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8 • ROCK products • September 2015 www.rockproducts.com I N D U S T RY N E W S IN THE KNOW Martin Marietta Materials Inc. announced its results for the second quarter ended June 30, 2015. The company is reporting consolidated net sales of $850.2 million compared with $601.9 million a year earlier, an increase of 41 percent. The company is also framing its results as "record net sales and operating earnings, despite the record rainfall experienced in its market areas." "Second-quarter results reflect con- tinued strong performance," said Ward Nye, chairman, president and CEO of Martin Marietta. "Among oth- er things, each heritage aggregates business reportable segment signifi- cantly improved gross profits, gen- erating an incremental gross margin contribution in line with, or exceed- ing, our stated objectives. This result was achieved despite historic levels of rainfall throughout the United States, and notably in Texas. According to the National Oceanic and Atmospheric Administration (NOAA), the United States experienced the second wettest second quarter in more than a century. The NOAA further indicated that Tex- as reported its wettest second quarter and first six months of the year for the 121 years this data has been tracked. These highly unusual factors resulted in nearly $100 million in deferred net sales across all product lines which lowered gross profit by an estimated $27 million. Additionally, precipita- tion reduced production and operat- ing leverage, which negatively affected gross profit by an estimated additional $8 million to $13 million. Nevertheless, strong pricing, operational excellence and our stringent cost discipline, cou- pled with continued slow-but-steady economic recovery in the southeast- ern United States, contributed to a 100-basis-point expansion of consoli- dated gross margin (excluding freight and delivery fees)." Heritage aggregates product line ship- ments increased 0.7 percent, excluding shipments from the third-quarter 2014 divestiture of three operations from the prior-year quarter. The divestiture included an Oklahoma quarry and two Dallas rail-located distribution yards and was required by the Department of Justice in connection with the closing of the TXI acquisition. Shipments from these divested loca- tions continue to be reported in heri- tage volumes in the prior-year quarter. Aggregates product line shipments in the Southeast Group increased 6.0 percent, and the Mid-America Group achieved an increase of 2.3 percent. Wet weather had the most significant impact in the West Group, where vol- umes decreased 3.2 percent, exclud- ing shipments from the divested oper- ations from the prior-year quarter. The reported variance for the West Group was a 9.4 percent decline, which reflects an estimated 2.2 million tons of shipments deferred due to rainfall. Iowa also experienced significant pre- cipitation during the second quarter which deferred an estimated 500,000 tons of shipments. Heritage aggregates product line ship- ments to the infrastructure market comprised 43 percent of quarterly volumes and decreased 4 percent. The Mid-America and Southeast Group each achieved an increase of 2 percent, which was offset by the impact of rain- fall in the West Group. In addition to Texas, major project activity is accel- erating in North Carolina, Georgia and Florida. Infrastructure investments are being driven by state initiatives and public private partnerships while federal funding continues to be pro- vided under a Congressional continu- ing resolution. The provisions of the Moving Ahead for Progress in the 21st Century, or MAP-21, have been extend- ed through Oct. 29, 2015. Management continues to anticipate the U.S. Con- gress working towards passage of a new multi-year bill later this year. The nonresidential market represent- ed 32 percent of quarterly heritage aggregates product line shipments and decreased 3 percent. Light nonresiden- tial, which includes the commercial sec- tor, increased 23 percent and was offset by a decline in heavy nonresidential, which includes the industrial and ener- gy sectors. Activity varies significantly by state, with growth in nonresidential starts for the last 12 months strongest in Texas; however, weather constrained activity during the second quarter. Louisiana, Florida and Georgia have also reported significant increases in nonresidential projects. The overall growth in light nonresidential ship- ments illustrates economic diversity and the ability of other nonresidential projects to replace energy-related ship- ments currently displaced by volatile oil prices. Notwithstanding, the compa- ny continues to expect energy-related activity to remain strong, supported by more than $100 billion of planned projects along the Gulf Coast, including a significant portion in Texas. The residential end-use market accounted for 16 percent of quarterly heritage aggregates product line ship- ments, and volumes within this mar- ket increased 4 percent. Nationally, residential starts are up 8 percent for the trailing 12 months through June. Florida and Georgia achieved dou- ble-digit growth and, along with Texas, were each ranked in the top five states Martin Marietta Reports 'Record Net Sales' FAST FACT Consolidated net sales increased 41 percent.