Martin Marietta Materials Inc. reported results for the second quarter ended June 30, 2016, including record net sales, gross profit and net earnings. Consolidated net sales for the quarter was $915.4 million, compared to $850.2 million in the second quarter of 2015. Consolidated net sales for the first six months of 2016 was $1.649 billion, compared to $1.482 billion for the first six months of 2015.
Ward Nye, chairman, president and CEO of Martin Marietta, stated, "We are pleased to deliver top-line and bottom-line growth with record net sales, gross profit and net earnings in the quarter. Net sales increased nearly 8 percent (12 percent excluding net sales attributable to the California cement business divested in the third quarter 2015). Gross profit and net earnings increased 23 percent and 49 percent, respectively. Diluted earnings per share of $1.90 increased 56 percent when compared with the comparable prior-year period. The record results for the quarter reflect our continued ability to capitalize on improving economic conditions across our markets, coupled with our disciplined approach to cost management and operational excellence.
"Aggregates product line pricing growth and cost discipline led to a 340-basis-point increase in our consolidated gross margin (excluding freight and delivery revenues)," Nye continued. "This gross margin expansion was achieved despite record or near-record rainfall and its attendant effects in many of our key markets, notably Texas, North Carolina and Colorado. Importantly, for every $1.00 increase in net sales, gross profit increased $0.71, which demonstrates the business' strong operating leverage with economic growth. The economic improvements we see across our geographic footprint, including both strong employment growth and population dynamics, together with robust public and private construction activity, further reinforces our positive outlook for a sustained construction-centric recovery during the next several years."
Domestic job growth remains a strong catalyst for construction activity and, during the trailing-12 months ended June 2016, the United States added nearly 2.5 million jobs, the company stated. The southeastern United States' steady economic recovery is gaining momentum with North Carolina, Georgia and Florida all ranked in the top 10 states nationally for employment growth. For the second quarter, these market conditions, among others, helped drive aggregates product line volume growth of 4.9 percent in the Mid-America Group, primarily due to increased private construction activity across North Carolina and South Carolina.
Demand in the company's Mid-America Group was constrained by heavy rainfall during the first two months of the quarter, according to Martin Marietta. In fact, for April and May, aggregate volume was down 1.3 percent; however, volume growth of nearly 16 percent in June more than offset the early quarter weather deficit. Volume growth for the Southeast Group was 1.9 percent, benefitting from increasing public-sector demand in Georgia and Florida, while increases were partially impacted by a reduction in ballast shipments.
"Aggregate shipments in the West Group were hindered by extremely wet weather in Texas throughout the majority of the second quarter," Nye said. "As previously predicted by the National Oceanic and Atmospheric Administration, the El Niño effect, which began in the spring of 2015, concluded at the end of May 2016. In addition, the reduction of shale-related shipments compared with the prior-year quarter and lower ballast shipments due to decreased rail demand further impacted the West Group's second quarter results. While some construction activity was temporarily displaced, contractor backlogs reveal pent-up aggregate demand. Further, the Dallas-Fort Worth Metroplex continues to be one of the nation's fastest growing areas, benefitting from strong population and employment trends."
Nye said the company remains highly optimistic as it looks towards the second half of the year and well beyond. "Our team is poised to capitalize on increasing demand, and we expect exceptional performance from all of our businesses," he said.