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Martin Marietta (MLM) Misses Q2 Earnings & Sales Estimates
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Martin Marietta Materials, Inc.'s (MLM - Free Report) second-quarter adjusted earnings per share of $1.90 missed the Zacks Consensus Estimate of $2.04 by about 7%. However, earnings rose 56% from the prior-year quarter.
Despite improving economic conditions and cost management and improved operational efficiency, the company’s profitability was hurt by wet weather in Texas during the majority of the second quarter of 2016 and the El Nino effect, which started in spring 2015 and ended in May 2016.
Net sales of $915.4 million missed the Zacks Consensus Estimate of $917 million by 0.2%.but increased 7.7% year over year.
Total revenue (including freight and delivery) was $977.3 million, up 6% from the year-ago period. Freight and delivery revenues were $61.9 million, down 13% year over year.
Segment Discussion
The Aggregates segment produces, processes and sells aggregates like crushed stone, sand and gravel. The segment also includes Martin Marietta’s vertically-integrated operations, i.e., asphalt products, ready mixed concrete and road paving construction services.
Aggregates business’ net sales (including vertically-integrated operations) grew 15.6% to $796.8 million on the back of strong volume and margin.
Shipments (volume) in the aggregates product line rose 1.3%. Geographically, Mid-America Group reported the highest increase in aggregate volume of 4.9% during the quarter, whereas the West group reported a decline in volume. Price per ton increased 6.8%.
Aggregates business' gross margin (excluding freight and delivery revenues) of 25.4% increased 300 basis points (bps), driven by economic recovery in the southeastern United States.
The Cement segment was formed after the TXI acquisition in Jul 2014. Martin Marietta divested its California cement business acquired from TXI in 2015. The segment recorded net sales of $59.8 million in the quarter, a 9.7% decline. Average selling price was down slightly while volume increased 2.2%. The segment was hurt by wet weather in the Texas market.
The Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, decreased 2.7% year over year to $58.8 million.
Margins Rise
Total adjusted gross margin (excluding freight and delivery revenues) increased 340 bps to 26.9% driven by higher margins in aggregates. Aggregates consolidated gross margin grew 330 bps to 31.8%.
2016 Outlook
Net sales are expected in a range of $3.5 billion to $3.7 billion. Consolidated EBITDA is likely to range within $1.00 billion to $1.05 billion.
Aggregates business’ net sales (excluding downstream business) are expected in a range of $1.95 billion–$2.05 billion. Aggregates product line volume is expected to increase within 6%-8%. Aggregates product line pricing is likely to increase 6% to 8%. Aggregates product line production cost per ton is likely to be within $7.35–$7.50.
Some stocks worth considering in the construction sector include Eagle Materials Inc. (EXP - Free Report) , Masco Corporation (MAS - Free Report) , and Owens Corning (OC - Free Report) . All the three companies carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Martin Marietta (MLM) Misses Q2 Earnings & Sales Estimates
Martin Marietta Materials, Inc.'s (MLM - Free Report) second-quarter adjusted earnings per share of $1.90 missed the Zacks Consensus Estimate of $2.04 by about 7%. However, earnings rose 56% from the prior-year quarter.
Despite improving economic conditions and cost management and improved operational efficiency, the company’s profitability was hurt by wet weather in Texas during the majority of the second quarter of 2016 and the El Nino effect, which started in spring 2015 and ended in May 2016.
Net sales of $915.4 million missed the Zacks Consensus Estimate of $917 million by 0.2%.but increased 7.7% year over year.
Total revenue (including freight and delivery) was $977.3 million, up 6% from the year-ago period. Freight and delivery revenues were $61.9 million, down 13% year over year.
Segment Discussion
The Aggregates segment produces, processes and sells aggregates like crushed stone, sand and gravel. The segment also includes Martin Marietta’s vertically-integrated operations, i.e., asphalt products, ready mixed concrete and road paving construction services.
Aggregates business’ net sales (including vertically-integrated operations) grew 15.6% to $796.8 million on the back of strong volume and margin.
Shipments (volume) in the aggregates product line rose 1.3%. Geographically, Mid-America Group reported the highest increase in aggregate volume of 4.9% during the quarter, whereas the West group reported a decline in volume. Price per ton increased 6.8%.
Aggregates business' gross margin (excluding freight and delivery revenues) of 25.4% increased 300 basis points (bps), driven by economic recovery in the southeastern United States.
The Cement segment was formed after the TXI acquisition in Jul 2014. Martin Marietta divested its California cement business acquired from TXI in 2015. The segment recorded net sales of $59.8 million in the quarter, a 9.7% decline. Average selling price was down slightly while volume increased 2.2%. The segment was hurt by wet weather in the Texas market.
The Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, decreased 2.7% year over year to $58.8 million.
Margins Rise
Total adjusted gross margin (excluding freight and delivery revenues) increased 340 bps to 26.9% driven by higher margins in aggregates. Aggregates consolidated gross margin grew 330 bps to 31.8%.
2016 Outlook
Net sales are expected in a range of $3.5 billion to $3.7 billion. Consolidated EBITDA is likely to range within $1.00 billion to $1.05 billion.
Aggregates business’ net sales (excluding downstream business) are expected in a range of $1.95 billion–$2.05 billion. Aggregates product line volume is expected to increase within 6%-8%. Aggregates product line pricing is likely to increase 6% to 8%. Aggregates product line production cost per ton is likely to be within $7.35–$7.50.
MARTIN MRT-MATL Price, Consensus and EPS Surprise
MARTIN MRT-MATL Price, Consensus and EPS Surprise | MARTIN MRT-MATL Quote
Martin Marietta carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some stocks worth considering in the construction sector include Eagle Materials Inc. (EXP - Free Report) , Masco Corporation (MAS - Free Report) , and Owens Corning (OC - Free Report) . All the three companies carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>