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Martin Marietta (MLM) Q1 Earnings & Revenues Beat, Margins Rise

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Martin Marietta Materials, Inc.’s (MLM - Free Report) shares jumped 4.27% in the pre-market trading session on May 4 after it reported solid results for first-quarter 2023. Earnings remarkably surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. Revenues beat the same and rose from the prior year.

The metrics improved on the back of solid pricing actions, which drove robust margin expansion despite continued inflationary pressure and modestly lower aggregates shipments.

Ward Nye, chairman and CEO of MLM, stated, “We continue to see solid near-term product demand reinforced by healthy customer backlogs across our coast-to-coast footprint, led by infrastructure and heavy non-residential projects of scale. We expect recent legislation and the resulting enhanced level of public investment in these kinds of aggregates-intensive end-use projects to support continued strong demand for several years to come. While single-family residential construction has slowed, builder sentiment has improved in Martin Marietta geographies as the single-family housing shortage continues to drive a base level of demand in our key Sun Belt markets. We also expect to see an uptick in residential activity as mortgage rates stabilize over the next several months.”

He added, “We are confident in our ability to continue to expand margins throughout the year and expect to deliver compelling full-year financial results more directionally in line with the high end of our previously announced 2023 guidance range, which we will revisit at mid-year.”

Inside the Headlines

Martin Marietta reported adjusted earnings from continuing operations of $2.16 per share, which handily surpassed the Zacks Consensus Estimate of 99 cents by 118.2%. Also, the metric increased a whopping 453.8% from the year-ago quarter’s 39 cents.

Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise


Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise

Martin Marietta Materials, Inc. price-consensus-eps-surprise-chart | Martin Marietta Materials, Inc. Quote

Quarterly revenues (including Product and Services and Freight revenues) were $1.35 billion, up 10% from the year-ago period. The metric topped the consensus mark of $1.19 billion by 14.2%.

Segmental Discussion

Building Materials (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) reported revenues of $1.27 billion, which increased 10.1% year over year. Double-digit pricing gains, partially offset by continued inflationary pressure, led to the gross margin improvement of 970 basis points (bps).

Within the Building Materials’ product and services umbrella, Aggregates’ revenues rose 20.5% of $911.9 million from the year-ago quarter. Cement revenues rose 21.9% year over year to $168.6 million. Ready Mixed Concrete’s revenues decreased 24.4% year over year to $220 million. Revenues in Asphalt and Paving product lines increased 2.1% from the year-ago quarter to $58 million.

Aggregates shipments fell 0.8% year over year and pricing advanced 22.6%. Shipments fell due to historically wet weather in California, partially offset by mild weather and strong demand in the Southeast.

Cement shipments declined 6.8% year over year. Pricing increased 32.2% year over year. The upside was driven by sold-out conditions and the compounding effect of price increases in 2022 and 2023.

Within the Downstream business, ready mixed concrete shipments declined 37.1%, with pricing growth of 20.2% from the prior-year quarter. Asphalt shipments and pricing declined 25.1% and 9.9%, respectively.

Magnesia Specialties reported revenues of $83.4 million, up 8.4% year over year, driven by higher pricing for all product lines.

Operating Highlights

The gross profit increased 94% year over year to $302.8 million. The adjusted gross margin was 22.4%, which increased from 12.7% a year ago. Adjusted EBITDA of $323.9 million increased 64.2% year over year. The adjusted EBITDA margin was 23.9%, up 790 bps from a year ago.

Liquidity and Cash Flow

As of Mar 31, 2022, Martin Marietta had cash and cash equivalents, and restricted cash of $229.4 million compared with $358 million at 2022-end. Also, it had $1.20 billion of unused borrowing capacity on its existing credit facilities at March-end. Long-term debt (excluding current maturities) was $4,342 million, down from $4,340.9 million at the 2022-end.

Net cash provided by operations was $160.5 million for the first three months, down from $169.9 million in the year-ago period.

2023 Guidance

Martin Marietta expects consolidated products and services revenues of $6,600-$6,815 million, up from $6,180-$6,370 million stated earlier. The company anticipates adjusted EBITDA between $1,800 million and $1,900 million.

Interest expenses are likely to be $165-170 million and the tax rate is projected to be 21-22%. Net earnings from continuing operations attributable to Martin Marietta are anticipated to be $880-$990 million. Capital expenditure is likely to be $575-625 million.

Within the Building Materials business, total aggregate shipment growth is expected between down 2% and up 2%. Total aggregate pricing per ton is anticipated to grow 13-15%. Gross profit is likely to be $1,225-$1,295 million.

Zacks Rank & Recent Construction Releases

Martin Marietta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Otis Worldwide Corporation (OTIS - Free Report) started 2023 on a solid note. The company’s first-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected the 10th consecutive quarter of organic sales growth, along with solid Service performance, contributing to mid-single-digit adjusted earnings per share growth.

Otis has been focused on strong portfolio growth and generating a solid New Equipment backlog. It intends to expand operating margins, return cash to shareholders through a capital allocation strategy and pursue additional progress toward ESG goals.

United Rentals, Inc. (URI - Free Report) reported first-quarter 2023 results. The company’s earnings missed the Zacks Consensus Estimate but revenues beat the same. Nonetheless, on a year-over-year basis, earnings and revenues increased, courtesy of sustained demand in its end markets and the strength of its core rental business.

URI reaffirmed its 2023 guidance, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility. The company unveiled a quarterly dividend of $1.48 per share, with an annualized yield of 0.4%. It repurchased $250 million of stock under its existing $1.25-billion share repurchase program.

Masco Corporation (MAS - Free Report) reported better-than-expected results for first-quarter 2023. The top and bottom lines surpassed the Zacks Consensus Estimate. The company has been benefiting from strong pricing actions and operational improvements.

Then again, MAS’ adjusted earnings and net sales declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.

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