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| MLM > SEC Filings for MLM > Form 10-Q on 5-May-2009 | All Recent SEC Filings |
5-May-2009
Quarterly Report
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2009
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2009
(Continued)
Gross Margin in Accordance with GAAP
Three Months Ended
March 31,
2009 2008
Gross profit $ 48,477 $ 75,148
Total revenues $ 375,063 $ 451,559
Gross margin 12.9 % 16.6 %
Gross Margin Excluding Freight and Delivery Revenues
Three Months Ended
March 31,
2009 2008
Gross profit $ 48,477 $ 75,148
Total revenues $ 375,063 $ 451,559
Less: Freight and delivery revenues (44,719 ) (55,266 )
Net sales $ 330,344 $ 396,293
Gross margin excluding freight and delivery revenues 14.7 % 19.0 %
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Operating Margin in Accordance with GAAP
Three Months Ended
March 31,
2009 2008
Earnings from operations $ 10,891 $ 42,860
Total revenues $ 375,063 $ 451,559
Operating margin 2.9 % 9.5 %
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2009
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2009
(Continued)
Operating Margin Excluding Freight and Delivery Revenues
Three Months Ended
March 31,
2009 2008
Earnings from operations $ 10,891 $ 42,860
Total revenues $ 375,063 $ 451,559
Less: Freight and delivery revenues (44,719 ) (55,266 )
Net sales $ 330,344 $ 396,293
Operating margin excluding freight and delivery revenues 3.3 % 10.8 %
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Operating margin excluding freight and delivery revenues and excluding nonrecurring gains on sales of assets for the quarter ended March 31, 2008 is a non-GAAP measure. The following reconciles operating margin excluding freight and delivery revenues and excluding nonrecurring gains on sales of assets to operating margin excluding freight and delivery revenues for the quarter ended March 31, 2008.
Three Months Ended
March 31, 2008
Earnings from operations $ 42,860
Less: Gains on sales of assets (5,465 )
Earnings from operations excluding gains on sales of assets $ 37,395
Total revenues $ 451,559
Less: Freight and delivery revenues (55,266 )
Net sales $ 396,293
Operating margin excluding freight and delivery revenues and excluding
gains on sales of assets 9.4 %
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• Earnings from operations of $10.9 million compared with $42.9 million in 2008
• Loss per diluted share of $0.14, compared with earnings per diluted share of $0.50 for the prior-year quarter
• Heritage aggregates product line pricing up 3.5% and volume down 21.1%
• Diesel expense down $13.6 million, or 58%, compared with the prior-year quarter
• Selling, general and administrative expenses down compared with the prior-year quarter, offsetting $1.8 million of increased pension costs
• Strengthened financial flexibility through issuance of 3.1 million shares of common stock for $233 million
• Secured new bank financing in advance of April 2010 debt maturity
The following table presents net sales, gross profit, selling, general and
administrative expenses and earnings (loss) from operations data for the
Corporation and its reportable segments for the three months ended March 31,
2009 and 2008. In each case, the data is stated as a percentage of net sales of
the Corporation or the relevant segment, as the case may be.
Earnings from operations include research and development expense and other
operating income and expenses, net. Research and development expense for the
Corporation was $0.1 million and $0.2 million for the quarters ended March 31,
2009 and 2008, respectively. Consolidated other operating income and expenses,
net, was expense of $0.3 million and income of $5.6 million for the quarters
ended March 31, 2009 and 2008, respectively.
Three Months Ended March 31,
2009 2008
% of % of
Amount Net Sales Amount Net Sales
(Dollars in Thousands)
Net sales:
Mideast Group $ 82,040 $ 118,674
Southeast Group 95,604 103,052
West Group 119,544 131,670
Total Aggregates Business 297,188 100.0 353,396 100.0
Specialty Products 33,156 100.0 42,897 100.0
Total $ 330,344 100.0 $ 396,293 100.0
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2009
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2009
(Continued)
Three Months Ended March 31,
2009 2008
% of % of
Amount Net Sales Amount Net Sales
(Dollars in Thousands)
Gross profit:
Mideast Group $ 15,969 $ 37,403
Southeast Group 14,853 15,949
West Group 10,748 12,042
Total Aggregates Business 41,570 14.0 65,394 18.5
Specialty Products 8,674 26.2 11,748 27.4
Corporate (1,767 ) - (1,994 ) -
Total $ 48,477 14.7 $ 75,148 19.0
Selling, general & administrative expenses:
Mideast Group $ 11,142 $ 11,318
Southeast Group 6,521 6,510
West Group 10,693 11,294
Total Aggregates Business 28,356 9.5 29,122 8.2
Specialty Products 2,354 7.1 2,518 5.9
Corporate 6,447 - 6,056 -
Total $ 37,157 11.2 $ 37,696 9.5
Earnings (Loss) from operations:
Mideast Group $ 5,155 $ 32,104
Southeast Group 8,141 9,553
West Group 52 1,720
Total Aggregates Business 13,348 4.5 43,377 12.3
Specialty Products 6,342 19.1 9,078 21.2
Corporate (8,799 ) - (9,595 ) -
Total $ 10,891 3.3 $ 42,860 10.8
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Historically, due to the seasonality of the Aggregates business, the first quarter is the Corporation's weakest since aggregates shipments and profitability are lowest and most volatile during this period. Further, the Corporation's performance was affected this year by the recession and unusually cold, wet weather throughout the southern United States. The Corporation mitigated the impact of declining aggregates volumes by maintaining its focus on cost management, thereby continuing to generate operating earnings.
Three Months Ended
March 31, 2009
Volume Pricing
Volume/Pricing Variance (1)
Heritage Aggregates Product Line (2):
Mideast Group (31.4 %) 0.7 %
Southeast Group (17.8 %) 5.3 %
West Group (15.9 %) 7.6 %
Heritage Aggregates Operations (21.1 %) 3.5 %
Aggregates Product Line (3) (20.2 %) 3.7 %
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2009
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2009
(Continued)
Three Months Ended
March 31,
2009 2008
(tons in thousands)
Shipments
Heritage Aggregates Product Line (2):
Mideast Group 6,681 9,740
Southeast Group 7,427 9,039
West Group 11,749 13,974
Heritage Aggregates Operations 25,857 32,753
Acquisitions 534 -
Divestitures(4) 9 313
Aggregates Product Line (3) 26,400 33,066
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(1) Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.
(2) Heritage Aggregates Product Line excludes volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and divestitures.
(3) Aggregates Product Line includes all acquisitions from the date of acquisition and divestitures through the date of disposal.
(4) Divestitures include the tons related to divested aggregates product line operations up to the date of divestiture.
The Aggregates business is significantly affected by seasonal changes and other weather-related conditions. Aggregates production and shipment levels coincide with general construction activity levels, most of which occurs in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Operations concentrated in the northern United States generally experience more severe winter weather conditions than operations in the Southeast and Southwest. Excessive rainfall, and conversely excessive drought, can also jeopardize shipments, production and profitability. Because of the potentially significant impact of weather on the Corporation's operations, first quarter results are not indicative of expected performance for other interim periods or the full year. Specialty Products' net sales were $33.2 million for the first quarter 2009 compared with $42.9 million for the prior-year period. The decrease in net sales is due to reduced dolomitic lime shipments to the steel industry and slowing magnesia chemicals sales. Price increases, coupled with cost control, helped mitigate the decline in volumes. Earnings from operations for the quarter of $6.3 million decreased $2.8 million compared with the prior-year quarter.
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2009
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2009
(Continued)
The Corporation's gross margin excluding freight and delivery revenues for the
quarter ended March 31 decreased 430 basis points to 14.7% in 2009. The
following presents a rollforward of the Corporation's gross profit (dollars in
thousands):
Consolidated gross profit, quarter ended March 31, 2008 $ 75,148
Aggregates Business:
Pricing strength 9,221
Volume weakness (65,430 )
Cost decreases, net 32,385
Decrease in Aggregates Business gross profit (23,824 )
Specialty Products (3,074 )
Corporate 227
Decrease in consolidated gross profit (26,671 )
Consolidated gross profit, quarter ended March 31, 2009 $ 48,477
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Selling, general and administrative expenses declined $0.5 million during the
quarter ended March 31, 2009, with other savings offsetting a $1.8 million
increase in pension expense. The Corporation's objective continues to be to
reduce selling, general and administrative spending after absorbing pension
expense increases.
Among other items, other operating income and expenses, net, includes gains and
losses on the sale of assets; gains and losses related to certain accounts
receivable; rental, royalty and services income; and the accretion and
depreciation expenses related to Statement of Financial Accounting Standards
No. 143, Accounting for Asset Retirement Obligations. For the first quarter,
consolidated other operating income and expenses, net, was an expense of
$0.3 million in 2009 compared with income of $5.6 million in 2008. First quarter
2008 results included a $5.5 million gain on the sale of land for the Mideast
Group.
Consolidated operating margin excluding freight and delivery revenues was 3.3%
for the first quarter 2009 compared with 10.8% in the first quarter 2008. The
2009 decrease of 750 basis points as compared with 2008 is due to the lower
gross margin excluding freight and delivery revenues and lower other operating
income and expenses, net. Excluding the $5.5 million of nonrecurring gains on
asset sales during the three months ended March 31, 2008, operating margin
excluding freight and delivery revenues for first quarter 2008 would have been
9.4%.
Interest expense was $18.5 million for the first quarter 2009 as compared with
$15.8 million for the prior-year quarter. The increase primarily resulted from
interest for the 6.6% Senior Notes issued in April 2008, as well as outstanding
borrowings on the Corporation's $325 million five-year revolving credit
agreement (the "Credit Agreement").
Three Months Ended
March 31,
2009 2008
Depreciation $ 41,193 $ 37,555
Depletion 709 672
Amortization 717 695
$ 42,619 $ 38,922
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The seasonal nature of the construction aggregates business impacts quarterly
operating cash flow when compared with the year. Full year 2008 net cash
provided by operating activities was $341.7 million, compared with $76.7 million
for the first three months of 2008.
First quarter capital expenditures, exclusive of acquisitions, were
$40.3 million in 2009 and $85.4 million in 2008. Capital expenditures during the
first three months of 2008 included work on several major plant expansion and
efficiency projects. Comparable full-year capital expenditures were
$258.2 million in 2008. Full-year capital spending is expected to approximate
$185 million for 2009, excluding the Hunt Martin Materials joint venture and
acquisitions. However, 2009 capital spending could be reduced, if necessary, to
a maintenance level, defined as aggregates depreciation, depletion and
amortization.
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