Martin Marietta Scores Record Fourth-Quarter, Full-Year Profitability

Martin Marietta Materials Inc. reported results for the fourth quarter and year ended Dec. 31, 2020. The company is reporting total revenues of $1,179.6 billion for the quarter, compared to $1,100.4 billion during the same quarter in 2019. For 2020 as a whole, the company is reporting total revenues of $4,729.9 billion versus $4,739.1 billion in 2019.

For 2020, the company is reporting record gross profit, achieving $325.4 million in the fourth quarter of 2020 versus $258.6 million in the fourth quarter of 2019; and $1,252.8 billion for 2020 as a whole, versus $1,179.0 billion in 2019.

The Building Materials business achieved record fourth-quarter revenues and gross profit. Products and services revenues of $1.05 billion increased 8.3% and product gross profit of $298.7 million increased 25.1%.

During the quarter, the Building Materials business experienced notable improvements in product demand, which benefitted from strong residential construction activity and milder weather conditions that extended the construction season. Consistent with management’s expectations, pricing remained resilient with growth in all product lines.

Fourth-quarter aggregates shipments grew 3.0% compared with the prior-year quarter. Aggregates pricing increased 3.5%on both a reported and mix-adjusted basis.

East Group shipments increased 3.1%, reflecting strengthening demand in North Carolina, Georgia, Florida and Indiana that more than offset reduced Midwestern wind energy construction activity. Pricing increased 6.0%, or 3.6% on a mix-adjusted basis, with solid improvements in both the East and Central divisions and aided by favorable geographic mix.

West Group shipments increased 2.8%, driven by housing activity and large heavy industrial projects that more than offset reduced energy-sector demand. Pricing decreased 1.3%, reflecting a lower percentage of higher-priced commercial rail-shipped volumes in Texas that offset robust underlying pricing gains. On a mix-adjusted basis, West Group pricing increased 3.2%.

Fourth-quarter aggregates gross profit per ton shipped improved 17.9% and product gross margin expanded 370 basis points to 30.7%, driven by higher shipment levels, strong pricing gains and lower production costs, including diesel fuel and contract services.

Cement shipments increased 11.7% to 1.1 million tons, a fourth-quarter record. This growth reflected robust underlying demand in North and South Texas that more than offset reduced energy-sector activity. Pricing improved 0.5%, as lower sales of higher-priced oil-well specialty cement products into West Texas disproportionately impacted overall pricing growth. 

On a mix-adjusted basis, cement pricing increased 3.0%. The cement business achieved record product gross margin of 44.5%, an 850-basis-point expansion, driven by improved kiln reliability from prior-period investments, lower fuel costs and the timing of planned kiln outages.

Ward Nye, chairman and CEO of Martin Marietta, stated, “In every respect, 2020 was extraordinary for Martin Marietta as we addressed and overcame challenges that were inconceivable a year earlier. Our resilient business model and team’s commitment to Martin Marietta’s vision and strategic priorities enabled us to achieve record fourth-quarter results and deliver record full-year profitability and the best safety performance in our company’s history.

“We are proud to extend our track record of financial and operational excellence despite the COVID-19 pandemic. Notably, 2020 marked our ninth consecutive year of growth for products and services revenues, gross profit, Adjusted EBITDA and earnings per diluted share. For the fourth quarter, we established new records for revenues and Adjusted EBITDA and expanded consolidated gross margin 410 basis points to 27.6%, driven by shipment growth, pricing gains and disciplined cost management across the business. These record-setting results underscore the thoughtful development and successful execution of our Strategic Operating Analysis and Review (SOAR) plan.

“As we move forward, we believe underlying demand fundamentals will reset, establishing 2021 as the year during which the nation regains its economic footing,” Nye continued. “While degrees of macroeconomic uncertainty will persist, our 2021 outlook is supported by the widespread shipment and pricing strength seen during the fourth quarter. We anticipate single-family housing growth, expanded infrastructure investment and notable heavy industrial projects of scale will support the company’s near-term shipment levels. We expect these demand drivers, combined with the ancillary construction necessary for housing community buildouts and the potential increased infrastructure investment from a comprehensive federal surface transportation package, should provide for multi-year growth in product demand.”

Nye concluded, “With a collective commitment to our strategies, disciplined pricing and operational excellence, Martin Marietta has built a strong foundation for continued success. Today, Martin Marietta is uniquely well-positioned, geographically, financially and otherwise, to capitalize on the emerging growth trends that are expected to support steady and sustainable construction activity over the long term. We remain confident in our company’s prospects for continued sustainable growth and superior shareholder value creation in 2021 and beyond.”

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