Martin Marietta Materials Inc. released results for the third quarter ended Sept. 30. The Building Materials business generated record revenues of $1.9 billion, a 10.5% increase. Gross profit increased 38.4% to a record of $649.5 million..
Third-quarter aggregates shipments decreased 7.3%, as softer demand in certain Midwest and Southwest markets was partially offset by continued strength in key Southeast markets. Pricing increased 20.0%, or 17.2% on a mix-adjusted basis, due to the cumulative effect of Jan.1, 2023 and mid-year 2023 pricing actions.
Aggregates gross profit increased 32.1% to a record of $440.6 million as pricing growth more than offset lower shipments and higher costs, underscoring the benefits of the company’s value-over volume commercial philosophy.
Ward Nye, chairman and CEO of Martin Marietta, stated, “We are pleased to again report record quarterly results for nearly every financial and operational measure, including continued world-class safety incidence rates. These extraordinary results demonstrate the earnings power of our business, driven by our team’s disciplined execution of our proven value-over-volume commercial strategy. Our commitment to safety, enterprise excellence and the steady advancement of our strategic plan underpins our track record of success and our confidence to continue delivering attractive growth.
“Consistent with our aggregates-led product focus, on October 31, 2023, we closed the sale of our Tehachapi, California cement plant for $315 million, which largely concludes planned asset sales from the 2021 Lehigh Hanson West acquisition. This divestiture not only improves our product mix, but also provides additional balance sheet flexibility to redeploy the proceeds into pure-play aggregates acquisitions.
“The results for the quarter and through nine months underscore our confidence that Martin Marietta will continue to outperform in the near-, medium- and long-term as we benefit from our business-mix portfolio and carefully curated coast-to-coast footprint. Specifically, we see increased investment in large infrastructure and manufacturing projects across the United States. These positive trends provide an attractive counter-balance to the slowing in warehouses, private light nonresidential and residential construction, which have been impacted by tightening credit conditions. Notably however, the single-family residential sector remains fundamentally underbuilt, particularly in key Martin Marietta Sun Belt markets. As such, we fully expect demand in these end markets to accelerate when inflation moderates and restrictive monetary policy eases.”
Nye concluded, “Our outstanding year-to-date results, despite reduced product shipments, underscore the durability of our business, the vitality of our chosen geographies, the efficacy of our value-over-volume market approach, as well as our ability to adapt to the challenges inherent in the current volatile macroeconomic and geopolitical environment. With robust, multi-year demand from infrastructure and U.S.-based manufacturing, coupled with an attractive commercial environment, Martin Marietta is well-positioned to deliver compelling results and superior shareholder value for the foreseeable future.”
In its other markets:
- Cement shipments of 1.1 million tons were relatively flat while pricing increased 18.9%, or 18.6% on a mix-adjusted basis, as largely sold-out conditions continue to drive robust pricing momentum. Cement gross profit increased 61.5% to a record $108.7 million.
- Ready mixed concrete revenues increased 25.3% to $285.2 million while gross profit increased 81.8% to $34.1 million.
- Asphalt and paving revenues increased 14.6% to a record of $359.9 million. Likewise, gross profit increased 33% to a record of $66.1 million, as lower natural gas and liquid asphalt, or bitumen, costs augmented pricing growth.
- Magnesia Specialties revenues of $75.5 million were flat as softer demand for chemical products was offset by strong pricing improvement in both chemicals and lime product lines. Gross profit increased 3.6% to $21.4 million, as energy cost moderation and higher pricing more than offset lower operating leverage.