Martin Marietta made financial gains within its building materials business in the third quarter, with revenues and gross profit related to aggregates both up.
Martin Marietta’s quarterly revenue in aggregates increased 7.5 percent to $1.21 billion, and its gross profit in aggregates jumped 36.2 percent to $440.6 million. The company’s revenues and gross profit in cement, ready-mixed concrete, and asphalt and paving were also up in the quarter.
Martin Marietta made its quarterly financial gains in aggregates despite a dip in shipments. Shipments of aggregates slipped 7.3 percent in the quarter due to softer demand in certain Midwest and Southwest markets, the company says. The Southeast exuded strength with shipments, however, and the company was able to further increase prices (20 percent) due to the cumulative effect of Jan. 1 and midyear actions.
“Our outstanding year-to-date results, despite reduced product shipments, underscore the durability of our business, the vitality of our chosen geographies, the efficacy of our value-over-volume market approach, as well as our ability to adapt to the challenges inherent in the current volatile macroeconomic and geopolitical environment,” says Ward Nye, chairman and CEO of Martin Marietta. “With robust, multiyear demand from infrastructure and U.S.-based manufacturing, coupled with an attractive commercial environment, Martin Marietta is well-positioned to deliver compelling results and superior shareholder value for the foreseeable future.”
Nye indicates that more materials demand opportunities are ahead but the nature of those is somewhat changing.
“Specifically, we see increased investment in large infrastructure and manufacturing projects across the United States,” he says. “These positive trends provide an attractive counterbalance to the slowing in warehouses, private light nonresidential and residential construction, which have been impacted by tightening credit conditions.
“Notably, however, the single-family residential sector remains fundamentally underbuilt, particularly in key Martin Marietta Sun Belt markets,” Nye adds. “As such, we fully expect demand in these end markets to accelerate when inflation moderates and restrictive monetary policy eases.”
Looking ahead, Martin Marietta expects shipments of aggregates to be relatively flat in 2024. The company also anticipates low double-digit pricing growth in aggregates next year, as carryover effects from 2023, combined with 2024 price increases, will offset continued inflationary pressure from the recent acceleration in energy-related costs.
Transaction of note
Additionally, Martin Marietta detailed in its third-quarter financial report that it completed the sale of a California cement plant. The sale paves the way for additional activity in aggregates, according to Nye.
“We closed the sale of our Tehachapi, California, cement plant for $315 million, which largely concludes planned asset sales from the 2021 Lehigh Hanson West acquisition,” he says. “This divestiture not only improves our product mix, but also provides additional balance sheet flexibility to redeploy the proceeds into pure-play aggregates acquisitions.”
