Skip to content
AnalystLens

Martin Marietta Materials Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed February 27, 2006
Period End
December 31, 2005
Security
MLM
In the record · 2016–202610-K1210-Q328-K141

MLM filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 141 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jun ’17Jun ’17
  2. Leadership change8-K · Jul ’19Jul ’19
  3. Material agreement8-K · Dec ’21Dec ’21
  4. Material agreement8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed February 27, 2006. Cited figures are marked; the original filing is the authoritative source.

Martin Marietta Materials, Inc. is the second largest producer of construction aggregates in the United States, and its Aggregates segment accounted for 93%a of 2005 total net sales, with the Specialty Products segment (Magnesia Specialties and Structural Composite Products) accounting for the remaining 7%.

The Aggregates segment shipped 203.2 million tons in 2005, generating net sales and earnings from operations of $1.6 billionb and $299.2 million, respectively. Net sales for the company rose to $1.755 billion in 2005 from $1.521 billion in 2004, and net earnings increased to $192.7 million, or $4.08 per diluted share, from $129.2 million, or $2.66 per diluted share. Management cited heritage aggregates pricing and volume increases of 8.2% and 5.4%, respectively, and noted that 2005 net earnings included one-time favorable tax benefits of $0.15 per diluted share.

The company's results remain exposed to construction cyclicality, weather (including Hurricanes Katrina and Rita in 2005), and a growing reliance on rail and water distribution, which the filing says lowers gross margin because of embedded freight. Management highlighted continued divestiture of underperforming assets, the formation of the Hunt Midwest joint venture effective January 1, 2005, and repurchases of 2,658,000 shares during 2005, with an additional 5 million shares authorized in February 2006. The Structural Composite Products business reported a 2005 loss from operations of $14.3 millionc and is described as a start-up business that has not yet generated profits.

For 2006, management projected aggregates pricing to increase 9% to 11% and expected net earnings per diluted share between $4.95d and $5.25, inclusive of stock-based compensation expense. Financial statements and most MD&A content are incorporated by reference from the 2005 Annual Report to Shareholders, which is included in this filing as Exhibit 13.01.

02—Key points

Key Highlights

  1. Net sales rose 15% to $1.755 billion in 2005; total revenues were $2.004 billion.
  2. Diluted earnings per share were $4.08 in 2005, up from $2.66 in 2004; net earnings were $192.7 million.
  3. Aggregates segment earnings from operations were $299.2 million on net sales of $1.6 billion, and the segment shipped 203.2 million tons.
  4. Heritage aggregates pricing increased 8.2% and heritage volumes increased 5.4% in 2005.
  5. Gross margin excluding freight and delivery revenues improved to 24.1% from 22.8% in 2004.
  6. Cash provided by operating activities was $317.8 million; the company repurchased 2,658,000 shares for $175.6 million in 2005.
  7. Management guided to 2006 diluted EPS of $4.95 to $5.25 and aggregates pricing growth of 9% to 11%.

03—Questions

Frequently Asked Questions

  1. What drove the increase in earnings in 2005?

    The filing attributes the improvement mainly to strong aggregates pricing and volume gains, as well as enhanced operating efficiency and targeted cost reductions. Net sales grew 15%, and gross margin excluding freight and delivery revenues rose 130 basis points. The filing also notes one-time favorable tax benefits of $0.15 per diluted share in 2005.

  2. How much of the company's business depends on the construction industry and specific geographies?

    Approximately 45% of Aggregates segment shipments went to highway and public infrastructure projects, with the balance to commercial and residential construction. The top five revenue-generating states (Texas, North Carolina, Georgia, Iowa and Florida) accounted for approximately 55% of 2005 net sales by state of destination.

  3. What risks did the filing highlight for the company's distribution strategy?

    The company is moving a growing share of aggregates by rail and water, with 74% moved by truck, 16% by rail and 10% by water in 2005. The filing says embedded freight costs reduce gross margins, and the company is exposed to railroad performance and barge availability. Rail shortages occurred in Texas and the Southeast in 2004 and to a lesser extent in 2005.

  4. What is the status of the Structural Composite Products business?

    The business is described as a start-up that has not generated profits since inception. The company recorded a 2005 operating loss of $14.3 million associated with developing it. Management's 2006 objective is to build a revenue base of $30 million to $40 million, which it says should support breakeven operations.

  5. How is the company returning capital to shareholders?

    In 2005 the company paid cash dividends of $0.86 per share, totaling $40.0 million, and repurchased 2,658,000 shares at an aggregate cost of $175.6 million. In February 2006 the Board authorized repurchase of an additional 5.0 million shares, and the company has targeted an average dividend payout of 25 to 30 percent of earnings over an economic cycle.

04—Continue

← View all 10-K filings