Martin Marietta Materials Inc. reported results for the fourth quarter and year ended Dec. 31, 2022, noting full-year records for revenues, profitability and safety performance. While fourth-quarter 2022 total revenues were lower, $1.477 billion versus $1,496 billion in 2021, full-year 2022 revenues totaled $6.161 billion, up from $5.414 billion in 2021.
The Building Materials business generated products and services revenues of $1.31 billion for the fourth quarter, a 1.7% decrease, attributable to colder temperatures and increased precipitation across most of the company’s geographies. However, products and services gross profit increased 4.0% to a fourth-quarter record of $331.1 million. Products and services gross margin improved 140 basis points to 25.2% as the effect of multiple price increases during the year more than offset higher operating costs and lower, weather-impacted shipments.
Fourth-quarter aggregates shipments decreased 12.0%, largely due to inclement weather in a number of key markets compared to the unseasonably warm and dry prior-year period that extended 2021 construction activity. Pricing increased 16.5%, a quarterly record, or 13.8% on a mix-adjusted basis, due to the cumulative effect of multiple price increases throughout the year.
Fourth-quarter aggregates product gross profit improved 10.1% to a fourth-quarter record of $239.0 million. Similarly, product gross margin improved 200 basis points to 28.2%, as robust pricing growth more than offset lower shipments and increased costs.
Despite robust product demand, fourth quarter cement shipments decreased 10.8% to 0.9 million tons, primarily attributable to wet and cold weather in Texas. Pricing increased 20.8%, aided by largely sold-out conditions and the compounding effect of the year’s multiple price increases. Cement product gross profit grew 4.4% to a fourth-quarter record of $58.2 million. Product gross margin declined 140 basis points to 39.6%, as pricing gains were not enough to offset the impacts of lower operating leverage and higher energy, raw materials and maintenance costs in the period.
Ready mixed concrete product revenues and product gross profit declined 35.4% and 39.9%, respectively, driven largely by the April 1 divestiture of the company’s Colorado and Central Texas ready mixed concrete businesses, impacting comparability with the prior year. Increased raw materials costs for aggregates and cement weighed on product gross profit and product gross margin.
Asphalt and paving product and services revenues increased 16.3% to $198.6 million while product and services gross profit decreased 6.9% to $18.4 million as price increases did not fully offset raw material cost increases.
Ward Nye, chairman and CEO of Martin Marietta, stated, “2022 marked our company’s 11th consecutive year delivering increased products and services revenues, gross profit and Adjusted EBITDA, as well as our most profitable year ever. We achieved record financial results and world-class safety incidence rates while also seamlessly integrating a large platform acquisition and completing non-core asset divestitures against a backdrop of rapid monetary tightening, a resulting housing slowdown, and cost inflation at 40-year highs. These accomplishments are a testament to our team’s disciplined execution of our strategic plan and unyielding focus on what we can control. Moreover, in a notably weather-impacted fourth quarter, our team nonetheless expanded aggregates margins and increased gross profit per shipped ton by 25% over the prior-year quarter. These successes were underscored by an all-time quarterly record of aggregates pricing growth and position our company well to deliver another record year in 2023.
“Entering 2023, near-term product demand visibility is supported by healthy customer backlogs driven by an acceleration in public infrastructure investment and announced large-scale energy and domestic manufacturing projects,” Nye continued. “While single-family residential construction is slowing, we expect a resumption of growth in this end market in Martin Marietta markets beyond 2023 as population growth continues and mortgage rates stabilize. In total, we expect full year 2023 aggregates shipments to be relatively flat but, given the carryover effects of our 2022 commercial actions and broad acceptance of our January 1, 2023 price increases, we are confident in our ability to continue to deliver accelerated margin expansion.”
Nye concluded, “Our resilient and durable business model gives us the confidence in our ability to continue our industry-leading operational, financial and regulatory performance while successfully navigating the dynamic macroeconomic environment and sustainably delivering value for shareholders.”