Martin Marietta Materials Inc. reported results for the fourth quarter and year ended Dec. 31, 2021. The company is reporting total fourth-quarter 2021 revenue of $1.405 billion, versus $1.111 billion in 2020. The company is also reporting full-year 2021 revenue of $ 5.085 billion, versus $4.432 billion in 2020.
The Building Materials business achieved record fourth-quarter products and services revenues of $1.3 billion, a 26.9% increase, and record product gross profit of $318.4 million, a 6.6% increase. The business experienced strong shipment levels across all product lines and primary end-use markets, aided, in part, by weather conditions that extended 2021 construction activity. Pricing also increased across all product lines.
As previously announced, on Oct. 1, 2021, the company completed the acquisition of Lehigh Hanson Inc.’s West Region business, which included a portfolio of 17 active aggregates quarries, two cement plants with related distribution terminals, and targeted downstream operations, predominantly in California and Arizona.
Lehigh West Region’s aggregates, asphalt and Arizona ready mixed concrete businesses are reported within the company’s West Group. The remainder of the Lehigh West Region’s operations, namely the cement and California ready mixed concrete businesses, are classified as assets held for sale/discontinued operations. The company is actively exploring strategic alternatives for these businesses.
Fourth-quarter organic aggregates shipments increased 9.3%, reflecting growing product demand that overcame continued contractor and transportation-related capacity constraints. Organic pricing increased 2.8%, in line with management’s previously stated expectations.
Total aggregates shipments, including acquired operations, grew 19.7%. Acquired operations have selling prices below the company’s average, which limited overall pricing growth to 1.4%.
- East Group total shipments increased 13.8% and benefitted from robust construction activity across all three primary end-use markets and volume from the acquired Minnesota-based Tiller operations. Pricing, inclusive of acquisitions, decreased slightly. On a mix-adjusted basis, East Group pricing grew 2.7%.
- West Group total shipments increased 30.5% from strong underlying demand in both Texas and Colorado and shipments from newly acquired operations. Pricing increased 6.1%, or 2.6% on a mix-adjusted basis, driven by improving long-haul shipments from higher-priced distribution yards.
Fourth-quarter aggregates product gross margin decreased 450 basis points to 26.2%, driven primarily by $15.3 million in higher diesel costs and a $13.4 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 27.9%.
Texas cement shipments increased 0.3% to nearly 1.1 million tons, a quarterly record. Large and diversified projects, coupled with improving demand for specialty oil-well cement products, offset one less shipping day relative to the prior-year quarter.
Pricing grew 11.6%, or 9.9% on a mix-adjusted basis, reflecting favorable Texas market dynamics. Cement product gross margin declined 350 basis points to 41.0% as higher energy and raw materials costs outpaced shipment and pricing gains.
Organic ready mixed concrete shipments increased 8.3%, reflecting the healthy Texas and Colorado demand environment. Organic pricing grew 3.3%, supported by mid-year price increases in Texas. Inclusive of the acquired Arizona operations, ready mixed concrete shipments and pricing increased 18.9% and 3.1%, respectively. Product gross margin declined 70 basis points to 8.0%, driven by higher raw material and diesel costs.
Favorable winter weather conditions in Colorado contributed to a 15.8% increase in organic asphalt shipments. Organic pricing increased 7.1%. Including the acquired Tiller and Lehigh West Region operations, total asphalt shipments and pricing increased 211.5% and 9.0%, respectively. Asphalt and paving products and services gross margin decreased 650 basis points to 11.6%, driven by higher raw material costs and a $1.5 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 products and services gross margin was 12.5%.
Ward Nye, chairman and CEO of Martin Marietta, stated, “By nearly all measures, 2021 was a momentous period of growth for Martin Marietta. We made tremendous progress on our SOAR 2025 initiatives and delivered the most profitable and safest year in our company’s history. Notably, 2021 marked 10 years of consecutive growth for consolidated products and services revenues, adjusted gross profit, Adjusted EBITDA and adjusted earnings per diluted share. We also successfully completed $3.1 billion in value-enhancing acquisitions, thereby expanding our geographic footprint and product offerings in multiple attractive high-growth markets. These accomplishments are a testament to our team’s commitment to Martin Marietta’s vision and strategic priorities and further position our company for continued success in 2022 and beyond.
“As we look forward, Martin Marietta is poised to capitalize on the favorable demand trends and market fundamentals across our key geographies. Building on attractive fourth-quarter momentum, we anticipate that both public and private construction activity will accelerate for the first time since our industry’s product shipment peak in 2005,” Nye continued. “Enhanced federal- and state-level surface transportation investment, single-family housing strength, and notable heavy industrial projects should drive robust product demand in 2022. These trends, combined with a light nonresidential recovery and incremental federal funding from the recently enacted Infrastructure Investment and Jobs Act, further support growing construction activity. Importantly, Martin Marietta has the ability and capacity to supply these needed products and, supported by our locally led pricing strategy, will do so in a manner that emphasizes value over volume.”
Nye concluded, “We are confident in our ability to benefit from these favorable macroeconomic trends as Martin Marietta builds the safest, best performing and most durable aggregates-led public company. With a steadfast commitment to employee health and safety, commercial and operational excellence, sustainable business practices and execution of our strategic plan, we are confident in Martin Marietta’s opportunities to continue to deliver industry-leading safety, operational and financial performance. As we SOAR to a Sustainable Future, we look forward to extending our long track record of disciplined growth and enhancing stakeholder value.”