Rock Products

NOV 2014

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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ROCK products • NOVEMBER 2014 6 IN THE KNOW www.rockproducts.com IN THE KNOW I N D U S T R Y N E W S Martin Marietta Materials Inc. reported its results for the third quarter ended Sept. 30, 2014, with a healthy increase in sales and profitability. Ward Nye, chairman, president and CEO of Martin Marietta, stated, "Third‐quar‐ ter 2014 results reflect the acquisition of Texas Industries Inc. (TXI), the bene‐ fits of our larger presence in the west‐ ern United States, continued growth and enhanced profitability across our her‐ itage business, and our disciplined ap‐ proach to cost. "The acquisition of TXI added $274 mil‐ lion of net sales and, even in advance of full integration and realization of signif‐ icant synergies, contributed $44.5 mil‐ lion of gross profit, excluding the one‐time increase in cost of sales for ac‐ quired inventory. Based on our evalua‐ tion to date, we expect to surpass our stated target of $70 million in annual synergies prior to 2017. This transfor‐ mational acquisition, when combined with our solid heritage business, creates a strong and broad foundation for dy‐ namic revenue and profit growth in 2015 and beyond, positioning Martin Marietta to capitalize on increasing de‐ mand for building materials. "In addition to aggregates and ready mixed operations, the TXI acquisi‐ tion provided us with a leading posi‐ tion in the Texas cement markets as well as a state‐of‐the‐art, rail‐located cement plant in Southern California. Driven by a sold‐out Texas market, cement made a solid contribution to our quarterly earnings, as volumes increased 16 percent in the third quarter compared with the three months ended Aug. 31, 2013, when Martin Marietta did not yet own the business," Nye said. "Job growth continues as a significant catalyst for construction activity, and Texas leads the nation in employment gains. Texas' strong Department of Transportation budget is supporting in‐ vestment in multiyear construction projects, including the expansion of In‐ terstate Highway 35E in Dallas and the TIFIA‐funded Grand Parkway project in Houston. These and other numerous state‐level major projects have provided for continued stability in public‐sector construction activity. "In the third quarter, growth contin‐ ued in heritage aggregates product line shipments and pricing, again led by strengthening economic activity in our West Group. Our heritage aggre‐ gates‐related downstream product lines achieved improved profitability compared with the prior‐year quarter and the Specialty Products business achieved record third‐quarter net sales and earnings. This performance led to a 130‐basis‐point expansion of our heritage consolidated gross mar‐ gin (excluding freight and delivery revenues)." Nye continued, "We welcomed approxi‐ mately 2,000 new employees from TXI and we look forward to working to‐ gether as we further the integration process and deliver upon the synergis‐ tic value of the acquisition. We remain focused on operating the combined company with an enduring commit‐ ment to both employee safety and in‐ creasing long‐term shareholder value." Heritage aggregates product line ship‐ ments reflect growth in the three largest end‐use markets. Shipments to the in‐ frastructure market comprised 47 per‐ cent of quarterly volumes and increased 3 percent. Growth was strongest in the West Group, notably in Texas and Col‐ orado, which continue to benefit from strong state Department of Transporta‐ tion programs. Highway awards in Texas increased approximately 26 percent for the trailing‐12 months through August. Infrastructure shipments in Colorado were up 21 percent, reflecting activ‐ ity from the Responsible Acceleration of Maintenance and Partnerships, or RAMP, program as well as reconstruc‐ tion efforts resulting from the historic flooding in 2013. During the quarter, Congress passed an extension of the provisions of the Mov‐ ing Ahead for Progress in the 21st Cen‐ tury, or MAP‐21, through May 31, 2015, and authorized an additional $11 billion of transfers to maintain solvency of the Highway Trust Fund. The company be‐ lieves these are the first steps toward full reauthorization of a new multi‐year fed‐ eral highway bill. The nonresidential market represented 30 percent of quarterly shipments and increased 3 percent, driven largely by energy‐sector shipments. The company continues to benefit from the nation's in‐ creasing investment in shale energy, particularly in South Texas. Martin Ma‐ rietta believes this trend will continue, driven by $100 billion of anticipated en‐ Martin Marietta Makes Big Gains FAST FACT Acquisition of TXI added $274 million of net sales and, even in advance of full integration and realization of significant synergies. Ward Nye

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