Aggregates Product Line Gross Margin
Improves 180 Basis Points;Consolidated Gross
Margin Expands Despite Lower Revenues
Martin Marietta Materials, Inc. (NYSE:MLM) today reported results
for the third quarter ended September 30, 2017.
Highlights Include the Following
Third-Quarter Results: (All comparisons are versus
prior-year third quarter)
- Consolidated net sales of $1.022 billion compared with $1.038
billion
- Building Materials business net sales of $963.6 million
compared with $978.1 million
- Magnesia Specialties net sales of $58.5 million compared with
$60.2 million
- Consolidated total revenues of $1.088 billion compared with
$1.104 billion
- Consolidated gross profit of $291.7 million compared with
$293.3 million
- Consolidated earnings from operations of $227.0 million
compared with $242.7 million
- Net earnings attributable to Martin Marietta of $151.5 million
compared with $159.5 million
- EBITDA of $302.0 million compared with $322.8 million
- Earnings per diluted share of $2.39 compared with $2.49
Ward Nye, Chairman, President and CEO
of Martin Marietta, stated, “Our third-quarter results reflect
our ability to adapt to external challenges and deliver solid
operating results. While Hurricanes Harvey and Irma unquestionably
impacted our business, negatively affecting revenues and
profitability, weather-related events are short-term in nature and
dislocations or delays are subsequently resolved. Furthermore, the
attractive markets in which Martin Marietta operates are
experiencing record employment levels. As a result, many
contractors are facing a skilled labor shortage, requiring them to
accept a slower, yet steadier, pace of project work often with
multi-year backlogs. State Departments of Transportation
(DOT) in several of our key states are also understaffed relative
to the influx of new projects and, as a result, projects have been
delayed.
“Notably, we achieved solid pricing growth
across all product lines and segments and a 180-basis-point
expansion in aggregates product line gross margin despite these
externally-driven volume headwinds. Notwithstanding weather,
the Company achieved record quarterly earnings per diluted share,
excluding nonrecurring repair costs related to certain of the
Company’s leased railcars. These results underscore the
importance of attractive market fundamentals, the pricing power of
our business and our continued focus on operational excellence.
“We remain confident in Martin Marietta’s
long-term outlook, with the fundamental drivers for broad-based
construction activity supporting a steady and extended, yet
somewhat slower than anticipated, cyclical recovery across our
geographic footprint. The United States is experiencing the
third longest construction recovery since the Great Depression, and
we see this recovery continuing for the next several years.
The building blocks to address the undeniable need for significant
investment exist; however, we have yet to see meaningful growth in
heavy construction activity, particularly in the public arena.
Positive momentum in residential and nonresidential construction
has been offset by lackluster infrastructure activity, which
continues to be significantly hindered by project delays and
uncertainty concerning regulatory and other related reform.
As a result, we expect aggregates shipments will continue its
steady growth through the extended recovery.”
Mr. Nye concluded, “Looking ahead, our leading
positions in many of the nation’s most attractive and otherwise
vibrant markets should allow Martin Marietta to capitalize on the
durable, multi-year construction recovery. Our customers
maintain positive near- and medium-term outlooks, as supported by
their reported strong backlogs. We stand to benefit from the
expected increased demand for infrastructure projects and
private-sector construction activity as regulatory reform emerges
and state DOTs and customers address labor constraints. We are
committed to further enhancing long-term shareholder value, with a
relentless focus on world-class safety standards, diligent cost
discipline, operational excellence and strategic growth
initiatives.”
Mr. Nye’s CEO Earnings Commentary and Market
Perspective can be found on the Investor Relations
section of the Company’s website.
Notable Items for the Quarter and Nine
Months Ended September 30 (All variance and margin
comparisons are versus the prior-year period)
|
Three months endedSeptember 30, |
|
Nine months endedSeptember
30, |
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
Consolidated net sales |
|
$ 1.022B |
|
|
$ 1.038B |
|
|
|
$ 2.810B |
|
|
|
$ 2.688B |
|
% variance |
|
(1.6 |
%) |
|
|
|
4.6 |
% |
|
Consolidated total revenues |
|
$ 1.088B |
|
|
$ 1.104B |
|
|
|
$ 2.995B |
|
|
|
$ 2.870B |
|
% variance |
|
(1.5 |
%) |
|
|
|
4.4 |
% |
|
Consolidated gross profit |
|
$ 291.7M |
|
|
$ 293.3M |
|
|
|
$ 712.8M |
|
|
|
$ 686.0M |
|
% variance |
|
(0.6 |
%) |
|
|
|
3.9 |
% |
|
Consolidated gross margin |
|
26.8 |
% |
|
26.6 |
% |
|
|
23.8 |
% |
|
23.9 |
% |
margin variance |
|
20 bps |
|
|
|
|
(10 bps) |
|
|
Consolidated earnings from operations |
|
$ 227.0M |
|
|
$ 242.7M |
|
|
|
$ 517.0M |
|
|
|
$ 519.5M |
|
% variance |
|
(6.5 |
%) |
|
|
|
(0.5 |
%) |
|
Net earnings attributable to Martin Marietta |
|
$ 151.5M |
|
|
$ 159.5M |
|
|
|
$ 336.2M |
|
|
|
$ 326.5M |
|
% variance |
|
(5.0 |
%) |
|
|
|
3.0 |
% |
|
EBITDA 1 |
|
$ 302.0M |
|
|
$ 322.8M |
|
|
|
$ 742.0M |
|
|
|
$ 741.9M |
|
% variance |
|
(6.5 |
%) |
|
|
|
-- |
|
|
EBITDA margin as a % of total revenues |
|
27.8 |
% |
|
29.2 |
% |
|
|
24.8 |
% |
|
25.9 |
% |
margin variance |
|
(140 bps) |
|
|
|
|
(110 bps) |
|
|
Earnings per diluted share |
|
$2.39 |
|
|
$2.49 |
|
|
|
$5.30 |
|
|
$5.08 |
|
% variance |
|
(4.0 |
%) |
|
|
|
4.3 |
% |
|
1 See appendix for a reconciliation to net
earnings.
Operating Results(All comparisons are versus
the prior-year period unless noted otherwise)
Building Materials Business
Third-quarter 2017 total revenues for the Building
Materials business, which includes the aggregates, cement, ready
mixed concrete and asphalt and paving product lines, were $1.024
billion, down slightly from $1.039 billion. Average selling
prices improved across all product lines and segments despite lower
shipment volumes. The aggregates product line average selling
price improvement of 5.1 percent was led by a 9.6 percent increase
in the Southeast Group. The Mid-America Group and West Group
reported increases of 6.2 percent and 1.1 percent, respectively.
The cement product line generated pricing growth of 3.9 percent,
driven by ongoing construction activity in the Dallas/Fort Worth
area. Ready mixed concrete and asphalt pricing increased 4.9
percent and 11.8 percent, respectively.
Aggregates product line shipments decreased 3.2
percent compared with the third quarter of 2016, driven by ongoing
project delays, customer- and DOT-related labor constraints,
government uncertainty and near-record precipitation compounded by
major hurricane and tropical storm activity. The West Group’s
shipments decreased 6.8 percent and were most negatively affected
by wet weather, notably in Texas where third quarter 2017 marked
the fourth wettest third quarter in the last 123 years. The
Southeast Group overcame the impact of Hurricane Irma and other
storms, reporting aggregates volume growth of 4.7 percent, driven
by strong residential and nonresidential construction activity.
Total cement shipments decreased 9.7 percent. Ready mixed concrete
and asphalt shipments decreased 13.1 percent and 10.7 percent,
respectively.
Infrastructure Market
Highlights
- The infrastructure market comprised 42 percent of third-quarter
aggregates product line volumes, which remains below the Company’s
most recent five-year average. Continued underinvestment in
the nation’s infrastructure, coupled with marginal infrastructure
construction activity from the Fixing America’s Surface
Transportation Act (FAST Act) and ongoing project delays, resulted
in declining infrastructure shipments.
Nonresidential Market
Highlights
- The nonresidential market represented 32 percent of aggregates
product line shipments and overall nonresidential shipments were
relatively flat for the third quarter. Volumes were driven
primarily by office, retail and warehouse projects along interstate
corridors as the Company awaits the start of the next round of
major energy-sector construction projects along the Gulf of
Mexico.
- The Mid-America and Southeast Groups reported strong industrial
construction growth. Consistent with management’s
expectations, the West Group reported a decline in nonresidential
shipments due to the completion of several large energy-related
projects in 2016 that were not immediately replaced in 2017.
Management expects the next wave of these projects to bid in
2018.
Residential Market
Highlights
- The residential market accounted for 19 percent of
third-quarter aggregates product line shipments, which increased 4
percent, driven by continued strength in housing across the
Company’s geographic footprint, particularly in the southeastern
United States.
- Texas, Florida, North Carolina, Georgia, South Carolina and
Colorado, key geographies for the Building Materials business,
comprised six of the top ten states for growth in single-family
housing unit starts as of September 2017.
ChemRock/Rail Market
Highlights
- The ChemRock/Rail market accounted for the remaining 7 percent
of aggregates product line volumes and declined versus the
prior-year quarter.
Magnesia Specialties Business
Third-quarter 2017 total revenues for the
Magnesia Specialties business were $63.9 million, a decrease of 1.9
percent from $65.1 million, with declines in both the chemicals and
lime product lines. Gross profit decreased $2.9 million due
to kiln outages, coupled with higher energy and maintenance
costs.
Consolidated Operating Results
Selling, general and administrative (SG&A)
expenses were 5.3 percent of total revenues, reflecting the impact
of weather and other delays on revenues.
On a year-to-date basis, the estimated effective
income tax rate was 26.2 percent, reflecting a 130-basis-point
benefit from excess tax benefits associated with option exercises
and vesting of stock-based compensation awards. Effective
January 1, 2017, the Company adopted ASU 2016-09, Improvements to
Employee Share-Based Payment Accounting, which requires excess
income tax benefits and tax deficiencies to be recorded in tax
expense, as a discrete event, in the period shares are issued or
options are exercised.
Liquidity and Capital Resources
Cash provided by operating activities for the
nine months ended September 30 was $418.4 million in 2017 compared
with $421.7 million in 2016.
Property, plant and equipment additions for the
nine months ended September 30, 2017 were $308.7 million,
reflecting the continued strategic deployment of capital into the
business, including mobile fleet purchases that will reduce
maintenance and repair costs. Full-year capital spending is
expected to range from $450 million to $500 million.
At September 30, 2017, the ratio of consolidated
debt-to-consolidated EBITDA, as defined in the applicable credit
agreement, for the trailing-12 months was 1.74 times.
Capital Allocation Priorities Enhance Shareholder
Value
Martin Marietta is dedicated to maintaining
disciplined capital allocation to further enhance shareholder
value. The Company’s unchanged capital allocation priorities
include the right acquisitions that enable the successful execution
of the Company’s strategic growth plan, organic capital investment,
and the return of cash to shareholders through a meaningful and
sustainable dividend and share repurchases.
Consistent with these objectives, the Company’s
previously-announced acquisition of Bluegrass Materials Company,
the largest privately-held, pure-play aggregates business in the
United States, is expected to close in the first half of 2018
subject to the customary regulatory process and other closing
conditions. Furthermore, in August 2017, Martin Marietta
increased its annual cash dividend by 5 percent. The Board of
Directors of Martin Marietta previously authorized a share
repurchase program under which the Company may acquire up to 20
million shares of its outstanding common stock. Since announcing
its repurchase authorization in February of 2015, the Company has
repurchased 5.3 million shares and, including the payment of
dividends, returned $1.18 billion to shareholders. As of
September 30, 2017, there were 62.9 million shares of Martin
Marietta common stock outstanding and 14.7 million shares remaining
under the current repurchase authorization.
Pending Bluegrass Materials Acquisition
As previously announced on October 19, 2017,
Martin Marietta committed to certain timelines with the United
States Department of Justice (DOJ) pursuant to which the Company
has agreed (1) not to consummate the Bluegrass Materials
acquisition before the end of January 2018, unless the DOJ has
completed its investigation and has issued any related orders prior
to that date, and (2) not to certify substantial compliance with
the DOJ’s previous request for additional information and
documentary material relating to the acquisition before November 9,
2017. Bluegrass Materials also made the same commitments to
the DOJ on the same terms.
Martin Marietta and Bluegrass Materials are
continuing to work closely and cooperatively with the DOJ in its
review of the proposed transaction. The parties currently
anticipate that the proposed acquisition will be completed in the
first half of 2018.
Full-Year 2017 Outlook
Martin Marietta remains optimistic about the
Company’s long-term outlook given its continued ability to
successfully execute its strategic business plans and the largely
positive trends in the markets it serves. Given the skilled
labor shortage, project delays and government uncertainty that has
limited growth throughout the year, management has revised its
guidance for full year 2017 as follows:
- Aggregates product line end-use markets compared with 2016
levels are as follows:
- Infrastructure market to decrease in the mid-single
digits.
- Nonresidential market to remain relatively flat.
- Residential market to increase in the high-single digits.
- ChemRock/Rail market to decrease in the low-double digits.
2017 GUIDANCE |
|
Low |
|
High |
Consolidated Results |
Net sales 1 |
$ 3.64B |
|
$ 3.74B |
Total revenues 1 |
$ 3.87B |
|
$ 3.97B |
Gross profit |
$ 910M |
|
$ 960M |
|
SG&A |
$ 260M |
|
$ 265M |
Interest expense |
$ 88M |
|
$ 93M |
Estimated tax rate (excluding discrete events) |
28% |
|
28% |
Capital expenditures |
$ 450M |
|
$ 500M |
|
Net earnings attributable to Martin Marietta |
$ 400M |
|
$ 445M |
EBITDA 2 |
$ 940M |
|
$ 985M |
|
Building Materials Business |
Aggregates Product Line |
Volume (total tons) 3 |
157M |
|
160M |
% growth 3 |
(1.0%) |
|
1.0% |
Average selling price per ton |
$ 13.40 |
|
$ 13.50 |
% growth |
4.0% |
|
5.0% |
Net sales |
$ 2.10B |
|
$ 2.16B |
Total revenues |
$ 2.30B |
|
$ 2.37B |
Gross profit |
$ 573M |
|
$ 602M |
|
|
|
|
Cement Product Line |
Net sales |
$ 365M |
|
$ 375M |
Total revenues |
$ 379M |
|
$ 389M |
Gross profit |
$ 110M |
|
$ 120M |
|
Ready Mixed Concrete and Asphalt and
Paving Product Lines |
Net sales |
$ 1.27B |
|
$ 1.31B |
Total revenues |
$ 1.27B |
|
$ 1.31B |
Gross profit |
$ 140M |
|
$ 145M |
|
|
|
|
Magnesia Specialties
Business |
Net sales |
$ 245M |
|
$ 250M |
Total revenues |
$ 268M |
|
$ 273M |
Gross profit |
$ 85M |
|
$ 90M |
1 2017 consolidated net sales and total revenues
exclude $355 million related to estimated interproduct
sales.
2 The 2017 guidance range for EBITDA is
calculated in a manner consistent with the presentation of
EBITDA. See appendix for a reconciliation to net
earnings.
3 Represents 2017 total aggregates volumes,
which includes approximately 11 million internal tons. Volume
growth ranges are in comparison to total volumes of 158.6 million
tons as reported for the full year 2016, which includes 10.4
million internal tons.
Preliminary View of 2018
The fundamental drivers for the Company’s
expected growth remain intact as the current broad-based recovery
continues on a steady and extended basis. Even with a
construction-centric phase of the economic expansion, given the
shortage of skilled labor and project delays, the pace of
construction activity has been slower. Notably:
- As state DOTs and contractors address labor constraints and
regulatory reform emerges, infrastructure construction should begin
to see benefits from the funding provided by the FAST Act.
Additionally, state and local initiatives that support
infrastructure funding, including gas tax increases and other
ballot initiatives passed over the previous 24 months, are expected
to grow and continue to play an expanded role in public-sector
activity.
- Nonresidential construction is expected to modestly increase in
both the heavy industrial and commercial sectors; Dodge forecasts
continued nonresidential growth for the next several years.
Additional energy-related economic activity, including follow-on
public and private construction, will be mixed. While the pace of
permitting and final investment decisions has slowed, management
expects new energy-related projects should enter the bid phase in
2018 with construction activity in 2019 and beyond.
- Residential construction is expected to continue growing,
particularly in key Martin Marietta markets, driven by employment
gains, historically low levels of construction activity over the
previous years, low mortgage rates, higher lot development, and
higher multi-family rental rates. Notably, six of Martin
Marietta’s key states - Texas, Florida, North Carolina, Georgia,
South Carolina and Colorado - rank in the top ten for single-family
housing unit permits.
Management’s preliminary view of 2018
anticipates aggregates shipments to increase in the mid-single
digits as long as the forces that have limited growth (i.e., labor
constraints, governmental/legislative uncertainty) remain in
place. Further, management expects faster expansion in the
West and Southeast Groups and comparatively slower growth in the
Mid-America Group, which historically has generated the Company’s
highest margins. This preliminary outlook excludes any impact
from the pending acquisition of Bluegrass Materials and any benefit
from a potential increase in federal infrastructure spending.
Risks to Outlook
The outlook includes management’s assessment of
the likelihood of certain risks and uncertainties that may 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 among themselves or with the current
Administration on policy issues that impact the federal budget; 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; 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; construction labor shortages and/or supply-chain
challenges; and unexpected equipment failures, unscheduled
maintenance, industrial accident or other prolonged and/or
significant disruption to its cement and/or its Magnesia
Specialties 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 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 demand in the
Company’s end-use markets, production levels and the management of
production costs will affect the operating leverage of the Building
Materials business and, therefore, profitability. Production
costs in the Building Materials business are also sensitive to
energy and raw material prices, both directly and indirectly.
Diesel fuel, coal, 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 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 aggregates products in
certain markets, most notably Texas, Colorado, Florida, North
Carolina 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 its customers. The
availability of trucks, drivers and railcars to transport the
Company’s products, 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 August and
September 2017, respectively, Hurricanes Harvey and Irma generated
winds and significant amounts of rainfall which disrupted
operations in Texas, Louisiana, Florida, Georgia and the
Carolinas. However, after 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.Non-GAAP Financial Information
This press release contains financial measures
that have not been prepared in accordance with GAAP — EBITDA and
the ratio of consolidated debt-to-consolidated EBITDA, as defined
in the applicable credit agreement. Tables reconciling these
non-GAAP financial measures for the respective periods are included
in the appendix to the press release.
Conference Call Information
The Company will discuss its third-quarter 2017
earnings results on a conference call and an online web simulcast
today (November 2, 2017). The live broadcast of the Martin
Marietta conference call will begin at 11:00 a.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 2189214.
Martin Marietta, a member of the S&P 500
Index, is an American-based company and a leading supplier of
building materials, including aggregates, cement, ready mixed
concrete, and asphalt. Through a network of operations spanning 26
states, Canada and The Bahamas, dedicated Martin Marietta teams
supply the resources necessary for building the solid foundations
on which our communities thrive. 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 Company’s current annual report and Forms 10-K, 10-Q
and 8-K reports to the Securities and Exchange Commission (SEC)
over the past year. The Company’s recent proxy statement for
the annual meeting of shareholders also contains important
information. These and other materials that have been filed
with the SEC are accessible through the Company’s website at
www.martinmarietta.com and are also available at the SEC’s website
at www.sec.gov. You may also write or call the Company’s
Corporate Secretary, who will provide copies of such reports.
Investors are cautioned that all statements in
this press release that relate to the future involve risks and
uncertainties, and are based on assumptions that the Company
believes in good faith are reasonable but which may be materially
different from actual results. Forward-looking statements
give the investor the Company’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 Company 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; 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 Company serves; a
reduction in defense spending, and the subsequent impact on
construction activity on or near military bases; a decline in the
commercial component of the nonresidential construction market,
notably office and retail space; a 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
Company; the volatility of fuel costs, particularly diesel fuel,
and the impact on the cost of other consumables, namely steel,
explosives, tires and conveyor belts, and with respect to the
Company’s Magnesia Specialties 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 production
facilities; increasing governmental regulation, including
environmental laws; transportation availability, notably the
availability of railcars and locomotive power to move trains to
supply the Company’s Texas, Florida and Gulf Coast markets;
increased transportation costs, including increases from higher
passed-through energy and other costs to comply with tightening
regulations as well as higher volumes of rail and water shipments;
availability of trucks and licensed drivers for transport of the
Company’s materials; availability and cost of construction
equipment in the United States; weakening in the steel industry
markets served by the Company’s dolomitic lime products; proper
functioning of information technology and automated operating
systems to manage or support operations; inflation and its effect
on both production and interest costs; ability to successfully
integrate acquisitions quickly and in a cost-effective manner and
achieve anticipated profitability to maintain compliance with the
Company’s leverage ratio debt covenant; changes in tax laws, the
interpretation of such laws and/or administrative practices that
would increase the Company’s tax rate; violation of the
Company’s debt covenant if price and/or volumes return to previous
levels of instability; downward pressure on the Company’s common
stock price and its impact on goodwill impairment evaluations;
reduction of the Company’s credit rating to non-investment grade
resulting from strategic acquisitions; and other risk factors
listed from time to time found in the Company’s filings with the
SEC. Other factors besides those listed here may also
adversely affect the Company, and may be material to the
Company. The Company assumes no obligation to update any such
forward-looking statements.
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|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Statements of Earnings |
(In millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net sales |
|
$ |
1,022.1 |
|
|
$ |
1,038.3 |
|
|
$ |
2,810.1 |
|
|
$ |
2,687.7 |
|
Freight and delivery
revenues |
|
|
65.6 |
|
|
|
65.6 |
|
|
|
185.0 |
|
|
|
182.2 |
|
Total
revenues |
|
|
1,087.7 |
|
|
|
1,103.9 |
|
|
|
2,995.1 |
|
|
|
2,869.9 |
|
Cost of sales |
|
|
730.4 |
|
|
|
745.0 |
|
|
|
2,097.3 |
|
|
|
2,001.7 |
|
Freight and delivery
costs |
|
|
65.6 |
|
|
|
65.6 |
|
|
|
185.0 |
|
|
|
182.2 |
|
Total
cost of revenues |
|
|
796.0 |
|
|
|
810.6 |
|
|
|
2,282.3 |
|
|
|
2,183.9 |
|
Gross
profit |
|
|
291.7 |
|
|
|
293.3 |
|
|
|
712.8 |
|
|
|
686.0 |
|
Selling, general and
administrative expenses |
|
|
57.2 |
|
|
|
54.8 |
|
|
|
195.1 |
|
|
|
172.9 |
|
Acquisition-related
expenses, net |
|
|
1.3 |
|
|
|
0.3 |
|
|
|
3.3 |
|
|
|
0.9 |
|
Other operating expense
(income), net |
|
|
6.2 |
|
|
|
(4.5 |
) |
|
|
(2.6 |
) |
|
|
(7.3 |
) |
Earnings
from operations |
|
|
227.0 |
|
|
|
242.7 |
|
|
|
517.0 |
|
|
|
519.5 |
|
Interest expense |
|
|
23.1 |
|
|
|
20.6 |
|
|
|
68.0 |
|
|
|
60.9 |
|
Other nonoperating
income, net |
|
|
(0.4 |
) |
|
|
(8.3 |
) |
|
|
(6.4 |
) |
|
|
(12.1 |
) |
Earnings
before taxes on income |
|
|
204.3 |
|
|
|
230.4 |
|
|
|
455.4 |
|
|
|
470.7 |
|
Taxes on
income |
|
|
52.8 |
|
|
|
70.9 |
|
|
|
119.3 |
|
|
|
144.0 |
|
Consolidated net earnings |
|
|
151.5 |
|
|
|
159.5 |
|
|
|
336.1 |
|
|
|
326.7 |
|
Less: Net (loss)
earnings attributable to noncontrolling interests |
|
|
- |
|
|
|
- |
|
|
|
(0.1 |
) |
|
|
0.2 |
|
Net earnings
attributable to Martin Marietta Materials, Inc. |
|
$ |
151.5 |
|
|
$ |
159.5 |
|
|
$ |
336.2 |
|
|
$ |
326.5 |
|
|
|
|
|
|
|
|
|
|
Net earnings per common
share attributable to common shareholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.40 |
|
|
$ |
2.50 |
|
|
$ |
5.33 |
|
|
$ |
5.10 |
|
Diluted |
|
$ |
2.39 |
|
|
$ |
2.49 |
|
|
$ |
5.30 |
|
|
$ |
5.08 |
|
|
|
|
|
|
|
|
|
|
Dividends per common
share |
|
$ |
0.44 |
|
|
$ |
0.42 |
|
|
$ |
1.28 |
|
|
$ |
1.22 |
|
|
|
|
|
|
|
|
|
|
Average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
62.9 |
|
|
|
63.5 |
|
|
|
62.9 |
|
|
|
63.7 |
|
Diluted |
|
|
63.2 |
|
|
|
63.7 |
|
|
|
63.2 |
|
|
|
64.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Financial Highlights |
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Total revenues: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
308.5 |
|
|
$ |
297.3 |
|
|
$ |
788.4 |
|
|
$ |
762.3 |
|
Southeast
Group |
|
|
94.8 |
|
|
|
83.8 |
|
|
|
277.5 |
|
|
|
243.1 |
|
West
Group |
|
|
620.5 |
|
|
|
657.7 |
|
|
|
1,726.7 |
|
|
|
1,671.6 |
|
Total
Building Materials Business |
|
|
1,023.8 |
|
|
|
1,038.8 |
|
|
|
2,792.6 |
|
|
|
2,677.0 |
|
Magnesia
Specialties |
|
|
63.9 |
|
|
|
65.1 |
|
|
|
202.5 |
|
|
|
192.9 |
|
Total |
|
$ |
1,087.7 |
|
|
$ |
1,103.9 |
|
|
$ |
2,995.1 |
|
|
$ |
2,869.9 |
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
287.1 |
|
|
$ |
275.8 |
|
|
$ |
734.3 |
|
|
$ |
708.1 |
|
Southeast
Group |
|
|
91.4 |
|
|
|
80.0 |
|
|
|
266.6 |
|
|
|
230.0 |
|
West
Group |
|
|
585.1 |
|
|
|
622.3 |
|
|
|
1,622.9 |
|
|
|
1,571.0 |
|
Total
Building Materials Business |
|
|
963.6 |
|
|
|
978.1 |
|
|
|
2,623.8 |
|
|
|
2,509.1 |
|
Magnesia
Specialties |
|
|
58.5 |
|
|
|
60.2 |
|
|
|
186.3 |
|
|
|
178.6 |
|
Total |
|
$ |
1,022.1 |
|
|
$ |
1,038.3 |
|
|
$ |
2,810.1 |
|
|
$ |
2,687.7 |
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss): |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
117.9 |
|
|
$ |
103.8 |
|
|
$ |
242.8 |
|
|
$ |
224.2 |
|
Southeast
Group |
|
|
18.4 |
|
|
|
16.0 |
|
|
|
51.6 |
|
|
|
41.9 |
|
West
Group |
|
|
132.0 |
|
|
|
154.0 |
|
|
|
349.2 |
|
|
|
361.2 |
|
Total
Building Materials Business |
|
|
268.3 |
|
|
|
273.8 |
|
|
|
643.6 |
|
|
|
627.3 |
|
Magnesia
Specialties |
|
|
19.9 |
|
|
|
22.8 |
|
|
|
65.8 |
|
|
|
67.6 |
|
Corporate |
|
|
3.5 |
|
|
|
(3.3 |
) |
|
|
3.4 |
|
|
|
(8.9 |
) |
Total |
|
$ |
291.7 |
|
|
$ |
293.3 |
|
|
$ |
712.8 |
|
|
$ |
686.0 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
12.7 |
|
|
$ |
12.8 |
|
|
$ |
39.9 |
|
|
$ |
39.2 |
|
Southeast
Group |
|
|
4.1 |
|
|
|
4.3 |
|
|
|
12.9 |
|
|
|
12.7 |
|
West
Group |
|
|
24.7 |
|
|
|
22.5 |
|
|
|
75.7 |
|
|
|
69.0 |
|
Total
Building Materials Business |
|
|
41.5 |
|
|
|
39.6 |
|
|
|
128.5 |
|
|
|
120.9 |
|
Magnesia
Specialties |
|
|
2.3 |
|
|
|
2.4 |
|
|
|
7.1 |
|
|
|
7.1 |
|
Corporate |
|
|
13.4 |
|
|
|
12.8 |
|
|
|
59.5 |
|
|
|
44.9 |
|
Total |
|
$ |
57.2 |
|
|
$ |
54.8 |
|
|
$ |
195.1 |
|
|
$ |
172.9 |
|
|
|
|
|
|
|
|
|
|
Earnings
(Loss) from operations: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
106.2 |
|
|
$ |
92.2 |
|
|
$ |
205.0 |
|
|
$ |
187.7 |
|
Southeast
Group |
|
|
17.9 |
|
|
|
11.9 |
|
|
|
42.3 |
|
|
|
30.6 |
|
West
Group |
|
|
96.5 |
|
|
|
134.6 |
|
|
|
270.3 |
|
|
|
299.7 |
|
Total
Building Materials Business |
|
|
220.6 |
|
|
|
238.7 |
|
|
|
517.6 |
|
|
|
518.0 |
|
Magnesia
Specialties |
|
|
17.6 |
|
|
|
20.4 |
|
|
|
58.6 |
|
|
|
60.3 |
|
Corporate |
|
|
(11.2 |
) |
|
|
(16.4 |
) |
|
|
(59.2 |
) |
|
|
(58.8 |
) |
Total |
|
$ |
227.0 |
|
|
$ |
242.7 |
|
|
$ |
517.0 |
|
|
$ |
519.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Financial Highlights |
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Total revenues by
product line: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
647.1 |
|
|
$ |
638.0 |
|
|
$ |
1,776.3 |
|
|
$ |
1,715.5 |
|
Ready
Mixed Concrete |
|
|
240.4 |
|
|
|
264.1 |
|
|
|
705.1 |
|
|
|
666.5 |
|
Cement |
|
|
91.9 |
|
|
|
97.3 |
|
|
|
290.5 |
|
|
|
287.9 |
|
Asphalt
and Paving |
|
|
150.4 |
|
|
|
151.1 |
|
|
|
291.9 |
|
|
|
253.9 |
|
Less: Interproduct revenues |
|
|
(106.0 |
) |
|
|
(111.7 |
) |
|
|
(271.2 |
) |
|
|
(246.8 |
) |
Total
Building Materials Business |
|
|
1,023.8 |
|
|
|
1,038.8 |
|
|
|
2,792.6 |
|
|
|
2,677.0 |
|
Magnesia
Specialties Business |
|
|
63.9 |
|
|
|
65.1 |
|
|
|
202.5 |
|
|
|
192.9 |
|
Total |
|
$ |
1,087.7 |
|
|
$ |
1,103.9 |
|
|
$ |
2,995.1 |
|
|
$ |
2,869.9 |
|
|
|
|
|
|
|
|
|
|
Net sales by product
line: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
591.2 |
|
|
$ |
581.5 |
|
|
$ |
1,621.0 |
|
|
$ |
1,559.7 |
|
Ready
Mixed Concrete |
|
|
240.2 |
|
|
|
263.8 |
|
|
|
704.5 |
|
|
|
665.5 |
|
Cement |
|
|
88.6 |
|
|
|
94.7 |
|
|
|
281.3 |
|
|
|
279.0 |
|
Asphalt
and Paving |
|
|
149.6 |
|
|
|
149.8 |
|
|
|
288.2 |
|
|
|
251.7 |
|
Less: Interproduct sales |
|
|
(106.0 |
) |
|
|
(111.7 |
) |
|
|
(271.2 |
) |
|
|
(246.8 |
) |
Total
Building Materials Business |
|
|
963.6 |
|
|
|
978.1 |
|
|
|
2,623.8 |
|
|
|
2,509.1 |
|
Magnesia
Specialties Business |
|
|
58.5 |
|
|
|
60.2 |
|
|
|
186.3 |
|
|
|
178.6 |
|
Total |
|
$ |
1,022.1 |
|
|
$ |
1,038.3 |
|
|
$ |
2,810.1 |
|
|
$ |
2,687.7 |
|
|
|
|
|
|
|
|
|
|
Gross profit (loss) by
product line: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
188.0 |
|
|
$ |
173.9 |
|
|
$ |
440.6 |
|
|
$ |
421.0 |
|
Ready
Mixed Concrete |
|
|
23.9 |
|
|
|
32.8 |
|
|
|
70.6 |
|
|
|
76.0 |
|
Cement |
|
|
27.6 |
|
|
|
36.9 |
|
|
|
88.0 |
|
|
|
93.5 |
|
Asphalt
and Paving |
|
|
28.8 |
|
|
|
30.2 |
|
|
|
44.4 |
|
|
|
36.8 |
|
Total
Building Materials Business |
|
|
268.3 |
|
|
|
273.8 |
|
|
|
643.6 |
|
|
|
627.3 |
|
Magnesia
Specialties Business |
|
|
19.9 |
|
|
|
22.8 |
|
|
|
65.8 |
|
|
|
67.6 |
|
Corporate |
|
|
3.5 |
|
|
|
(3.3 |
) |
|
|
3.4 |
|
|
|
(8.9 |
) |
Total |
|
$ |
291.7 |
|
|
$ |
293.3 |
|
|
$ |
712.8 |
|
|
$ |
686.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
|
Balance Sheet Data |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
September 30, |
|
|
|
2017 |
|
2016 |
|
2016 |
|
|
|
(Unaudited) |
|
(Audited) |
|
(Unaudited) |
|
ASSETS |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
35.2 |
|
$ |
50.0 |
|
$ |
60.7 |
|
Accounts
receivable, net |
|
|
582.5 |
|
|
457.9 |
|
|
566.4 |
|
Inventories, net |
|
|
576.4 |
|
|
521.6 |
|
|
508.2 |
|
Other
current assets |
|
|
83.9 |
|
|
56.9 |
|
|
56.2 |
|
Property,
plant and equipment, net |
|
|
3,521.6 |
|
|
3,423.4 |
|
|
3,379.6 |
|
Intangible assets, net |
|
|
2,664.6 |
|
|
2,670.7 |
|
|
2,675.7 |
|
Other
noncurrent assets |
|
|
102.6 |
|
|
120.4 |
|
|
126.4 |
|
Total
assets |
|
$ |
7,566.8 |
|
$ |
7,300.9 |
|
$ |
7,373.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
Current
maturities of long-term debt and short-term facilities |
|
$ |
80.0 |
|
$ |
180.0 |
|
$ |
228.0 |
|
Other
current liabilities |
|
|
388.5 |
|
|
366.6 |
|
|
376.9 |
|
Long-term
debt (excluding current maturities) |
|
|
1,642.5 |
|
|
1,506.2 |
|
|
1,536.8 |
|
Other
noncurrent liabilities |
|
|
1,121.8 |
|
|
1,105.5 |
|
|
1,073.1 |
|
Total
equity |
|
|
4,334.0 |
|
|
4,142.6 |
|
|
4,158.4 |
|
Total
liabilities and equity |
|
$ |
7,566.8 |
|
$ |
7,300.9 |
|
$ |
7,373.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
|
Unaudited Statements of Cash
Flows |
|
(In millions) |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2017 |
|
2016 |
|
Operating
activities: |
|
|
|
|
|
Consolidated net earnings |
|
$ |
336.1 |
|
|
$ |
326.7 |
|
|
Adjustments to reconcile consolidated net earnings to net cash
provided by operating activities: |
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
221.4 |
|
|
|
212.0 |
|
|
Stock-based compensation expense |
|
|
23.7 |
|
|
|
17.2 |
|
|
(Gain)
Loss on divestitures and sales of assets |
|
|
(18.0 |
) |
|
|
0.2 |
|
|
Deferred
income taxes |
|
|
6.5 |
|
|
|
59.8 |
|
|
Other
items, net |
|
|
(9.6 |
) |
|
|
(17.9 |
) |
|
Changes
in operating assets and liabilities, net of effects of acquisitions
and divestitures: |
|
|
|
|
|
Accounts receivable, net |
|
|
(124.6 |
) |
|
|
(133.8 |
) |
|
Inventories, net |
|
|
(54.8 |
) |
|
|
(34.0 |
) |
|
Accounts payable |
|
|
3.2 |
|
|
|
12.4 |
|
|
Other assets and liabilities, net |
|
|
34.5 |
|
|
|
(20.9 |
) |
|
Net cash provided by
operating activities |
|
|
418.4 |
|
|
|
421.7 |
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
Additions
to property, plant and equipment |
|
|
(308.7 |
) |
|
|
(285.5 |
) |
|
Acquisitions, net |
|
|
(7.2 |
) |
|
|
(178.7 |
) |
|
Cash
received in acquisition |
|
|
- |
|
|
|
4.3 |
|
|
Proceeds
from divestitures and sales of assets |
|
|
33.1 |
|
|
|
5.2 |
|
|
Payment
of railcar construction advances |
|
|
(43.0 |
) |
|
|
(37.4 |
) |
|
Reimbursement of railcar construction advances |
|
|
41.0 |
|
|
|
37.4 |
|
|
Net cash used for
investing activities |
|
|
(284.8 |
) |
|
|
(454.7 |
) |
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
Borrowings of long-term debt |
|
|
1,011.2 |
|
|
|
360.0 |
|
|
Repayments of long-term debt |
|
|
(975.0 |
) |
|
|
(168.3 |
) |
|
Payments
on capital leases |
|
|
(2.7 |
) |
|
|
(2.5 |
) |
|
Debt
issue costs |
|
|
(2.0 |
) |
|
|
(0.2 |
) |
|
Change in
bank overdraft |
|
|
1.0 |
|
|
|
(10.2 |
) |
|
Contributions by noncontrolling interest to joint venture |
|
|
0.2 |
|
|
|
- |
|
|
Repurchases of common stock |
|
|
(100.0 |
) |
|
|
(190.0 |
) |
|
Dividends
paid |
|
|
(81.0 |
) |
|
|
(78.3 |
) |
|
Proceeds
from exercise of stock options |
|
|
10.0 |
|
|
|
21.9 |
|
|
Shares
withheld for employees' income tax obligations |
|
|
(10.1 |
) |
|
|
(7.1 |
) |
|
Net cash used for
financing activities |
|
|
(148.4 |
) |
|
|
(74.7 |
) |
|
|
|
|
|
|
|
Net decrease in cash
and cash equivalents |
|
|
(14.8 |
) |
|
|
(107.7 |
) |
|
Cash and cash
equivalents, beginning of period |
|
|
50.0 |
|
|
|
168.4 |
|
|
Cash and cash
equivalents, end of period |
|
$ |
35.2 |
|
|
$ |
60.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
|
Unaudited Operational Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, 2017 |
|
September 30, 2016 |
|
|
|
Volume |
|
Pricing |
|
Volume |
|
Pricing |
|
Volume/Pricing
Variance (1) |
|
|
|
|
|
|
|
|
|
Mid-America Group |
|
|
(2.0 |
%) |
|
|
6.2 |
% |
|
|
(0.5 |
%) |
|
|
4.3 |
% |
|
Southeast Group |
|
|
4.7 |
% |
|
|
9.6 |
% |
|
|
5.3 |
% |
|
|
10.2 |
% |
|
West
Group |
|
|
(6.8 |
%) |
|
|
1.1 |
% |
|
|
(2.4 |
%) |
|
|
2.3 |
% |
|
Total Aggregates
Product Line (2) |
|
|
(3.2 |
%) |
|
|
5.1 |
% |
|
|
(0.6 |
%) |
|
|
4.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
September 30, |
|
Shipments (tons in thousands) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Mid-America Group |
|
|
21,371 |
|
|
|
21,818 |
|
|
|
54,624 |
|
|
|
54,872 |
|
|
Southeast Group |
|
|
5,349 |
|
|
|
5,109 |
|
|
|
15,579 |
|
|
|
14,802 |
|
|
West
Group |
|
|
17,085 |
|
|
|
18,331 |
|
|
|
49,637 |
|
|
|
50,845 |
|
|
Total Aggregates
Product Line (2) |
|
|
43,805 |
|
|
|
45,258 |
|
|
|
119,840 |
|
|
|
120,519 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Volume/pricing variances reflect the percentage
increase (decrease) from the comparable period in the prior
year. |
|
(2) 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, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Shipments (in thousands) |
|
|
|
|
|
|
|
|
|
Aggregates tons - external customers |
|
|
40,787 |
|
|
|
41,947 |
|
|
|
111,617 |
|
|
|
112,601 |
|
|
Internal
aggregates tons used in other product lines |
|
|
3,018 |
|
|
|
3,311 |
|
|
|
8,223 |
|
|
|
7,918 |
|
|
Total
aggregates tons |
|
|
43,805 |
|
|
|
45,258 |
|
|
|
119,840 |
|
|
|
120,519 |
|
|
|
|
|
|
|
|
|
|
|
|
Ready
Mixed Concrete - cubic yards |
|
|
2,160 |
|
|
|
2,486 |
|
|
|
6,442 |
|
|
|
6,269 |
|
|
|
|
|
|
|
|
|
|
|
|
Cement
tons - external customers |
|
|
523 |
|
|
|
574 |
|
|
|
1,749 |
|
|
|
1,837 |
|
|
Internal
cement tons used in other product lines |
|
|
294 |
|
|
|
331 |
|
|
|
895 |
|
|
|
879 |
|
|
Total
Cement tons |
|
|
817 |
|
|
|
905 |
|
|
|
2,644 |
|
|
|
2,716 |
|
|
|
|
|
|
|
|
|
|
|
|
Asphalt
tons - external customers |
|
|
385 |
|
|
|
412 |
|
|
|
863 |
|
|
|
755 |
|
|
Internal
asphalt tons used in road paving business |
|
|
829 |
|
|
|
948 |
|
|
|
1,615 |
|
|
|
1,597 |
|
|
Total
asphalt tons |
|
|
1,214 |
|
|
|
1,360 |
|
|
|
2,478 |
|
|
|
2,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average unit
sales price by product line (including internal
sales): |
|
|
|
|
|
|
|
|
|
Aggregates (per ton) |
|
$ |
13.40 |
|
|
$ |
12.75 |
|
|
$ |
13.43 |
|
|
$ |
12.83 |
|
|
Ready
Mixed Concrete (per cubic yard) |
|
$ |
109.22 |
|
|
$ |
104.16 |
|
|
$ |
107.34 |
|
|
$ |
104.06 |
|
|
Cement
(per ton) |
|
$ |
107.11 |
|
|
$ |
103.08 |
|
|
$ |
105.26 |
|
|
$ |
101.37 |
|
|
Asphalt
(per ton) |
|
$ |
44.73 |
|
|
$ |
40.01 |
|
|
$ |
43.08 |
|
|
$ |
39.54 |
|
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Non-GAAP Financial Measures |
(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 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, 2017, with certain
exceptions related to qualifying acquisitions, as defined. |
|
|
|
|
|
|
|
|
|
|
|
|
|
The following presents the calculation of Consolidated
Debt-to-Consolidated EBITDA, as defined by the Company's Credit
Agreement, at September 30, 2017, for the trailing-12 months
EBITDA. For supporting calculations, refer to Company's website at
www.martinmarietta.com. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve-Month Period |
|
|
|
|
|
|
|
|
October 1, 2016 to |
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
Earnings from
continuing operations attributable to Martin Marietta Materials,
Inc. |
|
$ |
435.0 |
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
88.8 |
|
|
|
|
|
|
|
Income
tax expense |
|
|
156.9 |
|
|
|
|
|
|
|
Depreciation, depletion and amortization expense |
|
|
290.8 |
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
27.0 |
|
|
|
|
|
|
|
Acquisition-related expenses |
|
|
3.3 |
|
|
|
|
|
|
|
Deduct: |
|
|
|
|
|
|
|
|
Interest
income |
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated EBITDA, as
defined by the Company's Credit Agreement |
|
$ |
1,001.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Net Debt,
as defined and including debt for which the Company is a
co-borrower, at September 30, 2017 |
|
$ |
1,738.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Debt-to-Consolidated EBITDA, as defined by the
Company's Credit Agreement, at September 30, 2017, for
the trailing-12 months EBITDA |
|
1.74 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 construedas an alternative to net earnings or operating cash
flow. For further information on EBITDA, refer to
theCompany's website at www.martinmarietta.com. EBITDA is as
follows: |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Consolidated Earnings
Before Interest, Income Taxes, Depreciation, Depletionand
Amortization (EBITDA) |
|
$ |
302.0 |
|
|
$ |
322.8 |
|
$ |
742.0 |
|
$ |
741.9 |
|
|
|
|
|
|
|
|
|
A
Reconciliation of Net Earnings Attributable to Martin Marietta
Materials, Inc.to Consolidated EBITDA is as follows: |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Net Earnings
Attributable to Martin Marietta Materials, Inc. |
|
$ |
151.5 |
|
|
$ |
159.5 |
|
$ |
336.2 |
|
$ |
326.5 |
Add back: |
|
|
|
|
|
|
|
|
Interest
Expense |
|
|
23.1 |
|
|
|
20.6 |
|
|
68.0 |
|
|
60.9 |
Taxes on
Income |
|
|
52.8 |
|
|
|
70.9 |
|
|
119.3 |
|
|
144.0 |
Depreciation, Depletion and Amortization Expense |
|
|
74.6 |
|
|
|
71.8 |
|
|
218.5 |
|
|
210.5 |
Consolidated
EBITDA |
|
$ |
302.0 |
|
|
$ |
322.8 |
|
$ |
742.0 |
|
$ |
741.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
reconciliation of Net Earnings Attributable to Martin Marietta
Materials, Inc. to the midpointof the range for EBITDA included in
the full-year 2017 outlook is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
Midpoint of Outlook |
|
|
|
|
|
|
|
Full-Year 2017 |
|
|
|
|
|
|
Net Earnings
Attributable to Martin Marietta Materials, Inc. |
|
$ |
422.5 |
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
Interest
Expense |
|
|
90.5 |
|
|
|
|
|
|
|
Taxes on
Income |
|
|
165.0 |
|
|
|
|
|
|
|
Depreciation, Depletion and Amortization Expense |
|
|
284.5 |
|
|
|
|
|
|
|
Consolidated
EBITDA |
|
$ |
962.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Contact:Suzanne OsbergVice President,
Investor Relations(919)
783-4691Suzanne.Osberg@martinmarietta.com
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