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Actionable news in MLM: MARTIN MARIETTA MATERIALS,

Martin Marietta: Executive Vice President And Chief Financial Officer

The following excerpt is from the company's SEC filing.

(919) 783-4660

www.martinmarietta.com

MARTIN MARIETTA REPORTS RECORD THIRD-QUARTER RESULTS

Record Net Earnings with Consolidated Net Sales in Excess of $1 Billion

Consolidated Gross Margin Expands 480 Basis Points

Aggregates Product Line Volume and Pricing Up 5 Percent

Company Repurchases $158 Million of Common Stock

Company Completes $420 Million Sale of California Cement Operations

RALEIGH, North Carolina (November 3, 2015) – Martin Marietta Materials, Inc. (NYSE:MLM) today reported record results for the third quarter ended September 30, 2015.

Ward Nye, Chairman, President and CEO of Martin Marietta, stated,

“Our record third-quarter results reflect the Company’s considerable earnings power resulting from the continued successful execution of our strategic plan. We believe that a construction-centric recovery is underway in our geographic markets, as evidenced by the growing demand for construction materials and favorable pricing that led to consolidated net sales of more than $1 billion, a milestone for our shareholders and employees. Our continuing focus on operational excellence and cost discipline enabled us to leverage those sales into a 480-basis-point increase in our gross margin, generating a consolidated incremental gross margin (excluding freight and delivery revenues) of 77 percent. This gain underscores the depth and breadth of our profitability trajectory. Looking beyond the third quarter, we are extremely pleased with our contractor backlogs, including future deliveries of weather-related delays from the first half of the year. Absent the early onset of winter weather, our outlook for the fourth quarter remains strong. Additionally, growing state Department of Transportation initiatives, plus the increasing likelihood that a multi-year federal highway bill will pass, make us highly optimistic that the construction-centric momentum will continue to grow our sales and profits in 2016 and beyond.

“Aggregates product line volume growth was led by a 9 percent increase in the Southeast Group. The Mid-America Group, which includes North and South Carolina, generated a 5 percent increase, despite record rainfall during the latter part of September. Employment growth, which provides a foundation for increased construction activity, is experiencing its strongest improvement since 2000, with North Carolina, Georgia and Florida each ranking in the top ten states for job growth. This trend is expected to further the ongoing recovery in the Southeastern United States, a region of disproportionate profitability for our business.

“The West Group achieved a 5 percent increase in aggregates product line shipments. This coincides with Texas ranking third in the country for job growth, underscoring that state’s economic diversity. Notably, Dallas-Fort Worth-Arlington is the third ranked metro area in the United States for job growth, according to the Bureau of Labor Statistics. A key driver of Texas’ sustained success is its recognition of the link between infrastructure investment and economic growth. To that effect, the Texas Department of Transportation commissioned

$7.4 billion in projects in fiscal year 2015, which added to a multi-year backlog, and is operating with a strong 2016 budget forecasted to exceed $10 billion. Further, Proposition 7, a Texas ballot initiative that would

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MLM Announces Third-Quarter 2015 Results

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dedicate an additional $2.5 billion annually for non-toll road projects, is expected to receive voter approval today.

“On September 30, 2015, we completed the sale of our California cement business to CalPortland Cement Company for $420 million. We are grateful to the skilled workforce at these operations for their contributions during the period of Martin Marietta’s ownership. As previously indicated, we expect to use the net proceeds from the sale to repurchase additional shares of our stock under our existing authorization. In anticipation of the sale proceeds, during the third quarter we repurchased 917,000 shares for $158 million.”

Mr. Nye continued, “In line with our stated capital allocation priorities, we have returned $339 million to our shareholders during the first nine months of the year. Key profit drivers, namely pricing, volume and cost, are expected to remain positive and further increase profitability and free cash flow. We expect our prudent allocation between investing in the business and returning cash to shareholders, coupled with a relentless commitment to industry-leading safety standards, to help drive increased long-term shareholder value.”

NOTABLE ITEMS FOR THE QUARTER (ALL COMPARISONS ARE VERSUS THE PRIOR-YEAR THIRD QUARTER)

Record consolidated net sales of $1.0 billion compared with $917.9 million, an increase of 9.5 percent

Aggregates product line volume increase of 5.4 percent; aggregates product line price increase of

5.4 percent

Cement business net sales of $110.5 million and gross profit of $38.2 million

Magnesia Specialties net sales of $57.3 million and earnings from operations of $17.0 million

Consolidated gross margin (excluding freight and delivery revenues) of 26.1 percent, an increase of 480 basis points

Consolidated selling, general and administrative expenses (SG&A) of $54.9 million, or 5.5 percent of net sales

Consolidated adjusted earnings from operations of $208.2 million

(which

excludes a $25.1 million loss on the sale of the California cement operations and an additional $3.6 million of related expenses) compared with $153.0 million

excludes $37.0 million of one-time expenses related to the TXI acquisition); reported earnings from operations of $179.5 million compared with $116.0 million

Adjusted earnings per diluted share of $2.04 (which

excludes the $0.30 per diluted share impact of the sale of the California cement operations and related expenses)

compared with $1.45 (which

excludes the $0.66 per diluted share impact of one-time net expenses related to the TXI acquisition); reported earnings per diluted share of $1.74 compared with $0.79

QUARTERLY OPERATING RESULTS (ALL COMPARISONS ARE VERSUS THE PRIOR-YEAR THIRD QUARTER UNLESS NOTED OTHERWISE)

Aggregates Business

Aggregates product line shipments to the infrastructure market comprised 43 percent of quarterly volumes and increased 5 percent.

Each reportable group achieved an increase, led by growth of 8 percent in the West Group. Major project activity in Texas, Florida, Georgia and North Carolina continues to accelerate, as states take increased responsibility for funding infrastructure investments. In fact, highway awards for the trailing twelve months through July were at their highest level since 2000, despite federal funding being provided under a Congressional continuing resolution. The provisions of the

Moving Ahead for Progress in the 21

Century

, or MAP-21, have been extended through November 20, 2015. Management continues to anticipate that Congress

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will pass and the President will sign a new multi-year bill later this year. Presently, relevant committees in both the House and Senate have proposed six-year bills that each provide increased funding levels serving to alleviate state-level uncertainty currently hampering the pace of construction activity; this is particularly relevant for rural construction markets.

The nonresidential market represented 30 percent of quarterly aggregates product line shipments and were relatively flat. The light nonresidential component, which includes the commercial sector, increased in each reportable group and reported overall growth of 29 percent. This improvement was offset by a decline in the heavy nonresidential component, which includes the industrial and energy sectors. Texas continues to lead the nation in nonresidential construction, with the benefits of multi-year, energy-related projects offsetting direct shipments to the shale fields that are currently lower due to reduced oil prices. Notwithstanding the challenging commodity price environment, the Company continues to expect energy-related activity to remain strong, supported by more than $100 billion of planned projects along the Gulf Coast with a significant portion of these projects in Texas. On a national scale, Florida, North Carolina and South Carolina each rank in the top 15 in growth (based on dollars invested) in nonresidential construction.

The residential end-use market accounted for 18 percent of quarterly aggregates product line shipments, and volumes within this market increased 15 percent. Nationally, residential starts increased 10 percent for the trailing twelve months ended September 2015. Florida and Georgia each rank in the top five states for growth in total residential starts while Texas, Colorado, North Carolina and South Carolina each rank in the top ten states for single-family housing starts. Consistent with the National Association of Homebuilders latest market index in October, the Company continues to witness strong residential subdivision development in nearly all of its relevant markets. The ChemRock/Rail market accounted for the remaining 9 percent of aggregates product line shipments. Volumes to this end use increased 7 percent, attributable to higher railroad ballast shipments.

Aggregates product line pricing grew in all reportable groups, led by the 6.6 percent increase in the West Group, with notable improvement in Central and South Texas. The Southeast Group and Mid-America Group reported increases of 5.8 percent and 4.1 percent, respectively.

Aggregates product line total production cost per ton shipped declined slightly. Lower energy costs continue to benefit the cost structure.

The Aggregates business gross margin (excluding freight and delivery revenues) was 25.3 percent, an increase of 500 basis points. Incremental gross margin (excluding freight and delivery revenues) for the aggregates business was 68 percent, with each reportable group exceeding internal expectations.

The heritage ready mixed concrete product line reported a 19 percent increase in shipments and a 9 percent increase in average selling price, which led to a 29 percent increase in net sales and gross margin expansion of 240 basis points (excluding freight and delivery revenues). For the quarter, the legacy TXI ready mixed concrete operations contributed $137 million of net sales, an increase of 8 percent. The hot mixed asphalt product line reported a slight increase in average selling price and $27 million of net sales.

Magnesia Specialties Business

Magnesia Specialties continued to deliver strong performance and generated third-quarter net sales of

$57.3 million and a gross margin (excluding freight and delivery revenues) of 33.9 percent. Net sales were impacted by lower domestic steel production, which is down almost 8 percent year-to-date versus the

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comparable period of 2014. Third-quarter earnings from operations were $17.0 million compared with $17.7 million.

Cement Business

The Cement business is benefitting from continued resilience in the Texas market, where pricing advances are proving more impactful than near-term demand dynamics. Average selling price increased 16.3 percent, reflective of price increases over the past twelve months coupled with the impact of the expiration of legacy TXI cement contracts with below-market pricing. The Company expects the remainder of the legacy TXI contracts to roll off by the end of the year. Third-quarter cement gross margin expanded 1,250 basis points to 34.6 percent, including $5.4 million in planned cement kiln maintenance costs, which are expected to double in the fourth quarter. The Company believes these trends bode well for performance as demand in the Texas markets continues to stabilize and mature over the next six-to-twelve months. For the quarter, the business generated $110.5 million of net sales, which were adversely affected by the sale of the California cement plant, as customers realigned their cement purchases post the August announcement of the planned divestiture of that piece of the Company’s business. Despite this, gross profit of $38.2 million increased $14.0 million over the prior-year quarter. The Company remains diligent in achieving margin growth in this business.

The Portland Cement Association, or PCA, forecasts a favorable supply/demand imbalance in Texas over the next several years, with continued growth on an annual basis through 2019.

CONSOLIDATED OPERATING RESULTS

Consolidated SG&A was 5.5 percent of net sales compared with 5.3 percent in the prior-year quarter. The increase reflects higher pension expense in 2015. During the third quarter of 2015, the Company incurred a loss of $25.1 million on the sale of the California Cement business and $3.6 million of related expenses subsequent to the transaction. Exclusive of these charges, adjusted earnings from operations for the quarter were $208.2 million compared with $153.0 million in the prior-year period, which excludes $37.0 million of nonrecurring TXI acquisition-related expenses, net.

Excluding discrete events, the 2015 estimated effective income tax rate for the year-to-date period was

30 percent, in line with annual guidance. Income tax expense for the third quarter includes a $3.2 million charge to reserve certain state net operating loss (NOL) carry forwards as a result of the California Cement business sale. For the year, the Company expects to utilize the $509 million remaining allowable NOL carry forwards acquired with TXI. Martin Marietta will have fully utilized the approximately $530 million of NOL carry forwards one-year ahead of its original plan.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities for the first nine months of 2015 was $319.6 million compared with $201.6 million in the comparable 2014 period. The increase is principally attributable to higher earnings before depreciation, depletion and amortization expense, partially offset by higher working capital and cash payments made in 2015, for 2014 taxes.

Capital investment for the first nine months of 2015 was $212.4 million, which includes $71 million related to the new Medina limestone quarry outside of San Antonio. The Medina quarry is rail connected and will ship

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aggregates products to South Texas, including Houston. The project is on budget and scheduled to be operational by January 1, 2016.

At September 30, 2015, the ratio of consolidated debt to consolidated EBITDA, as defined, for the trailing twelve months was 2.2 times, in compliance with the Company’s leverage covenant.

SHARE REPURCHASE PROGRAM

The Company is authorized to execute a share repurchase program under which it may acquire up to 20 million shares of its outstanding common stock. Repurchases are expected to be carried out through a variety of methods, which may include open market purchases, privately negotiated...


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