Martin Marietta reports third-quarter 2017 results

Martin Marietta Materials Inc. today reported results for the third quarter ended September 30, 2017.

Ward Nye, chairman, president and CEO of Martin Marietta, stated, “Our third-quarter results reflect our ability to adapt to external challenges and deliver solid operating results. While Hurricanes Harvey and Irma unquestionably impacted our business, negatively affecting revenues and profitability, weather-related events are short-term in nature and dislocations or delays are subsequently resolved.

“Furthermore,” Nye said, “the attractive markets in which Martin Marietta operates are experiencing record employment levels. As a result, many contractors are facing a skilled labor shortage, requiring them to accept a slower, yet steadier, pace of project work often with multi-year backlogs. State Departments of Transportation (DOT) in several of our key states are also understaffed relative to the influx of new projects and, as a result, projects have been delayed.

“Notably,” Nye said, “we achieved solid pricing growth across all product lines and segments and a 180-basis-point expansion in aggregate product line gross margin despite these externally driven volume headwinds.”

Building materials business
Third-quarter 2017 total revenues for the Building Materials business, which includes the aggregate, cement, ready-mixed concrete and asphalt and paving product lines, were $1.024 billion, down slightly from $1.039 billion. Average selling prices improved across all product lines and segments despite lower shipment volumes. The aggregate product line average selling price improvement of 5.1 percent was led by a 9.6 percent increase in the Southeast Group. The Mid-America Group and West Group reported increases of 6.2 percent and 1.1 percent, respectively.

Aggregate product line shipments decreased 3.2 percent compared with the third quarter of 2016, driven by ongoing project delays, customer- and DOT-related labor constraints, government uncertainty and near-record precipitation compounded by major hurricane and tropical storm activity.

The West Group’s shipments decreased 6.8 percent and were most negatively affected by wet weather, notably in Texas where third quarter 2017 marked the fourth-wettest third quarter in the last 123 years. The Southeast Group overcame the impact of Hurricane Irma and other storms, reporting aggregate volume growth of 4.7 percent, driven by strong residential and nonresidential construction activity.

The infrastructure market comprised 42 percent of third-quarter aggregate product line volumes, which remains below the company’s most recent five-year average. The company said continued under-investment in the nation’s infrastructure, coupled with marginal infrastructure construction activity from the Fixing America’s Surface Transportation Act and ongoing project delays, resulted in declining infrastructure shipments.

Martin Marietta expects its Bluegrass Materials acquisition will be completed in the first half of 2018.

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