01—Abstract
Summary
Summary of the 10-K filed February 19, 2021. Cited figures are marked; the original filing is the authoritative source.
Martin Marietta Materials, Inc. is a natural resource-based building materials company that supplies aggregates through approximately 300 quarries, mines and distribution yards in 27 states, Canada and The Bahamas.
Aggregates generated 68%a of 2020 consolidated total product gross profit. The Building Materials Business also includes cement (two Texas plants, 4.5 million tons of clinker capacity) and ready mixed concrete and asphalt/paving operations in Texas, Colorado and Wyoming. The Magnesia Specialties segment produces magnesia-based chemicals and dolomitic lime.
For 2020, consolidated total revenues were $4.73 billionb versus $4.74 billion in 2019. Gross profit reached a record $1.25 billion, up from $1.18 billion, and net earnings attributable to Martin Marietta were $721.0 million ($11.54 per diluted share) versus $611.9 million ($9.74). Consolidated Adjusted EBITDA was a record $1.39 billion and operating cash flow was a record $1.05 billion.
Results were helped by $69.9 millionc of nonrecurring gains on asset sales in Austin, Texas; Riverside, California; and Augusta, Kansas, while aggregates volume declined 2.4% and aggregates pricing improved 3.1%. Magnesia Specialties revenue fell as COVID-19 hurt steel-industry demand. Capital allocation in 2020 included a 4% dividend increase to $2.24 per share ($140.3 million), $50.0 million of share repurchases (paused in March 2020), $359.7 million of property, plant and equipment additions, and a $500.0 million issuance of 2.500% Senior Notes due 2030.
Long-term debt was $2.63 billiond at year-end, and the consolidated net debt-to-EBITDA ratio under the credit agreement was 1.75 times. The filing states that the company does not currently expect COVID-19 to have a material adverse effect on liquidity, and highlights public infrastructure funding (including $10 billion in federal stimulus for state DOTs and $14 billion in approved ballot initiatives) and the FAST Act's September 30, 2021 expiration as key risk factors.
02—Key points
Key Highlights
- Record 2020 consolidated gross profit of $1.25 billion (up from $1.18 billion) and record Adjusted EBITDA of $1.39 billion.
- Net earnings attributable to Martin Marietta rose to $721.0 million, or $11.54 per diluted share, from $611.9 million, or $9.74.
- Consolidated total revenues were essentially flat at $4.73 billion versus $4.74 billion, with aggregates volume down 2.4% and aggregates pricing up 3.1%.
- Earnings from operations included $69.9 million of nonrecurring gains on sales of investment land and divested assets in Texas, California and Kansas.
- Dividends of $2.24 per share totaled $140.3 million, with a 4% increase in August 2020; $50.0 million of stock was repurchased, and repurchases were paused in March 2020 due to COVID-19.
- Year-end long-term debt was $2.63 billion, and the consolidated net debt-to-EBITDA ratio under the credit agreement was 1.75 times.
- Public infrastructure, the largest end-use market at 36% of 2020 aggregates shipments, depends on the FAST Act, which is set to expire September 30, 2021.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Martin Marietta Materials kept $0.15.
- Revenue$4.73B100.0%
- Cost of revenue−$3.48B73.5%
- Gross profit$1.25B26.5%
- Operating costs−$247.4M5.2%
- Operating income$1.01B21.3%
- Interest, other & tax−$284.4M6.0%
- Net income$721.0M15.2%
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 19, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $4.73B$4.74B | −0.2% |
| Cost of Revenue | $3.48B$3.56B | −2.3% |
| Gross Profit | $1.25B$1.18B | +6.3% |
| SG&A Expenses | $305.90M$302.70M | +1.1% |
| Operating Income | $1.01B$884.90M | +13.6% |
| Interest Expense | $118.10M$129.30M | −8.7% |
| Net Income | $721.00M$611.90M | +17.8% |
| EPS (Basic) | $11.56$9.77 | +18.3% |
| EPS (Diluted) | $11.54$9.74 | +18.5% |
| Shares Outstanding (Basic) | 62.30M62.50M | −0.3% |
| Shares Outstanding (Diluted) | 62.40M62.70M | −0.5% |
05—Questions
Frequently Asked Questions
How did Martin Marietta perform financially in 2020?
Total revenues were $4.73 billion versus $4.74 billion in 2019, while gross profit rose to a record $1.25 billion from $1.18 billion. Net earnings attributable to Martin Marietta increased to $721.0 million, or $11.54 per diluted share, from $611.9 million, or $9.74 per diluted share. Earnings from operations were $1.01 billion, which includes $69.9 million of nonrecurring asset-sale gains.
What drove the 2020 results in the aggregates business?
Aggregates pricing improved 3.1% versus 2019, with the West Group up 1.7% and the East Group up 3.8%. Aggregates volume declined 2.4%, reflecting COVID-19's economic impact, lower anticipated infrastructure shipments in North Carolina, and reduced energy-sector shipments. Aggregates product gross profit was 68% of 2020 consolidated total product gross profit.
How is the company managing its balance sheet and capital returns?
The company issued $500.0 million of 2.500% Senior Notes due 2030 in March 2020, used to repay $300.0 million of floating rate notes, and recorded net long-term debt repayments of $149.0 million. It paid $140.3 million in dividends, repurchased $50.0 million of stock, and reported a 1.75 times consolidated net debt-to-EBITDA ratio. It had $1.1 billion of unused borrowing capacity under its Revolving Facility and Trade Receivable Facility at year-end.
What are the main risks flagged in the filing?
Key risks include cyclical construction demand, weather (especially hurricanes and winter conditions), dependence on public infrastructure funding, and the FAST Act's expiration on September 30, 2021. The filing also cites COVID-19 impacts, rising interest rates, energy and fuel cost volatility, climate-change regulation affecting cement and magnesia operations, and labor agreements expiring in 2022 and 2023 at the Magnesia Specialties plants.
06—Continue