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Martin Marietta (MLM) Q1 Earnings Beat Estimates, 2024 View Up

Martin Marietta Materials, Inc. MLM reported mixed results for the first quarter of 2024. Earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Both the top and bottom lines decreased on a year-over-year basis.

Following the results, shares of this producer and supplier of construction aggregates and other heavy building materials lost 0.7% in the pre-market trading session on Apr 30.

Going forward, MLM anticipates record federal-level and state-level infrastructure investments, large-scale heavy industrial activity, data centers, and energy projects to offset softer residential and warehouse construction demand, as well as anticipated moderation in light non-residential activity.

Impressively, MLM increased full-year adjusted EBITDA guidance to $2.37 billion at the midpoint.

Inside the Headlines

Martin Marietta reported adjusted earnings per share (EPS) from continuing operations of $1.93, which surpassed the Zacks Consensus Estimate of $1.88 by 2.7% but decreased 10.7% from the year-ago quarter’s $2.16.

Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise

Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise
Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise

Martin Marietta Materials, Inc. price-consensus-eps-surprise-chart | Martin Marietta Materials, Inc. Quote

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Total revenues were $1.25 billion in the reported quarter, down 7.6% from the year-ago figure of $1.35 billion. The metric missed the consensus mark of $1.3 billion by 3.4%.

Segmental Discussion

Building Materials reported revenues of $1.17 billion, which declined 7.9% year over year. For this segment’s revenues, our model predicted a value of $1.23 billion. The segment’s gross margin declined 100 basis points (bps) to 21% year over year.

Within the Building Materials umbrella, Aggregates’ revenues declined 3% to $885 million from the year-ago quarter. Aggregates shipments fell 12.3% year over year, but average selling price (ASP) advanced 12.2% (up 12.7% on an organic mix-adjusted basis). Shipments fell due to inclement weather, which impacted the East and Southwest divisions, coupled with softened demand in warehouse, office and retail construction. This was partially offset by more favorable weather and relative strength in its Central and West divisions. ASP increased due to the strong realization of pricing actions taken in January.

Cement and ready mixed concrete revenues fell 22.1% year over year to $265 million. Cement shipments declined 37.1% year over year. Ready mixed concrete shipments declined 21.2%. This was due to the divestiture of the South Texas cement plant and related concrete operations, as well as extremely wet weather in Texas.

Asphalt and Paving revenues increased to $59 million from the year-ago reported figure of $58 million. Asphalt shipments grew 0.2%. The segment witnessed seasonal winter operational shutdowns in Minnesota and unfavorable winter conditions in Colorado.

Magnesia Specialties reported revenues of $81 million, down 3% from $83 million year over year, due to lower chemical shipments offsetting higher pricing. We predicted a comparatively higher value of $86.7 million year over year.

The gross profit margin increased 600 bps to 36% on the back of higher pricing.

Operating Highlights

The adjusted gross margin was in line with the year-ago figure of 22%. Adjusted EBITDA of $291 million fell 10.2% year over year. The adjusted EBITDA margin was 23%, down 70 bps from a year ago. Our model predicted a gross margin of 22.1% and adjusted EBITDA margin of 21.8%.

Liquidity & Cash Flow

As of Mar 31, 2024, Martin Marietta had cash and cash equivalents of $2.65 billion compared with $1.27 billion at 2023-end. It had $1.2 billion of unused borrowing capacity on its existing credit facilities at March 2024-end. Long-term debt (excluding current maturities) was $3.95 billion, which aligned with the end of 2023.

Net cash provided by operations was $1.72 billion in the first quarter, up from $161 million in the year-ago period.

2024 Guidance Updated

Martin Marietta now expects total revenues of $6.9-$7.3 billion, up 5% at midpoint from $6.78 billion in 2023. Earlier the company expected total revenues of $6.75-$7.19 billion.

Adjusted EBITDA is now projected to be between $2.3 billion and $2.44 billion, up from the previous projection of $2.14-$2.34 billion. This reflects growth of 11% at midpoint from $2.13 billion in 2023.

Net earnings from continuing operations attributable to Martin Marietta are now anticipated to be $2.21-$2.3 billion (versus $1.21-$1.39 billion expected earlier), up 88% at midpoint year over year.

Aggregate shipment growth is expected to be up 2-6%, or $207 million at midpoint, up from prior expectation of down 2% to up 2%. Total aggregate pricing per ton is now anticipated to rise 11-13% or $22.24 at midpoint compared with 10-12% projected earlier.

Aggregate Gross profit is expected to be within the $1.71-$1.79 billion range, up 27% at the midpoint from the 2023 level. This reflects growth from previous projection of $1.61-$1.73 billion. Gross profit per shipped ton is estimated to be at $8.45, reflecting 22% growth from the previous year.

Capital expenditures are anticipated to be in the range of $675-725 million versus $650-700 million expected earlier.

Zacks Rank & Recent Construction Releases

Martin Marietta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EMCOR Group, Inc. EME reported impressive results for the first quarter of 2024. Its earnings surpassed the Zacks Consensus Estimate and increased year over year, backed by its focus on operational excellence.

Revenues also grew from the previous year due to a continued strong mix and pipeline of projects in large and growing market sectors with long-term secular trends, including high-tech and traditional manufacturing and network & communications.

Weyerhaeuser Company WY reported mixed results for first-quarter 2024. Its earnings beat the Zacks Consensus Estimate but net sales missed the same.

On a year-over-year basis, both metrics declined due to lower fee harvest volumes in the West, a decrease in domestic sales volumes as well as sales realizations accompanied by increased lumber manufacturing and raw materials costs. Also, export sales volumes were softer, especially in China.

Masco Corporation MAS reported mixed results for first-quarter 2024, wherein earnings surpassed the Zacks Consensus Estimate but net sales lagged the same. On a year-over-year basis, earnings increased while net sales declined. Strong operational efficiency helped deliver solid earnings.

Masco’s focus on a balanced capital deployment strategy helped it return $212 million to shareholders via dividends and share repurchases.

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