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Aggregate shipments down, pricing up at Martin Marietta

By |  October 29, 2020

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Third-quarter aggregate shipments declined 8.7 percent at Martin Marietta compared with the prior-year’s third quarter, the company reports.

Aggregate shipments to the infrastructure and nonresidential end-use markets also declined, the company adds, while shipments to the residential market increased slightly.

Aggregate pricing improved 2.7 percent in the third quarter, Martin Marietta says, or 4 percent on a mix-adjusted basis. Full-year 2020 pricing is expected to increase 3 to 4 percent, according to the company.

Regional breakdown

A stationary plant can support longer conveyor systems due to the site’s permanent structure. Photo: P&Q staff

Martin Marietta’s third-quarter aggregate gross profit per ton shipped improved 6.5 percent. Photo: P&Q staff

Aggregate shipments in Martin Marietta’s East Group dropped 8.8 percent in the quarter, reflecting weather-delayed projects in the Mid-Atlantic and Southeast, anticipated lower infrastructure shipments in portions of North Carolina, and reduced wind energy construction activity in the Midwest.

Pricing increased 4.4 percent with solid improvements in both Martin Marietta’s East and Central divisions.

West Group shipments decreased 8.4 percent, primarily due to wet weather in Texas and reduced energy-sector shipments, Martin Marietta says. Pricing decreased 0.6 percent, as a lower percentage of higher-priced commercial rail-shipped volumes in Houston offset price increases in the company’s other Texas markets and Colorado.

On a mix-adjusted basis, West Group pricing increased 3.9 percent.

Despite lower shipments, Martin Marietta says third-quarter aggregate gross profit per ton shipped improved 6.5 percent.

Companywide takeaways

Headshot: Ward Nye, Martin Marietta

Nye

Total revenues and gross profit were down in the third quarter at Martin Marietta, but the company’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was up over the prior year’s third quarter.

According to the company, it established quarterly records for consolidated and aggregate gross margin. Additionally, Martin Marietta has a record year-to-date gross profit of $927 million.

“Building on our strong business execution in the first half of the year, Martin Marietta again delivered outstanding financial and operational performance,” says Ward Nye, chairman and CEO of Martin Marietta. “The company expanded consolidated gross margin 100 basis points to 30.6 percent, a new record, and generated adjusted EBITDA of $501.7 million in the third quarter. Increased pricing across all product lines and disciplined cost management helped offset the anticipated decrease in shipment volumes driven by the COVID-19 pandemic.”

Company outlook

Martin Marietta anticipates continued industry-wide fluctuations in product demand over the next few quarters due to the pandemic and related government actions. Additionally, Martin Marietta believes the attractive underlying fundamentals and long-term secular growth trends in its key geographies, both of which underpinned the company’s record 2019 and year-to-date 2020 performance, remain intact and will again be evident as the U.S. economy stabilizes and recovers.

“We are confident that favorable pricing trends will continue, supported by our locally-driven pricing strategy, and that the attractive underlying fundamentals and long-term secular growth trends across our three primary end-use markets and key geographies will remain intact,” Nye says. “However, we anticipate product demand to remain modest through the first half of 2021 due to COVID-19 and related governmental actions.

“Importantly, as we continue to navigate today’s challenging environment, Martin Marietta remains well-positioned geographically, financially and otherwise to drive long-term sustainable growth and shareholder value,” Nye adds. “With Martin Marietta’s collective commitment to our strategic priorities, disciplined pricing and operational excellence, we are confident in the fundamental strength and underlying drivers of our business to capitalize on the emerging growth trends that are expected to support steady and sustainable construction activity over the long term.”

Kevin Yanik

About the Author:

Kevin Yanik is the editor-in-chief of Pit & Quarry magazine. Yanik can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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