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Martin Marietta (MLM) Misses Q3 Earnings & Sales Estimates
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Martin Marietta Materials, Inc.'s (MLM - Free Report) third-quarter 2016 adjusted earnings per share of $2.49 missed the Zacks Consensus Estimate of $2.64 by about 5.7%. However, earnings rose 43% from the prior-year quarter.
Despite improving economic conditions, cost management and enhanced operational efficiency, the company’s volume headwinds were more prevalent during the quarter. The company also faced constrained construction activity in its markets. Specifically, the company continues to see delays in Texas Department of Transportation projects, declines in railroad ballast shipments, abnormally wet weather and a slower energy-related marketplace.
Net sales of $1.038 billion missed the Zacks Consensus Estimate of $1.06 billion by 1.9% but increased 3.3% year over year.
Total revenue (including freight and delivery) was $1.103 million, up 2% from the year-ago period. Freight and delivery revenues were $65.6 million, down 14.8% 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 9.6% to $918 million on the back of strong volume and margin.
Shipments (volume) in the aggregates product line declined 7.2%. Geographically, Mid-America Group reported the highest increase in aggregate volume of 5% during the quarter, whereas the Southeast and West group reported a decline in volume. Price per ton increased 8.5%.
Aggregates business' gross margin (excluding freight and delivery revenues) of 26.5% increased 120 basis points (bps), driven by aggregates product line pricing improvement and improved margins in the aggregates-related downstream business.
The Cement segment was formed after the TXI acquisition in Jul 2014. Martin Marietta divested its California cement business, which had been acquired from TXI in 2015. The segment recorded net sales of $60.1 million in the quarter, reflecting a 45.6% decline.
Shipments were negatively impacted by department of transportation project delays and slower activity in the south Texas markets, in addition to damp weather conditions in Texas.
The Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, increased 5.2% year over year to $60.2 million.
Margins Rise
Total adjusted gross margin (excluding freight and delivery revenues) increased 210 bps to 28.2% driven by higher margins in aggregates and cement businesses.
2016 Outlook
Net sales are expected in the range of $3.5 billion to $3.7 billion. Consolidated EBITDA is likely to range within $950 million to $1.00 billion.
Masco Corporation (MAS - Free Report) released third-quarter results wherein both earnings and revenues missed the Zacks Consensus Estimate.
PulteGroup Inc.’s (PHM - Free Report) third-quarter 2016 earnings were in line with the Zacks Consensus Estimate while revenues missed the mark.
KB Home (KBH - Free Report) reported third-quarter numbers wherein earnings surpassed analysts’ expectations by 7.7% and also increased 83% year over year.
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Martin Marietta (MLM) Misses Q3 Earnings & Sales Estimates
Martin Marietta Materials, Inc.'s (MLM - Free Report) third-quarter 2016 adjusted earnings per share of $2.49 missed the Zacks Consensus Estimate of $2.64 by about 5.7%. However, earnings rose 43% from the prior-year quarter.
Despite improving economic conditions, cost management and enhanced operational efficiency, the company’s volume headwinds were more prevalent during the quarter. The company also faced constrained construction activity in its markets. Specifically, the company continues to see delays in Texas Department of Transportation projects, declines in railroad ballast shipments, abnormally wet weather and a slower energy-related marketplace.
Net sales of $1.038 billion missed the Zacks Consensus Estimate of $1.06 billion by 1.9% but increased 3.3% year over year.
Total revenue (including freight and delivery) was $1.103 million, up 2% from the year-ago period. Freight and delivery revenues were $65.6 million, down 14.8% 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 9.6% to $918 million on the back of strong volume and margin.
Shipments (volume) in the aggregates product line declined 7.2%. Geographically, Mid-America Group reported the highest increase in aggregate volume of 5% during the quarter, whereas the Southeast and West group reported a decline in volume. Price per ton increased 8.5%.
Aggregates business' gross margin (excluding freight and delivery revenues) of 26.5% increased 120 basis points (bps), driven by aggregates product line pricing improvement and improved margins in the aggregates-related downstream business.
The Cement segment was formed after the TXI acquisition in Jul 2014. Martin Marietta divested its California cement business, which had been acquired from TXI in 2015. The segment recorded net sales of $60.1 million in the quarter, reflecting a 45.6% decline.
Shipments were negatively impacted by department of transportation project delays and slower activity in the south Texas markets, in addition to damp weather conditions in Texas.
The Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, increased 5.2% year over year to $60.2 million.
Margins Rise
Total adjusted gross margin (excluding freight and delivery revenues) increased 210 bps to 28.2% driven by higher margins in aggregates and cement businesses.
2016 Outlook
Net sales are expected in the range of $3.5 billion to $3.7 billion. Consolidated EBITDA is likely to range within $950 million to $1.00 billion.
Martin Marietta carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
Masco Corporation (MAS - Free Report) released third-quarter results wherein both earnings and revenues missed the Zacks Consensus Estimate.
PulteGroup Inc.’s (PHM - Free Report) third-quarter 2016 earnings were in line with the Zacks Consensus Estimate while revenues missed the mark.
KB Home (KBH - Free Report) reported third-quarter numbers wherein earnings surpassed analysts’ expectations by 7.7% and also increased 83% year over year.
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Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>