Company Achieved Record Revenues, Profits
and Diluted Earnings per Share in the Second Quarter
Martin Marietta Materials, Inc. (NYSE:MLM) today reported record
results for the second quarter ended June 30, 2018.
Highlights Include the
Following:
|
Quarter ended June 30, |
($ in thousands, except per share) |
2018 |
2017 |
Total
revenues 1 |
$ |
1,202,403 |
$ |
1,063,524 |
Products and services revenues 2 |
$ |
1,128,777 |
$ |
996,843 |
Building Materials business products and services revenues |
$ |
1,060,620 |
$ |
931,115 |
Magnesia Specialties business products and services revenues |
$ |
68,157 |
$ |
65,728 |
Gross
profit |
$ |
315,917 |
$ |
274,094 |
Adjusted gross profit 3 |
$ |
326,084 |
$ |
274,094 |
Earnings from operations |
$ |
263,953 |
$ |
212,852 |
Adjusted earnings from operations 4 |
$ |
286,246 |
$ |
214,834 |
Net
earnings attributable to Martin Marietta |
$ |
185,377 |
$ |
142,279 |
Adjusted net earnings attributable to Martin Marietta 4 |
$ |
206,388 |
$ |
143,503 |
Adjusted EBITDA 4,5 |
$ |
378,959 |
$ |
294,280 |
Earnings per diluted share |
$ |
2.92 |
$ |
2.25 |
Adjusted earnings per diluted share 4 |
$ |
3.25 |
$ |
2.27 |
1 Total revenues include the sales of
products and services to customers (net of any discounts or
allowances) and freight revenues.2 Products and services
revenues include the sales of aggregates, cement, ready mixed
concrete, asphalt and Magnesia Specialties products, and paving
services to customers, and exclude related freight
revenues.3 Adjusted gross profit excludes an increase in cost
of sales from the impact of selling acquired inventory after its
markup to fair value as part of acquisition accounting. See
appendix to this earnings release for a reconciliation to reported
gross profit.4 Adjusted amounts exclude acquisition-related
expenses, net, and an increase in cost of sales from the impact of
selling acquired inventory after its markup to fair value as part
of acquisition accounting. See appendix to this earnings
release for a reconciliation to reported amounts.5 See
appendix to this earnings release for a reconciliation to net
earnings attributable to Martin Marietta.
Ward Nye, Chairman, President and CEO
of Martin Marietta, stated, “Our record-setting second-quarter
results, which were driven by increased shipments, pricing
improvements and growth initiatives, extend Martin Marietta’s
lengthy track record of operational excellence, disciplined
execution of our strategic plan and shareholder value creation.
Underlying product demand and customer backlogs remain strong
across our markets, with notable growth in Texas, North Carolina,
Georgia and Iowa. In addition, our cement operations benefitted
from the combination of strong demand and a tight supply
environment, resulting in double-digit volume growth and a
680-basis-point improvement in product gross margin for the
quarter.
“We are also pleased with the performance of our
acquired Bluegrass Materials (Bluegrass) operations, which
contributed $42 million in product revenues at anticipated margins
comparable to our Mid-Atlantic and Southeast operations. This
strategic acquisition is accretive to our shareholders and
positions us to meaningfully enhance future performance as the
eastern United States recovers from below mid-cycle aggregates
demand. We are also on track to achieve our stated
synergies. Additionally, in the second half of June, we
enhanced the scale of our Midwest business by acquiring several
Omaha, Nebraska-based sand and gravel operations and a permitted
greenfield site, adding approximately 30 million tons of aggregates
reserves. These value-enhancing transactions demonstrate our
ability to prudently deploy capital to drive significant value for
our shareholders, customers and other stakeholders.”
Mr. Nye concluded, “We believe the United States
is in the midst of a construction recovery that will continue
through the remainder of 2018 and beyond. Consistent with our
forecasts at the beginning of the year, we expect construction
activity to accelerate during the second half of this year, with
faster growth in our key geographies due to these regions’
attractive economic drivers and population trends. We remain
confident about Martin Marietta’s near-and long-term growth
trajectory and expect 2018 to be another record year, as evidenced
by our decision to raise our 2018 EBITDA guidance. We expect
the disciplined execution of our strategic plan will continue to
create shareholder value as we elevate Martin Marietta from an
aggregates industry leader to a globally recognized world-class
organization.”
Mr. Nye’s CEO Commentary and Market Perspective
can be found on the Investor Relations section of
the Company’s website.
Operating Results(All
comparisons are versus the prior-year quarter unless noted
otherwise)
|
Quarter ended June 30, 2018 |
($ in thousands) |
Revenues |
Gross profit (loss) |
Gross margin |
Building Materials business: |
|
|
|
Products and services: |
|
|
|
Aggregates |
$ |
665,308 |
|
$ |
198,540 |
|
29.8 |
% |
Cement |
|
113,148 |
|
|
41,305 |
|
36.5 |
% |
Ready mixed concrete |
|
277,202 |
|
|
29,952 |
|
10.8 |
% |
Asphalt and paving |
|
83,140 |
|
|
18,512 |
|
22.3 |
% |
Less: interproduct revenues |
|
(78,178 |
) |
|
--- |
|
--- |
|
Products and services |
|
1,060,620 |
|
|
288,309 |
|
27.2 |
% |
Freight |
|
68,821 |
|
|
598 |
|
NM |
|
Total Building Materials business |
|
1,129,441 |
|
|
288,907 |
|
25.6 |
% |
Magnesia Specialties business: |
|
|
|
|
|
|
|
|
Products and services |
|
68,157 |
|
|
24,870 |
|
36.5 |
% |
Freight |
|
4,805 |
|
|
(1,028 |
) |
NM |
|
Total Magnesia Specialties business |
|
72,962 |
|
|
23,842 |
|
32.7 |
% |
Corporate |
|
--- |
|
|
3,168 |
|
NM |
|
Total |
$ |
1,202,403 |
|
$ |
315,917 |
|
26.3 |
% |
|
Quarter ended June 30, 2017 |
($ in thousands) |
Revenues |
Gross profit (loss) |
Gross margin |
Building Materials business: |
|
|
|
Products and services: |
|
|
|
Aggregates |
$ |
577,913 |
|
$ |
173,012 |
|
29.9 |
% |
Cement |
|
98,937 |
|
|
29,369 |
|
29.7 |
% |
Ready mixed concrete |
|
241,871 |
|
|
26,840 |
|
11.1 |
% |
Asphalt and paving |
|
82,943 |
|
|
20,314 |
|
24.5 |
% |
Less: interproduct revenues |
|
(70,549 |
) |
|
--- |
|
--- |
|
Products and services |
|
931,115 |
|
|
249,535 |
|
26.8 |
% |
Freight |
|
62,380 |
|
|
621 |
|
NM |
|
Total Building Materials business |
|
993,495 |
|
|
250,156 |
|
25.2 |
% |
Magnesia Specialties business: |
|
|
|
|
|
|
|
|
Products and services |
|
65,728 |
|
|
24,798 |
|
37.7 |
% |
Freight |
|
4,301 |
|
|
(1,174 |
) |
NM |
|
Total Magnesia Specialties business |
|
70,029 |
|
|
23,624 |
|
33.7 |
% |
Corporate |
|
--- |
|
|
314 |
|
NM |
|
Total |
$ |
1,063,524 |
|
$ |
274,094 |
|
25.8 |
% |
Building Materials Business
Aggregates
During the quarter, aggregates shipments to the
Company’s three primary end-use markets increased, demonstrating
the breadth of the overall construction recovery. However, the
limited availability of transportation and tight contractor labor
markets pose challenges for more efficient throughput.
Specifically, suboptimal railroad performance, limited truck
availability and contractor capacity limitations, including their
notable employee shortages, muted the Company’s overall
second-quarter volume growth. That said, as capital and increased
wages flow into the construction sector, the Company expects these
temporary bottlenecks will abate, allowing supply and demand to
reach equilibrium.
Inclusive of acquired operations, aggregates
product revenues increased 15.1 percent for the quarter, reflecting
volume growth of 11.3 percent and pricing growth of 3.5 percent.
Heritage volume and pricing improved 3.4 percent and 4.4 percent,
respectively.
- Shipments for the Mid-America Group heritage operations
increased 4.6 percent, driven by several large public and private
construction projects in North Carolina. These operations generated
heritage pricing gains of 6.3 percent, driven by continued price
discipline.
- Shipments for the Southeast Group heritage operations increased
3.4 percent, driven by strong construction activity in North
Georgia. Weather and railroad inefficiencies hindered long-haul
shipments from South Georgia to distribution yards in Florida,
negatively affecting shipments and limited pricing growth to 1.5
percent.
- West Group shipments improved 2.0 percent. Notably, all
districts in the Southwest Division posted volume growth; however,
this growth was partially offset by reduced Colorado volumes
resulting from project delays and lower ballast sales. West Group
pricing improved 3.2 percent, reflecting robust pricing in Colorado
that was offset by product mix and a lower percentage of commercial
rail-shipped volumes in Texas.
Martin Marietta’s second-quarter heritage
aggregates shipments by end use are as follows (all comparisons are
versus the prior-year quarter on a heritage basis):
Infrastructure Market
- Aggregates shipments to the infrastructure market increased 2
percent, driven by large public projects in North Carolina and
partially offset by project delays in Texas and Colorado as well as
the previously-noted poor railroad service in Texas, South Georgia
and Florida. The Company is encouraged by the recent acceleration
of state lettings and contract awards; however, some contractors
are reporting a longer lag time between contract awards and the
commencement of projects. As state Departments of Transportation
(DOTs) and contractors address labor constraints and the broader
industry benefits from further regulatory reform, management
remains confident that infrastructure demand will continue to
improve from the funding provided by the Fixing America’s Surface
Transportation Act (FAST Act) and numerous state and local
transportation initiatives. Notably, once awarded, public
construction projects are typically certain to be fully completed;
thus, delays from weather or other factors merely extend the
duration of the construction cycle for the Company’s single largest
end use. Overall, aggregates shipments to the infrastructure market
comprised 40 percent of second-quarter aggregates volumes, which
remains below the Company’s most recent five-year average of 43
percent.
Nonresidential Market
- Aggregates shipments to the nonresidential market increased 6
percent, driven by both commercial and heavy industrial
construction activity. Additionally, ongoing energy-sector project
approvals, supported by higher oil prices, underpin management’s
expectation that the next wave of these large projects,
particularly along the Gulf Coast, will contribute to increased
aggregates demand for the next several years. The nonresidential
market represented 33 percent of second-quarter aggregates
shipments.
Residential Market
- Aggregates shipments to the residential market increased 11
percent. Six of the Company’s key states - Texas, Florida, North
Carolina, Colorado, Georgia and South Carolina - rank in the top
ten nationally for growth in single-family housing unit starts for
the trailing twelve months ended May 2018. The residential
construction outlook across the Company’s geographic footprint
remains positive for both single- and multi-family housing, driven
by favorable demographics, job growth, land availability and
efficient permitting. The residential market accounted for 22
percent of second-quarter aggregates shipments.
ChemRock/Rail Market
- The ChemRock/Rail market accounted for the remaining 5 percent
of second-quarter aggregates shipments. Shipments to this sector
declined 21 percent, reflective of the timing of certain purchases
by East Coast railroads in the prior-year quarter as well as
reduced ballast shipments due to lower maintenance spending by
Class I railroads.
Aggregates product gross margin was 29.8
percent, inclusive of a $10.2 million negative impact on cost of
sales related to selling acquired inventory that was marked up to
fair value as part of acquisition accounting. Excluding
this impact, adjusted aggregates product gross margin was 31.4
percent, an improvement of 150 basis points over the prior-year
quarter.
Cement
Second-quarter cement product revenues increased
14.4 percent and gross profit increased 40.6 percent. Shipments and
pricing improved 11.6 percent and 2.6 percent, respectively,
reflecting the strong underlying market conditions throughout
Texas. These factors, coupled with increased production
efficiencies, led to a product gross margin of 36.5
percent.
Downstream businesses
Ready mixed concrete shipments increased 15.0
percent, driven primarily by strong construction activity in Texas,
particularly in the Dallas/Fort Worth market. Overall,
second-quarter ready mixed concrete prices decreased slightly, with
lower energy-sector shipments and product mix in Texas offsetting
the solid pricing gains in Dallas/Fort Worth and the nearly 6.0
percent pricing growth in Colorado. Project delays contributed to
the 6.0 percent decrease in hot mixed asphalt shipments, while
rising raw material costs allowed for favorable pricing during the
quarter.
Magnesia Specialties
Business
Magnesia Specialties product revenues increased
3.7 percent to a record $68.2 million with growth in both the
chemicals and lime businesses. Higher costs for energy and contract
services contributed to a 120-basis-point reduction of
second-quarter product gross margin to 36.5 percent.
Consolidated
Other operating income, net, includes $16.9
million of gains on the sale of surplus land and $7.7 million, net,
of litigation and related settlements.
During the quarter, Martin Marietta divested its
heritage Forsyth aggregates quarry north of Atlanta, Georgia, and
the legacy Bluegrass Beaver Creek aggregates quarry in western
Maryland pursuant to the Company’s agreement with the United States
Department of Justice to obtain regulatory approval for the
Bluegrass acquisition. The gain on the Forsyth quarry divestiture
is included in acquisition-related expenses, net, on the
consolidated statements of earnings, and there was no gain or loss
on the Beaver Creek divestiture. Excluding acquisition-related
expenses, net, and the negative impact on cost of sales related to
selling acquired inventory that was marked up to fair value as part
of acquisition accounting, adjusted earnings from operations were
$286.2 million, a 33.2 percent improvement from the prior-year
quarter.
Liquidity and Capital
Resources
Cash provided by operating activities for the
six months ended June 30 was $238.0 million in 2018 compared with
$229.3 million in 2017.
Cash paid for property, plant and equipment
additions for the six months ended June 30, 2018 was $188.3
million. The Company expects capital expenditures for
full-year 2018 to range from $450 million to $500 million as it
continues to prudently deploy capital into the business.
At June 30, 2018, the Company’s ratio of
consolidated net debt-to-consolidated EBITDA, as defined in the
applicable credit agreement, for the trailing twelve months was
2.75 times. The Company expects to be within its target leverage
ratio of 2.0X to 2.5X by the end of 2018.
Commitment to Enhance Long-Term
Shareholder Value
Martin Marietta is dedicated to disciplined
capital allocation that preserves its financial flexibility and
further enhances shareholder value. The Company’s capital
allocation priorities remain unchanged and include value-enhancing
acquisitions that promote 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.
The Company has returned $1.3 billion to
shareholders, in the form of dividend payments and share
repurchases, since announcing a 20 million share repurchase
authorization in February 2015. At June 30, 2018, 14.7 million
shares remain under the current repurchase authorization and 63.0
million shares of Martin Marietta common stock were outstanding.
Outlook for 2018
Martin Marietta remains confident about its
near-term and long-term outlooks given the disciplined execution of
its strategic business plan and the underlying market fundamentals,
including positive employment and population trends, across its
geographic footprint. The Company expects growth in all three
primary construction end-use markets as the current broad-based
construction recovery continues on an extended basis. Notably:
- Infrastructure construction activity should benefit from the
funding provided by the FAST Act as state DOTs and contractors
address labor constraints and the benefits of further regulatory
reform emerges. Additionally, state and local initiatives that
support infrastructure funding, including gas tax increases, bond
programs and other ballot initiatives, continue to garner voter
approval and will play an expanded role in public-sector activity.
Third-party forecasts support increased infrastructure investment
in the second half of 2018, particularly for aggregates-intensive
highways and streets.
- Nonresidential construction activity should increase in both
the commercial and heavy industrial sectors for the next several
years as supported by third-party forecasts. Management
expects new energy-related projects, particularly along the Gulf
Coast, will bid in 2018 with broader construction activity
beginning in earnest in 2019 and beyond as regulatory permitting
and final investment decisions are either made and/or
approved.
- Residential construction should be robust, particularly in key
Martin Marietta markets, bolstered by positive employment and
population trends, historically low levels of construction activity
over the previous years, low mortgage rates and increased lot
development. Residential housing starts of 1.2 million units for
the trailing twelve months ended June 2018 remain well below the
50-year average of 1.5 million annual starts. Continued
strength in residential construction supports future infrastructure
and nonresidential activity.
2018 Guidance
Management has increased both the low end and
the high end of its full-year 2018 adjusted EBITDA guidance range
by $25.0 million to reflect current trends and expectations,
including the other operating income, net, recognized during the
second quarter.
Specifically:
- Heritage aggregates average selling price is expected to
increase in a range of 3 percent to 5 percent.
- Heritage aggregates volume is expected to increase in a range
of 4 percent to 6 percent and expected shipments by end-use market
compared with 2017 levels are as follows:
- Infrastructure shipments to increase in the mid-single
digits.
- Nonresidential shipments to increase in the low- to mid-single
digits.
- Residential shipments to increase in the high-single
digits.
- ChemRock/Rail shipments to decrease.
2018 GUIDANCE |
($ and
tons in thousands, except per ton) |
Low * |
|
High * |
Consolidated |
|
|
|
Total revenues 1 |
$ |
4,300,000 |
|
|
$ |
4,500,000 |
|
Products and services revenues |
$ |
4,050,000 |
|
|
$ |
4,200,000 |
|
Freight revenues |
$ |
250,000 |
|
|
$ |
300,000 |
|
Gross profit |
$ |
1,080,000 |
|
|
$ |
1,190,000 |
|
Adjusted gross profit 2 |
$ |
1,100,000 |
|
|
$ |
1,210,000 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses (SG&A) |
$ |
275,000 |
|
|
$ |
285,000 |
|
Interest expense |
$ |
135,000 |
|
|
$ |
140,000 |
|
Estimated tax rate (excluding discrete events) |
|
20 |
% |
|
|
22 |
% |
Net earnings attributable to Martin Marietta |
$ |
520,000 |
|
|
$ |
630,000 |
|
Adjusted net earnings attributable to Martin Marietta 3 |
$ |
550,000 |
|
|
$ |
660,000 |
|
Adjusted EBITDA 3 |
$ |
1,175,000 |
|
|
$ |
1,295,000 |
|
Capital expenditures |
$ |
450,000 |
|
|
$ |
500,000 |
|
|
|
|
|
Building Materials Business |
|
|
|
Aggregates |
|
|
|
Volume (total tons) 4 |
|
175,000 |
|
|
|
180,000 |
|
%
growth 4 |
|
11.0 |
% |
|
|
14.0 |
% |
Average selling price per ton (ASP) |
$ |
13.75 |
|
|
$ |
14.00 |
|
% growth 5 |
|
2.0 |
% |
|
|
4.0 |
% |
Total revenues |
$ |
2,630,000 |
|
|
$ |
2,740,000 |
|
Products and services revenues |
$ |
2,415,000 |
|
|
$ |
2,475,000 |
|
Freight revenues |
$ |
215,000 |
|
|
$ |
265,000 |
|
Gross profit |
$ |
695,000 |
|
|
$ |
765,000 |
|
Adjusted gross profit 2 |
$ |
715,000 |
|
|
$ |
785,000 |
|
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
Total revenues |
$ |
415,000 |
|
|
$ |
445,000 |
|
Products and services revenues |
$ |
400,000 |
|
|
$ |
430,000 |
|
Freight revenues |
$ |
15,000 |
|
|
$ |
15,000 |
|
Gross profit |
$ |
140,000 |
|
|
$ |
160,000 |
|
|
|
|
|
|
|
|
|
Ready Mixed Concrete and Asphalt and Paving |
|
|
|
|
|
|
|
Products and services revenues |
$ |
1,370,000 |
|
|
$ |
1,445,000 |
|
Gross profit |
$ |
160,000 |
|
|
$ |
175,000 |
|
|
|
|
|
Magnesia Specialties Business |
|
|
|
Total revenues |
$ |
265,000 |
|
|
$ |
270,000 |
|
Products and services revenues |
$ |
245,000 |
|
|
$ |
250,000 |
|
Freight revenues |
$ |
20,000 |
|
|
$ |
20,000 |
|
Gross profit |
$ |
85,000 |
|
|
$ |
90,000 |
|
* Guidance range represents the low end and high end of
the respective line items provided above.
1 2018 consolidated total revenues
exclude $380 million to $400 million related to estimated
interproduct sales.
2 Adjusted gross profit excludes a
$20 million increase in costs of sales from the impact of selling
acquired inventory after its markup to fair value as part of
acquisition accounting.
3 Adjusted amounts excludes
acquisition-related expenses, net, and a $20 million increase in
cost of sales from the impact of selling acquired inventory after
its markup to fair value as part of acquisition accounting.
4 Represents 2018 total
aggregates volumes, which includes approximately 11.2 million
internal tons. Volume growth ranges are in comparison with total
volumes of 157.7 million tons reported for the full year 2017,
which included 10.9 million internal tons.
5 ASP growth range is in
comparison with ASP of $13.46 per ton reported for the full year
2017. The 2% to 4% ASP growth shown above reflects the
inclusion of legacy Bluegrass Materials pricing which is below our
heritage corporate average.
Non-GAAP Financial
Information
This earnings release contains financial
measures that have not been prepared in accordance with GAAP.
Reconciliations of non-GAAP financial measures to the closest GAAP
measure are included in the appendix to this earnings
release.
Conference Call Information
The Company will discuss its second-quarter 2018
earnings results on a conference call and an online web simulcast
today (July 26, 2018). The live broadcast of the Martin
Marietta conference call will begin at 10:00 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 information
related to its second-quarter performance on its website. For those
investors without online web access, the conference call may also
be accessed by calling (970) 315-0423, confirmation number
2498539.
About Martin Marietta
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 27
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.
Investor Contact: Suzanne
Osberg Vice President, Investor Relations (919)
783-4691 Suzanne.Osberg@martinmarietta.com
MLM-E.
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. These statements, which are
forward-looking statements under the Private Securities Litigation
Reform Act of 1995, 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”, “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.
The Company’s outlook is subject to various
risks and uncertainties, and is based on assumptions that the
Company believes in good faith are reasonable but which may be
materially different from actual results. Factors that the Company
currently believes could cause actual results to differ materially
from the forward-looking statements in this press release
(including the outlook) include, but are not limited to: the
performance of the United States economy; shipment declines
resulting from economic events beyond the Company’s control; a
widespread decline in aggregates pricing, including a decline in
aggregates volume negatively affecting aggregates price; the
history of both cement and ready mixed concrete being subject to
significant changes in supply, demand and price fluctuations; 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, state
or local transportation or infrastructure projects funding, most
particularly in Texas, North Carolina, Iowa, Colorado, Georgia and
Maryland; the United States Congress’ inability to reach agreement
among themselves or with the current Administration on policy
issues that impact the federal budget; 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 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, particularly in Texas; a slowdown in
residential construction recovery; unfavorable weather conditions,
particularly Atlantic Ocean and Gulf Coast 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, any of which can significantly affect production
schedules, volumes and profitability; the volatility of fuel costs,
particularly diesel fuel, and the impact on the cost, or the
availability generally, 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;
construction labor shortages and/or supply‐chain challenges;
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 or a
sustained reduction in capital investment by the railroads, notably
the availability of railcars, locomotive power and the condition of
rail infrastructure to move trains to supply the Company’s Texas,
Colorado, Florida, North Carolina and the Gulf Coast markets,
including the movement of essential dolomitic lime for magnesia
chemicals to the Company’s plant in Manistee, Michigan and its
customers; increased transportation costs, including increases from
higher or fluctuating passed-through energy costs or fuel
surcharges, 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; a trade dispute with
one or more nations impacting the U.S. economy, including the
impact of tariffs on the steel industry; unplanned changes in costs
or realignment of customers that introduce volatility to earnings,
including that of the Magnesia Specialties business that is running
at capacity; proper functioning of information technology and
automated operating systems to manage or support operations;
inflation and its effect on both production and interest costs; the
concentration of customers in construction markets and the
increased risk of potential losses on customer receivables; the
impact of the level of demand in the Company’s end-use markets,
production levels and management of production costs on the
operating leverage and therefore profitability of the
Company; the possibility that the expected synergies from
acquisitions (including the acquisition of Bluegrass) will not be
realized or will not be realized within the expected time period,
including achieving 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.
You should consider these forward-looking
statements in light of risk factors discussed in our Annual Report
on Form 10-K for the year ended December 31, 2017, our Current
Report on Form 8-K filed on March 16, 2018 and other periodic
filings made with the SEC. All of our forward-looking
statements should be considered in light of these factors. In
addition, other risks and uncertainties not presently known to us
or that we consider immaterial could affect the accuracy of our
forward-looking statements, or adversely affect or be material to
the Company. The Company assumes no obligation to update any
such forward-looking statements.
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Statements of Earnings |
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Products and services
revenues |
|
$ |
1,128,777 |
|
|
$ |
996,843 |
|
|
$ |
1,882,082 |
|
|
$ |
1,789,159 |
|
Freight revenues |
|
|
73,626 |
|
|
|
66,681 |
|
|
|
122,325 |
|
|
|
118,224 |
|
Total
revenues |
|
|
1,202,403 |
|
|
|
1,063,524 |
|
|
|
2,004,407 |
|
|
|
1,907,383 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues -
products and services |
|
|
812,430 |
|
|
|
722,195 |
|
|
|
1,454,049 |
|
|
|
1,366,813 |
|
Cost of revenues -
freight |
|
|
74,056 |
|
|
|
67,235 |
|
|
|
124,049 |
|
|
|
119,410 |
|
Total
cost of revenues |
|
|
886,486 |
|
|
|
789,430 |
|
|
|
1,578,098 |
|
|
|
1,486,223 |
|
Gross Profit |
|
|
315,917 |
|
|
|
274,094 |
|
|
|
426,309 |
|
|
|
421,160 |
|
|
|
|
|
|
|
|
|
|
Selling general &
administrative expenses |
|
|
71,070 |
|
|
|
68,373 |
|
|
|
141,191 |
|
|
|
137,908 |
|
Acquisition-related
expenses, net |
|
|
12,126 |
|
|
|
1,982 |
|
|
|
12,836 |
|
|
|
2,004 |
|
Other operating income,
net |
|
|
(31,232 |
) |
|
|
(9,113 |
) |
|
|
(30,752 |
) |
|
|
(8,754 |
) |
Earnings
from operations |
|
|
263,953 |
|
|
|
212,852 |
|
|
|
303,034 |
|
|
|
290,002 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
32,971 |
|
|
|
24,045 |
|
|
|
68,059 |
|
|
|
44,896 |
|
Other nonoperating
income, net |
|
|
(7,122 |
) |
|
|
(5,420 |
) |
|
|
(15,626 |
) |
|
|
(5,956 |
) |
Earnings
before income tax expense |
|
|
238,104 |
|
|
|
194,227 |
|
|
|
250,601 |
|
|
|
251,062 |
|
Income tax expense |
|
|
52,601 |
|
|
|
51,986 |
|
|
|
55,058 |
|
|
|
66,514 |
|
Consolidated net
earnings |
|
|
185,503 |
|
|
|
142,241 |
|
|
|
195,543 |
|
|
|
184,548 |
|
Less: Net earnings
(loss) attributable to noncontrolling interests |
|
|
126 |
|
|
|
(38 |
) |
|
|
143 |
|
|
|
(65 |
) |
Net Earnings
Attributable to Martin Marietta Materials, Inc. |
|
$ |
185,377 |
|
|
$ |
142,279 |
|
|
$ |
195,400 |
|
|
$ |
184,613 |
|
|
|
|
|
|
|
|
|
|
Net earnings per common
share attributable to common shareholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.94 |
|
|
$ |
2.26 |
|
|
$ |
3.10 |
|
|
$ |
2.92 |
|
Diluted |
|
$ |
2.92 |
|
|
$ |
2.25 |
|
|
$ |
3.08 |
|
|
$ |
2.91 |
|
|
|
|
|
|
|
|
|
|
Dividends per common
share |
|
$ |
0.44 |
|
|
$ |
0.42 |
|
|
$ |
0.88 |
|
|
$ |
0.84 |
|
|
|
|
|
|
|
|
|
|
Average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
63,021 |
|
|
|
62,858 |
|
|
|
62,989 |
|
|
|
62,961 |
|
Diluted |
|
|
63,285 |
|
|
|
63,141 |
|
|
|
63,253 |
|
|
|
63,246 |
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Financial Highlights |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Total revenues: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
350,592 |
|
|
$ |
290,898 |
|
|
$ |
529,373 |
|
|
$ |
479,918 |
|
Southeast
Group |
|
|
112,963 |
|
|
|
92,348 |
|
|
|
193,202 |
|
|
|
182,630 |
|
West
Group |
|
|
665,886 |
|
|
|
610,249 |
|
|
|
1,139,608 |
|
|
|
1,106,230 |
|
Total
Building Materials Business |
|
|
1,129,441 |
|
|
|
993,495 |
|
|
|
1,862,183 |
|
|
|
1,768,778 |
|
Magnesia
Specialties |
|
|
72,962 |
|
|
|
70,029 |
|
|
|
142,224 |
|
|
|
138,605 |
|
Total |
|
$ |
1,202,403 |
|
|
$ |
1,063,524 |
|
|
$ |
2,004,407 |
|
|
$ |
1,907,383 |
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss): |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
120,874 |
|
|
$ |
98,537 |
|
|
$ |
139,129 |
|
|
$ |
124,822 |
|
Southeast
Group |
|
|
19,980 |
|
|
|
18,883 |
|
|
|
26,147 |
|
|
|
33,251 |
|
West
Group |
|
|
148,053 |
|
|
|
132,736 |
|
|
|
208,250 |
|
|
|
217,273 |
|
Total
Building Materials Business |
|
|
288,907 |
|
|
|
250,156 |
|
|
|
373,526 |
|
|
|
375,346 |
|
Magnesia
Specialties |
|
|
23,842 |
|
|
|
23,624 |
|
|
|
47,730 |
|
|
|
45,939 |
|
Corporate |
|
|
3,168 |
|
|
|
314 |
|
|
|
5,053 |
|
|
|
(125 |
) |
Total |
|
$ |
315,917 |
|
|
$ |
274,094 |
|
|
$ |
426,309 |
|
|
$ |
421,160 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
14,016 |
|
|
$ |
13,720 |
|
|
$ |
27,146 |
|
|
$ |
27,263 |
|
Southeast
Group |
|
|
4,833 |
|
|
|
4,447 |
|
|
|
9,249 |
|
|
|
8,799 |
|
West
Group |
|
|
27,161 |
|
|
|
25,874 |
|
|
|
53,293 |
|
|
|
50,948 |
|
Total
Building Materials Business |
|
|
46,010 |
|
|
|
44,041 |
|
|
|
89,688 |
|
|
|
87,010 |
|
Magnesia
Specialties |
|
|
2,505 |
|
|
|
2,429 |
|
|
|
5,107 |
|
|
|
4,817 |
|
Corporate |
|
|
22,555 |
|
|
|
21,903 |
|
|
|
46,396 |
|
|
|
46,081 |
|
Total |
|
$ |
71,070 |
|
|
$ |
68,373 |
|
|
$ |
141,191 |
|
|
$ |
137,908 |
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) from
operations: |
|
|
|
|
|
|
|
|
Building
Materials Business: |
|
|
|
|
|
|
|
|
Mid-America Group |
|
$ |
108,709 |
|
|
$ |
85,363 |
|
|
$ |
114,876 |
|
|
$ |
98,705 |
|
Southeast
Group |
|
|
32,052 |
|
|
|
14,334 |
|
|
|
34,093 |
|
|
|
24,449 |
|
West
Group |
|
|
122,844 |
|
|
|
112,491 |
|
|
|
157,796 |
|
|
|
173,724 |
|
Total
Building Materials Business |
|
|
263,605 |
|
|
|
212,188 |
|
|
|
306,765 |
|
|
|
296,878 |
|
Magnesia
Specialties |
|
|
21,329 |
|
|
|
21,118 |
|
|
|
42,565 |
|
|
|
40,999 |
|
Corporate |
|
|
(20,981 |
) |
|
|
(20,454 |
) |
|
|
(46,296 |
) |
|
|
(47,875 |
) |
Total |
|
$ |
263,953 |
|
|
$ |
212,852 |
|
|
$ |
303,034 |
|
|
$ |
290,002 |
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Financial Highlights
(Continued) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Total revenues: |
|
|
|
|
|
|
|
|
Building
Materials business products and services: |
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
665,308 |
|
|
$ |
577,913 |
|
|
$ |
1,090,324 |
|
|
$ |
1,028,968 |
|
Cement |
|
|
113,148 |
|
|
|
98,937 |
|
|
|
202,331 |
|
|
|
192,491 |
|
Ready
Mixed Concrete |
|
|
277,202 |
|
|
|
241,871 |
|
|
|
495,738 |
|
|
|
464,249 |
|
Asphalt
and paving |
|
|
83,140 |
|
|
|
82,943 |
|
|
|
99,507 |
|
|
|
104,680 |
|
Less: Interproduct sales |
|
|
(78,178 |
) |
|
|
(70,549 |
) |
|
|
(138,843 |
) |
|
|
(131,258 |
) |
Subtotal |
|
|
1,060,620 |
|
|
|
931,115 |
|
|
|
1,749,057 |
|
|
|
1,659,130 |
|
Freight |
|
|
68,821 |
|
|
|
62,380 |
|
|
|
113,126 |
|
|
|
109,648 |
|
Total
Building Materials Business |
|
|
1,129,441 |
|
|
|
993,495 |
|
|
|
1,862,183 |
|
|
|
1,768,778 |
|
Magnesia
Specialties business: |
|
|
|
|
|
|
|
|
Products
and services |
|
|
68,157 |
|
|
|
65,728 |
|
|
|
133,025 |
|
|
|
130,029 |
|
Freight |
|
|
4,805 |
|
|
|
4,301 |
|
|
|
9,199 |
|
|
|
8,576 |
|
Total
Magnesia Specialties Business |
|
|
72,962 |
|
|
|
70,029 |
|
|
|
142,224 |
|
|
|
138,605 |
|
Consolidated total
revenues |
|
|
1,202,403 |
|
|
$ |
1,063,524 |
|
|
$ |
2,004,407 |
|
|
$ |
1,907,383 |
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss): |
|
|
|
|
|
|
|
|
Building
Materials business products and services: |
|
|
|
|
|
|
|
|
Aggregates |
|
$ |
198,540 |
|
|
$ |
173,012 |
|
|
$ |
251,542 |
|
|
$ |
251,967 |
|
Cement |
|
|
41,305 |
|
|
|
29,369 |
|
|
|
65,038 |
|
|
|
60,148 |
|
Ready
Mixed Concrete |
|
|
29,952 |
|
|
|
26,840 |
|
|
|
45,593 |
|
|
|
46,630 |
|
Asphalt
and paving |
|
|
18,512 |
|
|
|
20,314 |
|
|
|
10,873 |
|
|
|
15,573 |
|
Subtotal |
|
|
288,309 |
|
|
|
249,535 |
|
|
|
373,046 |
|
|
|
374,318 |
|
Freight |
|
|
598 |
|
|
|
621 |
|
|
|
480 |
|
|
|
1,028 |
|
Total
Building Materials Business |
|
|
288,907 |
|
|
|
250,156 |
|
|
|
373,526 |
|
|
|
375,346 |
|
Magnesia
Specialties business: |
|
|
|
|
|
|
|
|
Products
and services |
|
|
24,870 |
|
|
|
24,798 |
|
|
|
49,933 |
|
|
|
48,153 |
|
Freight |
|
|
(1,028 |
) |
|
|
(1,174 |
) |
|
|
(2,203 |
) |
|
|
(2,214 |
) |
Total
Magnesia Specialties Business |
|
|
23,842 |
|
|
|
23,624 |
|
|
|
47,730 |
|
|
|
45,939 |
|
Corporate |
|
|
3,168 |
|
|
|
314 |
|
|
|
5,053 |
|
|
|
(125 |
) |
Consolidated gross
profit |
|
$ |
315,917 |
|
|
$ |
274,094 |
|
|
$ |
426,309 |
|
|
$ |
421,160 |
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Balance Sheet Data |
(In thousands) |
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
June 30, |
|
|
2018 |
|
2017 |
|
2017 |
|
|
(Unaudited) |
|
(Audited) |
|
(Unaudited) |
ASSETS |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
33,779 |
|
$ |
1,446,364 |
|
$ |
36,722 |
Accounts
receivable, net |
|
|
675,570 |
|
|
487,240 |
|
|
570,618 |
Inventories, net |
|
|
650,917 |
|
|
600,591 |
|
|
549,865 |
Other
current assets |
|
|
96,887 |
|
|
96,965 |
|
|
87,092 |
Property,
plant and equipment, net |
|
|
5,113,426 |
|
|
3,592,813 |
|
|
3,505,260 |
Intangible assets, net |
|
|
2,916,191 |
|
|
2,666,639 |
|
|
2,663,299 |
Other
noncurrent assets |
|
|
109,982 |
|
|
101,899 |
|
|
103,004 |
Total
assets |
|
$ |
9,596,752 |
|
$ |
8,992,511 |
|
$ |
7,515,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
Current
maturities of long-term debt and short-term facilities |
|
$ |
320,046 |
|
$ |
299,909 |
|
$ |
140,037 |
Other
current liabilities |
|
|
389,087 |
|
|
394,307 |
|
|
394,288 |
Long-term
debt (excluding current maturities) |
|
|
2,898,876 |
|
|
2,727,294 |
|
|
1,641,944 |
Other
noncurrent liabilities |
|
|
1,133,273 |
|
|
888,524 |
|
|
1,139,060 |
Total
equity |
|
|
4,855,470 |
|
|
4,682,477 |
|
|
4,200,531 |
Total
liabilities and equity |
|
$ |
9,596,752 |
|
$ |
8,992,511 |
|
$ |
7,515,860 |
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Statements of Cash
Flows |
(In thousands) |
|
|
Six Months Ended |
|
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
Operating
activities: |
|
|
|
|
Consolidated net earnings |
|
$ |
195,543 |
|
|
$ |
184,548 |
|
Adjustments to reconcile consolidated net earnings to net cash
provided by operating activities: |
|
|
|
|
Depreciation, depletion and amortization |
|
|
163,545 |
|
|
|
146,102 |
|
Stock-based compensation expense |
|
|
17,098 |
|
|
|
17,727 |
|
Gain on
divestitures and sales of assets |
|
|
(33,527 |
) |
|
|
(17,514 |
) |
Deferred
income taxes |
|
|
14,986 |
|
|
|
2,464 |
|
Other
items, net |
|
|
(4,757 |
) |
|
|
(4,669 |
) |
Changes
in operating assets and liabilities, net of effects of acquisitions
and divestitures: |
|
|
|
|
Accounts
receivable, net |
|
|
(157,603 |
) |
|
|
(112,708 |
) |
Inventories, net |
|
|
(7,133 |
) |
|
|
(28,240 |
) |
Accounts
payable |
|
|
44,266 |
|
|
|
11,663 |
|
Other
assets and liabilities, net |
|
|
5,615 |
|
|
|
29,950 |
|
Net cash provided by
operating activities |
|
|
238,033 |
|
|
|
229,323 |
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
Additions
to property, plant and equipment |
|
|
(188,270 |
) |
|
|
(216,089 |
) |
Acquisitions, net of cash acquired |
|
|
(1,645,698 |
) |
|
|
(2,200 |
) |
Proceeds
from divestitures and sales of assets |
|
|
58,213 |
|
|
|
32,089 |
|
Investments in life insurance contracts, net |
|
|
424 |
|
|
|
276 |
|
Payment
of railcar construction advances |
|
|
(28,306 |
) |
|
|
(40,930 |
) |
Reimbursement of railcar construction advances |
|
|
28,306 |
|
|
|
40,930 |
|
Net cash used for
investing activities |
|
|
(1,775,331 |
) |
|
|
(185,924 |
) |
|
|
|
|
|
Financing
activities: |
|
|
|
|
Borrowings of long-term debt |
|
|
665,000 |
|
|
|
941,244 |
|
Repayments of long-term debt |
|
|
(475,025 |
) |
|
|
(845,023 |
) |
Payments
of deferred acquisition consideration |
|
|
(1,426 |
) |
|
|
- |
|
Payments
on capital leases |
|
|
(1,725 |
) |
|
|
(1,752 |
) |
Debt
issue costs |
|
|
(3,194 |
) |
|
|
(1,055 |
) |
Change in
bank overdraft |
|
|
- |
|
|
|
3,795 |
|
Contributions by noncontrolling interest to joint venture |
|
|
- |
|
|
|
211 |
|
Repurchases of common stock |
|
|
- |
|
|
|
(99,999 |
) |
Dividends
paid |
|
|
(55,795 |
) |
|
|
(53,135 |
) |
Proceeds
from exercise of stock options |
|
|
6,943 |
|
|
|
7,937 |
|
Shares
withheld for employees' income tax obligations |
|
|
(10,065 |
) |
|
|
(8,938 |
) |
Net cash provided by
(used for) financing activities |
|
|
124,713 |
|
|
|
(56,715 |
) |
|
|
|
|
|
Net decrease in cash
and cash equivalents |
|
|
(1,412,585 |
) |
|
|
(13,316 |
) |
Cash and cash
equivalents, beginning of period |
|
|
1,446,364 |
|
|
|
50,038 |
|
Cash and cash
equivalents, end of period |
|
$ |
33,779 |
|
|
$ |
36,722 |
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Operational Highlights |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2018 |
|
June 30, 2018 |
|
|
Volume |
|
Pricing |
|
Volume |
|
Pricing |
Volume/Pricing
Variance (1) |
|
|
|
|
|
|
|
|
Heritage
Operations:(2) |
|
|
|
|
|
|
|
|
Mid-America Group |
|
|
4.6% |
|
|
|
6.3% |
|
|
|
(1.0%) |
|
|
|
5.6% |
|
Southeast
Group |
|
|
3.4% |
|
|
|
1.5% |
|
|
|
(4.4%) |
|
|
|
1.8% |
|
West
Group |
|
|
2.0% |
|
|
|
3.2% |
|
|
|
(1.1%) |
|
|
|
2.1% |
|
Total Heritage
Aggregates Product Line |
|
|
3.4% |
|
|
|
4.4% |
|
|
|
(1.5%) |
|
|
|
3.5% |
|
Total Aggregates
Product Line (3) |
|
|
11.3% |
|
|
|
3.5% |
|
|
|
3.0% |
|
|
|
2.9% |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
Shipments (tons in thousands) |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Heritage
Operations:(2) |
|
|
|
|
|
|
|
|
Mid-America Group |
|
|
21,448 |
|
|
|
20,513 |
|
|
|
32,920 |
|
|
|
33,251 |
|
Southeast
Group |
|
|
5,378 |
|
|
|
5,203 |
|
|
|
9,783 |
|
|
|
10,231 |
|
West
Group |
|
|
18,065 |
|
|
|
17,707 |
|
|
|
32,208 |
|
|
|
32,552 |
|
Total Heritage
Aggregates Product Line |
|
|
44,891 |
|
|
|
43,423 |
|
|
|
74,911 |
|
|
|
76,034 |
|
Acquisitions |
|
|
3,428 |
|
|
|
- |
|
|
|
3,428 |
|
|
|
- |
|
Total Aggregates
Product Line (3) |
|
|
48,319 |
|
|
|
43,423 |
|
|
|
78,339 |
|
|
|
76,034 |
|
|
|
|
|
|
|
|
|
|
(1)
Volume/pricing variances reflect the percentage increase (decrease)
from the comparable period in the prior year. |
(2)
Heritage aggregates operations exclude acquisitions that were not
included in prior-year operations for a full year. |
(3)
Aggregates Product Line includes acquisitions from the date of
acquisition and divestitures through the date of disposal. |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Shipments (in thousands) |
|
|
|
|
|
|
|
|
Aggregates tons -
external customers |
|
|
45,190 |
|
|
|
40,411 |
|
|
|
73,067 |
|
|
|
70,829 |
|
Internal aggregates
tons used in other product lines |
|
|
3,129 |
|
|
|
3,012 |
|
|
|
5,272 |
|
|
|
5,205 |
|
Total aggregates
tons |
|
|
48,319 |
|
|
|
43,423 |
|
|
|
78,339 |
|
|
|
76,034 |
|
|
|
|
|
|
|
|
|
|
Cement tons - external
customers |
|
|
653 |
|
|
|
620 |
|
|
|
1,180 |
|
|
|
1,226 |
|
Internal cement tons
used in other product lines |
|
|
375 |
|
|
|
302 |
|
|
|
673 |
|
|
|
601 |
|
Total cement tons |
|
|
1,028 |
|
|
|
922 |
|
|
|
1,853 |
|
|
|
1,827 |
|
|
|
|
|
|
|
|
|
|
Ready Mixed Concrete -
cubic yards |
|
|
2,559 |
|
|
|
2,226 |
|
|
|
4,567 |
|
|
|
4,282 |
|
|
|
|
|
|
|
|
|
|
Asphalt tons - external
customers |
|
|
293 |
|
|
|
325 |
|
|
|
408 |
|
|
|
478 |
|
Internal asphalt tons
used in road paving business |
|
|
635 |
|
|
|
662 |
|
|
|
711 |
|
|
|
786 |
|
Total asphalt tons |
|
|
928 |
|
|
|
987 |
|
|
|
1,119 |
|
|
|
1,264 |
|
|
|
|
|
|
|
|
|
|
Average unit
sales price by product line (including internal
sales): |
|
|
|
|
|
|
|
|
Aggregates (per
ton): |
|
|
|
|
|
|
|
|
Heritage |
|
$ |
13.82 |
|
|
$ |
13.24 |
|
|
$ |
13.91 |
|
|
$ |
13.45 |
|
Acquisition |
|
$ |
12.08 |
|
|
$ |
- |
|
|
$ |
12.08 |
|
|
$ |
- |
|
Total |
|
$ |
13.70 |
|
|
$ |
13.24 |
|
|
$ |
13.83 |
|
|
$ |
13.45 |
|
Cement (per ton) |
|
$ |
109.11 |
|
|
$ |
106.31 |
|
|
$ |
108.10 |
|
|
$ |
104.44 |
|
Ready Mixed Concrete
(per cubic yard) |
|
$ |
106.65 |
|
|
$ |
106.90 |
|
|
$ |
106.51 |
|
|
$ |
106.39 |
|
Asphalt (per ton) |
|
$ |
44.70 |
|
|
$ |
42.48 |
|
|
$ |
44.38 |
|
|
$ |
41.49 |
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Non-GAAP Financial Measures |
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
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
June 30, 2018, 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 June 30, 2018, for the
trailing-12 months EBITDA. For supporting calculations, refer to
the Company's website at www.martinmarietta.com. |
|
|
|
|
|
|
|
|
|
Twelve Month Period |
|
|
|
|
|
|
|
|
July 1, 2017 to |
|
|
|
|
|
|
|
|
June 30, 2018 |
|
|
|
|
|
|
Earnings from
continuing operations attributable to Martin Marietta Materials,
Inc. |
|
$ |
724,129 |
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
114,650 |
|
|
|
|
|
|
|
Depreciation, depletion and amortization expense |
|
|
311,571 |
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
29,831 |
|
|
|
|
|
|
|
Acquisition-related expenses, net |
|
|
31,556 |
|
|
|
|
|
|
|
Bluegrass
EBITDA - Pre-Acquisition (July 1, 2017 to April 27, 2018) |
|
|
77,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deduct: |
|
|
|
|
|
|
|
|
Income
tax benefit |
|
|
(105,999 |
) |
|
|
|
|
|
|
Interest
income |
|
|
(7,138 |
) |
|
|
|
|
|
|
Consolidated EBITDA, as
defined by the Company's Credit Agreement |
|
$ |
1,176,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Net Debt, as defined and including debt for which the
Company is a co-borrower, at June 30, 2018 |
$ |
3,234,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Debt-to-Consolidated EBITDA, as defined by the Company's Credit
Agreement, |
|
|
|
|
|
|
|
|
at
June 30, 2018, for the trailing-12 months EBITDA |
|
2.75 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: |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
2017 |
Consolidated Earnings
Before Interest, Income Taxes, Depreciation, Depletion and
Amortization (EBITDA) |
|
$ |
356,666 |
|
|
$ |
292,298 |
|
$ |
479,928 |
|
$ |
440,012 |
|
|
|
|
|
|
|
|
|
A
Reconciliation of Net Earnings Attributable to Martin Marietta to
Consolidated EBITDA is as follows: |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
2017 |
Net Earnings
Attributable to Martin Marietta |
|
$ |
185,377 |
|
|
$ |
142,279 |
|
$ |
195,400 |
|
$ |
184,613 |
Add back: |
|
|
|
|
|
|
|
|
Interest
Expense |
|
|
32,971 |
|
|
|
24,045 |
|
|
68,059 |
|
|
44,896 |
Income Tax Expense for
Controlling Interests |
|
|
52,581 |
|
|
|
51,981 |
|
|
55,018 |
|
|
66,503 |
Depreciation, Depletion
and Amortization Expense |
|
|
85,737 |
|
|
|
73,993 |
|
|
161,451 |
|
|
144,000 |
Consolidated
EBITDA |
|
$ |
356,666 |
|
|
$ |
292,298 |
|
$ |
479,928 |
|
$ |
440,012 |
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Non-GAAP Financial Measures
(continued) |
(Dollars, other than earnings per share amounts, in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
consolidated gross profit, adjusted consolidated earnings from
operations, adjusted net earnings attributable to Martin Marietta,
adjusted earnings per diluted share and adjusted consolidated
EBITDA for the three months ended June 30, 2018 and 2017, exclude
the impact of acquisition-related expenses, net, and the impact of
selling acquired inventory due to the markup to fair value as part
of acquisition accounting. Acquisition-related expenses, net,
consist of acquisition and integration expenses and the
nonrecurring gain on the required divestiture of a legacy Martin
Marietta quarry in Georgia as part of the acquisition of Bluegrass
Materials. Adjusted consolidated gross profit, adjusted
consolidated earnings from operations, adjusted net earnings
attributable to Martin Marietta, adjusted earnings per diluted
share and adjusted consolidated EBITDA represent non-GAAP financial
measures. Management presents these measures for investors
and analysts to evaluate and forecast the Company's financial
results, as acquisition-related expenses, net, and the impact of
selling acquired inventory due to the markup to fair value as
part of acquisition accounting are nonrecurring. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following reconciles consolidated gross profit in
accordance with GAAP to adjusted consolidated gross profit for the
three months ended June 30: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Consolidated gross profit in accordance with GAAP |
|
|
|
|
|
|
$ |
315,917 |
|
|
$ |
274,094 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of selling acquired inventory due to the markup to fair
value as part of acquisition accounting |
|
|
|
|
10,167 |
|
|
|
- |
|
|
Adjusted
consolidated gross profit |
|
|
|
$ |
326,084 |
|
|
$ |
274,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following reconciles consolidated earnings from
operations in accordance with GAAP to adjusted consolidated
earnings from operations for the three months ended June
30: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Consolidated earnings from operations in accordance with GAAP |
|
|
|
|
|
$ |
263,953 |
|
|
$ |
212,852 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses, net |
|
|
|
|
|
|
|
|
12,126 |
|
|
|
1,982 |
|
|
Impact of selling acquired inventory due to the markup to fair
value as part of acquisition accounting |
|
|
|
|
10,167 |
|
|
|
- |
|
|
Adjusted
consolidated earnings from operations |
|
|
|
$ |
286,246 |
|
|
$ |
214,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following reconciles net earnings attributable to
Martin Marietta in accordance with GAAP to adjusted net earnings
attributable to Martin Marietta for the three months ended June
30: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Net
earnings attributable to Martin Marietta in accordance with
GAAP |
|
|
|
|
$ |
185,377 |
|
|
$ |
142,279 |
|
|
Add
back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax impact of acquisition-related expenses, net |
|
|
|
|
|
|
|
13,230 |
|
|
|
1,224 |
|
|
After-tax impact of selling acquired inventory due to the
markup to fair value as part of acquisition accounting |
|
|
|
|
7,781 |
|
|
|
- |
|
|
Adjusted
net earnings attributable to Martin Marietta |
|
|
|
|
|
|
|
206,388 |
|
|
$ |
143,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following reconciles earnings per diluted share in
accordance with GAAP to adjusted earnings per diluted share for the
three months ended June 30: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Earnings
per diluted share in accordance with GAAP |
|
|
|
$ |
2.92 |
|
|
$ |
2.25 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per diluted share impact of acquisition-related
expenses, net |
|
|
|
|
|
0.21 |
|
|
|
0.02 |
|
|
Earnings per diluted share impact of selling acquired inventory
due to the markup to fair value as part of acquisition
accounting |
|
|
|
|
0.12 |
|
|
|
- |
|
|
Adjusted
earnings per diluted share |
|
|
|
|
|
|
|
$ |
3.25 |
|
|
$ |
2.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following reconciles consolidated EBITDA to adjusted
consolidated EBITDA for the three months ended June
30: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Consolidated EBITDA |
|
|
|
|
|
|
|
|
|
$ |
356,666 |
|
|
$ |
292,298 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses, net |
|
|
|
|
|
|
|
|
12,126 |
|
|
|
1,982 |
|
|
Impact of selling acquired inventory due to the markup to fair
value as part of acquisition accounting |
|
|
|
|
10,167 |
|
|
|
- |
|
|
Adjusted
consolidated EBITDA |
|
|
|
$ |
378,959 |
|
|
$ |
294,280 |
|
|
|
|
|
|
|
|
Adjusted
gross margin for aggregates products excludes the impact of selling
acquired inventory due to the markup to fair value as part of
acquisition accounting and is a non-GAAP measure. |
Management
presents this measure for investors and analysts to evaluate and
forecast the Company's financial results, as the impact of selling
acquired inventory due to the markup |
to fair
value as part of acquisition accounting is nonrecurring. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following reconciles gross margin for aggregates
products to adjusted gross margin for aggregates products for the
three months ended June 30, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Gross
profit for aggregates products |
|
|
|
|
|
|
|
$ |
198,540 |
|
|
$ |
173,012 |
|
|
Total
revenues for aggregates products |
|
|
|
|
|
|
|
$ |
665,308 |
|
|
$ |
577,913 |
|
|
Gross
margin for aggregates products in accordance with GAAP |
|
|
|
|
29.8% |
|
|
|
29.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit for aggregates products in accordance with GAAP |
|
$ |
198,540 |
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of selling acquired inventory due to the markup to fair
value as part of acquisition accounting |
|
|
|
$ |
10,167 |
|
|
|
|
Adjusted
gross profit for aggregates products |
|
|
|
|
|
|
$ |
208,707 |
|
|
|
|
Total
revenues for aggregates products |
|
|
|
|
|
|
|
$ |
665,308 |
|
|
|
|
Adjusted
gross margin for aggregates products |
|
|
|
|
31.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Non-GAAP Financial Measures
(continued) |
(Dollars, other than earnings per share amounts, in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following are reconciliations of the GAAP measure for the midpoints
of the 2018 guidance to the midpoints of the adjusted metrics
included in the |
|
2018
guidance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Guidance - Consolidated gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated gross profit in accordance with GAAP |
|
|
|
|
|
|
$ |
1,135,000 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
Impact of selling acquired inventory due to the markup to fair
value as part of acquisition accounting |
|
|
|
|
20,000 |
|
Adjusted
consolidated gross profit |
|
|
|
$ |
1,155,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Guidance - Aggregates product gross
profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregates
product gross profit in accordance with GAAP |
|
|
|
|
|
$ |
730,000 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
Impact of selling acquired inventory due to the markup to fair
value as part of acquisition accounting |
|
|
|
|
20,000 |
|
Adjusted
aggregates product gross profit |
|
|
|
$ |
750,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Guidance - Net earnings attributable to Martin
Marietta |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings attributable to Martin Marietta in accordance with
GAAP |
|
|
|
|
$ |
575,000 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
After-tax impact of acquisition-related expenses, net |
|
|
|
|
|
|
|
15,000 |
|
After-tax impact of selling acquired inventory due to the
markup to fair value as part of acquisition accounting |
|
|
|
|
15,000 |
|
Adjusted
net earnings attributable to Martin Marietta |
|
|
|
|
|
|
$ |
605,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Guidance - Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Earnings Attributable to Martin Marietta |
|
|
|
|
|
|
$ |
575,000 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense |
|
|
|
|
|
|
|
|
|
|
137,500 |
|
Taxes on Income |
|
|
|
|
|
|
|
|
|
|
152,500 |
|
Depreciation, Depletion and Amortization Expense |
|
|
|
|
|
|
|
335,000 |
|
EBITDA |
|
|
|
|
|
|
|
|
|
|
$ |
1,200,000 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
Bluegrass acquisition-related expenses, net |
|
|
|
|
|
|
|
15,000 |
|
Impact of selling acquired inventory due to the markup to fair
value as part of acquisition accounting |
|
|
|
|
20,000 |
|
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
$ |
1,235,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Marietta Materials (NYSE:MLM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Martin Marietta Materials (NYSE:MLM)
Historical Stock Chart
From Jul 2023 to Jul 2024