Martin Marietta Materials Inc. announced results for the third quarter and nine months ended Sept. 30, 2012. The company reported:
- Earnings per diluted share of $1.36 compared with $1.07.
- Consolidated net sales of $539.1 million compared with $445.0 million.
- Heritage aggregates product line pricing increased 4.1 percent; volume decreased 3.8 percent.
- Specialty Products net sales of $49.4 million and record third-quarter earnings from operations of $17.0 million.
- Consolidated selling, general and administrative expenses (SG&A) decreased 140 basis points as a percentage of net sales.
- Consolidated earnings from operations of $91.1 million compared with $80.0 million.
“Our strong third-quarter results reflect both revenue and profit growth that demonstrate the underlying strength of our legacy operations as well as the contribution from our recent acquisitions in the Denver market,” said Ward Nye, president and CEO of Martin Marietta Materials. “In terms of our overall performance, the heritage aggregates business benefitted from both continued strong pricing trends and increased productivity, and the specialty products business generated record earnings from operations. Our bottom line continued to reflect the diligent manner in which we control costs. As a result, our earnings per diluted share of $1.36, a 27 percent increase over the prior-year quarter, is especially noteworthy given that our team achieved this in an uncertain economic climate that has been marked by a reluctance by governmental bodies and private industry to commit to long-range capital projects.
“We also see several positive trends in construction activity. First, we continue to benefit from recovery and growth in the residential sector end-use market, which is reporting a 14 percent increase in heritage aggregates product line shipments over the prior-year quarter. Second, with the passage of the Moving Ahead for Progress in the 21st Century Act, or MAP-21, a 27-month Federal surface transportation bill intended to expedite project approvals and limit spending for programs unrelated to core transportation needs, federal highway funds can be obligated with more certainty. Consequently, many of our key states are taking steps to utilize various funding alternatives to support important infrastructure projects. Finally, it seems a backlog of construction work is awaiting, what we believe to be, a general restoration of confidence in the current economic and political environment. We anticipate these positive trends will continue and provide the prospect for increasing volume momentum as we move forward into 2013.”
Nye continued, “Consolidated net sales increased over 20 percent, with the recently acquired Denver, Colorado, area businesses contributing $92 million in the quarter. These operations once again exceeded our expectations, reflecting positive construction trends in that market where the rate of growth in highway contract awards ranks among the highest in the country, and, importantly, construction-related employment is well above the national average. Nonresidential construction activity also continues to improve in the market with commercial real estate realizing increased lease rates and decreasing vacancies. Year-to-date housing permits in Colorado increased more than 60 percent, outpacing the national average, while single-family home sales have increased significantly over the prior-year period.
“Heritage aggregates product line pricing increased 4.1 percent in the quarter over the prior-year period. Pricing growth was led by our Southeast Group, with an overall increase of 5.1 percent over the prior-year quarter, driven by improvement in all of its markets along with favorable product mix. The West Group reported a heritage aggregates product line price increase of 4.8 percent, with shipments to the energy sector being a significant driver of this improvement. The Mideast Group had a 3.5 percent increase in its heritage aggregates product line average selling price, led by growth in our North Carolina, Virginia and West Virginia markets.
“Volume trends noted in June continued throughout the third quarter, resulting in a 3.8 percent decline in heritage aggregates product line shipments versus the comparable prior-year period. Shipments to the infrastructure end-use market, which comprised more than half of our heritage aggregates product line volumes, declined 6 percent compared with the prior-year quarter. Much of the volume decline is attributable to the fact that for nearly three years federal highway spending operated under a series of short-term, continuing resolutions. This extended circumstance made it difficult, and at times impossible, for state departments of transportation to obligate traditional long-term expenditures. This created a chilling effect on various states' ability to advertise and award significant new highway construction activity.”