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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-12744

 

MARTIN MARIETTA MATERIALS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

North Carolina

56-1848578

( State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

4123 Parklake Avenue, Raleigh, NC

27612

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (919) 781-4550

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock (Par Value $0.01)

 

MLM

 

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

☒

 

Accelerated filer

 

☐

 

 

 

 

Non-accelerated filer

 

☐

 

Smaller reporting company

 

☐

 

 

 

 

 

 

 

Emerging growth company

 

☐

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

 

Class

 

Outstanding as of October 27, 2022

Common Stock, $0.01 par value

 

62,090,694

 

 

 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended September 30, 2022

 

 

Page

Part I. Financial Information:

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

Consolidated Balance Sheets – September 30, 2022 and December 31, 2021

 

3

 

 

 

Consolidated Statements of Earnings and Comprehensive Earnings – Three and Nine Months Ended September 30, 2022 and 2021

 

4

 

 

 

Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2022 and 2021

 

5

 

 

 

Consolidated Statements of Total Equity – Three and Nine Months Ended September 30, 2022 and 2021

 

6

 

 

 

Notes to Consolidated Financial Statements

 

8

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

26

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

49

 

 

 

Item 4. Controls and Procedures

 

50

 

 

 

Part II. Other Information:

 

 

 

 

 

Item 1. Legal Proceedings

 

51

 

 

 

Item 1A. Risk Factors

 

51

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

51

 

 

 

Item 4. Mine Safety Disclosures

 

51

 

 

 

Item 6. Exhibits

 

52

 

 

 

Signatures

 

53

 

 

 

 

 

Page 2 of 53

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED BALANCE SHEETS

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(In Millions, Except Par Value Data)

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

135.7

 

 

$

258.4

 

Restricted cash

 

 

—

 

 

 

0.5

 

Restricted investments (to satisfy discharged debt and related interest)

 

 

704.6

 

 

 

—

 

Accounts receivable, net

 

 

1,011.7

 

 

 

774.0

 

Inventories, net

 

 

823.4

 

 

 

752.6

 

Current assets held for sale

 

 

79.5

 

 

 

102.2

 

Other current assets

 

 

92.4

 

 

 

137.9

 

Total Current Assets

 

 

2,847.3

 

 

 

2,025.6

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

10,400.0

 

 

 

10,370.0

 

Allowances for depreciation, depletion and amortization

 

 

(4,246.2

)

 

 

(4,032.0

)

Net property, plant and equipment

 

 

6,153.8

 

 

 

6,338.0

 

Goodwill

 

 

3,640.4

 

 

 

3,494.4

 

Other intangibles, net

 

 

855.7

 

 

 

1,065.0

 

Operating lease right-of-use assets, net

 

 

397.3

 

 

 

426.7

 

Noncurrent assets held for sale

 

 

375.1

 

 

 

616.9

 

Other noncurrent assets

 

 

460.1

 

 

 

426.4

 

Total Assets

 

$

14,729.7

 

 

$

14,393.0

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

333.5

 

 

$

356.2

 

Accrued salaries, benefits and payroll taxes

 

 

77.1

 

 

 

86.6

 

Accrued other taxes

 

 

57.9

 

 

 

58.4

 

Accrued interest

 

 

41.1

 

 

 

48.0

 

Current maturities of discharged long-term debt

 

 

698.7

 

 

 

—

 

Operating lease liabilities

 

 

55.0

 

 

 

53.9

 

Current liabilities held for sale

 

 

4.6

 

 

 

7.5

 

Other current liabilities

 

 

151.8

 

 

 

142.0

 

Total Current Liabilities

 

 

1,419.7

 

 

 

752.6

 

 

 

 

 

 

 

 

Long-term debt

 

 

4,339.9

 

 

 

5,100.8

 

Deferred income taxes, net

 

 

886.0

 

 

 

895.3

 

Noncurrent operating lease liabilities

 

 

348.4

 

 

 

379.4

 

Noncurrent liabilities held for sale

 

 

23.8

 

 

 

53.5

 

Other noncurrent liabilities

 

 

774.1

 

 

 

673.8

 

Total Liabilities

 

 

7,791.9

 

 

 

7,855.4

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Common stock, par value $0.01 per share (62.1 shares and 62.4 shares
   outstanding at September 30, 2022 and December 31, 2021, respectively)

 

 

0.6

 

 

 

0.6

 

Preferred stock, par value $0.01 per share

 

 

—

 

 

 

—

 

Additional paid-in capital

 

 

3,483.2

 

 

 

3,470.4

 

Accumulated other comprehensive loss

 

 

(125.1

)

 

 

(97.6

)

Retained earnings

 

 

3,577.0

 

 

 

3,161.9

 

Total Shareholders' Equity

 

 

6,935.7

 

 

 

6,535.3

 

Noncontrolling interests

 

 

2.1

 

 

 

2.3

 

Total Equity

 

 

6,937.8

 

 

 

6,537.6

 

Total Liabilities and Equity

 

$

14,729.7

 

 

$

14,393.0

 

 

See accompanying notes to the consolidated financial statements.

 

Page 3 of 53

 

 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(In Millions, Except Per Share Data)

 

Products and services revenues

 

$

1,680.5

 

 

$

1,462.7

 

 

$

4,352.1

 

 

$

3,679.9

 

Freight revenues

 

 

131.2

 

 

 

94.6

 

 

 

332.1

 

 

 

237.7

 

Total Revenues

 

 

1,811.7

 

 

 

1,557.3

 

 

 

4,684.2

 

 

 

3,917.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues - products and services

 

 

1,193.8

 

 

 

1,021.0

 

 

 

3,281.3

 

 

 

2,676.9

 

Cost of revenues - freight

 

 

130.1

 

 

 

94.4

 

 

 

333.8

 

 

 

239.0

 

Total Cost of Revenues

 

 

1,323.9

 

 

 

1,115.4

 

 

 

3,615.1

 

 

 

2,915.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

487.8

 

 

 

441.9

 

 

 

1,069.1

 

 

 

1,001.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

94.9

 

 

 

86.0

 

 

 

296.0

 

 

 

248.2

 

Acquisition and integration expenses

 

 

1.8

 

 

 

7.4

 

 

 

6.1

 

 

 

18.0

 

Other operating income, net

 

 

(14.8

)

 

 

(8.4

)

 

 

(177.4

)

 

 

(28.2

)

Earnings from Operations

 

 

405.9

 

 

 

356.9

 

 

 

944.4

 

 

 

763.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

42.8

 

 

 

44.3

 

 

 

126.4

 

 

 

99.9

 

Other nonoperating income, net

 

 

(7.3

)

 

 

(5.6

)

 

 

(40.1

)

 

 

(23.8

)

Earnings from continuing operations before income tax
   expense

 

 

370.4

 

 

 

318.2

 

 

 

858.1

 

 

 

687.6

 

Income tax expense

 

 

79.2

 

 

 

63.6

 

 

 

189.4

 

 

 

141.7

 

Earnings from continuing operations

 

 

291.2

 

 

 

254.6

 

 

 

668.7

 

 

 

545.9

 

Earnings from discontinued operations, net of income tax
   expense

 

 

4.1

 

 

 

—

 

 

 

14.3

 

 

 

—

 

Consolidated net earnings

 

 

295.3

 

 

 

254.6

 

 

 

683.0

 

 

 

545.9

 

Less: Net (loss) earnings attributable to noncontrolling interests

 

 

—

 

 

 

—

 

 

 

(0.2

)

 

 

0.2

 

Net Earnings Attributable to Martin Marietta

 

$

295.3

 

 

$

254.6

 

 

$

683.2

 

 

$

545.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Comprehensive Earnings (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

Earnings attributable to Martin Marietta

 

$

298.3

 

 

$

256.2

 

 

$

655.7

 

 

$

552.7

 

(Loss) Earnings attributable to noncontrolling interests

 

 

—

 

 

 

—

 

 

 

(0.2

)

 

 

0.2

 

 

 

$

298.3

 

 

$

256.2

 

 

$

655.5

 

 

$

552.9

 

Net Earnings Attributable to Martin Marietta

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic from continuing operations attributable to common
   shareholders

 

$

4.67

 

 

$

4.08

 

 

$

10.73

 

 

$

8.74

 

Basic from discontinued operations attributable to
   common shareholders

 

 

0.07

 

 

 

—

 

 

 

0.23

 

 

 

—

 

 

 

$

4.74

 

 

$

4.08

 

 

$

10.96

 

 

$

8.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted from continuing operations attributable to common
   shareholders

 

$

4.67

 

 

$

4.07

 

 

$

10.69

 

 

$

8.72

 

Diluted from discontinued operations attributable to
   common shareholders

 

 

0.06

 

 

 

—

 

 

 

0.23

 

 

 

—

 

 

 

$

4.73

 

 

$

4.07

 

 

$

10.92

 

 

$

8.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

62.3

 

 

 

62.4

 

 

 

62.4

 

 

 

62.4

 

Diluted

 

 

62.5

 

 

 

62.6

 

 

 

62.5

 

 

 

62.6

 

 

See accompanying notes to the consolidated financial statements.

 

Page 4 of 53

 

 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

 

(Dollars in Millions)

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Consolidated net earnings

 

$

683.0

 

 

$

545.9

 

Adjustments to reconcile consolidated net earnings to net cash
   provided by operating activities:

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

380.3

 

 

 

320.0

 

Stock-based compensation expense

 

 

34.3

 

 

 

33.0

 

Gain on divestitures, sales of assets and extinguishment of debt

 

 

(190.7

)

 

 

(26.6

)

Deferred income taxes, net

 

 

(1.0

)

 

 

25.7

 

Other items, net

 

 

(1.0

)

 

 

(8.3

)

Changes in operating assets and liabilities, net of effects of
   acquisitions and divestitures:

 

 

 

 

 

 

Accounts receivable, net

 

 

(237.9

)

 

 

(218.0

)

Inventories, net

 

 

(87.0

)

 

 

65.1

 

Accounts payable

 

 

18.1

 

 

 

66.9

 

Other assets and liabilities, net

 

 

(37.4

)

 

 

(23.4

)

Net Cash Provided by Operating Activities

 

 

560.7

 

 

 

780.3

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(309.1

)

 

 

(321.3

)

Acquisitions, net of cash acquired

 

 

11.0

 

 

 

(792.9

)

Proceeds from divestitures and sales of assets

 

 

679.1

 

 

 

41.4

 

Purchase of restricted investments to discharge long-term debt

 

 

(704.6

)

 

 

—

 

Investments in life insurance contracts, net

 

 

2.2

 

 

 

13.9

 

Other investing activities, net

 

 

(3.0

)

 

 

—

 

Net Cash Used for Investing Activities

 

 

(324.4

)

 

 

(1,058.9

)

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

Borrowings of debt

 

 

—

 

 

 

2,896.6

 

Repayments of debt

 

 

(54.5

)

 

 

(400.0

)

Payments on finance lease obligations

 

 

(11.1

)

 

 

(7.6

)

Debt issuance and extinguishment costs

 

 

(0.3

)

 

 

(6.1

)

Distributions to owners of noncontrolling interest

 

 

—

 

 

 

(0.5

)

Repurchases of common stock

 

 

(150.0

)

 

 

—

 

Dividends paid

 

 

(118.1

)

 

 

(109.7

)

Proceeds from exercise of stock options

 

 

0.6

 

 

 

1.1

 

Shares withheld for employees' income tax obligations

 

 

(26.1

)

 

 

(16.5

)

Net Cash (Used for) Provided by Financing Activities

 

 

(359.5

)

 

 

2,357.3

 

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash

 

 

(123.2

)