Q1 2020
Supplemental Information*
May 5, 2020
- All the information provided in these slides is qualified in its entirety by reference to the Company's filings with the Securities and Exchange Commission (SEC), which are available on both our own and the SEC websites.
DISCLAIMER
Statement Regarding Safe Harbor for Forward-Looking Statements
This presentation may contain forward-looking statements - that is, information related to future, not past, events. Like other businesses, Martin Marietta (the "Company") is subject to risks and uncertainties that could cause its actual results to differ materially from its projections or that could cause forward-looking statements to prove incorrect, including the risks and uncertainties discussed in Martin Marietta's most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, which have been filed with the Securities and Exchange Commission and are readily available at www.sec.gov.Except as legally required, Martin Marietta undertakes no obligation to publicly update or revise any forward-looking statements, whether resulting from new information, future developments or otherwise.
Non-GAAP Financial Measures
These slides contain certain "non-GAAP financial measures" which are defined in the Appendix. Reconciliations
of non-GAAP measures to the closest GAAP measures are also provided in the Appendix. Management believes
these non-GAAP measures are commonly used financial measures for investors to evaluate the Company's operating performance, and when read in conjunction with the Company's consolidated financial statements, present a useful tool to evaluate the Company's ongoing operations, performance from period to period and anticipated performance. In addition, these are some of the factors the Company used in internal evaluation of the overall performance of its businesses. Management acknowledges there are many items that impact a company's reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results. In addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.
Q1 2020 Supplemental Information | 2 |
Q1 2020
REVIEW
FIRST-QUARTER HIGHLIGHTS
TOTAL REVENUES
$939M | $958M |
2019 | 2020 |
GROSS PROFIT
$143M | $142M |
2019 | 2020 |
ADJUSTED EBITDA*
$158M | $149M |
2019 | 2020 |
*Adjusted EBITDA is a non-GAAP financial measure. See slide 17 for reconciliation to nearest GAAP measure.
- Establishedfirst-quarter record for consolidated revenues
- Shipments and pricing improved across most of Building Materials business
- Expanded gross margins for Cement and Magnesia Specialties businesses
- Strengthened balance sheet and cash position through $500M bond offering in early March
- Withdrewfull-year 2020 earnings guidance in light of coronavirus (COVID-19) pandemic uncertainty
Note: The COVID-19 pandemic and related government policy responses largely began in mid-March in the United States. As such, first-quarter results and trends described in this Supplemental Information may not be indicative of the Company's future performance.
Q1 2020 Supplemental Information | 4 |
NORMALIZED VIEW OF PRETAX EARNINGS AND EPS (FIRST-QUARTERRESULTS)
CONSOLIDATED RESULTS INCLUDED SEVERAL ITEMS THAT AFFECT COMPARABILITY
EARNINGS BEFORE INCOME | EARNINGS PER DILUTED | |||||||
TAX EXPENSE (BENEFIT) | SHARE (EPS) | |||||||
($ in millions, except per share) | 2020 | 2019 | 2020 | 2019 | ||||
AS REPORTED | $ | 26.0 | $ | 37.9 | $ | 0.41 | $ | 0.68 |
Add back unfavorable items: | ||||||||
Third-party railroad maintenance expenditures in exchange for federal | ||||||||
income tax benefits 1 | 5.6 | - | (0.02) | - | ||||
Aggregates inventory standard cost revaluation 2 | 3.9 | - | 0.05 | - | ||||
Accrual for implementation of new paid time off policy for employees | 2.0 | - | 0.02 | - | ||||
Deduct favorable items: | ||||||||
Aggregates inventory standard cost revaluation 2 | - | (11.3) | - | (0.13) | ||||
Reversal of accrual for unclaimed property contingencies | - | (4.2) | - | (0.05) | ||||
Change in tax election for subsidiary | - | - | - | (0.21) | ||||
ABSENT ITEMS AFFECTING COMPARABILITY 3 | $ | 37.5 | $ | 22.4 | $ | 0.46 | $ | 0.29 |
- Provides $6.9 million of federal income tax benefits in part from Internal Revenue Code Section 45G credits.
- Earnings Release dated May 5, 2020 disclosed $15.2 millionyear-over-year unfavorable aggregates inventory standard cost revaluation.
- Earnings before income tax expense (benefit), absent items affecting comparability, and earnings per diluted share, absent items affecting comparability, arenon-GAAP measures. The Company is presenting these measures to provide a better understanding of the favorable and unfavorable items that affected the quarter-over-quarter comparability of earnings before income tax expense (benefit) and earnings per diluted share.
Q1 2020 Supplemental Information | 5 |
AGGREGATES PERFORMANCE (FIRST-QUARTERRESULTS)
SHIPMENTS (tons)
PRICE |
+2% | |
• | |
37.4M | 38.3M |
• | |
• | |
2019 | 2020 |
Volume growth driven by strong product demand trends,most notably in Colorado, Iowa, Indiana and Maryland
Texas and Georgia, two of the Company's largest states by revenue, experiencedproject delays from record or near- record precipitation
Tough prior-year comparison as Q1 2019 benefitted from carryover work from an extraordinarily wet 2018
+3% | ||||||||
$14.80 | ||||||||
$14.42 | ||||||||
•Pricinggains across all divisions | ||||||||
demonstrate disciplined | ||||||||
execution oflocally-driven | ||||||||
pricing strategy | ||||||||
2019 | 2020 |
Q1 2020 Supplemental Information | 6 |
CEMENT AND DOWNSTREAM PERFORMANCE (FIRST-QUARTERRESULTS)
CEMENT | |
+5% | |
885K | 931K |
SHIPMENTS | |
2019 | 2020 |
+3% | |
$110.93 | $113.77 |
PRICE | |
2019 | 2020 |
READY MIXED CONCRETE
-14% | |
1.9M | 1.7M |
2019 | 2020 |
+5% | |
$109.28 | $114.35 |
2019 | 2020 |
ASPHALT | |
+81% | |
0.2M | |
0.1M | |
2019 | 2020 |
-1% | |
$45.92 | $45.43 |
2019 | 2020 |
Q1 2020 Supplemental Information | 7 |
Aggregates product gross margin degradation of 160 basis points to 16.4 percent, as shipment and pricing improvements were more than offset by geographic mix, higher embedded freight costs and a $15 million year-over- year unfavorable inventory standard cost revaluation
Cement product gross margin expansion of 1,170 basis points to 25.6 percent, driven by top-line growth, production efficiencies and lower maintenance costs
Ready mixed concrete product gross margin declined 380 basis points primarily driven by Texas shipment shortfalls from record precipitation
Magnesia Specialties business product gross margin expansion of 500 basis points to 43.5 percent, driven by effective cost containment and lower energy costs
GROSS PROFIT(FIRST-QUARTER RESULTS)
-$1M | ||||
+$13M | ||||
$143M | $142M | |||
15.2% of | ||||
14.9% of | ||||
total revenues | ||||
total revenues |
-$9M
-$5M
Q1 2019 | Aggregates | Cement | Ready Mixed | Asphalt & Paving | Magnesia | Q1 2020 |
Concrete | Specialties |
Products & Services
Q1 2020 Supplemental Information | 8 |
STRONG LIQUIDITY POSITION
AMPLE LIQUIDITY WITH NO NEAR-TERM DEBT MATURITIES
Cash on hand, after $300M
$124Mrepayment of May 2020 floating rate notes
Maturity schedule
$700M undrawn$800M Revolving Credit
Facility
$830M
$758M | Unused borrowing capacity | ||
on existing credit facilities | |||
$500M
$400M Trade | $400M | ||||||||||||||
$340M | |||||||||||||||
Facility * | $125M | ||||||||||||||
($60M undrawn) | |||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | Beyond | ||||
Variable | Fixed | Revolver | |||||||||||||
$882MAvailable liquidity
Fixed / Variable | 89% / 11% |
Weighted average maturity | 11 years |
Weighted average interest rate | 3.8% |
Note: Maturity schedule excludes $300M of floating rate notes that mature in May, as repayment already funded.
- Trade Facility matures September 2020. Historically, the Company has successfully extended the maturity date of this facility.
Q1 2020 Supplemental Information
9
WELL PREPARED FOR CHALLENGING ECONOMIC CONDITIONS
ABILITY TO PRUDENTLY ALIGN COSTS WITH CUSTOMER DEMAND
ACTIONS TAKEN
- Developed extensive plans for variety of economic scenarios; ready to implement, as warranted
- Suspended nonessential spending
- Implemented hiring restrictions
- Reduced capital spending for discretionary projects
- Full-year2020 capital expenditures to range from $325M to $350M, down from original guidance of $425M to $475M
- Temporarily paused share repurchases until outlook visibility improves
CAPITAL SPENDING TREND
$500M | 14% |
12% | |
$400M | |
10% | |
$300M | 8% |
$200M | 6% |
4% | |
$100M | |
2% | |
$0M | 0% |
Capital Expenditures | CAPEX as % Total Revenues | |
Spending reduction
Q1 2020 Supplemental Information | 10 |
COMPANY
OUTLOOK
OPEN FOR BUSINESS…
BUT NOT IMMUNE TO COVID-19 IMPACTS
- Martin Marietta, along with most of our customers, continue to operate as an"essential business".
- Through April, we have seenminimal disruption to our product demand, operations, workforce and supply chainsfrom COVID-19 and related government agency responses.
- Despite stable April shipment trends, theindustry will likely experience lower product demand.
- We remainconfident that the attractive underlying market fundamentals and long-term secular growth trends in our key geographies, both of which underpinned the Company's record 2019 performance and strong first-quarter 2020 results, remain intact and will be evident once again as the U.S. economy stabilizes and recovers.
Q1 2020 Supplemental Information | 12 |
APRIL SHIPMENT TRENDS *
AVERAGE SHIPMENTS PER DAY (21 SHIPPING DAY ROLLING AVERAGE)
AGGREGATES
2019 Avg per Day | 2020 Avg per Day | |
900 | |
800 | |
(Thousands) | 700 |
600 | |
500 | |
Tons | 400 |
300 | |
200 | |
100 | |
0 |
CEMENT
2019 Avg per Day | 2020 Avg per Day | |
18 | |
16 | |
(Thousands) | 14 |
12 | |
10 | |
Tons | 8 |
6 | |
4 | |
2 | |
0 |
READY MIXED CONCRETE
2019 Avg per Day | 2020 Avg per Day | |
45 | |
40 | |
(Thousands) | 35 |
30 | |
25 | |
yards | 20 |
Cubic | 15 |
10 | |
5 | |
0 |
* Preliminary results as of April 30, 2020
Q1 2020 Supplemental Information | 13 |
APRIL PRICING TRENDS *
AGGREGATES
(per ton)
+ 4% | |
$14.20 | $14.82 |
2019 | 2020 |
* Preliminary results as of April 30, 2020
CEMENT
(per ton)
+ 3% | |
$113.68 | $117.64 |
2019 | 2020 |
READY MIXED CONCRETE
(per cubic yard)
+ 0.4%
$111.62$112.09
20192020
Q1 2020 Supplemental Information | 14 |
MARKETS
NEAR-TERM OUTLOOK
END-USE
Infrastructure construction is expected to be the mostnear-termresilient. That said, state Department of Transportation budgets are experiencing lower revenue collections and states may have othershort-termfunding needs fromCOVID-19impacts that may decrease the scale and/or postpone the timing of future construction.
Nonresidential construction activity on | Residential construction activity is |
existing projects has continued in most | expected to decline in 2020, as |
regions; however, many new projects | homebuilders and home buyers |
are expected to be delayed or | delay plans to move in the wake of |
cancelled. | economic uncertainty. |
Warehouses, distribution centers, data | |
centers and in-progressenergy-sector | |
projects are expected to continue. |
The industry will likely experience lower product demand
in the coming months as a result of COVID-19.
15
APPENDIX
DEFINITIONS AND RECONCILIATIONS
OF NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA,defined as earnings before interest, income taxes, depreciation, depletion and amortization and the noncash earnings/loss from nonconsolidated equity affiliates, is an indicator used by the Company and investors to evaluate the Company's operating performance from period to period. Adjusted EBITDA is not defined by generally accepted accounting principles and, as such, should not be construed as an alternative to earnings from operations, net earnings or operating cash flow.
* | ||||
Quarter Ended March 31, | ||||
($ in millions) | 2020 | 2019 | ||
NET EARNINGS ATTRIBUTABLE TO MARTIN MARIETTA | $ | 25.9 | $ | 42.9 |
Add back: | ||||
Interest expense, net of interest income | 29.6 | 32.8 | ||
Income tax expense (benefit) for controlling interests | 0.1 | (5.0) | ||
Depreciation, depletion and amortization and noncash | ||||
earnings/loss from nonconsolidated equity affiliates | 93.4 | 87.5 | ||
ADJUSTED EBITDA | $ | 149.0 | $ | 158.2 |
Q1 2020 Supplemental Information | 17 |
THANK YOU FOR YOUR INTEREST IN MARTIN MARIETTA
FOR MORE INFORMATION, PLEASE VISITWWW.MARTINMARIETTA.COM
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Martin Marietta Materials Inc. published this content on 05 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 May 2020 12:13:03 UTC