Feb. 11, 2020 – Martin Marietta Materials just reported record revenues for 2019. So what do they see up ahead? The company is confident in its 2020 outlook and in its key supporting factors. The company said its geographic footprint has attractive underlying market fundamentals, including notable employment gains, population growth and superior state fiscal health, that should promote steady and sustainable construction growth over the near- and medium-terms. Martin Marietta believes the current construction cycle will continue for the foreseeable future and expand at a steady pace in 2020 for each of its three primary construction end-use markets.
Infrastructure construction, particularly for aggregates-intensive highways and streets, is expected to benefit from lettings and contract awards in key Martin Marietta states, continued FAST Act funding, and regulatory reform allowing for reduced permitting time for large projects. Management believes that federal transportation funding will remain, at a minimum, at status quo levels absent the prospective passage of a successor infrastructure bill prior to the FAST Act’s September 2020 expiration. This should provide the necessary confidence and visibility for states to continue to advance planned and future construction projects.
Importantly, states will continue to play an expanded role in infrastructure investment. Incremental funding at both state and local levels, through bond issuances, toll roads, tax initiatives and other sources, should grow at faster near-term rates than federal funding. Martin Marietta’s top 10 states – Texas, Colorado, North Carolina, Georgia, Iowa, Florida, South Carolina, Indiana, Maryland and Nebraska – accounted for 86% of total Building Materials’ revenues in 2019 and have all introduced incremental transportation funding measures within the last five years. Third-party forecasts also predict increased infrastructure investment in 2020 and beyond.
Nonresidential construction is expected to increase in both the commercial and heavy industrial sectors for the next several years across many of the company’s key markets. Residential construction is expected to continue growing within Martin Marietta’s geographic footprint, particularly as mortgage rates remain attractive and contractors address the need for more affordable homes.