SEC Form 10-Q filed by Martin Marietta Materials Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.
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Outstanding as of April 25, 2024 |
Common Stock, $0.01 par value |
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
Page 2 of 35
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED BALANCE SHEETS
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March 31, |
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December 31, |
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2024 |
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2023 |
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(In Millions, Except Share and Par Value Data) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net |
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Inventories, net |
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Current assets held for sale |
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Other current assets |
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Total Current Assets |
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Property, plant and equipment |
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Allowances for depreciation, depletion and amortization |
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Net property, plant and equipment |
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Goodwill |
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Other intangibles, net |
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Operating lease right-of-use assets, net |
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Other noncurrent assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued salaries, benefits and payroll taxes |
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Accrued income taxes |
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Accrued other taxes |
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Accrued interest |
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Current maturities of long-term debt |
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Current operating lease liabilities |
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Current liabilities held for sale |
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Other current liabilities |
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Total Current Liabilities |
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Long-term debt |
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Deferred income taxes, net |
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Noncurrent operating lease liabilities |
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Noncurrent asset retirement obligations |
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Other noncurrent liabilities |
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Total Liabilities |
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Equity: |
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Common stock, par value $ |
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Preferred stock, par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained earnings |
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Total Shareholders' Equity |
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Noncontrolling interests |
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Total Equity |
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Total Liabilities and Equity |
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$ |
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$ |
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See accompanying notes to the consolidated financial statements.
Page 3 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
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Three Months Ended |
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March 31, |
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2024 |
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2023 |
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(In Millions, Except Per Share Data) |
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Total Revenues |
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$ |
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$ |
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Total cost of revenues |
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Gross Profit |
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Selling, general and administrative expenses |
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Acquisition, divestiture and integration expenses |
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Other operating (income) expense, net |
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Earnings from Operations |
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Interest expense |
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Other nonoperating income, net |
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Earnings from continuing operations before income |
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Income tax expense |
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Earnings from continuing operations |
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Loss from discontinued operations, net of |
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Consolidated net earnings |
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Less: Net earnings attributable to noncontrolling interests |
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Net Earnings Attributable to Martin Marietta |
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$ |
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$ |
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Consolidated Comprehensive Earnings (See Note 1): |
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Earnings attributable to Martin Marietta |
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$ |
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$ |
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Earnings attributable to noncontrolling interests |
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$ |
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$ |
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Net Earnings (Loss) Attributable to Martin Marietta |
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Per Common Share: |
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Basic earnings per share from continuing operations attributable to |
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$ |
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$ |
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Basic loss per share from discontinued operations attributable to |
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$ |
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$ |
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Diluted earnings per share from continuing operations attributable to |
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$ |
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$ |
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Diluted loss per share from discontinued operations attributable to |
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$ |
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$ |
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Weighted-Average Common Shares Outstanding: |
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Basic |
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Diluted |
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See accompanying notes to the consolidated financial statements.
Page 4 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three Months Ended |
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March 31, |
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2024 |
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2023 |
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(Dollars in Millions) |
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Cash Flows from Operating Activities: |
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Consolidated net earnings |
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$ |
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$ |
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Adjustments to reconcile consolidated net earnings to net cash |
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Depreciation, depletion and amortization |
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Stock-based compensation expense |
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Gain on divestitures and sales of assets |
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Deferred income taxes, net |
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Noncash asset and portfolio rationalization charge |
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Other items, net |
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Changes in operating assets and liabilities, net of effects of |
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Accounts receivable, net |
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Inventories, net |
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Accounts payable |
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Other assets and liabilities, net |
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Net Cash Provided by Operating Activities |
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Cash Flows from Investing Activities: |
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Additions to property, plant and equipment |
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Acquisitions, net of cash acquired |
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Proceeds from divestitures and sales of assets |
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Investments in life insurance contracts, net |
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Other investing activities, net |
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Net Cash Provided by (Used for) Investing Activities |
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Cash Flows from Financing Activities: |
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Payments on finance lease obligations |
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Dividends paid |
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Repurchases of common stock |
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Distributions to owners of noncontrolling interest |
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Shares withheld for employees’ income tax obligations |
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Net Cash Used for Financing Activities |
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Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash |
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Cash, Cash Equivalents and Restricted Cash, beginning of period |
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Cash, Cash Equivalents and Restricted Cash, end of period |
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$ |
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$ |
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See accompanying notes to the consolidated financial statements.
Page 5 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF TOTAL EQUITY
(In Millions, Except Share and Per Share Data) |
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Shares of Common Stock |
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Common Stock |
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Additional Paid-in Capital |
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Accumulated |
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Retained Earnings |
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Total Shareholders' Equity |
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Noncontrolling Interests |
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Total Equity |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Consolidated net earnings |
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— |
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— |
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Other comprehensive earnings, |
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— |
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— |
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Dividends declared ($ |
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— |
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— |
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Issuances of common stock for |
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— |
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Shares withheld for employees' |
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— |
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Repurchases of common stock |
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— |
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— |
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Stock-based compensation |
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— |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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Consolidated net earnings |
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— |
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— |
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Dividends declared ($ |
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— |
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Issuances of common stock for |
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— |
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— |
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Shares withheld for employees' |
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— |
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— |
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Repurchases of common stock |
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— |
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Stock-based compensation |
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Distributions to owners of |
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— |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to the consolidated financial statements.
Page 6 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Organization
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
The Company’s Building Materials business includes
BUILDING MATERIALS BUSINESS |
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Reportable Segments |
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East Group |
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West Group |
Operating Locations |
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Alabama, Florida, Georgia, Indiana, |
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Arizona, Arkansas, California, Colorado, Louisiana, Oklahoma, Texas, Utah,
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Product Lines |
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Aggregates and Asphalt |
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Aggregates, Cement and Ready Mixed Concrete, Asphalt and Paving |
Basis of Presentation and Use of Estimates
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. The Company has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These
Page 7 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The preparation of the Company’s consolidated financial statements requires management to make certain estimates and assumptions about future events. As future events and their effects cannot be fully determined with precision, actual results could differ significantly from estimates. Changes in estimates are reflected in the consolidated financial statements in the period in which the change in estimate occurs.
Restricted Cash
At March 31, 2024 and December 31, 2023, the Company had restricted cash of $
The statements of cash flows reflect cash flow changes and balances for cash, cash equivalents and restricted cash on an aggregated basis.
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March 31, |
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December 31, |
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2024 |
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|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
Consolidated Comprehensive Earnings and Accumulated Other Comprehensive Loss
Consolidated comprehensive earnings consist of consolidated net earnings, adjustments for the funded status of pension and postretirement benefit plans and foreign currency translation adjustments, and are presented in the Company’s consolidated statements of earnings and comprehensive earnings.
Consolidated comprehensive earnings attributable to Martin Marietta are as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Net earnings attributable to Martin Marietta |
|
$ |
|
|
$ |
|
||
Other comprehensive earnings, net of tax |
|
|
|
|
|
|
||
Consolidated comprehensive earnings |
|
$ |
|
|
$ |
|
||
Page 8 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Accumulated other comprehensive loss consists of unrecognized gains and losses related to the funded status of the pension and postretirement benefit plans and foreign currency translation adjustments and is presented on the Company’s consolidated balance sheets.
The components of the changes in accumulated other comprehensive loss, net of tax, are as follows:
|
|
(Dollars in Millions) |
|
|||||||||
|
|
Pension and |
|
|
Foreign Currency |
|
|
Accumulated |
|
|||
|
|
Three Months Ended March 31, 2024 |
|
|||||||||
Balance at beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive loss before reclassifications, |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from accumulated other |
|
|
|
|
|
— |
|
|
|
|
||
Other comprehensive earnings (loss), net of tax |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Balance at end of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|||
|
|
Three Months Ended March 31, 2023 |
|
|||||||||
Balance at beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Amounts reclassified from accumulated other |
|
|
|
|
|
— |
|
|
|
|
||
Other comprehensive earnings, net of tax |
|
|
|
|
|
— |
|
|
|
|
||
Balance at end of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Changes in net noncurrent deferred tax assets related to accumulated other comprehensive loss are as follows:
|
|
Pension and Postretirement Benefit Plans |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
||
Tax effect of other comprehensive |
|
|
( |
) |
|
|
|
|
Balance at end of period |
|
$ |
|
|
$ |
|
||
Page 9 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Reclassifications out of accumulated other comprehensive loss are as follows:
|
|
Three Months Ended |
|
|
Affected line items in the consolidated |
|||||
|
|
March 31, |
|
|
statements of earnings |
|||||
|
|
2024 |
|
|
2023 |
|
|
and comprehensive earnings |
||
|
|
(Dollars in Millions) |
|
|||||||
Pension and postretirement |
|
|
|
|
|
|
|
|
||
Amortization of prior service cost |
|
|
|
|
|
|
|
Other nonoperating income, net |
||
Tax effect |
|
|
( |
) |
|
|
|
|
Income tax expense |
|
Total |
|
$ |
|
|
|
|
|
|
||
Earnings per Common Share
The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Company’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three months ended March 31, 2024 and 2023, the diluted per-share computations reflect the number of common shares outstanding including the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued.
The following table reconciles the denominator for basic and diluted earnings from continuing operations per common share:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In Millions) |
|
|||||
Basic weighted-average common shares outstanding |
|
|
|
|
|
|
||
Effect of dilutive employee and director awards |
|
|
|
|
|
|
||
Diluted weighted-average common shares outstanding |
|
|
|
|
|
|
||
Page 10 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU requires companies to apply retrospectively to all prior periods presented in the financial statements. The ASU will impact the Company's disclosures, but will have no impacts to its results of operations, cash flows and financial condition.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU 2023-09 requires public entities to disclose, on annual basis, a tabular tax rate reconciliation using both percentages and currency amounts with specific categories, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. Additionally, all entities are required to disclose income taxes paid, net of refunds received, disaggregated by federal, state, local, and foreign taxes and by individual jurisdiction if the amount is at least
Reclassifications
Certain reclassifications have been made in the Company's financial statements of the prior year to conform to the current-year presentation. The reclassifications had no impact on the Company’s previously reported results of operations, financial position or cash flows.
Business Combinations
On January 12, 2024, the Company acquired Albert Frei & Sons, Inc. (AFS), a leading aggregates producer in Colorado. This acquisition provides more than
On February 11, 2024, the Company entered into a definitive agreement to acquire
Page 11 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Divestitures
On February 9, 2024, the Company completed the sale of its South Texas cement business and certain of its related ready mixed concrete operations to CRH Americas Materials, Inc., a subsidiary of CRH plc, for $
Discontinued Operations
For the three months ended March 31, 2023, discontinued operations included the Company's Tehachapi, California cement plant, which was divested in October 2023, and the Stockton, California cement import terminal, which was divested in May 2023. There were
Financial results for the Company's discontinued operations are as follows:
|
|
Three Months Ended |
|
|
|
|
March 31, 2023 |
|
|
|
|
(Dollars in Millions) |
|
|
Total revenues |
|
$ |
|
|
|
|
|
|
|
Pretax loss from discontinued operations |
|
$ |
( |
) |
Income tax benefit |
|
|
( |
) |
Loss from discontinued operations, |
|
$ |
( |
) |
Cash flow information for the Company's discontinued operations is as follows:
|
|
Three Months Ended |
|
|
|
|
March 31, 2023 |
|
|
|
|
(Dollars in Millions) |
|
|
Net cash used for operating activities |
|
$ |
( |
) |
Net cash used for investing activities (capital expenditures) |
|
$ |
( |
) |
Page 12 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Assets and Liabilities Held for Sale
Assets and liabilities held for sale at March 31, 2024 included certain nonoperating land. At December 31, 2023, assets and liabilities held for sale also included the South Texas cement plant, related cement distribution terminals and
Assets and liabilities held for sale are as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
|
|
Continuing Operations |
|
|||||
|
|
(Dollars in Millions) |
|
|||||
Inventories, net |
|
$ |
— |
|
|
$ |
|
|
Investment land |
|
|
|
|
|
|
||
Other assets |
|
|
— |
|
|
|
|
|
Property, plant and equipment |
|
|
— |
|
|
|
|
|
Intangible assets, excluding goodwill |
|
|
— |
|
|
|
|
|
Operating lease right-of-use assets |
|
|
— |
|
|
|
|
|
Goodwill |
|
|
— |
|
|
|
|
|
Total current assets held for sale |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Lease obligations |
|
|
— |
|
|
$ |
( |
) |
Asset retirement obligations |
|
|
— |
|
|
|
( |
) |
Total current liabilities held for sale |
|
$ |
— |
|
|
$ |
( |
) |
The following table shows the changes in goodwill by reportable segment and in total:
|
|
East |
|
|
West |
|
|
|
|
|||
|
|
Group |
|
|
Group |
|
|
Total |
|
|||
|
|
(Dollars in Millions) |
|
|||||||||
Balance at January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Acquisitions |
|
|
|
|
|
|
|
|
|
|||
Balance at March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Page 13 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Finished products |
|
$ |
|
|
$ |
|
||
Products in process |
|
|
|
|
|
|
||
Raw materials |
|
|
|
|
|
|
||
Supplies and expendable parts |
|
|
|
|
|
|
||
Total inventories |
|
|
|
|
|
|
||
Less: allowances |
|
|
( |
) |
|
|
( |
) |
Inventories, net |
|
$ |
|
|
$ |
|
||
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Total debt |
|
|
|
|
|
|
||
Less: current maturities |
|
|
( |
) |
|
|
( |
) |
Long-term debt |
|
$ |
|
|
$ |
|
||
The Company has a credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, Deutsche Bank Securities, Inc., PNC Bank, Truist Bank and Wells Fargo Bank, N.A., as Syndication Agents, and the lenders party thereto (the Credit Agreement), which provides for an $
The Credit Agreement requires the Company’s ratio of consolidated net debt-to-consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined by the Revolving Facility, for the trailing-twelve months (the Ratio) to not exceed
Page 14 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
quarters so long as the Ratio calculated without such exclusion does not exceed
The Company’s financial instruments include temporary cash investments, restricted cash, accounts receivable, accounts payable, publicly-registered long-term notes and debentures.
Temporary cash investments are placed primarily in money market funds, money market demand deposit accounts and Eurodollar time deposit accounts with financial institutions. The Company’s cash equivalents have maturities of less than three months. Due to the short maturity of these investments, they are carried on the consolidated balance sheets at cost, which approximates fair value.
Restricted cash is held in a trust account with a third-party intermediary. Due to the short-term nature of this account, the carrying value of restricted cash approximates its fair value.
Accounts receivable are due from a large number of customers, primarily in the construction industry, and are dispersed across wide geographic and economic regions. However, accounts receivable are more heavily concentrated in certain states, namely Texas, North Carolina, Colorado, California, Georgia, Minnesota, Arizona, Iowa, Florida and Indiana. The carrying values of accounts receivable approximate their fair values.
Accounts payable represent amounts owed to suppliers and vendors. The estimated carrying value of accounts payable approximates its fair value due to the short-term nature of the payables.
The carrying value and fair value of the Company’s long-term debt were $
Page 15 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The effective income tax rate reflects the effect of federal and state income taxes on earnings and the impact of differences in book and tax accounting arising primarily from the permanent tax benefits associated with the statutory depletion deduction for mineral reserves. The effective income tax rates for continuing operations were
The net periodic benefit cost for pension benefits includes the following components:
|
|
Pension |
|
|||||
|
|
Three Months Ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Service cost |
|
$ |
|
|
$ |
|
||
Interest cost |
|
|
|
|
|
|
||
Expected return on assets |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service cost |
|
|
|
|
|
|
||
Net periodic benefit cost |
|
$ |
|
|
$ |
|
||
The components of net periodic benefit cost, other than service cost, are included in the line item Other nonoperating income, net, in the consolidated statements of earnings and comprehensive earnings. Based on the roles of the employees, service cost is included in the Cost of revenues or Selling, general and administrative expenses line items in the consolidated statements of earnings and comprehensive earnings.
Page 16 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Legal and Administrative Proceedings
The Company is engaged in certain legal and administrative proceedings incidental to its normal business activities, including matters relating to environmental protection. The Company considers various factors in assessing the probable outcome of each matter, including but not limited to the nature of existing legal proceedings and claims, the asserted or possible damages, the jurisdiction and venue of the case and whether it is a jury trial, the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, the Company’s experience in similar cases and the experience of other companies, the facts available to the Company at the time of assessment, and how the Company intends to respond to the proceeding or claim. The Company’s assessment of these factors may change over time as proceedings or claims progress. The Company believes the probability is remote that the outcome of any currently pending legal or administrative proceeding will result in a material loss to the Company's financial condition, results of operations or cash flows, as a whole, based on currently available facts.
Letters of Credit
In the normal course of business, the Company provides certain third parties with standby letter of credit agreements guaranteeing its payment for certain insurance claims, contract performance and permit requirements. At March 31, 2024, the Company was contingently liable for $
The Building Materials business contains
Assets employed by segment include assets directly identified with those operations. Corporate assets consist primarily of cash, cash equivalents and restricted cash; restricted investments; property, plant and equipment for corporate operations; and other assets not directly identifiable with a reportable segment.
The following table displays selected financial data for the Company’s reportable segments. Total revenues, as presented on the consolidated statements of earnings and comprehensive earnings, reflect the elimination of intersegment revenues, which represent sales from one segment to another segment. Total revenues and earnings (loss) from operations reflect continuing operations only.
Page 17 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Total revenues: |
|
|
|
|
|
|
||
East Group |
|
$ |
|
|
$ |
|
||
West Group |
|
|
|
|
|
|
||
Total Building Materials business |
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Earnings (Loss) from operations: |
|
|
|
|
|
|
||
East Group |
|
$ |
|
|
$ |
|
||
West Group |
|
|
|
|
|
|
||
Total Building Materials business |
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
||
Total reportable segments |
|
|
|
|
|
|
||
Corporate |
|
|
( |
) |
|
|
( |
) |
Consolidated earnings from operations |
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
|
||
Other nonoperating income, net |
|
|
( |
) |
|
|
( |
) |
Consolidated earnings from continuing |
|
$ |
|
|
$ |
|
||
Earnings from operations for the West Group for 2024 included a $
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Assets employed: |
|
|
|
|
|
|
||
East Group |
|
$ |
|
|
$ |
|
||
West Group |
|
|
|
|
|
|
||
Total Building Materials business |
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
||
Total reportable segments |
|
|
|
|
|
|
||
Corporate |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Page 18 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The following tables, which are reconciled to consolidated amounts, provide total revenues and gross profit (loss) by line of business: Building Materials (further divided by product line) and Magnesia Specialties. Interproduct revenues represent sales from the aggregates product line to the ready mixed concrete and asphalt and paving product lines. Effective January 1, 2024, the Company combined the cement and ready mixed concrete product lines. This change was driven by the reduced significance of each of these product lines relative to the Building Materials business and consolidated operating results from recent divestitures. Additionally, there is a significant relationship between these product lines, as the ready mixed concrete product line is a significant customer of the cement product line. Total revenues and gross profit (loss) reflect continuing operations only.
|
|
Three Months Ended |
|
|
|||||
|
|
March 31, |
|
|
|||||
|
|
2024 |
|
|
2023 |
|
|
||
|
|
(Dollars in Millions) |
|||||||
Total revenues: |
|
|
|
|
|
|
|
||
Building Materials business: |
|
|
|
|
|
|
|
||
Aggregates |
|
$ |
|
|
$ |
|
|
||
Cement and ready mixed concrete |
|
|
|
|
|
|
|
||
Asphalt and paving services |
|
|
|
|
|
|
|
||
Less: interproduct revenues |
|
|
( |
) |
|
|
( |
) |
|
Total Building Materials business |
|
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|
|
|
||
Gross profit (loss): |
|
|
|
|
|
|
|
||
Building Materials business: |
|
|
|
|
|
|
|
||
Aggregates |
|
$ |
|
|
$ |
|
|
||
Cement and ready mixed concrete |
|
|
|
|
|
|
|
||
Asphalt and paving services |
|
|
( |
) |
|
|
( |
) |
|
Total Building Materials business |
|
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
|
||
Corporate |
|
|
( |
) |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
||
The above information for 2023 has been reclassified to conform to current-year presentation. For the quarter ended March 31, 2023, the cement product line reported total revenues of $
Page 19 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Performance Obligations. Performance obligations are contractual promises to transfer or provide a distinct good or service for a stated price. The Company’s product sales agreements are single-performance obligations that are satisfied at a point in time.
Future revenues from unsatisfied performance obligations at March 31, 2024 and 2023 were $
Service Revenues. Service revenues, which include paving services located in California and Colorado, were $
Contract Balances. Costs in excess of billings relate to the conditional right to consideration for completed contractual performance and are contract assets on the consolidated balance sheets. Costs in excess of billings are reclassified to accounts receivable when the right to consideration becomes unconditional. Billings in excess of costs relate to customers invoiced in advance of contractual performance and are contract liabilities on the consolidated balance sheets.
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Costs in excess of billings |
|
$ |
|
|
$ |
|
||
Billings in excess of costs |
|
$ |
|
|
$ |
|
||
Revenues recognized from the beginning balance of contract liabilities for the three months ended March 31, 2024 and 2023 were $
Retainage, which primarily relates to the paving services, represents amounts that have been billed to customers but payment is withheld until final acceptance of the performance obligation by the customer. Retainage, which is included in Other current assets on the Company’s consolidated balance sheets, was $
Page 20 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Noncash investing and financing activities are as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Accrued liabilities for purchases of property, plant and equipment |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for new |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for |
|
$ |
|
|
$ |
|
||
Remeasurement of operating lease right-of-use assets |
|
$ |
|
|
$ |
|
||
Acquisition of assets through asset exchange |
|
$ |
|
|
$ |
|
||
Accrued proceeds on the sale of property, plant and equipment |
|
$ |
|
|
$ |
|
||
Supplemental disclosures of cash flow information are as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Cash paid for interest, net of capitalized amount |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes, net of refunds |
|
$ |
|
|
$ |
|
||
Other operating income (expense), net, is comprised generally of gains and losses on divestitures and the sale of assets; asset and portfolio rationalization charges; recoveries and losses related to certain customer accounts receivable; rental, royalty and services income; and accretion expense, depreciation expense and gains and losses related to asset retirement obligations. For the three months ended March 31, 2024, other operating (income) expense, net, included a $
The noncash asset and portfolio rationalization charge for the three months ended March 31, 2024 relates to the Company's decision to cease using a railroad to transport aggregates products into Colorado. In connection with the AFS acquisition completed in January 2024, the Company has more local supply available from its operations and has discontinued using the railroad. This charge, which is reported in the West Group, reflects the Company's evaluation of the recoverability of certain long-lived assets, including property, plant and equipment and operating lease right-of-use assets, for the cessation of these railroad operations.
Page 21 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
OVERVIEW
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.
The Company’s Building Materials business includes two reportable segments: the East Group and the West Group.
BUILDING MATERIALS BUSINESS |
||||
Reportable Segments |
|
East Group |
|
West Group |
Operating Locations |
|
Alabama, Florida, Georgia, Indiana, Iowa, |
|
Arizona, Arkansas, California, Colorado, Louisiana, Oklahoma, Texas, Utah, |
|
|
|||
Product Lines |
|
Aggregates and Asphalt |
|
Aggregates, Cement and Ready Mixed Concrete, Asphalt and Paving Services |
|
|
|||
Facility Types |
|
Quarries, Mines, Asphalt Plants and Distribution Facilities |
|
Quarries, Cement Plant, Asphalt Plants, Ready Mixed Concrete Plants and Distribution Facilities |
|
|
|||
Modes of Transportation |
|
Truck, Railcar, Ship and Barge |
|
Truck and Railcar |
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.
The Company has a Magnesia Specialties business with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel and mining industries.
Page 22 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
CRITICAL ACCOUNTING POLICIES
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.
RESULTS OF OPERATIONS
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.
Adjusted EBITDA is not defined by accounting principles generally accepted in the United States (GAAP) and, as such, should not be construed as an alternative to net earnings attributable to Martin Marietta, earnings from operations or operating cash flow. Since Adjusted EBITDA excludes some, but not all, items that affect net earnings and may vary among companies, Adjusted EBITDA as presented by the Company may not be comparable with similarly titled measures of other companies.
The following table presents a reconciliation of net earnings from continuing operations attributable to Martin Marietta to Adjusted EBITDA:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Net earnings from continuing operations attributable to Martin Marietta |
|
$ |
1,045 |
|
|
$ |
134 |
|
Add back (Deduct): |
|
|
|
|
|
|
||
Interest expense, net of interest income |
|
|
14 |
|
|
|
32 |
|
Income tax expense for controlling interests |
|
|
368 |
|
|
|
35 |
|
Depreciation, depletion and amortization expense |
|
|
128 |
|
|
|
122 |
|
Acquisition, divestiture and integration expenses |
|
|
18 |
|
|
|
1 |
|
Nonrecurring gain on divestiture |
|
|
(1,331 |
) |
|
|
— |
|
Noncash asset and portfolio rationalization charge |
|
|
49 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
291 |
|
|
$ |
324 |
|
Page 23 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Mix-adjusted average selling price (mix-adjusted ASP) is a non-GAAP measure that excludes the impacts of period-over-period product, geographic and other mix on average selling price. Mix-adjusted ASP is calculated by comparing current-period shipments to like-for-like shipments in the comparable prior period. Management uses this metric to evaluate the realization of pricing increases and believes this information is useful to investors as it provides same-on-same pricing trends.
The following reconciles reported average selling price to organic mix-adjusted ASP and corresponding variances:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Aggregates: |
|
|
|
|
|
|
||
Reported average selling price |
|
$ |
22.26 |
|
|
$ |
19.83 |
|
Adjustment for impact of acquisitions |
|
|
0.05 |
|
|
|
— |
|
Organic average selling price |
|
$ |
22.31 |
|
|
$ |
19.83 |
|
Adjustment for impact of product, geographic |
|
|
0.03 |
|
|
|
|
|
Organic mix-adjusted ASP |
|
$ |
22.34 |
|
|
|
|
|
|
|
|
|
|
|
|
||
Reported average selling price variance |
|
|
12.2 |
% |
|
|
|
|
Organic average selling price variance |
|
|
12.5 |
% |
|
|
|
|
Organic mix-adjusted ASP variance |
|
|
12.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Page 24 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
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.
|
|
Three Months Ended March 31, |
||||||||||
|
|
2024 |
|
|
|
|
2023 |
|
|
|
||
|
|
Amount |
|
|
|
|
Amount |
|
|
|
||
|
|
(Dollars in Millions) |
|
|||||||||
Total revenues: |
|
|
|
|
|
|
|
|
|
|
||
Building Materials business: |
|
|
|
|
|
|
|
|
|
|
||
East Group |
|
|
|
|
|
|
|
|
|
|
||
Aggregates |
|
$ |
526 |
|
|
|
|
$ |
530 |
|
|
|
Asphalt |
|
|
— |
|
|
|
|
|
— |
|
|
|
Less: Interproduct revenues |
|
|
— |
|
|
|
|
|
— |
|
|
|
East Group Total |
|
|
526 |
|
|
|
|
|
530 |
|
|
|
West Group |
|
|
|
|
|
|
|
|
|
|
||
Aggregates |
|
|
359 |
|
|
|
|
|
382 |
|
|
|
Cement and ready mixed concrete |
|
|
265 |
|
|
|
|
|
340 |
|
|
|
Asphalt and paving services |
|
|
59 |
|
|
|
|
|
58 |
|
|
|
Less: Interproduct revenues |
|
|
(39 |
) |
|
|
|
|
(39 |
) |
|
|
West Group Total |
|
|
644 |
|
|
|
|
|
741 |
|
|
|
Total Building Materials business |
|
|
1,170 |
|
|
|
|
|
1,271 |
|
|
|
Total Magnesia Specialties |
|
|
81 |
|
|
|
|
|
83 |
|
|
|
Total |
|
$ |
1,251 |
|
|
|
|
$ |
1,354 |
|
|
|
|
|
Three Months Ended March 31, |
||||||||||
|
|
2024 |
|
2023 |
||||||||
|
|
Amount |
|
|
% of Revenues |
|
Amount |
|
|
% of Revenues |
||
|
|
(Dollars in Millions) |
||||||||||
Gross profit (loss): |
|
|
|
|
|
|
|
|
|
|
||
Building Materials business: |
|
|
|
|
|
|
|
|
|
|
||
Aggregates |
|
$ |
239 |
|
|
27% |
|
$ |
238 |
|
|
26% |
Cement and ready mixed concrete |
|
|
31 |
|
|
12% |
|
|
58 |
|
|
17% |
Asphalt and paving services |
|
|
(22 |
) |
|
(36)% |
|
|
(20 |
) |
|
(35)% |
Total Building Materials business |
|
|
248 |
|
|
21% |
|
|
276 |
|
|
22% |
Magnesia Specialties |
|
|
29 |
|
|
36% |
|
|
25 |
|
|
30% |
Corporate |
|
|
(5 |
) |
|
|
|
|
2 |
|
|
|
Total |
|
$ |
272 |
|
|
22% |
|
$ |
303 |
|
|
22% |
Page 25 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Building Materials Business
The following table presents shipment data for the Building Materials business:
|
|
Three Months Ended March 31, |
|||||||||||
|
|
2024 |
|
|
2023 |
|
|
% Change |
|||||
|
|
(In Millions) |
|
|
|
|
|
||||||
Aggregates tons |
|
|
36.6 |
|
|
|
41.7 |
|
|
|
(12.3 |
)% |
|
Cement tons |
|
|
0.6 |
|
|
|
1.0 |
|
|
|
(37.1 |
)% |
|
Ready Mixed Concrete cubic yards |
|
|
1.2 |
|
|
|
1.5 |
|
|
|
(21.2 |
)% |
|
Asphalt tons |
|
|
0.5 |
|
|
|
0.5 |
|
|
|
0.2 |
% |
|
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.
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.
Asphalt and paving revenues increased modestly to $59 million. Consistent with the Company's historical first-quarter trends, the asphalt and paving business posted a gross loss of $22 million due to seasonal winter operational shutdowns in Minnesota and unfavorable weather conditions in Colorado.
Aggregates End-Use Markets
While aggregates shipments to the infrastructure market decreased 6%, the value of state and local government highway, bridge and tunnel contract awards, a leading indicator for future product demand, is meaningfully higher year-over-year. The infrastructure market accounted for 34% of first-quarter aggregates shipments.
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.
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.
The ChemRock/Rail market accounted for the remaining 6% of first-quarter aggregates shipments. Volumes to this end use were flat quarter-over-quarter.
Magnesia Specialties Business
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.
Page 26 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Consolidated Operating Results
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.
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).
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.
Earnings from operations for the quarter were $1.4 billion in 2024 compared with $196 million in 2023.
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.
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.
LIQUIDITY AND CAPITAL RESOURCES
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.
The seasonal nature of construction activity impacts the Company’s interim operating cash flow when compared with the full year. Full-year 2023 net cash provided by operating activities was $1.5 billion.
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.
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.
The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility) that matures on September 19, 2024. The Trade Receivable Facility contains a cross-default provision to the Company’s other debt agreements.
Page 27 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
The Company has an $800 million five-year senior unsecured revolving facility (the Revolving Facility), which matures in December 2028. The Revolving Facility requires the Company’s ratio of consolidated net debt-to-consolidated EBITDA, as defined, for the trailing-twelve-month period (the Ratio) to not exceed 3.50 times as of the end of any fiscal quarter, provided that the Company may exclude from the Ratio debt incurred in connection with certain acquisitions during the quarter or the three preceding quarters so long as the Ratio calculated without such exclusion does not exceed 4.00 times. Additionally, if there are no amounts outstanding under the Revolving Facility or the Trade Receivable Facility, consolidated debt, including debt for which the Company is a guarantor, shall be reduced in an amount equal to the lesser of $500 million or the sum of the Company’s unrestricted cash and temporary investments, for purposes of the covenant calculation. The Company was in compliance with the Ratio at March 31, 2024.
In the event of a default on the Ratio, the lenders can terminate the Revolving Facility and Trade Receivable Facility and declare any outstanding balances as immediately due. There were no amounts outstanding under the Trade Receivable Facility or the Revolving Facility at March 31, 2024.
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.
TRENDS AND RISKS
The Company outlined the risks associated with its business in its Annual Report on Form 10-K for the year ended December 31, 2023. Management continues to evaluate its exposure to all operating risks on an ongoing basis.
OTHER MATTERS
If you are interested in Martin Marietta 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 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.
Page 28 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
The Company’s outlook is subject to 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 Form 10-Q include, but are not limited to:
Page 29 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Page 30 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
You should consider these forward-looking statements in light of risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and other periodic filings made with the SEC. All of the Company’s forward-looking statements should be considered in light of these factors. In addition, other risks and uncertainties not presently known to the Company or that the Company considers immaterial could affect the accuracy of its forward-looking statements, or adversely affect or be material to the Company. The Company assumes no obligation to update any such forward-looking statements.
INVESTOR ACCESS TO COMPANY FILINGS
Shareholders may obtain, without charge, a copy of Martin Marietta’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2023, by writing to:
Martin Marietta
Attn: Corporate Secretary
4123 Parklake Avenue
Raleigh, North Carolina 27612
Additionally, Martin Marietta’s Annual Report, press releases and filings with the Securities and Exchange Commission, including Forms 10-K, 10-Q, 8-K and 11-K, can generally be accessed via the Company’s website. Filings with the Securities and Exchange Commission accessed via the website are available through a link with the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Accordingly, access to such filings is available upon EDGAR placing the related document in its database. Investor relations contact information is as follows:
Telephone: (919) 510-4736
Website address: www.martinmarietta.com
Information included on the Company’s website is not incorporated into, or otherwise creates a part of, this report.
Page 31 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company’s operations are highly dependent upon the interest rate-sensitive construction and steelmaking industries. Consequently, these marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs.
Management has considered the current economic environment and its potential impact to the Company's business. Demand for aggregates products, particularly in the infrastructure construction market, is affected by federal, state and local budget and deficit issues. Further, delays or cancellations of capital projects in the nonresidential and residential construction markets could occur if companies and consumers are unable to obtain affordable financing for construction projects or if consumer confidence is eroded by economic uncertainty.
Demand in the nonresidential and residential construction markets, which combined accounted for 60% of aggregates shipments for the three months ended March 31, 2024, is affected by interest rates. While unchanged since December 31, 2023, the target federal funds rate remains above historical levels.
Aside from these inherent risks from within its operations, the Company’s earnings are also affected by changes in short-term interest rates and changes in enacted tax laws.
Variable-Rate Borrowing Facilities. At March 31, 2024, the Company had an $800 million Revolving Facility and a $400 million Trade Receivable Facility. Borrowings under these facilities bear interest at a variable interest rate. There were no borrowings outstanding on either facility at March 31, 2024. However, any future borrowings under the credit facilities or outstanding variable-rate debt are exposed to interest rate risk.
Pension Expense. The Company’s results of operations are affected by its pension expense. Assumptions that affect pension expense include the discount rate and, for the qualified defined benefit pension plan only, the expected long-term rate of return on assets. Therefore, the Company has interest rate risk associated with these factors. The impact of hypothetical changes in these assumptions on the Company’s annual pension expense is discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Income Tax. Any changes in enacted tax laws, rules or regulatory or judicial interpretations, or any change in the pronouncements relating to accounting for income taxes could materially impact the Company’s effective tax rate, tax payments, financial condition and results of operations.
Energy Costs. Energy costs, including diesel fuel, natural gas, electricity, coal, petroleum coke and liquid asphalt, represent significant production costs of the Company. The Company may be unable to pass along increases in the costs of energy to customers in the form of price increases for the Company’s products. The cement product line and Magnesia Specialties business each have varying fixed-price agreements for a portion of their 2024 energy requirements. Organic energy expense for the three months ended March 31, 2024 decreased 18% compared with the prior-year period, reflecting a $0.40-per-gallon decrease in organic diesel costs. A hypothetical 10% change in the Company’s organic energy prices in 2024 as compared with 2023, assuming comparable volumes, would change 2024 energy expense by $36 million.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. As of March 31, 2024, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2024. There were no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Page 32 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 9 Commitments and Contingencies, Legal and Administrative Proceedings of this Form 10-Q.
Item 1A. Risk Factors.
Reference is made to Part I. Item 1A. Risk Factors and Forward-Looking Statements of the Martin Marietta Annual Report on Form 10-K for the year ended December 31, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
ISSUER PURCHASES OF EQUITY SECURITIES
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Total Number of Shares |
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Maximum Number of |
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Purchased as Part of |
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Shares that May Yet |
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Total Number of |
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Average Price |
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Publicly Announced |
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be Purchased Under |
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Period |
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Shares Purchased |
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Paid per Share |
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Plans or Programs |
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the Plans or Programs |
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January 1, 2024 - January 31, 2024 |
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— |
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$ |
— |
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— |
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12,721,096 |
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February 1, 2024 - February 29, 2024 |
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88,869 |
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$ |
557.35 |
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88,869 |
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12,632,227 |
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March 1, 2024 - March 31, 2024 |
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166,732 |
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$ |
602.58 |
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166,732 |
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12,465,495 |
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Total |
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255,601 |
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255,601 |
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Reference is made to the Company's press release dated February 10, 2015 for the December 31, 2014 fourth-quarter and full-year results and announcement of the share repurchase program. The Company’s Board of Directors authorized a maximum of 20 million shares to be repurchased under the program. The program does not have an expiration date.
Item 4. Mine Safety Disclosures.
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this Quarterly Report on Form 10-Q.
Item 5. Other Information
During the three months ended March 31, 2024, no director or officer of the Company
Page 33 of 35
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2024
PART II. OTHER INFORMATION
(Continued)
Item 6. Exhibits.
Exhibit No. |
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Document |
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Certification dated April 30, 2024 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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Certification dated April 30, 2024 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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Written Statement dated April 30, 2024 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Written Statement dated April 30, 2024 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Mine Safety Disclosures |
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101.INS |
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Inline XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase |
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104 |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
Page 34 of 35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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MARTIN MARIETTA MATERIALS, INC. |
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(Registrant) |
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Date: April 30, 2024 |
By: |
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/s/ James A. J. Nickolas |
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James A. J. Nickolas |
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Executive Vice President and |
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Chief Financial Officer |
Page 35 of 35