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Martin Marietta (MLM) Stock Rises Despite Q2 Earnings Miss
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Martin Marietta Materials, Inc.’s (MLM - Free Report) shares jumped 4% in the pre-market trading session, despite reporting lower-than-expected earnings in second-quarter 2019. The upside in share price mainly resulted from solid 2019 guidance. The company raised its full-year 2019 guidance on the back of strong performance in the first half of the year and attractive underlying housing market fundamentals.
Martin Marietta reported adjusted earnings per share of $3.01, missing the Zacks Consensus Estimate of $3.08 by 2.3%. However, the reported figure increased 3.1% from the year-ago level of $2.92 per share.
Total revenues (including Product and services and Freight revenues) in the quarter came in at $1,279.5 million, up 6.4% year over year. The upside was mainly attributable to a 10% increase in aggregates shipments and continued pricing momentum across the Building Materials business.
Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise
Building Materials segment (including aggregates, cement, ready-mixed concrete, asphalt and paving product lines) total revenues were $1,203.2 million, reflecting an increase of 6.5% year over year. The improvement was backed by strong demand, mostly in North Carolina, Georgia, Iowa and Maryland. However, Texas and Colorado — two largest states in terms of revenues — experienced extreme weather conditions that negatively impacted its aggregates, cement and downstream operations in these regions.
Within the segment, product and services revenues amounted to $1,125.8 million, up 6.1% from the year-ago level. Freight revenues of $77.5 million were also up 12.6% from the year-ago period.
Again, in the Product and services, Aggregates’ revenues of $757.8 million improved 13.6% from the year-ago quarter. However, Cement’s revenues fell 0.7% year over year to $112.4 million. Also, Ready Mixed Concrete’s revenues declined 13% year over year to $241.2 million. Nonetheless, revenues in Asphalt and paving product lines inched up 0.9% from the year-ago quarter to $82.2 million.
Geographically, Mid-America Group operations’ shipments grew 15.9% from the prior-year period, driven by infrastructure and commercial projects. Pricing in the said region also improved 1.6% from the prior-year quarter.
Southeast Group operations also reported an increase of 12.7% from the prior-year quarter, given strength in North Georgia and Florida markets. Moreover, West Groups’ aggregate shipments grew 1.1% from a year ago, despite unfavorable weather that contributed to project delays.
The Magnesia Specialties segment — including magnesium oxide, magnesium hydroxide and dolomite lime products — reported total revenues of $76.2 million, increasing 4.5% year over year. The upside was driven by solid global demand for magnesia chemical products.
Operating Highlights
Consolidated gross margin during the quarter was 27.9%, improving 160 basis points. Its earnings from operations increased 8.3% from the year-ago level to $285.9 million. Also, adjusted EBITDA of $378.5 million grew 0.6% year over year.
Liquidity and Cash Flow
As of Jun 30, 2019, Martin Marietta had cash and cash equivalents of $53.6 million compared with $44.9 million on Dec 31, 2018. Net cash provided by operations was $333.7 million at the end of second-quarter 2019 compared with $238 million in the comparable period of 2018.
2019 Guidance Raised
Backed by solid underlying demand and third-party forecasts, Martin Marietta raised its full-year 2019 guidance. The company believes that the current construction cycle will continue to expand during the year for each of the three primary construction end-use markets.
Total revenues in 2019 are expected in the band of $4.535-$4.730 billion compared with $4.480-$4.680 billion expected earlier. Gross profit is projected in the range of $1,130-$1,235 million (compared with prior-projection of $1,110-$1,210 million). The company expects EBITDA within $1.20-1.315 billion, up from $1.17-1.28 billion guided earlier. The company expects capital expenditure in the range of $350-$400 million.
Aggregates Product line total revenues are projected in the range of $2.865-$2.960 billion. This is above the prior expectation of $2.80-$2.91 billion. Aggregates volume growth is expected in the range of 8-10% versus 6-8% anticipated earlier. Average selling price is likely to grow 3-5% from a year ago.
Cement total revenues are estimated in the band of $435-$465 million (compared with $420-$450 projected earlier). Ready Mixed Concrete and Asphalt and Paving’s Products and services revenues are anticipated within $1.20-$1.40 billion (versus $1.24-$1.31 billion expected earlier). The company expects Magnesia Specialties Business’ net sales between $290 million and $300 million.
Within Aggregates, infrastructure shipments are likely to grow in high-single digits. Non-residential shipments are projected to increase in double digits. Residential shipments are expected to rise in mid-single digits. ChemRock/Rail shipments are likely to be marginally up from the prior-year figure.
Vulcan Materials Company’s (VMC - Free Report) reported solid second-quarter 2019 results. The company reported adjusted earnings of $1.48 per share, surpassing the consensus mark of $1.45 by 2.1%. Total revenues of $1,327.7 million outpaced the consensus mark of $1,306 million by 1.7%. On a year-over-year basis, its earnings and revenues grew 20.4% and 10.6%, respectively, in the quarter
United Rentals (URI - Free Report) reported better-than-expected second-quarter 2019 earnings and revenues. However, the company trimmed its full-year guidance to reflect "a slightly slower than expected pace for the BlueLine integration, as well as historically bad weather in several key regions this past quarter."
Masco Corporation (MAS - Free Report) reported mixed second-quarter 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Also, on a year-over-year basis, the company’s bottom line improved owing to significant pricing actions and cost-control measures. However, its top line slipped marginally from the prior-year quarter due to lower volumes across the board.
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Martin Marietta (MLM) Stock Rises Despite Q2 Earnings Miss
Martin Marietta Materials, Inc.’s (MLM - Free Report) shares jumped 4% in the pre-market trading session, despite reporting lower-than-expected earnings in second-quarter 2019. The upside in share price mainly resulted from solid 2019 guidance. The company raised its full-year 2019 guidance on the back of strong performance in the first half of the year and attractive underlying housing market fundamentals.
Martin Marietta reported adjusted earnings per share of $3.01, missing the Zacks Consensus Estimate of $3.08 by 2.3%. However, the reported figure increased 3.1% from the year-ago level of $2.92 per share.
Total revenues (including Product and services and Freight revenues) in the quarter came in at $1,279.5 million, up 6.4% year over year. The upside was mainly attributable to a 10% increase in aggregates shipments and continued pricing momentum across the Building Materials business.
Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise
Martin Marietta Materials, Inc. price-consensus-eps-surprise-chart | Martin Marietta Materials, Inc. Quote
Segment Discussion
Building Materials segment (including aggregates, cement, ready-mixed concrete, asphalt and paving product lines) total revenues were $1,203.2 million, reflecting an increase of 6.5% year over year. The improvement was backed by strong demand, mostly in North Carolina, Georgia, Iowa and Maryland. However, Texas and Colorado — two largest states in terms of revenues — experienced extreme weather conditions that negatively impacted its aggregates, cement and downstream operations in these regions.
Within the segment, product and services revenues amounted to $1,125.8 million, up 6.1% from the year-ago level. Freight revenues of $77.5 million were also up 12.6% from the year-ago period.
Again, in the Product and services, Aggregates’ revenues of $757.8 million improved 13.6% from the year-ago quarter. However, Cement’s revenues fell 0.7% year over year to $112.4 million. Also, Ready Mixed Concrete’s revenues declined 13% year over year to $241.2 million. Nonetheless, revenues in Asphalt and paving product lines inched up 0.9% from the year-ago quarter to $82.2 million.
Geographically, Mid-America Group operations’ shipments grew 15.9% from the prior-year period, driven by infrastructure and commercial projects. Pricing in the said region also improved 1.6% from the prior-year quarter.
Southeast Group operations also reported an increase of 12.7% from the prior-year quarter, given strength in North Georgia and Florida markets. Moreover, West Groups’ aggregate shipments grew 1.1% from a year ago, despite unfavorable weather that contributed to project delays.
The Magnesia Specialties segment — including magnesium oxide, magnesium hydroxide and dolomite lime products — reported total revenues of $76.2 million, increasing 4.5% year over year. The upside was driven by solid global demand for magnesia chemical products.
Operating Highlights
Consolidated gross margin during the quarter was 27.9%, improving 160 basis points. Its earnings from operations increased 8.3% from the year-ago level to $285.9 million. Also, adjusted EBITDA of $378.5 million grew 0.6% year over year.
Liquidity and Cash Flow
As of Jun 30, 2019, Martin Marietta had cash and cash equivalents of $53.6 million compared with $44.9 million on Dec 31, 2018. Net cash provided by operations was $333.7 million at the end of second-quarter 2019 compared with $238 million in the comparable period of 2018.
2019 Guidance Raised
Backed by solid underlying demand and third-party forecasts, Martin Marietta raised its full-year 2019 guidance. The company believes that the current construction cycle will continue to expand during the year for each of the three primary construction end-use markets.
Total revenues in 2019 are expected in the band of $4.535-$4.730 billion compared with $4.480-$4.680 billion expected earlier. Gross profit is projected in the range of $1,130-$1,235 million (compared with prior-projection of $1,110-$1,210 million). The company expects EBITDA within $1.20-1.315 billion, up from $1.17-1.28 billion guided earlier. The company expects capital expenditure in the range of $350-$400 million.
Aggregates Product line total revenues are projected in the range of $2.865-$2.960 billion. This is above the prior expectation of $2.80-$2.91 billion. Aggregates volume growth is expected in the range of 8-10% versus 6-8% anticipated earlier. Average selling price is likely to grow 3-5% from a year ago.
Cement total revenues are estimated in the band of $435-$465 million (compared with $420-$450 projected earlier). Ready Mixed Concrete and Asphalt and Paving’s Products and services revenues are anticipated within $1.20-$1.40 billion (versus $1.24-$1.31 billion expected earlier). The company expects Magnesia Specialties Business’ net sales between $290 million and $300 million.
Within Aggregates, infrastructure shipments are likely to grow in high-single digits. Non-residential shipments are projected to increase in double digits. Residential shipments are expected to rise in mid-single digits. ChemRock/Rail shipments are likely to be marginally up from the prior-year figure.
Zacks Rank & Peer 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.
Vulcan Materials Company’s (VMC - Free Report) reported solid second-quarter 2019 results. The company reported adjusted earnings of $1.48 per share, surpassing the consensus mark of $1.45 by 2.1%. Total revenues of $1,327.7 million outpaced the consensus mark of $1,306 million by 1.7%. On a year-over-year basis, its earnings and revenues grew 20.4% and 10.6%, respectively, in the quarter
United Rentals (URI - Free Report) reported better-than-expected second-quarter 2019 earnings and revenues. However, the company trimmed its full-year guidance to reflect "a slightly slower than expected pace for the BlueLine integration, as well as historically bad weather in several key regions this past quarter."
Masco Corporation (MAS - Free Report) reported mixed second-quarter 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Also, on a year-over-year basis, the company’s bottom line improved owing to significant pricing actions and cost-control measures. However, its top line slipped marginally from the prior-year quarter due to lower volumes across the board.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>