MARTIN MARIETTA MATERIALS INC

Previous wording

Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. As of March 31, 2024, the Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 360 quarries, mines and distribution yards in 28 states, Canada and The Bahamas. Martin Marietta also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services, in certain vertically-integrated structured markets where the Company has a leading aggregates position. The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement and ready mixed concrete and asphalt and paving product lines are reported collectively as the “Building Materials” business.

Current wording

Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. As of June 30, 2024, the Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 380 quarries, mines and distribution yards in 28 states, Canada and The Bahamas. Martin Marietta also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services, in certain vertically-integrated structured markets where the Company has a leading aggregates position. The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement and ready mixed concrete and asphalt and paving product lines are reported collectively as the “Building Materials” business.

Previous wording

The Building Materials business is significantly affected by weather patterns, seasonal changes and other climate-related conditions. Production and shipment levels for aggregates, cement, ready mixed concrete and asphalt materials correlate with general construction activity levels, most of which occur in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Operations concentrated in the northern, midwestern and mountain west regions of the United States generally experience more severe winter weather conditions than operations in the Southeast, Southwest and West. Excessive rainfall, drought, wildfire and extreme hot and cold temperatures can also jeopardize production, shipments and profitability in all markets served by the Company. Due to the potentially significant impact of weather on the Company’s operations, current-period results are not necessarily indicative of expected performance for other interim periods or the full year.

Current wording

The Building Materials business is significantly affected by weather patterns, seasonal changes and other climate-related conditions. Production and shipment levels for aggregates, cement, ready mixed concrete and asphalt materials correlate with general construction activity levels, most of which occur in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Excessive rainfall, drought, wildfire and extreme hot and cold temperatures can also jeopardize production, shipments and profitability in all markets served by the Company. Due to the potentially significant impact of weather on the Company’s operations, current-period results are not necessarily indicative of expected performance for other interim periods or the full year.

Previous wording

The Company outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2023. There were no changes to the Company’s critical accounting policies during the three months ended March 31, 2024.

Current wording

The Company outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2023. There were no changes to the Company’s critical accounting policies during the six months ended June 30, 2024.

Previous wording

Earnings from continuing operations before interest; income taxes; depreciation, depletion and amortization; earnings/loss from nonconsolidated equity affiliates; acquisition, divestiture and integration expenses; the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting (the Inventory Markup) nonrecurring gain on divestiture; and noncash asset and portfolio rationalization charge, or Adjusted EBITDA, is an indicator used by the Company and investors to evaluate the Company’s operating performance from period to period. Effective January 1, 2024, the Company has elected to add back, for purposes of its Adjusted EBITDA calculation, acquisition, divestiture and integration expenses and the Inventory Markup only for transactions with consideration of $2.0 billion or more and expected acquisition, divestiture and integration expenses of at least $15 million.

Current wording

Earnings from continuing operations before interest; income taxes; depreciation, depletion and amortization; earnings/loss from nonconsolidated equity affiliates; acquisition, divestiture and integration expenses; the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting (the Inventory Markup); nonrecurring gain on divestiture; and noncash asset and portfolio rationalization charge, or Adjusted EBITDA, is an indicator used by the Company and investors to evaluate the Company’s operating performance from period to period. Effective January 1, 2024, the Company has elected to add back, for purposes of its Adjusted EBITDA calculation, acquisition, divestiture and integration expenses and the Inventory Markup only for transactions with consideration of $2.0 billion or more and expected acquisition, divestiture and integration expenses of at least $15 million. For 2024, this includes the acquisition of 20 active aggregates operations from affiliates of Blue Water Industries LLC (BWI Southeast) and the divestiture of the South Texas cement plant and related concrete operations (the Divestiture).

Previous wording

The following tables present total revenues and gross profit (loss) for the Company and its reportable segments by product line for continuing operations for the three months ended March 31, 2024 and 2023. Gross profit (loss) is stated as a percentage of revenues of the Company or the relevant segment or product line, as the case may be.

Current wording

The following tables present revenues and gross profit (loss) for the Company and its reportable segments by product line for continuing operations for the three months ended June 30, 2024 and 2023. Gross profit (loss) is stated as a percentage of revenues of the Company, the relevant segment or the product line, as the case may be.

Previous wording

Cement and ready mixed concrete revenues decreased 22% to $265 million and gross profit decreased 47% to $31 million, compared with the prior-year quarter, primarily attributable to the February 9th, 2024, divestiture of the South Texas cement plant and related concrete operations, as well as extremely wet weather in Texas.

Current wording

Cement and ready mixed concrete revenues decreased 37% to $261 million and gross profit decreased 44% to $72 million, compared with the prior-year quarter, primarily attributable to the Divestiture, as well as extremely wet weather in Texas.

Previous wording

Aggregates shipments to the residential market decreased 17%, resulting from the anticipated softening in single-family housing in the Company's geographies resulting from affordability concerns. The residential market accounted for 24% of first-quarter aggregates shipments.

Current wording

Aggregates shipments to the residential market decreased 2%, resulting from inclement weather and general softening in single-family housing resulting from affordability concerns. The residential market accounted for 24% of second-quarter aggregates shipments.

Previous wording

The ChemRock/Rail market accounted for the remaining 6% of first-quarter aggregates shipments. Volumes to this end use were flat quarter-over-quarter.

Current wording

The ChemRock/Rail market accounted for the remaining 5% of second-quarter aggregates shipments. Volumes to this end use market decreased 6% quarter-over-quarter due to inclement weather and project timing.

Previous wording

Consolidated SG&A for the first quarter of 2024 was 9.5% of total revenues compared with 7.7% in the prior-year quarter due to increases in personnel costs, coupled with lower revenues.

Current wording

Consolidated SG&A for the second quarter of 2024 was 6.7% of revenues compared with 6.1% in the prior-year quarter, reflecting increased costs from acquired operations and lower revenues.

Previous wording

First-quarter aggregates shipments decreased 12.3% from prior-year first-quarter shipments, due largely to a more weather-impacted start to the year in the Company's East and Southwest Divisions coupled with softening demand in warehouse, office and retail construction, partially offset by more favorable weather and relative strength in the Company's Central and West Divisions. Aggregates average selling price of $22.26 increased 12.2%, or 12.7% on an organic mix-adjusted basis, over the prior-year quarter, due to strong realization of January 1, 2024 pricing actions. Aggregates gross profit improved modestly to $239 million, as pricing growth more than offset lower shipments.

Current wording

Year-to-date aggregates shipments decreased 6.9%, due largely to a more weather-impacted first half of the year in Texas and the Company's East and Central Divisions, as well as softening demand in warehouse, office and retail construction, which were partially offset by shipments from acquired operations. Aggregates average selling price of $21.87 increased 11.8%, or 12.5% on an organic mix-adjusted basis, due to strong realization of mid-year 2023 and January 1, 2024 pricing actions. Aggregates gross profit improved 4% to $632 million, as pricing growth more than offset lower shipments and the $20 million Inventory Markup charge associated with the BWI Southeast acquisition.

Previous wording

Aggregates shipments to the nonresidential market decreased 16%, driven by inclement weather in many of the Company's markets. The nonresidential market represented 36% of first-quarter aggregates shipments.

Current wording

Aggregates shipments to the nonresidential market decreased 9%, driven by inclement weather in many of the Company's markets and declining warehouse construction. The nonresidential market represented 36% of year-to-date aggregates shipments.

Previous wording

Magnesia Specialties first-quarter total revenues of $81 million decreased 3%, due to continued headwinds in metal mining end markets. However, gross profit increased 15% to $29 million, as higher pricing combined with lower energy costs more than offset shipment declines.

Current wording

Magnesia Specialties revenues decreased 2% to $161 million for the six months ended June 30, 2024, due to continued headwinds in chemicals end markets. However, gross profit increased 6% to $56 million, as higher pricing combined with lower energy costs more than offset shipment declines.

Previous wording

For the first quarter, consolidated other operating (income) expense, net, was income of $1.3 billion in 2024 and expense of $2 million in 2023. The 2024 amount included a $1.3 billion pretax gain on the February 2024 divestiture of the South Texas cement business and certain of its related ready mixed concrete operations (the Divestiture), which was partially offset by a $49 million pretax, noncash asset and portfolio rationalization charge (the Rationalization Charge; see Note 13 to the consolidated financial statements).

Current wording

For the six months ended June 30, consolidated other operating income, net, was $1.3 billion in 2024 and $13 million in 2023. The 2024 amount included a $1.3 billion pretax gain on the Divestiture, which was partially offset by a $50 million pretax, noncash asset and portfolio rationalization charge (the Rationalization Charge; see Note 13 to the consolidated financial statements).

Previous wording

For the first quarter, other nonoperating income, net, was $33 million and $17 million in 2024 and 2023, respectively, with the increase resulting from higher interest income.

Current wording

For the six months ended June 30, other nonoperating income, net, was $46 million and $35 million in 2024 and 2023, respectively, with the increase resulting from higher interest income.

Previous wording

For the three months ended March 31, 2024 and 2023, the effective income tax rates for continuing operations were 26.0% and 20.9%, respectively. The higher 2024 effective income tax rate versus 2023 was driven by the Divestiture, which reflected the write-off of certain nondeductible goodwill and was treated as a discrete tax event to the quarter.

Current wording

For the six months ended June 30, 2024 and 2023, the effective income tax rates for continuing operations were 25.0% and 20.9%, respectively. The higher 2024 effective income tax rate versus 2023 was driven by the Divestiture, which reflected the write-off of certain nondeductible goodwill and was treated as a discrete tax event.

Previous wording

Net earnings from continuing operations attributable to Martin Marietta were $1.0 billion, or $16.87 per diluted share, in 2024 compared with $134 million, or $2.16 per diluted share, in 2023. 2024 included an after-tax gain of $976 million, or $15.75 per diluted share, on the Divestiture and an after-tax loss of $37 million, or $0.59 per diluted share, for the Rationalization Charge. Earnings per diluted share for 2024 also included acquisition, divestiture and integration expenses of $0.22 per diluted share.

Current wording

Net earnings from continuing operations attributable to Martin Marietta were $1.3 billion, or $21.66 per diluted share, in 2024 compared with $481 million, or $7.76 per diluted share, in 2023. 2024 included an after-tax gain of $976 million, or $15.79 per diluted share, on the Divestiture, an after-tax loss of $37 million, or $0.61 per diluted share, for the Rationalization Charge, an after-tax charge of $15 million, or $0.24 per diluted share, for the Inventory Markup and after-tax acquisition, divestiture and integration expenses of $29 million, or $0.47 per diluted share, related to the Blue Water Industries LLC acquisition and the Divestiture.

Previous wording

Cash provided by operating activities for the three months ended March 31, 2024 and 2023 was $172 million and $161 million, respectively. Operating cash flow is substantially derived from consolidated net earnings before deducting depreciation, depletion and amortization, and changes in working capital requirements.

Current wording

Cash provided by operating activities for the six months ended June 30, 2024 and 2023 was $173 million and $519 million, respectively, with the year-over-year decrease driven largely by significantly higher income tax payments in 2024 resulting from the Divestiture. Operating cash flow is substantially derived from consolidated net earnings before deducting depreciation, depletion and amortization, and changes in working capital requirements.

Previous wording

During the three months ended March 31, 2024 and 2023, the Company paid $200 million and $174 million, respectively, for additions to property, plant and equipment.

Current wording

During the six months ended June 30, 2024 and 2023, the Company paid $339 million and $293 million, respectively, for additions to property, plant and equipment.

Previous wording

The Company can repurchase its common stock through open-market purchases pursuant to authority granted by its Board of Directors or through private transactions at such prices and upon such terms as the Chief Executive Officer deems appropriate. During the first three months of 2024, the Company repurchased 255,601 shares of common stock at an average price of $586.85 and an aggregate cost of $150 million. At March 31, 2024, 12.5 million shares of common stock remain under the Company’s repurchase authorization.

Current wording

The Company can repurchase its common stock through open-market purchases pursuant to authority granted by its Board of Directors or through private transactions at such prices and upon such terms as the Chief Executive Officer deems appropriate. During the first six months of 2024, the Company repurchased 785,758 shares of common stock at an average price of $572.70 and an aggregate cost of $450 million. At June 30, 2024, 11.9 million shares of common stock remain under the Company’s repurchase authorization.

Previous wording

The Company used $2.05 billion of the cash on hand at March 31, 2024 to fund the acquisition of 20 active aggregates operations in Alabama, South Carolina, South Florida, Tennessee, and Virginia from affiliates of Blue Water Industries LLC on April 5th, 2024. The remaining cash on hand, along with the Company’s projected internal cash flows and availability of financing resources, including its access to debt and equity capital markets, is expected to continue to be sufficient to provide the capital resources necessary to support anticipated operating needs, cover debt service requirements, address near-term debt maturities, meet capital expenditures and discretionary investment needs, fund certain acquisition opportunities that may arise, allow for payment of dividends for the foreseeable future and allow the repurchase of shares of the Company’s common stock. At March 31, 2024, the Company had $1.20 billion of unused borrowing capacity under its Revolving Facility and Trade Receivable Facility, subject to complying with the related leverage covenant. Historically, the Company has successfully extended the maturity dates of these credit facilities.

Current wording

Cash on hand, along with the Company’s projected internal cash flows and availability of financing resources, including its access to debt and equity capital markets, is expected to continue to be sufficient to provide the capital resources necessary to support anticipated operating needs, cover debt service requirements, address near-term debt maturities, meet capital expenditures and discretionary investment needs, fund certain acquisition opportunities that may arise, allow for payment of dividends for the foreseeable future and allow the repurchase of shares of the Company’s common stock. At June 30, 2024, the Company had $1.20 billion of unused borrowing capacity under its Revolving Facility and Trade Receivable Facility, subject to complying with the related leverage covenant. Historically, the Company has successfully extended the maturity dates of these credit facilities. On July 2, 2024, the Company used available liquidity to repay the $400 million of 4.250% Senior Notes that matured by their own terms.

Previous wording

Investors are cautioned that all statements in this Form 10-Q 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, provide the investor with 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,” “may,” “expect,” “should,” “believe,” “project,” “intend,” “will,” and other words of similar meaning in connection with future events or future operating or financial performance. Any or all of management’s forward-looking statements here and in other publications may turn out to be wrong.

Current wording

Investors are cautioned that all statements in this Form 10-Q 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, provide the investor with 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,” “may,” “expect,” “should,” “believe,” “project,” “intend,” “will,” and other words of similar meaning in connection with future events or future operating or financial performance. Any, or all of, management’s forward-looking statements herein and in other publications may turn out to be wrong.

Previous wording

a decline in energy-related construction activity resulting from a sustained period of low global oil prices or changes in oil production patterns or capital spending, particularly in Texas and West Virginia;

Current wording

a decline in energy-related construction activity resulting from a sustained period of low global oil prices or changes in oil production patterns or capital spending in response to such a decline, particularly in Texas and West Virginia;

Previous wording

sustained high residential mortgage interest rates and other factors that have resulted in a slowdown in residential construction in some geographies;

Current wording

sustained high mortgage interest rates and other factors that have resulted in a slowdown in private construction in some geographies;

Previous wording

unfavorable weather conditions, particularly Atlantic Ocean, Pacific Ocean and Gulf of Mexico storm and hurricane activity, wildfires, 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;

Current wording

unfavorable weather conditions, particularly Atlantic Ocean, Pacific Ocean and Gulf of Mexico storm and hurricane activity, wildfires, the late start to spring or the early onset of winter and the impact of a drought, excessive rainfall or extreme temperatures in the markets served by the Company, any of which can significantly affect production schedules, volumes, product and/or geographic mix and profitability;

Previous wording

the volatility of fuel costs and energy, particularly diesel fuel, electricity, natural gas 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;

Current wording

the volatility of fuel and energy costs, particularly diesel fuel, electricity, natural gas 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;

Previous wording

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;

Current wording

unplanned changes in costs or realignment of customers that introduce volatility to earnings, including that of the Magnesia Specialties business;