Martin Marietta Materials, Inc. has reported its results for the third quarter, including milestone consolidated net sales of more than US$1 billion, up 9.5% y/y. Ward Nye, Chairman, President and CEO, attributed the company’s success to its ‘continuing focus on operational excellence and cost discipline’.
The cement business achieved net sales of US$110.5 million and gross profit of US$38.2 million in 3Q15. Discussing the sale of the California cement business to CalPortland, which closed at the end of September, Mr Nye said the company was grateful to the skilled workforce at these operations for their contributions. ‘As previously indicated, we expect to use the net proceeds from the sale to repurchase additional shares of our stock under our existing authorization. In anticipation of the sale proceeds, during the third quarter we repurchased 917 000 shares for US$158 million,’ he added.
The company’s aggregates business recorded a 5% increase in shipments thanks in part to project activity in Texas, Florida, Georgia and North Carolina. Martin Marietta notes that highway awards for the 12 months to the end of July were at their highest level since 2000, despite federal funding being provided under a Congressional continuing resolution. A multi-year bill is expected later this year.
The cement business also benefited from continued resilience in the Texas market, where price increases boosted results. Looking ahead, business in Texas is expected to remain good, with the PCA forecasting a favourable supply/demand imbalance over the next several years. Gross margin expanded 1250 basis points to 34.6%, including US$5.4 million in planned kiln maintenance costs, which are expected to double in 4Q15. The cement business generated US$110.5 million of net sales in 3Q15, which were adversely affected by the announced sale of the California cement plant in August, as customers realigned their cement purchases. Even so, gross profit increased US$14 million y/y to US$38.2 million.
Notwithstanding the early onset of winter weather, the group expects a strong 4Q15 and a positive full year.
Adapted from press release by Katherine Guenioui
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