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Martin Marietta (MLM) Misses Q3 Earnings Estimates, Cuts View

Martin Marietta Materials, Inc.'s MLM third-quarter 2017 adjusted earnings per share of $2.39 missed the Zacks Consensus Estimate of $2.49 by 4%. Earnings also declined 4% from the prior-year quarter due to the impact of hurricanes.

Consolidated net sales of $1.02 billion missed the Zacks Consensus Estimate of $1.06 billion and declined 1.6% year over year.

Martin Marietta reported total revenues (including freight and delivery) of $1.09 billion in the quarter under review that declined 1.5% from the year-ago quarter. Freight and delivery revenues totaled $65.6 million, remained flat year over year.

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

Segment Discussion

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

The segment’s net sales fell 1.5% to $963.6 million owing to lower volumes. The segment’s total revenues dropped 1.4% to $1.02 billion in the quarter.

Aggregates net sales grew 1.4% to $647.1 million. Ready Mixed Concrete net sales fell nearly 9% to $240.4 million.

Shipments (volume) in the aggregates product line decreased 3.2% due to ongoing project delays. Again, customer- and DOT-related labor constraints, government uncertainty and higher precipitation due to major hurricane and tropical storm activity led to the decline.

Geographically, West Group’s aggregate volumes dropped 6.8% owing to wet weather conditions. The Southeast Group, however, managed to withstand the effects of the hurricanes and reported a 4.7% increase in volumes on robust residential and nonresidential construction activity.

The Magnesia Specialties segment — which includes magnesium oxide, magnesium hydroxide and dolomite lime products — reported net sales of $58.5 million that decreased 2.8% year over year. The segment’s total revenues were $63.9 million, down 1.9% year over year.

The drop in revenues was led by decline in both chemicals and lime product lines.

Margins

Consolidated gross margin increased 20 basis points (bps) to 26.8%.

Financials

Martin Marietta ended the quarter with cash and cash equivalents of $35.2 million, as of Sep 30, 2017, compared with $60.7 million as of Sep 30, 2016, and $50 million as on Dec 31, 2016.

As of Sep 30, 2017, there were 62.9 million shares of Martin Marietta’s common stock outstanding and 14.7 million shares remaining under the current repurchase authorization.

2017 Guidance

Net sales are expected in the band of $3.64 billion to $3.74 billion, lower than the prior guidance of $3.75 billion to $3.95 billion.

Total revenues are projected in the range of $3.87 billion to $3.97 billion. Gross profit is anticipated in the range of $910 million to $960 million.

Aggregates Product line net sales are projected in the range of $ 2.1 billion to $2.16 billion (lower than the previous range of $2.2-$2.3 billion). Aggregates product line volume is expected in the range of -1% to 1%, down from the previously expected growth of 4-5.5%.

Cement Product Line net sales are estimated in the range of $365 million to $375 million, lowered from the previous expectation of $380-$400 million.

Ready Mixed Concrete and Asphalt/Paving Product Lines net sales are projected in the band of $1.27 billion to $1.31 billion as compared to the prior guidance of $1.3-$1.4 billion.

Magnesia Specialties Business net sales are expected between $245 million and $250 million.

Zacks Rank & Peer Release

Martin Marietta carries a Zacks Rank #5 (Strong Sell).

Vulcan Materials Company’s VMC third-quarter 2017 adjusted earnings of $1.04 per share beat the Zacks Consensus Estimate of 95 cents by 9.5%. The bottom line increased about 2% on a year-over-year basis.

Total revenues of $1.09 billion surpassed the Zacks Consensus Estimate of $1.06 billion by 2.8%. Sales increased 9% from the prior-year quarter.

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

Upcoming Sector Releases

D.R. Horton, Inc. DHI is slated to release its quarterly numbers on Nov 9. The Zacks Consensus Estimate for earnings is pegged at 82 cents, highlighting an increase of 9.3% on a year-over-year basis.

Louisiana-Pacific Corp. LPX is scheduled to release its quarterly numbers on Nov 6. The Zacks Consensus Estimate for earnings is pegged at 77 cents, highlighting an increase of 140.6% on a year-over-year basis.

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Louisiana-Pacific Corporation (LPX): Free Stock Analysis Report
 
Vulcan Materials Company (VMC): Free Stock Analysis Report
 
Martin Marietta Materials, Inc. (MLM): Free Stock Analysis Report
 
D.R. Horton, Inc. (DHI): Free Stock Analysis Report
 
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