Martin Marietta growth continues in fourth quarter 2020

Martin Marietta’s building materials business achieved record fourth-quarter revenues and gross profit.

Martin Mariettas’s products and services revenues of $1.05 billion increased 8.3 percent, and the company’s product gross profit of $298.7 million increased 25.1 percent.

The building materials business experienced notable improvements in product demand during the fourth quarter, Martin Marietta says. The company benefitted from strong residential construction activity and milder weather conditions that extended the construction season.

Additionally, consistent with Martin Marietta management’s expectations, pricing remained resilient with growth in all product lines.

“In every respect, 2020 was extraordinary for Martin Marietta as we addressed and overcame challenges that were inconceivable a year earlier,” says Ward Nye, chairman and CEO of Martin Marietta. “Our resilient business model and team’s commitment to Martin Marietta’s vision and strategic priorities enabled us to achieve record fourth-quarter results and deliver record full-year profitability, and the best safety performance in our company’s history.”

Aggregate performance

Aggregate shipments were up in the fourth quarter at Martin Marietta. Photo: P&Q Staff

Fourth-quarter aggregate shipments grew 3 percent compared with the fourth quarter of 2019, Martin Marietta says. Aggregate pricing increased 3.5 percent on both a reported and mix-adjusted basis.

Martin Marietta’s East Group shipments increased 3.1 percent, reflecting strengthening demand in North Carolina, Georgia, Florida and Indiana that more than offset reduced Midwest wind energy construction activity.

Pricing increased 6 percent, or 3.6 percent on a mix-adjusted basis, with solid improvements in both Martin Marietta’s East and Central divisions and aided by a favorable geographic mix.

West Group shipments increased 2.8 percent, driven by housing activity and large heavy industrial projects that more than offset reduced energy-sector demand, Martin Marietta says. Pricing decreased 1.3 percent, reflecting a lower percentage of higher-priced commercial rail-shipped volumes in Texas that offset robust underlying pricing gains. On a mix-adjusted basis, West Group pricing increased 3.2 percent.

Fourth-quarter aggregate gross profit per ton shipped improved 17.9 percent, and product gross margin expanded 370 basis points to 30.7 percent, driven by higher shipment levels, strong pricing gains and lower production costs – including diesel fuel and contract services.

2020 reflection

Nye

According to Martin Marietta, 2020 marked the ninth straight year of growth for products and services revenues, gross profit, adjusted EBITDA (earnings before interest, tax, depreciation and amortization) and earnings per diluted share.

“For the fourth quarter, we established new records for revenues and adjusted EBITDA and expanded consolidated gross margin 410 basis points to 27.6 percent, driven by shipment growth, pricing gains and disciplined cost management across the business,” Nye says. “These record-setting results underscore the thoughtful development and successful execution of our ‘Strategic Operating Analysis and Review’ plan.

Martin Marietta sees opportunities for growth in the year ahead, as well.

“As we move forward, we believe underlying demand fundamentals will reset, establishing 2021 as the year during which the nation regains its economic footing,” Nye says. “While degrees of macroeconomic uncertainty will persist, our 2021 outlook is supported by the widespread shipment and pricing strength seen during the fourth quarter.

“We anticipate single-family housing growth, expanded infrastructure investment and notable heavy industrial projects of scale will support the company’s near-term shipment levels,” Nye adds. “We expect these demand drivers, combined with the ancillary construction necessary for housing community buildouts and the potential increased infrastructure investment from a comprehensive federal surface transportation package, should provide for multi-year growth in product demand.”