Sizable price hikes fuel Martin Marietta in third quarter

Double-digit price increases drove record profitability at Martin Marietta in the third quarter despite relatively flat aggregate shipments.

Martin Marietta says its building materials business generated record products and services revenues of $1.61 billion for the third quarter – a 15.9 percent increase – thanks to  acquisitions and pricing growth across all product lines. Products and services gross profit within the building materials business, meanwhile, jumped 13.1 percent.

According to Martin Marietta, third-quarter organic aggregate shipments were flat, largely due to logistical constraints, cement shortages and inclement weather in some markets. Organic aggregate pricing, however, increased 11.9 percent.

Including acquired operations, total aggregate shipments and pricing increased 5.6 percent and 11.6 percent in the third quarter, respectively.

“Martin Marietta’s track record of success throughout various business cycles proves the resiliency and durability of our aggregates-led business model, chosen geographies and our ability to adapt to the challenges inherent in a dynamic macroeconomic environment,” says Ward Nye, chairman and CEO of Martin Marietta. “Importantly, we expect that the carryover effects of our 2022 pricing momentum, coupled with our broad-based Jan. 1, 2023, announced price increases, will drive accelerated aggregates unit margin expansion next year.”

Martin Marietta says its third-quarter aggregate product gross profit improved 12.8 percent to a record $330.3 million, while product gross margin declined to 32.5 percent because of increased energy, internal freight, and repairs and maintenance costs.

Regionally, total aggregate shipments in Martin Marietta’s East Group were flat. The company says solid underlying demand was negatively impacted by supply chain challenges and weather-related disruptions. Pricing increased 11.5 percent in the East.

In the West, total aggregate shipments improved 15.6 percent. Shipments were driven primarily by contributions from acquired operations and strong Texas demand, but they were partially offset by a historically wet August in north Texas. Organic aggregate pricing increased 12.4 percent in the region.

“Our third-quarter results highlight our commitment to execution of our value-over-volume strategy, as double-digit pricing growth drove record profitability despite relatively flat organic aggregates shipments,” Nye says. “Importantly, we expect a return to expanding margins in the fourth quarter as the compounding effect of multiple pricing actions throughout the year offsets continued inflationary pressure and a slowdown in single-family residential construction.

“Martin Marietta’s strategic coast-to-coast footprint is well-positioned for long-term growth, driven by favorable population migration trends, housing shortages in our markets and a long-term federal highway bill complemented by healthy Department of Transportation budgets in the company’s key states,” Nye adds. “Near term, we expect affordability-driven headwinds in the single-family residential end market will be offset by a significant acceleration in public infrastructure investment and continued strength in large-scale energy, domestic manufacturing and multi-family residential projects.

Featured photo: Martin Marietta