Martin Marietta (MLM) Q2 Earnings Beat on Higher Demand

Martin Marietta Materials, Inc. MLM reported second-quarter 2018 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate and also improved year over year, given higher shipments, pricing improvements and benefits from growth initiatives.

Adjusted earnings per share of $3.25 beat the Zacks Consensus Estimate of $2.84 by 14.4%. Earnings also increased 43.2% from the prior-year quarter.

Total revenues of $1,202.4 million surpassed the consensus mark of $1,173 million and also increased 13.1% year over year. Product and services revenues amounted to $1,128.8 million compared with $996.8 million a year ago. Freight revenues totaled $73.6 million, up from $66.7 million in the year-earlier period.

Segment Discussion

The Building Materials business includes aggregates, cement, ready mixed concrete, asphalt and paving product lines.

The segment’s total revenues were up 13.7% to $1,129.4 million. Aggregates total revenues jumped 15.1% to $665.3 million. Ready Mixed Concrete total revenues grew 14.6% to $277.2 million. Cement revenues improved to $113.1 million from $98.9 million in the year-ago quarter. Asphalt and paving product lines revenues also increased to $83.1 million from $82.9 million a year ago.

Shipments (volume) in the aggregates product line increased 11.3% on 3.5% pricing growth. Meanwhile, Heritage volume and pricing grew 3.4% and 4.4%, respectively, in the quarter.

Geographically, West Groups’ aggregate shipments increased 2%. The Southeast Group heritage operation reported a 3.4% increase in volumes, given robust construction activity in North Georgia. Moreover, Mid-America Group heritage operations’ shipment grew 4.6% owing to various large public and private construction projects in North Carolina.

The Magnesia Specialties segment — which includes magnesium oxide, magnesium hydroxide and dolomite lime products — reported total revenues of $68.2 million, up 3.7% year over year. The upside was driven by growth in both chemicals and lime businesses.

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

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

Margins

Consolidated gross margin expanded 50 basis points to 26.3%.

Financials

Martin Marietta ended the quarter with cash and cash equivalents of $33.8 million as of Jun 30, 2018 compared with $1,446.4 million on Dec 31, 2017.

2018 Guidance

Total revenues are expected in the band of $4.3-$4.5 billion. The company expects capital expenditure between $450 million and $500 million.Gross profit is projected in the range of $1.08-$1.19 billion (versus $1.1-$1.12 million expected earlier). On an adjusted basis, gross profit is expected in the band of $1.1-$1.21 billion.

Aggregates Product line total revenues are projected in the range of $2.63-$2.74 billion. Aggregates volume growth is expected in the range of 11-14%.

The company increased its adjusted EBITDA guidance by $25.0 million to $1,175-$1,295 million.

Cement total revenues are still estimated in the band of $415-$445 million.

The company continues to expect Magnesia Specialties Business net sales between $265 million and $270 million.

Zacks Rank

Martin Marietta currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

D.R. Horton, Inc. DHI reported earnings of $1.18 per share, surpassing the Zacks Consensus Estimate of $1.08 by 9.3%. Earnings increased 55.3% from the year-ago profit level of 76 cents. Total revenues (Homebuilding, Forestar and Financial Services) came in at $4.44 billion. The figure surpassed the Zacks Consensus Estimate of $4.33 billion and also increased 17.4% year over year.

Meritage Homes Corporation MTH reported earnings of $1.31 per share, surpassing the Zacks Consensus Estimate of $1.10 by 19.1%. Earnings increased 34% from the year-ago profit level of 98 cents. Homebuilding revenues of $872.4 million surpassed the consensus mark of $833 million and also increased 9.4% from $797.8 million a year ago.

PulteGroup Inc. PHM reported second-quarter 2018 earnings per share of 89 cents, beating the consensus mark of 74 cents. The bottom line also improved 89.4% on a year-over-year basis. Total revenues of $2.57 billion surpassed the consensus mark of $2.37 billion and also increased 27.2% on a year-over-year basis.

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