Martin Marietta (MLM) Down 4.7% Since Last Earnings Report: Can He Bounce Back?
A months have passed since Martin Marietta’s (MLM) last earnings report. Stocks lost around 4.7% over that time frame, underperforming the S&P 500.
Will the recent negative trend continue until its next results release, or is Martin Marietta due for a breakout? Before we dive into how investors and analysts have reacted in recent times, let’s take a look at the latest earnings report to better understand the important catalysts.
Martin Marietta at peak second quarter earnings, margin on strong pricing
Martin Marietta Materials, Inc. reported better-than-expected earnings for the first quarter of 2021. Its earnings and revenues (products and services) increased year-over-year, supported by improved pricing in the business of aggregate and cement upstream. as disciplined management of costs throughout the company.
On April 30, the Company acquired Minnesota-based Tiller Corporation (“Tiller”), which will be integrated into the central division. Tiller is the leading supplier of aggregate and FOB hot mix asphalt in the Minneapolis / St. Paul region. This strategic and rewarding acquisition will strengthen Martin Marietta’s high-margin upstream materials business in one of the largest and fastest growing Midwestern metropolitan areas.
He expects this acquisition aligned with strategic operations analysis and review (SOAR) to immediately accretion to earnings and cash flow, as well as to $ 170 million in generated revenue and $ 60 million. million dollars of adjusted EBITDA in 2021.
Ward Nye, President and CEO of Martin Marietta, said: âOur record first quarter results reinforce our confidence in Martin Marietta’s ability to continue to generate sustainable growth and superior shareholder value creation in 2021 and beyond. The company’s unparalleled growth opportunities and unwavering commitment to disciplined pricing and operational excellence, combined with the favorable winds of emerging demand that should support construction activity over the long term, firmly and uniquely position Martin Marietta for SOAR towards a sustainable future. “
In the headlines
Martin Marietta reported adjusted earnings per share of $ 1.04, comfortably beating the Zacks consensus estimate of 50 cents by 108%. The metric also rose 153.7% from last year’s level of 41 cents per share. The uptrend was mainly driven by price gains from upstream aggregates and cement activities as well as disciplined cost management across the company.
Total quarterly revenue (including revenue from products and services and freight) was $ 982.4 million, up 2.5% from the $ 958.2 million figure for the l ‘last year. Product and service revenue of $ 921.9 million, representing 93.8% of total revenue, increased 3.5% year over year and exceeded the consensus bar of 905.3 million 1.8% dollars.
Building materials (including aggregates, cement, ready-mixed concrete, asphalt, paving product lines and freight) reported revenue of $ 911.5 billion, up from 2.1% year over year. Within this segment, revenues from products and services amounted to $ 856.6 billion, up 3.1% from a year ago. However, freight revenue of $ 54.9 million was down 10.6% from the same period last year.
Also in products and services, aggregate revenue of $ 572.6 million increased 0.4% from the previous year quarter. In addition, cement revenue increased 2.8% year-over-year to $ 109.6 million. Ready-mix concrete revenue increased 24% year-on-year to $ 235.3 million. However, revenues from the asphalt and paving product lines decreased 32.6% from the prior year quarter to $ 12.2 million.
Aggregate shipments were down 3% year-on-year, while prices improved 3.4% (2.5% on a mix-adjusted basis).
Geographically, East Group shipments increased 0.2% year-over-year, given strong residential and non-residential construction activity in the Carolinas, Georgia, Florida and Maryland. . This was partially offset by the end of the construction season in the Midwest and reduced wind power construction activity. Prices in the region improved 3.9% from the previous year quarter. West Groups aggregate shipments were down 7.7% from a year ago. Adverse winter weather conditions in Texas and Colorado as well as reduced demand in the energy sector detracted from the segment. Prices increased 1.9% year over year.
Cement shipments increased 0.3% year-on-year. Double-digit growth in shipments from the Midlothian plant in North Texas offset weather-related impacts and reduced energy sector activity in South and West Texas. Prices improved 1.5% (2.2% on a mix-adjusted basis) year over year.
Within the Downstream business, ready-mixed concrete shipments increased 26.5% year-over-year, driven by double-digit growth in Texas resulting from major projects and additional volume of operations acquired in August 2020. The increase was offset by weather-related shipments. drop in Colorado.
Magnesia Specialties reported product revenue of $ 65.3 million, up 8.9% year-over-year. The increase was due to increased demand for chemicals and lime products.
Highlights of operations
The gross margin was 17.8%, an improvement of 290 basis points. Additionally, Adjusted EBITDA of $ 204.4 million increased 37.2% year-on-year, driven by pricing momentum and improved cost management across the business.
Liquidity and cash flow
As at March 31, 2021, Martin Marietta had cash and cash equivalents of $ 313.9 million, compared to $ 207.3 million at the end of 2020. Long-term debt (excluding current maturities) is ‘amounted to $ 2.63 billion, almost in line with 2020 levels. Net cash from operations stood at $ 191.9 million at the end of the first quarter, compared to $ 106.7 million. dollars for the comparable period of 2020. It had unused borrowing capacity of $ 1.1 billion on the existing credit facility at the end of March.
The company expects product and service revenue of between $ 4.510 billion and $ 4.700 billion, gross profit of $ 1.290 billion to $ 1.380 billion, selling, general and administrative expenses of $ 320 million to $ 330 million, as well as an adjusted EBITDA of between $ 1.35 billion and $ 1.45 billion. Net profit is expected to be between $ 665 million and $ 750 million.
Overall growth in shipments is expected to be between 1% and 4%. Prices are expected to increase by 3-5%.
How have the estimates evolved since then?
It turns out that revised estimates have trended upward over the past month. The consensus estimate has changed 5.11% due to these changes.
At the moment Martin Marietta has an average Growth Score of C, but his Momentum Score is doing much better with an A. However, the stock received a D rating on the value side, making it place in the bottom 40% for this investment strategy.
Overall, the stock has an overall VGM score of C. If you’re not strategy-focused, this score is the one you should be interested in.
Estimates have trended higher for the stock, and the magnitude of these revisions looks promising. It’s no surprise that Martin Marietta has a Zacks Rank # 2 (Buy). We expect an above-average return on the security over the next few months.
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