TXI, heritage business performance deepen Wall Street confidence in Martin Marietta

Sources: Martin Marietta Materials Inc., Raleigh, N.C.; CP staff

Year-over-year sales and profit gains, bolstered by core aggregate operations’ higher shipments and pricing conditions, plus better than anticipated Texas Industries merger results, have Martin Marietta enjoying investor confidence approximating pre-recession levels.

In 2014 figures that include six months of TXI cement, ready mixed concrete and aggregates volume, Martin Marietta reports sales of $2.68 billion, a 38 percent increase over the prior year’s $1.94 billion. Of last year’s revenue, $2.17 billion is from 12 months of heritage operations, $511 million from TXI, a merger with which was consummated July 1. Higher volume and pricing levels added up to earnings of $3.74 per diluted share, $1.13 above 2013 results. Shortly after the release of 2014 financials, Martin Marietta stock climbed north of $140/share, up 25-30 percent year to date and a threshold last reached in fall 2007.

Positive trends confirmed in October—when third quarter figures showed early TXI returns—continued through year’s end, with Martin Marietta calculating merger synergies of $27 million, 50 percent higher than original expectations. “We continue to focus on maximizing the synergistic value of the TXI transaction [and] now expect to achieve annual synergies of $100 million by the end of 2016, an increase of more than 40 percent compared with our previously announced target,” says Martin Marietta CEO Ward Nye.

Aggregates, ready mixed concrete and asphalt pricing across the company’s regions spelled a strong 2014 finish against prior-year figures: Total aggregates product line (existing + TXI aggregate, concrete, asphalt) volume and pricing up 13.7 percent and 4.5 percent, respectively. Texas and California cement operations, meanwhile, began the fourth quarter with a $10/ton increase.

The Martin Marietta share price spike also reflects investor response to board authorization of the repurchase of up to 20 million outstanding common shares—from a 67.3 million share float. “Our strong balance sheet and cash flow generation provides us the flexibility to repurchase up to 30 percent of outstanding shares while continuing to invest in our business and execute strategic growth initiatives,” affirms Nye.