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Martin Marietta's (MLM) Q3 Earnings Beat, Revenues Lag, View Up
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Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed third-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. On the other hand, revenues missed the consensus mark but rose year over year.
The company’s results reflect gains from increased investment in large infrastructure and manufacturing projects, the business-mix portfolio, its discreetly curated coast-to-coast footprint and its prime focus on value-over-volume commercial strategy. Owing to these tailwinds, Martin Marietta expects a significant boost in aggregate demand in the U.S. economy in the remainder of 2023. However, a slowdown in warehouses, along with softness in private nonresidential and residential construction activities considering the ongoing economic uncertainties, partially offset the abovementioned positives.
Abiding by its aggregates-led product focus strategy, Martin Marietta divested its Tehachapi, California cement plant for $315 million on Oct 31, 2023. This will enhance its product mix and encourage it to proceed with more pure-play aggregates acquisitions.
Given the improving trends, the company is optimistic that the demand in its end markets is likely to accelerate upon the moderation of inflation and restrictive monetary policy. Moreover, owing to the tailwinds, the company also lifted its full-year adjusted EBITDA and net earnings from continuing operations expectations.
Following the results, shares of this producer and supplier of construction aggregates and other heavy building materials inched up 0.4% in the pre-market trading session on Nov 1.
Inside the Headlines
Martin Marietta reported earnings from continuing operations of $6.94 per share, which notably surpassed the Zacks Consensus Estimate of earnings of $5.93 per share by 17%. Also, the metric increased 48% from the year-ago quarter’s adjusted earnings level of $4.69 per share.
Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise
Quarterly revenues of $1.99 billion missed the consensus mark of $2 billion by 0.5%. However, the metric grew 10.1% from the year-ago period.
Segmental Discussion
Building Materials (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) reported third-quarter revenues of $1.9 billion, which increased 10.5% year over year. For this segment’s revenues, our model predicted a value of $1.89 billion. The segment’s gross margin improved by 680 basis points (bps) to 33.8% year over year backed by favorable pricing.
Within the Building Materials’ product and services umbrella, Aggregates’ revenues rose 8% to $1.22 billion from the year-ago quarter. Cement revenues rose 18.4% year over year to $199.1 million. Ready Mixed Concrete’s revenues grew 25.3% year over year to $285.2 million. Revenues in Asphalt and Paving product lines increased 14.6% from the year-ago quarter to $359.9 million.
In the reporting quarter, Aggregates shipments fell 7.3% year over year due to soft demand in a few Midwest and Southwest markets. However, pricing advanced 20%. Aggregates gross profit in the quarter increased 32.1% to a record value of $440.6 million year over year.
Cement shipments were on par with the prior-year quarter while pricing increased 18.9% year over year. The Cement gross profit grew 61.5% in the quarter from a year ago.
Within the Downstream business, ready mixed concrete shipments increased 4% and Asphalt shipments grew 6% in the quarter.
Magnesia Specialties reported revenues of $75.5 million, flat year over year. We predicted a comparatively higher value of $97 million year over year compared with the reported figure. Nonetheless, the gross profit margin increased 110 bps to 28.3% on the back of higher pricing and a moderation of energy expenses.
Operating Highlights
The gross profit increased 38.6% year over year to $676 million. The adjusted gross margin was 33.9%, which notably increased 700 bps year over year. Adjusted EBITDA of $705.2 million increased 32.3% year over year.
Liquidity and Cash Flow
As of Sep 30, 2023, Martin Marietta had unrestricted cash and cash equivalents of $647.6 million compared with $358 million at 2022 end. Also, it had $1.20 billion of unused borrowing capacity on its existing credit facilities in September-end. Long-term debt (excluding current maturities) was $3.94 billion, down from $4.34 billion as of 2022 end.
Net cash provided by operations was $972.5 million for the first nine months, up from $560.7 million reported in the year-ago period.
Updated 2023 Guidance
Martin Marietta now expects consolidated products and services revenues to be $6,735-$6,855 million compared with $6,725-$6,860 million stated earlier. The company anticipates adjusted EBITDA to be between $2,050 million and $2,150 million, up from the prior-projected range of $2,000 million and $2,100 million
Interest expenses are still likely to be in the range of $165-$170 million and the tax rate is projected to be 21-22%. Net earnings from continuing operations attributable to Martin Marietta are now anticipated to be in the range of $1,095-$1,195 million, up from the prior expectation of $1,040-$1,150 million. Capital expenditure is likely to be in the band of $575-$625 million.
Within the Building Materials business, total aggregate shipment growth is now expected to be between down 5% and down 4% compared with prior anticipation of down 5% and down 1%. Total aggregate pricing per ton is anticipated to grow 18-20%, up from the previously anticipated range of 17-19%. Gross profit is expected to be between $1,350 million and $1,410 million, up from $1,330 million and $1,395 million expected earlier.
Vulcan Materials Company (VMC - Free Report) reported stellar results for the third quarter of 2023, surpassing the Zacks Consensus Estimate for both earnings and revenues. The company experienced solid growth in both its top and bottom lines compared to the previous year.
This performance can be attributed to the consistent strategic execution and the strong performance of its aggregates-led business. Additionally, large industrial projects contributed to their better-than-expected results.
Weyerhaeuser Company (WY - Free Report) reported third-quarter 2023 results, wherein its earnings met the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines declined on a year-over-year basis.
Lower harvest volumes, mainly in the West and the South, lower sales realizations, lower export sales volumes along with temporary operational disruptions led to the downside.
M.D.C. Holdings, Inc. reported mixed third-quarter 2023 results, wherein earnings topped the Zacks Consensus Estimate while the revenues missed the same. Moreover, both the metrics declined year over year as well.
MDC’s results are attributable to the current new home market, which continues to benefit from the lack of existing home supply. The company witnessed notable improvements in its net new orders driven by a significant decline in cancellations and its use of financing incentives, which are aimed at reducing the negative impact of higher mortgage rates for its buyers. However, lower ASP and units delivered given the uncertain macroeconomic conditions and high mortgage rates hurt growth prospects.
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Martin Marietta's (MLM) Q3 Earnings Beat, Revenues Lag, View Up
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed third-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. On the other hand, revenues missed the consensus mark but rose year over year.
The company’s results reflect gains from increased investment in large infrastructure and manufacturing projects, the business-mix portfolio, its discreetly curated coast-to-coast footprint and its prime focus on value-over-volume commercial strategy. Owing to these tailwinds, Martin Marietta expects a significant boost in aggregate demand in the U.S. economy in the remainder of 2023. However, a slowdown in warehouses, along with softness in private nonresidential and residential construction activities considering the ongoing economic uncertainties, partially offset the abovementioned positives.
Abiding by its aggregates-led product focus strategy, Martin Marietta divested its Tehachapi, California cement plant for $315 million on Oct 31, 2023. This will enhance its product mix and encourage it to proceed with more pure-play aggregates acquisitions.
Given the improving trends, the company is optimistic that the demand in its end markets is likely to accelerate upon the moderation of inflation and restrictive monetary policy. Moreover, owing to the tailwinds, the company also lifted its full-year adjusted EBITDA and net earnings from continuing operations expectations.
Following the results, shares of this producer and supplier of construction aggregates and other heavy building materials inched up 0.4% in the pre-market trading session on Nov 1.
Inside the Headlines
Martin Marietta reported earnings from continuing operations of $6.94 per share, which notably surpassed the Zacks Consensus Estimate of earnings of $5.93 per share by 17%. Also, the metric increased 48% from the year-ago quarter’s adjusted earnings level of $4.69 per share.
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 of $1.99 billion missed the consensus mark of $2 billion by 0.5%. However, the metric grew 10.1% from the year-ago period.
Segmental Discussion
Building Materials (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and Freight) reported third-quarter revenues of $1.9 billion, which increased 10.5% year over year. For this segment’s revenues, our model predicted a value of $1.89 billion. The segment’s gross margin improved by 680 basis points (bps) to 33.8% year over year backed by favorable pricing.
Within the Building Materials’ product and services umbrella, Aggregates’ revenues rose 8% to $1.22 billion from the year-ago quarter. Cement revenues rose 18.4% year over year to $199.1 million. Ready Mixed Concrete’s revenues grew 25.3% year over year to $285.2 million. Revenues in Asphalt and Paving product lines increased 14.6% from the year-ago quarter to $359.9 million.
In the reporting quarter, Aggregates shipments fell 7.3% year over year due to soft demand in a few Midwest and Southwest markets. However, pricing advanced 20%. Aggregates gross profit in the quarter increased 32.1% to a record value of $440.6 million year over year.
Cement shipments were on par with the prior-year quarter while pricing increased 18.9% year over year. The Cement gross profit grew 61.5% in the quarter from a year ago.
Within the Downstream business, ready mixed concrete shipments increased 4% and Asphalt shipments grew 6% in the quarter.
Magnesia Specialties reported revenues of $75.5 million, flat year over year. We predicted a comparatively higher value of $97 million year over year compared with the reported figure. Nonetheless, the gross profit margin increased 110 bps to 28.3% on the back of higher pricing and a moderation of energy expenses.
Operating Highlights
The gross profit increased 38.6% year over year to $676 million. The adjusted gross margin was 33.9%, which notably increased 700 bps year over year. Adjusted EBITDA of $705.2 million increased 32.3% year over year.
Liquidity and Cash Flow
As of Sep 30, 2023, Martin Marietta had unrestricted cash and cash equivalents of $647.6 million compared with $358 million at 2022 end. Also, it had $1.20 billion of unused borrowing capacity on its existing credit facilities in September-end. Long-term debt (excluding current maturities) was $3.94 billion, down from $4.34 billion as of 2022 end.
Net cash provided by operations was $972.5 million for the first nine months, up from $560.7 million reported in the year-ago period.
Updated 2023 Guidance
Martin Marietta now expects consolidated products and services revenues to be $6,735-$6,855 million compared with $6,725-$6,860 million stated earlier. The company anticipates adjusted EBITDA to be between $2,050 million and $2,150 million, up from the prior-projected range of $2,000 million and $2,100 million
Interest expenses are still likely to be in the range of $165-$170 million and the tax rate is projected to be 21-22%. Net earnings from continuing operations attributable to Martin Marietta are now anticipated to be in the range of $1,095-$1,195 million, up from the prior expectation of $1,040-$1,150 million. Capital expenditure is likely to be in the band of $575-$625 million.
Within the Building Materials business, total aggregate shipment growth is now expected to be between down 5% and down 4% compared with prior anticipation of down 5% and down 1%. Total aggregate pricing per ton is anticipated to grow 18-20%, up from the previously anticipated range of 17-19%. Gross profit is expected to be between $1,350 million and $1,410 million, up from $1,330 million and $1,395 million expected earlier.
Zacks Rank
Martin Marietta currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Recent Construction Releases
Vulcan Materials Company (VMC - Free Report) reported stellar results for the third quarter of 2023, surpassing the Zacks Consensus Estimate for both earnings and revenues. The company experienced solid growth in both its top and bottom lines compared to the previous year.
This performance can be attributed to the consistent strategic execution and the strong performance of its aggregates-led business. Additionally, large industrial projects contributed to their better-than-expected results.
Weyerhaeuser Company (WY - Free Report) reported third-quarter 2023 results, wherein its earnings met the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines declined on a year-over-year basis.
Lower harvest volumes, mainly in the West and the South, lower sales realizations, lower export sales volumes along with temporary operational disruptions led to the downside.
M.D.C. Holdings, Inc. reported mixed third-quarter 2023 results, wherein earnings topped the Zacks Consensus Estimate while the revenues missed the same. Moreover, both the metrics declined year over year as well.
MDC’s results are attributable to the current new home market, which continues to benefit from the lack of existing home supply. The company witnessed notable improvements in its net new orders driven by a significant decline in cancellations and its use of financing incentives, which are aimed at reducing the negative impact of higher mortgage rates for its buyers. However, lower ASP and units delivered given the uncertain macroeconomic conditions and high mortgage rates hurt growth prospects.