MLM - Earnings call transcript Q1 2018 | Martin Marietta Materials, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Martin Marietta First Quarter 2018 Earnings Conference Call. My name is Kevin and I'll be your coordinator today. At this time, all participants have been placed on a listen-only mode. A question-and-answer session will follow the company's prepared remarks.

As a reminder, today's call is being recorded. the to turn host, now will call your over Ms. I for Vice President, Osberg, Martin Investor Suzanne Relations Marietta. Ms. may you Osberg, begin.

Suzanne Osberg

today the and are have quarter, summarizes Chairman prior-year website Good begin. the that webcast before morning our Jim information versus quarter Officer. XXXX Investor comparisons results today our facilitate me A made we section quarter operating XXXX Martin Nickolas, the Relations this first All XXXX Marietta's otherwise Ward discussion, and any quarterly thank and and To discussed you financial for during noted. earnings for and Senior results Vice few unless call. and on Chief supplemental trends. Officer; administrative Chief QX of are first we today's available and Executive and joining President first are and Nye, Financial With items clarifying

X, As arrangements. to and between revenues disclosures detailed enhanced services, on from line generated and slide our product distinguish products and profit we gross have from freight

As the a measures reconciled filings. information references and SEC based are in defined are any today to revenues, and discussed and GAAP QX on XXXX non-GAAP measure our supplemental reminder, nearest all margin

the our quarter are contained and forward-looking refer first the which earnings available teleconference to legally securities information, Except developments, We future As website. financial future that materially. cause revise our X, forward-looking undertake slide to and and obligation you today's defined subject filings and Commission, other differ on risks to businesses, other Exchange by Like new publicly we actual disclaimers to legal or as update include statements, uncertainties performance. both SEC could detailed future with no as release whether operating laws on statements, with connection or from results in own may any events, Securities required, resulting or results, we the otherwise. are in

as market remarks. and financial operating recently well Jim first will guidance. prepared We our who XXXX Nye, call to I will our Materials revised discuss will session the acquisition. and will begin now question-and-answer performance turn Ward. will results completed today's Bluegrass upwardly teleconference trends, quarter Nickolas as review over A these follow with Ward then the

C. Howard Nye

all you, today's Suzanne, for joining you teleconference. thank and Thank

results with line our quarter were first Our in expectations.

quarter Group customer bidding remained backlogs and, Importantly, as the the demand as in and continued West in customer notably, underlying increased, progressed, strong most grow particularly activity to Texas.

to the regions more than billion the welcomed talented weather successfully pure-play Martin fewer time target safe United Materials largest expected aggregates reserves, we team, contribution year, Marietta activity XXX more of Noteworthy privately-held as we're Building the in than acquisition we States. of On winter trends, again strong increasing shipment rate the acceleration April to acquisition. from With employees Bluegrass Bluegrass, but peak shipments to XX, on the X that incidents With exceeds on and, high-quality the mid-cycle business through in the aggregates and states, the completed impacted tons offerings price demand, In these lost Georgia acquired Our world-class of favorable demand, aggregates-led principally total Mid-Atlantic, Maryland. together Southeast strengthened as XX% product we discipline, to original volumes and importantly, posted high-growth our below expand operations mid-cycle levels. XX% our injury achieve with saw reportable XX% announced continued this to and not and and XX% today's guidance the XXXX positions remain in below two balance guidance days than point we our pricing. now With incident of performance. benchmarks. and, as remain business underlying safety efficient the year, reflect not well, company's construction and once last operations improved in demand of release, by record our

second to integrate United working an and progressed our forward significant Eastern integration believe increased our employees shareholders, activity. both footprint the the our grateful value aggregates in in their from efforts to us for perspective. company's have Thus operations reaching employees. history. enhanced to anticipated meaningfully States construction growth positions deliver largest Bluegrass operational realize I'm We benefit acquisition, complete the collective to to and demand perseverance customer-facing to this customers look seamlessly economic activities geographic accelerates, synergies and superbly point from their to our we and As together and this from in dedication far,

this continue. to We expect trend

reviewed appreciate appropriate the to fair, process. of the conclusion we transaction. the assets view the the with the DoJ transaction. (X:XX) divest reached Additionally, of We Georgia. north efforts as of it the agreement Bluegrass as quarry, related leasehold interest a We've requires agreement and specifically, our and More Justice Department already the U.S. the Atlanta, Hart-Scott-Rodino that County responsible of Forsyth we

required we're Western Beaver Additionally, to quarry divest Bluegrass's Creek Maryland. in

second the the earnings and Such impact were which quarter. not months. Our transaction, anticipated to rationale to expected of, this Bluegrass accretive complete the in diluted be cash share for, and XX strategic aim divestitures within do the is is to per or value sale flow

with to punctuated XX.X that weather and to Dallas-Fort company's February Antonio, line single from our experienced widespread Houston snow market, in quarter cold as and normal all and segments temperatures Oceanic geographic footprint. and fact, wettest normal these or typical first National turn performance. Carolina. and the the the in conditions, or largest with measurable area, the X record Atmospheric well inches This as plan our with in seasonality, North aggregates according decreased In said, business San Worth NOAA, above shipments quarter of occurred X% metropolitan precipitation Administration, rainfall, reporting on That let's accumulation our more Now first across inches overall, declines the eclipsed was by level.

company's Mid-Atlantic XXXX, our compared additional resulting which experienced district-wide shutdowns. example, first margins, with has Division, events the historically For seven snow three generated highest quarter in

because regard, degrees Fahrenheit affect Scotia Nova contractors respect hydrate concrete. XX impacts from is on our concrete with too temperatures operation Division higher construction typically ready our days volume concrete, to can and cement With bonding meaning deferred relevant Extreme the freezing, to above temperatures it's and Midwest double-digit the a temperature into or work low, fewer the or In mixed experienced XX% that water freeze, of shipments New perform to asphalt available ambient activity. be needs are appropriately addition, mix to projects. temperature patching potentially which if decline. contributed also In York. for multiple nor'easters This to not strength agent the paving construction

shipment surprised West is Groups. meet our both conditions longer to due most aggregates typically were for sensitive below and We Public infrastructure including Class railroad reports company's of to minimum temperatures expectations. stringent most not Transportation first volume, inefficiencies, load Southeast to of the market specifications of our the construction Well-chronicled Additionally, performance recent X The infrastructure XX%. of hindered XX%. did the quarterly to performance shipments aggregates and five-year well XX% see times, average weather Department levels regarding quarter market decrease standards. not comprised

are however, urgency to we as a sense what We by view advance greater encouraged, projects. of customer

previously our Express as be Charlotte by the to we shipped project Interstate deferred Lanes District for For tons completed posted scheduled volume year-end. XX double-digit growth, example,

or Mountaineer January, by Aggregates infrastructure the will Transportation transportation numerous demand. reported building overall, underlying that weather season earnest activity FAST Fixing industrial long-awaited office Looking see impacted as in the retail Act, XPress in the Act, construction local heavy confident state as Virginia growth, we funding the Notably, regulatory finally non-residential obtaining improve we strong in shipments the ground after America's and begins as federal market Division and product in works. construction demand XX% translates clearance. project West to initiatives increased strong Surface challenges broke decreased ahead, activity. and and provided Mideast remain Pipeline Accordingly, public the into

the prices, sector project next Gulf of for oil along increased from aggregates approvals, bode particularly consumption Continued with Coast. projects, energy higher wave large well the along

to bid broader We expect projects activity earnest in construction XXXX, beginning and to these in with XXXX beyond. in continue

the driven third-party least Florida, activity the and XX% of which our market and for residential XX% almost Carolina, be national aggregates-intensive robust, years. The average. North Texas, Marietta of top for particularly activity in industrial top states permitting. aggregates South growth Martin core activity, and outlook construction XXXX. single-family in several population Inclusive multi-family for residential by addition construction is Bluegrass, outpaces trends, We're The were the to XX the the in next housing market, quarter of for shipments. heavy Additionally, Aggregates in the tends commercial support forecasts and and for the of of with X than starts ended growth comprise XX-months in unit single-family sectors to positive employment housing non-residential efficient the shipments permits both single-family now Iowa, greater availability, housing states first Maryland Colorado, in of flat represented weather-constrained key states. unit quarter. several nine remains of markets, Carolina levels end Georgia, use, which land March our seeing more trailing increased Indiana,

constraints support Lower in end the and volumes should to weather on The of Continued in shipments East prior-year Coast declined for and our reflect X% use residential the quarter. strength of ChemRock/Rail future conclude market market shipments XX%. timing first of aggregates non-residential shipments. quarter railroads accounted for aggregates by activity. ballast XX% the purchases first remaining quarter the residential and construction accounted discussion infrastructure To markets,

Midwest of and driven cold X%. aggregates and price by generally took more the economy agricultural price outlook. challenging improved combination the wet Additionally, winter increases and of April. lime A shipments in X%, in agricultural weather effect our annual declined host Nevertheless, the

and rail shipped price the $X.XX per average However, reduced volumes combination selling mix the of commercial lowered product ton. by company's

to distribution reduced long-haul rail compounded Worth, the America production in of growth February's mix portions our continued railroad cement resulting issues Importantly, coupled product Colorado, service as shipments. in led of price Group. growth X%. abnormally robust and our shipments, in and to Transient into the a Dallas-Fort Group increase X%, Georgia for ability move Mid for winter to Product decline in mix our limited dynamics pricing discipline Southeast X% price helped predominantly higher aggregates heavy offset Texas Geographic growth in by West product and modest truck-served in a Florida competitive constraints, favorable ongoing priced precipitation with weather by Group, resulted pricing yards. mix in pricing

what planned remain a to volumes plant bidding and shaping more for by reinforced significantly unplanned with cement quarter. resilience. supply. seems year tight a Midlothian market by be the the into prior-year not Encouragingly, with days and dynamics likely favorable market compared on and impacted our downtime demonstrate robust negatively with Texas strength had Additionally, weather filled Shipment repairs pipeline

increased pricing X%. cement quarter, the For

prices selling downstream a planned X%. at were increased in levels Colorado decreased X%, by Mountains. Turning our price businesses, ready in more Rocky the Southwest concrete for modestly driven quarter. primarily the typical Overall, Division the winter Shipments for the to mixed Average improved shipments for quarter.

However, for spread winter lower Texas pricing making mix, contributing energy ready mixed more lost In sector other weather and geographic production out, crews concrete to it were opportunities. challenging days factors related limited normal shipments, gain to operating efficiencies, shipments. now turn for Colorado, pricing to the to asphalt financial material full-year XX% Rising quarter the call discuss and Jim in costs our I'll XXXX during to favorable guidance. the first decrease asphalt quarter. results to increases allowed the raw the over

James A. J. Nickolas

to gas Materials outages costs, batteries. back a aggregates This services operating Ward DD&A total to natural in internal maintenance contributed was and products demand and in kilns prices, to million, cement in record to product XX.X%. this XXX-basis-point first $XX along production of product Building contract for business costs. from benefiting diesel million. currently lower shipment X% we at business ton is inefficiencies expansion Magnesia margin and and XXX-basis-point XX.X%. margin, Lower services reduction plan, are Consistent revenues services product and lithium-ion increased of of mentioned can The a production other Ward. Thanks, levels, selling reduction all plant profit sales, gross to $XXX I'll led temporary first million. margin with with quarter produce. higher leverage gross revenues things, XX.X%. The now note, decrease, and Among products increased our reflects and increased gross stable lower Specialties $XX every earlier a contributing the we the gross impact cement operating the and XXX-basis-point posted quarter

capital and prudently million returned for combination products remain over to key million is we magnesium $XXX mines operations in earnings flexibility. sold to achieved the million Our we in $XX the of share. a since February a of which in $X.XX invest from first input diluted $XX disciplined that basis, world On as expenditures are batteries. them a cobalt, $XXX of million financial to the XXXX, $X.XX. shareholders reserves share help we around to earnings oxide repurchase from a shareholders consolidated We for our manner on and through extract to Capital XXXX. allocating repurchases those of of per our range focused to full-year per Bluegrass inclusive are of a announcement with program dividends quarter, our $X.X expected continue In business. billion share dividend We share returned to

bonds of to in part, of million repaid $XXX the in acquisition. size XXXX, fund, the ended trade billion issued credit defined EBITDA, facility agreement, debt increase amended the In as For our the times. ratio consolidated to the the credit to $XXX receivable trailing the April, months December debt consolidated $X.X applicable net agreement, maturing facility Bluegrass March was provisions Pursuant million. we to to certain of XX in ratio excludes X.XX of and our

current net X billion, times. level is acquisition, $X.X EBITDA a Following ratio the of with debt to Bluegrass our debt

We within XX to our target leverage X X.X to of XX to return ratio expect to months. times

from in detailed guidance XXXX full-year today's remains Bluegrass, XXXX operations. we XXXX. February and Absent increased release, unchanged in guidance provided the full-year guidance As updated Bluegrass reflect the expected from our contributions acquired the to

costs from total eight including we adjusted with Bluegrass range the consolidated non-recurring range $X.XX year, billion, for an billion For EBITDA now to $X.XX aggregates to $X.X Bluegrass least revenues synergies contribute the to billion, operations billion XXXX, and Accordingly, expect acquisition. and of of excluding we margin months from expect tons approximately transaction realized at to XX the XX%. remaining EBITDA the shipment of $X.X million to at associated

C. Howard Nye

conclude, anticipated benefit increased To and the to of recovery, we midst Jim. States in the from believe demand. Thanks, steady extended and well United is construction a positioned the we're

expect to faster through due year with growth the geographies construction We in market to attractive activity the regions' fundamentals. our accelerate key nationally, balance these of

our be As your a for addressing we'll a year required questions. to If Marietta. record attention the the result, instructions, we will turn provide expect operator XXXX Martin now to

Operator

first question from Kathryn Group. Thompson comes Our Thompson with Research

Kathryn Ingram Thompson

taking Hi. for you Thank my today. questions

clarification your unchanged, or guidance and could just you understand puts sales on bridge. fiscal and left help The you contribution first a synergies? Thank Bluegrass heritage that us core addition from you guidance know of XXXX but asset is said to in the if the takes proceeds the you. I

C. Howard Nye

your question. Kathryn. morning, Good for Sure. Thanks

the right. exactly The same. heritage exactly guidance You're remains

our Bluegrass. you Let XX% shipments to shipments me at sense we we in, guidance let's how from If Bluegrass a with give expect first, look of to in factor up look at range to XX%.

about said we year, remarks, for million prepared the So, as in Bluegrass adds, this tons. XX

be Now million, of only tons eight XX this did let that. we're on that Bluegrass last about me year million months clear for is again, so that about talking XX.X year.

X%. up look expect at to you and up Marietta Bluegrass We ASP, from Martin range when together, X% to the

Now, remember, heritage is to X% actually up X%.

$XX.XX X% Bluegrass price to increase. XX% of corporate ton a overall So is below we selling X% from aggregates The the X% XX% we're our reaffirming are the average. that to X% to taking heritage average that to reason is

if out. SG&A, at averaging original no our you simply is change we're look guidance. that there to Kathryn, So

interest If you incremental up borrowing the expense, bond on that That billion in the Jim simply about his $XX opening referenced $X.X look at comments. million. that's deal reflects

So, look in if range been revised an we EBITDA, at adjusted million. the of it's $XX upward

$XX that, your the to months. calendar of will plus believe this the we going that we we essence to full get of get about million Remember, add said synergies million. synergies we'd but Bluegrass in had will $XX itself about question, $X.X part million, realized be in of said is operating to So, XX and we year what

in million of we'll $X.X calendar think, get about this year, So XXXX, that. we

a we divestiture have do point, Now, impact. to your

Forsyth the be knew others through and this the So, have believe that process. have it's quarries look that We the quarry We as transaction I to sale for were say the comments, what thing required, might my we Creek in Georgia. the the We're into be quarry value And operation for but already sell, $X than the there certainly me I going up a about exactly opening couple came a transaction. sold seen that to be through now is we as what million in to we in in divestiture the commented one's. for that year. gone Forsyth worth of divestitures North quarry would X.X Forsyth County, among important going about as we impact That's in this we've divested picked had Cumming in in we is now a is process of think Georgia Maryland. profitable candidly Beaver more we've times one regard, at the

again, So, EBITDA that we in be CapEx and strategic thing all it guidance. that draw the And at reminder, look of business overall as before. there's to I'll at the your And this divestitures and a change a attention look transaction, should not makes the in the as it margins is the we made sense financial specifically thought XX%-plus. other

that you questions much we transaction, the see of from how deal we of one we is it did have rhythm got, this changing CapEx. the this Kathryn, been So, and might our cadence announced when

the thus the was at comments change CapEx guidance. well-run, in was a well-maintained business, time Our this no

So out, Kathryn. helps that I fill commentary hope you bridge that

Kathryn Ingram Thompson

Maryland, the one give on the a you could on appreciate already does. you give compare comment contrast – versus Forsyth mentioned? your could you sold Cumming It more maybe and little having two and bit in be just to maybe is due also Forsyth, And a that just but quarry assets, color sold

C. Howard Nye

quarry on insofar around and actually to there's I simply is that's it. XX more a going profitability. in going XX and bit volume development sell larger as than probably as Cumming out about farther the said, a Well, It's EBITDA

like quarry Cumming and operation, Boonsboro on it's to the a our very Beaver at close you're divestiture. Cumming, perspective, tons a by per thus about happy we're small basis. have annum itself, we quarry. if like to going That's quarry looking a from So, required that's both but our forward. looking And we XXX,XXX quarry all Creek Forsyth It's relatively the

all significant in at Kathryn. tonnage it's the So of not scheme grand things,

Kathryn Ingram Thompson

Okay. And off had But that earnings. of get at feedback you of you mostly gotten terms April's But, in in a different look We're the pure a activity to give variety on into last Thank the construction-related wanted you wide QX then, cadence just of lot cadence to importantly, way the activity volumes. We've how finally, bid year, from start. just better in relative look And different just a in thoughts of terms contracts. to through with just beyond QX. mind, your things comment if any could QX. of if very much. bid

C. Howard Nye

a things. look we as that average we was thought we There Kathryn. of If Absolutely, change feel we be. predictable, tons it where We're precisely almost actually confident sitting are the couple remarkably is the are. in daily one in which quarter, reason as would we at

guidance So, balance if what for more you go QX in thought normal said anticipating February, were the year. we we back of to be would the and we that's that gave we the

we the gave recall, if ashamed average last X%. into look Shipments suddenly Texas, at a would If we were shipments March down for to like down were March February, was not again as that was Then in it it look So, year in you was heaviest history XX%. in what and been this January go one, ties January over, up number month to except February. record-keeping in changes of. commentary have normal anyone X% the rain was that look and everywhere almost I relative that, tons, daily we shipments

with. certainly always of will the It's our done talk weather custom I general know months I rhythm the clear, So of, you shipping quarter. we is been not disagree have that. in like to mantra next the that practice cadence the specifically that we tell others about is and see. good, and we do view is not what if a

hope to responsive it that's So and that at I'll that I your leave question.

Kathryn Ingram Thompson

Thank again. Great. you,

C. Howard Nye

Thank Sure. you, Kathryn.

Operator

Ng Phil Jefferies. comes question with from next Our

Philip Ng

us on a Hey, standpoint, your seen seeing guys. level that and And year? DOT in? in and pick on you're end thoughts can from you from to funding to kick money public an Act outlook Encouraged their how for give about spending, March have markets that started key get up update a any see note, lastly, Curious you're this things FAST to thinking the catch-up any you just on April.

C. Howard Nye

ties of Kathryn's No, a absolutely. out. Phil, I question left into inadvertently that And, actually that piece

are We seeing pick and Martin are pickup actually federal that up, and seeing to we're important that Marietta. public work in pretty states

looking looking and a So, in right at importantly Carolina, as North at while. activity seen I've as for Texas letting attractive activity in if we're we're letting it's now looking

get Our worth to started the quickly. DOT Secretary about of here year system with and in there billion he needed North to $X.X last needed Carolina money the get year into it

anticipates the he into end had $X that is we by came year, very fiscal left. of is for September, that billion left attractive he only billion From of him which in where about the having As sit, news. year, that and $X.X of

in The states picked that work have other I'll also seen gas thing we is Carolina Indiana, and those in states. that up have price South the like say increases

to Prop in more while So, seen year we've by disproportionately see of that money we're looking activity, this $X.X going is and oil about for X billion we're also starting and that go going X money Keep Martin that to a largest last schedule because billion Texas Prop to to $X.X revenue state states we're to letting is year come at see mind, our this going in. year. if than to Marietta, matter from

of we're talked outlook. those about supply has we're going So, attractive like there, so public we critical North Colorado. as in perspective, what shift but seeing One certainty like is that. is we've jobs, And jobs, fewer attractive Carolina suddenly Texas, the jobs larger well. becomes to larger, complicated from because outlook more the on next, an we jobs. have Colorado seeing a a very

year. this be would DOT Next a and Georgia Again, Florida. budget Florida's near-record got

Florida activity The to relative to very we're nice Beyond would that what X other they I-X in the seeing Interstate Ultimate. I what seeing and we're call, relative thing is say

a this budget off year. $XX sitting about So, which record DOT on is last DOT budget, billion Florida is a from year, modestly

North we going it as most that of would. volume Remember, year that way replicated Carolina public. That our again, record that of up again lining are finished We year. this than the to last piece to do was we on public not So, rack we important it, thought to up it's a XX% with states low. be less the the expect

other keep with said prepared work, The piece, higher to say at that residential. in that you're to as tends would the our to I when something is average come is specification that's Phil, that mind looking DOT product selling we to tends a be, in does as going higher remarks, stone price,

positive see we in single-family it'll like, more ASPs hope out the that going to ways, on in move continuing volumes Carolinas, not helpful, Georgia, as and you, door, just helpful the the residential the be be particularly Colorado helpful Phil. will on So to I well. that's

Philip Ng

that to the correctly, if remember a was the give strong helpful. appreciate really I needed to because, Carolinas I on color you that's confidence hit you of that be said numbers. your No, market And kind to

on like up a then, aggregates mid-year competitor things. about nicely And planning sounds pricing, there. So shaping the price of yours of to are implement it a side talked things on increase

kind the of your dynamic? opportunity that if Is to And of what that for business thoughts. from would Just curious get benefit case, that's percentage your you? an

C. Howard Nye

I remarks, that April. in a closer get Keep have prepared in effect Yeah. We'll certainly point mind, time. increases that into went as did we in our of in and at to host come we price back said as increases price look mid-year

of think, Colorado a on some tight I to be that. watching really, driver this going Look, mid-year market we see is of tight be how well think are markets get these some I to year. closer as may the to

We'll in think may because midpoint far you to Southeast may respects put have of shift that producers likely of tight do area off pricing tight think to of year. going again, what in a markets to more itself. means Texas. year relative you're I on to while other spots that going and about see in have steady host cement Texas some so state I'm good, for a that to One of many see the been and and be to I in some cement. going is those is But hustle a this cement respects, ground. this I on this to portions talk stone see to the year, that bit, be Phil, activity tightness just particular, do relative to think some markets have in a

think lead us increases, to talk will we that next I our on mid-year reflective during call. that more and price certainly will about be

Philip Ng

to cement. forward? how from Thanks. offset inflation came just of are you just And final But need pricing? Margins a business. operating that going it. Got is noticeable any question seeing And obviously leverage on you standpoint. going with Part wanted color headwinds mindful down. that that that of the just Are some an we maybe be to

C. Howard Nye

that really We're seeing that's business. not inflation notable affecting

have the us for this us. going It that quarter forward and As issue lets was outage a costs longer had I is had we clinker commentary, year February and past. actually several was does wet, had energy cooler that said we the lets in our biggest the we in things in going maintenance lower us lower forward. that We underway a project costs than

we cement in So a believe be inflation I go into of this opposed be think will think Texas, those attractive as so year the cement. of volume and lack are continue abate actually we we to clearly fly and ash while shortages to is in and And think other abated were any we going operating year, will Again, that to tight. in just fully will our volumes seen were a be the Texas, to degree we leverage, seeing it that down is in you a that help QX, pretty we've what certainly factors as think not in lot business. a longer significant

Philip Ng

guys. Thanks a lot,

C. Howard Nye

Thank you, Phil.

Operator

Our next with question Barclays. comes from Adam Seiden

Adam Seiden

Thanks, guys, for taking my question.

Just – guys aggregates demand thank the that the helpful slide you across that you also showed I for guess, cycle. had first

importantly, largest Texas, the and expectations, wondering could of could then just was mid-cycle last that how some I with And bottlenecks I what particularly seeing your versus prevent you of more states, those being around the guess, that have comment Carolina? compared, I some year North if So recognized? Colorado, from or potentially on that guess, some would particularly come those of of volumes higher-cycle up are some

C. Howard Nye

from for to it take question. revenue. sustainable Texas, perspective, thanks of in try hit a level right I cycle order Adam, think your I'll pretty now. has Look, a

like But it. But is they as healthy clearly history, to potential mid-cycle of relative because above Texas in go think least looked if we to the were ahead I don't that. mid-cycle what least, doubt where relatively look at back I has a it's Texas, growth I state. were back in to look, way they at at, cycle in mid-cycle, several make the like going not a years. to that next me go great when confidence and we those is the of drivers deal just continue population have now at to looked for but the be that Texas what marketplace

look next nice, three you what for year relative PCA cement growth saying two projecting the not that growth Texas, marketplace. years, but If steady PCA at to this just and in is is in

reserve mid-cycle volumes has for a for watching that a been been pretty Now, is a are market spectacular below Colorado hit in us state significantly. spectacular Colorado And that depletion still has at us. market deposits

in long-haul things well-positioned, Population Northern than still marketplace Wyoming very, to marketplace. anyone one corporate And is considerably past that Now, oddly make that our that in aggregate be we strong. average. exceptionally we've continue specifically sure very Colorado from keep else enough, can trends I continue better transportations, the is, to into mentioned sector in of to below the positioned submit state in in through that pricing Denver coming the mind, are in serve we would

fact state is, high part growth going We state, be the and of way has in depletion that that good. good. think is continues that's given indicated We we've that what So to scenarios a nice forward. residential still a public be seeing you're population very believe to

seeing Bluegrass. us. acquisition both profit important And, at is perspective that profitability are of states with us, at Georgia despite looking like that obviously, referenced, of we're look As and from important XX% states, Carolina the the that and those those the like those mean, below gross other the a looking we I mid-cycle. We you we're states states, slide slide on both disproportionately of of even you important are to becoming that XX, at North and in fact what Georgia, to are more

you chart we have, So those delighted trends the are of go the look again, Georgia we're presence excited if the both particularly that. positions the doing in core that at we that Atlanta in about reveals Iowa, to are North some that if today. single one what over footprint back and what and and near-term, we're very with have, other have we population Again, projections long-term, of states medium-term Carolina in increased certainly our stable of and the states we in our states most and

are be all attractive are works, have and Florida, where like of the our South at to us looking on Carolina, respect they relative and population to medium-, they've position with the those to are places feel friend Maryland, in they Adam. what a But, Indiana they're will mid-cycle. and but mid-cycle, with again, done continue gas long-term, states very states type like what public grow in rank, what in fiscal to but at their and those the near-, we doing, they are and for we health certainly footprint doing tax,

Adam Seiden

bit. And a That's remarks, around helpful. which have you spoke Thank then the but in little about this a been quite prepared you. also logistics, bit constrained

particularly Texas And (XX:XX) the in talked up, also than it a in about starts you guess Dallas Georgia. so bit step rail seen area. I little You've Houston in more

clearing how there's if same we're some sight you seeing in that or spot? could the or type those? logistical guys what today, line of of around up wondering issues of And So to impact these can potentially to place put some in get a of measures

C. Howard Nye

rail. did Look, fair a and a relative QX more one. what see or from that's a to was impact good what the happening, point, not question was perfectly We happening to

us primary at were times. cars that we're the performance cost the If saw three drivers. West load And Group, it Southeast in around the at in we issues I XXX,XXX looking XXX,XXX trains, increase held, mean, tons. if we're longer increased Group, and us were tons. it those delays So looking about cost the

X,XXX They're expected Transportation to BNSF believe, requested were Now those part actually number. happened Southern on X March similar X,XXX people said you of to to going very too they what XXXX. more in to UP that Board the issues. And company-wide Surface hired in we hire, them on the if entail, actually, responses how last an address what hire at some XXXX. around X,XXX outlook these around looking they railroads employees XX, looking year. a is, Class of is Norfolk give at look

It's quick than answer your it QX. Here's already in the was better to question.

of in rail with better? of better? going we're months? getting positioned quantum back perhaps is we the because material We sure So, the that move regard. it hope so. the that to again, sheer seen this and in quo to progress notable we one make of and have railroads than most been by grateful in the Do minimized it is working that And getting efforts we're better very work Yes. status be several Yes. to-date feel at we like has for certainly Is that to their railroads with measurably every

Adam Seiden

Appreciate that. Ward. Thanks,

C. Howard Nye

You bet, Adam.

Operator

comes question Jerry next Goldman from Revich, Sachs. Our

Jerry Revich

could wondering EBITDA Bluegrass? I'm could Good Jim, of morning, so true I'm sales Ward, the moving of about incremental there the Hi. there, pieces if Yes. maybe assuming in you that revision, that million, guidance profile $XXX you flesh talk but other Is margin. margin of raise the XX% implies us. Suzanne. for $XX million, are raise out that so

James A. J. Nickolas

Yeah. Jerry, it's Jim.

Ward I the are that's there mean, other bridge. through pieces of correct. kind directionally moving walked there. So in

you're it. and directionally of pretty close takes some are there, to divestitures those in there with kinds So things but and puts

Jerry Revich

Good.

just over clear, In XX%? profile to so, the terms of of Bluegrass EBITDA is Jim, business the margin be

James A. J. Nickolas

Yes.

Jerry Revich

Okay.

Okay. And the Martin as the folks the getting are the opportunities what to you better then, talk has the opportunity an practices on as Bluegrass operations you you similar know you're get are you the for to on the folks implement side seeing you as close? undertaken. folks are Can operations and largest Marietta post deal side? as any this Anything seeing know had mentioned, that to there about, operators, is company

C. Howard Nye

for the it's one, the question. Number largest thanks a second of couple done. Jerry, things. guess, we've I ever

or still ribbon has TXI the the So, being largest.

largest. business, Friday. I second year Obviously, closed you've when is, they Martin Martin past scales, we heard integrating morning has is So we're of us a front. What be will the integration this last tell is gone over process on our by you the the saying a see sign we what a Marietta when should close a Monday ticket. this exceptionally should Part out trucks can They on Friday, Marietta stone go if getting well.

been we trained employees and and integrated, in large have Our business have part where that's will that are. been exactly will

we're what seeing. Here's

an efficiencies on group here. Martin of what them. be to Marietta. in brought they're delighted in have have We transaction delighted be employees. to We're There this from will incredibly and come tell, will From we legacy talented both clearly that Bluegrass heritage can

arrogance been with One that of has historically we we what do make that the going of the the is to transaction called don't sure acquirer. things a to try

it, Marietta, like have I that this activities the Martin we than in time. absolutely of we positively same we feel different have about what other will direction. three is and So, Marietta like in that Part in if divisions better on we things likewise are they're the been integration we doing doing of at adopt what going historically transaction find Martin

Mid-Atlantic that that all cross-section Division, and through and to process we a of Mideast communication we Division I these Southeast the the like operations. great have reason get a going exposure is integration. we So of Division, have The the

one we presence very all divisions, talent have are again, of much. districts like division those involved, and we experienced overseeing So each the very the who

enthusiastically a felt already Jerry. when we than nine ago months actually today enthusiastic announced transaction more it, here we today we sit it received So about about what very was

Jerry Revich

of XXXX. where And highlight And the are constraints see if if come we realize you're talk across if of the lots industries can result you pricing wondering as to a if think so, supply it, you possible, the rail through a you regions up. willing service could be get that as constraints, might opine. better if of to you course folks I'm seeing of issues, number an about opportunity

C. Howard Nye

tightness be Yeah. There see certainly could because of you some that if end up can that, you varying areas opportunity. degrees with that of

stone-oriented. of going If at opposed going you a business practical Midwest, to ballast-oriented long-haul in that's long-haul be principally commercial more parts our way the some matter. the to some it's works, Jerry, company, There's be the look as in to

with that Could markets. course those in that certainly Yes. be country could of answer potentially will factors different of, year. varying Georgia? at South Could sizes, mind, have today what markets pricing, But of will in experience shortages be you're stone be out yes into there and keep plays you're be of could that could be be portions portions it well. But, will we'll the during happen different by parts again, the I said it calculated be that supply that potentially may The to actually the Texas? demand degrees have in be. of as that portions of South it question Florida? it and if could is Yeah, to see speaking looking impacted the So, what how of

Jerry Revich

the acquisition for the on biggest you Well, much, very you correction right. All one. and Okay. and this thank second thank closing congratulations on

C. Howard Nye

Nicely you, noted. Jerry. Thank

Operator

from Tanners question of with next comes Merrill Our Bank America Timna Lynch.

Timna Beth Tanners

Good guys. Hey. morning,

C. Howard Nye

Hi, Timna.

Timna Beth Tanners

a if time. metric within a buybacks? the Wanted talk period pretty about get M&A pipeline I as see seems little little about of think to bit to you do cash. achievable a you your debt you on ask to returning big a if as more bit what targets comments uses to short it? did could transaction of circumstances pretty but the you said, elaborate just about could Under you you And know

wanted just thoughts latest So, your on cash use. get to

C. Howard Nye

Yeah. Timna, well, first for your of thank question. all, you

prepared where at ratio closed what remarks, our is, at end quarter. a EBITDA if it you of the point on you, shortly Jim as some we look was large debt that, to noted. we his after transaction, Obviously, at Secondly, in gave the

end year, EBITDA go to is us to like heard you've be a through that is of at ratio what in a about to where we debt be Part going X be Our times. think to cycle, to down times through as the to times. of we going look of X.X we now it's say X.X about range think X by cycle. we'd we Timna, that's If the

do business, through transaction at look back we're of what you to cash eight that off say if changed. by at would targeted months, into taken in the the generation is thrown history ratio. literally, you our capital I'm others I within what billion that's and, they second So EBITDA priorities being this, debt you to largest haven't is the are, and company's What $X.XXX a

priorities thing right any making the most We're also transaction, transaction. sure And do for shareholders, capital is our we the think the prudently. right not the right business that doing transaction. value-accretive the can what's transaction are we're Our we to that investing in sensitive

our doing So, what year Again, $X.X from year into saying. investing number not CapEx came in we're the changed part is has what business. billion of that into this nearly we

need to. pull can on one Now, that thing will note, if back Timna, is we I we CapEx

very shares our companies years steadily dividend the a the I is never through been buying making think So that's decision. have not of cut dividend. company, a in next seen we you've one that Keep we dividend think space, if the us sure up. And to only in the we're mind, what prudently. might last we're sustainable is that's board Again, And its shareholders. of things, and that back. the who And downturn only cash take through do two investing returning couple

be board Our at looking August. in will that again

and they the exactly So, on business changed are, from spent de-levers what perspective is in and capital views policies not your our right. other how have quickly

Timna Beth Tanners

more do last cycle big as acquisitions, mid-innings, at the the we kind apt not of a past, mind, Okay. less think were your that earlier of in were wouldn't how about I pretty if that any the you cycle? of the If, you we're you've if more, for about or you're in ones to top we're given Yeah. you pipeline middle the M&A this said timing comments in looking innings, it, and in cycle. bit little mean was on the does good

C. Howard Nye

would would I be transactions. more I do there what Timna, say, Yeah. expect I guess is

transactions, something be year candidly, a markets. this you're of more That's you of smaller, you'll year that's If this see fairly we to year year, last year. like not portion think going I what My we year that a and, to said that's more you're had last back it where to expect would would through and is traditional likely said it expect see of bolt-on next I might think a see that's what we've sense what what large year. more see I good was. in discrete felt acquisitions see to to even And

good So, here I'm looking a certainly I'm right there's it, if now. at number sitting underway measuring conversations just are the of way that that

the certainly So, in that and are owners transactions I'm of large But, future. the at. and appropriate seeing look immediate others and intend thoughtful time, At again, not interested measured in transactions businesses to in dialogues. the we be same we

Timna Beth Tanners

on Got past cobalt you. was helpful. Thank a contribution the the Magnesia by on interest wouldn't I then mining. steel comments the that you've mind, question are piqued tariffs And positive. segment. That's to actually last My in if Specialties the net your said you you. know And

C. Howard Nye

Yeah.

Timna Beth Tanners

think about there? on – that outlook you segment least growing? It at seems exciting buzzword-wise, a are little are those you Can like the Is this pretty a more bit those elaborate opportunities.

C. Howard Nye

of higher at of do to are opportunities. that look And They continue is exciting part what allowed for us. business to it's us portions margin

to really different together Timna. you business, is, If that what about it's that that things come two form business very think

uses Manistee, got has and to product that the has you've You've States, on the Michigan got that operation a a a in capacity a worldwide Woodville, also but to plant lime serve industrial capacity chemical basis. dolomitic serve that's United making a in in Ohio

through has questions see what of Midwest been business, One will at you, one look of that continue that if find we of capacity, been business grow of the ago while the I steady through to business remarkably on the has and to too, our ways one biggest steady we a to issues cycles. will all tell can business. way But cycles. is that This how is has referenced part little we

business little first, is this a and that the look we margins do harm. and tremendous is, management at has business no we you like that do Hippocratic that Oath, This that a So bit team certainly it, And can are that got capacity like very proud only would it. there the that we've management the team of. not do to, a grow extent has to to we we

you to probably anyway. quick that's That on I'm the give take not that you today, but Timna. wish, that not give So, may granularity my you that, all going

Timna Beth Tanners

anyway. Thank Thanks a you, lot.

C. Howard Nye

you, Thank Timna.

Operator

Citi. from Schrier Our with Scott next question comes

Scott Schrier

Good Hi. morning.

C. Howard Nye

Good morning, Scott.

Scott Schrier

maybe what should limited could appears private see I'm pricing. you're you more of well you're can little there a and geographical How constraints, wanted bit public talk I about Obviously, you've Maryland to and you number there. have that if seeing it for added from so perspective. there environment a state competitors, a now trends bode to about in thinking if the the the Bluegrass? talk about curious which demands

C. Howard Nye

No, very absolutely. Maryland. we're proud Look, of a leading having in now position

state SOAR, did we which If said that in our to one you have two Maryland. the back changes position going to position there. not we Today, them. XX% say. version while, for barriers we business, of or go of community think Strategic that because strategic rolled two in of always we two we about eight XX% Number of XXXX over that's any would environmental markets Bay that. characterize was one the Operating have our markets, Several entry, that our areas if Chesapeake last in we borders position first And a of sensitive have when least had transaction in and or out things a Analysis you're relatively a or the one, Review, is one a to Scott, going we what one high have that years I this clearly in plan, way our the long-term pretty at our and our

community Baltimore-Washington around lives corridor of are worth into Northeast projects to we and that perspective, of Hogan's as Megaregion. there have or billion a you move into a the that proposal in You up anticipated also state From large types D.C. community have in that either needs into Bluegrass. expansion and farther simply large who of the Governor we PX went the interstate projects our come $X

the of So, state attractive is a particularly business, public funding be One, And attractive think state, as that going attractive. will think to while. we on we things. PX be to we it, look period. to both several Maryland think at we for side an and traditional that Number a very using and make two, the Maryland's it's going continue way think we

happy from with now So, that. we states where we're where we're being be, one on continues to for XX% that sitting, And our are big mid-cycle Maryland and cycle, call earlier relative let's XX%-plus the one looking the demand. below it, too, you'll number state at of nine when from recall, of states, us, really or to slide midpoint Maryland were the below very

time. we helpful. good color good Maryland like So around we've the some But gives that business a you I in feel is acquired that at areas hope right

Scott Schrier

Georgia course that there's back the operations, of the then and mind, the expect from business. in comments already those margins and to incremental with XX% and curious I'm And margins you Yes. EBITDA high

margin currently, from the of realize years? geographics, and opportunity of next business XX% this to pricing out the the is don't below some Bluegrass couple difference markets see throw I to such. I to, these So you it's be XX% we But from or see potentially in something from pricing. to know, even going XX% average a there, XX% just in EBITDA of accelerate where the long-haul because dynamics that's over do explained start Maryland, to higher going corporate you

C. Howard Nye

that faced be out how environment. I we model evolving think economic its you very and environment. to to to which on depleting leave growth, And with, that. entry, I'll regions won't to want to have hate as of will what we good and barriers an position happen which type to has, own reserves, you it high Maryland I I typically speak Maryland I Again, which think will pricing. or creates economic Maryland specific population an know, leading up has, a to form you mean, in sort think of And

Scott Schrier

me. Got one it. more for And

On do Or see dynamics in given shipments better ramp continue curious, see a that even some Texas in you pricing, in dynamics to will to up? believe these mentioned underlying competitive demand as Texas? we strong I'm of a trajectory in such were the fundamentals, competitive path place, I the and

C. Howard Nye

exceeded side has be at we over to clearly state in years, upwardly a pricing what the has look because Texas corporate the going last It's that aggregates the interesting, aggregates that done in if average. actually several fashion has moved in on pricing in

historically value being that cement, us. I see during a market what sure we're tight how to will dealing last places that want As corporate I position to I If good I Again, be Worth like be actually of we responsive how in the be plays being overall I what It'll res tightness strong, we're cement to years, end think to where where Again, demographics, average. resource Particularly we'll that you're that circumstance Worth, this have for seen. be look that's product, in a selling state. our San on several Dallas-Fort where population curious and at to continues getting market indicated year before, the important Houston, Dallas-Fort with goes the responsible that's at think and in and course I diminishing and because could in marketplace marketplace, pricing marketplace like over and a we you've for stone look got of may a making I've non-res as and around sure be the I still infrastructure Antonio relative for spend, make out with do see XX% that I very the going have through year. there. that our up attractive think

Scott Schrier

Thanks a on appreciate luck. color lot, questions. I the these Ward. all Good

C. Howard Nye

you. Thank

care. take You

Operator

Craig comes from Securities. with question next CJS Bibb Our

Craig Bibb

volume volume is At morning. weather Ward, the ag very present, Good running much? when about how helpful comments daily average volume, about good, Hi. is in average thanks daily up QX. for

C. Howard Nye

I you and accurate go do quarter, that what you into aren't. do the will months that into do because try is ever if at read are not then again, things it don't Craig, to outside times or oftentimes it, people

North you been. what much the of probably snapshot But it's the good, look, about to forecast are has beautiful when as the And it I'm a how trying day it's around. did weather been good. can just is as But at try next to give up when saying, could stick the shipments a is one Carolina. and in what tell look do drive-by I'll of with by rolls quarter. I to the you come you a I So

Craig Bibb

year And Okay. Great. on hinges then, of coming this kind infrastructure back.

You're talk like the you off for confidence to weak about year? cetera, due metrics, first the in quarter. backlog, weather Can that a you give to start of the internal et remainder

C. Howard Nye

divisions, about our on in with that teams month. the but also different Yeah. We reforecast forecast districts and are And not customers. these good with quarries our ground conversations, have every we or just or

look tell what that in richest they think our presidents customers We from have their there our have time. had you their can largest customer one largest like of they're several in events on I And with I with they've our perspective April. and division them. and feeling I backlogs like, backlogs visit long a days the spend

if that have a most seeing have being year. confidence are programs for mind, trifecta are this been us. and to I again, And great and states that high NCDOT, customers as again, have keep are we're up dollars as we when these from optimism numbers see are in DOTs seen. I And given for and are DOTs our local customers aggressive we we as think for up in out, are that believe the of seeing, And the it last from of when the our way our amped spot we in us, off the see infrastructure's what attractive us has some amped have promise would year. the our those TxDOT that very at being different have some dialogue customers FAST we're I they getting and historically in as confident of when particular feeling good, and and important we several types and work through, number have that's two, DOTs of certainly years, and we of and think perspective, look degree there, what I And state that we're been improves hearing starting programs, holds Act that to coming a outlook. the

Craig Bibb

and then, whether it that seeing seems through And What's Okay. price? have and competitive with always the there's in see some dynamic, we it share. in capacity some to change that, then tight of going come imports of getting actually cusp like and price the a tight trying acceleration, competitors take it's that on could now change dynamic or to it's maybe

C. Howard Nye

did cement Well, a really today things. bit supply does. relative their anything Does what's a program, what their it ash Texas? $X over marketplace. going several tighter? a letting bit ramping or in else fly in we've corner housing Does billion, staying has. make bit been think, to into that about up of make It It back tighter strong is budget It a One, cement And being in than does. I that more on TxDOT tighter? make market talking

this going mean, think to new North South market, in frankly, Caney. Texas a mentioned believe New cement opened we've is And, look host right we the Texas be So that it of Texas a out. that is terminal earlier at we I I one in pretty of as now, are we just calls, there year. healthy at sold reasons

some have outlets we've this to opposed past. different had year, we as outlets So in years

So volumes it's more a we think, to as south, attractive the central sheer we and, this year in at in year. a degree, the north, look both just

Craig Bibb

just income then, that? the Two-thirds What pre-tax of of was And quarter housekeeping other questions. your a Okay. in couple was income. quick

C. Howard Nye

about $X.X you're other income, at the If I we're million. looking think looking probably at

Craig Bibb

Right.

C. Howard Nye

About of billion that's on $X worth of of $X.X borrowing, income the was that million interest and the it. or the biggest piece

The other investments. on equity was just income

Craig Bibb

didn't looked was add-backs. it like number. the in it I see Okay. left EBITDA And in then, that adjusted your

So...

C. Howard Nye

sure. not just back take we'll to offline. have Yeah. Craig, I'm and that go

Craig Bibb

Okay. Anyway, yeah, again, thanks a lot.

C. Howard Nye

Okay.

Operator

next Our Longbow Garik from question with comes Research. Shmois

Jeffrey Stevenson

of geographic the Jeff just year into over I aggregates expect Garick. the you that Hey. and had in on This is question wondered and pricing, the evolve how Stevenson impact for mix a XXXX? rest for

C. Howard Nye

question. we had to to No, I'll appreciate the those probably geographic, were XX of Sure. about both what opposed geographic product bps. it the for couple both the at impact two A at then you. mix lenses was, and look a product to look try adjustment, the about XX I look relative If tailwinds. fuse and them things. together product look, and bps impact of impact and and headwinds at those probably And impact as through

XXX which a basis pricing, of gives points So, about ton $X.XX headwind relative you headwind. really per cumulatively, to about

assuming early price end, had at low the if within pricing but the in even been, year, would us albeit the would would about on in X.X%, growth year the be year. of same mix host have thought increases. have what And would So, what that on of have the we within, the ASP full look prior X we of the a April been X.X%, it had again, ahead for range we that

at we with it guidance through look when put that the very we've out. that So, lens, we comfortable feel

Jeffrey Stevenson

if Okay. quick out in you Last Great. what in seeing? of being what And door. out? color the had on kind wondering Georgia. seeing just projects market? more Are the let in delays I had just And you're getting had additional And on increase you're any question projects DOT the any year, some a

C. Howard Nye

year FAST ago. little the That look more bit even unusual in XX rhythm that was that. the system. dollars not $XXX you is on and type months, XX, years to seeing longer get And Act, the of cadence at sometimes actually to public. two time, those trail a what's was through on an is the like is and market with of Remember, effectively the doubled feel private We XXX, this couple Georgia healthy went as budget, Georgia they they going DOT adding both House issues ago of a into Bill incremental million referred where their years one spend, be faced to if that of

to So, and very be we new position, year. private, again, North we attractive benefit feel that. public like be think particularly is augmented our Georgia, from this will Georgia, in situated to well both And going

Jeffrey Stevenson

Ward. Thanks, Okay.

C. Howard Nye

Thank you.

Operator

not over showing back this our call any to the And turn like I'm I'd hosts. at questions time. further to

C. Howard Nye

organization, and joining leader to globally our earnings disciplined quarter focused again, plan, by Thank core discussing recognized deliver for our in call. We to Take our results allowing support XXXX value you remain to with aggregates July. to our industry care. us time thank Martin we an we conference second strategic elevating execution Marietta. you, forward of look you your enhanced your commitment and then, quarter a XXXX first Martin of a shareholders. continued Until Guided our to for values world-class on Marietta from

Operator

conclude Ladies this does today's gentlemen, and presentation.

day. wonderful a have and disconnect now may You

Martin Marietta Materials (MLM) 8 May 182018 Q1 Earnings call transcript