- Aggregates volume may rise as much as 7 percent, company says
- Wettest weather on record in fourth quarter hurt shipments
Martin Marietta Materials Inc. posted the biggest gain in a year after forecasting that its shipments of crushed stone, sand and gravel will rise as much as 7 percent, helping alleviate investor concerns over a construction slowdown.
- Pricing for the company’s main products, also known as aggregates, is expected to rise as much as 8 percent this year, Martin Marietta said in a statement Tuesday.
- For 2016, Martin Marietta forecast earnings before interest, taxes, depreciation and amortization of $930 million to $980 million. Analysts surveyed by Bloomberg projected an average of $999 million.
- Net sales are expected to be $3.5 billion to $3.7 billion in 2016, the company said, compared with the average analyst estimate of $3.61 billion.
- Shares rose 9.4 percent to $128.88 at the close in New York, the biggest one-day gain since Feb. 10, 2015.
The Big Picture
The construction industry is hitting on all cylinders with growth in residential housing, commercial and public projects. Demand for aggregates will be spurred by a five-year, $305 billion U.S. highway funding plan -- the longest one in almost two decades -- that Congress approved in December.
Earnings per share were less than expected after Texas, North Carolina and South Carolina -- three of Martin Marietta’s largest markets -- recorded the wettest fourth quarter on record, reducing construction activity and aggregates demand, the company said.
- Adjusted earnings per share were $1.15, up from 94 cents a year earlier, according to Martin Marietta, the second-largest provider of crushed stone and sand in the U.S. Analysts had predicted $1.34.
- Sales were little changed at $780.8 million after the company completed the sale of its California cement business for $420 million on Sept. 30. Analysts had estimated sales of $826 million.
- Martin Marietta completed two acquisitions in November near Colorado Springs, Colorado, to add almost 1 billion tons of aggregates reserves.
- “The guidance was significantly better than management’s preliminary outlook from three months ago and was generally in line with our estimates,” said Todd Vencil, an analyst at Sterne Agee CRT.
- “MLM offered better-than-expected aggregates volume and cement guidance for 2016. This seems to be a reversal from the conservative outlook offered last quarter in aggregates, while cement strength is a positive surprise relative to more cautious Texas market anecdotes,” said Garik Shmois, an analyst at Longbow Research.