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Martin Marietta (MLM) Misses Q4 Earnings, Beats Revenues

Martin Marietta Materials, Inc.'sMLM fourth-quarter 2016 adjusted earnings per share of $1.55 missed the Zacks Consensus Estimate of $1.65 by 6.1%. However, earnings rose 23% from the prior-year quarter.

Despite improving economic conditions, cost management and enhanced operational efficiency, the company has been facing constrained construction activity in its markets. Specifically, Martin Marietta continues to face delays in Texas Department of Transportation projects, decline in railroad ballast shipments, abnormally wet weather conditions and a slower energy-related marketplace and the impact of hurricane Matthew.

Net sales of $889.0 billion surpassed the Zacks Consensus Estimate of $887.61 million by 0.2% but increased 13.9% year over year.

Total revenue (including freight and delivery) was $948.8 million, up 12.3% from the year-ago quarter. Freight and delivery revenues were $59.8 million, down 6.3% year over year.

Segment Discussion

The Aggregates segment produces, processes and sells aggregates like crushed stone, sand and gravel. The segment also includes Martin Marietta's vertically-integrated operations, i.e., asphalt products, ready mixed concrete and road paving construction services.

Aggregates business' net sales (including vertically-integrated operations) grew 16.1% to $777.4 million on the back of strong volume and margins.

Shipments (volume) in the aggregates product line increased 0.4%. Geographically, Mid-America Group reported the highest increase in aggregate volume of 4.9% during the quarter, whereas the Southeast and West groups reported a decline in volume by 2.5% and 3.6%, respectively.

Aggregates business' gross margin (excluding freight and delivery revenues) of 22.6% increased 160 basis points (bps).

The Cement segment was formed after the TXI acquisition in Jul 2014. Martin Marietta divested its California cement business, which had been acquired from TXI in 2015. The segment recorded net sales of $85.4 million in the quarter, reflecting a 2.2% increase.

Shipments were impacted by delays in the department of transportation projects and slower activity in the south Texas markets.

Revenues at the Magnesia Specialties segment, which includes magnesium oxide, magnesium hydroxide and dolomite lime products, increased 16.5% year over year to $59.4 million.

Margins Rise

Total adjusted gross margin (excluding freight and delivery revenues) increased 160 bps to 25.3%.016 Results

Martin Marietta's adjusted earnings of $6.63 per share in 2016 increased 54.5%. The company's net sales of $3.57 billion grew 9.4% year over year.

2017 Guidance

The company is encouraged by the positive trends in the markets it serves and its ability to execute strategic business plans.

Net sales are expected in the band of $3.57 billion to $3.95 billion.

Aggregates business' net sales (excluding downstream business) are expected in the range of $1.32-$1.40 billion. Aggregates product line volume is expected to increase in the range of 4-5.5%.

Non-residential market is expected to increase in a low to mid-single digit range. The residential market is expected to grow in mid to high-single digit range. Meanwhile, the ChemRock/Rail market volumes are likely to remain stable.

Sales at the Magnesia Specialties Products segment are projected between $235 million and $240 million. Cement sales are expected in the band of $380 million to $400 million. SG&A expenses are estimated in the range of $255 million to $265 million.

Cement net sales is expected in the $380 million to $400 million range.

Financials

Martin Marietta ended the quarter with cash and cash equivalents of $50 million, as of Dec 31, 2016, compared with $168.4 million as of Dec 31, 2015.

In the fourth quarter, the company repurchased 344,300 shares, returning $69.2 million to shareholders.

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

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

Zacks Rank & Peer Releases

Martin Marietta carries a Zacks Rank #3 (Hold).You can see the complete list of today's Zacks #1 Rank stocks here.

D.R. Horton, Inc. DHI exhibited an impressive performance in the first quarter of fiscal 2017, with earnings and revenues beating the Zacks Consensus Estimate by 17% and 6.8%, respectively.

Vulcan Materials Company's VMC fourth-quarter 2016 adjusted earnings and total revenue missed the Zacks Consensus Estimate by 16.9% by 4.6%, respectively.

Upcoming Release

Toll Brothers Inc. TOL is expected to release its quarterly numbers on Feb 22, before the opening bell.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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