01—Abstract
Summary
Summary of the 10-K filed February 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Martin Marietta Materials, Inc. is a natural resource-based building materials company whose Building Materials business (aggregates, cement, ready mixed concrete, asphalt and paving) is reported through East Group and West Group segments, alongside a Magnesia Specialties segment.
In 2023 the company reported total revenues of $6.78 billiona, up from $6.16 billion, with gross profit of $2.02 billion versus $1.42 billion and net earnings from continuing operations attributable to Martin Marietta of $1.20 billion, or $19.32 per diluted share. Consolidated Adjusted EBITDA reached a record $2.13 billion, and operating cash flow was $1.53 billion. Aggregates shipments fell 4.3% as the company pursued a value-over-volume strategy, while aggregates pricing rose 18.9%, or 17.2% on a mix-adjusted basis.
Portfolio activity was significant. The company closed the sale of its South Texas cement business and 20 ready mixed concrete plants to CRH Americas Materials, Inc. for $2.1 billionb in cash on February 9, 2024, and completed the acquisition of Albert Frei & Sons, Inc. in Colorado on January 12, 2024. It also agreed on February 11, 2024 to acquire 20 aggregates operations from affiliates of Blue Water Industries LLC (BWI Southeast) for $2.05 billion in cash, with closing expected during 2024 subject to regulatory approvals.
Shareholder returns in 2023 included dividends of $2.80c per share ($174.0 million) and $150.0 million of share repurchases. The filing also flags risks including construction cyclicality, weather, interest-rate sensitivity of residential and nonresidential demand, energy cost exposure in cement, and climate-related regulation. Management reports that the Company's internal control over financial reporting was effective as of December 31, 2023, and PricewaterhouseCoopers LLP issued an unqualified audit opinion.
02—Key points
Key Highlights
- Record 2023 total revenues of $6.78 billion (up from $6.16 billion) and gross profit of $2.02 billion (up from $1.42 billion), with gross margin of 29.8% versus 23.1%.
- Net earnings from continuing operations attributable to Martin Marietta were $1.20 billion, or $19.32 per diluted share, compared with $856.3 million, or $13.70 per diluted share, in 2022.
- Record consolidated Adjusted EBITDA of $2.13 billion, up from $1.60 billion, and operating cash flow of $1.53 billion versus $991.2 million in 2022.
- Aggregates pricing rose 18.9% (17.2% mix-adjusted) while aggregates shipments decreased 4.3%, reflecting the value-over-volume strategy and a residential slowdown.
- Divested South Texas cement and 20 ready mixed concrete plants to CRH for $2.1 billion (closed February 9, 2024) and the Tehachapi, California cement plant for $315.0 million.
- Agreed to acquire 20 aggregates operations from BWI Southeast for $2.05 billion in cash, expected to close in 2024; completed the Albert Frei & Sons acquisition in January 2024.
- Long-term debt of $4.35 billion at December 31, 2023, with $1.20 billion of unused borrowing capacity under the Revolving Facility and Trade Receivable Facility; 12.7 million shares remain under the repurchase authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Martin Marietta Materials kept $0.20.
- Revenue$5.85B100.0%
- Cost of revenue−$4.11B70.2%
- Gross profit$1.75B29.8%
- Operating costs−$412.0M7.0%
- Operating income$1.33B22.8%
- Interest, other & tax−$163.6M2.8%
- Net income$1.17B20.0%
Where FY2023 revenue went
$5.85B- Cost of revenue: $4.11B, 70% of revenue
- Net income: $1.17B, 20% of revenue
- SG&A: $425.0M, 7.3% of revenue
- Interest, other & tax: $163.6M, 2.8% of revenue
Kept 20% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 23, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $5.85B$6.16B | −5.0% |
| Cost of Revenue | $4.11B$4.74B | −13.3% |
| Gross Profit | $1.75B$1.42B | +22.6% |
| SG&A Expenses | $425.00M$397.00M | +7.1% |
| Operating Income | $1.33B$1.21B | +10.4% |
| Interest Expense | $165.00M$169.00M | −2.4% |
| Net Income | $1.17B$866.74M | +34.9% |
| EPS (Basic) | $18.88$13.91 | +35.7% |
| EPS (Diluted) | $18.82$13.87 | +35.7% |
| Shares Outstanding (Basic) | 61.90M62.30M | −0.6% |
| Shares Outstanding (Diluted) | 62.10M62.50M | −0.6% |
05—Questions
Frequently Asked Questions
What drove the increase in 2023 profitability?
The filing attributes the increase in Building Materials gross profit primarily to pricing growth and lower energy costs, which more than offset lower shipments and higher repairs and maintenance costs. Aggregates gross margin increased 660 basis points and cement gross margin expanded 1,330 basis points.
How are the recent divestitures and acquisitions expected to affect the portfolio?
The company says the South Texas cement divestiture optimizes its product mix and provides balance sheet flexibility to redeploy net proceeds into pure-play aggregates acquisitions. The Albert Frei & Sons and BWI Southeast acquisitions expand its aggregates footprint in Denver and the southeast, including target markets such as Nashville and Miami.
What are the main risks highlighted for investors?
Key risks include the cyclical construction industry, weather (particularly hurricanes and precipitation), interest-rate sensitivity of residential and nonresidential construction, public infrastructure funding levels, energy and fuel costs (energy was 18% of 2023 cement cost of revenues excluding inventory change), dependence on rail transportation, and climate-related regulation. The filing also notes that integrating acquisitions may not achieve expected synergies.
How did the company return capital to shareholders in 2023?
The Board approved total cash dividends of $2.80 per share in 2023, totaling $174.0 million paid, up from $2.54 per share in 2022. The company repurchased 0.4 million shares for $150.0 million, at an average cost of $393.16 per share.
What is the company's leverage and liquidity position?
Long-term debt, including current maturities, was $4.35 billion at December 31, 2023. The company had $1.27 billion in unrestricted cash and short-term investments and was in compliance with its net debt-to-EBITDA covenant of not more than 3.50x. Its stated target leverage ratio for debt-financed transactions is 2.0 to 2.5 times Adjusted EBITDA.
06—Continue