Martin Marietta Materials Inc. reported results for the first quarter ended March 31. Total revenues were $982.4 million versus $958.2 million in the first quarter of 2020.
The company also announced that it acquired Minnesota-based Tiller Corp. on April 30. The Tiller business will be integrated into the company’s Central Division, complementing Martin Marietta’s product offerings, broadening its geographic reach and creating a leading aggregates position in the Minneapolis/St. Paul region.
As anticipated in the company’s previously-announced guidance, first-quarter aggregates shipments declined 3.0%. Pricing increased 3.4%, or 2.5% on a mix-adjusted basis.
East Group shipments increased 0.2%, reflecting strong residential and nonresidential construction activity in the Carolinas, Georgia, Florida and Maryland, which more than offset the Midwest’s later start to the construction season, as compared with the prior year, as well as reduced wind energy construction activity. Pricing increased 3.9%, with improvements in both the East and Central divisions.
West Group shipments decreased 7.7%, despite robust underlying demand, due to unfavorable winter weather conditions in both Texas and Colorado and reduced energy-sector demand. Geographic mix limited pricing growth to 1.9%.
First-quarter aggregates gross profit per ton shipped improved 34.4% and product gross margin expanded 490 basis points to 21.3%, driven by pricing gains and lower overall costs for contract services and internal freight.
Cement shipments increased 0.3% despite the historic winter storm that shut down the company’s cement operations for 11 days in February. Notably, the Midlothian facility in North Texas experienced double-digit shipment growth for the quarter, demonstrating the robust demand in the Dallas/Fort Worth metroplex that more than offset weather-related impacts and reduced energy-sector activity in South and West Texas.
Pricing improved 1.5%, as lower sales of higher-priced oil-well specialty cement products into West Texas disproportionately limited overall pricing growth. On a mix-adjusted basis, cement pricing increased 2.2%.
Cement product gross margin declined 1,160 basis points to 14.0%, driven by storm-related incremental costs and inefficiencies as a result of the unplanned plant shutdowns.
Ready mixed concrete shipments increased 26.5%, led by double-digit growth in Texas resulting from large projects and incremental volume from operations acquired in August 2020. This growth more than offset weather-related shipment declines in Colorado. Pricing declined 2.0%, reflecting geographic mix from a lower percentage of higher-priced Colorado shipments. Product gross margin improved 520 basis points to 8.3%, driven primarily by higher shipments and improved delivery costs.
A return to normal winter weather conditions in Colorado contributed to the 36.2% decrease in asphalt shipments. Asphalt pricing increased 7.9%.
Ward Nye, chairman and CEO of Martin Marietta, stated, “Following record performance in 2020, our company is off to a strong start to what we expect to be another outstanding year for Martin Marietta. For the first three months of 2021, we delivered solid operational and financial performance, establishing first-quarter records for revenues, profits and safety. These results are a testament to our differentiated business model and dedication to our proven Strategic Operating Analysis and Review (SOAR) plan.
“The company expanded consolidated gross margin 290 basis points to 17.8% on 2.5% top-line improvement and generated record Adjusted EBITDA of $204 million, primarily driven by pricing gains achieved by our upstream aggregates and cement businesses and disciplined cost management across the enterprise. Importantly, the Building Materials business benefitted from widespread strengthening in product demand, notwithstanding the disruptions from February’s unprecedented winter ice storm in Texas, our largest revenue-generating state. Looking ahead, we remain confident that long-term secular demand trends and the rapidly recovering U.S. economy will drive aggregates-intensive construction growth in our key geographies.
“We are equally excited to announce the strategic, value-enhancing acquisition of Tiller Corp. Tiller is the leading aggregates and FOB hot mix asphalt supplier in the Minneapolis/St. Paul region, notably enhancing Martin Marietta’s high-margin, upstream materials business in one of the largest and fastest growing midwestern metropolitan areas. We expect this SOAR-aligned acquisition to be immediately accretive to earnings and cash flow, and contribute $170 million of product revenues and $60 million of Adjusted EBITDA for the remaining eight months of 2021.”
Nye concluded, “Our record-setting first-quarter results underpin our confidence in Martin Marietta’s ability to continue delivering sustainable growth and superior shareholder value creation in 2021 and beyond. The company’s unrivaled growth opportunities and steadfast commitment to disciplined pricing and operational excellence, combined with emerging demand tailwinds that are expected to support construction activity over the long term, firmly and uniquely position Martin Marietta to SOAR to a Sustainable Future.”