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Martin Marietta (MLM) Down 1.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Martin Marietta (MLM - Free Report) . Shares have lost about 1.7% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Martin Marietta due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Martin Marietta (MLM - Free Report) Misses on Q3 Earnings, Updates View
Martin Marietta Materials, Inc.reported mixed third-quarter 2021 results, wherein earnings missed the Zacks Consensus Estimate but revenues (products and services) beat the same.
The company remains optimistic regarding its prospects, given secular demand trends across its geographic footprint, including single-family housing strength, expanded federal- and state-level infrastructure investment as well as light non-residential recovery. In this regard, Ward Nye, chairman and CEO of Martin Marietta, further added, “Our overall confidence is augmented by our newly completed acquisition of Lehigh Hanson, Inc.’s West Region business (“Lehigh West Region”), which further enhanced our pipeline of growth opportunities and deep bench of talent at Martin Marietta. This SOAR-aligned, strategic transaction provides attractive new growth platforms for Martin Marietta’s continued geographic expansion, especially in key California and Arizona regions, where we are poised to benefit from favorable market dynamics and accelerating public and private construction activity.”
Inside the Headlines
Martin Marietta reported adjusted earnings per share of $4.25, missing the Zacks Consensus Estimate of $4.27 by 0.5%. The metric also decreased 9.8% from the year-ago level of $4.71 per share. The downside was mainly driven by continuing energy-related cost headwinds.
Total quarterly revenues (including Product and Services as well as Freight revenues) came in at $1,557.3 million, up 17.9% from the year-ago figure of $1,321.4 million. Products and services revenues of $1,462.7 million, accounting for 94% of total revenues, increased 17.9% year over year and topped the consensus mark of $1,404 million. The upside was driven by organic shipment growth, pricing gains and value-enhancing acquisitions.
Segment Discussion
Building Materials (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) reported revenues of $1,478.9 million, which increased 17.3% year over year. Within the segment, product and services revenues amounted to $1,390.8 million, up 17.3% from the year-ago level. Freight revenues of $88.1 million were up from $75 million in the year-ago period.
Again in Product and Services, Aggregates’ revenues of $851.1 million grew 11.8% from the year-ago quarter. Also, Cement revenues rose 14.4% year over year to $132.3 million. Ready Mixed Concrete’s revenues grew 26% year over year to $320.8 million. Revenues in Asphalt and Paving product lines also increased 50.9% from the year-ago quarter to $195.9 million.
Shipments & Pricing
Aggregates shipments improved 10.2% year over year (up 6% organically) and pricing advanced 1.2% (up 2.2% organically).
Geographically, East Group shipments edged up 10.1% from the prior year, given strong construction activity across all three primary end-use markets — infrastructure, private residential and private non-residential construction. Pricing in the region improved 0.4% from the prior-year quarter. West Groups’ aggregate shipments grew 10.4% from a year ago. Pricing in the region grew 2.8% year over year.
Cement shipments advanced 4.1% year over year. Pricing improved 8.4% (6.6% on a mix-adjusted basis) year over year.
Within the Downstream business, ready mixed concrete shipments increased 23.2% from the prior-year quarter owing to greater demand from Texas and Colorado. Pricing grew 2.3% from the year-ago quarter.
Asphalt shipments grew 115.9% owing to the buyout of the Minnesota operation. Pricing, however, declined 1.7% from a year ago.
The Magnesia Specialties reported product revenues of $71.9 million, up 30.3% year over year.
Operating Highlights
Gross margin came in at 28.4%, which decreased 220 basis points. Adjusted EBITDA of $490 million also decreased 2.3% year over year.
Liquidity and Cash Flow
As of Sep 30, 2021, Martin Marietta had cash and cash equivalents of $2,381.4 million compared with $207.3 million at 2020-end. Long-term debt (excluding current maturities) was $5,099.4 million, up from $2,625.8 million at 2020-end. Net cash provided by operations was $780.3 million for the first nine months of 2021, up from $684 million in the comparable period of 2020. It had $1.1 billion of unused borrowing capacity on the existing credit facility at September-end.
The company returned $109.7 million to shareholders in the first nine months of 2021 through dividend payments and share repurchases, and more than $1.9 billion since the announcement of a 20-million share repurchase authorization in February 2015.
Guidance Updated
Martin Marietta has updated its guidance to reflect its acquisitions amid continuing energy-related cost headwinds.
The company now expects products and services revenues in the range of $4.955-$5.050 billion versus $4.705-$4.850 billion expected earlier, gross profit in the $1.330-$1.380 billion band ($1.310-$1.380 billion projected before), selling, general and administrative expenses within $340-$345 million ($330-$335 million projected earlier) as well as adjusted EBITDA between $1.5 billion and $1.55 billion compared with the earlier expectation of $1.47-$1.54 billion. Net earnings are anticipated in the $680-$735 million range versus $675-$750 million expected earlier.
Total aggregate shipment growth is expected in the range of 4.5-6.5% (1-3% organically). It was expected within 3-5% earlier. Total pricing is expected to grow between 2% and 3% (2.5% and 3.5% organically).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Martin Marietta has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Martin Marietta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Martin Marietta (MLM) Down 1.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Martin Marietta (MLM - Free Report) . Shares have lost about 1.7% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Martin Marietta due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Martin Marietta (MLM - Free Report) Misses on Q3 Earnings, Updates View
Martin Marietta Materials, Inc.reported mixed third-quarter 2021 results, wherein earnings missed the Zacks Consensus Estimate but revenues (products and services) beat the same.
The company remains optimistic regarding its prospects, given secular demand trends across its geographic footprint, including single-family housing strength, expanded federal- and state-level infrastructure investment as well as light non-residential recovery. In this regard, Ward Nye, chairman and CEO of Martin Marietta, further added, “Our overall confidence is augmented by our newly completed acquisition of Lehigh Hanson, Inc.’s West Region business (“Lehigh West Region”), which further enhanced our pipeline of growth opportunities and deep bench of talent at Martin Marietta. This SOAR-aligned, strategic transaction provides attractive new growth platforms for Martin Marietta’s continued geographic expansion, especially in key California and Arizona regions, where we are poised to benefit from favorable market dynamics and accelerating public and private construction activity.”
Inside the Headlines
Martin Marietta reported adjusted earnings per share of $4.25, missing the Zacks Consensus Estimate of $4.27 by 0.5%. The metric also decreased 9.8% from the year-ago level of $4.71 per share. The downside was mainly driven by continuing energy-related cost headwinds.
Total quarterly revenues (including Product and Services as well as Freight revenues) came in at $1,557.3 million, up 17.9% from the year-ago figure of $1,321.4 million. Products and services revenues of $1,462.7 million, accounting for 94% of total revenues, increased 17.9% year over year and topped the consensus mark of $1,404 million. The upside was driven by organic shipment growth, pricing gains and value-enhancing acquisitions.
Segment Discussion
Building Materials (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) reported revenues of $1,478.9 million, which increased 17.3% year over year. Within the segment, product and services revenues amounted to $1,390.8 million, up 17.3% from the year-ago level. Freight revenues of $88.1 million were up from $75 million in the year-ago period.
Again in Product and Services, Aggregates’ revenues of $851.1 million grew 11.8% from the year-ago quarter. Also, Cement revenues rose 14.4% year over year to $132.3 million. Ready Mixed Concrete’s revenues grew 26% year over year to $320.8 million. Revenues in Asphalt and Paving product lines also increased 50.9% from the year-ago quarter to $195.9 million.
Shipments & Pricing
Aggregates shipments improved 10.2% year over year (up 6% organically) and pricing advanced 1.2% (up 2.2% organically).
Geographically, East Group shipments edged up 10.1% from the prior year, given strong construction activity across all three primary end-use markets — infrastructure, private residential and private non-residential construction. Pricing in the region improved 0.4% from the prior-year quarter. West Groups’ aggregate shipments grew 10.4% from a year ago. Pricing in the region grew 2.8% year over year.
Cement shipments advanced 4.1% year over year. Pricing improved 8.4% (6.6% on a mix-adjusted basis) year over year.
Within the Downstream business, ready mixed concrete shipments increased 23.2% from the prior-year quarter owing to greater demand from Texas and Colorado. Pricing grew 2.3% from the year-ago quarter.
Asphalt shipments grew 115.9% owing to the buyout of the Minnesota operation. Pricing, however, declined 1.7% from a year ago.
The Magnesia Specialties reported product revenues of $71.9 million, up 30.3% year over year.
Operating Highlights
Gross margin came in at 28.4%, which decreased 220 basis points. Adjusted EBITDA of $490 million also decreased 2.3% year over year.
Liquidity and Cash Flow
As of Sep 30, 2021, Martin Marietta had cash and cash equivalents of $2,381.4 million compared with $207.3 million at 2020-end. Long-term debt (excluding current maturities) was $5,099.4 million, up from $2,625.8 million at 2020-end. Net cash provided by operations was $780.3 million for the first nine months of 2021, up from $684 million in the comparable period of 2020. It had $1.1 billion of unused borrowing capacity on the existing credit facility at September-end.
The company returned $109.7 million to shareholders in the first nine months of 2021 through dividend payments and share repurchases, and more than $1.9 billion since the announcement of a 20-million share repurchase authorization in February 2015.
Guidance Updated
Martin Marietta has updated its guidance to reflect its acquisitions amid continuing energy-related cost headwinds.
The company now expects products and services revenues in the range of $4.955-$5.050 billion versus $4.705-$4.850 billion expected earlier, gross profit in the $1.330-$1.380 billion band ($1.310-$1.380 billion projected before), selling, general and administrative expenses within $340-$345 million ($330-$335 million projected earlier) as well as adjusted EBITDA between $1.5 billion and $1.55 billion compared with the earlier expectation of $1.47-$1.54 billion. Net earnings are anticipated in the $680-$735 million range versus $675-$750 million expected earlier.
Total aggregate shipment growth is expected in the range of 4.5-6.5% (1-3% organically). It was expected within 3-5% earlier. Total pricing is expected to grow between 2% and 3% (2.5% and 3.5% organically).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Martin Marietta has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Martin Marietta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.