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Martin Marietta Materials Annual Report, Year Ended Dec 31, 2007

Filing Date
Filed February 25, 2008
Period End
December 31, 2007
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 25, 2008. Cited figures are marked; the original filing is the authoritative source.

Martin Marietta Materials, Inc. (NYSE: MLM) reported record 2007 results in this Form 10-K filed February 25, 2008.

Aggregates generated 92% of 2007 net sales. Net sales were $1.97 billiona (up 2% from $1.93 billion in 2006), and total revenues were $2.21 billion. Earnings from operations rose to $433.0 million from $390.5 million, and net earnings were $262.7 million, or $6.06 per diluted share, compared with $5.29 in 2006.

The filing cites record diluted earnings per share, gross margin excluding freight and delivery revenues of 29.0% (up 180 basis points), and a 2007 shipment volume decline of 8.1% in aggregates, offset by heritage pricing up 10.3%. Capital allocation was a major theme. The company returned $629 millionb to shareholders in 2007, including $575 million for repurchases of 4,189,100 shares and $54 million in dividends.

It issued $250 millionc of 6.25% Senior Notes due 2037 and $225 million of Floating Rate Senior Notes due 2010 to fund these repurchases and refinance the $125 million 6.9% Notes that matured in August 2007. Total long-term debt including current maturities rose to $1.124 billion from $705.3 million. The debt-to-EBITDA ratio, as defined under the credit agreement, was 1.86 at year-end and was nearly 2.0 in January 2008.

Management's 2008 outlook calls for record net earnings per diluted share in a range of $6.25 to $7.00d, assuming aggregates volume from up 1% to down 3% and price increases of 5.5% to 7.5%. Management flagged residential construction declines, state highway funding pressure in North Carolina, Texas and South Carolina, and the health of the U.S. economy as the main risks to that range.

02—Key points

Key Highlights

  1. 2007 net sales of $1.97 billion, up 2% from $1.93 billion in 2006; total revenues of $2.21 billion
  2. Record diluted earnings per share of $6.06 in 2007, versus $5.29 in 2006; net earnings of $262.7 million
  3. Earnings from operations of $433.0 million, up from $390.5 million in 2006
  4. Heritage aggregates pricing increased 10.3%, partly offset by a 7.6% heritage volume decrease; aggregates shipments of 182.3 million tons, down 8.1%
  5. Returned $629 million to shareholders in 2007 ($575 million in buybacks of 4,189,100 shares and $54 million in dividends)
  6. Long-term debt including current maturities rose to $1.124 billion, driven by $475 million of new Senior Notes; debt-to-EBITDA ratio of 1.86 at year-end
  7. 2008 guidance for record diluted EPS of $6.25 to $7.00, contingent on U.S. economic stabilization in the second half of 2008

03—Questions

Frequently Asked Questions

  1. What drove the increase in 2007 earnings despite lower shipments?

    Pricing and productivity. Heritage aggregates pricing rose 10.3% while heritage volume fell 7.6%. Gross margin excluding freight and delivery revenues improved 180 basis points to 29.0%, reflecting pricing gains and productivity from plant automation, which outpaced the volume decline and production cost increases.

  2. How did the company fund its 2007 share repurchases and dividends?

    Largely with debt. The company issued $250 million of 6.25% Senior Notes due 2037 and $225 million of Floating Rate Senior Notes due 2010, and it also borrowed commercial paper ($72 million outstanding at year-end). Net cash from operations was $395.6 million, and cash used in financing activities was $151.8 million.

  3. What are the main risks to the 2008 earnings outlook?

    Management identifies volume-related risks as most significant: a greater-than-expected drop in residential construction, a decline in commercial construction, infrastructure project delays, and state highway funding pressure in North Carolina, Texas and South Carolina. Management also cites the performance of the U.S. economy and its effect on construction activity, and the cost of diesel fuel and energy.

  4. How concentrated is the aggregates business geographically?

    The top five revenue-generating states (North Carolina, Texas, Georgia, Iowa and South Carolina) account for approximately 61% of 2007 aggregates net sales by state of destination, and the top ten account for approximately 81%. North Carolina accounted for 22% and Texas for 19% of aggregates net sales in the destination table.

  5. What upcoming debt obligations and refinancing plans does the company have?

    The company has $200 million of 5.875% Notes due December 1, 2008, which management expects to refinance. Forward-starting interest rate swaps lock in a 5.42% LIBOR rate on $150 million of that refinancing. If capital markets access is unfavorable, the company would use cash on hand, its commercial paper program and its $250 million revolving credit facility, which expires June 2011.

04—Continue

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