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Martin Marietta (MLM) Q2 Earnings Miss, 2024 Guidance Down
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Martin Marietta Materials, Inc. (MLM - Free Report) reported tepid results for second-quarter 2024, with earnings and revenues missing the Zacks Consensus Estimate. Both the top and bottom lines decreased on a year-over-year basis.
MLM witnessed historic precipitation in Texas and parts of the Midwest, along with ongoing restrictive monetary policy and curtailed volumes, thanks to April and May's historically wet weather.
Owing to the slowing product demand in the interest-rate-sensitive private construction sector, the company lowered its full-year adjusted EBITDA guidance to $2.2 billion at the midpoint.
Nonetheless, shares of this producer and supplier of construction aggregates and other heavy building materials gained 1.3% in the pre-market trading session on Aug 8.
Inside the Headlines
Martin Marietta reported adjusted earnings per share (EPS) from continuing operations of $5.26, which missed the Zacks Consensus Estimate of $5.57 by 5.6% and decreased 6.1% from the year-ago quarter’s $5.60. The reported EPS includes 50 cents for acquisition, divestiture and integration expenses and the impact of selling acquired inventory after markup to fair value as part of acquisition accounting.
Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise
Total revenues were $1.76 billion in the reported quarter, down 3% from the year-ago figure of $1.82 billion. The metric missed the consensus mark of $1.81 billion by 2.6%.
Segmental Discussion
Building Materials reported revenues of $1.68 billion, which declined 3% year over year. For this segment’s revenues, our model predicted a value of $1.85 billion. The segment’s gross margin declined 100 basis points (bps) to 30% year over year.
Within the Building Materials umbrella, Aggregates’ revenues declined 7.9% to $1.24 billion from the year-ago quarter. Aggregates shipments fell 2.8% year over year to 53 million tons, but average selling price (ASP) increased 11.6% to $21.69 (up 12% on an organic mix-adjusted basis).
Shipments fell due to inclement weather, mainly in Texas and the Central Division, and softening warehouse, office and residential demand. Notably, aggregates gross profit per ton increased 9% to a second-quarter record of $7.41, despite weather-driven inefficiencies and a $0.37 per ton headwind of selling acquired inventory.
Cement and ready mixed concrete revenues fell 37% year over year to $261 million. Cement shipments declined 51.9% year over year. Ready mixed concrete shipments declined 32.2% from the year-ago period. 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 $245 million from the year-ago reported figure. Asphalt shipments fell 4.2%.
Magnesia Specialties reported revenues of $81 million, flat year over year, due to strong pricing offset by lower chemical and lime shipments. We predicted a comparatively higher value of $81.5 million year over year. The gross margin remained flat at 34%.
Operating Highlights
The adjusted gross margin was down 200 bps from the year-ago figure of 29%. Adjusted EBITDA of $584 million fell 2% year over year. The adjusted EBITDA margin was 33%, up 40 bps from a year ago. Our model predicted a gross margin of 33.6% and adjusted EBITDA margin of 35.5%.
Liquidity & Cash Flow
As of Jun 30, 2024, Martin Marietta had cash and cash equivalents of $109 million compared with $1.27 billion at 2023-end. It had $1.2 billion of unused borrowing capacity on its existing credit facilities at June 2024-end. Long-term debt (excluding current maturities) was $3.95 billion, in-line with the end of 2023.
Net cash provided by operations was $173 million in the first half of 2024, down from $519 million in the year-ago period.
2024 Guidance
Martin Marietta now expects total revenues of $6.5-$6.94 billion, down 1% at midpoint from $6.78 billion in 2023. Earlier, it expected total revenues of $6.9-$7.3 billion.
Adjusted EBITDA is now projected to be between $2.1 billion and $2.3 billion, down from the previous projection of $2.3-$2.44 billion. This reflects growth of 3% at midpoint from $2.128 billion in 2023. The reduced projection reflects weather-impacted first-half results and revised second-half shipment expectations due to weather and uncertainty relative to demand softening in private construction markets.
Adjusted EBITDA margins are expected to be 33% at mid-point of the guidance range versus 31% reported a year ago.
Net earnings from continuing operations attributable to Martin Marietta are now anticipated to be $2.03-$2.165 billion (versus $2.21-$2.3 billion expected earlier), up 75% at midpoint year over year.
Aggregate shipment growth is expected to be down 1-4%, or $194 million at midpoint, versus prior expectations of up 2-6%. Total aggregate pricing per ton is still anticipated to rise 11-13% or $22.24 at midpoint.
Aggregate gross profit is expected to be in the $1.51-$1.62 billion range, up 14% at the midpoint from the 2023 level. This reflects a decline from a previous projection of $1.71-$1.79 billion. Gross profit per shipped ton is estimated to be at $8.08, reflecting 17% growth from the previous year.
Cement and Downstream gross profit is expected to be in the $365-$420 million range, down 28% at the midpoint from the 2023 level. Magnesia Specialties’ gross profit is expected to be in the $100-$110 billion range, up 8% at the midpoint from the 2023 level.
Capital expenditures are anticipated to be in the range of $675-725 million.
Vulcan Materials Company (VMC - Free Report) reported dismal second-quarter 2024 results, with earnings and revenues missing their respective Zacks Consensus Estimate. On a year-over-year basis, earnings increased, but revenues declined due to lower Aggregate shipments.
For 2024, Vulcan now anticipates adjusted EBITDA in the range of $2.00-$2.15 billion, up from the prior projection of $2.15-$2.30 billion. This indicates a 3.2% improvement from 2023 levels, considering the mid-point of the guidance. Net earnings are now expected to be in the range of $0.95-$1.07 billion (up from the prior projection of $1.07-$1.19) versus $933 million in the prior year.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
KBR performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Armstrong World Industries, Inc. (AWI - Free Report) reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
AWI’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value and volume. Also, contributions from recent acquisitions aided the uptrend.
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Martin Marietta (MLM) Q2 Earnings Miss, 2024 Guidance Down
Martin Marietta Materials, Inc. (MLM - Free Report) reported tepid results for second-quarter 2024, with earnings and revenues missing the Zacks Consensus Estimate. Both the top and bottom lines decreased on a year-over-year basis.
MLM witnessed historic precipitation in Texas and parts of the Midwest, along with ongoing restrictive monetary policy and curtailed volumes, thanks to April and May's historically wet weather.
Owing to the slowing product demand in the interest-rate-sensitive private construction sector, the company lowered its full-year adjusted EBITDA guidance to $2.2 billion at the midpoint.
Nonetheless, shares of this producer and supplier of construction aggregates and other heavy building materials gained 1.3% in the pre-market trading session on Aug 8.
Inside the Headlines
Martin Marietta reported adjusted earnings per share (EPS) from continuing operations of $5.26, which missed the Zacks Consensus Estimate of $5.57 by 5.6% and decreased 6.1% from the year-ago quarter’s $5.60. The reported EPS includes 50 cents for acquisition, divestiture and integration expenses and the impact of selling acquired inventory after markup to fair value as part of acquisition accounting.
Martin Marietta Materials, Inc. Price, Consensus and EPS Surprise
Martin Marietta Materials, Inc. price-consensus-eps-surprise-chart | Martin Marietta Materials, Inc. Quote
Total revenues were $1.76 billion in the reported quarter, down 3% from the year-ago figure of $1.82 billion. The metric missed the consensus mark of $1.81 billion by 2.6%.
Segmental Discussion
Building Materials reported revenues of $1.68 billion, which declined 3% year over year. For this segment’s revenues, our model predicted a value of $1.85 billion. The segment’s gross margin declined 100 basis points (bps) to 30% year over year.
Within the Building Materials umbrella, Aggregates’ revenues declined 7.9% to $1.24 billion from the year-ago quarter. Aggregates shipments fell 2.8% year over year to 53 million tons, but average selling price (ASP) increased 11.6% to $21.69 (up 12% on an organic mix-adjusted basis).
Shipments fell due to inclement weather, mainly in Texas and the Central Division, and softening warehouse, office and residential demand. Notably, aggregates gross profit per ton increased 9% to a second-quarter record of $7.41, despite weather-driven inefficiencies and a $0.37 per ton headwind of selling acquired inventory.
Cement and ready mixed concrete revenues fell 37% year over year to $261 million. Cement shipments declined 51.9% year over year. Ready mixed concrete shipments declined 32.2% from the year-ago period. 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 $245 million from the year-ago reported figure. Asphalt shipments fell 4.2%.
Magnesia Specialties reported revenues of $81 million, flat year over year, due to strong pricing offset by lower chemical and lime shipments. We predicted a comparatively higher value of $81.5 million year over year. The gross margin remained flat at 34%.
Operating Highlights
The adjusted gross margin was down 200 bps from the year-ago figure of 29%. Adjusted EBITDA of $584 million fell 2% year over year. The adjusted EBITDA margin was 33%, up 40 bps from a year ago. Our model predicted a gross margin of 33.6% and adjusted EBITDA margin of 35.5%.
Liquidity & Cash Flow
As of Jun 30, 2024, Martin Marietta had cash and cash equivalents of $109 million compared with $1.27 billion at 2023-end. It had $1.2 billion of unused borrowing capacity on its existing credit facilities at June 2024-end. Long-term debt (excluding current maturities) was $3.95 billion, in-line with the end of 2023.
Net cash provided by operations was $173 million in the first half of 2024, down from $519 million in the year-ago period.
2024 Guidance
Martin Marietta now expects total revenues of $6.5-$6.94 billion, down 1% at midpoint from $6.78 billion in 2023. Earlier, it expected total revenues of $6.9-$7.3 billion.
Adjusted EBITDA is now projected to be between $2.1 billion and $2.3 billion, down from the previous projection of $2.3-$2.44 billion. This reflects growth of 3% at midpoint from $2.128 billion in 2023. The reduced projection reflects weather-impacted first-half results and revised second-half shipment expectations due to weather and uncertainty relative to demand softening in private construction markets.
Adjusted EBITDA margins are expected to be 33% at mid-point of the guidance range versus 31% reported a year ago.
Net earnings from continuing operations attributable to Martin Marietta are now anticipated to be $2.03-$2.165 billion (versus $2.21-$2.3 billion expected earlier), up 75% at midpoint year over year.
Aggregate shipment growth is expected to be down 1-4%, or $194 million at midpoint, versus prior expectations of up 2-6%. Total aggregate pricing per ton is still anticipated to rise 11-13% or $22.24 at midpoint.
Aggregate gross profit is expected to be in the $1.51-$1.62 billion range, up 14% at the midpoint from the 2023 level. This reflects a decline from a previous projection of $1.71-$1.79 billion. Gross profit per shipped ton is estimated to be at $8.08, reflecting 17% growth from the previous year.
Cement and Downstream gross profit is expected to be in the $365-$420 million range, down 28% at the midpoint from the 2023 level. Magnesia Specialties’ gross profit is expected to be in the $100-$110 billion range, up 8% at the midpoint from the 2023 level.
Capital expenditures are anticipated to be in the range of $675-725 million.
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.
Vulcan Materials Company (VMC - Free Report) reported dismal second-quarter 2024 results, with earnings and revenues missing their respective Zacks Consensus Estimate. On a year-over-year basis, earnings increased, but revenues declined due to lower Aggregate shipments.
For 2024, Vulcan now anticipates adjusted EBITDA in the range of $2.00-$2.15 billion, up from the prior projection of $2.15-$2.30 billion. This indicates a 3.2% improvement from 2023 levels, considering the mid-point of the guidance. Net earnings are now expected to be in the range of $0.95-$1.07 billion (up from the prior projection of $1.07-$1.19) versus $933 million in the prior year.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
KBR performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Armstrong World Industries, Inc. (AWI - Free Report) reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
AWI’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value and volume. Also, contributions from recent acquisitions aided the uptrend.