Martin Marietta Materials Inc. reported results for the second quarter ended June 30, including products and services revenues of $1.295 billion versus $1.189 billion in the second quarter of 2020.
Products and services revenues include the sale of aggregates, cement, ready mixed concrete, asphalt and Magnesia Specialties products, plus paving services to customers, but excludes related freight revenues.
The Building Materials business achieved products and services revenues of $1.2 billion, a 7.4% increase, and product gross profit of $356.9 million. The Building Materials business benefitted from solid product demand driven by single-family housing growth, infrastructure investment and notable heavy industrial projects of scale.
The aggregates, cement and ready mixed concrete operations in Texas experienced project delays as the state marked its 11th-wettest second quarter in 127 years. Additionally, the aggregates and downstream operations in Colorado faced a difficult comparison versus second-quarter 2020, which benefitted from unseasonably favorable weather conditions.
As previously announced, the company completed the acquisition of Minnesota-based Tiller Corporation on April 30. Tiller’s aggregates and asphalt operations are reported as part of the East Group.
Second-quarter organic aggregates shipments and pricing increased 1.5% and 3.4%, respectively. Total aggregates shipments and pricing increased 3.3% and 2.9%, respectively.
East Group total shipments increased 7.0% reflecting strong construction activity in the Carolinas, Georgia, Florida and Maryland across all three primary end-use markets and shipments from the recently acquired Tiller operations. This growth more than offset weather-induced project delays in the Midwest. Pricing increased 3.6%, reflecting favorable geographic mix.
West Group shipments decreased 3.6%, as significant rainfall in Texas and Colorado hindered robust construction activity. Pricing increased 0.7%, reflecting a lower percentage of higher-priced commercial rail-shipped volumes. On a mix-adjusted basis, West Group pricing increased 2.4%.
Second-quarter aggregates product gross margin decreased 150 basis points to 34.0%, driven by higher diesel costs and a $6.1 million increase in cost of revenues from the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting. Excluding the impact of acquisition accounting, adjusted aggregates product gross margin was 34.8%.
Cement shipments decreased 1.9%, despite robust demand and construction activity throughout the Texas Triangle, resulting from extreme precipitation from late April through mid-June. Pricing improved 6.8%, or 4.2% on a mix-adjusted basis, following annual price increases that went into effect on April 1.
Ward Nye, chairman and CEO of Martin Marietta, stated, “Our second-quarter results demonstrate Martin Marietta’s strong execution of our proven Strategic Operating Analysis and Review (SOAR) plan and the benefit of strengthening product demand, pricing gains across all product lines and targeted growth initiatives. The Company established new quarterly records for revenues, profits and safety, notwithstanding significant rainfall that adversely impacted operations in several of our key geographies, most notably Texas and Colorado, our two largest revenue states. Importantly, Martin Marietta is poised to capitalize on long-term secular demand trends that are expected to support growing construction activity and contribute to favorable pricing dynamics across our footprint. We remain on track to once again deliver record revenues and Adjusted EBITDA for the full year.
“As we responsibly and sustainably grow our business, we continue to advance SOAR 2025 and enhance our geographic footprint and product offerings. In May, we announced an agreement to acquire Lehigh Hanson Inc.’s West Region business (Lehigh West Region), which provides the company with a new upstream materials-led growth platform across several of the nation’s largest and fastest growing megaregions in California and Arizona. We expect the transaction to be accretive to earnings per diluted share in the first full year following closing, and are confident in our ability to quickly drive shareholder value using the time-tested integration approach we took with our River for the Rockies, TXI and Bluegrass acquisitions.”
Nye concluded, “As we SOAR to a Sustainable Future, Martin Marietta will continue to build on our foundation that has proven successful – an aggregates-led growth platform, a steadfast commitment to employee safety, disciplined pricing, operational excellence and solid execution of our strategy. We are confident in Martin Marietta’s outlook for the balance of the year and beyond and remain committed to delivering sustainable growth and superior shareholder value.”