Company Sets New Records for Consolidated
Net Sales, Gross Profit and Net Earnings
Consolidated Gross Margin (Excluding Freight
and Delivery Revenues) Expands 210 Basis Points
Earnings per Diluted Share Increases 43% to
$2.49
Aggregates Product Line Pricing Up Nearly
9%
Magnesia Specialties Record Gross Margin
(Excluding Freight and Delivery Revenues) of 38%
Martin Marietta Materials, Inc. (NYSE:MLM) today reported
results for the third quarter ended September 30, 2016.
Ward Nye, Chairman, President and CEO of Martin Marietta,
stated: “Our ability to take advantage of a slow and steady
economic expansion and improvement across our markets helped us
achieve exceptional performance in each of our business units. For
the third quarter of 2016, we delivered significant margin
expansion and achieved record gross profit, net earnings and
earnings per diluted share from our record net sales for the
period. Aggregate product line pricing increased approximately 9
percent which, coupled with our focus on diligent cost control,
allowed us to leverage the increased net sales into a
210-basis-point improvement in consolidated gross margin (excluding
freight and delivery revenues), generating a 91 percent incremental
gross margin (excluding freight and delivery revenues). Overall,
our record performance across our business underscores our ability
to deliver top- and bottom-line growth.
“The businesses’ underlying quarterly performance was
outstanding. Every business across the broad spectrum of our
enterprise made meaningful contributions, reflecting the soundness
of our strategic planning together with market-specific execution.
For example, positive underlying market conditions contributed to
the Southeast Group and the Mid-America Group expanding their gross
margin (excluding freight and delivery revenues) 530 basis points
and 90 basis points, respectively. In addition, aggregate product
line volume increased 8 percent in the Carolinas, with some markets
increasing 15 percent or more. This growth was driven by early and
small advances in both non-residential and residential demand.
Importantly, these results were achieved despite some market
challenges we faced during the quarter. Indeed, volume headwinds
were more prevalent than tailwinds during the quarter and
constrained construction activity in our markets. Specifically, we
continue to see delays in Texas Department of Transportation
projects, declines in railroad ballast shipments, abnormally wet
weather and a slower energy-related marketplace. Our record
financial results demonstrate our ability to overcome these and
other macro headwinds as our employees focus on executing our
business plan and meeting our objectives.
“As we look forward to 2017, we note that domestic job growth
remains a strong catalyst for construction activity and demand for
our products. In fact, during the last three years, the United
States added nearly eight million jobs. Durable employment growth
in the east, where North Carolina, Georgia and Florida each rank in
the top 10 states nationally for job gains, continues to support
the early stages of a construction-centric phase of recovery in
many of these states.
“We anticipate infrastructure activity should grow as the impact
of the $305 billion FAST Act, together with increased state
department of transportation funding initiatives, begin to
meaningfully flow into the construction pipeline. We see solid
non-residential demand in our key markets driven, in part, by
growth in warehousing, data center and wind farm construction,
despite the perception of weakening activity at the macroeconomic
level. We believe this perception relates to volatility in
quarterly construction start data that is better explained by the
natural ebb and flow of mega projects moving through the
construction cycle. Residential construction in our key markets is
expected to continue increasing, driven largely by historically low
levels of construction activity over the previous several years
together with low mortgage rates, significant lot absorption and
higher multi-family rental rates.
Mr. Nye continued, “Our leadership positions in some of the
nation’s most vibrant geographic and demographic markets should
allow us to capitalize on a durable construction and infrastructure
recovery in 2017 and beyond. Driven by expected steady growth in
volume and pricing, as well as improved cost dynamics, we believe
that the Company’s profitability and cash generation outlook is the
strongest it has been in years. This view, combined with our stated
focus and priority on driving enhanced shareholder value through
capital appreciation and returning cash to shareholders, was an
impetus for our recent Board action increasing our cash dividend by
5 percent. It is our present intention to increase our cash
dividend on an annual basis, wholly consistent with our
pre-recession practice. Our confidence in our future is underpinned
by our talented employees, outstanding assets and proven strategy,
which position Martin Marietta to deliver consistent long-term
shareholder value.”
NOTABLE ITEMS FOR THE THIRD QUARTER
(All growth and margin comparisons are versus the prior-year
period)
Quarter-ended September 30,
Nine-months ended September 30,
2016 2015 2016
2015 Consolidated net sales
$
1.038B
$
1.005B
$
2.688B
$
2.487B
% growth 3.3 %
8.1 % Consolidated
gross profit $ 292.6M $ 262.5M
$ 683.9M $ 536.9M % growth
11.5 % 27.4
%
Consolidated gross profit margin
(excluding freight and delivery revenues)
28.2 % 26.1 % 25.4
% 21.6 % margin expansion
210 bps
380 bps
Earnings from operations
$ 240.4M $ 179.5M $ 511.9M
$ 342.1M % growth 33.9 %
49.6 %
EBITDA 1 $ 322.8M $
248.2M $ 741.9M $ 546.3M %
growth 30.1 %
35.8 % EBITDA margin as a
% of net sales 31.1 % 24.7 %
27.6 % 22.0 % margin expansion
640 bps
560 bps
Earnings per diluted share
$ 2.49 $ 1.74 $ 5.08
$ 3.03 % growth 43.1 %
67.7 %
Aggregates Product Line:
Net sales $ 542.7M
$ 530.0M
$
1.466B
$
1.344B
% growth 2.4 %
9.1 % Gross profit
$ 173.0M $ 166.1M $
418.5M $ 344.9M % growth
4.1 % 21.3 %
Gross profit margin (excluding freight and
delivery revenues) 31.9 % 31.4 %
28.6 % 25.7 % margin expansion
50 bps
290 bps
Aggregates-related downstream
operations:
Net sales $ 375.3M
$ 307.4M $ 853.9M $ 659.5M
% growth 22.1 %
29.5 % Gross
profit $ 70.3M $ 45.7M $
120.3M $ 60.1M % growth
54.0 % 100.0 %
Gross profit margin (excluding freight and
delivery revenues) 18.7 % 14.8 %
14.1 % 9.1 % margin expansion
390 bps
500 bps
Cement 2:
Net sales $ 60.1M
$ 79.7M $ 189.7M $ 209.4M
% growth (24.6 %)
(9.4 %) Gross profit
$ 29.7M $ 34.9M $ 86.2M
$ 85.0M % growth (14.9 %)
1.4 %
Gross profit margin (excluding freight and delivery
revenues) 49.5 % 43.8 %
45.4 % 40.6 % margin expansion
570 bps
480 bps
Magnesia Specialties:
Net sales
$ 60.2M $ 57.3M $ 178.6M
$ 176.5M % growth 5.2 %
1.2 %
Gross profit $ 22.8M $
19.4M $ 67.5M $ 60.8M % growth
17.6 %
11.0 % Gross profit margin
(excluding freight and delivery revenues) 37.9
% 33.9 % 37.8 % 34.4 %
margin expansion
400 bps
340 bps
1 See page 20 for a reconciliation to net
earnings.
2 Cement results reflect Texas cement
operations. For comparability purposes, the quarter and nine-months
ended September 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 page 13.
QUARTERLY OPERATING RESULTS (All comparisons are versus
the prior-year quarter unless noted otherwise)
Aggregates Business
Aggregates product line shipments to the infrastructure market
comprised 42 percent of quarterly volumes and decreased 7.2
percent. Infrastructure shipments in the third quarter were
impacted by significant rainfall and project start-up delays,
primarily in Texas, which deferred shipments and led to reduced
public-sector volumes.
The nonresidential market represented 31 percent of quarterly
aggregates product line shipments and declined 4.3 percent. The
Mid-America Group achieved a 5.0 percent increase, driven by growth
in office, retail and industrial development in North Carolina and
South Carolina. The Southeast Group and West Group each experienced
a decline in nonresidential activity, primarily related to weather
deferrals, further reductions in energy sector headwinds and
project timing.
The residential market accounted for 18 percent of quarterly
aggregates product line shipments. Volumes to this segment
increased 3.0 percent, due to the continued housing recovery. While
the pace of housing permit growth has slowed, Dallas, Atlanta and
Denver all continue to rank in the top 10 in the country. In fact,
the increase in housing permits in Dallas for the trailing-12
months led the nation. ChemRock/Rail market accounted for the
remaining 9 percent of aggregates product line volumes. The volume
decline in this segment principally reflects reduced ballast
shipments driven by reduced energy demand, which impacts
transportation and results in lower capital and maintenance
activity by railroads.
Overall, aggregates product line shipments decreased 4.7
percent, reflecting various department of transportation delays,
weather-driven impacts in addition to reduced energy-related
shipments and lower ballast demand.
Aggregates product line pricing improvement of 8.5 percent
reflects growth in all reportable groups, led by a 13.7 percent
increase in the West Group. The Southeast Group and Mid-America
Group reported increases of 7.4 percent and 4.7 percent,
respectively.
The ready mixed concrete product line continued to benefit from
strong demand and better pricing. Inclusive of operations acquired
during the quarter, these factors drove a 17.8 percent increase in
shipments and a 6.1 percent increase in average selling price.
Increased sales led to a 380-basis-point improvement in gross
margin (excluding freight and delivery revenues). Excluding the
results of businesses acquired in 2016, ready mixed concrete
volumes and average selling price increased 3.6 percent and 7.0
percent, respectively, driving gross margin expansion (excluding
freight and delivery revenues) of 415 basis points.
The Aggregates business’ gross margin (excluding freight and
delivery revenues) was 26.5 percent, an increase of 120 basis
points, driven by aggregates product line pricing improvement and
improved margins in the aggregates-related downstream business.
Cement Business
The Cement business generated $60.1 million of net sales and
$29.7 million of gross profit. For the quarter, gross profit margin
(excluding freight and delivery revenues) was 49.5 percent,
compared with 43.8 percent for the third quarter of 2015 (excluding
the results of the divested California cement business), an
improvement of 570 basis points. During the quarter, shipments were
negatively impacted by department of transportation project delays
and slower activity in the south Texas markets, in addition to wet
weather in Texas. That said, the Company sees improving conditions
in most Texas markets. The Portland Cement Association, or PCA,
forecasts supply/demand imbalance in Texas over the next several
years.
Planned cement kiln maintenance costs of $1.8 million were
incurred during the quarter and are expected to be $9.7 million in
the fourth quarter.
Magnesia Specialties Business
Magnesia Specialties delivered record performance and generated
third-quarter net sales of $60.2 million and $22.8 million of gross
profit. Net sales for the quarter increased 5.2 percent,
attributable to the chemicals product line. Gross margin (excluding
freight and delivery revenues) in the quarter reflected lower
natural gas and kiln outage costs and expanded 400 basis points to
37.9 percent. Third-quarter earnings from operations were $20.4
million compared with $17.0 million in the prior-year quarter.
CONSOLIDATED OPERATING RESULTS
SG&A was 5.4 percent of net sales, down slightly compared
with the prior-year quarter. Earnings from operations for the
quarter were $240.4 million compared with $179.5 million in the
prior-year period, an increase of 33.9 percent. The prior-year
quarter reflects a $28.7 million loss on the sale of the California
cement operations.
The estimated effective income tax rate for the quarter was 31
percent, which is 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 nine months
of the year was $414.1 million in 2016 compared with $319.6 million
in 2015. The increase is principally attributable to higher
earnings before depreciation, depletion and amortization
expense.
At September 30, 2016, the ratio of consolidated debt to
consolidated EBITDA, as defined, for the trailing-12 months was 1.9
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.
The Company has repurchased 4.5 million shares and, including
the payment of dividends, returned $896 million to shareholders
since announcing its repurchase authorization in February of 2015.
As of September 30, 2016, there were 63.5 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 the Company’s primary markets, will be mixed with
overall strength in large downstream construction projects,
providing a counterbalance to energy-sector headwinds.
- 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
low-single digits.
- Nonresidential market to increase in
the mid-single digits.
- Residential market to experience a
high-single digit increase.
- ChemRock/Rail market to experience a
decline.
2016 GUIDANCE
Low
High
Consolidated
Results
Consolidated net
sales
$
3.5B
$
3.7B
Consolidated gross profit $ 900M
$ 925M
SG&A $ 225M $ 230M
Interest expense $ 80M $ 80M
Estimated tax rate (excluding discrete events)
30.0 % 30.0 % Capital Expenditures $
350M $ 350M
EBITDA $ 950M
$
1.00B
Aggregates
Product Line
Volume (total
tons) 1 159.5M 161.0M
% growth 1 2 % 3 % Volume
(external tons) 150.0M
151.5M Average selling price per ton $ 12.90
$ 13.00 % growth 7.5 %
8.5 %
Net sales
$
1.9B
$
2.0B
Gross profit $ 560M $ 570M
Direct production cost per ton shipped $ 7.50
$ 7.60
Aggregates-related downstream
operations
Net sales
$
1.10B
$
1.15B
Gross profit $ 150M $ 155M
Cement
Volume (total
tons) 3.5M 3.6M %
growth 2 0 % 3 % Volume
(external tons) 2.4M 2.5M
Average selling price per ton $ 102.00
$ 103.00 % growth 2 1 %
2 % Net sales $ 250M $ 260M
Gross profit $ 105M $ 110M
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 page 13 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 United States Congress’
inability to reach agreement on the federal budget and this impact
on federal highway spending; 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. In fact, in early October 2016,
Hurricane Matthew generated winds and significant amounts of
rainfall disrupting operations from the Bahamas, Florida, Georgia
and the Carolinas. Management expects operations, particularly in
eastern North Carolina to be affected throughout the fourth
quarter. However, after hurricane-related flood waters recede,
management expects an increase in construction activity as roads,
homes and businesses are repaired.
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 third quarter 2016 earnings results
on a conference call and an online web simulcast today (November 1,
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 third-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 5274425.
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 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.
MLM-E
MARTIN MARIETTA
MATERIALS, INC. Unaudited Statements of Earnings (In
millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Net sales $ 1,038.3 $ 1,005.2 $ 2,687.7 $
2,487.3 Freight and delivery revenues 65.6
77.0 182.2 207.7 Total revenues
1,103.9 1,082.2 2,869.9
2,695.0 Cost of sales 745.7 742.7 2,003.8 1,950.4
Freight and delivery costs 65.6 77.0
182.2 207.7 Total cost of revenues
811.3 819.7 2,186.0
2,158.1 Gross profit 292.6 262.5 683.9 536.9 Selling,
general and administrative expenses 56.3 54.9 177.7 161.1
Acquisition-related expenses, net 0.3 2.1 1.6 5.8 Other operating
(income) and expenses, net (4.4 ) 26.0
(7.3 ) 27.9 Earnings from operations 240.4 179.5
511.9 342.1 Interest expense 20.6 18.9 60.9 57.4 Other nonoperating
income, net (10.6 ) (4.5 ) (19.7 ) (6.6
) Earnings before taxes on income 230.4 165.1 470.7 291.3 Income
tax expense 70.9 47.5 144.0
85.6 Consolidated net earnings 159.5 117.6
326.7 205.7 Less: Net earnings attributable to noncontrolling
interests - 0.1 0.2
0.1 Net earnings attributable to Martin Marietta
Materials, Inc. $ 159.5 $ 117.5 $ 326.5 $
205.6 Net earnings per common share attributable to
common shareholders: Basic $ 2.50 $ 1.75 $ 5.10
$ 3.05 Diluted $ 2.49 $ 1.74 $ 5.08
$ 3.03 Dividends per common share $ 0.42
$ 0.40 $ 1.22 $ 1.20 Average
number of common shares outstanding: Basic 63.5
66.8 63.7 67.2 Diluted
63.7 67.1 64.0
67.5
MARTIN MARIETTA MATERIALS, INC. Unaudited Financial
Highlights (In millions)
Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Net sales: Aggregates Business: Mid-America
Group $ 275.8 $ 265.6 $ 708.2 $ 632.7 Southeast Group 80.0 78.3
230.0 214.5 West Group 562.2 493.5
1,381.2 1,156.1 Total Aggregates
Business 918.0 837.4 2,319.4 2,003.3 Cement 60.1 110.5 189.7 307.5
Magnesia Specialties 60.2 57.3
178.6 176.5 Total $ 1,038.3 $ 1,005.2
$ 2,687.7 $ 2,487.3 Gross profit
(loss): Aggregates Business: Mid-America Group $ 103.6 $ 97.4 $
223.6 $ 184.7 Southeast Group 15.9 11.5 41.8 24.1 West Group
123.8 102.9 273.4 196.2
Total Aggregates Business 243.3 211.8 538.8 405.0 Cement
29.7 38.2 86.2 87.6 Magnesia Specialties 22.8 19.4 67.5 60.8
Corporate (3.2 ) (6.9 ) (8.6 ) (16.5 )
Total $ 292.6 $ 262.5 $ 683.9 $ 536.9
Selling, general and administrative expenses: Aggregates
Business: Mid-America Group $ 12.9 $ 12.9 $ 39.5 $ 39.2 Southeast
Group 4.3 4.5 12.7 13.3 West Group 16.5 16.6
51.0 48.4 Total Aggregates
Business 33.7 34.0 103.2 100.9 Cement 6.1 6.8 18.5 20.1 Magnesia
Specialties 2.4 2.4 7.2 7.1 Corporate 14.1
11.7 48.8 33.0 Total $ 56.3
$ 54.9 $ 177.7 $ 161.1 Earnings
(Loss) from operations: Aggregates Business: Mid-America Group $
91.9 $ 85.7 $ 186.8 $ 148.4 Southeast Group 11.9 7.6 30.4 10.8 West
Group 110.8 87.5 227.0
151.2 Total Aggregates Business 214.6 180.8 444.2
310.4 Cement 23.0 2.8 70.6 37.5 Magnesia Specialties 20.4 17.0 60.2
53.5 Corporate (17.6 ) (21.1 ) (63.1 )
(59.3 ) Total $ 240.4 $ 179.5 $ 511.9 $ 342.1
MARTIN
MARIETTA MATERIALS, INC. Unaudited Financial Highlights
(In millions)
Three
Months Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Net sales by product line: Heritage: Aggregates
Business: Aggregates $ 538.0 $ 530.0 $ 1,453.7 $ 1,343.8 Ready
Mixed Concrete 234.4 209.6 627.0 486.9 Asphalt and Paving
110.0 97.8 186.1 172.6
Total Aggregates Business 882.4 837.4 2,266.8 2,003.3 Cement
Business 60.1 110.5 189.7 307.5 Magnesia Specialties Business 60.2
57.3 178.6 176.5 Acquisition: Aggregates Business: Aggregates 4.7 -
11.8 - Ready Mixed Concrete 29.3 - 38.4 - Asphalt and Paving
1.6 - 2.4 - Total
Aggregates Business 35.6 - 52.6
- Total $ 1,038.3 $ 1,005.2 $
2,687.7 $ 2,487.3 Gross profit (loss) by
product line: Heritage: Aggregates Business: Aggregates $ 173.3 $
166.1 $ 420.8 $ 344.9 Ready Mixed Concrete 36.1 23.6 78.9 34.9
Asphalt and Paving 30.0 22.1
36.7 25.2 Total Aggregates Business 239.4
211.8 536.4 405.0 Cement Business 29.7 38.2 86.2 87.6 Magnesia
Specialties Business 22.8 19.4 67.5 60.8 Corporate (3.2 ) (6.9 )
(8.6 ) (16.5 ) Acquisition: Aggregates Business: Aggregates (0.3 )
- (2.3 ) - Ready Mixed Concrete 3.8 - 4.3 - Asphalt and Paving
0.4 - 0.4 -
Total Aggregates Business 3.9 -
2.4 - Total $ 292.6 $ 262.5 $
683.9 $ 536.9 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)
September 30,
December 31, September 30, 2016 2015
2015 (Unaudited) (Audited) (Unaudited) ASSETS Cash and cash
equivalents $ 60.7 $ 168.4 $ 436.4 Accounts receivable, net 566.4
410.9 577.4 Inventories, net 508.2 469.1 464.5 Other current assets
56.2 33.2 37.4 Property, plant and equipment, net 3,379.6 3,156.0
3,073.5 Intangible assets, net 2,675.7 2,578.8 2,577.2 Other
noncurrent assets 126.4 141.2 142.0 Total assets $
7,373.2 $ 6,957.6 $ 7,308.4 LIABILITIES AND EQUITY
Current maturities of long-term debt and short-term facilities $
228.0 $ 18.7 $ 147.0 Other current liabilities 376.9 348.0 427.9
Long-term debt (excluding current maturities) 1,536.8 1,550.1
1,553.8 Other noncurrent liabilities 1,073.1 980.6 927.1 Total
equity 4,158.4 4,060.2 4,252.6 Total
liabilities and equity $ 7,373.2 $ 6,957.6 $ 7,308.4
MARTIN MARIETTA MATERIALS,
INC. Unaudited Statements of Cash Flows (In millions)
Nine Months Ended September
30, 2016 2015 Operating activities:
Consolidated net earnings $ 326.7 $ 205.7 Adjustments to reconcile
consolidated net earnings to net cash provided by operating
activities: Depreciation, depletion and amortization 212.0 199.9
Stock-based compensation expense 17.2 10.7 Gain on divestitures and
sales of assets 0.2 27.6 Deferred income taxes 59.8 43.3 Excess tax
benefits from stock-based compensation (5.0 ) - Other items, net
(17.9 ) (6.5 ) Changes in operating assets and liabilities, net of
effects of acquisitions and divestitures: Accounts receivable, net
(133.8 ) (155.1 ) Inventories, net (34.0 ) (17.6 ) Accounts payable
12.4 22.2 Other assets and liabilities, net (23.5 )
(10.6 ) Net cash provided by operating activities 414.1
319.6 Investing activities: Additions
to property, plant and equipment (285.5 ) (212.4 ) Acquisitions,
net (178.7 ) (10.8 ) Cash received in acquisition 4.3 - Proceeds
from divestitures and sales of assets 5.2 422.0 Repayments from
affiliate - 1.8 Payment of railcar construction advances (37.4 )
(25.3 ) Reimbursement of railcar construction advances 37.4
25.2 Net cash (used for) provided by investing
activities (454.7 ) 200.5 Financing
activities: Borrowings of long-term debt 360.0 230.0 Repayments of
long-term debt (168.3 ) (111.4 ) Debt issue costs (0.2 ) - Payments
on capital leases (2.5 ) (5.8 ) Change in bank overdraft (10.2 )
(0.2 ) Repurchases of common stock (190.0 ) (257.7 ) Dividends paid
(78.3 ) (81.2 ) Excess tax benefits from stock-based compensation
5.0 - Issuances of common stock 17.4 33.9
Net cash used for financing activities (67.1 )
(192.4 ) Net (decrease) increase in cash and cash
equivalents (107.7 ) 327.7 Cash and cash equivalents, beginning of
period 168.4 108.7 Cash and cash
equivalents, end of period $ 60.7 $ 436.4
MARTIN MARIETTA
MATERIALS, INC. Unaudited Operational Highlights
Three Months Ended
Nine Months Ended September 30, 2016 September 30,
2016 Volume Pricing Volume Pricing
Volume/Pricing Variance (1) Heritage Aggregates
Product Line: (2) Mid-America Group (0.7 %) 4.7 % 7.0 %
4.6 % Southeast Group (5.5 %) 7.4 % 0.2 % 7.0 % West Group (10.9 %)
13.7 % (4.7 %) 11.9 % Heritage Aggregates Operations (5.6 %) 8.6 %
1.0 % 8.0 % Aggregates Product Line (3) (4.7 %) 8.5 % 1.8 % 7.9 %
Three Months Ended Nine Months Ended
September 30, September 30, Shipments (tons in
thousands)
2016 2015 2016 2015
Heritage Aggregates Product Line: (2) Mid-America
Group 21,799 21,958 54,809 51,212 Southeast Group 5,109 5,405
14,802 14,769 West Group 17,901 20,096
49,878 52,316 Heritage Aggregates
Operations 44,809 47,459 119,489 118,297 Acquisitions 430
- 967 – Aggregates
Product Line (3) 45,239 47,459
120,456 118,297 (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 Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Heritage (in thousands) Aggregates tons -
external customers 41,588 44,422 111,748 111,204 Internal
aggregates tons used in other product lines 3,221
3,037 7,741 7,093 Total
aggregates tons 44,809 47,459
119,489 118,297 Asphalt tons - external
customers 378 473 697 1,042 Internal asphalt tons used in road
paving business 755 783 1,289
1,296 Total asphalt tons 1,133
1,256 1,986 2,338
Ready Mixed Concrete - cubic yards 2,188 2,111
5,893 5,088 Cement tons -
external customers 574 1,081 1,837 3,100 Internal cement tons used
in other product lines 331 256
879 657 Total Cement tons 905
1,337 2,716 3,757
Acquisitions (in thousands) Aggregates tons - external
customers 340 - 791 - Internal aggregates tons used in other
product lines 90 - 176
- Total aggregates tons 430 -
967 - Asphalt tons -
external customers 34 - 58 - Internal asphalt tons used in road
paving business 193 - 308
- Total asphalt tons 227 -
366 - Ready Mixed
Concrete - cubic yards 298 - 376
-
Average unit sales price by
product line (including internal sales): Heritage:
Aggregates (per ton) $ 12.77 $ 11.76 $ 12.85 $
11.90 Asphalt (per ton) $ 39.18 $ 43.00 $
38.71 $ 42.80 Ready Mixed Concrete (per cubic yard) $
105.04 $ 98.15 $ 104.25 $ 94.27 Cement
(per ton) $ 103.08 $ 99.95 $ 101.37 $ 97.48
Acquisitions: Aggregates (per ton) $ 10.86
$ - $ 10.85 $ - Asphalt (per ton) $
44.18 $ - $ 44.03 $ - Ready Mixed
Concrete (per cubic yard) $ 97.67 $ - $ 101.01
$ -
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 nine months ended September 30, 2016 and
2015, in accordance with GAAP and reconciliations of the ratios as
percentages of total revenues to percentages of net sales:
Consolidated Gross Margin in
Accordance with Generally Accepted Accounting Principles
Three Months Ended Nine Months Ended September
30, September 30, 2016 2015 2016
2015 Gross profit $ 292.6 $ 262.5 $ 683.9
$ 536.9 Total revenues $ 1,103.9 $ 1,082.2
$ 2,869.9 $ 2,695.0 Gross margin 26.5 %
24.3 % 23.8 % 19.9 %
Consolidated
Gross Margin Excluding Freight and Delivery Revenues Three
Months Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Gross profit $ 292.6 $ 262.5 $ 683.9
$ 536.9 Total revenues $ 1,103.9 $ 1,082.2 $ 2,869.9
$ 2,695.0 Less: Freight and delivery revenues (65.6 )
(77.0 ) (182.2 ) (207.7 ) Net sales $ 1,038.3
$ 1,005.2 $ 2,687.7 $ 2,487.3 Gross margin
excluding freight and delivery revenues 28.2 % 26.1 %
25.4 % 21.6 %
Consolidated Operating Margin
in Accordance with Generally Accepted Accounting Principles
Three Months Ended Nine Months Ended September
30, September 30, 2016 2015 2016
2015 Earnings from operations $ 240.4 $ 179.5
$ 511.9 $ 342.1 Total revenues $ 1,103.9 $
1,082.2 $ 2,869.9 $ 2,695.0 Operating margin
21.8 % 16.6 % 17.8 % 12.7 %
Consolidated Operating Margin Excluding Freight and Delivery
Revenues Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Earnings from operations $ 240.4 $
179.5 $ 511.9 $ 342.1 Total revenues $ 1,103.9
$ 1,082.2 $ 2,869.9 $ 2,695.0 Less: Freight and delivery revenues
(65.6 ) (77.0 ) (182.2 ) (207.7 ) Net
sales $ 1,038.3 $ 1,005.2 $ 2,687.7 $ 2,487.3
Operating margin excluding freight and delivery revenues
23.2 % 17.9 % 19.0 % 13.8 %
Aggregates Business Gross Margin in Accordance with Generally
Accepted Accounting Principles Three Months Ended
Nine Months Ended September 30, September 30,
2016 2015 2016 2015 Gross profit $
243.3 $ 211.8 $ 538.8 $ 405.0 Total
revenues $ 976.2 $ 903.9 $ 2,478.3 $ 2,180.4
Gross margin 24.9 % 23.4 % 21.7 %
18.6 %
Aggregates Business Gross Margin Excluding
Freight and Delivery Revenues Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 2016 2015 Gross profit $
243.3 $ 211.8 $ 538.8 $ 405.0 Total
revenues $ 976.2 $ 903.9 $ 2,478.3 $ 2,180.4 Less: Freight and
delivery revenues (58.2 ) (66.5 ) (158.9 )
(177.1 ) Net sales $ 918.0 $ 837.4 $ 2,319.4
$ 2,003.3 Gross margin excluding freight and delivery
revenues 26.5 % 25.3 % 23.2 % 20.2 %
Aggregates Product Line Gross Margin in Accordance with
Generally Accepted Accounting Principles Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Gross profit $ 173.0 $ 166.1 $ 418.5
$ 344.9 Total revenues $ 599.2 $ 593.5
$ 1,621.2 $ 1,513.5 Gross margin 28.9 %
28.0 % 25.8 % 22.8 %
Aggregates Product
Line Gross Margin Excluding Freight and Delivery Revenues
Three Months Ended Nine Months Ended September
30, September 30, 2016 2015 2016
2015 Gross profit $ 173.0 $ 166.1 $ 418.5
$ 344.9 Total revenues $ 599.2 $ 593.5 $ 1,621.2 $
1,513.5 Less: Freight and delivery revenues (56.5 )
(63.5 ) (155.7 ) (169.7 ) Net sales $ 542.7 $
530.0 $ 1,465.5 $ 1,343.8 Gross margin
excluding freight and delivery revenues 31.9 % 31.4 %
28.6 % 25.7 %
MARTIN MARIETTA MATERIALS, INC. Non-GAAP
Financial Measures (continued) (Dollars in millions)
Ready Mixed Concrete Product Line Gross
Margin in Accordance with Generally Accepted Accounting
Principles
Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Gross profit $ 39.9 $ 23.6 $
83.2 $ 34.9 Total revenues $ 264.0 $ 210.1
$ 666.4 $ 487.9 Gross margin 15.1 %
11.2 % 12.5 % 7.2 %
Ready Mixed
Concrete Product Line Gross Margin Excluding Freight and Delivery
Revenues Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Gross profit $ 39.9 $ 23.6 $
83.2 $ 34.9 Total revenues $ 264.0 $ 210.1 $ 666.4 $
487.9 Less: Freight and delivery revenues (0.3 ) (0.5
) (1.0 ) (1.0 ) Net sales $ 263.7 $ 209.6
$ 665.4 $ 486.9 Gross margin excluding freight
and delivery revenues 15.1 % 11.3 % 12.5 %
7.2 %
Heritage Ready Mixed Concrete Product
Line Gross Margin in Accordance with Generally Accepted Accounting
Principles
Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Gross profit $ 36.1 $ 23.6 $
78.9 $ 34.9 Total revenues $ 234.7 $ 210.1
$ 628.0 $ 487.9 Gross margin 15.4 %
11.2 % 12.6 % 7.2 %
Heritage Ready
Mixed Concrete Product Line Gross Margin Excluding Freight and
Delivery Revenues Three Months Ended Nine Months
Ended September 30, September 30, 2016
2015 2016 2015 Gross profit $ 36.1 $
23.6 $ 78.9 $ 34.9 Total revenues $ 234.7 $
210.1 $ 628.0 $ 487.9 Less: Freight and delivery revenues
(0.3 ) (0.5 ) (1.0 ) (1.0 ) Net sales $ 234.4
$ 209.6 $ 627.0 $ 486.9 Gross margin
excluding freight and delivery revenues 15.4 % 11.3 %
12.6 % 7.2 %
Aggregates-Related Downstream
Operations Gross Margin in Accordance with Generally Accepted
Accounting Principles
Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Gross profit $ 70.3 $ 45.7 $
120.3 $ 60.1 Total revenues $ 377.0 $ 310.4
$ 857.1 $ 666.9 Gross margin 18.6 %
14.7 % 14.0 % 9.0 %
Aggregates-Related Downstream Operations Gross Margin Excluding
Freight and Delivery Revenues Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 2016 2015 Gross profit $ 70.3
$ 45.7 $ 120.3 $ 60.1 Total revenues $
377.0 $ 310.4 $ 857.1 $ 666.9 Less: Freight and delivery revenues
(1.7 ) (3.0 ) (3.2 ) (7.4 ) Net sales $
375.3 $ 307.4 $ 853.9 $ 659.5 Gross
margin excluding freight and delivery revenues 18.7 %
14.8 % 14.1 % 9.1 %
Mid-America Group Gross
Margin in Accordance with Generally Accepted Accounting
Principles Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Gross profit $ 103.6 $ 97.4 $
223.6 $ 184.7 Total revenues $ 297.3 $ 289.7
$ 762.3 $ 688.1 Gross margin 34.8 %
33.6 % 29.3 % 26.8 %
Mid-America
Gross Margin Excluding Freight and Delivery Revenues Three
Months Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Gross profit $ 103.6 $ 97.4 $ 223.6
$ 184.7 Total revenues $ 297.3 $ 289.7 $ 762.3 $
688.1 Less: Freight and delivery revenues (21.5 )
(24.1 ) (54.1 ) (55.4 ) Net sales $ 275.8 $
265.6 $ 708.2 $ 632.7 Gross margin excluding
freight and delivery revenues 37.6 % 36.7 %
31.6 % 29.2 %
MARTIN MARIETTA MATERIALS, INC. Non-GAAP Financial
Measures (continued) (Dollars in millions)
Southeast Group Gross
Margin in Accordance with Generally Accepted Accounting
Principles Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Gross profit $ 15.9 $ 11.5 $
41.8 $ 24.1 Total revenues $ 83.8 $ 83.0
$ 243.1 $ 229.1 Gross margin 19.0 %
13.9 % 17.2 % 10.5 %
Southeast Gross
Margin Excluding Freight and Delivery Revenues Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Gross profit $ 15.9 $ 11.5 $ 41.8
$ 24.1 Total revenues $ 83.8 $ 83.0 $ 243.1 $ 229.1 Less:
Freight and delivery revenues (3.8 ) (4.7 )
(13.1 ) (14.6 ) Net sales $ 80.0 $ 78.3 $
230.0 $ 214.5 Gross margin excluding freight and
delivery revenues 19.9 % 14.6 % 18.2 %
11.2 %
Magnesia Specialties Business Gross Margin in
Accordance with Generally Accepted Accounting Principles
Three Months Ended Nine Months Ended September
30, September 30, 2016 2015 2016
2015 Gross profit $ 22.8 $ 19.4 $ 67.5
$ 60.8 Total revenues $ 65.1 $ 62.2 $ 192.9
$ 190.5 Gross margin 35.0 % 31.2 %
35.0 % 31.9 %
Magnesia Specialties Business
Gross Margin Excluding Freight and Delivery Revenues Three
Months Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Gross profit $ 22.8 $ 19.4 $ 67.5
$ 60.8 Total revenues $ 65.1 $ 62.2 $ 192.9 $ 190.5 Less:
Freight and delivery revenues (4.9 ) (4.9 )
(14.3 ) (14.0 ) Net sales $ 60.2 $ 57.3 $
178.6 $ 176.5 Gross margin excluding freight and
delivery revenues 37.9 % 33.9 % 37.8 %
34.4 %
Cement Business Gross Margin in Accordance with
Generally Accepted Accounting Principles Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Gross profit $ 29.7 $ 38.2 $ 86.2
$ 87.6 Total revenues $ 62.6 $ 116.1 $ 198.7
$ 324.1 Gross margin 47.4 % 32.9 %
43.4 % 27.0 %
Cement Business Gross Margin
Excluding Freight and Delivery Revenues Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Gross profit $ 29.7 $ 38.2 $ 86.2
$ 87.6 Total revenues $ 62.6 $ 116.1 $ 198.7 $ 324.1 Less:
Freight and delivery revenues (2.5 ) (5.6 )
(9.0 ) (16.6 ) Net sales $ 60.1 $ 110.5 $
189.7 $ 307.5 Gross margin excluding freight and
delivery revenues 49.5 % 34.6 % 45.4 %
28.5 %
Cement Business, Excluding California
Business, Gross Margin in Accordance with Generally Accepted
Accounting Principles
Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Gross profit $ 29.7 $ 34.9 $
86.2 $ 85.0 Total revenues $ 62.6 $ 84.3
$ 198.7 $ 222.5 Gross margin 47.4 %
41.4 % 43.4 % 38.2 %
Cement
Business, Excluding California Business, Gross Margin Excluding
Freight and Delivery Revenues Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 2016 2015 Gross profit $ 29.7
$ 34.9 $ 86.2 $ 85.0 Total revenues $
62.6 $ 84.3 $ 198.7 $ 222.5 Less: Freight and delivery revenues
(2.5 ) (4.6 ) (9.0 ) (13.1 ) Net sales
$ 60.1 $ 79.7 $ 189.7 $ 209.4 Gross
margin excluding freight and delivery revenues 49.5 %
43.8 % 45.4 % 40.6 %
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 September 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 September 30, 2016. For supporting
calculations, refer to Company's website at
www.martinmarietta.com.
Twelve Month Period October 1, 2015 to
September 30, 2016 Earnings from continuing operations
attributable to Martin Marietta Materials, Inc. $ 409.7 Add back:
Interest expense 79.8 Income tax expense 183.2 Depreciation,
depletion and amortization expense 274.7 Stock-based compensation
expense 20.0 Deduct: Interest income (0.5 ) Nonrecurring
gains on divestitures and acquisition-related expenses, net (18.3 )
Consolidated EBITDA, as defined $ 948.6 Consolidated
Debt, including debt for which the Company is a co-borrower, at
September 30, 2016 $ 1,788.7
Consolidated Debt-to-Consolidated EBITDA,
as defined, at September 30, 2016, for the trailing-twelve month
EBITDA
1.89 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 nine
months ended September 30, 2016 and 2015.
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 2016 2015 Consolidated Earnings
Before Interest, Income Taxes, Depreciation, Depletion and
Amortization (EBITDA) $ 322.8 $ 248.2 $ 741.9
$ 546.3
A Reconciliation of Net Earnings
(Loss) Attributable to Martin Marietta Materials, Inc. to
Consolidated EBITDA is as follows: Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Net Earnings Attributable to Martin Marietta Materials,
Inc. $ 159.5 $ 117.5 $ 326.5 $ 205.6 Add back: Interest Expense
20.6 18.9 60.9 57.4 Taxes on Income 70.9 47.5 144.0 85.6
Depreciation, Depletion and Amortization Expense 71.8
64.3 210.5 197.7
Consolidated EBITDA $ 322.8 $ 248.2 $ 741.9 $
546.3 Net Sales $ 1,038.3 $ 1,005.2 $
2,687.7 $ 2,487.3 EBITDA margin as percentage
of net sales 31.1 % 24.7 % 27.6 % 22.0
% 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 September 30, 2016: Consolidated net
sales for the quarter ended September 30, 2016 $ 1,038.3
Consolidated net sales for the quarter ended September 30, 2015
1,005.2 Incremental net sales $ 33.1
Consolidated gross profit for the quarter ended September 30, 2016
$ 292.6 Consolidated gross profit for the quarter ended September
30, 2015 262.5 Incremental gross profit $ 30.1
Incremental consolidated gross margin (excluding freight and
delivery revenues) for the quarter ended September 30, 2016
91 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161101005888/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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