Martin Marietta Materials Inc. reported results for the second quarter ended June 30. The company is reporting revenues of $1.524 billion versus $1.295 billion in the second quarter of 2021, a 17.6% increase.
The Building Materials business generated record products and services revenues of $1.45 billion in the second quarter, an 18.3% increase, driven primarily by robust pricing growth across all product lines coupled with contributions from acquisitions.
Product gross profit of $400.8 million, a second-quarter record, increased 12.3%; however, higher energy, internal freight, contract services and supplies costs contributed to a gross margin decline of 140 basis points to 27.7%.
Second-quarter organic aggregates shipments increased 1.8% due to healthy underlying public and private product demand partially constrained by supply chain and logistics-related bottlenecks.
Organic pricing increased 8.8%, or 7.5% on a mix-adjusted basis, as the company began to benefit from price increases implemented on April 1, Including acquired operations, total aggregates shipments and pricing grew 9.3% and 8.4%, respectively.
- East Group total shipments decreased 1.0% as strong underlying demand was negatively impacted by unfavorable weather in April coupled with rail and marine shipping challenges. Pricing increased 7.6%.
- West Group total shipments improved 30.0%, driven primarily by contributions from acquired operations and strong Texas demand. Organic pricing increased 11.7%, or 8.3% on a mix-adjusted basis.
Second-quarter aggregates product gross profit improved 13.2% to $309.0 million, while gross margin declined 170 basis points to 32.3% primarily due to significantly higher energy, contract services, supplies and internal freight costs.
Cement shipments increased 19.8% to a new quarterly record of 1.1 million tons, while pricing increased 14.7%, or 12.5% on a mix-adjusted basis, driven by continued strong demand and tight cement supply in Texas.
Cement product gross profit grew to $51.1 million, an increase of 41.7%, and gross margins expanded 140 basis points to 32.4%, driven by volume and pricing gains but partially offset by significant energy related headwinds and unplanned kiln outages at both the Midlothian and Hunter plants.
On an organic basis, ready-mix concrete shipments and pricing increased 3.4% and 17.4%, respectively, driven by strong demand in Dallas/Fort Worth, Austin and San Antonio.
Ready-mix concrete product revenues and gross profit from continuing operations declined 15.8% and 25.1%, respectively, driven primarily by the divestiture of our Colorado and Central Texas ready-mix concrete businesses on April 1, but partially offset by acquired operations in Arizona.
Including contributions from the acquired West Coast operations, total asphalt shipments and pricing increased 40.2% and 24.0%, respectively. However, rapid acceleration of liquid asphalt, or bitumen, costs contributed to the gross margin compression of 880 basis points in the second quarter.
Ward Nye, chairman and CEO of Martin Marietta, stated, “I am pleased to report that Martin Marietta delivered second-quarter records for aggregates and cement shipments, revenues, gross profit, Adjusted EBITDA and Adjusted earnings per diluted share. Our strong financial performance this quarter demonstrates the successful execution of our strategic business plan and also serves as a testament to the focus of our remarkable team and resiliency of our aggregates-led business. Despite increased inflationary pressure from rising input costs, and a challenging overall macroeconomic and geopolitical operating environment, our differentiated business model once again delivered outstanding results as we capitalized on an attractive commercial environment for our business and diligently executed our value-over-volume commercial strategy. We expect to see a positive inflection in the current price/cost dynamic, as well as record second-half pricing growth rates which will facilitate attractive margin expansion and accelerated unit profitability growth going forward.
“In the second quarter, we closed two previously announced transactions finalizing the divestiture of our Colorado and Central Texas ready mixed concrete businesses and completing the divestiture of certain West Coast cement and ready mixed concrete operations. These portfolio optimizing transactions not only improve our product mix and margin profile, but also strengthen our balance sheet and the economic durability of our company. Importantly, these transactions provide flexibility to continue driving shareholder value by prudently investing in strategic acquisitions and organic growth initiatives, returning capital to shareholders and reducing our leverage to within our targeted range.”
Nye concluded, “Martin Marietta is well positioned to capitalize on strong demand trends across our coast-to-coast geographic footprint as increased infrastructure investment coupled with a recovery in light nonresidential construction, large scale energy projects and domestic manufacturing is expected to insulate product shipments from any near-term, affordability-driven headwinds in residential end markets. 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.”