What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-02 compared with 2021-07-29 · 217 added, 186 removed, 450 unchanged (47% of the section changed)

2 unchanged sentences

(the Company or Martin Marietta) is a natural resource-based building materials company.

The Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 310 quarries, mines and distribution yards in 26 states, Canada and The Bahamas.

As of September 30, 2021, the Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 320 quarries, mines and distribution yards in 26 states, Canada and The Bahamas.

In the southwestern and western United States, Martin Marietta also provides cement and downstream products and services, namely, ready mixed concrete, asphalt and paving, in vertically-integrated structured markets where the Company has a leading aggregates position.

29 unchanged sentences

The Building Materials business is significantly affected by weather patterns and seasonal changes.

Production and shipment levels for aggregates, cement, ready mixed concrete and asphalt and paving materials correlate with general construction activity levels, most of which occur in the spring, summer and fall.

Production and shipment levels for aggregates, cement, ready mixed concrete and asphalt materials correlate with general construction activity levels, most of which occur in the spring, summer and fall.

Thus, production and shipment levels vary by quarter.

Operations concentrated in the northern and midwestern United States generally experience more severe winter weather conditions than operations in the southeast and southwest.

Operations concentrated in the northern and midwestern United States generally experience more severe winter weather conditions than operations in the southeast, southwest and west.

Excessive rainfall, and conversely excessive drought, can also jeopardize production, shipments and profitability in all markets served by the Company.

5 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

2 unchanged sentences

The Company outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2020.

There were no changes to the Company’s critical accounting policies during the six months ended June 30, 2021.

There were no changes to the Company’s critical accounting policies during the nine months ended September 30, 2021.

RESULTS OF OPERATIONS

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(Dollars in Millions)

11 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

1 unchanged sentence

Mix-adjusted average selling price (mix-adjusted ASP) excludes the impacts of product, geographic and other mix from the current-period average selling price and is a non-GAAP measure.

Mix-adjusted ASP is calculated by comparing current-period shipments to like-to-like shipments in the comparable prior period.

Mix-adjusted ASP is calculated by comparing current-period shipments to like-for-like shipments in the comparable prior period.

Management uses this metric to evaluate the effectiveness of the Company’s pricing increases and believes this information is useful to investors as it provides same-on-same pricing trends.

1 unchanged sentence

Three Months Ended

Six Months Ended

West Group - Aggregates:

Nine Months Ended

September 30,

East Group - Aggregates:

Reported average selling price

10 unchanged sentences

Mix-adjusted ASP variance

Quarter Ended June 30, 2021

Financial highlights for the quarter ended June 30, 2021 (unless noted, all comparisons are versus the prior-year quarter):

Page 30 of 54

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Quarter Ended September 30, 2021

Financial highlights for the quarter ended September 30, 2021 (unless noted, all comparisons are versus the prior-year quarter):

Consolidated total revenues of $1.56 billion compared with $1.32 billion

6 unchanged sentences

Earnings per diluted share of $4.07 (5) compared with $4.71 ( 4 )

(1) Includes $8.1 million of costs for selling acquired inventory after markup to fair value as a part of acquisition accounting

(2) Includes $8.1 million of costs for selling acquired inventory after markup to fair value as a part of acquisition accounting and $7.4 million of acquisition-related expenses

( 3 ) Includes nonrecurring gains on sales of investment land and divested assets of $69.9 million

( 4 ) Includes nonrecurring gains on sales of investment land and divested assets, net of tax, of $54.1 million, or $0.87 per diluted share

(5) Includes $0.18 per diluted share of costs for selling acquired inventory after markup to fair value as a part of acquisition accounting and of acquisition-related expenses

Page 31 of 54

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following tables present total revenues, gross profit (loss), selling, general and administrative (SG&A) expenses and earnings (loss) from operations data for the Company and its reportable segments by product line for the three months ended June 30, 2021 and 2020.

In each case, the data is stated as a percentage of revenues of the Company or the relevant segment or product line, as the case may be.

Three Months Ended June 30,

Three Months Ended September 30,

(Dollars in Millions)

15 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Three Months Ended June 30,

Three Months Ended September 30,

% of Revenues

14 unchanged sentences

The following presents a rollforward of aggregates products gross profit (dollars in millions):

Aggregates products gross profit, quarter ended June 30, 2020

Aggregates products gross profit, quarter ended September 30, 2020

Operational performance (1)

Change in aggregates products gross profit

Aggregates products gross profit, quarter ended June 30, 2021

Aggregates products gross profit, quarter ended September 30, 2021

(1) Inclusive of cost increases/decreases, product and geographic mix and other operating impacts

2 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Three Months Ended June 30,

Three Months Ended September 30,

(Dollars in Millions)

10 unchanged sentences

Three Months Ended

June 30, 2021

September 30, 2021

Volume/Pricing variance (1)

Total aggregates operations (2)

Organic aggregates operations (3)

Page 34 of 54

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

1 unchanged sentence

Three Months Ended

September 30,

(Tons in Millions)

2 unchanged sentences

(2 ) Total aggregates operations include acquisitions from the date of acquisition and divestitures through the date of disposal.

The following table presents shipments data for the Building Materials business by product line:

(3) Organic aggregates operations exclude volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and divestitures.

The following table presents shipments data by product line for the Building Materials business:

Three Months Ended

September 30,

Aggregates (in millions):

11 unchanged sentences

Total asphalt tons

Page 35 of 54

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The average selling price by product line for the Building Materials business is as follows:

Three Months Ended

September 30,

Aggregates (per ton)

2 unchanged sentences

Asphalt (per ton)

Page 34 of 52

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Aggregates End-Use Markets

Aggregates shipments to the infrastructure market declined, primarily driven by weather-related project delays in key geographies and the timing of projects.

The infrastructure market accounted for 34% of second-quarter aggregates shipments.

Aggregates shipments to the infrastructure market increased 5%, primarily driven by strong underlying demand.

The infrastructure market accounted for 36% of third-quarter organic aggregates shipments.

Aggregates shipments to the nonresidential market increased 17%, driven by robust demand in heavy industrial projects of scale across our geographic footprint.

The nonresidential market represented 36% of second-quarter aggregates shipments.

The nonresidential market represented 35% of third-quarter organic aggregates shipments.

Aggregates shipments to the residential market increased 8%.

Low available resale inventory and underbuilt conditions continue to drive robust residential construction activity.

The residential market accounted for 25% of second-quarter aggregates shipments.

The ChemRock/Rail market accounted for the remaining 5% of second-quarter aggregates shipments.

Volumes to this end use decreased, driven by lower ballast shipments to the Class I western railroads.

Low available resale inventory and underbuilt single-family housing conditions continued to drive robust residential construction activity.

The residential market accounted for 24% of third-quarter organic aggregates shipments.

The ChemRock/Rail market accounted for the remaining 5% of third-quarter organic aggregates shipments.

Volumes to this end use increased 14%, driven by increased aglime shipments in Iowa.

Building Materials Business Product Lines

Second-quarter aggregates shipments and pricing increased 3.3% and 2.9%, respectively, compared with prior-year quarter.

Organic aggregates shipments and pricing increased 1.5% and 3.4%, respectively.

East Group shipments increased 7.0% reflecting strong construction activity in the Carolinas, Georgia, Florida and Maryland across all three primary end-use markets, coupled with incremental volumes from the Tiller operations, which more than offset the weather-induced project delays in the Midwest.

Pricing increased 3.6% in the East Group, reflecting favorable geographic mix.

West Group shipments decreased 3.6%, despite robust underlying demand, due to significant rainfall in both Texas and Colorado.

West Group’s pricing increased 0.7%, reflecting a lower percentage of higher-priced commercial rail-shipped volumes.

Pricing in the West Group increased 2.4% on a mix-adjusted basis.

Aggregates product gross margin decreased 150 basis points to 34.0%, driven by higher diesel costs of $12.2 million and a $6.1 million increase in cost of revenues from the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting.

Cement pricing improved 6.8%, or 4.2% on a mix-adjusted basis, following annual price increases that went into effect April 1, 2021.

Cement shipments decreased 1.9% despite robust demand and construction activity throughout the Texas Triangle, due to extreme precipitation from late April through mid-June.

Product gross margin declined 870 basis points to 31.0%, driven by the timing of planned outages at the Hunter plant as well as higher energy and raw materials costs.

Ready mixed concrete shipments increased 8.2%, or 2.3% organically, driven by incremental volume from large projects and operations acquired in August 2020.

This growth more than offset weather-related shipment declines.

Pricing increased 1.2% in second quarter 2021 compared with second quarter 2020, reflecting geographic mix from a lower percentage of higher-priced Colorado shipments.

Product gross margin decreased 350 basis points to 7.1%, driven primarily by higher raw material and diesel costs.

Asphalt shipments increased 67.6% as incremental volume from the acquired Tiller operations more than offset weather-related shipment declines in Colorado.

Pricing increased 4.9% due to price increases in Colorado as well as mix impact from higher priced Tiller asphalt sales, both contributing to asphalt and paving products and services gross margin improvement of 80 basis points.

Third-quarter aggregates shipments, including shipments from acquired operations, grew 10.2% compared with prior-year quarter.

Acquired operations have selling prices below the Company’s average which limited pricing growth to 1.2%.

Organic aggregates shipments increased 6.0% while pricing increased 2.2%, reflecting a higher percentage of lower-priced base stone shipments and opportunistic sales of low-priced excess fill material.

East Group shipments increased 10.1%, reflecting strong construction activity across all three primary end-use markets and shipments from the recently acquired Tiller operations.

Pricing increased 0.4% in the East Group, inclusive of acquisitions.

On a mix-adjusted basis, East Group pricing grew 2.5%.

West Group shipments increased 10.4%, from strong underlying demand in both Texas and Colorado, improving energy-sector activity and shipments from the recent SCC acquisition in Texas.

West Group pricing increased 2.8%.

Aggregates product gross margin decreased 220 basis points to 34.2%, driven primarily by higher diesel costs, higher repairs, maintenance and contract service costs and an increase in cost of revenues from the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting, partially offset by higher average selling prices

Cement shipments increased 4.1% benefitting from robust construction activity throughout the Texas Triangle and improving demand for specialty oil-well cement products.

Cement pricing improved 8.4%, or 6.6% on a mix-adjusted basis, reflecting periodic price increases.

Product gross margin declined 250 basis points to 37.7%, as higher energy, operating and raw materials costs more than offset pricing gains.

Ready mixed concrete shipments increased 23.2%, or 20.5% organically, reflecting the healthy Texas and Colorado demand environment.

Pricing increased 2.3% in third quarter 2021 compared with third quarter 2020, following the implementation of mid-year price increases in Texas.

Product gross margin increased modestly to 9.8%, as volume and

Page 36 of 54

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

pricing growth overcame higher raw material and diesel costs .

Asphalt shipments increased 115.9 % as incremental volume from the Tiller acquisition more than offset Colorado shipment declines resulting from the late-summer liquid asphalt shortages that have since been resolved.

Asphalt pricing decreased 1.7%, reflecting a higher percentage of lower-priced shipments from the Company’s newly-acquired Minnesota business.

Organic p ricing increased 1.2 % .

Asphalt and paving products and services gross margin decreased 530 basis points, driven by higher raw material costs and operational disruptions from the Colorado liquid asphalt shortage .

Magnesia Specialties Business

Magnesia Specialties second-quarter product revenues increased 43.2% to $70.0 million, reflecting improved demand for chemicals and lime products compared with a COVID-19-challenged prior year.

Magnesia Specialties third-quarter product revenues increased 30.3% to $71.9 million, reflecting improved demand for chemicals and lime products compared with a COVID-19-challenged prior-year quarter.

Product gross profit was $28.1 million compared with $21.0 million.

Product gross margin increased 260 basis points to 39.9% on strong volume increases.

Second-quarter earnings from operations were $23.1 million in 2021 compared with $13.2 million in 2020.

Product gross margin increased 100 basis points to 39.0% on strong volume and price increases.

Third-quarter earnings from operations were $23.1 million in 2021 compared with $16.4 million in 2020.

Consolidated Operating Results

Consolidated SG&A for second quarter 2021 was 6.0% of total revenues compared with 5.6% in the prior-year quarter.

During second-quarter 2021, the Company incurred $0.7 million in COVID-19-related expenses versus $3.4 million in the prior-year quarter for enhanced personal protective equipment, as well as cleaning and sanitizing protocols across the Company’s operations, which are recorded in SG&A.

The Company incurred acquisition-related expenses of $9.3 million in the quarter ended June 30, 2021.

Consolidated SG&A for third quarter 2021 was 5.5% of total revenues compared with 5.4% in the prior-year quarter.

During the third quarter 2021, the Company incurred $0.2 million in COVID-19-related expenses versus $1.3 million in the prior-year quarter.

Prior year spending included stock build of enhanced personal protective equipment, as well as cleaning and sanitizing protocols across the Company’s operations, which are recorded in SG&A.

The Company incurred acquisition-related expenses of $7.4 million in the quarter ended September 30, 2021 versus $0.4 million in the prior-year quarter.

Earnings from operations for the quarter were $356.9 million in 2021 compared with $400.6 million in 2020.

Among other items, other operating (income) and expenses, net, includes gains and losses on the sale of assets;

Among other items, other operating income net, includes gains and losses on the sale of assets;

recoveries and write-offs related to customer accounts receivable;

1 unchanged sentence

accretion expense, depreciation expense and gains and losses related to asset retirement obligations.

For the second quarter, consolidated other operating (income) and expenses, net, was income of $14.1 million in 2021 and expense of $2.4 million in 2020.

The 2021 income primarily reflects gain on the sale of the former corporate headquarters.

Other nonoperating (income) and expenses, net, includes interest income;

For the third quarter, consolidated other operating income, net, was $8.4 million in 2021 and $67.6 million in 2020.

The income in 2020 included $69.9 million of nonrecurring gains on the sales of investment land and divested assets.

Other nonoperating income net, includes interest income;

pension and postretirement benefit cost excluding service cost;

1 unchanged sentence

equity earnings or losses from nonconsolidated affiliates and other miscellaneous income and expenses.

For the second quarter, other nonoperating income, net, was $8.7 million and $3.8 million in 2021 and 2020, respectively.

The 2021 amount reflected lower pension expense of $4.6 million.

Six Months Ended June 30, 2021

Financial highlights for the six months ended June 30, 2021 (unless noted, all comparisons are versus the prior-year period):

For the third quarter, other nonoperating income, net, was $5.6 million and $4.0 million in 2021 and 2020, respectively.

The 2021 amount reflected $3.9 million of lower pension expense.

Page 37 of 54

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Nine Months Ended September 30, 2021

Financial highlights for the nine months ended September 30, 2021 (unless noted, all comparisons are versus the prior-year period):

Consolidated total revenues of $3.92 billion compared with $3.55 billion

Building Materials business products and services revenues of $3.47 billion compared with $3.16 billion

Consolidated gross profit of $559.8 million compared with $522.9 million

Consolidated gross profit of $1.00 billion (1) compared with $927.4 million

Consolidated earnings from operations of $763.7 million (2) compared with $764.8 million ( 3 )

Net earnings attributable to Martin Marietta of $545.7 million compared with $538.0 million ( 4 )

Adjusted EBITDA of $644.8 million compared with $556.0 million

Adjusted EBITDA of $1.13 billion compared with $1.06 billion ( 3 )

Earnings per diluted share of $8.72 (5) compared with $8.61 ( 4 )

(1) Includes $15.7 million of costs for selling acquired inventory after markup to fair value as a part of acquisition accounting

(2) Includes $15.7 million of costs for selling acquired inventory after markup to fair value as a part of acquisition accounting and $18.0 million of acquisition-related expenses

( 3 ) Includes nonrecurring gains on sales of investment land and divested assets of $69.9 million

( 4 ) Includes nonrecurring gains on sales of investment land and divested assets, net of tax, of $54.1 million, or $0.87 per diluted share

(5) Includes $0.40 per diluted share of costs for selling acquired inventory after markup to fair value as a part of acquisition accounting and acquisition-related expenses

Page 38 of 54

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following tables present total revenues, gross profit (loss), SG&A expenses and earnings (loss) from operations data for the Company and its reportable segments by product line for the six months ended June 30, 2021 and 2020.

In each case, the data is stated as a percentage of revenues of the Company or the relevant segment or product line, as the case may be.

Prior-year segment information has been reclassified to conform to the operations and management reporting structure change effective July 1, 2020 (see Note 1 to financial statements).

Six Months Ended June 30,

Nine Months Ended September 30,

% of Revenues

17 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Six Months Ended June 30,

Nine Months Ended September 30,

% of Revenues

14 unchanged sentences

The following presents a rollforward of aggregates products gross profit (dollars in millions):

Aggregates products gross profit, six months ended June 30, 2020

Aggregates products:

Aggregates products gross profit, nine months ended September 30, 2020

Operational performance (1)

Change in aggregates products gross profit

Aggregates products gross profit, six months ended June 30, 2021

Aggregates products gross profit, nine months ended September 30, 2021

(1) Inclusive of cost increases/decreases, product and geographic mix and other operating impacts

2 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Six Months Ended June 30,

Nine Months Ended September 30,

% of Total Revenues

11 unchanged sentences

The following tables present aggregates volume and pricing variance data and shipments data by segment:

Six Months Ended

June 30, 2021

Nine Months Ended

September 30, 2021

Volume/Pricing variance (1)

4 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Six Months Ended

Nine Months Ended

September 30,

(Tons in Millions)

2 unchanged sentences

(2) Total aggregates operations include acquisitions from the date of acquisition and divestitures through the date of disposal.

The following table presents shipments data for the Building Materials business by product line:

Six Months Ended

(3) Organic aggregates operations exclude volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and divestitures.

The following table presents shipments data by product line for the Building Materials business:

Nine Months Ended

September 30,

Aggregates (in millions):

14 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

1 unchanged sentence

The average selling price by product line for the Building Materials business is as follows:

Six Months Ended

Nine Months Ended

September 30,

Aggregates (per ton)

3 unchanged sentences

Aggregates Product Line End-Use Markets

For the six months ended June 30, 2021, aggregates shipments to the infrastructure market accounted for 33% of aggregates volumes and declined 8% compared to the prior-year period, primarily attributable to weather-impacted project delays and timing of projects.

Aggregates shipments to the nonresidential market increased 9%, driven by robust warehouse and data center activity.

The nonresidential market represented 36% of year-to-date aggregates shipments.

Aggregates shipments to the residential market increased 8%, reflecting sustained robust housing demand.

The residential market accounted for 26% of year-to-date aggregates shipments.

The ChemRock/Rail market accounted for the remaining 5% of year-to-date aggregates shipments.

For the nine months ended September 30, 2021, organic aggregates shipments to the infrastructure market accounted for 34% of aggregates volumes and declined 5% compared to the prior-year period, primarily attributable to weather-impacted project delays, timing of projects and third-party logistical challenges.

Organic aggregates shipments to the nonresidential market increased 9%, driven by robust warehouse and data center activity.

The nonresidential market represented 36% of year-to-date organic aggregates shipments.

Organic aggregates shipments to the residential market increased 9%, reflecting sustained robust housing demand and low available resale inventory.

The residential market accounted for 25% of year-to-date organic aggregates shipments.

The ChemRock/Rail market accounted for the remaining 5% of year-to-date organic aggregates shipments.

Volumes to this end use decreased 10%, driven by lower ballast shipments to Class I railroads.

Building Materials Business Product Lines

For the six months ended June 30, 2021, aggregates shipments increased 0.6%, reflecting strong construction activity in the Carolinas, Georgia, Florida and Maryland, offset by weather-induced delays in the Midwest, Texas and Colorado.

Pricing increased 3.1% compared with the prior-year period which led to a 140-basis-point improvement in aggregates product gross margin to 28.7%.

Aggregates shipments declined 0.4% and pricing increased 3.4% on an organic basis.

For the six months ended June 30, 2021, cement pricing increased 4.2% and shipments decreased 0.8% compared with the prior-year period.

For the nine months ended September 30, 2021, aggregates shipments increased 4.1%, reflecting strong construction activity in the Carolinas, Georgia, Florida and Maryland.

Pricing increased 2.4% compared with the prior-year period which offset higher energy and operating costs leading to a modest 20-basis-point improvement in aggregates product gross margin to 30.8%.

Aggregates shipments increased 2.0% and pricing increased 2.9% on an organic basis.

For the nine months ended September 30, 2021, cement shipments increased 0.9% and pricing increased 5.7% compared with the prior-year period.

On a mix-adjusted basis, pricing increased 4.3%.

Higher kiln maintenance costs, storm-related incremental costs and inefficiencies caused by weather-related shut downs coupled with an increase in energy and raw material costs contributed to a decline in cement product gross margin to 22.7%.

Ready mixed concrete shipments increased 16.1%, or 9.6% organically, driven by incremental volume from large projects and operations acquired in August 2020, partially offset by weather-related delays.

Ready mixed concrete pricing for the six months ended June 30, 2021 decreased 0.2%, reflecting a lower percentage of shipments from Colorado, which carry higher average selling prices.

Higher kiln maintenance costs, storm-related incremental costs and inefficiencies caused by weather-related shut downs, coupled with an increase in energy and raw material costs contributed to a 700-basis-point decline in cement product gross margin to 28.3%.

Ready mixed concrete shipments increased 18.7%, or 14.2% organically, driven by higher volumes from large projects and continued strong demand.

Ready mixed concrete pricing for the nine months ended September 30, 2021 increased 0.7%.

Asphalt shipments improved 84.8% compared with the prior-year period, attributable to incremental volumes from the acquired Tiller operations.

Asphalt pricing increased 5.3% reflecting increased pricing and favorable mix impact from Tiller operations.

Asphalt pricing increased 1.6% reflecting increased pricing from organic asphalt operations.

Magnesia Specialties Business

For the six months ended June 30, 2021, Magnesia Specialties reported product revenues of $135.2 million compared with $108.8 million for the prior-year period.

Lower lime and periclase shipments to the steel industry due to COVID-19-induced shutdowns of domestic auto manufacturers in the prior year resulted in lower revenues for 2020.

Product gross profit was $56.3 million compared with $44.3 million, primarily driven by higher volumes and revenues.

For the nine months ended September 30, 2021, Magnesia Specialties reported product revenues of $207.1 million compared with $164.0 million for the prior-year period reflecting improved demand for chemicals and lime products compared with a COVID-19-challenged prior-year period.

Product gross profit was $84.4 million compared with $65.3 million, primarily driven by higher volumes and revenues from improving domestic steel production and global demand for magnesia chemicals products.

Product line gross margin for the nine months ended September 30, 2021, was 40.7%,

Page 43 of 54

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

gross margin for the six months ended June 30, 2021 , was 41.7 % , a 100-basis-point increase versus the prior-year period.

a 90 -basis-point increase versus the prior-year period.

Earnings from operations were $69.8 million compared with $51.2 million .

Consolidated Operating Results

For the six months ended June 30, 2021, consolidated SG&A was 6.9% of total revenues compared with 6.7% in 2020.

During the first six months of 2021, the Company incurred $1.7 million in COVID-19-related expenses compared with $3.5 million in the prior-year period for enhanced cleaning and sanitizing protocols across the Company’s operations, which are recorded in SG&A.

The Company incurred $10.6 million of acquisition-related expenses for the six months ended June 30, 2021.

Earnings from operations for the six months ended June 30 were $406.8 million in 2021 compared with $364.2 million in 2020.

Among other items, other operating income, net, includes gains and losses on the sale of assets;

recoveries and write-offs related to customer accounts receivable;

rental, royalty and services income;

accretion expense, depreciation expense and gains and losses related to asset retirement obligations.

For the six months ended June 30, consolidated other operating income, net, was income of $19.8 million and expense of $8.0 million in 2021 and 2020, respectively.

The 2021 amount is primarily attributable to the gains on the sales of several properties of $16.5 million.

The 2020 amount reflected higher credit loss expenses and increased asset reclamation costs.

Other nonoperating income, net, includes interest income;

pension and postretirement benefit cost, excluding service cost;

foreign currency transaction gains and losses;

equity in earnings or losses of nonconsolidated affiliates and other miscellaneous income.

For the six months ended June 30, other nonoperating income, net, was $18.2 million in 2021 and $1.9 million in 2020.

The 2021 amount reflected lower pension expense of $7.8 million compared with the prior year.

For the nine months ended September 30, 2021, consolidated SG&A was 6.3% of total revenues compared with 6.2% in 2020.

During the first nine months of 2021, the Company incurred $1.8 million in COVID-19-related expenses compared with $4.8 million in the prior-year period for enhanced cleaning and sanitizing protocols across the Company’s operations, which are recorded in SG&A.

The Company incurred $18.0 million of acquisition-related expenses for the nine months ended September 30, 2021.

Earnings from operations for the nine months ended September 30 were $763.7 million in 2021 compared with $764.8 million in 2020.

For the nine months ended September 30, consolidated other operating income, net, was income of $28.2 million and income of $59.6 million in 2021 and 2020, respectively.

The 2021 income includes the $12.3 million gain on the sale of the former corporate headquarters.

The 2020 amount included $69.9 million of nonrecurring gains on the sales of investment land and divested assets.

For the nine months ended September 30, other nonoperating income, net, was $23.8 million in 2021 and $5.9 million in 2020.

The 2021 amount reflected $11.8 million of lower pension expense compared with the prior year.

The 2020 amount included an expense of $5.6 million to finance third-party railroad track maintenance.

Income Tax Expense

For the six months ended June 30, 2021, the effective income tax rate was 21.2%.

For the six months ended June 30, 2020, the effective income tax rate of 20.2% reflected a $6.9 million discrete benefit from financing third-party railroad track maintenance.

For the nine months ended September 30, 2021, the effective income tax rate was 20.6%, which included a $2.9 million discrete benefit for research and development tax credits.

For the nine months ended September 30, 2020, the effective income tax rate of 21.0% reflected a $6.9 million discrete benefit from financing third-party railroad track maintenance.

In exchange, the Company received a federal income tax credit and deduction.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities for the six months ended June 30, 2021 and 2020 was $441.2 million and $373.2 million, respectively.

Cash provided by operating activities for the nine months ended September 30, 2021 and 2020 was $780.3 million and $684.0 million, respectively.

Operating cash flow is primarily derived from consolidated net earnings before deducting depreciation, depletion and amortization, and the impact of changes in working capital.

Depreciation, depletion and amortization were as follows:

Six Months Ended

Nine Months Ended

September 30,

(Dollars in Millions)

The seasonal nature of construction activity impacts the Company’s interim operating cash flow when compared with the full year.

Full-year 2020 net cash provided by operating activities was $1.05 billion.

Page 44 of 54

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The seasonal nature of construction activity impacts the Company’s interim operating cash flow when compared with the full year.

Full-year 2020 net cash provided by operating activities was $1.05 billion.

During the six months ended June 30, 2021 and 2020, the Company paid $213.0 million and $175.7 million, respectively, for capital investments.

During the nine months ended September 30, 2021 and 2020 , the Company paid $321.3 million and $ 250 .

8 million, respectively, for capital investments.

The Company can repurchase its common stock through open-market purchases pursuant to authority granted by its Board of Directors or through private transactions at such prices and upon such terms as the Chief Executive Officer deems appropriate.

The Company did not repurchase any shares of common stock during the first six months of 2021.

At June 30, 2021, 13,520,952 shares of common stock were remaining under the Company’s repurchase authorization.

On April 30, 2021, the Company completed the acquisition of Tiller Corporation (Tiller), a leading aggregates and hot mix asphalt supplier in the Minneapolis/St.

The Company did not repurchase any shares of common stock during the first nine months of 2021.

At September 30, 2021, 13,520,952 shares of common stock can be purchased under the Company’s repurchase authorization.

On April 30, 2021, the Company completed the acquisition of Tiller, a leading aggregates and hot mix asphalt supplier in the Minneapolis/St.

Paul region, one of the largest and fastest growing midwestern metropolitan areas.

1 unchanged sentence

The Company financed the acquisition using available cash and borrowings under its credit facilities.

On July 30, 2021 , the Company acquired assets of SCC.

SCC is a leading producer of recycled concrete in the Houston area, one of the country’s largest addressable aggregates markets.

Recycled concrete is principally used as a base aggregates product in infrastructure, commercial and residential construction applications.

The Company financed the acquisition using available cash.

On July 2, 2021, the Company issued $700 million aggregate principal amount of 0.650% Senior Notes due 2023 (the 0.650% Senior Notes), $900 million aggregate principal amount of 2.400% Senior Notes due 2031 (the 2.400% Senior Notes) and $900 million aggregate principal amount of 3.200% Senior Notes due 2051 (the 3.200% Senior Notes) and, together with the 0.650% Senior Notes and the 2.400% Senior Notes (the Senior Notes).

The Company intends to use the net proceeds of the 2.400% Senior Notes and the 3.200% Senior Notes to pay the consideration for the acquisition of Lehigh Hanson, Inc.’s West Region business (Lehigh West Region).

The net proceeds of the 0.650% Senior Notes will be used for general corporate purposes, which may include funding acquisitions (including Lehigh West Region) or repaying indebtedness.

If (i) the Lehigh West Region acquisition is not consummated prior to March 31, 2022, (ii) the securities purchase agreement in respect of the acquisition is terminated at any time prior to March 31, 2022 (other than as a result of consummating the acquisition) or (iii) the Company publicly announces at any time prior to March 31, 2022 that it will no longer pursue the consummation of the acquisition, then the Company will be required to redeem all of the outstanding 2.400% Senior Notes and 3.200% Senior Notes pursuant to a special mandatory redemption at a redemption price equal to 101% of the aggregate principal amount of the 2.400% Senior Notes and the 3.200% Senior Notes, respectively, plus accrued and unpaid interest to, but excluding, the date of such special mandatory redemption.

The 0.650% Senior Notes will not be subject to the special mandatory redemption.

The Company used the net proceeds for the acquisition of the Lehigh West Region business, which closed on October 1, 2021, and for general corporate purposes.

See Note 6 for further information regarding the Senior Notes.

The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility), which expires on September 22, 2021.

The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility).

On September 22, 2021, the Company extended the maturity of the Trade Receivable Facility to September 21, 2022.

The Trade Receivable Facility contains a cross-default provision to the Company’s other debt agreements.

Management intends to renew the Trade Receivable Facility beyond September 22, 2021.

Subject to certain conditions, including lenders providing the requisite commitments, the Trade Receivable Facility may be increased to a borrowing base not to exceed $500 million.

The Company has a $700 million five-year senior unsecured revolving facility (the Revolving Facility), which expires on December 5, 2024.

1 unchanged sentence

Additionally, if there are no amounts outstanding under the Revolving Facility and the Trade Receivable Facility, consolidated debt, including debt for which the Company is a co-borrower, may be reduced by the Company’s unrestricted cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million, for purposes of the covenant calculation.

Page 43 of 52

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The Ratio is calculated as debt, including debt for which the Company is a co-borrower, divided by consolidated EBITDA, as defined by the Company’s Revolving Facility, for the trailing-twelve months.

3 unchanged sentences

Certain other nonrecurring items, if they occur, can affect the calculation of consolidated EBITDA.

At June 30, 2021, the Company’s ratio of consolidated net debt-to-consolidated EBITDA, as defined by the Company’s Revolving Facility, for the trailing-twelve months was 1.95 times and was calculated as follows:

July 1, 2020 to

June 30, 2021

Page 45 of 54

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

At September 30, 2021 , the Company’s ratio of consolidated net debt-to-consolidated EBITDA, as defined by the Company’s Revolving Facility, for the trailing-twelve months was 3.49 times and was calculated as follows:

October 1, 2020 to

September 30, 2021

(Dollars in Millions)

6 unchanged sentences

EBITDA related to acquired operations (Pre-acquisition

July 1, 2020 to April 30, 2021) (1)

October 1, 2020 to July 31, 2021) ( 1)

Interest income

1 unchanged sentence

Consolidated net debt, as defined and including debt for which the Company

is a co-borrower, at June 30, 2021

is a co-borrower, at September 30, 2021

Consolidated net debt-to-consolidated EBITDA, as defined by the Company’s

Revolving Facility, at June 30, 2021 for the trailing-twelve months EBITDA

Revolving Facility, at September 30, 2021 for the trailing-twelve months EBITDA

(1) Inclusive of one-time, non-recurring and transaction-related expenses.

In the event of a default on the Ratio, the lenders can terminate the Revolving Facility and Trade Receivable Facility and declare any outstanding balances as immediately due.

There was $240 million outstanding under the Trade Receivable Facility and no borrowings under the Revolving Facility as of June 30, 2021.

There was $20 million outstanding under the Trade Receivable Facility and no borrowings under the Revolving Facility as of September 30, 2021.

Cash on hand, along with the Company’s projected internal cash flows and availability of financing resources, including its access to debt and equity capital markets, is expected to continue to be sufficient to provide the capital resources necessary to support anticipated operating needs, cover debt service requirements, address near-term debt maturities, meet capital expenditures and discretionary investment needs, fund certain acquisition opportunities that may arise, allow the repurchase of shares of the Company’s common stock and allow for payment of dividends for the foreseeable future.

At June 30, 2021, the Company had $857.4 million of unused borrowing capacity under its Revolving Facility and Trade Receivable Facility, subject to complying with the related leverage covenant.

Historically, the Company has

At September 30, 2021, the Company had $1,077.4 million of unused borrowing capacity under its Revolving Facility and Trade Receivable Facility, subject to complying with the related leverage covenant.

Historically, the Company has successfully extended the maturity dates of these credit facilities.

Further, as of September 30, 2021, the Company does not have any publicly-traded debt that matures prior to 2023.

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in March 2020 and provided liquidity support for businesses.

Through the CARES Act, the Company deferred payment of $27.6 million, representing the 6.2% employer share of Social Security taxes for the period from March 27, 2020 through December 31, 2020.

Half of the deferred obligation will be due December 31, 2021 and the remaining half will be due December 31, 2022.

There will be no interest assessed on amounts deferred.

Page 46 of 54

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

successfully extended the maturity dates of these credit facilities.

Further, as of June 30, 2021 , the Company does not have any publicly-traded debt that matures prior to 202 3 .

As of June 30, 2021, the Company had restricted cash of $17.2 million for the purchase of like-kind exchange replacement assets under Section 1031 of the Internal Revenue Code and related IRS procedures (Section 1031) available to use until November 22, 2021.

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in March 2020 and provided liquidity support for businesses.

Through the CARES Act, the Company deferred payment of $27.6 million, representing the 6.2% employer share of Social Security taxes for the period from March 27, 2020 through December 31, 2020.

Half of the deferred obligation will be due December 31, 2021 and the remaining half will be due December 31, 2022.

There will be no interest assessed on amounts deferred.

TRENDS AND RISKS

17 unchanged sentences

the potential negative impact of the COVID-19 pandemic on the Company’s ability to continue supplying heavy-side building materials and related services at normal levels or at all in the Company’s key regions;

the duration, impact and severity of the impact of the COVID-19 pandemic on the Company, including the markets in which the Company does business, its suppliers, customers or other business partners as well as

Page 45 of 52

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

the Company’s employees ;

the economic impact of government responses to the pandemic;

8 unchanged sentences

the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures;

levels of construction spending in the markets the Company serves;

levels of construction spending in

Page 47 of 54

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

the markets the Company serves;

a reduction in defense spending and the subsequent impact on construction activity on or near military bases;

21 unchanged sentences

the concentration of customers in construction markets and the increased risk of potential losses on customer receivables;

the impact of the level of demand in the Company’s end-use markets, production levels and management of production

Page 46 of 52

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter June 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

costs on the operating leverage and therefore profitability of the Company;

the impact of the level of demand in the Company’s end-use markets, production levels and management of production costs on the operating leverage and therefore profitability of the Company;

the possibility that the expected synergies from acquisitions will not be realized or will not be realized within the expected time period, including achieving anticipated profitability to maintain compliance with the Company’s leverage ratio debt covenant;

changes in tax laws, the interpretation of such laws and/or administrative practices that would increase the Company’s tax rate;

changes in tax laws, the interpretation of such laws and/or administrative practices , including acquisitions or divestitures, that would increase the Company’s tax rate;

violation of the Company’s debt covenant if price and/or volumes return to previous levels of instability;

4 unchanged sentences

All of the Company’s forward-looking statements should be considered in light of these factors.

In addition, other risks and uncertainties not presently known to the Company or that the Company considers immaterial could affect the accuracy of its forward-looking statements, or adversely affect or be material to the Company.

In addition, other risks and uncertainties not presently known to the Company or that the Company considers immaterial could affect the accuracy of its forward-

Page 48 of 54

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

looking statements, or adversely affect or be material to the Company.

The Company assumes no obligation to update any such forward-looking statements.

16 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter Ended June 30, 2021

For the Quarter Ended September 30, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis