Martin Marietta Materials, Inc. announced its results for the first quarter ended March 31, 2013.
Ward Nye, president and CEO of Martin Marietta Materials, stated, “Due to a more normal winter weather pattern, and in fact, more severe and extended in some parts of the country, aggregates shipments declined 8.8 percent compared with the prior-year quarter. The prior year benefitted from an unseasonably warm winter, accelerating the start of construction projects in many of our markets into the first quarter. The decline in aggregates volumes directly correlated to the gross profit reduction. Notably, however, our aggregates business continues to experience pricing growth in each reportable segment and in each product line. This trend bodes well for the future performance of this business as shipments pick up during the remainder of the year. Our specialty products business benefitted from the new lime kiln completed in the fourth quarter of 2012 and established new records for net sales and gross profit.
“From a macroeconomic view, we see positive indicators, including upward trends in housing starts, construction employment and highway obligations. All of these factors should result in increased construction activity during the remainder of the year, and we are well-positioned to capitalize on these opportunities and enhance value for our shareholders and, in fact, reaffirm our guidance for the full year.”
Nye continued, “Aggregates product line pricing improved 5.7 percent. Importantly, pricing growth was widespread as evidenced by increases in nearly all of our geographic markets. The West Group achieved the strongest growth, an 8.7-percent increase, reflecting price increases implemented over the past year and the favorable impact of product and geographic mix. The Mid-America and Southeast Groups reported increases of 4.1percent and 5.8 percent, respectively, in the average selling prices for the aggregates product line.
“The improving housing market, an important trend for the economy generally and the aggregates industry specifically, is leading the current economic recovery. Housing starts and completions for the trailing 12 months are up approximately 47 percent and 36 percent, respectively, over the comparable period for the prior year. For the quarter, the residential end-use market accounted for 14 percent of our aggregates product line shipments, which is in line with our historical average. Despite the overall reduction in quarterly aggregates shipments, volumes to the residential market increased 1percent.
“The infrastructure market continues to represent the largest end use for the aggregates product line and comprised 42 percent of volumes for the quarter. We are encouraged that highway obligations for fiscal 2013 through March were at the highest level since 2010 and up 28 percent over the prior-year period. This increase reflects funding stability provided by the Moving Ahead for Progress in the 21st Century Act, or MAP-21, as well as the Executive Branch’s action last summer, which freed up $400 million of unspent earmarks from fiscal years 2003 through 2006. Additionally, February marked the first month in which highway contract awards increased over the prior-year month in almost two years. We continue to monitor new applications for funding under the Transportation Infrastructure Finance and Innovation Act, or TIFIA. While this program has the ability to leverage up to $50 billion in financing for transportation projects, administrative delays will likely push initial awards to later in 2013 than the U.S. Department of Transportation originally anticipated. Long term, we anticipate growth in the infrastructure market. While it is not possible to determine any potential impact from the Federal sequester that went into effect in March, it appears that transportation spending is mostly exempt from spending cuts. Still, there may be a short-term setback in this end use.”
Nye also noted that the nonresidential market accounted for 33 percent of aggregates product line shipments for the quarter.