About Martin Marietta Materials

Martin Marietta Materials, Inc. (Martin Marietta) is a natural resource-based building materials company. The company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 360 quarries, mines and distribution yards in 28 states, Canada and The Bahamas. Martin Marietta also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services, in targeted markets where the company has a leading aggregates position. The company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement, ready mixed concrete and asphalt and paving operations are reported collectively as the Building Materials business. The company also operates a Magnesia Specialties business with production facilities in Michigan and Ohio. The Magnesia Specialties business produces magnesia-based chemical products that are used in industrial, agricultural and environmental applications. It also produces dolomitic lime sold primarily to customers for steel production and soil stabilization. Magnesia Specialties’ products are shipped to customers domestically and worldwide. Segments The company conducts its Building Materials business through two segments, organized by geography: East Group and West Group. The East Group provides aggregates and asphalt products. The West Group provides aggregates, cement, downstream products and paving services. The company’s Magnesia Specialties business is reported as a separate segment and includes its magnesia-based chemicals and dolomitic lime businesses. Building Materials Business The profitability of the Building Materials business, which serves customers in the construction marketplace, is sensitive to national, regional and local economic conditions and construction cyclicality, which are in turn affected by fluctuations in levels of public-sector infrastructure funding; interest rates; access to capital markets; and demographic, geographic, employment and population dynamics. The heavy-side construction business is conducted outdoors, as are much of the Building Materials business’ operations. Therefore, erratic weather patterns, seasonal changes, and other weather-related conditions, including precipitation, flooding, hurricanes, snowstorms, extreme temperatures, wildfires, earthquakes and droughts, can significantly affect production schedules, shipments, costs, efficiencies and profitability. The Building Materials business markets its products primarily to the construction industry, with 36% of its 2023 aggregates shipments sold to contractors in connection with highway and other public infrastructure projects and the balance of its shipments sold primarily to contractors for nonresidential and residential construction projects. The Building Materials business covers a wide geographic area. The ten largest revenue-generating states (Texas, North Carolina, Colorado, California, Georgia, Minnesota, Arizona, Iowa, Florida and Indiana) accounted for 82% of the Building Materials business’ total revenues in 2023. In 2023, aggregates shipments decreased 4.3%, largely reflective of the company's value-over-volume strategy and moderating demand resulting from the affordability-driven residential slowdown and a softening in warehouse and data center construction demand. Aggregates Aggregates, consisting of crushed stone, sand and gravel, are an engineered, granular material that is manufactured to specific sizes, grades and chemistry for use primarily in construction applications. The company’s operations consist primarily of open pit quarries; however, it is the largest operator of underground aggregates mines in the United States, with 14 active underground mines located in the East Group. The company’s distribution system mainly uses trucks, but also has access to rail and waterborne networks where the per-mile unit costs of transporting aggregates are lower. The company’s distribution network moves aggregates materials from certain domestic and offshore sources via its long-haul rail and waterborne distribution network, to markets where aggregates supply is limited. The company’s rail network primarily serves its Texas, Florida, Colorado and Gulf Coast markets, while its locations in The Bahamas and Nova Scotia transport materials via oceangoing ships. The company’s strategic focus includes expanding inland and offshore capacity and acquiring distribution facilities and port locations to offload transported material. As of December 31, 2023, the company’s aggregated distribution facilities consisted of 76 yards. The company’s rail-based distribution network, coupled with the extensive use of rail service, increases its dependence on and exposure to railroad performance, including track congestion, crew availability, railcar availability, locomotive availability and the ability to negotiate favorable railroad shipping contracts. The waterborne distribution network also increases the company’s exposure to certain risks, including among other items, meeting minimum tonnage requirements of shipping contracts, demurrage costs, fuel costs, ship availability and weather disruptions. The company has long-term agreements with shipping companies to provide ships to transport its aggregates to various coastal ports. The company generally acquires contiguous property around existing quarry locations. Such parcels can serve as buffer property or additional mineral reserves, assuming the underlying geology supports economical aggregates mining. In either instance, the acquisition of additional property around an existing quarry typically allows the expansion of the quarry footprint and extension of quarry life. Some locations having limited reserves may be unable to expand. Due to the nature of the indigenous aggregates supply in the midwestern United States, a long-term capital focus for the company is underground limestone aggregates mines. Production costs are generally higher at underground mines than surface quarries since the depth of the aggregates deposits and the access to the reserves result in higher costs related to development, explosives and depreciation costs. The company generally sells its aggregates upon receipt of customer orders or requests. The company generally maintains inventories of aggregates products in sufficient quantities to meet the requirements of customers. Cement and Downstream Operations Cement is the basic agent used to bind aggregates, sand and water in the production of ready mixed concrete. Similar to aggregates, cement is used in infrastructure projects, nonresidential and residential construction, and the railroad, agricultural, utility and environmental industries. Consequently, the cement industry is cyclical and dependent on the strength of the construction sector. At December 31, 2023, the Company had production facilities in Midlothian, Texas, south of Dallas/Fort Worth, and New Braunfels, Texas, north of San Antonio. These plants, which produce Portland and specialty cements, operated at 71% utilization in 2023. Clinker is the initial product in cement production, and the two Texas production facilities had a combined annual clinker capacity of 4.5 million tons in 2023. The Midlothian plant permit allows the company to expand production by up to 0.8 million additional tons. The company is undertaking a finishing capacity expansion project at the Midlothian plant, which is expected to be completed in mid-2024 and will provide 0.5 million tons of annual incremental cement capacity. Further, the company has converted its plants to manufacture a less carbon-intensive Portland limestone cement, known as Type 1L, which has been approved by the Texas Department of Transportation. On February 9, 2024, the company closed the sale of it South Texas cement business and related cement distribution terminals. This divestiture optimizes the company's portfolio and product mix and provides additional balance sheet flexibility to redeploy net proceeds into pure-play aggregates acquisitions. The company's cement operations generally deliver their products upon receipt of customer orders or requests. Inventory for products is generally maintained in sufficient quantities to meet rapid delivery requirements of customers. The company has fixed-price supply contracts for portions of its natural gas, electricity and coal needs, but also consumes alternative fuel and petroleum coke. Further, profitability of the cement operations is also impacted by kiln maintenance, which typically is planned but requires a plant to be shut down for a period of time. Ready mixed concrete is measured in cubic yards and specifically batched or produced for customers’ construction projects and then typically transported by mixer trucks and poured at the project site. The aggregates used for ready mixed concrete is a washed material with limited amounts of fines (such as dirt and clay). As of December 31, 2023, the company operated 82 ready mixed concrete plants in Arizona and Texas, of which 20 plants located in the Austin and San Antonio region are classified as assets held for sale. These 20 plants were subsequently divested on February 9, 2024. Asphalt is most commonly used in surfacing roads and parking lots and consists of liquid asphalt, or bitumen, the binding medium, and aggregates. Similar to ready mixed concrete, each asphalt batch is produced to customer specifications. As of December 31, 2023, the company operated 38 asphalt plants in Arizona, California, Colorado and Minnesota. The company also offers paving services in California and Colorado. Market dynamics for these downstream product lines. Magnesia Specialties Business The Magnesia Specialties business produces and sells dolomitic lime from its Woodville, Ohio facility and manufactures magnesia-based chemical products for industrial, agricultural and environmental applications at its Manistee, Michigan facility. These magnesia-based chemical products have varying uses, including flame retardants, wastewater treatment, pulp and paper production and other environmental applications. In 2023, 66% of Magnesia Specialties’ total revenues were attributable to chemical products, 33% to lime, and 1% to stone sold as construction materials. Magnesia Specialties generally delivers its products upon receipt of customer orders or requests. Inventory for products is generally maintained in sufficient quantities to meet rapid delivery requirements of customers. A significant portion of the 275,000-ton dolomitic lime capacity from a lime kiln at Woodville, Ohio is committed under a long-term supply contract. In 2023, 78% of the lime shipments in the Magnesia Specialties business was sold to third-party customers, while the remaining 22% was used internally as a raw material in making the business’ chemical products. Dolomitic lime products sold to external customers are used primarily by the steel industry. In 2023, 38% of the Magnesia Specialties’ total revenues were attributable to products used in the steel industry, primarily dolomitic lime. Patents and Trademarks As of January 31, 2024, the company owned, had the right to use, or has pending applications for patents pending or granted by the United States and various countries and trademarks related to its business. Customers The company’s products are sold principally to commercial customers in private industry. Although large amounts of construction materials are used in public works projects, relatively insignificant sales are made directly to federal, state, county or municipal governments, or agencies thereof. Dispositions On May 3, 2023, the company divested its Stockton cement import terminal in California. On October 31, 2023, the company divested the Tehachapi, California cement plant. On February 9, 2024, the company closed the sale of its South Texas cement business and certain of its related ready mixed concrete operations to CRH Americas Materials, Inc., a subsidiary of CRH plc. Specifically, the divested facilities included the Hunter cement plant in New Braunfels, Texas, related cement distribution terminals and 20 ready mixed concrete plants serving the Austin and San Antonio region. Acquisitions On January 16, 2024, the company completed the acquisition of Albert Frei & Sons, Inc., a leading aggregates producer in Colorado. This transaction enhances the company's aggregates platform in the high-growth Denver metropolitan area. Environmental and Governmental Regulations The company’s cement plants, as well as its Magnesia Specialties plants, are strictly regulated with respect to GHG emissions and hold Title V Permits, and each (other than the Manistee, Michigan facility) is also subject to the U.S. Clean Air Act's Prevention of Significant Deterioration (PSD) requirements, which require a permit program for certain new or modified sources of emission. In addition, the cement produced by the company’s cement operations, like other U.S. producers, is subject to strict limits set by the U.S. Department of Transportation (USDOT) and other agencies, including those relating to clinker substitution, or the replacement of ground clinker in cement with alternate materials such as pozzolan, slag and fly ash, which has implications for the company’s fuel use and efforts to reduce GHG emissions from its cement operations. History Martin Marietta Materials, Inc. was founded in 1939 as a North Carolina corporation. The company was incorporated in 1993.