Back to top

Martin Marietta's (MLM) Q3 Earnings Beat, 2018 Guidance Down

Read MoreHide Full Article

Martin Marietta Materials, Inc. (MLM - Free Report) reported third-quarter 2018 results, wherein earnings as well as revenues surpassed the Zacks Consensus Estimate and also improved year over year, given higher shipments, pricing improvements and benefits from growth initiatives owing to strong underlying demand and increased public-sector activity.

Adjusted earnings per share of $2.85 beat the Zacks Consensus Estimate of $2.64 by 8%. Earnings also increased 19.2% from the prior-year quarter.

Total revenues of $1,219.6 million surpassed the consensus mark of $1,125 million and also increased 12.1% year over year. Product and services revenues amounted to $1,142.2 million compared with $1,022.5 million a year ago. Freight revenues totaled $77.4 million, up from $65.2 million in the year-earlier period.

Segment Discussion

The Building Materials business includes aggregates, cement, ready mixed concrete, asphalt and paving product lines.

The segment’s total revenues were up 11.9% to $1,146.1 million. Aggregates total revenues jumped 16.5% to $687.8 million. Ready Mixed Concrete total revenues grew to $254.7 million from $240.2 million a year ago. Cement revenues improved to $98.2 million from $88.5 million in the year-ago quarter. However, Asphalt and paving product lines revenues decreased to $100 million from $111 million a year ago.

Meanwhile, Heritage volume and pricing grew 3.8% and 2.9%, respectively, in the quarter.

Geographically, West Groups’ aggregate shipments decreased slightly. The Southeast Group heritage operation reported a 11.9% increase in volumes, given robust construction activity in North Georgia and improving long-haul shipments from Florida distribution yards. Moreover, Mid-America Group heritage operations’ shipment grew 5.4% owing to various large public and private construction projects in North Carolina, along with windfarm activity in Iowa.

The Magnesia Specialties segment — which includes magnesium oxide, magnesium hydroxide and dolomite lime products — reported total revenues of $68.4 million, up 14.2% year over year. The upside was driven by growth in both chemicals and lime businesses.

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

 

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

Margins

Consolidated gross margin contracted 110 basis points to 25.7%.

2018 Guidance Updated

Weather challenges that include record Texas rainfall and devastation from Hurricane Florence, mostly in the Carolinas, impacted its third-quarter results. Texas, the company’s largest state in terms of revenues, and North Carolina, the third-largest state on account of revenues and leading state by unit profitability, were negatively impacted during the industry’s most profitable period. Accordingly, the company revised its guidance to reflect the weather-related impact.

Total revenues are expected in the band of $4.135-$4.255 billion (versus $4.3-$4.5 billion expected earlier). The company expects capital expenditure of approximately $375 million (versus $450-$500 million projected earlier).

Gross profit is projected in the range of $960-$1,000 million (versus $1.08-$1.19 billion expected earlier). On an adjusted basis, gross profit is expected in the band of $980-$1,020 million (versus $1.1-$1.21 billion expected earlier).

Aggregates Product line total revenues are projected in the range of $2.53-$2.6 billion (versus prior expectation of $2.63-$2.74 billion). Aggregates volume growth is expected in the range of 6-8% (versus 11-14% expected earlier).

The company expects its adjusted EBITDA within $1.1-1.145 billion (versus $1.175-$1.295 billion expected earlier).

Cement total revenues are estimated in the band of $390-$405 million versus prior projection of $415-$445 million.

The company now expects Magnesia Specialties Business net sales between $280 million and $285 million compared with the earlier projection of $265-$270 million.

Zacks Rank

Martin Marietta, which shares space with Summit Materials, Inc. (SUM - Free Report) in the Zacks Concrete and Aggregates industry, currently holds a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Vulcan Materials Company’s (VMC - Free Report) third-quarter 2018 earnings and revenues topped the Zacks Consensus Estimate and also improved year over year, given above-average increase in demand in the markets served by the company.

United Rentals’ (URI - Free Report) third-quarter 2018 earnings and revenues surpassed the Zacks Consensus Estimate and also improved year over year. The upside can be attributed to strong growth in volume, margins and rates.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like