Martin Marietta Materials Inc. Reports Operating Results (10-Q)
Martin Marietta Materials Inc. has a market cap of $3.61 billion; its shares were traded at around $80.26 with a P/E ratio of 44 and P/S ratio of 2.1. The dividend yield of Martin Marietta Materials Inc. stocks is 2%. Martin Marietta Materials Inc. had an annual average earning growth of 7.7% over the past 10 years.MLM is in the portfolios of Tom Russo of Gardner Russo & Gardner, Wallace Weitz of Weitz Wallace R & Co, RS Investment Management, Mason Hawkins of Southeastern Asset Management, Chris Davis of Davis Selected Advisers, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Manning & Napier Advisors, Inc, Columbia Wanger of Columbia Wanger Asset Management, John Keeley of Keeley Fund Management, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors, Mario Gabelli of GAMCO Investors, Pioneer Investments.
Highlight of Business Operations:The Corporation reported its second consecutive quarter of aggregates volume growth. Aggregates shipments improved in each of the Corporations end-use markets during the quarter, resulting in an overall 6.3% increase compared with the prior-year third quarter, led by a 14% increase in the nonresidential end-use market compared with the prior-year quarter. The infrastructure end-use market, which had volume growth of 3% compared with the prior-year quarter, was supported by an increase in state transportation spending that was somewhat offset by a decline in shipments to projects funded by the American Recovery and Reinvestment Act (ARRA or Stimulus). The Corporation continues to believe that this is a timing issue since Stimulus-related projects contributed volume growth in some states during the quarter. In other states, principally Iowa, where they aggressively completed their Stimulus-related work in 2009, the Aggregates business shipments actually declined. Overall, however, aggregates shipments to the infrastructure end-use market, excluding projects funded by ARRA, increased more than 6% over the prior-year quarter. Activity in portions of the energy sector, specifically the Haynesville and Barnett Shale Natural Gas Fields in northwest Louisiana, east Texas and Arkansas, continues to be the most significant volume driver in the Corporations nonresidential end-use market, as aggregates are essential to build both oilfield roads and pads for drilling rigs. The ChemRock/Rail end-use market experienced a 9% volume increase over the prior-year quarter, fueled by railroad expansion activity in certain markets. The residential end-use market had a volume increase of 3% over the prior-year quarter.
Weather had a disparate impact on the Corporations third-quarter results. Volume growth was led by the Mideast Group, which experienced dry weather and generated a 10.3% increase in heritage aggregates shipments compared with the prior-year quarter. In particular, the Corporations Indiana markets experienced significant highway work performed under the states 10-year, $12 billion transportation plan known as Major Moves. Contractors benefitted from the favorable weather and accelerated construction in efforts to achieve early completion bonuses on some state work. The West Group reported a 6.0% increase in heritage aggregates shipments which principally reflects the positive impact of the increased shipments to the energy sector and railroad industries. These achievements were partially offset by significantly wet weather in the Midwest Division. Flooding at multiple Midwest Division facilities restricted both operations and sales and served to increase production costs at certain locations. These conditions are a strong contrast to the Divisions prior-year record third-quarter operating results which reflected aggressive spending of ARRA funds by the state of Iowa.
Overall heritage aggregates product line pricing decreased 3.1% compared with the prior-year quarter. Two previously-reported pricing trends continued in the third quarter. First, a higher percentage of shipments of base stone, which is used in both road construction and energy sector activity and has a lower average selling price compared with clean stone, contributed to this negative period-to-period comparison of selling price. Second, pricing on Stimulus-related projects was 10% lower than the overall average for the Aggregates business. Management estimates that the impact of these factors negatively affected aggregates pricing by 160 basis points and expects this pricing pressure to ease as the Corporations end-markets continue to either recover or reach levels of sustained stability. However, competitive pricing pressure exists and opportunities to increase pricing will return one product and one region at a time.
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