| Significant Accounting Policies | 1.
Significant Accounting Policies Organization Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. The Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 300 quarries, mines and distribution yards in 27 states, Canada and the Bahamas. In the southwestern and western United States, Martin Marietta also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services, in vertically-integrated structured markets where the Company has a leading aggregates position. The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement, ready mixed concrete and asphalt and paving product lines are reported collectively as the “Building Materials” business. Effective January 1, 2020, the Company moved the management of its one quarry in the state of Washington from the Mid-America Group to the West Group, resulting in an immaterial change to its reportable segments. The Company’s Building Materials business includes three reportable segments: the Mid-America Group, the Southeast Group and the West Group.
BUILDING MATERIALS BUSINESS
Reportable Segments
Mid-America Group
Southeast Group
West Group
Operating Locations
Indiana, Iowa, northern Kansas, Kentucky, Maryland, Minnesota, Missouri, eastern Nebraska, North Carolina, Ohio, Pennsylvania,
Alabama, Florida, Georgia, southwestern South Carolina, Tennessee, Nova Scotia and The Bahamas
Arkansas, Colorado, southern Kansas, Louisiana, western Nebraska, Nevada, Oklahoma, Texas, Utah, Wyoming
Product Lines
Aggregates
Aggregates
Aggregates, Cement, Ready Mixed Concrete, Asphalt and Paving The Company has a Magnesia Specialties business with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications, and dolomitic lime sold primarily to customers in the steel and mining industries. Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. The Company has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three months ended March 31, 2020 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 . The preparation of the Company’s consolidated financial statements requires management to make certain estimates and assumptions about future events. As future events and their effects, including the impact of the coronavirus (COVID-19) pandemic and the related societal response, cannot be fully determined with precision, actual results could differ significantly from estimates. Changes in estimates are reflected in the consolidated financial statements in the period in which the change in estimate occurs. New Accounting Pronouncement Credit Losses Effective January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses The Company records an allowance for credit losses, which includes a provision for probable losses based on historical write-offs and a specific reserve for accounts deemed at risk. The allowance is the Company’s estimate for receivables as of the balance sheet date that ultimately will not be collected. Any changes in the allowance are reflected in earnings in the period in which the change occurs. The Company writes-off accounts receivable when it becomes probable, based upon customer facts and circumstances, that such amounts will not be collected. Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss Consolidated comprehensive earnings/loss and accumulated other comprehensive loss consist of consolidated net earnings or loss; adjustments for the funded status of pension and postretirement benefit plans; and foreign currency translation adjustments; and are presented in the Company’s consolidated statements of earnings and comprehensive earnings. Comprehensive earnings attributable to Martin Marietta is as follows:
Three Months Ended
March 31,
2020
2019
(Dollars in Millions)
Net earnings attributable to Martin Marietta Materials, Inc.
$
25.9
$
42.9
Other comprehensive earnings, net of tax
0.4
3.2
Comprehensive earnings attributable to Martin Marietta Materials, Inc.
$
26.3
$
46.1
Changes in accumulated other comprehensive loss, net of tax, are as follows:
(Dollars in Millions)
Pension and Postretirement Benefit Plans
Foreign Currency
Accumulated Other Comprehensive Loss
Three Months Ended March 31, 2020
Balance at beginning of period
$
(144.9
)
$
(0.9
)
$
(145.8
)
Other comprehensive loss before reclassifications, net of tax
—
(2.1
)
(2.1
)
Amounts reclassified from accumulated other comprehensive loss, net of tax
2.5
—
2.5
Other comprehensive earnings (loss), net of tax
2.5
(2.1
)
0.4
Balance at end of period
$
(142.4
)
$
(3.0
)
$
(145.4
)
Three Months Ended March 31, 2019
Balance at beginning of period
$
(141.5
)
$
(2.1
)
$
(143.6
)
Other comprehensive earnings before reclassifications, net of tax
—
0.5
0.5
Amounts reclassified from accumulated other comprehensive loss, net of tax
2.7
—
2.7
Other comprehensive earnings, net of tax
2.7
0.5
3.2
Balance at end of period
$
(138.8
)
$
(1.6
)
$
(140.4
)
Changes in net noncurrent deferred tax assets recorded in accumulated other comprehensive loss are as follows:
(Dollars in Millions)
Pension and Postretirement Benefit Plans
Three Months Ended March 31, 2020
Balance at beginning of period
$
85.2
Tax effect of other comprehensive earnings
(0.8
)
Balance at end of period
$
84.4
Three Months Ended March 31, 2019
Balance at beginning of period
$
84.2
Tax effect of other comprehensive earnings
(0.9
)
Balance at end of period
$
83.3
Reclassifications out of accumulated other comprehensive loss are as follows:
Three Months Ended
Affected line items in the consolidated
March 31,
statements of earnings and
2020
2019
comprehensive earnings
(Dollars in Millions)
Pension and postretirement benefit plans
Amortization of:
Prior service credit
$
—
$
(0.2
)
Actuarial loss
3.3
3.8
3.3
3.6
Other nonoperating expenses and (income), net
Tax benefit
(0.8
)
(0.9
)
Income tax expense (benefit)
$
2.5
$
2.7
Earnings per Common Share The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta Materials, Inc. reduced by dividends and undistributed earnings attributable to certain of the Company’s stock-based compensation. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Company’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three months ended March 31, 2020 and 2019, the diluted per-share computations reflect the number of common shares outstanding to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued. The following table reconciles the numerator and denominator for basic and diluted earnings per common share:
Three Months Ended
March 31,
2020
2019
(In Millions)
Net earnings attributable to Martin Marietta Materials, Inc.
$
25.9
$
42.9
Less: Distributed and undistributed earnings attributable to unvested awards
—
0.1
Basic and diluted net earnings available to common shareholders attributable to Martin Marietta Materials, Inc.
$
25.9
$
42.8
Basic weighted-average common shares outstanding
62.3
62.6
Effect of dilutive employee and director awards
0.2
0.2
Diluted weighted-average common shares outstanding
62.5
62.8 |
