MARTIN MARIETTA MATERIALS INC [MLM] Filings

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Emerging growth company

10-Q 1 mlm-10q_20220331.htm 10-Q mlm-10q_20220331.htm

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 March 31, 2022

☐	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.

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 April 28, 2022
Common Stock, $0.01 par value		62,365,483

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2022

	Page
Part I. Financial Information:

Item 1. Financial Statements

Consolidated Balance Sheets – March 31, 2022 and December 31, 2021		3

Consolidated Statements of Earnings and Comprehensive Earnings – Three Months Ended March 31, 2022 and 2021		4

Consolidated Statements of Cash Flows – Three Months Ended March 31, 2022 and 2021		5

Consolidated Statement of Total Equity – Three Months Ended March 31, 2022 and 2021		6

Notes to Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3. Quantitative and Qualitative Disclosures About Market Risk		37

Item 4. Controls and Procedures		38

Part II. Other Information:

Item 1. Legal Proceedings		39

Item 1A. Risk Factors		39

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		39

Item 4. Mine Safety Disclosures		39

Item 6. Exhibits		40

Signatures		41

Page 2 of 41

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2022			2021
	(In Millions, Except Par Value Data)
ASSETS
Current Assets:
Cash and cash equivalents	$	189.6		$	258.4
Restricted cash		—			0.5
Accounts receivable, net		759.2			774.0
Inventories, net		782.4			752.6
Current assets held for sale		121.2			102.2
Other current assets		135.1			137.9
Total Current Assets		1,987.5			2,025.6

Property, plant and equipment		10,252.0			10,370.0
Allowances for depreciation, depletion and amortization		(4,043.1	)		(4,032.0	)
Net property, plant and equipment		6,208.9			6,338.0
Goodwill		3,392.0			3,494.4
Other intangibles, net		1,050.7			1,065.0
Operating lease right-of-use assets, net		410.7			426.7
Noncurrent assets held for sale		812.9			616.9
Other noncurrent assets		378.8			426.4
Total Assets	$	14,241.5		$	14,393.0

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	383.8		$	356.2
Accrued salaries, benefits and payroll taxes		43.1			86.6
Accrued other taxes		46.6			58.4
Accrued interest		41.5			48.0
Operating lease liabilities		53.8			53.9
Current liabilities held for sale		9.3			7.5
Other current liabilities		134.8			142.0
Total Current Liabilities		712.9			752.6

Long-term debt		5,102.3			5,100.8
Deferred income taxes, net		890.0			895.3
Noncurrent operating lease liabilities		362.1			379.4
Noncurrent liabilities held for sale		63.9			53.5
Other noncurrent liabilities		679.2			673.8
Total Liabilities		7,810.4			7,855.4

Equity:
Common stock, par value $0.01 per share (62.4 shares outstanding at March 31, 2022 and December 31, 2021)		0.6			0.6
Preferred stock, par value $0.01 per share		—			—
Additional paid-in capital		3,462.6			3,470.4
Accumulated other comprehensive loss		(129.2	)		(97.6	)
Retained earnings		3,094.9			3,161.9
Total Shareholders' Equity		6,428.9			6,535.3
Noncontrolling interests		2.2			2.3
Total Equity		6,431.1			6,537.6
Total Liabilities and Equity	$	14,241.5		$	14,393.0

See accompanying notes to the consolidated financial statements.

Page 3 of 41

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

	Three Months Ended
	March 31,
	2022			2021
	(In Millions, Except Per Share Data)
Products and services revenues	$	1,147.8		$	921.9
Freight revenues		83.0			60.5
Total Revenues		1,230.8			982.4

Cost of revenues - products and services		991.9			746.0
Cost of revenues - freight		82.8			61.7
Total Cost of Revenues		1,074.7			807.7

Gross Profit		156.1			174.7

Selling, general & administrative expenses		97.1			79.8
Acquisition and integration expenses		1.4			1.2
Other operating income, net		(2.3	)		(5.6	)
Earnings from Operations		59.9			99.3

Interest expense		40.5			27.4
Other nonoperating income, net		(10.8	)		(9.5	)
Earnings from continuing operations before income tax expense		30.2			81.4
Income tax expense		5.8			15.9
Earnings from continuing operations		24.4			65.5
Loss from discontinued operations, net of income tax benefit		(3.1	)		—
Consolidated net earnings		21.3			65.5
Less: Net (loss) earnings attributable to noncontrolling interests		(0.1	)		0.2
Net Earnings Attributable to Martin Marietta Materials, Inc.	$	21.4		$	65.3

Consolidated Comprehensive (Loss) Earnings:
(Loss) Earnings attributable to Martin Marietta Materials, Inc.	$	(10.2	)	$	68.1
(Loss) Earnings attributable to noncontrolling interests		(0.1	)		0.2
	$	(10.3	)	$	68.3
Net Earnings (Loss) Attributable to Martin Marietta Materials, Inc.
Per Common Share:
Basic from continuing operations attributable to common shareholders	$	0.39		$	1.05
Basic from discontinued operations attributable to common shareholders		(0.05	)		—
	$	0.34		$	1.05

Diluted from continuing operations attributable to common shareholders	$	0.39		$	1.04
Diluted from discontinued operations attributable to common shareholders		(0.05	)		—
	$	0.34		$	1.04

Weighted-Average Common Shares Outstanding:
Basic		62.4			62.3
Diluted		62.6			62.5

See accompanying notes to the consolidated financial statements.

Page 4 of 41

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31,
	2022			2021
	(Dollars in Millions)
Cash Flows from Operating Activities:
Consolidated net earnings	$	21.3		$	65.5
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities:
Depreciation, depletion and amortization		128.2			98.6
Stock-based compensation expense		12.0			10.9
Gain on divestitures and sales of assets		(2.9	)		(3.8	)
Deferred income taxes, net		5.2			(4.7	)
Other items, net		(0.9	)		(4.7	)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net		14.8			11.5
Inventories, net		(28.9	)		19.0
Accounts payable		95.5			25.0
Other assets and liabilities, net		(74.4	)		(25.4	)
Net Cash Provided by Operating Activities		169.9			191.9

Cash Flows from Investing Activities:
Additions to property, plant and equipment		(139.8	)		(110.3	)
Acquisitions, net of cash acquired		18.8			—
Proceeds from divestitures and sales of assets		1.0			12.2
Investments in life insurance contracts, net		—			9.8
Other investing activities, net		(3.0	)		—
Net Cash Used for Investing Activities		(123.0	)		(88.3	)

Cash Flows from Financing Activities:
Payments on finance lease obligations		(3.7	)		(2.2	)
Repurchases of common stock		(50.0	)		—
Dividends paid		(38.9	)		(36.1	)
Proceeds from exercise of stock options		0.6			0.6
Shares withheld for employees' income tax obligations		(24.2	)		(15.5	)
Net Cash Used for Financing Activities		(116.2	)		(53.2	)
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash		(69.3	)		50.4
Cash, Cash Equivalents and Restricted Cash, beginning of period		258.9			304.4
Cash, Cash Equivalents and Restricted Cash, end of period	$	189.6		$	354.8

See accompanying notes to the consolidated financial statements.

Page 5 of 41

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF TOTAL EQUITY

(In Millions, Except Per Share Data)	Shares of Common Stock			Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2020		62.3		$	0.6	$	3,440.8		$	(158.4	)	$	2,607.7		$	5,890.7		$	2.6		$	5,893.3
Consolidated net earnings		—			—		—			—			65.3			65.3			0.2			65.5
Other comprehensive earnings, net of tax		—			—		—			2.8			—			2.8			—			2.8
Dividends declared ($0.57 per share)		—			—		—			—			(35.8	)		(35.8	)		—			(35.8	)
Issuances of common stock for stock award plans		0.1			—		5.5			—			—			5.5			—			5.5
Shares withheld for employees' income tax obligations		—			—		(15.5	)		—			—			(15.5	)		—			(15.5	)
Stock-based compensation expense		—			—		10.9			—			—			10.9			—			10.9
Balance at March 31, 2021		62.4		$	0.6	$	3,441.7		$	(155.6	)	$	2,637.2		$	5,923.9		$	2.8		$	5,926.7

Balance at December 31, 2021		62.4		$	0.6	$	3,470.4		$	(97.6	)	$	3,161.9		$	6,535.3		$	2.3		$	6,537.6
Consolidated net earnings (loss)		—			—		—			—			21.4			21.4			(0.1	)		21.3
Other comprehensive loss, net of tax		—			—		—			(31.6	)		—			(31.6	)		—			(31.6	)
Dividends declared ($0.61 per share)		—			—		—			—			(38.4	)		(38.4	)		—			(38.4	)
Issuances of common stock for stock award plans		0.1			—		4.6			—			—			4.6			—			4.6
Shares withheld for employees' income tax obligations					—		(24.4	)		—			—			(24.4	)		—			(24.4	)
Repurchases of common stock		(0.1	)		—		—			—			(50.0	)		(50.0	)		—			(50.0	)
Stock-based compensation expense					—		12.0			—			—			12.0			—			12.0
Balance at March 31, 2022		62.4		$	0.6	$	3,462.6		$	(129.2	)	$	3,094.9		$	6,428.9		$	2.2		$	6,431.1

See accompanying notes to the consolidated financial statements.

Page 6 of 41

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2022

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	Significant Accounting Policies

Organization

Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. As of March 31, 2022, the Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 350 quarries, mines and distribution yards in 28 states, Canada and The Bahamas. Martin Marietta also provides cement and downstream products and services, namely, ready mixed concrete, asphalt and paving, in vertically-integrated structured markets where the Company has a leading aggregates position. In addition, the Company has two cement plants, cement distribution terminals and ready mixed concrete operations primarily in California that are classified as assets held for sale and discontinued operations as of and for the quarter ended March 31, 2022. The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement, ready mixed concrete, asphalt and paving product lines are reported collectively as the “Building Materials” business.

The Company’s Building Materials business includes two reportable segments: the East Group and the West Group.

BUILDING MATERIALS BUSINESS
Reportable Segments	East Group	West Group
Operating Locations	Alabama, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, Nova Scotia and The Bahamas	Arizona, Arkansas, California, Colorado, Louisiana, Oklahoma, Texas, Utah, Washington and Wyoming

Product Lines	Aggregates and Asphalt	Aggregates, Cement, Ready Mixed Concrete, Asphalt and Paving

The Company’s Magnesia Specialties business, which represents a separate reportable segment, has manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications, and dolomitic lime sold primarily to customers in the steel and mining industries.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. The Company has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited

Page 7 of 41

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2022

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The preparation of the Company’s consolidated financial statements requires management to make certain estimates and assumptions about future events. As future events and their effects cannot be fully determined with precision, actual results could differ significantly from estimates. Changes in estimates are reflected in the consolidated financial statements in the period in which the change in estimate occurs.

Consolidated Comprehensive (Loss) Earnings and Accumulated Other Comprehensive Loss

Consolidated comprehensive (loss) earnings and accumulated other comprehensive loss consist of consolidated net earnings; adjustments for the funded status of pension and postretirement benefit plans; and foreign currency translation adjustments; and are presented in the Company’s consolidated statements of earnings and comprehensive earnings.

Comprehensive (loss) earnings attributable to Martin Marietta is as follows:

	Three Months Ended
	March 31,
	2022			2021
	(Dollars in Millions)
Net earnings attributable to Martin Marietta	$	21.4		$	65.3
Other comprehensive (loss) earnings, net of tax		(31.6	)		2.8
Comprehensive (loss) earnings attributable to Martin Marietta	$	(10.2	)	$	68.1

Changes in accumulated other comprehensive loss, net of tax, are as follows:

	(Dollars in Millions)
	Pension and Postretirement Benefit Plans			Foreign Currency		Total
	Three Months Ended March 31, 2022
Balance at beginning of period	$	(97.6	)	$	—	$	(97.6	)
Other comprehensive (loss) earnings before reclassifications, net of tax		(33.3	)		0.4		(32.9	)
Amounts reclassified from accumulated other comprehensive loss, net of tax		1.3			—		1.3
Other comprehensive (loss) earnings, net of tax		(32.0	)