Martin Marietta Touts Record 2018 Results

Fourth-quarter heritage aggregates pricing improved 2.3 percent and shipments declined slightly. Excluding the fourth-quarter 2017 shipments from the company’s Forsyth, Ga., quarry that was divested in April 2018, fourth-quarter 2018 heritage aggregates volume improved 0.5 percent.

 

Shipments for the Mid-America Group heritage operations increased 1.6 percent, driven by heavy industrial projects in the Mideast Division. These gains were offset by weather-related delays in several large public and private construction projects in the Carolinas. Heritage pricing improved 2.1 percent.

 

Shipments for the Southeast Group heritage operations, as reported, decreased 3.2 percent; excluding fourth-quarter 2017 shipments from the Forsyth, Georgia quarry, these shipments increased 1.9 percent. Weather hindered construction activity in Georgia and Florida. Heritage pricing improved 7.4 percent, driven by strong gains in North Georgia and a higher percentage of long-haul shipments.

 

West Group shipments declined 1.2 percent, driven by Texas’ record October rainfall, as well as project delays in Colorado. West Group pricing improved 0.5 percent, reflecting robust pricing in Colorado that was partially offset by product mix in Texas.

 

Aggregates shipments to the infrastructure market decreased 5 percent, as large public projects in North Carolina, South Carolina and Texas were delayed by weather. Public construction projects, once awarded, are seen through to completion. Thus, delays from weather or other factors typically serve to extend the duration of the construction cycle for the company’s single largest end-use market.  

 

The company is encouraged by the acceleration of state lettings and contract awards in key states, including Texas, Colorado, North Carolina, Georgia and Florida. As state Departments of Transportation (DOTs) and contractors continue to address labor constraints and the broader industry benefits from further regulatory reform, management remains confident that infrastructure demand will continue to improve, driven by funding provided by the Fixing America’s Surface Transportation Act (FAST Act) and numerous state and local transportation initiatives.  

 

Aggregates shipments to the infrastructure market comprised 36 percent of fourth-quarter aggregates volumes. For the full year, the infrastructure market represented 39 percent of aggregates shipments, remaining below the company’s most recent 10-year average of 46 percent.

Ward Nye, chairman, president and CEO of Martin Marietta, stated, “Our industry-leading safety and record financial performance in 2018 can be best summarized as challenges faced and challenges met. We produced record results for the seventh consecutive year and concluded 2018 with the best heritage safety performance in our company’s history. These accomplishments demonstrate our commitment to operational excellence and the successful execution of our strategic plan. Full-year revenues increased 7 percent to a record $4.2 billion and adjusted EBITDA (Earnings Before Interest, Taxes, and Depreciation and Amortization) increased 9 percent to an all-time high of $1.1 billion, driven by a modest improvement in heritage Building Materials shipments, solid pricing gains and value-enhancing acquisitions. We also delivered record net earnings and earnings per diluted share (after adjusting for the one-time benefit in 2017 of the 2017 Tax Act on earnings metrics) for the full year.

“Even more noteworthy, we extended our lengthy history of record performance without meaningful shipment growth from our heritage Building Materials business,” Nye stated. “Weather, contractor capacity and logistics disruptions challenged both our company and the industry throughout the year, resulting in aggregates volumes, on a comparable basis, that remained only modestly above 2010 trough levels. Our proven ability to successfully manage short-term external disruptions makes us highly optimistic about our business and ability to achieve both continued profitability growth and shareholder value creation in 2019 and beyond.

“Looking ahead, we expect 2019 to be another record year for Martin Marietta,” Nye said. “The fundamentals of our business and underlying demand trends remain strong across our geographic footprint. We believe the combination of continued private-sector strength and the long-awaited arrival of increased public-sector activity in our key geographies will drive shipment, pricing and profitability growth in 2019. Leading employment and population growth across the Sunbelt should continue to bolster private-sector construction activity. Further, after a decade of underinvestment, infrastructure activity is poised for meaningful growth as evidenced by an acceleration in public lettings and contract awards in our key states of Texas, Colorado, North Carolina, Georgia and Florida. These trends, combined with an improved pricing outlook, underscore the strength of our markets and the near-term growth trajectory of our business.”

Nye concluded, “We are confident in Martin Marietta’s outlook given our leading market positions, disciplined pricing strategy and proven execution of our strategic plan. For 2019, we anticipate construction growth in our key regions to outpace the nation as a whole, driven by attractive employment growth, population trends and favorable momentum from state Departments of Transportation. Additionally, widespread customer optimism and growing contractor backlogs support increased demand for our construction materials. With both the ability and capacity to meet future market demand, Martin Marietta remains committed to world-class attributes across our business – including safety, efficiency and operational excellence – and is well-positioned to deliver enhanced long-term value for our shareholders.”