Martin Marietta has announced its financial results for 3Q18. The company has reported double digit growth for consolidated revenues, gross profit, and net earnings. Shipments and pricing increased for aggregates, cement, and ready mix concrete, and cement product gross margin was reported to expand 210 basis points.
In terms of aggregates, volume growth accelerated in the first two months of 3Q18, reflecting strong underlying product demand. This was most notably the case in Texas, North Carolina, Georgia, and Iowa. However, construction activity was temporarily hindered by extreme weather conditions, including Hurricane Florence. The company has stated that this adversely impacted aggregates shipment, production, and overall efficiency levels in September. However, Martin Marietta notes that it remains encouraged by the recent acceleration of state lettings and contract awards.
Heritage aggregates volume improved by 3.8% compared to 3Q17 and pricing improved by 2.9%. These figures exclude 3Q17 shipments from the company’s Forsyth quarry in Georgia, which was divested in April 2018.
Aggregates shipments to the infrastructure market made up for 41% of the company’s 3Q18 aggregates volumes. In 3Q17, this figure was 39%, remaining below Martin Marietta’s most recent five year average of 43%.
Comparatively, aggregates shipments to the nonresidential market increased by 5% compared to 3Q17. This was driven by both commercial and heavy industrial construction activity. Company management expects that the next wave of large projects, especially along the Gulf Coast, will contribute to increased aggregates demand in the next several years, due to ongoing energy sector approvals, which have been supported by higher oil prices. 33% of 3Q18 aggregates shipments were represented by the nonresidential market.
There was a 7% increase in the company’s aggregates shipments to the residential market, accounting for 20% of the company’s 3Q18 aggregates shipments.
Furthermore, 3Q18 cement shipments improved by 7.6% and pricing improved by 3.3%, it is reported. Double digit volume growth was reported before record rainfall in September. These factors, as well as increased production efficiencies, led to a 210 basis point expansion in product gross margin, to 33.1%.
The company has also reported that it has updated its full-year 2018 guidance to reflect current trends and expectations. This includes the impact of unusual weather in 3Q18. In particular, the average selling price of heritage aggregates is expected to increase between 3% and 4%. It is predicted that the volume of heritage aggregates will be flat up to 1%.
Preliminary views of 2019 anticipate that there will be mid-single digit growth in both aggregates pricing and shipments. Martin Marietta has stated that it remains confident in its near- and long-term outlooks, due to the disciplined execution of its strategic plan and its attractive geographic footprint.
“Our record 3Q18 results demonstrate Martin Marietta’s strong execution, as we capitalised on improving the strength of the current construction cycle while successfully managing through near-term challenges,” said Ward Nye, Chairman, President, and CEO of Martin Marietta. “Aggregates, cement, and ready mix concrete shipments meaningfully accelerated in July and August under normal operating conditions. Pricing also improved, highlighting robust product demand across our geographic footprint. In September, extraordinary weather challenges, including record Texas rainfall and devastation from Hurricane Florence, mostly in the Carolinas, adversely impacted our third quarter. As a result, Texas, our largest state by revenues, and North Carolina, our third-largest state by revenues and leading state by unit profitability, were disproportionately negatively affected during the industry’s busiest and most profitable period. Despite these short-term interruptions, we remain on track to once again deliver record revenues and EBITDA for the full year, and we are well positioned to continue our growth trajectory in 2019.
“We believe the ongoing construction cycle will continue to promote sustainable and steady growth for the foreseeable future, fueled by strong underlying demand and the long awaited arrival of increased public sector activity. A compelling need for greater infrastructure investments exists to address much-needed maintenance and improvements, support economic growth, and rebuild from weather events. We are encouraged by the recent and ongoing actions that the state and local governments are taking to secure additional funding for transportation projects. Indeed, Martin Marietta is poised to benefit from an acceleration in public lettings and contract awards in key states, such as Texas, Colorado, North Carolina, Georgia, and Florida. We are prepared to meet these future market demands. Important catalysts to do so will come from increased sector capacity and logistics improvements. While getting better, these bottlenecks have nonetheless contributed to project delays and constrained construction growth in recent years. That said, these factors are also extending the construction cycle and promoting steady growth.
“Assessing these macroeconomic factors holistically and applying them to Martin Marietta, we anticipate increased private sector demand, improving infrastructure construction activity and favourable pricing trends throughout 2019. We expect our key states to benefit from continued , favourable construction growth, due to their attractive economic drivers and population trends. Our strategic geographic footprint, leading market positions, disciplined execution of our strategic plan, and world-class attributes across our business – including safety, efficiency, and operational excellence – firmly positions Martin Marietta for both further growth and shareholder value creation.”
Martin Marietta is a US-based company and leading supplier of building materials, including aggregates, cement, ready mix concrete, and asphalt.
Read the article online at: https://www.worldcement.com/the-americas/07112018/martin-marietta-reports-record-revenues/
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