Martin Marietta Materials Inc. reported results for the third quarter ended Sept. 30, achieving record consolidated products and services revenues of $1.463 billion, versus $1.241 billion in 2020.
The Building Materials business achieved record products and services revenues of $1,390.8 million, a 17.3% increase, and record product gross profit of $413.1 million, a 7.9% increase.
The Building Materials business experienced growing product demand across its three primary end-use markets. However, contractor capacity constraints, including transportation availability and labor shortages, combined with wet weather in several markets, muted third-quarter shipment growth.
Third-quarter aggregates shipments, including shipments from acquired operations, grew 10.2%. Acquired operations have selling prices below the company’s average, which limited pricing growth to 1.2%.
On an organic basis, aggregates shipments increased 6.0% while pricing increased 2.2%, reflecting a higher percentage of lower-priced base stone shipments and opportunistic sales of low-priced excess fill material.
East Group total shipments increased 10.1% and benefitted from robust construction activity across all three primary end-use markets and shipments from the recently acquired Minnesota-based operations. Pricing increased 0.4%, inclusive of acquisitions. On a mix-adjusted basis, East Group pricing grew 2.5%.
West Group shipments increased 10.4% from strong underlying demand in both Texas and Colorado, improving energy-sector activity and shipments from a recent bolt-on acquisition in Texas. Pricing increased 2.8%.
Third-quarter aggregates product gross margin decreased 220 basis points to 34.2%, driven primarily by $11.7 million in higher diesel costs and a $5.9 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 34.9%.
Cement shipments increased 4.1%, benefitting from robust construction activity throughout the Texas Triangle and improving demand for specialty oil-well cement products. Pricing grew 8.4%, or 6.6% on a mix-adjusted basis, reflecting periodic price increases.
Cement product gross margin declined 250 basis points to 37.7% as higher energy and raw materials costs outpaced shipment and pricing gains.
Ready mixed concrete shipments increased 23.2%, or 20.5% organically, reflecting the healthy Texas and Colorado demand environment. Pricing increased 2.3% following the implementation of mid-year price increases in Texas. Product gross margin expanded modestly to 9.8%, as volume and pricing growth overcame higher raw material and diesel costs.
Total asphalt shipments increased 115.9% as incremental volume from the acquired Minnesota operations more than offset Colorado shipment declines resulting from late-summer liquid asphalt shortages that have since been resolved.
Asphalt pricing decreased 1.7%, reflecting a higher percentage of lower-priced shipments from the company’s newly acquired Minnesota business. Organic pricing increased 1.2%. Asphalt and paving products and services gross margin decreased 530 basis points, driven by higher raw material costs and operational disruptions from the Colorado liquid asphalt shortage.
Ward Nye, chairman and CEO of Martin Marietta, stated, “Our third-quarter results demonstrate Martin Marietta’s industry-leading performance and disciplined execution of our proven Strategic Operating Analysis and Review (SOAR) plan. We established new quarterly records for revenues, gross profit, Adjusted EBITDA (excluding the $69.9 million of nonrecurring gains in third quarter 2020) and earnings per diluted share (excluding the $0.87 per share of nonrecurring gains in third quarter 2020). These strong quarterly results were primarily driven by organic shipment growth, pricing gains and value-enhancing acquisitions, which more than offset higher energy-related costs. Importantly, the year’s first nine months concluded with the best safety performance in our history.
“Martin Marietta is well positioned to capitalize on the secular demand trends across our geographic footprint, including single-family housing strength, expanded federal- and state-level infrastructure investment and light nonresidential recovery,” Nye continued. “These trends should support growing construction activity and contribute to attractive pricing acceleration for heavy-side building materials. Our overall confidence is augmented by our newly completed acquisition of Lehigh Hanson, Inc.’s West Region business, which further enhanced our pipeline of growth opportunities and deep bench of talent at Martin Marietta. This SOAR-aligned, strategic transaction provides attractive new growth platforms for Martin Marietta’s continued geographic expansion, especially in key California and Arizona regions, where we are poised to benefit from favorable market dynamics and accelerating public and private construction activity.”
Nye concluded, “Underpinned by our record-setting safety, operational and financial performance, we are highly confident about Martin Marietta’s future. Our focus remains on building the safest, best performing and most durable aggregates-led public company. With our steadfast commitment to employee health and safety, disciplined pricing, operational excellence, sustainable business practices and strategy execution, we are confident Martin Marietta will continue delivering attractive growth and superior value for all of our stakeholders as we SOAR to a Sustainable Future.”