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Martin Marietta (MLM) Stock Up as Q1 Earnings Beat Estimates

Zacks Equity Research

Martin Marietta Materials, Inc. MLM reported better-than-expected results in first-quarter 2019, backed by solid segmental performance, higher shipments, and strong pricing and cost-management efforts.

The company’s adjusted earnings came in at 68 cents per share, surpassing the Zacks Consensus Estimate of 21 cents. Also, the reported figure increased significantly from the year-ago level of 16 cents per share. Shares of this leading supplier of building materials, including aggregates, cement, ready-mixed concrete and asphalt, were up more than 5% at the time of writing.

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

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

Total revenues (including Product and services and Freight revenues) of $939 million increased 17.1% year over year.

Segment Discussion

The Building Materials business includes aggregates, cement, ready-mixed concrete, asphalt and paving product lines. Total revenues in the said segment increased 18% year over year to $864.9 million. Product and services revenues amounted to $809.1 million, up 17.5% from $688.4 million a year ago. Freight revenues totaled $55.6 million, up 25.8% from the year-ago figure of $44.3 million.

Within Product and services, Aggregates’ total revenues amounted to $541.5 million, increasing 27.4% from the year-ago quarter. Cement revenues also grew 11% to $99 million from $89.2 million in the year-ago quarter. However, Ready Mixed Concrete’s total revenues declined 3.4% year over year to $211.2 million. Asphalt and paving product lines revenues also fell 3.1% from the year-ago quarter to $15.8 million.

Heritage aggregates’ pricing and shipments improved 4% and 12.5%, respectively, in the reported quarter. Moreover, pricing and shipments, including acquisitions and divestitures, increased 2.3% and 24.2%, respectively, year over year.

Geographically, Mid-America Group heritage operations’ shipment grew 18.4% from the prior-year period, owing to infrastructure, commercial and residential projects in the Carolinas. Pricing in the said region also grew 3.1% on the back of increased shipments of lower-priced base stone in 2019.

The Southeast Group heritage operation also reported an increase of 16.7% from the prior-year quarter, given strength of North Georgia and Florida markets. Moreover, West Groups’ aggregate shipments improved 6.3% from a year ago, primarily backed by strong non-residential construction activity in Texas, which more than offset weather-related impact in Colorado.

The Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, reported total revenues of $74.1 million, up 6.9% year over year. The upside was driven by strong domestic steel production and increased global demand for magnesia chemical products.

Operating Highlights

Consolidated gross margin improved 140 basis points (bps) to 15.2%. Its earnings from operations jumped 77.1% from the year-ago level to $69.2 million. Also, adjusted EBITDA of $158.9 million increased 28.2% year over year.

Liquidity and Cash Flow

Martin Marietta's cash and cash equivalents as of Mar 31, 2019 were $37.4 million compared with $44.9 million recorded on Dec 31, 2018. Net cash provided by operations came in at $117.9 million at the end of first-quarter 2019 compared with $105 million at the end of the comparable period of 2018.

2019 View Reaffirmed

Total revenues in 2019 are expected in the band of $4.480-$4.680 billion. Gross profit is projected in the range of $1,110-$1,210 million. The company expects EBITDA within $1.17-1.28 billion. The company also expects capital expenditure in the range of $350-$400 million.

Aggregates Product line total revenues are projected in the range of $2.80-$2.91 billion. Aggregates volume growth is expected in the range of 6-8%. Average selling price is likely to grow 3-5% from a year ago. Cement total revenues are estimated in the band of $420-$450 million. Ready Mixed Concrete and Asphalt and Paving’s total revenues are anticipated within $1.24-$1.31 billion.

The company expects Magnesia Specialties Business’ net sales between $290 million and $300 million.

Moreover, within Aggregates, Infrastructure shipments are likely to grow in high-single digits. Non-residential shipments are also projected to increase in mid-high single digits. Moreover, residential shipments are expected to rise in mid-single digits. ChemRock/Rail shipments are likely to marginally increase from the prior-year figure.

Zacks Rank & Peer 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.

United Rentals URI reported first-quarter 2019 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate, as well as improved on a year-over-year basis. Adjusted earnings of $3.31 per share beat the consensus mark of $3.06 by 8.3% and increased 15.3% from the prior-year figure of $2.87. Total revenues of $2.12 billion also surpassed the consensus mark of $2.07 billion by 2.5%. Moreover, revenues rose 22.1% year over year.

Owens Corning OC reported first-quarter 2019 adjusted earnings of 54 cents per share, lagging the Zacks Consensus Estimate of 56 by 3.6%. Also, net sales of $1.67 billion missed analysts’ expectation of $1.69 billion by 1.5% in the reported quarter. Moreover, both the top and bottom lines decreased 34.1% and 1%, respectively, on a year-over-year basis.

Masco Corporation MAS reported first-quarter 2019 adjusted earnings of 44 cents per share, lagging the consensus mark of 47 cents by 6.4%. Also, total net sales of $1,908 million missed analysts’ expectation of $2,007 million by 4.9%. Moreover, on a year-over-year basis, adjusted earnings and net sales decreased 2.2% and 0.6%, respectively. Also, net sales (excluding acquisitions and currency) fell 2% from the prior-year quarter.

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