Martin Marietta Supplies (MLM) Misses Q1 EPS by 8c, Revenues Beat; Withdraws FY20 Steering


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Martin Marietta Supplies (NYSE: MLM) reported Q1 EPS of $0.41, $0.08 worse than the analyst estimate of $0.49. Income for the quarter got here in at $958.2 million versus the consensus estimate of $881.86 million.

  • LONG-TERM FUNDAMENTALS OF BUSINESS REMAIN POSITIVE
  • Shipments and Pricing Elevated Throughout Majority of Constructing Supplies Enterprise within the First Quarter
  • Cement and Magnesia Specialties Delivered First-Quarter Margin Growth
  • Firm Strengthened Stability Sheet by means of Lengthy-Time period Debt Providing in Early March
  • Firm Nicely Ready for COVID-19 Difficult Working Circumstances
  • Withdraws Beforehand-Issued Full-Yr 2020 Steering in Gentle of COVID-19 Uncertainty

Ward Nye, Chairman and CEO of Martin Marietta, said, “For the primary three months of the yr, Martin Marietta delivered sturdy monetary and operational efficiency, producing Adjusted EBITDA of $149 million. We established a brand new first-quarter document for consolidated revenues, as product demand led to improved shipments and pricing throughout most of our Constructing Supplies enterprise. Notably, manufacturing efficiencies improved our year-over-year per unit aggregates price. Whereas that is what we intention for, as decrease unit prices enhance working margins, within the present quarter, this decrease unit price served to cut back aggregates stock valuation. This year-over-year impression alone lowered earnings per share by $0.18. Additional, the prior-year’s first-quarter benefitted from a change in tax election for a subsidiary of $0.21 per share. Understanding these circumstances largely contextualizes our spectacular first-quarter 2020 efficiency. Moreover, we strengthened the Firm’s stability sheet and money place by means of the early March issuance of $500 million of two.5% senior notes due in 2030. Whereas our stable first-quarter efficiency supplied a promising begin to 2020, we acknowledge it will now be a difficult yr for our nation, clients, communities and business as a complete. Thus, given the unprecedented stage of uncertainty surrounding the size, breadth and severity of the coronavirus (COVID-19) pandemic, now we have withdrawn our previously-issued full-year 2020 steering and won’t replace it presently. With that mentioned, we stay assured that the enticing underlying market fundamentals and long-term secular progress tendencies in our key geographies, each of which underpinned the Firm’s document 2019 efficiency and robust first-quarter 2020 outcomes, stay intact and can be evident as soon as once more because the U.S. financial system stabilizes and recovers.

“Our Firm’s dedication to operational excellence, disciplined strategy to progress and custom of preparedness have positioned us properly to climate this era of uncertainty. We’ve got thoughtfully developed and persistently executed on our strategic plans, positioning our enterprise as an aggregates chief in enticing high-growth geographies, aligning our product choices to leverage strategic cement and focused downstream alternatives and prudently allocating capital whereas sustaining monetary flexibility. In doing so, now we have constructed a enterprise that’s sturdy and resilient. Whereas Martin Marietta shouldn’t be proof against the impression of COVID-19, we imagine our Firm is properly ready to satisfy the present and coming challenges.

“Importantly, the Firm’s stability sheet stays wholesome and now we have ample liquidity for the foreseeable future. Martin Marietta, together with our clients, continues to function as an “important enterprise” in most jurisdictions and, by means of the tip of April, now we have seen minimal disruption to our operations, workforce and provide chains from the consequences of COVID-19 and associated authorities company responses. Nonetheless, we anticipate product demand will soften within the coming months, as companies and governments prioritize actions in response to COVID-19. Our staff has plans for a wide range of situations and can react appropriately to altering situations. We are going to proceed to intently monitor the scenario and concentrate on safeguarding our stakeholders’ well being and well-being, working safely and effectively, preserving liquidity and aligning prices with buyer demand.”

Mr. Nye concluded, “Per our values of security, integrity, excellence, neighborhood, and stewardship, Martin Marietta is dedicated to offering the services our communities want. I’m enormously happy with the dedication, professionalism and devotion of our Martin Marietta workers who’re working every day. Their dedication helps our communities and enterprise companions who’re persevering by means of the impacts of the present disaster. We stay appropriately targeted on our tactical day-to-day duties and ever aware of the values and methods which have pushed our lengthy track-record of success. Guided by our shared dedication to the world-class attributes of our enterprise, security, operational excellence, price administration, and the disciplined execution of our confirmed strategic plan, Martin Marietta has the proper methods, priorities and staff to responsibly navigate by means of these difficult instances and drive sustainable long-term progress and shareholder worth.”

Full-Yr Outlook

The Firm has withdrawn its 2020 full-year steering issued on February 11, 2020, given the financial disruptions pushed by the COVID-19 pandemic and the a number of measures put in place to deal with and reduce the unfold of the virus. We can’t reliably forecast the impression these disruptions can have on the U.S. financial system, the timing and advantages of associated governmental actions and, extra particularly, demand for the Firm’s services. Whereas most jurisdictions have deemed the availability of building supplies as an important enterprise, Martin Marietta believes its business will seemingly expertise decrease total demand throughout the COVID-19 disaster. Nonetheless, the magnitude of decline and velocity and fee of restoration are prone to fluctuate by building end-use market and geography.

  • Of the Firm’s three main finish makes use of, the outlook for infrastructure building, significantly for aggregates-intensive highways and streets, is anticipated to be probably the most near-term resilient. Whereas the vast majority of the USA has presently been ordered to shelter in place, most state Departments of Transportation (DOTs) are presently operational and proceed to advance transportation tasks, capitalizing on the discount of autos on the street and associated site visitors congestion. Florida, for instance, just lately introduced plans to speed up $2.1 billion of vital transportation tasks. That mentioned, state DOTs are experiencing decrease income collections and states could produce other short-term funding wants regarding the COVID-19 impression which will lower the dimensions and/or postpone the timing of future building. Trade representatives are actively participating with Congress to handle floor transportation infrastructure within the “Section 4” emergency reduction and financial restoration COVID-19 laws, together with a right away $49.95 billion in versatile federal funding to offset an estimated 30 % loss in state transportation revenues within the subsequent 18 months and the passage of a complete main floor transportation reauthorization bundle.
  • Nonresidential building exercise on present tasks has continued in most areas. Nonetheless, in accordance with an April 2020 survey revealed by the Related Basic Contractors of America, an awesome variety of respondents indicated that industrial tasks within the design or planning levels are being delayed or canceled. Not like industrial exercise, industrial building shouldn’t be anticipated to expertise vital near-term disruption from COVID-19. Warehouses, distribution facilities and knowledge facilities are anticipated to carry out comparatively properly within the present surroundings as companies improve e-commerce exercise, safe regional provide chains and develop into extra reliant on cloud and community companies. Equally, massive energy-sector tasks alongside the Gulf Coast of Texas which are actively underway are anticipated to proceed.
  • Residential building exercise is anticipated to say no in 2020, as homebuilders and homebuyers delay plans within the wake of unprecedented financial uncertainty. Supported by third-party forecasts, administration believes the residential decline can be widespread however not as persistent because the interval of low exercise seen throughout the Nice Recession as Freddie Mac estimates that 2.5 million housing items are wanted to handle the present nationwide housing scarcity. This case is especially evident in states with vital undersupply, together with Texas, Colorado, North Carolina and Florida. On a nationwide stage, housing begins stay beneath the 50-year annual common of 1.5 million regardless of notable inhabitants features.

For earnings historical past and earnings-related knowledge on Martin Marietta Supplies (MLM) click on right here.

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