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Martin Marietta (MLM) Q2 Earnings Miss Mark, Revenues Top

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Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed second-quarter 2021 results, wherein earnings missed the Zacks Consensus Estimate but revenues (products and services) beat the same. Earnings and revenues increased on a year-over-year basis backed by improved pricing across businesses as well as disciplined cost management throughout the business.

Ward Nye, Chairman and CEO of Martin Marietta, said, “Our second-quarter results demonstrate Martin Marietta’s strong execution of our proven Strategic Operating Analysis and Review (SOAR) plan and the benefit of strengthening product demand, pricing gains across all product lines and targeted growth initiatives. The Company established new quarterly records for revenues, profits and safety, notwithstanding significant rainfall that adversely impacted operations in several of our key geographies, most notably Texas and Colorado, our two largest revenue states.”

Inside the Headlines

Martin Marietta reported adjusted earnings per share of $3.81, missing the Zacks Consensus Estimate of $3.91 by 2.6%. The metric, however, increased 9.2% from the year-ago level of $3.49 per share. The uptrend was mainly driven by pricing gains achieved across all businesses and disciplined cost management across the enterprise.

Total quarterly revenues (including Product and Services as well as Freight revenues) came in at $1.377.9 million, up 8.4% from the year-ago figure of $1,270.6 million. Products and services revenues of $1,295.3 million, accounting for 94% of total revenues, increased 8.9% year over year and topped the consensus mark of $1,294 million.

Segment Discussion

Building Materials (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) reported revenues of $1,302.1 million, which increased 7% year over year. Within the segment, product and services revenues amounted to $1,225.3 million, up 7.4% from the year-ago level. Freight revenues of $76.8 million were almost on par with the year-ago level of $76.4 million.

Again in Product and Services, Aggregates’ revenues of $801.8 million grew 6.2% from the year-ago quarter. Also, Cement revenues rose 6.4% year over year to $116.5 million. Ready Mixed Concrete’s revenues grew 9.5% year over year to $268.4 million. Revenues in Asphalt and Paving product lines increased 26.4% from the year-ago quarter to $135.3 million.

Shipments & Pricing

Aggregates shipments improved 1.5% year over year and pricing advanced 3.4% (on an organic basis).

Geographically, East Group shipments inched up 7% from the prior year, given strong construction activity in the Carolinas, Georgia, Florida and Maryland across all three primary end-use markets — infrastructure, private residential and private non-residential construction. The Tiller buyout also added to the positives. Pricing in the region improved 3.6% from the prior-year quarter. West Groups’ aggregate shipments decreased 3.6% from a year ago. Unfavorable wet weather conditions in both Texas and Colorado ailed the segment. That said, pricing grew 0.7% year over year.

Cement shipments declined 1.9% year over year. Pricing improved 6.8% (4.2% on a mix-adjusted basis) year over year.

Within the Downstream business, ready mixed concrete shipments increased 8.2% from the prior-year quarter owing to greater volume from large projects and incremental volume from operations acquired in August 2020. The upside was offset by weather-related shipment declines. Pricing grew 1.2% from the year-ago quarter.

Asphalt shipments grew 67.6% owing to the Tiller acquisition, partly offset by weather-related shipment declines in Colorado. Pricing grew 4.9% from a year ago.

The Magnesia Specialties reported product revenues of $70 million, up 43.2% year over year.

Operating Highlights

Gross margin came in at 27.9%, which decreased 200 basis points. Nonetheless, adjusted EBITDA of $439.2 million increased 7.9% year over year driven by pricing momentum and improved cost management across the business.

Liquidity and Cash Flow

As of Jun 30, 2021, Martin Marietta had cash and cash equivalents of $53.1 million compared with $207.3 million at 2020-end. Long-term debt (excluding current maturities) was $2.63 billion, almost in line with the 2020 level. Net cash provided by operations was $441.2 million for the first six months of 2021, up from $373.2 million in the comparable period of 2020. It had $857.4 million of unused borrowing capacity on the existing credit facility at June-end.

Guidance Raised

The company now expects products and services revenues in the range of $4.705-$4.850 billion versus $4.510-$4.700 billion expected earlier, gross profit in the $1.310-$1.380 billion band ($1.290-$1.380 billion projected before), selling, general and administrative expenses within $330-$335 million ($320-$330 million projected earlier) as well as adjusted EBITDA between $1.47 billion and $1.54 billion compared with earlier expectation of $1.35-$1.45 billion. Net earnings are anticipated in the $675-$750 million range versus $665-$750 million expected earlier.

Total aggregate shipment growth is expected in the range of 3-5% (1-3% organically). Total pricing is expected to grow between 2% and 4% (3% and 5% organically).

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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