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Martin Marietta (MLM) Q3 Earnings Top Estimates, Shares Rise
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Martin Marietta Materials, Inc. (MLM - Free Report) reported third-quarter 2020 results, wherein earnings topped the Zacks Consensus Estimate but revenues (products and services) lagged the same. Increased pricing strategy and prudent cost management helped the company offset lower shipments.
Shares of the company gained 5% on Oct 29 following the earnings release.
Martin Marietta expects industry-wide fluctuations in product demand over the next few quarters owing to the COVID-19 pandemic and related governmental actions. Nonetheless, it remains confident about favorable pricing trends owing to continued success of the locally-driven pricing strategy.
Inside the Headlines
Martin Marietta reported adjusted earnings per share of $4.71, which surpassed the Zacks Consensus Estimate of $3.76 by 25.3%. The metric also increased 18.9% from the year-ago level of $3.96 per share. The uptrend was mainly attributable to operational excellence and disciplined execution of its strategic plan to combat COVID-19 impacts.
Total quarterly revenues (including Product and services, and Freight revenues) came in at $1.32 billion, down 7% from the year-ago figure of $1.42 billion. Products and services revenues, accounting for 94% of total revenues, slipped 6.2% year over year and missed the consensus mark by 0.8%.
Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise
The Building Materials segment (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) revenues of $1.26 billion decreased 7% year over year. Within the segment, product and services revenues amounted to $1.19 billion, down 6.2% from the year-ago level. Moreover, freight revenues of $75 million were down 18% from the year-ago period. The segment experienced shipment volume headwinds from COVID-19-induced economic slowdown and a challenging prior-year comparison.
Again in product and services, Aggregates’ revenues of $766.9 million fell 6.2% from the year-ago quarter. Also, Cement revenues slipped 3.3% year over year to $115.6 million. Ready Mixed Concrete’s revenues slipped 6.3% year over year to $254.6 million. Revenues in Asphalt and paving product lines also decreased 1% from the year-ago quarter to $129.8 million.
Aggregates shipments declined 8.7% year over year. Shipments to the infrastructure and nonresidential end-use markets declined, while shipments to the residential market increased slightly. Aggregates pricing improved 2.7% from the prior-year quarter.
Despite lower shipments, third-quarter aggregates gross margin grew 130 basis points (bps) to 36.4% driven by higher pricing and lower production costs, including diesel fuel.
Within the Building Materials business segment, the company changed the reportable segments to the East Group — previously reported in the Mid-America and Southeast — and West Group, effective Jul 1, 2020.
Now, geographically, East Group operations’ shipments declined 8.8% from the prior-year period due to weather-delayed projects in the Mid-Atlantic and Southeast, lower infrastructure shipments in portions of North Carolina, as well as reduced wind energy construction activity in the Midwest. That said, pricing grew 4.4% from the year-ago quarter, with improvements in both the East and Central divisions.
West Groups’ aggregate shipments slipped 8.4% from a year ago. This was due to wet weather in Texas and reduced energy-sector shipments. Pricing dropped 0.6% year over year.
The Magnesia Specialties segment — including magnesium oxide, magnesium hydroxide and dolomite lime products — reported total revenues of $60.9 million, reflecting a 6% decline from the year-ago period due to lower demand for chemicals and lime products. Product and services revenues of $55.2 million were down 6.9% year over year. Freight revenues of $5.7 million were also down 3.6% from the year-ago period.
Operating Highlights
Consolidated gross margin came in at 30.6%, which improved 100 basis points. Also, adjusted EBITDA of $501.7 million increased 14.3% year over year.
Liquidity and Cash Flow
As of Sep 30, 2020, Martin Marietta had cash and cash equivalents of $193.7 million compared with $21 million at 2019-end. Long-term debt (excluding current maturities) was $2.63 billion compared with $2.43 at 2019-end. Net cash provided by operations was $684 million for the first nine months of 2020, up from $649.8 million in the comparable period of 2019.
It had $1.1 billion of unused borrowing capacity on the existing credit facility as of Sep 30, 2020.
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Martin Marietta (MLM) Q3 Earnings Top Estimates, Shares Rise
Martin Marietta Materials, Inc. (MLM - Free Report) reported third-quarter 2020 results, wherein earnings topped the Zacks Consensus Estimate but revenues (products and services) lagged the same. Increased pricing strategy and prudent cost management helped the company offset lower shipments.
Shares of the company gained 5% on Oct 29 following the earnings release.
Martin Marietta expects industry-wide fluctuations in product demand over the next few quarters owing to the COVID-19 pandemic and related governmental actions. Nonetheless, it remains confident about favorable pricing trends owing to continued success of the locally-driven pricing strategy.
Inside the Headlines
Martin Marietta reported adjusted earnings per share of $4.71, which surpassed the Zacks Consensus Estimate of $3.76 by 25.3%. The metric also increased 18.9% from the year-ago level of $3.96 per share. The uptrend was mainly attributable to operational excellence and disciplined execution of its strategic plan to combat COVID-19 impacts.
Total quarterly revenues (including Product and services, and Freight revenues) came in at $1.32 billion, down 7% from the year-ago figure of $1.42 billion. Products and services revenues, accounting for 94% of total revenues, slipped 6.2% year over year and missed the consensus mark by 0.8%.
Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise
Martin Marietta Materials, Inc. price-consensus-eps-surprise-chart | Martin Marietta Materials, Inc. Quote
Segment Discussion
The Building Materials segment (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) revenues of $1.26 billion decreased 7% year over year. Within the segment, product and services revenues amounted to $1.19 billion, down 6.2% from the year-ago level. Moreover, freight revenues of $75 million were down 18% from the year-ago period. The segment experienced shipment volume headwinds from COVID-19-induced economic slowdown and a challenging prior-year comparison.
Again in product and services, Aggregates’ revenues of $766.9 million fell 6.2% from the year-ago quarter. Also, Cement revenues slipped 3.3% year over year to $115.6 million. Ready Mixed Concrete’s revenues slipped 6.3% year over year to $254.6 million. Revenues in Asphalt and paving product lines also decreased 1% from the year-ago quarter to $129.8 million.
Aggregates shipments declined 8.7% year over year. Shipments to the infrastructure and nonresidential end-use markets declined, while shipments to the residential market increased slightly. Aggregates pricing improved 2.7% from the prior-year quarter.
Despite lower shipments, third-quarter aggregates gross margin grew 130 basis points (bps) to 36.4% driven by higher pricing and lower production costs, including diesel fuel.
Within the Building Materials business segment, the company changed the reportable segments to the East Group — previously reported in the Mid-America and Southeast — and West Group, effective Jul 1, 2020.
Now, geographically, East Group operations’ shipments declined 8.8% from the prior-year period due to weather-delayed projects in the Mid-Atlantic and Southeast, lower infrastructure shipments in portions of North Carolina, as well as reduced wind energy construction activity in the Midwest. That said, pricing grew 4.4% from the year-ago quarter, with improvements in both the East and Central divisions.
West Groups’ aggregate shipments slipped 8.4% from a year ago. This was due to wet weather in Texas and reduced energy-sector shipments. Pricing dropped 0.6% year over year.
The Magnesia Specialties segment — including magnesium oxide, magnesium hydroxide and dolomite lime products — reported total revenues of $60.9 million, reflecting a 6% decline from the year-ago period due to lower demand for chemicals and lime products. Product and services revenues of $55.2 million were down 6.9% year over year. Freight revenues of $5.7 million were also down 3.6% from the year-ago period.
Operating Highlights
Consolidated gross margin came in at 30.6%, which improved 100 basis points. Also, adjusted EBITDA of $501.7 million increased 14.3% year over year.
Liquidity and Cash Flow
As of Sep 30, 2020, Martin Marietta had cash and cash equivalents of $193.7 million compared with $21 million at 2019-end. Long-term debt (excluding current maturities) was $2.63 billion compared with $2.43 at 2019-end. Net cash provided by operations was $684 million for the first nine months of 2020, up from $649.8 million in the comparable period of 2019.
It had $1.1 billion of unused borrowing capacity on the existing credit facility as of Sep 30, 2020.
Zacks Rank
Martin Marietta — which shares space with Vulcan Materials Company (VMC - Free Report) , Summit Materials, Inc. (SUM - Free Report) and Eagle Materials Inc. (EXP - Free Report) in the Zacks Building Products - Concrete and Aggregates industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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