Martin Marietta Materials : MLM Q1 2021 Earnings Release

MARTIN MARIETTA REPORTS FIRST-QUARTER 2021 RESULTS

Record First-Quarter Consolidated Revenues, Gross Profit and Earnings per Diluted Share

Upstream Aggregates and Cement Businesses Delivered Pricing Gains

Aggregates Unit Profitability Improved 34 Percent

Strengthening Product Demand Seen Across the Enterprise

Disciplined Execution of SOAR 2025 Underway with the Acquisition of Tiller Corporation

RALEIGH, N.C. (May 4, 2021) - Martin Marietta Materials, Inc. (NYSE: MLM) ("Martin Marietta" or the "Company"), a leading national supplier of aggregates and heavy building materials, today reported results for the first quarter ended March 31, 2021.

The Company also announced that it acquired Minnesota-based Tiller Corporation ("Tiller") on April 30, 2021. The Tiller business will be integrated into the Company's Central Division, complementing Martin Marietta's product offerings, broadening its geographic reach and creating a leading aggregates position in the Minneapolis/St. Paul region.

First-Quarter Highlights

			Quarter Ended March 31,
($ in millions, except per share)			2021				2020
Products and services revenues 1		$	921.9			$	891.0
Building Materials business		$	856.6			$	831.1
Magnesia Specialties		$	65.3			$	59.9
Total revenues 2		$	982.4			$	958.2
Gross profit		$	174.7			$	142.4
Earnings from operations		$	99.3			$	57.8
Net earnings attributable to Martin Marietta		$	65.3			$	25.9
Adjusted EBITDA 3		$	204.4			$	149.0
Earnings per diluted share		$	1.04			$	0.41

1. Products and services revenues include the sales of aggregates, cement, ready mixed concrete, asphalt and Magnesia Specialties products, and paving services to customers, and exclude related freight revenues.
2. Total revenues include the sales of products and services to customers (net of any discounts or allowances) and freight revenues.
3. Earnings before interest; income taxes; depreciation, depletion and amortization; and the earnings/loss from nonconsolidated equity affiliates, or Adjusted EBITDA, is a non-GAAP financial measure. See Appendix to this earnings release for a reconciliation to net earnings attributable to Martin Marietta.
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Ward Nye, Chairman and CEO of Martin Marietta, stated, "Following record performance in 2020, our Company is off to a strong start to what we expect to be another outstanding year for Martin Marietta. For the first three months of 2021, we delivered solid operational and financial performance, establishing first-quarter records for revenues, profits and safety. These results are a testament to our differentiated business model and dedication to our proven Strategic Operating Analysis and Review (SOAR) plan.

"The Company expanded consolidated gross margin 290 basis points to 17.8 percent on 2.5-percenttop-line improvement and generated record Adjusted EBITDA of $204 million, primarily driven by pricing gains achieved by our upstream aggregates and cement businesses and disciplined cost management across the enterprise. Importantly, the Building Materials business benefitted from widespread strengthening in product demand, notwithstanding the disruptions from February's unprecedented winter ice storm in Texas, our largest revenue- generating state. Looking ahead, we remain confident that long-term secular demand trends and the rapidly recovering U.S. economy will drive aggregates-intensive construction growth in our key geographies.

"We are equally excited to announce the strategic, value-enhancing acquisition of Tiller Corporation. Tiller is the leading aggregates and FOB hot mix asphalt supplier in the Minneapolis/St. Paul region, notably enhancing Martin Marietta's high-margin, upstream materials business in one of the largest and fastest growing midwestern metropolitan areas. We expect this SOAR-aligned acquisition to be immediately accretive to earnings and cash flow, and contribute $170 million of product revenues and $60 million of Adjusted EBITDA for the remaining eight months of 2021."

Mr. Nye concluded, "Our record-settingfirst-quarter results underpin our confidence in Martin Marietta's ability to continue delivering sustainable growth and superior shareholder value creation in 2021 and beyond. The Company's unrivaled growth opportunities and steadfast commitment to disciplined pricing and operational excellence, combined with emerging demand tailwinds that are expected to support construction activity over the long term, firmly and uniquely position Martin Marietta to SOAR to a Sustainable Future."

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First-Quarter Operating and Financial Results

(All comparisons are versus the prior-year first quarter unless noted otherwise)

Building Materials Business

The Building Materials business achieved record first-quarter revenues and gross profit. Products and services revenues of $856.6 million increased 3.1 percent and product gross profit of $148.3 million increased 25.1 percent.

During the quarter, the Building Materials business experienced broad-based improvements in product demand, as evidenced by shipment levels on days not impacted by harsh winter weather. Aggregates, cement and ready mixed concrete operations in Texas experienced temporary disruptions from February's historic winter storm and subfreezing temperatures. Additionally, the aggregates and downstream operations in Colorado, the Company's second largest revenue-generating state, faced a difficult comparison versus first-quarter 2020, which benefitted from unseasonably favorable weather conditions.

Aggregates

As anticipated in the Company's previously-announced guidance, first-quarter aggregates shipments declined 3.0 percent. Pricing increased 3.4 percent, or 2.5 percent on a mix-adjusted basis.

By segment:

• East Group shipments increased 0.2 percent, reflecting strong residential and nonresidential construction activity in the Carolinas, Georgia, Florida and Maryland, which more than offset the Midwest's later start to the construction season, as compared with the prior year, as well as reduced wind energy construction activity. Pricing increased 3.9 percent, with improvements in both the East and Central divisions.
• West Group shipments decreased 7.7 percent, despite robust underlying demand, due to unfavorable winter weather conditions in both Texas and Colorado and reduced energy-sector demand. Geographic mix limited pricing growth to 1.9 percent.

First-quarter aggregates gross profit per ton shipped improved 34.4 percent and product gross margin expanded 490 basis points to 21.3 percent, driven by pricing gains and lower overall costs for contract services and internal freight.

Cement

Cement shipments increased 0.3 percent despite the historic winter storm that shut down the Company's cement operations for eleven days in February. Notably, the Midlothian facility in North Texas experienced double-digit shipment growth for the quarter, demonstrating the robust demand in the Dallas/Fort Worth metroplex that more than offset weather-related impacts and reduced energy-sector activity in South and West Texas. Pricing improved

1.5 percent, as lower sales of higher-pricedoil-well specialty cement products into West Texas disproportionately limited overall pricing growth. On a mix-adjusted basis, cement pricing increased 2.2 percent.

Cement product gross margin declined 1,160 basis points to 14.0 percent, driven by storm-related incremental costs and inefficiencies as a result of the unplanned plant shutdowns.

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Downstream businesses

Ready mixed concrete shipments increased 26.5 percent, led by double-digit growth in Texas resulting from large projects and incremental volume from operations acquired in August 2020. This growth more than offset weather- related shipment declines in Colorado. Pricing declined 2.0 percent, reflecting geographic mix from a lower percentage of higher-priced Colorado shipments. Product gross margin improved 520 basis points to 8.3 percent, driven primarily by higher shipments and improved delivery costs.

A return to normal winter weather conditions in Colorado contributed to the 36.2 percent decrease in asphalt shipments. Asphalt pricing increased 7.9 percent.

Magnesia Specialties Business

Magnesia Specialties first-quarter product revenues increased 8.9 percent to $65.3 million, reflecting improved demand for chemicals and lime products. Higher revenues, combined with disciplined cost control, resulted in record first-quarter product gross profit of $28.4 million. Product gross margin of 43.5 percent matched the first- quarter record established in the prior-year quarter.

Consolidated

For comparative purposes, total cost of revenues for first-quarter 2020 included $2.0 million of expense for the implementation of a new paid time off policy for employees. Additionally, first-quarter 2020 other nonoperating expenses, net, included $5.6 million to finance third-party railroad maintenance in exchange for a federal income tax benefit of $6.9 million.

Cash Generation, Capital Allocation and Liquidity

Cash provided by operating activities for the three months ended March 31, 2021 was $191.9 million compared with $106.7 million for the prior-year period.

Cash paid for property, plant and equipment additions for the three months ended March 31, 2021 was $110.3 million. For the full-year, capital expenditures are expected to range from $425 million to $475 million.

Through dividend payments and share repurchases, the Company returned $36.1 million to shareholders in the first three months of 2021 and nearly $1.9 billion since announcing a 20 million share repurchase authorization in February 2015.

The Company had $354.8 million of cash, cash equivalents and restricted cash on hand and nearly $1.1 billion of unused borrowing capacity on its existing credit facilities as of March 31, 2021.

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Full-Year Outlook

Martin Marietta remains confident that favorable pricing dynamics will continue, supported by the Company's locally-driven pricing strategy. Additionally, the Company anticipates single-family housing growth, expanded infrastructure investment and notable heavy industrial projects of scale will drive increased shipment levels. Martin Marietta expects these demand drivers, combined with the ancillary construction necessary for housing community buildouts and the potential for increased infrastructure investment from a comprehensive federal surface transportation package, to result in sustained, multi-year growth in product demand.

The Company's full-year 2021 guidance provided below is unchanged from the guidance provided in February 2021. This guidance excludes the expected contribution of the Tiller acquisition as well as any benefit from additional fiscal stimulus, relief funds beyond those already enacted or a potential successor federal surface transportation bill. The Company will revisit its 2021 guidance when it reports half-year results.

2021 GUIDANCE

($ in millions, except per ton)		Low *		High *
Consolidated
Products and services revenues 1	$	4,510		$	4,700
Gross profit	$	1,290		$	1,380
Selling, general and administrative expenses (SG&A)	$	320		$	330
Interest expense	$	110		$	115
Estimated tax rate (excluding discrete events)		20%		22%
Net earnings attributable to Martin Marietta	$	665		$	750
Adjusted EBITDA 2	$	1,350		$	1,450
Capital expenditures	$	425		$	475
Building Materials Business
Aggregates
Volume % growth 3		1.0	%		4.0	%
Average selling price per ton (ASP) % growth 4		3.0%		5.0%
Products and services revenues	$	2,900		$	2,990
Gross profit	$	895		$	945
Cement
Products and services revenues	$	460		$	500
Gross profit	$	175		$	185
Ready Mixed Concrete and Asphalt and Paving
Products and services revenues	$	1,240		$	1,310
Gross profit	$	130		$	150
Magnesia Specialties Business
Products and services revenues	$	230		$	240
Gross profit	$	90		$	100

* Guidance range represents the low end and high end of the respective line items provided above.

1. Consolidated products and services revenues exclude $320 million to $340 million related to estimated interproduct sales and exclude freight revenues.
2. Adjusted EBITDA is a non-GAAP financial measure. See Appendix to this earnings release for a reconciliation to net earnings attributable to Martin Marietta.
3. Volume % growth range is for total aggregates shipments, inclusive of internal tons, and is in comparison with total 2020 shipments of 186.5 million tons.
4. ASP % growth range is in comparison with 2020 ASP of $14.77 per ton.
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