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Martin Marietta Rolls to Record Second-Quarter Revenues

Martin Marietta Materials Inc. reported results for the second quarter ended June 30. Total revenues amounted to $1.279 billion versus $1.202 billion for the same period in 2018.

Second-quarter aggregates volume and pricing improved 9.9% and 3.4%, respectively. Same-store aggregates volume and pricing improved 6.1% and 4.1%, respectively.

Shipments for the Mid-America Group operations increased 15.9%, or 10.2% on a same-store basis, supported by infrastructure and commercial projects. Additionally, the Midwest Division benefited from shipments related to emergency flood repairs. Pricing improved 1.6%, or 3.0% on a same-store basis. 

Shipments for the Southeast Group operations increased 12.7%, or 5.4% on a same-store basis, reflecting the strength of the North Georgia and Florida markets. Pricing improved 7.3%, or 8.3% on a same-store basis, driven by solid gains in North Georgia and a higher percentage of long-haul shipments.  

West Group shipments increased 1.1% despite unfavorable weather that contributed to project delays. West Group pricing increased 3.4%.

Martin Marietta’s second-quarter aggregates shipments by end use are as follows (all comparisons are versus the prior-year quarter):

Aggregates shipments to the infrastructure market increased 2% as contractors continued to advance transportation-related projects. Following more than a decade of underinvestment, management believes infrastructure demand is poised for meaningful growth. 

Funding provided by the Fixing America’s Surface Transportation Act (FAST Act), combined with numerous state and local transportation initiatives, has recently accelerated lettings and contract awards in key states, including Texas, Colorado, Iowa and Maryland. For the quarter, the infrastructure market represented 37% of aggregates shipments, which is below the company’s most recent 10-year average of 46%

Aggregates shipments to the nonresidential market increased 25%, driven by gains in commercial and heavy industrial construction activity. The company continued to benefit from robust distribution center, warehouse, data center and wind energy projects in key geographies, including Texas, the Carolinas, Georgia and Iowa, as well as the early phases of several large energy-sector projects along the Gulf Coast. The nonresidential market represented 37% of second-quarter aggregates shipments.

Aggregates shipments to the residential market increased modestly, as ongoing homebuilding activity in the Carolinas, Georgia and Florida was offset by weather-related delays in Texas. The residential construction outlook across the company’s geographic footprint remains positive for both single- and multi-family housing, driven by favorable demographics, job growth, land availability, low interest rates and efficient permitting. 

On a national level, housing starts remain below the 50-year annual average of 1.5 million despite notable population gains. The residential market accounted for 21% of second-quarter aggregates shipments.

The ChemRock/Rail market accounted for the remaining 5% of second-quarter aggregates shipments. Volumes to this end use increased 11%, driven by improved ballast shipments to the western Class I railroads for emergency flood repairs.

Ward Nye, chairman, president and CEO of Martin Marietta, stated, “We are proud to have established new quarterly records for revenues, gross profit and adjusted EBITDA, driven by increased aggregates shipments, continued pricing momentum across the Building Materials business and improved cost management. These record-setting second-quarter results demonstrate Martin Marietta’s strong execution as we capitalized on the robust underlying demand across our geographic footprint. Notably, aggregates shipments increased 10%, led by our Mid-America and Southeast Groups, which achieved double-digit-growth as these markets benefited from improving strength in public- and private-sector spending and contributions from acquired operations. Based on these current trends and our strong first-half performance, we are raising our full-year outlook and believe 2019 will be another record year for Martin Marietta.

“Construction activity in our top 10 states is outpacing the nation as a whole, as evidenced by recent trends in total construction starts, Nye continued. "Importantly, aggregates shipments to our three primary end-use markets increased for a second consecutive quarter, demonstrating the breadth of overall demand in our key regions. Attractive underlying market fundamentals, including notable employment gains, population growth and superior state fiscal health, across our geographic footprint should continue to bolster private-sector construction demand. We expect infrastructure projects to accelerate during the second half of the year, supported by meaningful increases in public lettings and contract awards in our key states, notably Texas and Colorado.”

Nye concluded, “Throughout our 25-year history as a public company, Martin Marietta has established a proven record of responsibly managing and growing our business to create long-term shareholder value. Going forward, we will continue to build upon our successful approach of price discipline, strategic geographic positioning and prudent capital allocation. We remain committed to the disciplined execution of our strategic plan and the world-class attributes of our business – including safety, ethics, cost oversight and operational excellence – to drive continued profitability growth in 2019 and beyond.”