Rock Products

DEC 2018

Rock Products is the aggregates industry's leading source for market analysis and technology solutions, delivering critical content focusing on aggregates-processing equipment; operational efficiencies; management best practices; comprehensive market

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8 • ROCKproducts • December 2018 I N D U S T RY N E W S IN THE KNOW This same-store gain was driven by a 6 percent increase in shipments and an 8 percent increase in gross profit per ton, to $5.45. The improvement in unit profitability was supported by both higher sell- ing prices and lower operating costs. The gross profit flow-through rate on same-store incremental segment sales excluding freight and delivery was 65 percent in the third quarter. The com- pany estimates that weather conditions impacted third quarter earnings by approximately $27 million, as com- pared to $30 million in the prior year's third quarter. "We remain focused on executing at a high level and capitalizing on the above-average demand growth in our markets," Hill said. "The aggregates shipment growth rate seen in the third quarter should continue for the balance of the year. Aggregates pricing contin- ues to show upward momentum and the rate of price growth will continue to improve during the fourth quarter given additional pricing actions implemented earlier this year in certain markets. "Looking ahead to 2019, our business is positioned for continued shipment growth, compounding pricing improve- ments, and further gains in unit profitability in 2019," Hill continued. "Vulcan-served markets are benefitting disproportionally from both growing public construction demand and con- tinued growth in private demand, led by residential demand growth in our markets. We expect our aggregates shipment and price momentum to continue in 2019 leading to mid-single- digit growth in both." In its aggregates segment, growth in gross profit accelerated again in the third quarter despite severe weather in key markets and a 28 percent increase in diesel cost per gallon. Third quarter segment gross profit increased 18 per- cent to $304 million, or $5.41 per ton. Segment gross profit flow-through rate continues to move toward longer-term expectations of 60 percent. During the third quarter, same-store incremental gross profit was 65 percent of incre- mental segment sales excluding freight and delivery, and 52 percent year-to- date. Although quarterly gross profit flow-through rates can vary widely from quarter to quarter, the company expects continued flow-through improvement in the fourth quarter. Third quarter aggregates shipments increased 10 percent (6 percent on a same-store basis) versus the prior-year quarter. Shipments in most markets out- side those impacted by severe weather realized solid growth versus the prior year. Shipment growth in North Caro- lina and Virginia was interrupted due to the impact of Hurricane Florence and same-store shipment growth in most Texas markets was limited due to extremely wet weather in September. For the quarter, freight-adjusted aver- age sales price for aggregates increased 2 percent, with the growth rate nega- tively affected by weather-impacted shipments in higher-priced markets such as North Carolina and Virginia as well as strong shipment growth in rel- atively lower-priced markets such as Alabama, Arizona and Illinois. Exclud- ing this mix impact, aggregates price increased 3 percent. Positive trends in backlogged project work along with demand visibility, customer confidence, rising diesel prices, and logistics con- straints support continued upward pricing movements for the remainder of the year and into 2019. Martin Marietta Mate- rials Inc. reported record results for the third quarter ended Sept. 30. The company is report- ing total revenues of just over $1.2 bil- lion versus just under $1.1 billion for the year-ago period. • Aggregates revenues were $688 mil- lion, with gross profit of $209 million and a gross margin of 30.4 percent. •  Cement revenues were $98 million, with gross profit of 33 million and a gross margin of 33.1 percent. • Ready mix revenues were $255 million, with gross profit of 21 mil- lion, and gross margin of 8.1 percent. Ward Nye, chairman, president and CEO of Martin Marietta, stated, "Our record third-quarter results demonstrate Martin Marietta's strong execution as we capitalized on the improving strength of the current construction cycle while successfully managing through near-term challenges. Aggre- gates, cement and ready mixed concrete shipments meaningfully accelerated in July and August under normal oper- ating conditions. Pricing also improved, highlighting robust product demand across our geographic footprint. In September, extraordinary weather challenges, including record Texas rainfall and devastation from Hurri- cane Florence, mostly in the Carolinas, adversely impacted our third quarter. As a result, Texas, our largest state by revenues, and North Carolina, our third-largest state by revenues and FAST FACT The company is reporting total revenues of just over $1.2 billion versus just under $1.1 billion for the year-ago period. Martin Marietta Surges to Record Third-Quarter Results Ward Nye

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