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MLM Martin Marietta Materials

Filed: 4 May 21, 2:05pm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 1-12744

 

MARTIN MARIETTA MATERIALS, INC.

(Exact name of registrant as specified in its charter)

 

 

 North Carolina

 

56-1848578

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

4123 Parklake Avenue, Raleigh, NC

 

27612

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: 919-781-4550

2710 Wycliff Road, Raleigh, NC 27607

(Former name, former address and former fiscal year, if changes since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading Symbol(s)

Name of each exchange on
which registered

Common Stock (Par Value $0.01)

MLM

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act.        

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes      No  

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

 

Class

 

Outstanding as of April 30, 2021

Common Stock, $0.01 par value

 

62,368,903

 

 

 


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

 

 

Page

Part I. Financial Information:

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

Consolidated Balance Sheets – March 31, 2021 and December 31, 2020

 

3

 

 

 

Consolidated Statements of Earnings and Comprehensive Earnings – Three Months Ended March 31, 2021 and 2020

 

4

 

 

 

Consolidated Statements of Cash Flows – Three Months Ended March 31, 2021 and 2020

 

5

 

 

 

Consolidated Statement of Total Equity – Three Months Ended March 31, 2021 and 2020

 

6

 

 

 

Notes to Consolidated Financial Statements

 

7

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

34

 

 

 

Item 4. Controls and Procedures

 

35

 

 

 

Part II. Other Information:

 

 

 

 

 

Item 1. Legal Proceedings

 

36

 

 

 

Item 1A. Risk Factors

 

36

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

36

 

 

 

Item 4. Mine Safety Disclosures

 

36

 

 

 

Item 6. Exhibits

 

37

 

 

 

Signatures

 

38

 

 

 

 

 

 

Page 2 of 38


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions, Except Par Value Data)

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

313.9

 

 

$

207.3

 

Restricted cash

 

 

40.9

 

 

 

97.1

 

Accounts receivable, net

 

 

563.6

 

 

 

575.1

 

Inventories, net

 

 

690.0

 

 

 

709.0

 

Other current assets

 

 

67.3

 

 

 

79.8

 

Total Current Assets

 

 

1,675.7

 

 

 

1,668.3

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

9,103.5

 

 

 

8,955.0

 

Allowances for depreciation, depletion and amortization

 

 

(3,768.1

)

 

 

(3,712.7

)

Net property, plant and equipment

 

 

5,335.4

 

 

 

5,242.3

 

Goodwill

 

 

2,414.0

 

 

 

2,414.0

 

Other intangibles, net

 

 

504.4

 

 

 

508.0

 

Operating lease right-of-use assets, net

 

 

440.9

 

 

 

453.0

 

Other noncurrent assets

 

 

288.9

 

 

 

295.2

 

Total Assets

 

$

10,659.3

 

 

$

10,580.8

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

200.0

 

 

$

207.8

 

Accrued salaries, benefits and payroll taxes

 

 

35.9

 

 

 

82.6

 

Accrued other taxes

 

 

42.1

 

 

 

45.4

 

Accrued interest

 

 

29.8

 

 

 

18.3

 

Operating lease liabilities

 

 

47.2

 

 

 

48.6

 

Other current liabilities

 

 

93.8

 

 

 

96.6

 

Total Current Liabilities

 

 

448.8

 

 

 

499.3

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

2,626.5

 

 

 

2,625.8

 

Deferred income taxes, net

 

 

777.6

 

 

 

781.5

 

Noncurrent operating lease liabilities

 

 

399.1

 

 

 

410.4

 

Other noncurrent liabilities

 

 

480.6

 

 

 

370.5

 

Total Liabilities

 

 

4,732.6

 

 

 

4,687.5

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Common stock, par value $0.01 per share

 

 

0.6

 

 

 

0.6

 

Preferred stock, par value $0.01 per share

 

 

 

 

 

 

Additional paid-in capital

 

 

3,441.7

 

 

 

3,440.8

 

Accumulated other comprehensive loss

 

 

(155.6

)

 

 

(158.4

)

Retained earnings

 

 

2,637.2

 

 

 

2,607.7

 

Total Shareholders' Equity

 

 

5,923.9

 

 

 

5,890.7

 

Noncontrolling interests

 

 

2.8

 

 

 

2.6

 

Total Equity

 

 

5,926.7

 

 

 

5,893.3

 

Total Liabilities and Equity

 

$

10,659.3

 

 

$

10,580.8

 

 

See accompanying notes to the consolidated financial statements.

 

Page 3 of 38


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(In Millions, Except Per Share Data)

 

Products and services revenues

 

$

921.9

 

 

$

891.0

 

Freight revenues

 

 

60.5

 

 

 

67.2

 

Total Revenues

 

 

982.4

 

 

 

958.2

 

 

 

 

 

 

 

 

 

 

Cost of revenues - products and services

 

 

746.0

 

 

 

747.4

 

Cost of revenues - freight

 

 

61.7

 

 

 

68.4

 

Total Cost of Revenues

 

 

807.7

 

 

 

815.8

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

174.7

 

 

 

142.4

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

79.8

 

 

 

78.7

 

Acquisition-related expenses

 

 

1.2

 

 

 

0.3

 

Other operating (income) and expenses, net

 

 

(5.6

)

 

 

5.6

 

Earnings from Operations

 

 

99.3

 

 

 

57.8

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

27.4

 

 

 

29.8

 

Other nonoperating (income) and expenses, net

 

 

(9.5

)

 

 

2.0

 

Earnings before income tax expense

 

 

81.4

 

 

 

26.0

 

Income tax expense

 

 

15.9

 

 

 

0.1

 

Consolidated net earnings

 

 

65.5

 

 

 

25.9

 

Less: Net earnings attributable to noncontrolling   interests

 

 

0.2

 

 

 

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

$

65.3

 

 

$

25.9

 

 

 

 

 

 

 

 

 

 

Consolidated Comprehensive Earnings:

 

 

 

 

 

 

 

 

Earnings attributable to Martin Marietta Materials, Inc.

 

$

68.1

 

 

$

26.3

 

Earnings attributable to noncontrolling interests

 

 

0.2

 

 

 

 

 

 

$

68.3

 

 

$

26.3

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

 

 

 

 

 

 

 

Per Common Share:

 

 

 

 

 

 

 

 

Basic attributable to common shareholders

 

$

1.05

 

 

$

0.42

 

Diluted attributable to common shareholders

 

$

1.04

 

 

$

0.41

 

 

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

62.3

 

 

 

62.3

 

Diluted

 

 

62.5

 

 

 

62.5

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 4 of 38


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Consolidated net earnings

 

$

65.5

 

 

$

25.9

 

Adjustments to reconcile consolidated net earnings to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

98.6

 

 

 

95.0

 

Stock-based compensation expense

 

 

10.9

 

 

 

12.5

 

Gain on divestitures and sales of assets

 

 

(3.8

)

 

 

(1.5

)

Deferred income taxes

 

 

(4.7

)

 

 

3.2

 

Other items, net

 

 

(4.7

)

 

 

(0.4

)

Changes in operating assets and liabilities, net of effects of

   acquisitions and divestitures:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

11.5

 

 

 

10.2

 

Inventories, net

 

 

19.0

 

 

 

(9.6

)

Accounts payable

 

 

25.0

 

 

 

4.9

 

Other assets and liabilities, net

 

 

(25.4

)

 

 

(33.5

)

Net Cash Provided by Operating Activities

 

 

191.9

 

 

 

106.7

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(110.3

)

 

 

(104.1

)

Proceeds from divestitures and sales of assets

 

 

12.2

 

 

 

15.9

 

Investments in life insurance contracts, net

 

 

9.8

 

 

 

(7.2

)

Other investing activities, net

 

 

 

 

 

(0.1

)

Net Cash Used for Investing Activities

 

 

(88.3

)

 

 

(95.5

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Borrowings of debt

 

 

 

 

 

618.0

 

Repayments of debt

 

 

 

 

 

(127.0

)

Payments on financing leases

 

 

(2.2

)

 

 

(0.8

)

Debt issuance costs

 

 

 

 

 

(1.1

)

Repurchases of common stock

 

 

 

 

 

(50.0

)

Dividends paid

 

 

(36.1

)

 

 

(34.8

)

Proceeds from exercise of stock options

 

 

0.6

 

 

 

0.2

 

Shares withheld for employees' income tax obligations

 

 

(15.5

)

 

 

(12.7

)

Net Cash (Used for) Provided by Financing Activities

 

 

(53.2

)

 

 

391.8

 

Net Increase in Cash, Cash Equivalents and Restricted Cash

 

 

50.4

 

 

 

403.0

 

Cash, Cash Equivalents and Restricted Cash, beginning of period

 

 

304.4

 

 

 

21.0

 

Cash, Cash Equivalents and Restricted Cash, end of period

 

$

354.8

 

 

$

424.0

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 5 of 38


 

 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF TOTAL EQUITY

 

(In Millions, Except Per Share Data)

 

Shares of Common Stock

 

 

Common Stock

 

 

Additional Paid-in Capital

 

 

Accumulated

Other Comprehensive

Loss

 

 

Retained Earnings

 

 

Total Shareholders' Equity

 

 

Noncontrolling Interests

 

 

Total Equity

 

Balance at December 31, 2019

 

 

62.4

 

 

$

0.6

 

 

$

3,418.8

 

 

$

(145.8

)

 

$

2,077.2

 

 

$

5,350.8

 

 

$

2.5

 

 

$

5,353.3

 

Consolidated net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25.9

 

 

 

25.9

 

 

 

 

 

 

25.9

 

Other comprehensive earnings,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

0.4

 

 

 

 

 

 

0.4

 

 

 

 

 

 

0.4

 

Dividends declared ($0.55 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34.5

)

 

 

(34.5

)

 

 

 

 

 

(34.5

)

Issuances of common stock for stock

   award plans

 

 

 

 

 

 

 

 

 

4.5

 

 

 

 

 

 

 

 

 

4.5

 

 

 

 

 

 

4.5

 

Shares withheld for employees'

   income tax obligations

 

 

 

 

 

 

 

 

(12.7

)

 

 

 

 

 

 

 

 

(12.7

)

 

 

 

 

 

(12.7

)

Repurchases of common stock

 

 

(0.2

)

 

 

 

 

 

 

 

 

 

 

 

(50.0

)

 

 

(50.0

)

 

 

 

 

 

(50.0

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

12.5

 

 

 

 

 

 

 

 

 

12.5

 

 

 

 

 

 

12.5

 

Balance at March 31, 2020

 

 

62.2

 

 

$

0.6

 

 

$

3,423.1

 

 

$

(145.4

)

 

$

2,018.6

 

 

$

5,296.9

 

 

$

2.5

 

 

$

5,299.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

62.3

 

 

$

0.6

 

 

$

3,440.8

 

 

$

(158.4

)

 

$

2,607.7

 

 

$

5,890.7

 

 

$

2.6

 

 

$

5,893.3

 

Consolidated net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65.3

 

 

 

65.3

 

 

 

0.2

 

 

 

65.5

 

Other comprehensive earnings,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

2.8

 

 

 

 

 

 

2.8

 

 

 

 

 

 

2.8

 

Dividends declared ($0.57 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35.8

)

 

 

(35.8

)

 

 

 

 

 

(35.8

)

Issuances of common stock for stock

   award plans

 

 

0.1

 

 

 

 

 

 

5.5

 

 

 

 

 

 

 

 

 

5.5

 

 

 

 

 

 

5.5

 

Shares withheld for employees'

   income tax obligations

 

 

 

 

 

 

 

 

(15.5

)

 

 

 

 

 

 

 

 

(15.5

)

 

 

 

 

 

(15.5

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

10.9

 

 

 

 

 

 

 

 

 

10.9

 

 

 

 

 

 

10.9

 

Balance at March 31, 2021

 

 

62.4

 

 

$

0.6

 

 

$

3,441.7

 

 

$

(155.6

)

 

$

2,637.2

 

 

$

5,923.9

 

 

$

2.8

 

 

$

5,926.7

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 6 of 38


 

 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.

Significant Accounting Policies

Organization

Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. The Company supplies aggregates (crushed stone, sand and gravel) through its network of 290 quarries, mines and distribution yards in 26 states, Canada and The Bahamas.  In the southwestern and western United States, Martin Marietta also provides cement and downstream products and services, namely, ready mixed concrete, asphalt and paving, in vertically-integrated structured markets where the Company has a leading aggregates position.  The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects.  Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement, ready mixed concrete and asphalt and paving product lines are reported collectively as the “Building Materials” business.

The Company’s Building Materials business includes 2 reportable segments:  the East Group and the West Group.

 

 

BUILDING MATERIALS BUSINESS

Reportable Segments

  

East Group

  

West Group

Operating Locations

  

Alabama, Florida, Georgia, Indiana,
Iowa, Kansas, Kentucky, Maryland,
Minnesota, Missouri, eastern
Nebraska, North Carolina, Ohio,
Pennsylvania, South Carolina,
Tennessee, Virginia, West Virginia,
Nova Scotia and The Bahamas

  

Arkansas, Colorado, Louisiana, western
Nebraska, Oklahoma, Texas, Utah,
Washington and Wyoming

 

 

 

 

 

 

Product Lines

 

Aggregates

 

Aggregates, Cement, Ready Mixed Concrete, Asphalt and Paving

The Company’s Magnesia Specialties business, which represents a separate reportable segment, has manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications, and dolomitic lime sold primarily to customers in the steel and mining industries.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. The Company has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited

 

Page 7 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The preparation of the Company’s consolidated financial statements requires management to make certain estimates and assumptions about future events.  As future events and their effects cannot be fully determined with precision, actual results could differ significantly from estimates. Changes in estimates are reflected in the consolidated financial statements in the period in which the change in estimate occurs.

Reclassifications

As of January 1, 2021, the Company reclassified accrued income taxes from Other current liabilities to Accrued other taxes on the Company’s consolidated balance sheet.  Prior-year information has been reclassified to conform to current year presentation. The reclassification had no impact on the Company’s previously reported results of operations, financial position or cash flows.

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss

Consolidated comprehensive earnings/loss and accumulated other comprehensive loss consist of consolidated net earnings or loss; adjustments for the funded status of pension and postretirement benefit plans; and foreign currency translation adjustments; and are presented in the Company’s consolidated statements of earnings and comprehensive earnings.

Comprehensive earnings attributable to Martin Marietta is as follows:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Net earnings attributable to Martin Marietta

 

$

65.3

 

 

$

25.9

 

Other comprehensive earnings, net of tax

 

 

2.8

 

 

 

0.4

 

Comprehensive earnings attributable to Martin Marietta

 

$

68.1

 

 

$

26.3

 

 

Page 8 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

 

Changes in accumulated other comprehensive loss, net of tax, are as follows:  

 

 

 

(Dollars in Millions)

 

 

 

Pension and

Postretirement Benefit Plans

 

 

Foreign Currency

 

 

Accumulated

Other Comprehensive

Loss

 

 

 

Three Months Ended March 31, 2021

 

Balance at beginning of period

 

$

(158.1

)

 

$

(0.3

)

 

$

(158.4

)

Other comprehensive earnings before reclassifications,

   net of tax

 

 

 

 

 

0.3

 

 

 

0.3

 

Amounts reclassified from accumulated other

   comprehensive earnings, net of tax

 

 

2.5

 

 

 

 

 

 

2.5

 

Other comprehensive earnings, net of tax

 

 

2.5

 

 

 

0.3

 

 

 

2.8

 

Balance at end of period

 

$

(155.6

)

 

$

 

 

$

(155.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2020

 

Balance at beginning of period

 

$

(144.9

)

 

$

(0.9

)

 

$

(145.8

)

Other comprehensive loss before reclassifications,

   net of tax

 

 

 

 

 

(2.1

)

 

 

(2.1

)

Amounts reclassified from accumulated other

   comprehensive loss, net of tax

 

 

2.5

 

 

 

 

 

 

2.5

 

Other comprehensive earnings (loss), net of tax

 

 

2.5

 

 

 

(2.1

)

 

 

0.4

 

Balance at end of period

 

$

(142.4

)

 

$

(3.0

)

 

$

(145.4

)

 

Changes in net noncurrent deferred tax assets related to accumulated other comprehensive loss are as follows:

 

 

 

Pension and Postretirement Benefit Plans

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Balance at beginning of period

 

$

89.4

 

 

$

85.2

 

Tax effect of other comprehensive earnings

 

 

(0.7

)

 

 

(0.8

)

Balance at end of period

 

$

88.7

 

 

$

84.4

 

Page 9 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

 

Reclassifications out of accumulated other comprehensive loss are as follows:

 

 

 

Three Months Ended

 

 

Affected line items in the consolidated

 

 

March 31,

 

 

statements of earnings and

 

 

2021

 

 

2020

 

 

comprehensive earnings

 

 

(Dollars in Millions)

 

Pension and postretirement

   benefit plans

 

 

 

 

 

 

 

 

 

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

Actuarial loss

 

$

3.2

 

 

$

3.3

 

 

Other nonoperating (income) and expenses, net

Tax benefit

 

 

(0.7

)

 

 

(0.8

)

 

Income tax expense

 

 

$

2.5

 

 

$

2.5

 

 

 

Earnings per Common Share

The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta reduced by dividends and undistributed earnings attributable to certain of the Company’s stock-based compensation. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Company’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three months ended March 31, 2021 and 2020, the diluted per-share computations reflect the number of common shares outstanding to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued.

The following table reconciles the numerator and denominator for basic and diluted earnings per common share:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(In Millions)

 

Net earnings attributable to Martin Marietta

 

$

65.3

 

 

$

25.9

 

Less: Distributed and undistributed earnings

   attributable to unvested awards

 

 

0.1

 

 

 

 

Basic and diluted net earnings available to common

   shareholders attributable to Martin Marietta

 

$

65.2

 

 

$

25.9

 

 

 

 

 

 

 

 

 

 

Basic weighted-average common shares outstanding

 

 

62.3

 

 

 

62.3

 

Effect of dilutive employee and director awards

 

 

0.2

 

 

 

0.2

 

Diluted weighted-average common shares outstanding

 

 

62.5

 

 

 

62.5

 

Page 10 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

 

Restricted Cash

As of March 31, 2021 and December 31, 2020, the Company had restricted cash of $40.9 million and $97.1 million, respectively, which is invested in an account designated for the purchase of like-kind exchange replacement assets under Section 1031 of the Internal Revenue Code and related IRS procedures (Section 1031). The Company is restricted from utilizing the cash for purposes other than the purchase of the qualified assets for a designated period from receipt of the proceeds from the sale of the exchanged property. Any unused cash at the end of the designated period will be transferred to unrestricted accounts of the Company and can then be used for general corporate purposes. The Company has until June 15, 2021 to use the restricted cash to purchase qualified assets under Section 1031.

In connection with Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230), the statement of cash flows reflects cash flow changes and balances for cash, cash equivalents and restricted cash on an aggregated basis.

The following table reconciles cash, cash equivalents and restricted cash as reported on the consolidated balance sheets to the aggregated amounts presented on the consolidated statements of cash flows:

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Cash and cash equivalents

 

$

313.9

 

 

$

207.3

 

Restricted cash

 

 

40.9

 

 

 

97.1

 

Total cash, cash equivalents and restricted cash presented in

   the consolidated statements of cash flows

 

$

354.8

 

 

$

304.4

 

 

2.

Revenue Recognition

Total revenues include sales of products and services to customers, net of any discounts or allowances, and freight revenues. Product revenues are recognized when control of the promised good is transferred to the customer, typically when finished products are shipped. Intersegment and interproduct revenues are eliminated in consolidation. Service revenues are derived from the paving business and recognized using the percentage-of-completion method under the cost-to-cost approach. Freight revenues reflect delivery arranged by the Company using a third party on behalf of the customer and are recognized consistently with the timing of the product revenues.

Performance Obligations. Performance obligations are contractual promises to transfer or provide a distinct good or service for a stated price. The Company’s product sales agreements are single-performance obligations that are satisfied at a point in time. Performance obligations within paving service agreements are satisfied over time, primarily ranging from one day to two years. For product revenues and freight revenues, customer payment terms are generally 30 days from invoice date. Customer payments for the paving operations are based on a contractual billing schedule and are due 30 days from invoice date.

Future revenues from unsatisfied performance obligations at March 31, 2021 and 2020 were $172.8 million and $212.7 million, respectively, where the remaining periods to complete these obligations ranged from one month to 19 months and one month to 21 months, respectively.  

Page 11 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

Revenue by Category. The following table presents the Company’s total revenues by category for each reportable segment.

 

 

 

Three Months Ended

 

 

 

March 31, 2021

 

 

 

Products and Services

 

 

Freight

 

 

Total

 

 

 

(Dollars in Millions)

 

East Group

 

$

372.5

 

 

$

22.4

 

 

$

394.9

 

West Group

 

 

484.1

 

 

 

32.5

 

 

 

516.6

 

Total Building Materials business

 

 

856.6

 

 

 

54.9

 

 

 

911.5

 

Magnesia Specialties

 

 

65.3

 

 

 

5.6

 

 

 

70.9

 

Total

 

$

921.9

 

 

$

60.5

 

 

$

982.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2020

 

 

 

Products and Services

 

 

Freight

 

 

Total

 

 

 

(Dollars in Millions)

 

East Group

 

$

357.9

 

 

$

24.0

 

 

$

381.9

 

West Group

 

 

473.2

 

 

 

37.4

 

 

 

510.6

 

Total Building Materials business

 

 

831.1

 

 

 

61.4

 

 

 

892.5

 

Magnesia Specialties

 

 

59.9

 

 

 

5.8

 

 

 

65.7

 

Total

 

$

891.0

 

 

$

67.2

 

 

$

958.2

 

 

Service revenues, which include paving operations located in Colorado, were $8.8 million and $14.5 million for the three months ended March 31, 2021 and 2020, respectively.

Contract Balances. Costs in excess of billings relate to the conditional right to consideration for completed contractual performance and are contract assets on the consolidated balance sheets. Costs in excess of billings are reclassified to accounts receivable when the right to consideration becomes unconditional. Billings in excess of costs relate to customers invoiced in advance of contractual performance and are contract liabilities on the consolidated balance sheets. The following table presents information about the Company’s contract balances:

 

(Dollars in Millions)

 

March 31, 2021

 

 

December 31, 2020

 

Costs in excess of billings

 

$

1.4

 

 

$

2.2

 

Billings in excess of costs

 

$

11.6

 

 

$

14.0

 

 

Revenues recognized from the beginning balance of contract liabilities for the three months ended March 31, 2021 and 2020 were $4.9 million and $4.4 million, respectively.

Retainage, which primarily relates to the paving services, represents amounts that have been billed to customers but payment withheld until final acceptance by the customer of the performance obligation.  Included in other current assets on the Company’s consolidated balance sheets, retainage was $7.5 million and $10.6 million at March 31, 2021 and December 31, 2020, respectively.

Page 12 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

Policy Elections. When the Company arranges third-party freight to deliver products to customers, the Company has elected the delivery to be a fulfillment activity rather than a separate performance obligation.  Further, the Company acts as a principal in the delivery arrangements and, as required by the accounting standard, the related revenues and costs are presented gross and are included in the consolidated statements of earnings.

3.

Inventories, Net

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Finished products

 

$

661.4

 

 

$

667.0

 

Products in process

 

 

26.2

 

 

 

37.1

 

Raw materials

 

 

37.9

 

 

 

35.3

 

Supplies and expendable parts

 

 

151.1

 

 

 

149.9

 

 

 

 

876.6

 

 

 

889.3

 

Less: Allowances

 

 

(186.6

)

 

 

(180.3

)

Total

 

$

690.0

 

 

$

709.0

 

 

4.

Long-Term Debt

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

4.250% Senior Notes, due 2024

 

$

397.8

 

 

$

397.6

 

7% Debentures, due 2025

 

 

124.5

 

 

 

124.5

 

3.450% Senior Notes, due 2027

 

 

297.7

 

 

 

297.6

 

3.500% Senior Notes, due 2027

 

 

495.9

 

 

 

495.8

 

2.500% Senior Notes, due 2030

 

 

490.4

 

 

 

490.1

 

6.25% Senior Notes, due 2037

 

 

228.2

 

 

 

228.2

 

4.250% Senior Notes, due 2047

 

 

591.9

 

 

 

591.9

 

Other notes

 

 

0.1

 

 

 

0.1

 

Total debt

 

 

2,626.5

 

 

 

2,625.8

 

Less: Current maturities of long-term debt

 

 

 

 

 

 

Long-term debt

 

$

2,626.5

 

 

$

2,625.8

 

 

Page 13 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

 

The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility), which expires on September 22, 2021. The Trade Receivable Facility, with Truist Bank, Regions Bank, PNC Bank, N.A., The Bank of Tokyo-Mitsubishi UFJ, LTD. (New York Branch), and certain other lenders that may become a party to the facility from time to time, is backed by eligible trade receivables, as defined, and is limited to the lesser of the facility limit or the borrowing base, as defined.  These receivables are originated by the Company and then sold to the wholly-owned special-purpose subsidiary by the Company.  The Company continues to be responsible for the servicing and administration of the receivables purchased by the wholly-owned special-purpose subsidiary.  Borrowings under the Trade Receivable Facility bear interest at a rate equal to asset-backed commercial paper costs of conduit lenders plus 0.85% for borrowings funded by conduit lenders and one-month London Interbank Offered Rate, or LIBOR, plus 1.00%, subject to change in the event that this rate no longer reflects the lender’s cost of lending, for borrowings funded by all other lenders.  The Trade Receivable Facility contains a cross-default provision to the Company’s other debt agreements. There were 0 borrowings outstanding under the Trade Receivable Facility at March 31, 2021 or December 31, 2020.

The Company has a $700 million five-year senior unsecured revolving facility (the Revolving Facility) with JPMorgan Chase Bank, N.A., as Administrative Agent, Truist Bank, Deutsche Bank Securities, Inc., and Wells Fargo Bank, N.A., as Co-Syndication Agents, and the lenders party thereto.  Borrowings under the Revolving Facility bear interest, at the Company’s option, at rates based upon LIBOR or a base rate, plus, for each rate, a margin determined in accordance with a ratings-based pricing grid. There were 0 borrowings outstanding under the Revolving Facility at March 31, 2021 or December 31, 2020. The Revolving Facility requires the Company’s ratio of consolidated debt-to-consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), as defined by the Revolving Facility, for the trailing-twelve months (the Ratio) to not exceed 3.50x as of the end of any fiscal quarter, provided that the Company may exclude from the Ratio debt incurred in connection with certain acquisitions during such quarter or the three preceding quarters so long as the Ratio calculated without such exclusion does not exceed 3.75x.  Additionally, if there are 0 amounts outstanding under the Revolving Facility and the Trade Receivable Facility, consolidated debt, including debt for which the Company is a co-borrower, may be reduced by the Company’s unrestricted cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million, for purposes of the covenant calculation.  The Company was in compliance with this covenant at March 31, 2021.

The Revolving Facility expires on December 5, 2024, with any outstanding principal amounts, together with interest accrued thereon, due in full on that date. Available borrowings under the Revolving Facility are reduced by any outstanding letters of credit issued by the Company under the Revolving Facility.  The Company had $2.6 million of outstanding letters of credit issued under the Revolving Facility at March 31, 2021 and December 31, 2020.

5.

Financial Instruments

The Company’s financial instruments include temporary cash investments, restricted cash, accounts receivable, accounts payable, publicly-registered long-term notes, debentures and other long-term debt.

Temporary cash investments are placed primarily in money market funds, money market demand deposit accounts and Eurodollar time deposits. The Company’s cash equivalents have original maturities of less than three months. Due to the short maturity of these investments, they are carried on the consolidated balance sheets at cost, which approximates fair value.

Restricted cash is held in a trust account with a third-party intermediary. Due to the short-term nature of this account, the fair value of restricted cash approximates its carrying value.

Accounts receivable are due from a large number of customers, primarily in the construction industry, and are dispersed across wide geographic and economic regions. NaN single customer accounted for 10% or more of

Page 14 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

consolidated total revenues in the three month period ended March 31, 2021 and 2020. The estimated fair values of accounts receivable approximate their carrying amounts due to the short-term nature of the accounts.

Accounts payable represent amounts owed to suppliers and vendors. The estimated fair value of accounts payable approximates the carrying amount due to the short-term nature of the payables.

The carrying values and fair values of the Company’s long-term debt were $2.63 billion and $2.92 billion, respectively, at March 31, 2021 and $2.63 billion and $3.08 billion, respectively, at December 31, 2020. The estimated fair value of the publicly-registered long-term notes was estimated based on Level 2 of the fair value hierarchy using quoted market prices. The estimated fair values of other borrowings approximate their carrying amounts as the interest rates reset periodically.  

6.

Income Taxes

The effective income tax rate reflects the effect of federal and state income taxes on earnings and the impact of differences in book and tax accounting arising primarily from the permanent tax benefits associated with the statutory depletion deduction for mineral reserves.  For the three months ended March 31, 2021, the effective income tax rate was 19.5%. For the three months ended March 31, 2020, the effective income tax rate of 0.6% reflected a $6.9 million discrete benefit from financing third-party railroad track maintenance. In exchange, the Company received a federal income tax credit and deduction.  

The Company records interest accrued in relation to unrecognized tax benefits as income tax expense. Penalties, if incurred, are recorded as operating expenses in the consolidated statements of earnings and comprehensive earnings.

7.

Pension and Postretirement Benefits

The estimated components of the recorded net periodic benefit cost (credit) for pension and postretirement benefits are as follows:

 

 

Pension

 

 

Postretirement Benefits

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Service cost

 

$

11.6

 

 

$

9.7

 

 

$

 

 

$

 

Interest cost

 

 

9.0

 

 

 

9.2

 

 

 

0.1

 

 

 

0.1

 

Expected return on assets

 

 

(17.6

)

 

 

(14.6

)

 

 

 

 

 

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior service cost (credit)

 

 

0.2

 

 

 

0.2

 

 

 

(0.2

)

 

 

(0.2

)

Actuarial loss (gain)

 

 

3.3

 

 

 

3.3

 

 

 

(0.1

)

 

 

 

Net periodic benefit cost (credit)

 

$

6.5

 

 

$

7.8

 

 

$

(0.2

)

 

$

(0.1

)

 

The service cost component of net periodic benefit cost (credit) is included in Cost of revenues – products and services and Selling, general and administrative expenses. All other components are included in Other nonoperating (income) and expenses, net, in the consolidated statements of earnings and comprehensive earnings.

Page 15 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

8.

Commitments and Contingencies

Legal and Administrative Proceedings

The Company is engaged in certain legal and administrative proceedings incidental to its normal business activities, including matters relating to environmental protection. The Company considers various factors in assessing the probable outcome of each matter, including but not limited to the nature of existing legal proceedings and claims, the asserted or possible damages, the jurisdiction and venue of the case and whether it is a jury trial, the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, the Company’s experience in similar cases and the experience of other companies, the facts available to the Company at the time of assessment, and how the Company intends to respond to the proceeding or claim. The Company’s assessment of these factors may change over time as proceedings or claims progress. The Company believes the probability is remote that the outcome of any currently pending legal or administrative proceeding will result in a material loss to the Company as a whole, based on currently available facts.

Borrowing Arrangements with Affiliate

The Company is a co-borrower with an unconsolidated affiliate for a $12.5 million revolving line of credit agreement with Truist Bank, of which $7.8 million was outstanding as of March 31, 2021 and has a maturity date of March 2022. The affiliate has agreed to reimburse and indemnify the Company for any payments and expenses the Company may incur from this agreement. The Company holds a lien on the affiliate’s membership interest in a joint venture as collateral for payment under the revolving line of credit.

In addition, the Company has a $6.0 million interest-only loan, due December 31, 2022, outstanding from this unconsolidated affiliate as of March 31, 2021 and December 31, 2020.  The interest rate is one-month LIBOR plus a current spread of 1.75%.

Letters of Credit

In the normal course of business, the Company provides certain third parties with standby letter of credit agreements guaranteeing its payment for certain insurance claims, contract performance and permit requirements.  At March 31, 2021, the Company was contingently liable for $32.0 million in letters of credit, of which $2.6 million were issued under the Company’s Revolving Facility.

9.

Business Segments

The Building Material business contains 2 reportable segments: the East Group and the West Group. The Company also has a Magnesia Specialties segment.  The Company’s evaluation of performance and allocation of resources are based primarily on earnings from operations. Consolidated earnings from operations include total revenues less cost of revenues; selling, general and administrative expenses; acquisition-related expenses; other operating income and expenses, net; and exclude interest expense; other nonoperating income and expenses, net; and income taxes. Corporate loss from operations primarily includes depreciation; expenses for corporate administrative functions; acquisition-related expenses; and other nonrecurring income and expenses excluded from the Company’s evaluation of business segment performance and resource allocation. All long-term debt and related interest expense are held at Corporate.

The following table displays selected financial data for the Company’s reportable segments. Total revenues, as presented on the consolidated statements of earnings and comprehensive earnings, exclude intersegment revenues, which represent sales from one segment to another segment and are eliminated in consolidation.

 

Page 16 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Total revenues:

 

 

 

 

 

 

 

 

East Group

 

$

394.9

 

 

$

381.9

 

West Group

 

 

516.6

 

 

 

510.6

 

Total Building Materials business

 

 

911.5

 

 

 

892.5

 

Magnesia Specialties

 

 

70.9

 

 

 

65.7

 

Total

 

$

982.4

 

 

$

958.2

 

 

 

 

 

 

 

 

 

 

Products and services revenues:

 

 

 

 

 

 

 

 

East Group

 

$

372.5

 

 

$

357.9

 

West Group

 

 

484.1

 

 

 

473.2

 

Total Building Materials business

 

 

856.6

 

 

 

831.1

 

Magnesia Specialties

 

 

65.3

 

 

 

59.9

 

Total

 

$

921.9

 

 

$

891.0

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) from operations:

 

 

 

 

 

 

 

 

East Group

 

$

61.7

 

 

$

34.8

 

West Group

 

 

31.9

 

 

 

22.7

 

Total Building Materials business

 

 

93.6

 

 

 

57.5

 

Magnesia Specialties

 

 

23.5

 

 

 

21.7

 

Corporate

 

 

(17.8

)

 

 

(21.4

)

Total

 

$

99.3

 

 

$

57.8

 

 

Page 17 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

 

10.

Revenues and Gross Profit

The Building Materials business includes the aggregates, cement, ready mixed concrete and asphalt and paving product lines. All cement, ready mixed concrete and asphalt and paving product lines reside in the West Group. The following table, which is reconciled to consolidated amounts, provides total revenues and gross profit by product line.  

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2021

 

 

2020

 

 

 

 

(Dollars in Millions)

Total revenues:

 

 

 

 

 

 

 

 

 

Building Materials business:

 

 

 

 

 

 

 

 

 

Products and services:

 

 

 

 

 

 

 

 

 

Aggregates

 

$

572.6

 

 

$

570.3

 

 

Cement

 

 

109.6

 

 

 

106.6

 

 

Ready mixed concrete

 

 

235.3

 

 

 

189.7

 

 

Asphalt and paving services

 

 

12.2

 

 

 

18.1

 

 

Less: interproduct revenues

 

 

(73.1

)

 

 

(53.6

)

 

Products and services

 

 

856.6

 

 

 

831.1

 

 

Freight

 

 

54.9

 

 

 

61.4

 

 

Total Building Materials business

 

 

911.5

 

 

 

892.5

 

 

Magnesia Specialties:

 

 

 

 

 

 

 

 

 

Products and services

 

 

65.3

 

 

 

59.9

 

 

Freight

 

 

5.6

 

 

 

5.8

 

 

Total Magnesia Specialties

 

 

70.9

 

 

 

65.7

 

 

Total

 

$

982.4

 

 

$

958.2

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit (loss):

 

 

 

 

 

 

 

 

 

Building Materials business:

 

 

 

 

 

 

 

 

 

Products and services:

 

 

 

 

 

 

 

 

 

Aggregates

 

$

121.8

 

 

$

93.4

 

 

Cement

 

 

15.3

 

 

 

27.3

 

 

Ready mixed concrete

 

 

19.4

 

 

 

5.9

 

 

Asphalt and paving services

 

 

(8.2

)

 

 

(8.1

)

 

Products and services

 

 

148.3

 

 

 

118.5

 

 

Freight

 

 

(0.3

)

 

 

(0.3

)

 

Total Building Materials business

 

 

148.0

 

 

 

118.2

 

 

Magnesia Specialties:

 

 

 

 

 

 

 

 

 

Products and services

 

 

28.4

 

 

 

26.1

 

 

Freight

 

 

(0.9

)

 

 

(0.9

)

 

Total Magnesia Specialties

 

 

27.5

 

 

 

25.2

 

 

Corporate

 

 

(0.8

)

 

 

(1.0

)

 

Total

 

$

174.7

 

 

$

142.4

 

 

Page 18 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

 

11.

Supplemental Cash Flow Information

Noncash investing and financing activities are as follows:

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Noncash investing and financing activities:

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for

   new finance lease liabilities

 

$

115.1

 

 

$

 

Accrued liabilities for purchases of property, plant and equipment

 

$

28.7

 

 

$

21.4

 

Right-of-use assets obtained in exchange for new

   operating lease liabilities

 

$

6.0

 

 

$

12.7

 

Accrued proceeds from company-owned life insurance benefits

 

$

 

 

$

0.8

 

Remeasurement of operating lease right-of-use assets

 

$

(6.2

)

 

$

 

 

For the three months ended March 31, 2021, the right-of-use assets obtained in exchange for new finance lease liabilities balance primarily consisted of the lease for the new corporate headquarters.  

Supplemental disclosures of cash flow information are as follows:

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Cash paid for interest, net of capitalized amount

 

$

14.8

 

 

$

11.9

 

Cash paid for income taxes, net of refunds

 

$

 

 

$

1.4

 

During the quarter ended March 31, 2021 and 2020, the Company received proceeds of $9.8 million and repaid $7.2 million of loans, respectively, related to its company-owned life insurance policies.  The proceeds and repayment, as applicable, are included in the Investments in life insurance contracts, net, in the investing activities of the consolidated statements of cash flows.

12.

Other Operating (Income) and Expenses, Net

Other operating (income) and expenses, net, for the three months ended March 31, 2021 reflected lower credit losses and higher gains on sales of assets compared with the prior year period.

13.

Other Nonoperating (Income) and Expenses, Net

For the three months ended March 31, 2021, other nonoperating (income) and expenses, net, included a $3.3 million reduction in pension expense compared with the prior-year period. For the three months ended March 31, 2020, other nonoperating (income) and expenses, net, included $5.6 million of third-party railroad track maintenance expense.

14.

Subsequent Events

On April 30, 2021, the Company completed the acquisition of Tiller Corporation (Tiller), a leading aggregates and hot mix asphalt supplier in the Minneapolis/St. Paul region, one of the largest and fastest growing midwestern metropolitan areas and complements the Company’s existing product offerings in the surrounding areas. Additionally, Tiller sells asphalt FOB, or free on board, origin, serving solely as a materials provider, and does not offer paving or other associated services. The Company financed the acquisition using available cash and borrowings under its credit facilities.  

 

Page 19 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. The Company supplies aggregates (crushed stone, sand and gravel) through its network of 290 quarries, mines and distribution yards in 26 states, Canada and The Bahamas.  In the southwestern and western United States, Martin Marietta also provides cement and downstream products and services, namely, ready mixed concrete, asphalt and paving, in vertically-integrated structured markets where the Company has a leading aggregates position.  The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects.  Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement, ready mixed concrete and asphalt and paving product lines are reported collectively as the “Building Materials” business.

The Company’s Building Materials business includes two reportable segments: the East Group and the West Group.

 

BUILDING MATERIALS BUSINESS

Reportable Segments

 

East Group

 

West Group

Operating Locations

  

Alabama, Florida, Georgia, Indiana, Iowa,
Kansas, Kentucky, Maryland,
Minnesota, Missouri, eastern Nebraska,
North Carolina, Ohio, Pennsylvania,
South Carolina, Tennessee, Virginia,
West Virginia, Nova Scotia and The Bahamas

  

Arkansas, Colorado, Louisiana, western
Nebraska, Oklahoma, Texas, Utah,
Washington and Wyoming

 

 

Product Lines

  

Aggregates

  

Aggregates, Cement, Ready

Mixed Concrete, Asphalt and

Paving

 

 

Plant Types

  

Quarries, Mines and Distribution Facilities

  

Quarries, Mines, Plants and

Distribution Facilities

 

 

Modes of Transportation

  

Truck, Railcar and Ship

  

Truck and Railcar

 

The Company has a Magnesia Specialties business with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel and mining industries.

CRITICAL ACCOUNTING POLICIES

The Company outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2020. There were no changes to the Company’s critical accounting policies during the three months ended March 31, 2021.  

 

Page 20 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

RESULTS OF OPERATIONS

The Building Materials business is significantly affected by weather patterns and seasonal changes.  Production and shipment levels for aggregates, cement, ready mixed concrete and asphalt and paving materials correlate with general construction activity levels, most of which occur in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Operations concentrated in the northern and midwestern United States generally experience more severe winter weather conditions than operations in the southeast and southwest. Excessive rainfall, and conversely excessive drought, can also jeopardize production, shipments and profitability in all markets served by the Company.  Due to the potentially significant impact of weather on the Company’s operations, current-period results are not necessarily indicative of expected performance for other interim periods or the full year.

Earnings before interest; income taxes; depreciation, depletion and amortization; and the earnings/loss from nonconsolidated equity affiliates (Adjusted EBITDA) is an indicator used by the Company and investors to evaluate the Company’s operating performance from period to period. Adjusted EBITDA is not defined by accounting principles generally accepted in the United States and, as such, should not be construed as an alternative to net earnings, earnings from operations or cash provided by operating activities. However, the Company’s management believes that Adjusted EBITDA may provide additional information with respect to the Company’s performance and is a measure used by management to evaluate the Company’s performance. Because Adjusted EBITDA excludes some, but not all, items that affect net earnings and may vary among companies, Adjusted EBITDA as presented by the Company may not be comparable with similarly titled measures of other companies.

A reconciliation of net earnings attributable to Martin Marietta to consolidated Adjusted EBITDA is as follows:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Net Earnings Attributable to Martin Marietta

 

$

65.3

 

 

$

25.9

 

Add back:

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

 

27.3

 

 

 

29.6

 

Income tax expense for controlling interests

 

 

15.8

 

 

 

0.1

 

Depreciation, depletion and amortization and

   earnings/loss from nonconsolidated equity affiliates

 

 

96.0

 

 

 

93.4

 

Consolidated Adjusted EBITDA

 

$

204.4

 

 

$

149.0

 

 

Page 21 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

 

Mix-adjusted average selling price (mix-adjusted ASP) excludes the impacts of product, geographic and other mix from the current-period average selling price and is a non-GAAP measure.  Mix-adjusted ASP is calculated by comparing current-period shipments to like-to-like shipments in the comparable prior period.  Management uses this metric to evaluate the effectiveness of the Company’s pricing increases and believes this information is useful to investors as it provides same-on-same pricing trends.  The following reconciles reported average selling price to mix-adjusted ASP and corresponding variances.

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Aggregates Product Line:

 

 

 

 

 

 

 

 

Reported average selling price

 

$

15.31

 

 

$

14.80

 

Adjustment for favorable impact of product,

   geographic and other mix

 

 

(0.14

)

 

 

 

 

Mix-adjusted ASP

 

$

15.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported average selling price variance

 

 

3.4

%

 

 

 

 

Mix-adjusted ASP variance

 

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Cement Product Line:

 

 

 

 

 

 

 

 

Reported average selling price

 

$

115.49

 

 

$

113.77

 

Adjustment for unfavorable impact of product,

   geographic and other mix

 

 

0.83

 

 

 

 

 

Mix-adjusted ASP

 

$

116.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported average selling price variance

 

 

1.5

%

 

 

 

 

Mix-adjusted ASP variance

 

 

2.2

%

 

 

 

 

 

Financial highlights for the quarter ended March 31, 2021 (unless noted, all comparisons are versus the prior-year quarter):

 

Consolidated total revenues of $982.4 million compared with $958.2 million

 

Building Materials business products and services revenues of $856.6 million compared with $831.1 million

 

Magnesia Specialties products revenues of $65.3 million compared with $59.9 million

 

Consolidated gross profit of $174.7 million compared with $142.4 million

 

Consolidated earnings from operations of $99.3 million compared with $57.8 million

 

Net earnings attributable to Martin Marietta of $65.3 million compared with $25.9 million

 

Consolidated Adjusted EBITDA of $204.4 million compared with $149.0 million

 

Earnings per diluted share of $1.04 compared with $0.41

Page 22 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

 

The following tables present total revenues, gross profit (loss), selling, general and administrative (SG&A) expenses and earnings (loss) from operations data for the Company and its reportable segments by product line for the three months ended March 31, 2021 and 2020. In each case, the data is stated as a percentage of revenues of the Company or the relevant segment or product line, as the case may be.

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

Amount

 

 

 

 

 

 

Amount

 

 

 

 

 

 

 

(Dollars in Millions)

 

Total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

372.5

 

 

 

 

 

 

$

357.9

 

 

 

 

 

West Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

 

200.1

 

 

 

 

 

 

 

212.4

 

 

 

 

 

Cement

 

 

109.6

 

 

 

 

 

 

 

106.6

 

 

 

 

 

Ready mixed concrete

 

 

235.3

 

 

 

 

 

 

 

189.7

 

 

 

 

 

Asphalt and paving

 

 

12.2

 

 

 

 

 

 

 

18.1

 

 

 

 

 

Less: Interproduct revenues

 

 

(73.1

)

 

 

 

 

 

 

(53.6

)

 

 

 

 

West Group Total

 

 

484.1

 

 

 

 

 

 

 

473.2

 

 

 

 

 

Products and services

 

 

856.6

 

 

 

 

 

 

 

831.1

 

 

 

 

 

Freight

 

 

54.9

 

 

 

 

 

 

 

61.4

 

 

 

 

 

Total Building Materials business

 

 

911.5

 

 

 

 

 

 

 

892.5

 

 

 

 

 

Magnesia Specialties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

65.3

 

 

 

 

 

 

 

59.9

 

 

 

 

 

Freight

 

 

5.6

 

 

 

 

 

 

 

5.8

 

 

 

 

 

Total Magnesia Specialties

 

 

70.9

 

 

 

 

 

 

 

65.7

 

 

 

 

 

Total

 

$

982.4

 

 

 

 

 

 

$

958.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 23 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

Amount

 

 

% of Revenues

 

 

Amount

 

 

% of Revenues

 

 

 

(Dollars in Millions)

 

Gross profit (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

86.5

 

 

 

23.2

 

 

$

59.9

 

 

 

16.7

 

West Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

 

35.3

 

 

 

17.6

 

 

 

33.5

 

 

 

15.8

 

Cement

 

 

15.3

 

 

 

14.0

 

 

 

27.3

 

 

 

25.6

 

Ready mixed concrete

 

 

19.4

 

 

 

8.3

 

 

 

5.9

 

 

 

3.1

 

Asphalt and paving

 

 

(8.2

)

 

NM

 

 

 

(8.1

)

 

NM

 

West Group Total

 

 

61.8

 

 

 

12.8

 

 

 

58.6

 

 

 

12.4

 

Products and services

 

 

148.3

 

 

 

17.3

 

 

 

118.5

 

 

 

14.3

 

Freight

 

 

(0.3

)

 

 

 

 

 

 

(0.3

)

 

 

 

 

Total Building Materials business

 

 

148.0

 

 

 

16.2

 

 

 

118.2

 

 

 

13.2

 

Magnesia Specialties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

28.4

 

 

 

43.5

 

 

 

26.1

 

 

 

43.5

 

Freight

 

 

(0.9

)

 

 

 

 

 

 

(0.9

)

 

 

 

 

Total Magnesia Specialties

 

 

27.5

 

 

 

38.8

 

 

 

25.2

 

 

 

38.4

 

Corporate

 

 

(0.8

)

 

 

 

 

 

 

(1.0

)

 

 

 

 

Total

 

$

174.7

 

 

 

17.8

 

 

$

142.4

 

 

 

14.9

 

Aggregates Products Gross Profit Rollforward

The following presents a rollforward of aggregates products gross profit (dollars in millions):  

 

Aggregates products gross profit, quarter ended March 31, 2020

 

$

93.4

 

Volume

 

 

(4.6

)

Pricing

 

 

18.9

 

Operational performance (1)

 

 

14.1

 

Change in aggregates products gross profit

 

 

28.4

 

Aggregates products gross profit, quarter ended March 31, 2021

 

$

121.8

 

(1)

Inclusive of cost increases/decreases, product and geographic mix and other operating impacts

 

Page 24 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

Amount

 

 

% of

Revenues

 

 

Amount

 

 

% of

Revenues

 

 

 

(Dollars in Millions)

 

Selling, general & administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Group

 

$

24.2

 

 

 

 

 

 

$

24.7

 

 

 

 

 

West Group

 

 

33.3

 

 

 

 

 

 

 

33.4

 

 

 

 

 

Total Building Materials business

 

 

57.5

 

 

 

 

 

 

 

58.1

 

 

 

 

 

Magnesia Specialties

 

 

3.7

 

 

 

 

 

 

 

3.5

 

 

 

 

 

Corporate

 

 

18.6

 

 

 

 

 

 

 

17.1

 

 

 

 

 

Total

 

$

79.8

 

 

 

8.1

 

 

$

78.7

 

 

 

8.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Materials business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Group

 

$

61.7

 

 

 

 

 

 

$

34.8

 

 

 

 

 

West Group

 

 

31.9

 

 

 

 

 

 

 

22.7

 

 

 

 

 

Total Building Materials business

 

 

93.6

 

 

 

 

 

 

 

57.5

 

 

 

 

 

Magnesia Specialties

 

 

23.5

 

 

 

 

 

 

 

21.7

 

 

 

 

 

Corporate

 

 

(17.8

)

 

 

 

 

 

 

(21.4

)

 

 

 

 

Total

 

$

99.3

 

 

 

10.1

 

 

$

57.8

 

 

 

6.0

 

 

Building Materials Business

The following tables present aggregates products volume and pricing variance data and shipments data by segment:

 

 

 

Three Months Ended

 

 

 

March 31, 2021

 

 

 

Volume

 

 

Pricing

 

Volume/Pricing variance(1)

 

 

 

 

 

 

 

 

East Group

 

 

0.2

%

 

 

3.9

%

West Group

 

 

(7.7

)%

 

 

1.9

%

Total aggregates operations(2)

 

 

(3.0

)%

 

 

3.4

%

 

Page 25 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Tons in Millions)

 

Shipments

 

 

 

 

 

 

 

 

East Group

 

 

22.7

 

 

 

22.7

 

West Group

 

 

14.4

 

 

 

15.6

 

Total aggregates operations(2)

 

 

37.1

 

 

 

38.3

 

(1) Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.

(2) Total aggregates operations include acquisitions from the date of acquisition and divestitures through the date of disposal.

The following table presents shipments data for the Building Materials business by product line:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Shipments

 

 

 

 

 

 

 

 

Aggregates (in millions):

 

 

 

 

 

 

 

 

Tons to external customers

 

 

34.5

 

 

 

36.0

 

Internal tons used in other product lines

 

 

2.6

 

 

 

2.3

 

Total aggregates tons

 

 

37.1

 

 

 

38.3

 

 

 

 

 

 

 

 

 

 

Cement (in millions):

 

 

 

 

 

 

 

 

Tons to external customers

 

 

0.6

 

 

 

0.7

 

Internal tons used in ready mixed concrete

 

 

0.3

 

 

 

0.2

 

Total cement tons

 

 

0.9

 

 

 

0.9

 

 

 

 

 

 

 

 

 

 

Ready Mixed Concrete (in millions of cubic yards)

 

 

2.1

 

 

 

1.7

 

 

 

 

 

 

 

 

 

 

Asphalt (in millions):

 

 

 

 

 

 

 

 

Tons to external customers

 

 

0.1

 

 

 

0.1

 

Internal tons used in paving business

 

 

 

 

 

0.1

 

Total asphalt tons

 

 

0.1

 

 

 

0.2

 

 

The average selling price by product line for the Building Materials business is as follows:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

% Change

 

Aggregates (per ton)

 

$

15.31

 

 

$

14.80

 

 

 

3.4

%

Cement (per ton)

 

$

115.49

 

 

$

113.77

 

 

 

1.5

%

Ready Mixed Concrete (per cubic yard)

 

$

112.12

 

 

$

114.35

 

 

 

(2.0

)%

Asphalt (per ton)

 

$

49.04

 

 

$

45.43

 

 

 

7.9

%

Page 26 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

 

Aggregates End-Use Markets

Aggregates shipments to all end-use markets were broadly impacted by winter weather in most of the Company’s divisions that more than offset increased residential and nonresidential construction activity in the East Division.  

Aggregates shipments to the infrastructure market declined, primarily driven by weather-related project delays and the timing of projects. The infrastructure market accounted for 30% of first-quarter aggregates shipments, below the Company’s most recent ten-year annual average of 43%.

Aggregates shipments to the nonresidential market declined, driven by reduced wind energy construction in the Midwest and lower energy-sector demand in Texas and Colorado.  Additionally, the completion of certain projects and the delayed start of new projects due to weather hindered shipments to this end use. Further, the COVID-19 pandemic negatively impacted office and retail development. The nonresidential market represented 37% of first-quarter aggregates shipments.

Aggregates shipments to the residential market increased 9%. Low available inventory along with low interest rates continues to drive robust residential construction activity. The residential market accounted for 27% of first-quarter aggregates shipments.

The ChemRock/Rail market accounted for the remaining 6% of first-quarter aggregates shipments. Volumes to this end use decreased, driven by lower ballast shipments to the Class I western railroads.

Building Materials Business Product Lines

First-quarter aggregates shipments declined 3.0% compared with prior-year quarter. East Group shipments increased 0.2%, reflecting strong residential and nonresidential construction activity in the Carolinas, Georgia, Florida and Maryland, which more than offset the Midwest’s later start to the construction season, as compared with the prior year, as well as reduced wind energy construction activity. West Group shipments decreased 7.7%, despite robust underlying demand, due to unfavorable winter weather conditions in both Texas and Colorado and reduced energy-sector demand. Pricing increased 3.4%, or 2.5% on a mix-adjusted basis. In the East Group, pricing increased 3.9%, with improvements in both the East and Central divisions.  Geographic mix limited the West Group’s pricing growth to 1.9%. Aggregates product gross margin increased 490 basis points to 21.3%, driven by pricing gains and lower overall costs for contract services and internal freight.  

Cement shipments increased 0.3% despite the historic winter storm that effectively shut down the Company’s cement operations for 11 days in February. Notably, the Midlothian facility in North Texas experienced double-digit shipment growth for the quarter, demonstrating the robust demand in the Dallas/Fort Worth metroplex that more than offset weather-related impacts and reduced energy-sector activity in the South and West Texas. Pricing improved 1.5%, as lower sales of higher-priced oil-well specialty cement products into West Texas disproportionately impacted overall pricing growth. On a mix-adjusted basis, cement pricing increased 2.2%. Product gross margin declined 1,160 basis points to 14.0%, driven by storm-related incremental costs and inefficiencies caused by the weather-related shut downs.

Ready mixed concrete volume increased 26.5%, led by double-digit growth in Texas from large projects and incremental volume from operations acquired in August 2020. This growth more than offset weather-related shipment declines in Colorado. Pricing declined 2.0% in the first quarter, reflecting geographic mix from a lower percentage of higher-priced Colorado shipments. Product gross margin improved 520 basis points to 8.3%, driven primarily by higher shipments and improved delivery costs.  Asphalt pricing increased 7.9% while a return to more normal winter weather conditions in Colorado contributed to the 36.2% decrease in asphalt shipments.  

Page 27 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

Magnesia Specialties Business

Magnesia Specialties first-quarter product revenues increased 8.9% to $65.3 million, reflecting improved demand for chemicals and lime products. Product gross profit was $28.4 million compared with $26.1 million. Product gross margin was 43.5%, flat compared with prior-year quarter. First-quarter earnings from operations were $23.5 million in 2021 compared with $21.7 million in 2020.

Consolidated Operating Results

Consolidated SG&A for first quarter 2021 was 8.1% of total revenues compared with 8.2% in the prior-year quarter. During first-quarter 2021, the Company incurred $0.9 million in COVID-19 related expenses for enhanced personal protective equipment, as well as cleaning and sanitizing protocols across the Company’s operations, which are recorded in SG&A. Earnings from operations for the quarter were $99.3 million in 2021 compared with $57.8 million in 2020.  

Among other items, other operating (income) and expenses, net, includes gains and losses on the sale of assets; recoveries and write-offs related to customer accounts receivable; rental, royalty and services income; accretion expense, depreciation expense and gains and losses related to asset retirement obligations. For the first quarter, consolidated other operating (income) expenses, net, was income of $5.6 million in 2021 and expense of $5.6 million in 2020. The year-over-year change reflects higher gains on assets sales and lower credit losses.

Other nonoperating (income) and expenses, net, includes interest income; pension and postretirement benefit cost excluding service cost; foreign currency transaction gains and losses; equity earnings or losses from nonconsolidated affiliates and other miscellaneous income and expenses.  For the first quarter, other nonoperating (income) and expenses, net, was income of $9.5 million and expense of $2.0 million in 2021 and 2020, respectively. The 2021 amount reflected lower pension expense of $3.3 million. Additionally, the 2020 expense included a $5.6 million charge to finance third-party railroad maintenance.

Income Tax Expense

For the three months ended March 31, 2021, the effective income tax rate was 19.5%. For the three months ended March 31, 2020, the effective income tax rate of 0.6% reflected a $6.9 million discrete benefit from financing third-party railroad track maintenance. In exchange, the Company received a federal income tax credit and deduction.

Page 28 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

LIQUIDITY AND CAPITAL RESOURCES

For the three months ended March 31, cash provided by operating activities was $191.9 million in 2021 compared with $106.7 million in 2020.  Operating cash flow is primarily derived from consolidated net earnings before deducting depreciation, depletion and amortization, and the impact of changes in working capital.  Depreciation, depletion and amortization were as follows:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in Millions)

 

Depreciation

 

$

84.7

 

 

$

83.1

 

Depletion

 

 

6.8

 

 

 

7.0

 

Amortization

 

 

7.1

 

 

 

4.9

 

Total

 

$

98.6

 

 

$

95.0

 

 

The seasonal nature of construction activity impacts the Company’s quarterly operating cash flow when compared with the full year. Full-year 2020 net cash provided by operating activities was $1,050.1 million.

During the three months ended March 31, 2021, the Company paid $110.3 million for capital investments.

The Company can repurchase its common stock through open-market purchases pursuant to authority granted by its Board of Directors or through private transactions at such prices and upon such terms as the Chief Executive Officer deems appropriate. The Company did not repurchase any shares of common stock during the first three months of 2021.  At March 31, 2021, 13,520,952 shares of common stock were remaining under the Company’s repurchase authorization.  

On April 30, 2021, the Company completed the acquisition of Tiller Corporation (Tiller), a leading aggregates and hot mix asphalt supplier in the Minneapolis/St. Paul region, one of the largest and fastest growing midwestern metropolitan areas and complements the Company’s existing Central Division’s product offerings in the surrounding areas.  The Company financed the acquisition using available cash and borrowings under its credit facilities.

The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility), which expires on September 22, 2021. The Trade Receivable Facility contains a cross-default provision to the Company’s other debt agreements.

The Company has a $700 million five-year senior unsecured revolving facility (the Revolving Facility), which expires on December 5, 2024. The Revolving Facility requires the Company’s ratio of consolidated debt-to-consolidated EBITDA, as defined, for the trailing-twelve-month period (the Ratio) to not exceed 3.50x as of the end of any fiscal quarter, provided that the Company may exclude from the Ratio debt incurred in connection with certain acquisitions during the quarter or the three preceding quarters so long as the Ratio calculated without such exclusion does not exceed 3.75x. Additionally, if there are no amounts outstanding under the Revolving Facility and the Trade Receivable Facility, consolidated debt, including debt for which the Company is a co-borrower, may be reduced by the Company’s unrestricted cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million, for purposes of the covenant calculation.

Page 29 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

The Ratio is calculated as debt, including debt for which the Company is a co-borrower, divided by consolidated EBITDA, as defined by the Company’s Revolving Facility, for the trailing-twelve months.  Consolidated EBITDA is generally defined as earnings before interest expense, income tax expense, and depreciation and amortization expense. Additionally, stock-based compensation expense is added back and interest income is deducted in the calculation of consolidated EBITDA. During periods that include an acquisition, pre-acquisition adjusted EBITDA of the acquired company is added to consolidated EBITDA as if the acquisition occurred on the first day of the calculation period. Certain other nonrecurring items, if they occur, can affect the calculation of consolidated EBITDA.

At March 31, 2021, the Company’s ratio of consolidated net debt-to-consolidated EBITDA, as defined by the Company’s Revolving Facility, for the trailing-twelve months was 1.74 times and was calculated as follows:

 

 

 

April 1, 2020 to

 

 

 

March 31, 2021

 

 

 

(Dollars in Millions)

 

Earnings from continuing operations attributable to Martin Marietta

 

$

760.4

 

Add back:

 

 

 

 

Interest expense

 

 

115.7

 

Income tax expense

 

 

183.8

 

Depreciation, depletion and amortization expense

 

 

393.2

 

Stock-based compensation expense

 

 

28.4

 

 

 

 

 

 

Deduct:

 

 

 

 

Interest income

 

 

(0.3

)

Consolidated EBITDA, as defined by the Company’s Revolving Facility

 

$

1,481.2

 

Consolidated net debt, as defined and including debt for which the Company

     is a co-borrower, at March 31, 2021

 

$

2,571.7

 

Consolidated net debt-to-consolidated EBITDA, as defined by the Company’s

   Revolving Facility, at March 31, 2021 for the trailing-twelve months EBITDA

 

1.74 times

 

 

In the event of a default on the Ratio, the lenders can terminate the Revolving Facility and Trade Receivable Facility and declare any outstanding balances as immediately due.  There were no borrowings under the credit facilities as of March 31, 2021.

Cash on hand, along with the Company’s projected internal cash flows and availability of financing resources, including its access to debt and equity capital markets, is expected to continue to be sufficient to provide the capital resources necessary to support anticipated operating needs, cover debt service requirements, address near-term debt maturities, meet capital expenditures and discretionary investment needs, fund certain acquisition opportunities that may arise, allow the repurchase of shares of the Company’s common stock when the repurchase program is resumed and allow for payment of dividends for the foreseeable future.  Any future significant strategic acquisition for cash would likely require an appropriate balance of newly-issued equity with debt in order to maintain a composite investment-grade credit rating. At March 31, 2021, the Company had $1,097.4 million of unused borrowing capacity under its Revolving Facility and Trade Receivable Facility, subject to complying with the related leverage covenant.  Historically, the Company has successfully extended the maturity dates of these credit facilities.  Further, as of March 31, 2021, the Company does not have any publicly-traded debt that matures prior to 2024.

Page 30 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

As of March 31, 2021, the Company had restricted cash of $40.9 million for the purchase of like-kind exchange replacement assets under Section 1031 of the Internal Revenue Code and related IRS procedures (Section 1031) available to use until June 15, 2021.

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in March 2020 and provided liquidity support for businesses.  Through the CARES Act, the Company deferred the payment of $27.6 million, representing the 6.2% employer share of Social Security taxes for the period from March 27, 2020 through December 31, 2020.  Half of the deferred obligation will be due December 31, 2021 and the remaining half will be due December 31, 2022.  There will be no interest assessed on amounts deferred.

TRENDS AND RISKS

The Company outlined the risks associated with its business in its Annual Report on Form 10-K for the year ended December 31, 2020.  Management continues to evaluate its exposure to all operating risks on an ongoing basis.

OTHER MATTERS

If you are interested in Martin Marietta stock, management recommends that, at a minimum, you read the Company’s current annual report and Forms 10-K, 10-Q and 8-K reports to the Securities and Exchange Commission (SEC) over the past year.  The Company’s recent proxy statement for the annual meeting of shareholders also contains important information.  These and other materials that have been filed with the SEC are accessible through the Company’s website at www.martinmarietta.com and are also available at the SEC’s website at www.sec.gov.  You may also write or call the Company’s Corporate Secretary, who will provide copies of such reports.

Investors are cautioned that all statements in this Form 10-Q that relate to the future involve risks and uncertainties, and are based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results.  These statements, which are forward-looking statements under the Private Securities Litigation Reform Act of 1995, provide the investor with the Company’s expectations or forecasts of future events.  You can identify these statements by the fact that they do not relate only to historical or current facts.  They may use words such as “anticipate,” “expect,” “should be,” “believe,” “will,” and other words of similar meaning in connection with future events or future operating or financial performance.  Any or all of management’s forward-looking statements here and in other publications may turn out to be wrong.

The Company’s outlook is subject to various risks and uncertainties, and is based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results. Factors that the Company currently believes could cause actual results to differ materially from the forward-looking statements in this Form 10-Q (including the outlook) include, but are not limited to: the ability of the Company to face challenges, including those posed by the COVID-19 pandemic and implementation of any such related response plans; fluctuations in COVID-19 cases in the United States and the extent that geography of outbreak primarily matches the regions in which the Company’s Building Materials business principally operates; the resiliency and potential declines of the Company’s various construction end-use markets; the potential negative impact of the COVID-19 pandemic on the Company’s ability to continue supplying heavy-side building materials and related services at normal levels or at all in the Company’s key regions; the duration, impact and severity of the impact of the COVID-19 pandemic on the Company, including the markets in which the Company does business, its suppliers, customers or other business partners as well as the Company’s employees; the economic impact of government responses to the pandemic; the performance of the United States economy, including the impact on the economy of the COVID-19 pandemic and governmental orders

Page 31 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

restricting activities imposed to prevent further outbreak of COVID-19; shipment declines resulting from economic events beyond the Company’s control; a widespread decline in aggregates pricing, including a decline in aggregates shipment volume negatively affecting aggregates price; the history of both cement and ready mixed concrete being subject to significant changes in supply, demand and price fluctuations; the termination, capping and/or reduction or suspension of the federal and/or state gasoline tax(es) or other revenue related to public construction; the level and timing of federal, state or local transportation or infrastructure or public projects funding, most particularly in Texas, Colorado, North Carolina, Georgia, Iowa and Maryland; the impact of governmental orders restricting activities imposed to prevent further outbreak of COVID-19 on travel, potentially reducing state fuel tax revenues used to fund highway projects; the United States Congress’ inability to reach agreement among themselves or with the Administration on policy issues that impact the federal budget; the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures; levels of construction spending in the markets the Company serves; a reduction in defense spending and the subsequent impact on construction activity on or near military bases; a decline in the commercial component of the nonresidential construction market, notably office and retail space, including a decline resulting from economic distress related to the COVID-19 pandemic; a decline in energy-related construction activity resulting from a sustained period of low global oil prices or changes in oil production patterns or capital spending in response to this decline, particularly in Texas; increasing residential mortgage rates and other factors that could result in a slowdown in residential construction; unfavorable weather conditions, particularly Atlantic Ocean and Gulf of Mexico hurricane activity, the late start to spring or the early onset of winter and the impact of a drought or excessive rainfall in the markets served by the Company, any of which can significantly affect production schedules, volumes, product and/or geographic mix and profitability; whether the Company’s operations will continue to be treated as “essential” operations under applicable government orders restricting business activities imposed to prevent further outbreak of COVID-19 or, even if so treated, whether site-specific health and safety concerns might otherwise require certain of the Company’s operations to be halted for some period of time; the volatility of fuel costs, particularly diesel fuel, and the impact on the cost, or the availability generally, of other consumables, namely steel, explosives, tires and conveyor belts, and with respect to the Company’s Magnesia Specialties business, natural gas; continued increases in the cost of other repair and supply parts; construction labor shortages and/or supply‐chain challenges; unexpected equipment failures, unscheduled maintenance, industrial accident or other prolonged and/or significant disruption to production facilities; increasing governmental regulation, including environmental laws; the failure of relevant government agencies to implement expected regulatory reductions; transportation availability or a sustained reduction in capital investment by the railroads, notably the availability of railcars, locomotive power and the condition of rail infrastructure to move trains to supply the Company’s Texas, Colorado, Florida, Carolinas and the Gulf Coast markets, including the movement of essential dolomitic lime for magnesia chemicals to the Company’s plant in Manistee, Michigan and its customers; increased transportation costs, including increases from higher or fluctuating passed-through energy costs or fuel surcharges, and other costs to comply with tightening regulations, as well as higher volumes of rail and water shipments (leading to reduced profit margins when compared with aggregates moved by truck); availability of trucks and licensed drivers for transport of the Company’s materials; availability and cost of construction equipment in the United States; weakening in the steel industry markets served by the Company’s dolomitic lime products; trade disputes with one or more nations impacting the U.S. economy, including the impact of tariffs on the steel industry; unplanned changes in costs or realignment of customers that introduce volatility to earnings, including the Magnesia Specialties business; proper functioning of information technology and automated operating systems to manage or support operations; inflation and its effect on both production and interest costs; the concentration of customers in construction markets and the increased risk of potential losses on customer receivables; the impact of the level of demand in the Company’s end-use markets, production levels and management of production costs on the operating leverage and therefore profitability of the Company; the possibility that the expected synergies

Page 32 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter March 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

First Quarter Ended March 31, 2021

(Continued)

 

from acquisitions will not be realized or will not be realized within the expected time period, including achieving anticipated profitability to maintain compliance with the Company’s leverage ratio debt covenant; changes in tax laws, the interpretation of such laws and/or administrative practices that would increase the Company’s tax rate; violation of the Company’s debt covenant if price and/or volumes return to previous levels of instability; downward pressure on the Company’s common stock price and its impact on goodwill impairment evaluations; the possibility of a reduction of the Company’s credit rating to non-investment grade; and other risk factors listed from time to time found in the Company’s filings with the SEC.  

You should consider these forward-looking statements in light of risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and other periodic filings made with the SEC.  All of the Company’s forward-looking statements should be considered in light of these factors.  In addition, other risks and uncertainties not presently known to the Company or that the Company considers immaterial could affect the accuracy of its forward-looking statements, or adversely affect or be material to the Company.  The Company assumes no obligation to update any such forward-looking statements.

INVESTOR ACCESS TO COMPANY FILINGS

Shareholders may obtain, without charge, a copy of Martin Marietta’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2020, by writing to:

Martin Marietta

Attn: Corporate Secretary

4123 Parklake Avenue

Raleigh, North Carolina 27612

Additionally, Martin Marietta’s Annual Report, press releases and filings with the Securities and Exchange Commission, including Forms 10-K, 10-Q, 8-K and 11-K, can generally be accessed via the Company’s website. Filings with the Securities and Exchange Commission accessed via the website are available through a link with the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Accordingly, access to such filings is available upon EDGAR placing the related document in its database. Investor relations contact information is as follows:

Telephone: (919) 783-4691

Website address: www.martinmarietta.com

Information included on the Company’s website is not incorporated into, or otherwise create a part of, this report.

 

Page 33 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The COVID-19 pandemic continues to impact the global and domestic economy.  The Company’s operations have to date been considered “essential” operations under applicable governmental orders that restrict activities in an effort to prevent further outbreak of COVID-19. As such, the Company is conducting business with certain modifications, including having non-operational personnel working remotely; limiting site access to necessary employees and critical third parties; engaging medical experts to screen those who may have had COVID-19 exposure before allowing access to sites; enhancing the cleaning and disinfection of equipment and common areas, including engaging third-party specialists to disinfect work spaces; and issuing a quarantine policy requiring employees with COVID-19 symptoms to stay home for at least 14 days, among other things.  The Company continues to actively monitor the situation and may take further actions that alter its business operations including any that may be required by federal, state or local authorities or that the Company determines are in the best interests of its employees, customers, suppliers, vendors, communities and other stakeholders.

Demand for aggregates products, particularly in the infrastructure construction market, is affected by federal, state and local budget and deficit issues. Remote working and stay-at-home orders and other guidelines are reducing miles driven, which is having a negative impact on various revenue streams that fund roadway projects. Further, delays or cancellations of projects in the nonresidential and residential construction markets could occur if companies and consumers are unable to obtain financing for construction projects or if consumer confidence continues to be eroded by economic uncertainty. The residential construction market accounted for 24% of the Company’s aggregates shipments in 2020 and 27% in the first three months of 2021.

The Company’s operations are highly dependent upon the interest rate-sensitive construction and steelmaking industries. Consequently, these marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs.

Aside from these inherent risks from within its operations, the Company’s earnings are also affected by changes in short-term interest rates.

Variable-Rate Borrowing Facilities. At March 31, 2021, the Company had a $700 million Revolving Facility and a $400 million Trade Receivable Facility. Borrowings under these facilities bear interest at a variable interest rate. There were no borrowings outstanding on either facility at March 31, 2021.

Pension Expense. The Company’s results of operations are affected by its pension expense. Assumptions that affect pension expense include the discount rate and, for the qualified defined benefit pension plan only, the expected long-term rate of return on assets. Therefore, the Company has interest rate risk associated with these factors. The impact of hypothetical changes in these assumptions on the Company’s annual pension expense is discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. As of March 31, 2021, discount rates were approximately 70 basis points higher than the rate selected as of December 31, 2020, the most recent measurement date. Unless an event requires an interim remeasurement, the Company will next remeasure its pension obligation and funded status as of December 31, 2021.  Changes in the discount rate and pension asset values will impact 2022 pension expense.

Energy Costs. Energy costs, including diesel fuel, natural gas, coal and liquid asphalt, represent significant production costs of the Company.  The cement operations and Magnesia Specialties business have fixed price agreements covering a majority of their 2021 coal requirements.  Energy expense for the three months ended March 31, 2021 decreased approximately 4% compared with the prior-year period, due to lower electricity, diesel and coal costs in 2021; however, any future energy prices cannot be reliably predicted.  A hypothetical price change of 4%, which represents the quarter-over-quarter change in the Company’s energy expense, would change full year 2021 energy expense by $9 million as compared with 2020, assuming constant volumes.  

 

Page 34 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

(Continued)

 

Commodity Risk. Cement is a commodity, and competition is based principally on price, which is highly sensitive to changes in supply and demand. Prices are often subject to material changes in response to relatively minor fluctuations in supply and demand, general economic conditions and other market conditions beyond the Company’s control. Increases in the production capacity of industry participants or increases in cement imports tend to create an oversupply of such products leading to an imbalance between supply and demand, which can have a negative impact on product prices. There can be no assurance that prices for products sold will not decline in the future or that such declines will not have a material adverse effect on the Company’s business, financial condition and results of operations.  Assuming full year 2020 cement product revenues of $453 million, a hypothetical 10% change in sales price would impact cement product revenues by $45.3 million.

Cement is a key raw material in the production of ready mixed concrete. The Company may be unable to pass along increases in the costs of cement and raw materials to customers in the form of price increases for the Company’s products. A hypothetical 10% change in cement costs in 2021 compared with 2020, assuming constant volumes, would change the ready mixed concrete product line cost of revenues by $25.5 million. While increases in cement pricing may negatively impact the profitability of the ready mixed concrete operations, the cement business would benefit, although the positive impact may not reflect a direct correlation to the impact on the ready mix business.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.  As of March 31, 2021, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2021. There were no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.  

 

 

Page 35 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

PART II- OTHER INFORMATION

 

 

Certain legal proceedings in which the Company is involved are discussed in Note O to the consolidated financial statements and Part I, Item 3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. See also Note 8 Commitments and Contingencies, Legal and Administrative Proceedings, of this Form 10-Q.

Item 1A. Risk Factors.

Reference is made to Part I. Item 1A. Risk Factors and Forward-Looking Statements of the Martin Marietta Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES

 

 

 

 

 

 

 

 

 

 

 

Total Number of Shares

 

 

Maximum Number of

 

 

 

 

 

 

 

 

 

 

 

Purchased as Part of

 

 

Shares that May Yet

 

 

 

Total Number of

 

 

Average Price

 

 

Publicly Announced

 

 

be Purchased Under

 

Period

 

Shares Purchased

 

 

Paid per Share

 

 

Plans or Programs

 

 

the Plans or Programs

 

January 1, 2021 - January 31, 2021

 

 

 

 

$

 

 

 

 

 

 

13,520,952

 

February 1, 2021 - February 28, 2021

 

 

 

 

$

 

 

 

 

 

 

13,520,952

 

March 1, 2021 - March 31, 2021

 

 

 

 

$

 

 

 

 

 

 

13,520,952

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference is made to the press release dated February 10, 2015 for the December 31, 2014 fourth-quarter and full-year results and announcement of the share repurchase program. The Company’s Board of Directors authorized a maximum of 20 million shares to be repurchased under the program.  The program does not have an expiration date.

Item 4. Mine Safety Disclosures.

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

 

Page 36 of 38


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2021

PART II- OTHER INFORMATION

(Continued)

 

Item 6. Exhibits.

 

Exhibit No.

  

Document

 

 

31.01

  

Certification dated May 4, 2021 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

31.02

  

Certification dated May 4, 2021 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

32.01

  

Written Statement dated May 4, 2021 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

32.02

  

Written Statement dated May 4, 2021 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

95

  

Mine Safety Disclosures

 

 

101.INS

  

Inline XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

 

101.SCH

  

Inline XBRL Taxonomy Extension Schema Document

 

 

101.CAL

  

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

101.LAB

  

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

101.PRE

  

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

101.DEF

  

Inline XBRL Taxonomy Extension Definition Linkbase

 

 

104

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

 

 

 

Page 37 of 38


 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

MARTIN MARIETTA MATERIALS, INC.

 

 

 

            (Registrant)

 

 

 

 

Date: May 4, 2021

By:

 

/s/ James A. J. Nickolas

 

 

 

James A. J. Nickolas

 

 

 

Sr. Vice President and

 

 

 

   Chief Financial Officer

 

 

Page 38 of 38