01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
Martin Marietta Materials, Inc. reported record 2022 total revenues of $6.16 billiona, up 13.8% from $5.41 billion, and net earnings from continuing operations attributable to Martin Marietta of $856.3 million, or $13.70 per diluted share, compared with $702.0 million in 2021.
Consolidated gross profit rose to $1.42 billionb from $1.35 billion, and Adjusted EBITDA from continuing operations reached a record $1.60 billion, an increase of 4.7%. The company attributed these results to double-digit aggregates pricing across the Building Materials business and contributions from acquired operations, which more than offset historically high cost inflation and divestiture impacts. Aggregates pricing improved 10.6% compared with 2021, and aggregates shipments rose 3.3%.
During 2022 the company executed portfolio optimization, divesting its Colorado and Central Texas ready mixed concrete operations (a $151.9 millionc pretax gain), the Redding, California cement plant and 14 California ready mix operations for $235.0 million, and a cement distribution terminal interest for $15.0 million. It also agreed to sell the Tehachapi, California cement plant for $350.0 million, subject to regulatory approval. Operating cash flow decreased 12.9% to $991.2 million, primarily due to increased cash taxes and working capital changes.
Capital investments were $481.8 milliond, dividends paid totaled $159.1 million ($2.54 per share), and the company repurchased 0.4 million shares for $150.0 million. The balance sheet shows long-term debt of $5.04 billion including $700 million of 0.650% Senior Notes that were satisfied and discharged in September 2022 with restricted investments of $704.6 million held in trust.
Total equity was $7.17 billion. Management reports its aggregates reserves average approximately 75 years at 2022 production levels, and it highlighted infrastructure funding from the IIJ Act as a demand driver for 2023 and beyond.
02—Key points
Key Highlights
- Record 2022 total revenues of $6.16 billion, up 13.8% from $5.41 billion in 2021.
- Net earnings from continuing operations attributable to Martin Marietta of $856.3 million, or $13.70 per diluted share, versus $702.0 million in 2021.
- Record Adjusted EBITDA from continuing operations of $1.60 billion, up 4.7%; the company cited eleven consecutive years of growth in products and services revenues, adjusted gross profit and Adjusted EBITDA.
- Aggregates average selling price rose 10.6% (10.0% mix-adjusted), while aggregates shipments increased 3.3%, driven by a full year of Lehigh West Region operations.
- Portfolio optimization: divested Colorado and Central Texas ready mix operations (pretax gain of $151.9 million), Redding cement plant for $235.0 million, and agreed to sell Tehachapi cement plant for $350.0 million.
- Operating cash flow declined 12.9% to $991.2 million, mainly due to increased cash taxes and working capital changes; capital investments were $481.8 million.
- Shareholder returns in 2022 included $159.1 million in dividends ($2.54 per share) following an 8% quarterly dividend increase, plus $150.0 million in share repurchases; 13.1 million shares remain under the authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Martin Marietta Materials kept $0.14.
- Revenue$6.16B100.0%
- Cost of revenue−$4.74B76.9%
- Gross profit$1.42B23.1%
- Operating costs−$216.0M3.5%
- Operating income$1.21B19.6%
- Interest, other & tax−$340.3M5.5%
- Net income$866.7M14.1%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $6.16B$5.41B | +13.8% |
| Cost of Revenue | $4.74B$4.07B | +16.5% |
| Gross Profit | $1.42B$1.35B | +5.5% |
| SG&A Expenses | $397.00M$351.00M | +13.1% |
| Operating Income | $1.21B$973.80M | +23.9% |
| Interest Expense | $169.00M$142.70M | +18.4% |
| Net Income | $866.74M$702.77M | +23.3% |
| EPS (Basic) | $13.91$11.26 | +23.5% |
| EPS (Diluted) | $13.87$11.22 | +23.6% |
| Shares Outstanding (Basic) | 62.30M62.40M | −0.2% |
| Shares Outstanding (Diluted) | 62.50M62.60M | −0.2% |
05—Questions
Frequently Asked Questions
What drove the increase in Martin Marietta's 2022 earnings?
Net earnings from continuing operations attributable to Martin Marietta rose to $856.3 million from $702.0 million. The company attributed the results to double-digit pricing growth across all Building Materials product lines and contributions from acquired operations, which more than offset cost inflation and divestiture impacts. The effective income tax rate was 21.5%, compared with 17.9% in 2021, and the 2022 result included a $151.9 million pretax gain from the Colorado and Central Texas ready mix divestiture.
How much debt does the company carry and what happened to the 2023 notes?
Long-term debt, including current maturities of discharged debt, was $5.04 billion at December 31, 2022. On September 29, 2022, the company satisfied and discharged its $700 million of 0.650% Senior Notes due 2023 by irrevocably depositing funds sufficient to pay remaining principal and interest. The notes remain on the balance sheet until their July 2023 maturity, with the related $704.6 million of restricted investments shown as assets. The company also had $1.20 billion of unused borrowing capacity under its Revolving Facility and Trade Receivable Facility.
What is the company's strategy regarding acquisitions and portfolio changes?
The company's SOAR strategic framework focuses on aggregates-led platform and bolt-on acquisitions, with nearly $8.0 billion invested in acquisitions since 2010. It targets a leverage ratio of 2.0 to 2.5 times within about 18 months after a debt-financed transaction. In 2022 it divested ready mix and certain West Coast cement operations to refine its product mix, and it allocates capital to acquisitions, organic investment and shareholder returns.
What risks are highlighted in the filing for investors?
Key risks include the cyclicality of construction spending, weather impacts (the first and fourth quarters are most affected by winter weather, and Gulf Coast and southeastern operations face hurricane risk), rising interest rates, which the company noted the Federal Reserve raised by 425 basis points in 2022, energy and fuel cost volatility, and climate-related regulation. Cement operations are capacity-constrained in Texas, and the company noted its pension plans were overfunded by $209.5 million at December 31, 2022.
What is the outlook for public infrastructure demand?
The company stated that the IIJ Act, signed November 15, 2021, contains a five-year surface transportation reauthorization plus $110 billion in new funding for roads, bridges and other hard infrastructure, and that it expects a meaningful federal impact beginning in 2023. It also cited approximately $23 billion in approved state and local infrastructure ballot initiatives in November 2022, with over $15 billion in Texas. Public infrastructure accounted for 35% of 2022 aggregates shipments.
06—Continue