mlm-10q_20200630.htm

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-12744

MARTIN MARIETTA MATERIALS, INC.

(Exact name of registrant as specified in its charter)

North Carolina		56-1848578
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2710 Wycliff Road, Raleigh, NC		27607-3033
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 919-781-4550

Former name, former address and former fiscal year, if changes since last report: None

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of each exchange on
which registered

Common Stock (Par Value $0.01)

MLM

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Class		Outstanding as of July 21, 2020
Common Stock, $0.01 par value		62,268,855

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2020

	Page
Part I. Financial Information:

Item 1. Financial Statements

Consolidated Balance Sheets – June 30, 2020 and December 31, 2019		3

Consolidated Statements of Earnings and Comprehensive Earnings – Three and Six Months Ended June 30, 2020 and 2019		4

Consolidated Statements of Cash Flows – Six Months Ended June 30, 2020 and 2019		5

Consolidated Statement of Total Equity – Three and Six Months Ended June 30, 2020 and 2019		6

Notes to Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3. Quantitative and Qualitative Disclosures About Market Risk		47

Item 4. Controls and Procedures		48

Part II. Other Information:

Item 1. Legal Proceedings		49

Item 1A. Risk Factors		49

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		50

Item 4. Mine Safety Disclosures		50

Item 6. Exhibits		51

Signatures		52

Page 2 of 52

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2020			2019
	(Dollars in Millions, Except Par Value Data)
ASSETS
Current Assets:
Cash and cash equivalents	$	70.1		$	21.0
Accounts receivable, net		690.4			573.7
Inventories, net		712.9			690.8
Other current assets		113.7			141.2
Total Current Assets		1,587.1			1,426.7

Property, plant and equipment		8,737.8			8,633.5
Allowances for depreciation, depletion and amortization		(3,577.3	)		(3,427.5	)
Net property, plant and equipment		5,160.5			5,206.0
Goodwill		2,397.5			2,396.8
Other intangibles, net		481.0			486.8
Operating lease right-of-use assets, net		468.0			481.9
Other noncurrent assets		132.5			133.4
Total Assets	$	10,226.6		$	10,131.6

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	197.2		$	229.6
Accrued salaries, benefits and payroll taxes		43.4			56.7
Accrued insurance and other taxes		58.2			63.1
Current maturities of long-term debt and short-term facilities		130.0			340.0
Operating lease liabilities		51.4			52.7
Other current liabilities		115.1			96.4
Total Current Liabilities		595.3			838.5

Long-term debt		2,624.5			2,433.6
Deferred income taxes, net		741.2			733.0
Noncurrent operating lease liabilities		420.7			433.9
Other noncurrent liabilities		351.3			339.3
Total Liabilities		4,733.0			4,778.3

Equity:
Common stock, par value $0.01 per share		0.6			0.6
Preferred stock, par value $0.01 per share		—			—
Additional paid-in capital		3,431.0			3,418.8
Accumulated other comprehensive loss		(142.2	)		(145.8	)
Retained earnings		2,201.7			2,077.2
Total Shareholders' Equity		5,491.1			5,350.8
Noncontrolling interests		2.5			2.5
Total Equity		5,493.6			5,353.3
Total Liabilities and Equity	$	10,226.6		$	10,131.6

See accompanying notes to the consolidated financial statements.

Page 3 of 52

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
	(In Millions, Except Per Share Data)
Products and services revenues	$	1,189.5		$	1,196.1		$	2,080.5		$	2,074.4
Freight revenues		81.1			83.4			148.4			144.0
Total Revenues		1,270.6			1,279.5			2,228.9			2,218.4

Cost of revenues - products and services		807.4			838.3			1,554.8			1,572.5
Cost of revenues - freight		82.7			84.3			151.2			146.1
Total Cost of Revenues		890.1			922.6			1,706.0			1,718.6

Gross Profit		380.5			356.9			522.9			499.8

Selling, general & administrative expenses		71.2			72.4			149.9			150.7
Acquisition-related expenses		0.5			—			0.8			0.2
Other operating expenses and (income), net		2.4			(1.4	)		8.0			(6.2	)
Earnings from Operations		306.4			285.9			364.2			355.1

Interest expense		31.2			33.3			61.0			66.2
Other nonoperating (income) and expenses, net		(3.8	)		13.2			(1.9	)		11.7
Earnings before income tax expense		279.0			239.4			305.1			277.2
Income tax expense		61.4			49.9			61.6			44.9
Consolidated net earnings		217.6			189.5			243.5			232.3
Less: Net earnings attributable to noncontrolling interests		—			—			—			—
Net Earnings Attributable to Martin Marietta Materials, Inc.	$	217.6		$	189.5		$	243.5		$	232.3

Consolidated Comprehensive Earnings:
Earnings attributable to Martin Marietta Materials, Inc.	$	220.8		$	192.5		$	247.1		$	238.6
Earnings attributable to noncontrolling interests		—			—			—			—
	$	220.8		$	192.5		$	247.1		$	238.6
Net Earnings Attributable to Martin Marietta Materials, Inc.
Per Common Share:
Basic attributable to common shareholders	$	3.49		$	3.02		$	3.91		$	3.71
Diluted attributable to common shareholders	$	3.49		$	3.01		$	3.90		$	3.69

Weighted-Average Common Shares Outstanding:
Basic		62.3			62.6			62.3			62.6
Diluted		62.3			62.7			62.4			62.7

See accompanying notes to the consolidated financial statements.

Page 4 of 52

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,
	2020			2019
	(Dollars in Millions)
Cash Flows from Operating Activities:
Consolidated net earnings	$	243.5		$	232.3
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities:
Depreciation, depletion and amortization		193.4			182.0
Stock-based compensation expense		19.7			22.3
Gain on divestitures and sales of assets		(3.1	)		(3.9	)
Deferred income taxes		6.6			(6.4	)
Other items, net		1.2			14.9
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net		(117.4	)		(187.1	)
Inventories, net		(21.7	)		15.7
Accounts payable		(0.5	)		36.6
Other assets and liabilities, net		51.5			27.3
Net Cash Provided by Operating Activities		373.2			333.7

Cash Flows from Investing Activities:
Additions to property, plant and equipment		(175.7	)		(207.4	)
Acquisitions, net		(2.3	)		—
Proceeds from divestitures and sales of assets		17.9			6.0
Investments in life insurance contracts, net		(6.2	)		0.5
Other investing activities, net		(4.5	)		(1.0	)
Net Cash Used for Investing Activities		(170.8	)		(201.9	)

Cash Flows from Financing Activities:
Borrowings of debt		618.0			165.0
Repayments of debt		(637.0	)		(170.0	)
Payments on financing leases		(1.6	)		(1.8	)
Debt issuance costs		(1.7	)		—
Distributions to owners of noncontrolling interest		—			(0.6	)
Repurchases of common stock		(50.0	)		(50.0	)
Dividends paid		(69.4	)		(60.6	)
Proceeds from exercise of stock options		1.3			7.1
Shares withheld for employees' income tax obligations		(12.9	)		(12.2	)
Net Cash Used for Financing Activities		(153.3	)		(123.1	)
Net Increase in Cash and Cash Equivalents		49.1			8.7
Cash and Cash Equivalents, beginning of period		21.0			44.9
Cash and Cash Equivalents, end of period	$	70.1		$	53.6

See accompanying notes to the consolidated financial statements.

Page 5 of 52

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF TOTAL EQUITY

(In Millions, Except Per Share Data)	Shares of Common Stock		Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders' Equity			Noncontrolling Interests		Total Equity
Balance at March 31, 2020		62.2	$	0.6	$	3,423.1		$	(145.4	)	$	2,018.6		$	5,296.9		$	2.5	$	5,299.4
Consolidated net earnings		—		—		—			—			217.6			217.6			—		217.6
Other comprehensive earnings, net of tax		—		—		—			3.2			—			3.2			—		3.2
Dividends declared ($0.55 per share)		—		—		—			—			(34.5	)		(34.5	)		—		(34.5	)
Issuances of common stock for stock award plans		0.1		—		1.1			—			—			1.1			—		1.1
Shares withheld for employees' income tax obligations		—		—		(0.4	)		—			—			(0.4	)		—		(0.4	)
Stock-based compensation expense		—		—		7.2			—			—			7.2			—		7.2
Balance at June 30, 2020		62.3	$	0.6	$	3,431.0		$	(142.2	)	$	2,201.7		$	5,491.1		$	2.5	$	5,493.6

Balance at December 31, 2019		62.4	$	0.6	$	3,418.8		$	(145.8	)	$	2,077.2		$	5,350.8		$	2.5	$	5,353.3
Consolidated net earnings		—		—		—			—			243.5			243.5			—		243.5
Other comprehensive earnings, net of tax		—		—		—			3.6			—			3.6			—		3.6
Dividends declared ($1.10 per share)		—		—		—			—			(69.0	)		(69.0	)		—		(69.0	)
Issuances of common stock for stock award plans		0.1