Martin Marietta Materials, Inc. (NYSE:MLM) today announced its results for the second quarter and six months ended June 30, 2013.
Ward Nye, President and CEO of Martin Marietta Materials, stated: “We are pleased to report higher second-quarter net sales and gross margin compared with the prior-year quarter, which is particularly rewarding in light of excessive rainfall in most of our key markets.”
The Company reported a net sales increase of 4%, driven by pricing growth in all Aggregates business product lines and a new quarterly net sales record achieved by the Specialty Products business. Net earnings increased 12%, despite being constrained by the impact of wet weather, particularly in the midwestern and southeastern United States. For example, the state of Iowa had the wettest second quarter in over a century, and many Georgia markets had rainfall during the quarter equivalent to more than double the average levels, including Augusta, which reported its wettest month in weather history in June. While it’s difficult to isolate all of the quarter’s weather impact, the Company knows the effect was at least three-fold. First, with respect to potential lost sales, the Company estimates that the precipitation reduced shipment volumes between 1.5 million and 1.7 million tons, lowering net earnings by up to $0.11 per diluted share. Second, though more difficult to estimate than the sales component, throughput challenges created by wet weather significantly reduced operational productivity. Finally, lower production volumes led to an underabsorption of fixed costs.
“While weather conditions will always have an impact on our short-term results, we have demonstrated that over the long term, the focused execution of our strategic plan enables us to outperform our peers and deliver shareholder value. The second quarter results also show our ability to manage through weather-related disruptions, which did not prevent us from performing well. More importantly and for the longer term, we are well positioned to leverage a strengthening business environment for our products. To that end, we continue to see positive indicators of construction activity, including double-digit growth on a year-to-date basis in the private-sector construction market. Historically, increases in private-sector construction have led to growth in public-sector construction. We anticipate this trend will continue and remain well-positioned to serve these opportunities,” Nye said.