ 24.0
$ 27.0 $ 56.6 $ 50.0 Total revenues $
62.5 $ 70.6 $ 136.0 $ 138.3 Gross
margin 38.4 % 38.2 % 41.6 % 36.2 %
Three Months Ended Six Months Ended Cement
Business, Excluding California Business, Gross Margin Excluding
Freight and Delivery Revenues June 30, June 30,
2016 2015
2016 2015 Gross profit $ 24.0
$ 27.0 $ 56.6 $ 50.0 Total revenues $
62.5 $ 70.6 $ 136.0 $ 138.3 Less: Freight and delivery revenues
(2.7 ) (4.4 )
(6.4 ) (8.6 ) Net sales $ 59.8 $ 66.2 $ 129.6
$ 129.7 Gross margin excluding freight and delivery
revenues 40.1 % 40.7 % 43.6 % 38.6 %
MARTIN MARIETTA MATERIALS, INC. Non-GAAP Financial
Measures (continued) (Dollars in millions)
Three Months Ended
Six Months Ended Magnesia Specialties Business Gross
Margin in Accordance with Generally Accepted Accounting
Principles June 30, June 30, 2016
2015 2016
2015 Gross profit $ 21.7 $ 21.2 $ 44.7
$ 41.4 Total revenues $ 63.6 $ 65.1 $
127.8 $ 128.3 Gross margin 34.1 % 32.6
% 34.9 % 32.3 %
Three Months Ended
Six Months Ended Magnesia Specialties Business Gross
Margin Excluding Freight and Delivery Revenues June 30,
June 30, 2016 2015
2016 2015 Gross profit $
21.7 $ 21.2 $ 44.7 $ 41.4 Total
revenues $ 63.6 $ 65.1 $ 127.8 $ 128.3 Less: Freight and delivery
revenues (4.8 ) (4.7 ) (9.4 ) (9.1 )
Net sales $ 58.8 $ 60.4 $ 118.4 $ 119.2
Gross margin excluding freight and delivery revenues 36.8 %
35.1 % 37.7 % 34.7 %
The Corporation presents the increases in
consolidated net sales and cement business shipments, excluding net
sales and shipments attributable to the California cement business
which was divested in September 2015, from the prior-year quarter.
Management presents these measures, as they present the growth in
net sales and cement shipments on a comparable basis. The following
presents the calculations of the measures:
Three Months Ended June 30, 2016
2015 Consolidated net sales $ 915.4 $
850.2 Less: Net sales attributable to California cement business:
Cement - (33.9 ) Aggregates - (0.3 ) Less: Net
sales attributable to California cement business -
(34.2 ) Consolidated net sales excluding net sales
attributable to the California cement business $ 915.4 $
816.0 Increase in net sales excluding net sales
attributable to the California cement business 12 %
Three Months Ended June 30, (shipments in
thousands of tons)
2016 2015
Cement shipments 854 1,203 Less: Cement shipments
attributable to California cement business -
(367 ) Cement shipments excluding shipments attributable to the
California cement business 854 836
Increase in cement shipments, excluding shipments
attributable to the California cement business 2.2 %
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 June 30,
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 June 30, 2016:
Twelve Month
Period July 1, 2015 to June 30, 2016 Earnings
from continuing operations attributable to Martin Marietta
Materials, Inc. $ 367.8 Add back: Interest expense 78.2 Income tax
expense 159.8 Depreciation, depletion and amortization expense
266.6 Stock-based compensation expense 18.9 Nonrecurring expenses
19.0 Deduct: Interest income (0.5 ) Consolidated
EBITDA, as defined $ 909.8 Consolidated Debt,
including debt for which the Company is a co-borrower, at June 30,
2016 $ 1,802.0
Consolidated Debt-to-Consolidated EBITDA,
as defined, at June 30, 2016, for the trailing-twelve month
EBITDA
1.98 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 and six
months ended June 30, 2016 and 2015.
Three Months
Ended Six Months Ended June 30, June 30,
2016 2015
2016 2015 Consolidated Earnings
Before Interest, Income Taxes, Depreciation, Depletion and
Amortization (EBITDA) $ 266.5 $ 206.9 $ 419.1
$ 298.1 A Reconciliation of Net Earnings Attributable
to Martin Marietta Materials, Inc. to Consolidated EBITDA is as
follows:
Three Months Ended Six Months Ended June
30, June 30, 2016
2015 2016 2015
Net Earnings Attributable to Martin Marietta Materials, Inc.
$ 122.1 $ 81.9 $ 167.0 $ 88.1 Add back: Interest Expense 20.3 19.1
40.3 38.4 Taxes on Income 53.4 38.9 73.1 38.1 Depreciation,
Depletion and Amortization Expense 70.7 67.0
138.7 133.5 Consolidated EBITDA
$ 266.5 $ 206.9 $ 419.1 $ 298.1
Net Sales $ 915.4 $ 850.2 $ 1,649.4 $ 1,482.1
EBITDA margin as percentage of net sales 29.1
% 24.3 % 25.4 % 20.1 %
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 Company 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 June 30, 2016:
Consolidated net sales for the quarter ended June 30, 2016 $ 915.4
Consolidated net sales for the quarter ended June 30, 2015
850.2 Incremental net sales $ 65.2
Consolidated gross profit for the quarter ended June 30, 2016 $
246.7 Consolidated gross profit for the quarter ended June 30, 2015
200.2 Incremental gross profit $ 46.5
Incremental consolidated gross margin (excluding freight and
delivery revenues) for the quarter ended June 30, 2016 71 %
MLM-E
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version on businesswire.com: http://www.businesswire.com/news/home/20160802006048/en/
Martin Marietta Materials, Inc.Anne H. Lloyd,
919-783-4660Executive Vice President and ChiefFinancial
Officerwww.martinmarietta.comorInvestor Contact:Elisabeth Eisleben,
919-510-4776Director, Investor
RelationsElisabeth.eisleben@martinmarietta.com
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