Martin Marietta Q3 results: $443.7 million net sales
For the second consecutive quarter, Martin Marietta Materials Inc. has had aggregates volume growth and improved aggregates shipments in each of its end-used markets, the company reported in third quarter report on Nov. 2.
“We are pleased to report our second consecutive quarter of aggregates volume growth,” said Ward Nye, president and CEO of Martin Marietta, in the earnings statement announcement. “In fact, aggregates shipments improved in each of our end-use markets during the quarter, resulting in an overall 6.3 percent increase, led by a 14 percent increase in the non-residential end-use market, both compared with the prior-year quarter. We are confident that we are well positioned to capitalize on an economic recovery.”
Notable items include the following:
-Earnings per diluted share of $1.13 compared with $1.23
-Net sales increased to $443.7 million compared with $428.3 million
- Heritage aggregates product line volume up 6.3 percent for the quarter
- Heritage aggregates product line pricing down 3.1 percent, or $0.32 per ton; product and project mix account for 160 basis points of the decline
- Specialty Products record third-quarter earnings from operations of $12.0 million
- Selling, general and administrative expenses down $1.7 million and 70 basis points as a percentage of net sales
- Consolidated operating margin (excluding freight and delivery revenues) of 18.9 percent compared with 20.8 percent
“The infrastructure end-use market, which had volume growth of 3 percent, was supported by an increase in state transportation spending that was somewhat offset by a decline in shipments to projects funded by the American Recovery and Reinvestment Act (ARRA), a.k.a. “the stimulus”). “We continue to believe that this is a timing issue since stimulus-related projects contributed volume growth in some states during the quarter. In other states, principally Iowa, where they aggressively completed their stimulus-related work in 2009, our shipments actually declined.”
Overall, However, aggregates shipments to the infrastructure end-use market, excluding projects funded by ARRA, increased more than 6 percent, Nye notes.
Activity in portions of the energy sector, specifically the Haynesville and Barnett Shale Natural Gas Fields in northwest Louisiana, east Texas, and Arkansas, continues to be the most significant volume driver in our non-residential end-use market, as aggregates are essential to build both oilfield roads and pads for drilling rigs. Our ChemRock/Rail end-use market experienced a 9-percent volume increase, fueled by railroad expansion activity in certain markets. The residential end-use market had a volume increase of 3 percent.
“Weather had a disparate impact on our third-quarter results,” Nye said.”Volume growth was led by our Mideast Group, which experienced dry weather and generated a 10.3 percent-increase in heritage aggregates shipments.”
In particular, our Indiana markets experienced significant highway work performed under the state’s 10-year, $12 billion transportation plan known as “Major Moves.” Contractors benefitted from the favorable weather and accelerated construction in efforts to achieve early completion bonuses on some state work.
The West Group reported a 6.0-percent increase in heritage aggregates shipments, which principally reflects the positive impact of the increased shipments to the energy sector and railroad industries. These achievements were partially offset by wet weather in our Midwest Division. Flooding at multiple Midwest Division facilities restricted both operations and sales, and served to increase production costs at certain locations. These conditions are a strong contrast to its prior-year record third-quarter operating results which reflected aggressive spending of ARRA funds by the state of Iowa, Nye says.
“Overall heritage aggregates product line pricing decreased 3.1 percent,” Nye says. “Two previously reported pricing trends continued in the third quarter. First, a higher percentage of shipments of base stone, which is used in both road construction and energy sector activity and has a lower average selling price compared with clean stone, contributed to this negative period-to-period comparison of selling price. Second, pricing on stimulus-related projects was 10 percent lower than our company average. We estimate that the impact of these factors negatively affected aggregate pricing by 160 basis points and expect this pricing pressure to ease as our end-markets continue to either recover or reach levels of sustained stability. However, competitive pricing pressure exists and opportunities to increase pricing will return one product and one region at a time.”