Martin Marietta Materials, Inc. (NYSE:MLM) today reported results
for the second quarter ended June 30, 2019.
Highlights include:
|
Quarter
Ended June 30, |
|
($ in thousands, except per share) |
2019 |
|
|
2018 |
|
Total revenues 1 |
$ |
1,279,468 |
|
|
$ |
1,202,403 |
|
Products and services revenues 2 |
$ |
1,196,135 |
|
|
$ |
1,128,777 |
|
Building Materials business |
$ |
1,125,756 |
|
|
$ |
1,060,620 |
|
Magnesia Specialties business |
$ |
70,379 |
|
|
$ |
68,157 |
|
Gross profit |
$ |
356,867 |
|
|
$ |
315,917 |
|
Adjusted gross profit 3 |
$ |
356,867 |
|
|
$ |
326,084 |
|
Earnings from operations |
$ |
285,882 |
|
|
$ |
263,953 |
|
Adjusted earnings from operations 4 |
$ |
285,882 |
|
|
$ |
286,246 |
|
Net earnings attributable to Martin Marietta |
$ |
189,475 |
|
|
$ |
185,377 |
|
Adjusted EBITDA 5 |
$ |
378,467 |
|
|
$ |
376,096 |
|
Earnings per diluted share 6 |
$ |
3.01 |
|
|
$ |
2.92 |
|
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 |
|
2018 second-quarter adjusted
gross profit excludes an increase in cost of revenues 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 under
generally accepted accounting principles (GAAP). |
4 |
|
2018 second-quarter adjusted
earnings from operations exclude an increase in cost of revenues
from the impact of selling acquired inventory after its markup to
fair value as part of acquisition accounting and
acquisition-related expenses, net. See Appendix to this earnings
release for a reconciliation to reported earnings from operations
under GAAP. |
5 |
|
Adjusted EBITDA is a non-GAAP
financial measure. See Appendix to this earnings release for
a reconciliation to net earnings attributable to Martin
Marietta. |
6 |
|
2019 second-quarter earnings per
diluted shares includes a charge of $0.19 per diluted share for a
prior-period error that overstated equity earnings from a
nonconsolidated affiliate. 2018 second-quarter earnings per diluted
share includes a charge of $0.12 per diluted share for the impact
of selling acquired inventory after its markup to fair value as
part of acquisition accounting and a charge of $0.21 per diluted
share for acquisition-related expenses, net. Second-quarter 2018
also includes nonrecurring gains on the sale of surplus land and
favorable litigation settlements which contributed $0.29 per
diluted share. |
|
|
|
Ward Nye, Chairman, President and CEO
of Martin Marietta, stated, “We are proud to have established
new quarterly records for revenues, gross profit and adjusted
EBITDA, driven by increased aggregates shipments, continued pricing
momentum across the Building Materials business and improved cost
management. These record-setting second-quarter results demonstrate
Martin Marietta’s strong execution as we capitalized on the robust
underlying demand across our geographic footprint. Notably,
aggregates shipments increased 10 percent, led by our Mid-America
and Southeast Groups which achieved double-digit-growth as these
markets benefited from improving strength in public- and
private-sector spending and contributions from acquired operations.
Based on these current trends and our strong first-half
performance, we are raising our full-year outlook and believe 2019
will be another record year for Martin Marietta.
“Construction activity in our Top 10 states is
outpacing the nation as a whole, as evidenced by recent trends in
total construction starts. Importantly, aggregates shipments to our
three primary end-use markets increased for a second consecutive
quarter, demonstrating the breadth of overall demand in our key
regions. Attractive underlying market fundamentals, including
notable employment gains, population growth and superior state
fiscal health, across our geographic footprint should continue to
bolster private-sector construction demand. We expect
infrastructure projects to accelerate during the second half of the
year, supported by meaningful increases in public lettings and
contract awards in our key states, notably Texas and Colorado.”
Mr. Nye concluded, “Throughout our 25-year
history as a public company, Martin Marietta has established a
proven record of responsibly managing and growing our business to
create long-term shareholder value. Going forward, we will
continue to build upon our successful approach of price discipline,
strategic geographic positioning and prudent capital
allocation. We remain committed to the disciplined execution
of our strategic plan and the world-class attributes of our
business – including safety, ethics, cost oversight and operational
excellence – to drive continued profitability growth in 2019 and
beyond.”
Mr. Nye’s CEO Commentary may be found on the
Investor Relations section of the Company’s
website.
Second-Quarter Operating Results(All
comparisons are versus the prior-year quarter unless noted
otherwise)
|
Quarter ended June 30, 2019 |
|
($ in thousands) |
Revenues |
|
Gross profit (loss) |
|
Gross margin |
|
Building Materials business: |
|
|
|
|
|
|
|
|
|
Products and services: |
|
|
|
|
|
|
|
|
|
Aggregates |
$ |
757,802 |
|
$ |
251,422 |
|
|
33.2 |
% |
Cement |
|
112,350 |
|
|
42,229 |
|
|
37.6 |
% |
Ready mixed concrete |
|
241,178 |
|
|
19,014 |
|
|
7.9 |
% |
Asphalt and paving |
|
82,198 |
|
|
15,742 |
|
|
19.2 |
% |
Less: interproduct revenues |
|
(67,772 |
) |
|
- |
|
|
- |
|
Products and services |
|
1,125,756 |
|
|
328,407 |
|
|
29.2 |
% |
Freight |
|
77,473 |
|
|
227 |
|
NM |
|
Total Building
Materials business |
|
1,203,229 |
|
|
328,634 |
|
|
27.3 |
% |
Magnesia Specialties business: |
|
|
|
|
|
|
|
|
|
Products and services |
|
70,379 |
|
|
29,212 |
|
|
41.5 |
% |
Freight |
|
5,860 |
|
|
(1,174 |
) |
NM |
|
Total Magnesia Specialties business |
|
76,239 |
|
|
28,038 |
|
|
36.8 |
% |
Corporate |
|
- |
|
|
195 |
|
NM |
|
Total |
$ |
1,279,468 |
|
$ |
356,867 |
|
|
27.9 |
% |
|
Quarter ended June 30, 2018 |
|
($ in thousands) |
Revenues |
|
Gross profit (loss) |
|
Gross margin |
|
Building Materials business: |
|
|
|
|
|
|
|
|
|
Products and services: |
|
|
|
|
|
|
|
|
|
Aggregates |
$ |
666,966 |
|
$ |
198,705 |
|
|
29.8 |
% |
Cement |
|
113,148 |
|
|
41,305 |
|
|
36.5 |
% |
Ready mixed concrete |
|
277,202 |
|
|
29,952 |
|
|
10.8 |
% |
Asphalt and paving |
|
81,482 |
|
|
18,347 |
|
|
22.5 |
% |
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 |
% |
|
|
|
|
|
|
|
|
|
|
Building Materials Business
Second-quarter operating results reflect strong
underlying product demand, most notably in North Carolina, Georgia,
Iowa and Maryland, as customers continued to address
weather-deferred projects from 2018 and growing backlogs. Texas and
Colorado, the Company’s two largest states by revenues, experienced
near-record precipitation and unseasonable snow accumulation,
respectively. This extreme weather temporarily hindered
construction activity and negatively impacted the aggregates,
cement and downstream operations in these regions.
Aggregates
Second-quarter aggregates volume and pricing
improved 9.9 percent and 3.4 percent, respectively. Same-store
aggregates volume and pricing improved 6.1 percent and 4.1 percent,
respectively.
- Shipments for the Mid-America Group operations increased 15.9
percent, or 10.2 percent on a same-store basis, supported by
infrastructure and commercial projects. Additionally, the Midwest
Division benefited from shipments related to emergency flood
repairs. Pricing improved 1.6 percent, or 3.0 percent on a
same-store basis.
- Shipments for the Southeast Group operations increased 12.7
percent, or 5.4 percent on a same-store basis, reflecting the
strength of the North Georgia and Florida markets. Pricing improved
7.3 percent, or 8.3 percent on a same-store basis, driven by solid
gains in North Georgia and a higher percentage of long-haul
shipments.
- West Group shipments increased 1.1 percent despite unfavorable
weather that contributed to project delays. West Group pricing
increased 3.4 percent.
Martin Marietta’s second-quarter aggregates shipments by end use
are as follows (all comparisons are versus the prior-year
quarter):
Infrastructure Market
- Aggregates shipments to the infrastructure market increased 2
percent as contractors continued to advance transportation-related
projects. Following more than a decade of underinvestment,
management believes infrastructure demand is poised for meaningful
growth. Funding provided by the Fixing America’s Surface
Transportation Act (FAST Act), combined with numerous state and
local transportation initiatives, has recently accelerated lettings
and contract awards in key states, including Texas, Colorado, Iowa
and Maryland. For the quarter, the infrastructure market
represented 37 percent of aggregates shipments, which is below the
Company’s most recent ten-year average of 46 percent.
Nonresidential Market
- Aggregates shipments to the nonresidential market increased 25
percent, driven by gains in commercial and heavy industrial
construction activity. The Company continued to benefit from robust
distribution center, warehouse, data center and wind energy
projects in key geographies, including Texas, the Carolinas,
Georgia and Iowa, as well as the early phases of several large
energy-sector projects along the Gulf Coast. The nonresidential
market represented 37 percent of second-quarter aggregates
shipments.
Residential Market
- Aggregates shipments to the residential market increased
modestly, as ongoing homebuilding activity in the Carolinas,
Georgia and Florida was offset by weather-related delays in Texas.
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, low interest rates and efficient permitting. On
a national level, housing starts remain below the 50-year annual
average of 1.5 million despite notable population gains. The
residential market accounted for 21 percent of second-quarter
aggregates shipments.
ChemRock/Rail Market
- The ChemRock/Rail market accounted for the remaining 5 percent
of second-quarter aggregates shipments. Volumes to this end
use increased 11 percent, driven by improved ballast shipments to
the western Class I railroads for emergency flood repairs.
Aggregates product gross margin increased 340
basis points to 33.2 percent, reflecting improved operating
leverage from increased shipment and production levels and the
absence of the $10.2 million impact of selling acquired inventory
after its markup to fair value as part of acquisition accounting
incurred in 2018.
Cement
Second-quarter cement product revenues decreased
slightly, as pricing growth of 4.6 percent was offset by a 4.9
percent volume decline resulting from extreme Texas precipitation,
most significantly in Dallas/Fort Worth. Production efficiencies
and lower maintenance costs contributed to the 110-basis-point
expansion in product gross margin to 37.6 percent.
Downstream businesses
Ready mixed concrete shipments decreased 15.5
percent, driven by unfavorable weather conditions in Texas and
Colorado. Ready mixed concrete selling prices improved 2.5
percent. Colorado asphalt shipments declined 8.2 percent
while pricing improved 5.2 percent.
Magnesia Specialties Business
Magnesia Specialties product revenues increased
3.3 percent to a record $70.4 million as the business continued to
benefit from solid global demand for magnesia chemical
products. Product gross margin improved 500 basis points to
41.5 percent driven by favorable product mix, production
efficiencies and lower energy costs.
Consolidated
During the second quarter ended June 30, 2019,
the Company identified a prior-period error that overstated its
equity earnings from a nonconsolidated affiliate. The overstatement
was not deemed material to any previously-reported periods and was
therefore corrected as an out-of-period expense of $15.7 million
($12.0 million net of tax) during second-quarter 2019. The pretax
noncash adjustment is recorded in other nonoperating expenses, net,
consistent with the recurring classification of equity earnings
from the affiliate.
For the quarter ended June 30, 2018, other
operating income, net, included $16.9 million of gains on the sale
of surplus land and $7.7 million, net, of litigation and related
settlements.
Liquidity and Capital Resources
Cash provided by operating activities for the
six months ended June 30 was $333.7 million in 2019 compared with
$238.0 million in 2018.
Cash paid for property, plant and equipment
additions for the six months ended June 30, 2019 was $207.5
million. Capital expenditures for the full year are expected
to range from $350 million to $400 million as the Company continues
to prudently deploy capital into the business.
At June 30, 2019, the Company’s ratio of
consolidated net debt-to-consolidated EBITDA, as defined in the
applicable credit agreement, for the trailing twelve months was 2.7
times.
Commitment to Enhance Long-Term Shareholder
Value
Martin Marietta is dedicated to disciplined
capital allocation that preserves the Company’s 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 $1.5 billion to
shareholders in the form of dividend payments and share repurchases
since announcing a 20 million share repurchase authorization in
February 2015. In May 2019, the Company declared its 100th
consecutive quarterly cash dividend. Additionally, during
second-quarter 2019, the Company repurchased 232,400 shares of
common stock pursuant to its share repurchase authorization.
As of June 30, 2019, 13.9 million shares remained under the current
repurchase authorization and 62.4 million shares of Martin Marietta
common stock were outstanding.
Full-Year Outlook
Martin Marietta’s geographic footprint has
attractive underlying market fundamentals, including notable
employment gains, population growth and superior state fiscal
health – all attributes promoting steady and sustainable
construction growth. Supported by robust underlying demand and
third-party forecasts, Martin Marietta is raising its full-year
guidance based on its belief that the current construction cycle
will continue for the foreseeable future and expand further this
year for each of the Company’s three primary construction end-use
markets. Notably:
- Infrastructure construction,
particularly for aggregates-intensive highways and streets, should
benefit from recent accelerations in state lettings and contract
awards in key Martin Marietta states, continued FAST Act funding,
and regulatory reform that allows for reduced permitting time for
large projects. Importantly, states will continue to play an
expanded role in infrastructure investment. Incremental funding at
the state and local levels, through bond issuances, toll roads and
tax initiatives, should grow at faster near-term rates than federal
funding. Martin Marietta’s top ten states – Texas, Colorado, North
Carolina, Georgia, Iowa, Florida, South Carolina, Indiana, Maryland
and Nebraska – accounted for 85 percent of total Building
Materials’ revenues in 2018 and have all introduced incremental
transportation funding measures within the last five years.
Third-party forecasts also predict increased infrastructure
investment this year and beyond.
- Nonresidential construction should
increase in both the commercial and heavy industrial sectors for
the next several years across many of the Company’s key markets.
Both the Architectural Billings Index and Dodge Momentum Index
indicate healthy commercial construction activity throughout the
year. Continued federal regulatory approvals should notably
contribute to increased heavy building materials consumption from
the next wave of large energy-sector projects, particularly along
the Gulf Coast. Construction activity for these projects has begun
in earnest and is expected to continue for several years.
- Residential construction should
continue to grow within Martin Marietta’s geographic footprint,
particularly as mortgage rates remain attractive and homebuilders
are beginning to address the need for more affordable homes. The
Company’s leading positions in southeastern and southwestern states
offer superior opportunities for gains in both multi- and
single-family housing, driven by a multitude of factors, such as
available land, an overall business-friendly environment and fewer
regulatory barriers. The Company believes that permits represent
the best indicator of future housing construction. Martin
Marietta’s top ten states outpaced the nation in housing unit
permit growth for the trailing twelve months ended May 2019
for all three residential categories: total, multi-family and
single-family. Continued strength in residential construction
supports future infrastructure and nonresidential activity.
Based on current trends and expectations,
management has raised its full-year guidance as follows:
- Aggregates shipments by end-use market compared with 2018
levels are as follows:- Infrastructure shipments to increase
in the high-single digits.- Nonresidential shipments to
experience a double-digit increase.- Residential shipments to
increase in the mid-single digits.- ChemRock/Rail shipments
to be up slightly.
2019 GUIDANCE |
|
($ and tons in
thousands, except per ton) |
Low * |
|
|
High * |
|
Consolidated |
|
|
|
|
|
|
|
Total revenues 1 |
$ |
4,535,000 |
|
|
$ |
4,730,000 |
|
Products and services revenues |
$ |
4,255,000 |
|
|
$ |
4,430,000 |
|
Freight revenues |
$ |
280,000 |
|
|
$ |
300,000 |
|
Gross profit |
$ |
1,130,000 |
|
|
$ |
1,235,000 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses (SG&A) |
$ |
290,000 |
|
|
$ |
300,000 |
|
Interest expense |
$ |
130,000 |
|
|
$ |
140,000 |
|
Estimated tax rate (excluding discrete events) |
|
20 |
% |
|
|
22 |
% |
Net earnings attributable to Martin Marietta |
$ |
530,000 |
|
|
$ |
640,000 |
|
Adjusted EBITDA 2 |
$ |
1,200,000 |
|
|
$ |
1,315,000 |
|
Capital
expenditures |
$ |
350,000 |
|
|
$ |
400,000 |
|
|
|
|
|
|
|
|
|
Building Materials Business |
|
|
|
|
|
|
|
Aggregates |
|
|
|
|
|
|
|
Volume (total tons) 3 |
|
185,000 |
|
|
|
188,000 |
|
% growth 3 |
|
8.0 |
% |
|
|
10.0 |
% |
Average selling price per ton (ASP) |
$ |
14.15 |
|
|
$ |
14.40 |
|
% growth 4 |
|
3.0 |
% |
|
|
5.0 |
% |
Total revenues |
$ |
2,865,000 |
|
|
$ |
2,960,000 |
|
Products and services revenues |
$ |
2,625,000 |
|
|
$ |
2,700,000 |
|
Freight revenues |
$ |
240,000 |
|
|
$ |
260,000 |
|
Gross profit |
$ |
780,000 |
|
|
$ |
840,000 |
|
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
Total revenues |
$ |
435,000 |
|
|
$ |
465,000 |
|
Products and services revenues |
$ |
415,000 |
|
|
$ |
445,000 |
|
Freight revenues |
$ |
20,000 |
|
|
$ |
20,000 |
|
Gross profit |
$ |
135,000 |
|
|
$ |
155,000 |
|
|
|
|
|
|
|
|
|
Ready Mixed Concrete and Asphalt and Paving |
|
|
|
|
|
|
|
Products and services revenues |
$ |
1,205,000 |
|
|
$ |
1,275,000 |
|
Gross profit |
$ |
120,000 |
|
|
$ |
140,000 |
|
|
|
|
|
|
|
|
|
Magnesia Specialties Business |
|
|
|
|
|
|
|
Total revenues |
$ |
290,000 |
|
|
$ |
300,000 |
|
Products and services revenues |
$ |
270,000 |
|
|
$ |
280,000 |
|
Freight revenues |
$ |
20,000 |
|
|
$ |
20,000 |
|
Gross profit |
$ |
100,000 |
|
|
$ |
105,000 |
|
* |
|
Guidance range represents the low end and high end of the
respective line items provided above. |
1 |
|
2019 consolidated total revenues exclude $260 million to $270
million related to estimated interproduct sales. |
2 |
|
Adjusted EBITDA is a non-GAAP financial measure. See Appendix
to this earnings release for a reconciliation to net earnings
attributable to Martin Marietta. |
3 |
|
Represents total aggregates volumes, which includes
approximately 9.6 million internal tons. Volume growth ranges are
in comparison with total volumes of 170.8 million tons for the full
year 2018, which included 10.6 million internal tons. |
4 |
|
ASP growth range is in comparison with ASP of $13.71 per ton
for the full year 2018. |
|
|
|
Same-Store Information
This earnings release contains certain
information on a same-store basis. When providing certain results
in comparison with prior periods, the Company may exclude the
operating results of recently acquired businesses that do not have
comparable results in the periods being discussed. This approach
allows management and investors to evaluate the performance of the
Company’s operations on a comparable basis without the effects of
acquisition activity. The Company’s same-store information may not
be comparable with similar measures used by other companies.
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 accompanying Appendix to this earnings
release.
Conference Call Information
The Company will discuss its second-quarter 2019
earnings results on a conference call and an online web simulcast
today (July 30, 2019). 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 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 4274137.
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 OsbergVice President,
Investor Relations(919)
783-4691Suzanne.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, Colorado, North Carolina, Georgia, Iowa 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,
product and/or geographic mix 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 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;
continued 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; 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, 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, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Products and services
revenues |
$ |
1,196,135 |
|
|
$ |
1,128,777 |
|
|
$ |
2,074,440 |
|
|
$ |
1,882,082 |
|
Freight revenues |
|
83,333 |
|
|
|
73,626 |
|
|
|
143,983 |
|
|
|
122,325 |
|
Total revenues |
|
1,279,468 |
|
|
|
1,202,403 |
|
|
|
2,218,423 |
|
|
|
2,004,407 |
|
|
|
|
|
|
|
|
|
Cost of revenues - products
and services |
|
838,322 |
|
|
|
812,430 |
|
|
|
1,572,490 |
|
|
|
1,454,049 |
|
Cost of revenues -
freight |
|
84,279 |
|
|
|
74,056 |
|
|
|
146,159 |
|
|
|
124,049 |
|
Total cost of revenues |
|
922,601 |
|
|
|
886,486 |
|
|
|
1,718,649 |
|
|
|
1,578,098 |
|
Gross Profit |
|
356,867 |
|
|
|
315,917 |
|
|
|
499,774 |
|
|
|
426,309 |
|
|
|
|
|
|
|
|
|
Selling general &
administrative expenses |
|
72,382 |
|
|
|
71,070 |
|
|
|
150,674 |
|
|
|
141,191 |
|
Acquisition-related expenses,
net |
|
47 |
|
|
|
12,126 |
|
|
|
191 |
|
|
|
12,836 |
|
Other operating income,
net |
|
(1,444 |
) |
|
|
(31,232 |
) |
|
|
(6,194 |
) |
|
|
(30,752 |
) |
Earnings from operations |
|
285,882 |
|
|
|
263,953 |
|
|
|
355,103 |
|
|
|
303,034 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
33,297 |
|
|
|
32,971 |
|
|
|
66,245 |
|
|
|
68,059 |
|
Other nonoperating expense and
(income), net |
|
13,226 |
|
|
|
(7,122 |
) |
|
|
11,663 |
|
|
|
(15,626 |
) |
Earnings before income tax expense |
|
239,359 |
|
|
|
238,104 |
|
|
|
277,195 |
|
|
|
250,601 |
|
Income tax expense |
|
49,890 |
|
|
|
52,601 |
|
|
|
44,899 |
|
|
|
55,058 |
|
Consolidated net earnings |
|
189,469 |
|
|
|
185,503 |
|
|
|
232,296 |
|
|
|
195,543 |
|
Less: Net (loss) earnings
attributable to noncontrolling interests |
|
(6 |
) |
|
|
126 |
|
|
|
(32 |
) |
|
|
143 |
|
Net Earnings Attributable to
Martin Marietta Materials, Inc. |
$ |
189,475 |
|
|
$ |
185,377 |
|
|
$ |
232,328 |
|
|
$ |
195,400 |
|
|
|
|
|
|
|
|
|
Net earnings per common share
attributable to common shareholders: |
|
|
|
|
|
|
|
Basic |
$ |
3.02 |
|
|
$ |
2.94 |
|
|
$ |
3.71 |
|
|
$ |
3.10 |
|
Diluted |
$ |
3.01 |
|
|
$ |
2.92 |
|
|
$ |
3.69 |
|
|
$ |
3.08 |
|
|
|
|
|
|
|
|
|
Dividends per common
share |
$ |
0.48 |
|
|
$ |
0.44 |
|
|
$ |
0.96 |
|
|
$ |
0.88 |
|
|
|
|
|
|
|
|
|
Average number of common
shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
62,563 |
|
|
|
63,021 |
|
|
|
62,574 |
|
|
|
62,989 |
|
Diluted |
|
62,720 |
|
|
|
63,285 |
|
|
|
62,749 |
|
|
|
63,253 |
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Financial Highlights |
(In thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Total revenues: |
|
|
|
|
|
|
|
Building Materials Business: |
|
|
|
|
|
|
|
Mid-America Group |
$ |
415,327 |
|
|
$ |
350,592 |
|
|
$ |
664,140 |
|
|
$ |
529,373 |
|
Southeast Group |
|
137,024 |
|
|
|
112,963 |
|
|
|
256,262 |
|
|
|
193,202 |
|
West Group |
|
650,878 |
|
|
|
665,886 |
|
|
|
1,147,708 |
|
|
|
1,139,608 |
|
Total Building Materials Business |
|
1,203,229 |
|
|
|
1,129,441 |
|
|
|
2,068,110 |
|
|
|
1,862,183 |
|
Magnesia Specialties |
|
76,239 |
|
|
|
72,962 |
|
|
|
150,313 |
|
|
|
142,224 |
|
Total |
$ |
1,279,468 |
|
|
$ |
1,202,403 |
|
|
$ |
2,218,423 |
|
|
$ |
2,004,407 |
|
|
|
|
|
|
|
|
|
Gross profit (loss): |
|
|
|
|
|
|
|
Building Materials Business: |
|
|
|
|
|
|
|
Mid-America Group |
$ |
155,775 |
|
|
$ |
120,874 |
|
|
$ |
201,006 |
|
|
$ |
139,129 |
|
Southeast Group |
|
37,761 |
|
|
|
19,980 |
|
|
|
64,005 |
|
|
|
26,147 |
|
West Group |
|
135,098 |
|
|
|
148,053 |
|
|
|
181,462 |
|
|
|
208,250 |
|
Total Building Materials Business |
|
328,634 |
|
|
|
288,907 |
|
|
|
446,473 |
|
|
|
373,526 |
|
Magnesia Specialties |
|
28,038 |
|
|
|
23,842 |
|
|
|
53,580 |
|
|
|
47,730 |
|
Corporate |
|
195 |
|
|
|
3,168 |
|
|
|
(279 |
) |
|
|
5,053 |
|
Total |
$ |
356,867 |
|
|
$ |
315,917 |
|
|
$ |
499,774 |
|
|
$ |
426,309 |
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses: |
|
|
|
|
|
|
|
Building Materials Business: |
|
|
|
|
|
|
|
Mid-America Group |
$ |
15,542 |
|
|
$ |
14,016 |
|
|
$ |
31,135 |
|
|
$ |
27,146 |
|
Southeast Group |
|
5,376 |
|
|
|
4,833 |
|
|
|
10,753 |
|
|
|
9,249 |
|
West Group |
|
27,717 |
|
|
|
27,161 |
|
|
|
56,995 |
|
|
|
53,293 |
|
Total Building Materials Business |
|
48,635 |
|
|
|
46,010 |
|
|
|
98,883 |
|
|
|
89,688 |
|
Magnesia Specialties |
|
2,796 |
|
|
|
2,505 |
|
|
|
5,662 |
|
|
|
5,107 |
|
Corporate |
|
20,951 |
|
|
|
22,555 |
|
|
|
46,129 |
|
|
|
46,396 |
|
Total |
$ |
72,382 |
|
|
$ |
71,070 |
|
|
$ |
150,674 |
|
|
$ |
141,191 |
|
|
|
|
|
|
|
|
|
Earnings (Loss) from operations: |
|
|
|
|
|
|
|
Building Materials Business: |
|
|
|
|
|
|
|
Mid-America Group |
$ |
141,678 |
|
|
$ |
108,709 |
|
|
$ |
172,633 |
|
|
$ |
114,876 |
|
Southeast Group |
|
32,688 |
|
|
|
32,052 |
|
|
|
53,822 |
|
|
|
34,093 |
|
West Group |
|
110,223 |
|
|
|
122,844 |
|
|
|
130,158 |
|
|
|
157,796 |
|
Total Building Materials Business |
|
284,589 |
|
|
|
263,605 |
|
|
|
356,613 |
|
|
|
306,765 |
|
Magnesia Specialties |
|
25,219 |
|
|
|
21,329 |
|
|
|
47,862 |
|
|
|
42,565 |
|
Corporate |
|
(23,926 |
) |
|
|
(20,981 |
) |
|
|
(49,372 |
) |
|
|
(46,296 |
) |
Total |
$ |
285,882 |
|
|
$ |
263,953 |
|
|
$ |
355,103 |
|
|
$ |
303,034 |
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Financial Highlights (Continued) |
(In thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Total revenues: |
|
|
|
|
|
|
|
Building Materials business products and services: |
|
|
|
|
|
|
|
Aggregates |
$ |
757,802 |
|
|
$ |
666,966 |
|
|
$ |
1,302,750 |
|
|
$ |
1,094,139 |
|
Cement |
|
112,350 |
|
|
|
113,148 |
|
|
|
211,367 |
|
|
|
202,331 |
|
Ready Mixed Concrete |
|
241,178 |
|
|
|
277,202 |
|
|
|
452,335 |
|
|
|
495,738 |
|
Asphalt and paving |
|
82,198 |
|
|
|
81,482 |
|
|
|
94,570 |
|
|
|
95,692 |
|
Less: Interproduct sales |
|
(67,772 |
) |
|
|
(78,178 |
) |
|
|
(126,135 |
) |
|
|
(138,843 |
) |
Subtotal |
|
1,125,756 |
|
|
|
1,060,620 |
|
|
|
1,934,887 |
|
|
|
1,749,057 |
|
Freight |
|
77,473 |
|
|
|
68,821 |
|
|
|
133,223 |
|
|
|
113,126 |
|
Total Building Materials Business |
|
1,203,229 |
|
|
|
1,129,441 |
|
|
|
2,068,110 |
|
|
|
1,862,183 |
|
Magnesia Specialties business: |
|
|
|
|
|
|
|
Products and services |
|
70,379 |
|
|
|
68,157 |
|
|
|
139,553 |
|
|
|
133,025 |
|
Freight |
|
5,860 |
|
|
|
4,805 |
|
|
|
10,760 |
|
|
|
9,199 |
|
Total Magnesia Specialties Business |
|
76,239 |
|
|
|
72,962 |
|
|
|
150,313 |
|
|
|
142,224 |
|
Consolidated total revenues |
$ |
1,279,468 |
|
|
$ |
1,202,403 |
|
|
$ |
2,218,423 |
|
|
$ |
2,004,407 |
|
|
|
|
|
|
|
|
|
Gross profit (loss): |
|
|
|
|
|
|
|
Building Materials business products and services: |
|
|
|
|
|
|
|
Aggregates |
$ |
251,422 |
|
|
$ |
198,705 |
|
|
$ |
349,482 |
|
|
$ |
252,246 |
|
Cement |
|
42,229 |
|
|
|
41,305 |
|
|
|
56,007 |
|
|
|
65,038 |
|
Ready Mixed Concrete |
|
19,014 |
|
|
|
29,952 |
|
|
|
33,506 |
|
|
|
45,593 |
|
Asphalt and paving |
|
15,742 |
|
|
|
18,347 |
|
|
|
7,415 |
|
|
|
10,169 |
|
Subtotal |
|
328,407 |
|
|
|
288,309 |
|
|
|
446,410 |
|
|
|
373,046 |
|
Freight |
|
227 |
|
|
|
598 |
|
|
|
63 |
|
|
|
480 |
|
Total Building Materials Business |
|
328,634 |
|
|
|
288,907 |
|
|
|
446,473 |
|
|
|
373,526 |
|
Magnesia Specialties business: |
|
|
|
|
|
|
|
Products and services |
|
29,212 |
|
|
|
24,870 |
|
|
|
55,819 |
|
|
|
49,933 |
|
Freight |
|
(1,174 |
) |
|
|
(1,028 |
) |
|
|
(2,239 |
) |
|
|
(2,203 |
) |
Total Magnesia Specialties Business |
|
28,038 |
|
|
|
23,842 |
|
|
|
53,580 |
|
|
|
47,730 |
|
Corporate |
|
195 |
|
|
|
3,168 |
|
|
|
(279 |
) |
|
|
5,053 |
|
Consolidated gross profit |
$ |
356,867 |
|
|
$ |
315,917 |
|
|
$ |
499,774 |
|
|
$ |
426,309 |
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Balance Sheet Data |
(In thousands) |
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
(Unaudited) |
|
(Audited) |
|
ASSETS |
|
|
|
|
Cash and cash equivalents |
$ |
53,595 |
|
$ |
44,892 |
|
Accounts receivable, net |
|
710,605 |
|
|
523,276 |
|
Inventories, net |
|
646,342 |
|
|
663,035 |
|
Other current assets |
|
122,579 |
|
|
134,613 |
|
Property, plant and equipment, net |
|
5,132,682 |
|
|
5,157,229 |
|
Intangible assets, net |
|
2,888,144 |
|
|
2,900,400 |
|
Operating lease right-of-use assets |
|
487,360 |
|
|
- |
|
Other noncurrent assets |
|
122,350 |
|
|
127,974 |
|
Total assets |
$ |
10,163,657 |
|
$ |
9,551,419 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current maturities of long-term debt and short-term facilities |
$ |
385,043 |
|
$ |
390,042 |
|
Other current liabilities |
|
437,173 |
|
|
396,708 |
|
Long-term debt (excluding current maturities) |
|
2,732,018 |
|
|
2,730,439 |
|
Other noncurrent liabilities |
|
1,512,153 |
|
|
1,084,818 |
|
Total equity |
|
5,097,270 |
|
|
4,949,412 |
|
Total liabilities and equity |
$ |
10,163,657 |
|
$ |
9,551,419 |
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Statements of Cash Flows |
(In thousands) |
|
Six Months Ended |
|
June 30, |
|
|
2019 |
|
|
|
2018 |
|
Operating activities: |
|
|
|
Consolidated net earnings |
$ |
232,296 |
|
|
$ |
195,543 |
|
Adjustments to reconcile consolidated net earnings to net cash
provided by operating activities: |
|
|
|
Depreciation, depletion and amortization |
|
181,986 |
|
|
|
163,545 |
|
Stock-based compensation expense |
|
22,250 |
|
|
|
17,098 |
|
Gains on divestitures and sales of assets |
|
(3,927 |
) |
|
|
(33,527 |
) |
Deferred income taxes |
|
(6,393 |
) |
|
|
14,986 |
|
Other items, net |
|
14,892 |
|
|
|
(4,757 |
) |
Changes in operating assets and liabilities, net of effects of
acquisitions and divestitures: |
|
|
|
Accounts receivable, net |
|
(187,076 |
) |
|
|
(157,603 |
) |
Inventories, net |
|
15,744 |
|
|
|
(7,133 |
) |
Accounts payable |
|
36,614 |
|
|
|
44,266 |
|
Other assets and liabilities, net |
|
27,345 |
|
|
|
5,615 |
|
Net cash provided by operating
activities |
|
333,731 |
|
|
|
238,033 |
|
|
|
|
|
Investing activities: |
|
|
|
Additions to property, plant and equipment |
|
(207,452 |
) |
|
|
(188,270 |
) |
Acquisitions, net |
|
- |
|
|
|
(1,645,698 |
) |
Proceeds from divestitures and sales of assets |
|
5,997 |
|
|
|
58,213 |
|
Investments in life insurance contracts, net |
|
527 |
|
|
|
424 |
|
Payment of railcar construction advances |
|
- |
|
|
|
(28,306 |
) |
Reimbursement of railcar construction advances |
|
- |
|
|
|
28,306 |
|
Other investing activities, net |
|
(957 |
) |
|
|
- |
|
Net cash used for investing
activities |
|
(201,885 |
) |
|
|
(1,775,331 |
) |
|
|
|
|
Financing activities: |
|
|
|
Borrowings of long-term debt |
|
165,000 |
|
|
|
665,000 |
|
Repayments of long-term debt |
|
(170,028 |
) |
|
|
(475,025 |
) |
Payments on financing leases |
|
(1,820 |
) |
|
|
- |
|
Payments on capital leases |
|
- |
|
|
|
(1,725 |
) |
Debt issue costs |
|
- |
|
|
|
(3,194 |
) |
Payments of deferred acquisition consideration |
|
- |
|
|
|
(1,426 |
) |
Dividends paid |
|
(60,615 |
) |
|
|
(55,795 |
) |
Repurchase of common stock |
|
(50,000 |
) |
|
|
- |
|
Proceeds from exercise of stock options |
|
7,094 |
|
|
|
6,943 |
|
Shares withheld for employees' income tax obligations |
|
(12,174 |
) |
|
|
(10,065 |
) |
Distributions to owners of noncontrolling interest |
|
(600 |
) |
|
|
- |
|
Net cash (used for) provided
by financing activities |
|
(123,143 |
) |
|
|
124,713 |
|
|
|
|
|
Net increase (decrease) in
cash and cash equivalents |
|
8,703 |
|
|
|
(1,412,585 |
) |
Cash and cash equivalents,
beginning of period |
|
44,892 |
|
|
|
1,446,364 |
|
Cash and cash equivalents, end
of period |
$ |
53,595 |
|
|
$ |
33,779 |
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
Unaudited Operational Highlights |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2019 |
|
Volume |
|
Pricing |
|
Volume |
|
Pricing |
Volume/Pricing
Variance (1) |
|
|
|
|
|
|
|
Mid-America Group |
|
15.9 |
% |
|
|
1.6 |
% |
|
|
23.2 |
% |
|
|
0.6 |
% |
Southeast Group |
|
12.7 |
% |
|
|
7.3 |
% |
|
|
25.8 |
% |
|
|
5.2 |
% |
West Group |
|
1.1 |
% |
|
|
3.4 |
% |
|
|
3.5 |
% |
|
|
3.2 |
% |
Total Aggregates Product Line
(2) |
|
9.9 |
% |
|
|
3.4 |
% |
|
|
15.4 |
% |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
Shipments
(tons in thousands) |
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Mid-America Group |
|
27,624 |
|
|
|
23,843 |
|
|
|
43,491 |
|
|
|
35,315 |
|
Southeast Group |
|
7,228 |
|
|
|
6,411 |
|
|
|
13,610 |
|
|
|
10,816 |
|
West Group |
|
18,301 |
|
|
|
18,106 |
|
|
|
33,432 |
|
|
|
32,303 |
|
Total Aggregates Product Line
(2) |
|
53,153 |
|
|
|
48,360 |
|
|
|
90,533 |
|
|
|
78,434 |
|
(1) Volume/pricing variances reflect the percentage increase
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 |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Shipments (in
thousands) |
|
|
|
|
|
|
|
Aggregates tons - external customers |
|
50,491 |
|
|
|
45,231 |
|
|
|
85,841 |
|
|
|
73,162 |
|
Internal aggregates tons used in other product lines |
|
2,662 |
|
|
|
3,129 |
|
|
|
4,692 |
|
|
|
5,272 |
|
Total aggregates tons |
|
53,153 |
|
|
|
48,360 |
|
|
|
90,533 |
|
|
|
78,434 |
|
|
|
|
|
|
|
|
|
Cement tons - external customers |
|
689 |
|
|
|
653 |
|
|
|
1,278 |
|
|
|
1,180 |
|
Internal cement tons used in other product lines |
|
289 |
|
|
|
375 |
|
|
|
585 |
|
|
|
673 |
|
Total cement tons |
|
978 |
|
|
|
1,028 |
|
|
|
1,863 |
|
|
|
1,853 |
|
|
|
|
|
|
|
|
|
Ready Mixed Concrete - cubic yards |
|
2,162 |
|
|
|
2,559 |
|
|
|
4,094 |
|
|
|
4,567 |
|
|
|
|
|
|
|
|
|
Asphalt tons - external customers |
|
218 |
|
|
|
252 |
|
|
|
265 |
|
|
|
313 |
|
Internal asphalt tons used in road paving business |
|
596 |
|
|
|
635 |
|
|
|
647 |
|
|
|
711 |
|
Total asphalt tons |
|
814 |
|
|
|
887 |
|
|
|
912 |
|
|
|
1,024 |
|
|
|
|
|
|
|
|
|
Average
unit sales price by product line
(including internal sales): |
Aggregates (per ton) |
$ |
14.18 |
|
|
$ |
13.72 |
|
|
$ |
14.28 |
|
|
$ |
13.86 |
|
Cement (per ton) |
$ |
114.17 |
|
|
$ |
109.11 |
|
|
$ |
112.63 |
|
|
$ |
108.10 |
|
Ready Mixed Concrete (per cubic yard) |
$ |
109.36 |
|
|
$ |
106.65 |
|
|
$ |
108.17 |
|
|
$ |
106.51 |
|
Asphalt (per ton) |
$ |
47.22 |
|
|
$ |
44.89 |
|
|
$ |
47.08 |
|
|
$ |
44.80 |
|
|
|
|
|
|
|
|
|
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, 2019, 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, 2019, for the trailing-12 months
EBITDA. For supporting calculations, refer to the Company's website
at www.martinmarietta.com. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Month Period |
|
|
|
|
|
|
|
July 1, 2018 to |
|
|
|
|
|
|
|
June 30, 2019 |
Earnings from
continuing operations attributable to Martin Marietta Materials,
Inc. |
|
$ |
506,926 |
|
Add back: |
|
|
Interest expense |
|
|
95,494 |
|
Income tax expense |
|
|
135,255 |
|
Depreciation, depletion and amortization expense and noncash
nonconsolidated equity affiliate adjustment |
|
|
371,191 |
|
Stock-based compensation expense |
|
|
34,405 |
|
Acquisition-related expenses, net |
|
|
9,082 |
|
Noncash portion of asset and portfolio rationalization charge |
|
|
16,970 |
|
Deduct: |
|
|
Interest income |
|
|
(480 |
) |
Consolidated
EBITDA, as defined by the Company's Credit Agreement |
|
$ |
1,168,843 |
|
|
|
|
Consolidated
Debt, as defined and including debt for which the Company is a
co-borrower, at June 30, 2019 |
|
$ |
3,129,756 |
|
|
|
|
Consolidated
Debt-to-Consolidated EBITDA, as defined by the Company's Credit
Agreement, at June 30, 2019, for the trailing-12 months EBITDA |
|
2.68 times |
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest, income taxes, depreciation, depletion and
amortization, the noncash earnings/loss from nonconsolidated equity
affiliates, the impact of Bluegrass acquisition-related expenses,
net, and the impact of selling acquired inventory after the markup
to fair value as part of acquisition accounting (Adjusted EBITDA)
is a financial indicator of a company's ability to service and/or
incur indebtedness. Adjusted 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 Adjusted EBITDA, refer to
the Company's website at www.martinmarietta.com. Consolidated
Adjusted EBITDA is as follows: |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2019 |
|
|
2018(1) |
|
|
2019 |
|
2018(1) |
Consolidated Adjusted EBITDA |
$ |
378,467 |
|
|
$ |
376,096 |
|
$ |
536,698 |
|
$ |
497,363 |
|
|
|
|
|
|
|
|
|
A Reconciliation of Net Earnings Attributable to Martin
Marietta to Consolidated Adjusted EBITDA is as
follows: |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2019 |
|
|
2018(1) |
|
|
2019 |
|
2018(1) |
Net Earnings Attributable to
Martin Marietta |
$ |
189,475 |
|
|
$ |
185,377 |
|
$ |
232,328 |
|
$ |
195,400 |
|
Add back: |
|
|
|
|
|
|
|
Interest Expense |
|
33,199 |
|
|
|
32,971 |
|
|
66,045 |
|
|
68,059 |
|
Income Tax Expense for Controlling Interests |
|
49,878 |
|
|
|
52,581 |
|
|
44,876 |
|
|
55,018 |
|
Depreciation, Depletion and Amortization and Earnings/Loss
from Nonconsolidated Equity Affiliates |
|
105,915 |
|
|
|
82,874 |
|
|
193,449 |
|
|
155,883 |
|
Bluegrass Acquisition-Related Expenses, Net |
|
- |
|
|
|
12,126 |
|
|
- |
|
|
12,836 |
|
Impact of selling acquired inventory after markup to fair
value as part of acquisition accounting |
|
- |
|
|
|
10,167 |
|
|
- |
|
|
10,167 |
|
Consolidated Adjusted
EBITDA |
$ |
378,467 |
|
|
$ |
376,096 |
|
$ |
536,698 |
|
$ |
497,363 |
|
|
|
|
|
|
|
|
|
(1) The Company
modified the calculation of Adjusted EBITDA in 2019. 2018
amounts have been calculated consistently with the 2019
presentation. |
|
|
|
|
|
|
|
|
The following is a reconciliation of the GAAP measure to
the 2019 Adjusted EBITDA guidance: |
|
Low Point of Range |
|
High Point of Range |
|
|
|
|
Net Earnings Attributable to
Martin Marietta |
$ |
530,000 |
|
|
$ |
640,000 |
|
|
|
|
Add back: |
|
|
|
|
|
|
|
Interest Expense |
|
140,000 |
|
|
|
130,000 |
|
|
|
|
Taxes on Income |
|
150,000 |
|
|
|
165,000 |
|
|
|
|
Depreciation, Depletion and Amortization Expense and Earnings/Loss
from Nonconsolidated Equity Affiliates |
|
380,000 |
|
|
|
380,000 |
|
|
|
|
Adjusted EBITDA |
$ |
1,200,000 |
|
|
$ |
1,315,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
consolidated gross profit and adjusted consolidated earnings from
operations for the three months ended June 30, 2018, exclude the
impact of selling acquired inventory after the markup to fair value
as part of acquisition accounting and exclude the impact of
acquisition-related expenses, net. Adjusted consolidated
gross profit and adjusted consolidated earnings from operations are
non-GAAP financial measures. Management presents these
measures for investors and analysts to evaluate and forecast the
Company's financial results, as the impact of selling acquired
inventory after the markup to fair value and acquisition related
expenses, net, are nonrecurring. |
|
|
|
|
|
|
|
|
The
following is a reconciliation of the GAAP measure to adjusted gross
profit and adjusted earnings from operations for the quarter ended
June 30, 2018: |
|
|
|
|
|
|
|
|
Gross profit as
reported |
|
$ |
315,917 |
|
Impact of selling
acquired inventory after the markup to fair value as part of
acquisition accounting |
|
|
10,167 |
|
Adjusted gross
profit |
|
$ |
326,084 |
|
|
|
|
|
|
Earnings from
operations as reported |
|
$ |
263,953 |
|
Impact of selling
acquired inventory after the markup to fair value as part of
acquisition accounting |
|
|
10,167 |
|
Acquisition-related expenses, net |
|
|
12,126 |
|
Adjusted earnings
from operations |
|
$ |
286,246 |
|
|
|
|
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