Martin Marietta Materials Inc. reported record results for the first quarter ended March 31, 2019. Total revenues were $939 million versus $802 million in the first quarter of 2018.
First-quarter heritage aggregates volume and pricing improved 12.5% and 4.0%, respectively.
Shipments for the Mid-America Group heritage operations increased 18.4%, primarily driven by infrastructure, commercial and residential projects in the Carolinas. Heritage pricing improved 3.1% despite unfavorable product mix from increased shipments of lower-priced base stone in 2019.
Shipments for the Southeast Group heritage operations increased 16.7%, reflecting the overall strength of the North Georgia and Florida markets. Heritage pricing improved 6.2%.
West Group shipments increased 6.3% as strong nonresidential construction activity in Texas more than offset weather-impacted Colorado shipments. Product and geographic mix limited West Group pricing growth to 2.7%.
Inclusive of acquired operations, aggregates volume and pricing improved 24.2% and 2.3%, respectively. Acquired operations shipped 3.5 million tons at selling prices that are approximately 15% below the company’s average.
Martin Marietta’s first-quarter heritage aggregates shipments by end use are as follows (all comparisons are versus the prior-year quarter):
Aggregates shipments to the infrastructure market increased 2% as modestly improved weather, particularly in the Southeast, allowed contractors to advance transportation-related projects earlier in the construction season. Following more than a decade of underinvestment, management remains confident that infrastructure demand is poised for meaningful growth. Funding provided by the Fixing America’s Surface Transportation Act (FAST Act), combined with numerous state and local transportation initiatives, has resulted in an acceleration in lettings and contract awards in key states, including Texas, Colorado, North Carolina, Georgia and Florida. For the quarter, the infrastructure market represented 33% of aggregates shipments, which is below the company’s most recent 10-year average of 46% but consistent with first-quarter historical trends.
Aggregates shipments to the nonresidential market increased 33%, driven by both commercial and heavy industrial construction activity. The company continued to benefit from robust distribution center, warehouse, data center and wind turbine projects in key geographies, including Texas, the Carolinas, Georgia and Iowa. The nonresidential market represented 37% of first-quarter aggregates shipments.
Aggregates shipments to the residential market increased 8%, driven by weather-deferred homebuilding activity in the Carolinas, Georgia and Florida. Despite the recent slowdown in housing unit starts at the national level, the residential construction outlook across the company’s geographic footprint remains positive for both single- and multi-family housing, driven by favorable demographics, job growth, land availability, steady interest rates and efficient permitting. On a national level, housing starts remain below the 50-year annual average of 1.5 million despite notable population gains. The residential market accounted for 23% of first-quarter aggregates shipments.
Ward Nye, chairman, president and CEO of Martin Marietta, stated, “Our company delivered strong operating and financial performance for the first three months of 2019, including first-quarter records for revenues and Earnings Before Interest, Taxes, and Depreciation and Amortization (EBITDA). Driven by improved shipments, pricing and cost management, we are off to a promising start to what we expect to be another record year for Martin Marietta. Notably, the Building Materials business benefitted from robust pent-up demand as well as modestly improved weather across portions of our geographic footprint, which allowed for an early beginning to the construction season. These encouraging trends, combined with favorable pricing momentum and growing contractor backlogs, reaffirm our confidence in our full-year outlook.
“Consistent with our expectations, construction activity in our key regions, supported by strengthening public- and private-sector spending, is outpacing the nation as a whole. Infrastructure construction has begun in earnest on several transportation projects in North Carolina, Georgia and Florida following the recent acceleration in public lettings and contract awards in these key states,” Nye said. “Additionally, notable employment gains and population growth continue to support private-sector strength in our leading markets. These favorable dynamics bode well for a busy construction season throughout the remainder of the year.”
Nye concluded, “This year, Martin Marietta celebrates 25 years as a public company. We have established a proven record of value creation and will continue to build upon our success by focusing on price discipline, strategic geographic positioning and prudent capital allocation. We remain committed to the diligent execution of our strategic plan and further enhancement of the world-class attributes of our business – including safety, cost discipline and operational excellence. We believe Martin Marietta is firmly positioned for continued growth and enhanced shareholder value in 2019 and beyond.”