Martin Marietta Materials Inc. reported results for the first quarter ended March 31. The company is reporting record first-quarter consolidated revenues of $1.147.8 billion compared to $921.9 million in last year’s first quarter, a 24.5% increase.
Ward Nye, chairman and CEO of Martin Marietta stated, “In the first quarter, Martin Marietta again exceeded world-class safety metrics and achieved record consolidated revenues, which benefitted from enterprise-wide pricing gains ahead of April’s more broadly planned increases, organic aggregates and cement shipment growth, and contributions from 2021 acquisitions. However, consistent with broader national macroeconomic trends, cost inflation outpaced top-line improvement, reducing our profit margins versus the prior-year quarter. Importantly, with the first-quarter nadir behind us, we believe annual price increases, most of which became effective on April 1, the expectation of further widespread pricing actions mid-year, and the disciplined execution of our operational excellence initiatives will enable Martin Marietta to mitigate rising costs and drive upstream margin expansion in the second half of the year. Based on our current expectations, we are raising our full-year outlook for aggregates and cement pricing to offset inflation and replace the earnings from recently divested downstream businesses.
“We continue to optimize and enhance our aggregates-led portfolio in line with our SOAR 2025 priorities. We divested our Colorado and Central Texas ready mixed concrete businesses on April 1. We also recently announced a definitive agreement to sell certain West Coast cement and concrete operations, which is expected to close in the second half of 2022. These portfolio optimization actions further reduce our business cyclicality and raw material cost inflation exposure, while strengthening our ability to generate consistently higher, sustainable margins over the long term. We expect to utilize proceeds from these transactions consistent with our clearly articulated capital allocation priorities, facilitating high-return external and organic growth investments to further enhance shareholder value.”
Nye concluded, “Martin Marietta is well positioned to capitalize on infrastructure tailwinds and strong private demand across our geographic footprint, including strength in single-family housing, warehouses and data centers, as well as a recovery in light nonresidential categories impacted by the pandemic. We expect these trends to drive multi-year demand and favorable pricing for our products. Beyond the benefits of these attractive industry dynamics, we are confident our strategic decisions will allow for responsible growth of our coast-to-coast footprint, which will benefit Martin Marietta’s bright future. Our team remains steadfastly committed to employee health and safety, commercial and operational excellence, sustainable business practices and the execution of our SOAR 2025 initiatives as we build and maintain the world’s safest, best performing and most durable aggregates-led public company.”
The Building Materials business achieved record first-quarter products and services revenues of $1,077.0 million, a 25.7% increase. Across all end-use markets, the business experienced healthy underlying demand with shipment levels commensurate with seasonal first-quarter trends. Pricing increased across all product lines. Product gross profit of $137.0 million decreased 7.6% amid volatile energy costs and broader inflation headwinds.
First-quarter organic aggregates shipments increased 2.5%, reflecting growing public and private product demand at the onset of the construction season. Organic pricing increased 6.5%, or 4.6% on a mix-adjusted basis.
Including acquired operations, total aggregates shipments grew 13.4% and pricing increased 5.6%. By segment:
East Group total shipments increased 1.1% from infrastructure construction activity in the Southeast and Midwest. Pricing, inclusive of acquisitions, increased 5.1%.
West Group total shipments increased 32.7%, driven by strong underlying demand in Texas and shipments from acquired operations that more than offset Colorado weather-related shipment shortfalls. Pricing increased 9.0%, or 4.8% on a mix-adjusted basis, and benefitted from improving long-haul shipments from higher-priced distribution yards and higher selling prices at acquired operations following January 1 pricing actions.
First-quarter aggregates product gross margin decreased 640 basis points to 14.9%, driven primarily by higher costs for diesel, repairs, internal freight and depreciation costs.
Texas cement shipments increased 10.0%, supported by robust product demand and tight supply throughout the Texas Triangle. Pricing increased 11.8%, benefiting from the carryover of 2021 mid-year price increases and improving demand for higher-priced specialty oil-well cement products. Cement product gross margin expanded 630 basis points to 20.3% compared with the prior-year quarter which was negatively impacted by incremental costs and inefficiencies from the Texas Deep Freeze.
Organic ready mixed concrete shipments fell slightly, despite healthy product demand, driven by timing of project completions. Organic pricing grew 8.2%, following the implementation of annual price increases early in the year. Inclusive of the acquired Arizona concrete operations, ready mix shipments and pricing increased 14.8% and 7.7%, respectively. Product gross margin declined 100 basis points to 7.3%, driven primarily by higher raw material and diesel costs.
Seasonal winter weather conditions in Colorado contributed to a 3.1% decrease in organic asphalt shipments. Organic pricing increased 5.8%. Including contributions from the acquired West Coast operations, total asphalt shipments and pricing increased 509.1% and 27.2%, respectively.
As anticipated, the Minnesota-based asphalt facilities, which were acquired in April 2021, were closed during the first quarter as the construction season in that market does not begin in earnest until late spring. Consistent with the company’s historical first-quarter trends, the asphalt and paving business posted an overall loss.