01—Abstract
Summary
Summary of the 10-K filed February 25, 2011. Cited figures are marked; the original filing is the authoritative source.
Martin Marietta Materials, Inc. (NYSE: MLM) reported its 2010 Form 10-K, filed February 25, 2011.
The Aggregates business, the second largest U.S. aggregates producer, generated 89% of 2010 net sales and shipped 130 million tons. Net sales were $1.55 billiona, up from $1.50 billion in 2009, and diluted earnings per share were $2.10 versus $1.91 in 2009. Net earnings attributable to the Company were $97.0 million, compared with $85.5 million in 2009.
Management described 2010 as a trough period in the construction cycle, with aggregates volume up 5.4% after several years of declines, while the average heritage aggregates selling price fell 3.4%. Profitability was mixed. Gross profit declined to $321.95 millionb from $337.73 million, driven by a $25.5 million increase in energy costs that reduced diluted EPS by $0.34.
Earnings from operations rose to $196.4 millionc, supported by record results in the Specialty Products segment, which earned $50.6 million from operations. Cash from operations fell to $269.8 million from $318.4 million. The Company repaid $217.6 million of Floating Rate Senior Notes in cash, paid $73.6 million in dividends ($1.60 per share), and ended the year with total debt of $1.03 billion and cash of $70.3 million.
The debt-to-EBITDA covenant ratio was 2.73 times against a 3.50 limit. Key near-term items include $242 milliond of 6.875% notes due April 2011, which management planned to refinance through a new multi-year credit facility expected in the first quarter of 2011. The federal highway bill had been extended by continuing resolution through March 4, 2011, and management's 2011 outlook called for flat to a 3% improvement in aggregates volume.
02—Key points
Key Highlights
- Aggregates business generated 89% of 2010 net sales and shipped 130 million tons across 30 states, Canada, the Bahamas and the Caribbean Islands.
- Net sales of $1.55 billion rose from $1.50 billion in 2009, and diluted EPS was $2.10 compared with $1.91 in 2009.
- Gross margin excluding freight and delivery revenues fell to 20.8% from 22.6%, reflecting higher energy costs of $25.5 million and lower aggregates pricing.
- Specialty Products segment delivered record results with earnings from operations of $50.6 million on net sales of $176.3 million, up 22.7%.
- Cash from operations was $269.8 million, and the Company repaid $217.6 million of Floating Rate Senior Notes using cash on hand.
- Dividends of $1.60 per share totaled $73.6 million, and the leverage covenant ratio was 2.73 times against a 3.50 limit.
- $242 million of 6.875% notes due April 2011 were slated for refinancing through a new credit facility expected in Q1 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Martin Marietta Materials kept $0.06.
- Revenue$1.65B100.0%
- Cost of revenue−$1.33B80.5%
- Gross profit$321.7M19.5%
- Operating costs−$123.3M7.5%
- Operating income$198.3M12.0%
- Interest, other & tax−$101.3M6.1%
- Net income$97.0M5.9%
Where FY2010 revenue went
$1.65B- Cost of revenue: $1.33B, 81% of revenue
- Net income: $97.0M, 5.9% of revenue
- R&D: $153,000, 0.0% of revenue
- SG&A: $130.4M, 7.9% of revenue
- Interest, other & tax: $101.3M, 6.1% of revenue
Kept 5.9% as net incomeNet income $97.0M · 5.9%R&D $153,000 · 0.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 25, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $1.65B$1.57B | +5.1% |
| Cost of Revenue | $1.33B$1.24B | +7.2% |
| Gross Profit | $321.65M$331.57M | −3.0% |
| R&D Expenses | $153K$373K | −59.0% |
| SG&A Expenses | $130.42M$135.88M | −4.0% |
| Operating Income | $198.31M$182.91M | +8.4% |
| Interest Expense | $68.44M$73.45M | −6.8% |
| Net Income | $97.01M$85.46M | +13.5% |
| EPS (Basic) | $2.11$1.92 | +9.9% |
| EPS (Diluted) | $2.10$1.91 | +9.9% |
| Shares Outstanding (Basic) | 45.48M44.00M | +3.4% |
| Shares Outstanding (Diluted) | 45.66M44.19M | +3.3% |
05—Questions
Frequently Asked Questions
How did Martin Marietta perform financially in 2010?
Net sales rose to $1.55 billion from $1.50 billion, and net earnings attributable to the Company increased to $97.0 million from $85.5 million. Diluted EPS was $2.10, compared with $1.91 in 2009. Gross profit declined to $321.95 million from $337.73 million, mainly because of higher energy costs.
What drove the decline in aggregates pricing?
The average selling price for the heritage aggregates product line fell 3.4%. Management attributed this to changes in product and geographic mix, more lower-priced base stone sold, and competitive pressure on bids for stimulus-related infrastructure projects.
What are the key risks to the business?
The filing cites dependence on the construction industry, uncertainty over federal highway funding after the SAFETEA-LU extension through March 4, 2011, state budget pressures in North Carolina and Texas, weather, energy and diesel costs, rail and barge availability, and environmental and zoning regulation.
How is the Company managing its debt and liquidity?
The Company had $70.3 million of cash and $1.03 billion of principal debt at year-end 2010. It had $423 million of unused borrowing capacity, of which $212 million was committed by Wells Fargo. Management planned to replace its credit facilities and refinance the $242 million of notes due in April 2011 during the first quarter of 2011.
What is the 2011 outlook?
Management expected aggregates volume to be flat to up 3%, aggregates pricing to be flat to up 2%, and Specialty Products to contribute $50 million to $52 million in pretax earnings. Capital expenditures were forecast at $175 million and the estimated effective tax rate at 28%.
06—Continue