On the heels of Martin Marietta Materials’ record revenues, profitability, earnings reported for the fourth quarter of 2017, Ward Nye, chairman, president and CEO is looking forward to 2018 with confidence.
“Our confidence in our 2018 outlook is particularly strengthened by positive fourth-quarter trends,” Nye said. “Once again, we posted solid pricing growth across all product lines and segments. These ongoing pricing improvements, coupled with the benefits from the strategic deployment of capital into our business, contributed in part to a 290-basis-point expansion in fourth-quarter consolidated gross margin compared with the prior-year quarter. Notably, the aggregates product line posted a fourth-quarter incremental gross margin well in excess of management’s targeted goal of 60 percent despite lower volumes. These results underscore the comparative strength of our markets and our continued focus on operational excellence.
“While employment expansion has led to continued strength in private residential and nonresidential construction, we have yet to see meaningful and consistent growth in public heavy construction activity. Infrastructure projects have been hindered by project delays and uncertainty concerning regulatory and other related reform. We are encouraged, however, by the recent enactment of the “Tax Cuts and Jobs Act of 2017” (2017 Tax Act) and its long-term benefits for Martin Marietta, our customers and our industry. Importantly, passage of this legislation provides positive momentum in Washington, D.C., to address the shortfall in sustainable funding commensurate with the nation’s need for infrastructure investment.
The recent release of President Trump’s “Legislative Outline for Rebuilding Infrastructure in America” provides additional momentum, increasing the likelihood that both infrastructure funding will be increased and regulatory burdens will be lightened. While state Departments of Transportation (DOTs) and contractors are slowly addressing their labor constraints, we believe that were an enhanced infrastructure bill enacted, those efforts would be more rapidly addressed. However, even in the absence of such an enhanced infrastructure bill, strong customer confidence and improving sentiment lead us to believe that infrastructure activity for 2018 and beyond should benefit from the “Fixing America’s Surface Transportation Act” (FAST Act), the 2017 Tax Act, and state and local infrastructure initiatives.”
Nye concluded, “Looking ahead to 2018, the fundamental drivers for broad-based construction activity support our optimism that we will continue to benefit from a steady multi-year cyclical recovery across our geographic footprint. Our leading positions in many of the nation’s most attractive and vibrant markets should allow us to capitalize on anticipated increased demand for infrastructure projects and private-sector construction activity in 2018 and beyond. With a relentless focus on world-class safety standards, diligent cost discipline, operational excellence and prudent capital allocation, Martin Marietta remains committed to achieving industry-leading results and further enhancing long-term shareholder value.”