Martin Marietta Materials Inc. announced results for the fourth quarter and year ended Dec. 31, 2012. For the fourth quarter of 2012, versus fourth quarter 2011, the company reported:
- Earnings per diluted share of $0.46 compared with $0.32.
- Consolidated net sales of $457.9 million compared with $374.7 million.
- Heritage aggregates product line volume increased 5.0 percent; pricing increased 1.0 percent.
- Specialty Products net sales of $50.6 million and earnings from operations of $15.8 million.
- Consolidated selling, general and administrative expenses (SG&A) decreased 20 basis points as a percentage of net sales despite absorbing a $3.3 million charge for restructuring initiatives.
- Consolidated earnings from operations of $40.0 million compared with $20.7 million; 2011 results included $15.1 million of business development expenses.
For full-year 2012, versus full-year 2011, the company reported:
- Adjusted earnings per diluted share (excluding business development expenses of $0.46 and $0.25 per diluted share in 2012 and 2011, respectively) of $2.29 compared with $2.03.
- Earnings per diluted share of $1.83 compared with $1.78.
- Net sales of $1.839 billion compared with $1.520 billion.
- Heritage aggregates product line volume up 2.9 percent; pricing up 2.5 percent.
- Specialty Products record net sales of $202.2 million and record earnings from operations of $68.5 million compared with $200.6 million and $66.3 million, respectively.
- SG&A expenses down 70 basis points as a percentage of net sales.
“We were pleased that 2012 concluded the same way it started – with growth in both heritage aggregates product line shipments and average selling price,” said Ward Nye, president and CEO of Martin Marietta Materials, stated. “Notably, heritage volume growth in the fourth quarter was achieved in each of our reportable groups, leading to an overall increase of 5.0 percent. Underlying this improvement was expansion in our nonresidential and residential end-use markets, continuing trends we have experienced throughout the year. Our Colorado operations acquired in December 2011 also provided an important contribution to the quarter. Additionally, we see tangible signs that the infrastructure end-use market is poised to benefit from the Moving Ahead for Progress in the 21st Century Act, or MAP-21, as well as other federal- and state-sponsored funding initiatives. Our 2012 results and trends, coupled with external indicators, have provided optimism that our momentum will continue in 2013.”
Nye continued, “Heritage aggregates product line volume growth reflects a 13 percent increase in shipments in both the nonresidential and residential end-use markets. The nonresidential market is our second largest aggregates product line end use, comprising 31 percent of quarterly shipments. Volume growth was notable in the energy sector, as well as the commercial construction sector, which we believe is beginning to benefit from six consecutive quarters of improvement in the residential end-use market. Generally, growth in the commercial component of nonresidential construction follows the residential construction market with a 12- to 18-month lag.
“The infrastructure market represents approximately half of our aggregates product line volumes and increased 1.5 percent for the quarter,” Nye continued. “We were encouraged by the 91 percent increase in highway obligations during the quarter compared with the prior-year period. While the rate of improvement will moderate as the fiscal year progresses, we believe this is an early indicator for increased infrastructure construction activity in 2013. We also continue to monitor applications for funding provided by the Transportation Infrastructure Finance and Innovation Act (TIFIA), which provides $1.75 billion of federal credit assistance over the next two years for nationally or regionally significant surface transportation projects. Each dollar of federal funds can provide up to $10 in TIFIA credit assistance and, on an overall basis, TIFIA can leverage $30 billion to $50 billion in new transportation infrastructure investment. Several of our key states, including Texas, North Carolina and Virginia, have applied for TIFIA monies, which are expected to be awarded in early 2013. Construction activity related to TIFIA projects could begin as early as second half 2013, but more likely will have a greater impact on 2014 through 2016 construction activity.
“We continue to see significant state-level programs aimed at increasing funding for infrastructure projects,” Nye said. “Recently, the state of Colorado passed a measure potentially increasing annual infrastructure funding by $300 million for the next five years. Texas, Iowa and Florida have also approved programs to provide additional funding for key initiatives. Additionally, the governor of Virginia proposed a transportation funding overhaul that could have provided more than $3 billion for highways, rail and transit systems in the next five years. The plan was approved by the Virginia House of Delegates but was effectively tabled by the State Senate. Not surprisingly, the increase in highway contract awards in Colorado, Virginia and Iowa is significantly outpacing the national average.
“Geographically, energy-sector shipments and strength in both residential and nonresidential end-use markets led to an 8.7 percent increase in heritage aggregates product line shipments in the West Group,” Nye said. “The Mideast and Southeast Groups had heritage volume growth of 1.2 percent and 1.7 percent, respectively. Once again, aggregates shipment levels varied by market, with notable strength in Texas, Florida, Indiana and Charlotte, North Carolina. On the contrary, shipment weakness was noted in the Ohio and Kansas City markets, which experienced reductions in state infrastructure projects; Virginia, where several large nonresidential projects were completed earlier in the year; and West Virginia, which saw a decline in sales of asphalt stone.
“Our overall heritage aggregates product line average selling price increased 1.0 percent, reflecting expansions in all of our reportable groups,” Nye concluded. “This growth was led by the 2.9 percent increase in our Southeast Group, which was due to pricing increases and product mix. Our West Group achieved a 1.3 percent increase in pricing, while our Mideast Group improved 0.5 percent. Heritage aggregates product line production increased 6 percent to meet shipment activity. Our operations personnel leveraged efficiencies gained through higher production volumes and reduced our heritage cost per ton by 2 percent.”