What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-19 · 170 added, 140 removed, 242 unchanged (56% of the section changed)

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The Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 350 quarries, mines and distribution yards in 28 states, Canada and The Bahamas.

In 2020, the aggregates product gross profit accounted for 68% of the Company’s consolidated total product gross profit.

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

Specifically, the Company has two cement plants in Texas, and ready mixed concrete and asphalt operations in Texas, Colorado and Wyoming.

Asphalt operations and paving services are exclusively in Colorado.

In 2021, the aggregates product gross profit accounted for 67% of the Company’s consolidated total product and services gross profit.

Martin Marietta also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services, in markets that are naturally vertically integrated and where the Company has a leading aggregates position.

The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects.

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Magnesia Specialties’ products are shipped to customers domestically and worldwide.

On October 1, 2021, the Company acquired the Lehigh Hanson West Region business (Lehigh West Region) for $2.28 billion in cash.

The acquisition included a portfolio of 17 active aggregates quarries, two cement plants with related distribution terminals, and targeted downstream operations in California, Arizona, Nevada and Oregon.

These operations provided a new upstream, materials-led growth platform across several of the nation’s largest megaregions in California and Arizona, solidifying the Company’s position as a leading coast-to-coast aggregates producer.

The acquired cement plants, distribution terminals and California ready mixed concrete operations are classified as assets held for sale and discontinued operations as of December 31, 2021.

The Lehigh West Region business is reported in the Company’s West Group.

On July 30, 2021, the Company acquired assets of Southern Crushed Concrete (SCC).

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

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

SCC is reported in the Company’s West Group.

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

Paul area, a large and fast-growing midwestern metropolitan area.

The Tiller acquisition complements the Company’s existing product offerings in the surrounding areas.

Additionally, Tiller sells asphalt solely as a materials provider and does not offer paving or other associated services.

Tiller is reported in the Company’s East Group.

FOR FURTHER INFORMATION WITH RESPECT TO THE DEVELOPMENT OF THE COMPANY’S BUSINESS PRIOR TO 2021, SEE THE INFORMATION APPEARING UNDER THE HEADING “GENERAL” INCLUDED IN PART I, ITEM 1 OF THE COMPANY’S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2019, WHICH INFORMATION IS INCORPORATED BY REFERENCE.

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East Group and West Group.

The East Group provides aggregates products only.

The East Group provides aggregates and asphalt products only.

The West Group provides aggregates, cement and downstream products.

The top ten states accounted for 87% of the Building Materials Business total revenues in 2020:

Texas, Colorado, North Carolina, Georgia, Iowa, Florida, South Carolina, Indiana, Maryland and Nebraska.

The Company’s Magnesia Specialties is reported as a separate segment, which includes its magnesia-based chemicals and dolomitic lime businesses.

The ten largest revenue-generating states accounted for 84% of the Building Materials business total revenues in 2021:

Texas, Colorado, North Carolina, Georgia, Minnesota, Iowa, Florida, South Carolina, Indiana and Maryland.

The Company’s Magnesia Specialties business is reported as a separate segment, which includes its magnesia-based chemicals and dolomitic lime businesses.

For more information on the organization and geographic area of the Company’s business segments, see “ Note A:

Accounting Policies-Organization ” and “ Note P:

Segments ” of the “Notes to Financial Statements” of the Company’s consolidated financial statements, which appear in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K (this Form 10-K).

Accounting Policies ” and “ Note P:

Building Materials Business

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access to capital markets;

and demographic, geographic, employment and population dynamics.

The heavy-side construction business, inclusive of much of the Company’s operations, is conducted outdoors.

Therefore, erratic weather patterns, seasonal changes, and other weather-related conditions, including precipitation, flooding, hurricanes, snowstorms, extreme temperatures and droughts, can significantly affect production schedules, shipments, costs, efficiencies and profitability.

Generally, the financial results for the first and fourth quarters are subject to the impacts of winter weather, while the second and third quarters are subject to the impacts of heavy precipitation.

Aggregates are an engineered, granular material consisting of crushed stone, sand and gravel, which 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, the Company is the largest operator of underground aggregates mines in the United States with 14 active underground mines located in the East Group.

Cement is the basic agent used to bind aggregates, sand and water in the production of ready mixed concrete.

The Company has a strategic and leading cement position in Texas, with production facilities in Midlothian, Texas, south of Dallas/Fort Worth, and Hunter, Texas, north of San Antonio.

These plants produce Portland and specialty cements, have a combined

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and demographic,

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annual clinker capacity of 4.5 million tons, and operated at 80% utilization in 20 20 .

The Midlothian plant permit allows the Company to expand production by up to 0.8 million additional tons.

In addition to the two production facilities, the Company operates several cement distribution terminals.

Calcium carbonate in the form of limestone is the principal raw material used in the production of cement.

The Company owns more than 600 million tons of limestone reserves adjacent to its cement production plants.

Ready mixed concrete, a mixture primarily consisting of cement, aggregates, sand and water, is measured in cubic yards and specifically batched or produced for customers’ construction projects and then transported 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).

The Company operates 120 ready mix plants in Texas, Colorado and Wyoming.

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.

The Company’s asphalt and paving operations are exclusively in Colorado.

Market dynamics for these downstream product lines include a highly competitive environment and lower barriers to entry compared with aggregates and cement.

The Building Materials Business markets its products primarily to the construction industry, with 36% of aggregates shipments in 2020 to contractors in connection with highway and other public infrastructure projects and the balance of its shipments primarily to contractors for nonresidential and residential construction projects.

geographic, employment and population dynamics.

The heavy-side construction business is conducted outdoors , as are much of the Building Materials business’s 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.

Generally, the financial results for the first and fourth quarters are subject to the impacts of winter weather, while the second and third quarters are subject to the impacts of heavy precipitation.

The Building Materials business markets its products primarily to the construction industry, with 34% of its 2021 organic aggregates shipments sold to contractors in connection with highway and other public infrastructure projects and the balance of its organic shipments sold primarily to contractors for nonresidential and residential construction projects.

The Company also believes exposure to fluctuations in nonresidential and residential, or private-sector, construction spending is lessened by the business’ mix of public sector-related shipments.

Funding of public infrastructure, the Company’s largest end-use market, is discussed in greater detail under “ Building Materials Business’ Key Considerations—Public Infrastructure ” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations ,’’ of this Form 10-K.

Funding of public infrastructure, historically the Company’s largest end-use market, is discussed in greater detail under “ Building Materials Business’ Key Considerations—Public Infrastructure ” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations ,’’ of this Form 10-K.

The Building Materials business covers a wide geographic area.

The five largest revenue-generating states (Texas, Colorado, North Carolina, Georgia, and Iowa) accounted for 71% of the Building Materials Business’ total revenues by state of destination in 2020.

The five largest revenue-generating states, determined by state of destination, (Texas, Colorado, North Carolina, Georgia and Minnesota) accounted for 68% of the Building Materials business’ total revenues by state of destination in 2021.

The Building Materials business is accordingly affected by the economies in these regions and has been adversely affected in part by recessions and weaknesses in these economies from time to time.

In 2020, the coronavirus (COVID-19) pandemic impacted the global economy.

The Company, being considered an essential business, continued to operate but experienced a modest volume decline in aggregates shipments due to a slowdown in overall construction activity.

However, management believes this slowdown represents a delay rather than cancellations of projects.

The Company, being considered an essential business, continued to operate but experienced a modest decline in aggregates shipments in 2020 due to a slowdown in overall construction activity and only modest growth in organic aggregates shipments in 2021.

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, the Company is the largest operator of underground aggregates mines in the United States, with 14 active underground mines located in the East Group.

Natural aggregates sources can be found in relatively homogeneous deposits in certain areas of the United States.

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In addition, acquisitions have enabled the Company to extend its customer base through increased access to rail transportation.

Proximity of quarry facilities to customers or to long-haul transportation corridors is an important factor in competition for aggregates businesses.

The Company’s distribution network moves aggregates materials from domestic and offshore sources via its long-haul rail and waterborne distribution network, to markets where aggregates supply is limited.

Proximity of quarry facilities to customers’ construction sites or to long-haul transportation corridors is an important factor in competition for aggregates businesses.

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 the Company’s 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.

At December 31, 2020, the Company’s distribution facilities consisted of 84 terminals.

At December 31, 2021, the Company’s aggregates distribution facilities consisted of 84 terminals.

The long-haul distribution network can diversify market risk for locations that engage in long-haul transportation of their aggregates products.

The risk of a downturn in one market may be somewhat mitigated by other markets served by the location, particularly where a producing quarry serves a local market and transports products via rail, water and/or truck to be sold in other markets.

As the Company continues to move more aggregates by rail and water, associated internal freight costs are expected to reduce gross margin.

This typically occurs where the Company transports aggregates from a production location to a distribution location, and the customer pays a selling price that includes a freight component.

Margins are negatively affected because the Company typically does not charge the customer a profit associated with the transportation component of the selling price of the materials.

Moreover, the Company’s expansion of its rail-based distribution network, coupled with the extensive use of rail service, increases the Company’s dependence on and exposure to railroad performance, including track congestion, crew availability, railcar availability, locomotive availability, and the ability to renegotiate favorable railroad shipping contracts.

The waterborne distribution network also increases the Company’s exposure to certain risks, including, among other items, meeting minimum tonnage

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requirements of shipping contracts, demurrage costs, fuel costs, ship availability and weather disruptions.

However, the Company’s expansion of its rail-based distribution network, coupled with the extensive use of rail service, increases the Company’s dependence on and exposure to railroad performance, including track congestion, crew availability, railcar availability, locomotive availability, and the ability to renegotiate 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 the Company’s aggregates to various coastal ports.

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This property can serve as buffer property or additional mineral reserve capacity, assuming the underlying geology supports economical aggregates mining.

In either instance, the acquisition of additional property around an existing quarry allows the expansion of the quarry footprint and extension of quarry life.

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either instance, the acquisition of additional property around an existing quarry allows the expansion of the quarry footprint and extension of quarry life.

Some locations having limited reserves may be unable to expand.

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When acquired, new locations sometimes do not satisfy the Company’s internal safety, maintenance, pit development, or other standards, and may require additional resources before benefits of the acquisitions are fully realized.

Industry consolidation slowed several years ago as the number of suitable small- to mid-sized acquisition targets in high-growth markets declined.

During that period of fewer acquisition opportunities, the Company focused on investing in internal expansion or efficiency projects in high-growth markets.

The number of acquisition opportunities has increased in the last several years as the economy recovered from the protracted recession.

Opportunities include public and large private, family-owned businesses, as well as asset swaps and divestitures from companies executing their strategic plans, rationalizing non-core assets, and repairing financially-constrained balance sheets.

The Company’s Board of Directors (the Board of Directors) and management continue to review and monitor the Company’s long-term strategic plans, commonly referred to as SOAR (Strategic Operating Analysis and Review), which include assessing business combinations and arrangements with other companies engaged in similar businesses, increasing the Company’s presence in its core businesses, investing in internal expansion projects in high-growth markets, and pursuing new opportunities related to the Company’s existing markets.

The Company reports cement and downstream operations within the Building Materials Business’ West Group reportable segment;

their results are affected by volatile factors, including fuel costs, operating efficiencies and weather, to a greater extent than the Company’s aggregates operations.

Liquid asphalt and cement serve as key raw materials in the production of hot mix asphalt and ready mixed concrete, respectively.

Therefore, fluctuations in prices for these raw materials directly affect the Company’s operating results.

Acquisition opportunities include public and large private, family-owned businesses, as well as asset swaps and divestitures from companies executing their strategic plans, rationalizing non-core assets, and repairing financially-constrained balance sheets.

The Company’s Board of Directors and management continue to review and monitor the Company’s long-term strategic plans, commonly referred to as SOAR (Strategic Operating Analysis and Review), which include assessing business combinations and arrangements with other companies engaged in similar businesses, increasing the Company’s presence in its core businesses, investing in internal expansion projects in high-growth markets, and pursuing new opportunities related to the Company’s existing markets.

Environmental and zoning regulations have made it increasingly difficult for the aggregates industry to expand existing quarries and to develop new quarry operations.

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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.

The Company has a strategic and leading cement position in Texas, with production facilities in Midlothian, Texas, south of Dallas/Fort Worth, and Hunter, Texas, north of San Antonio.

These plants, which produce Portland and specialty cements, have a combined annual clinker capacity of 4.5 million tons, and operated at 76% utilization in 2021.

The Midlothian plant permit allows the Company to expand production by up to 0.8 million additional tons.

In 2021, as part of the Lehigh West Region acquisition, the Company acquired two cement production facilities, including one in Redding, California and one in Tehachapi, California, and several cement distribution terminals.

These operations are classified as assets held for sale as of December 31, 2021.

Calcium carbonate in the form of limestone is the principal raw material used in the production of cement.

The Company owns more than 600 million tons of limestone reserves adjacent to its Texas cement production plants and more than 50 million tons of limestone reserves adjacent to its California cement production plants.

The cement operations of the Building Materials business produce Portland and specialty cements.

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cement consumption occurs in the six months between May and October.

Approximately 70% - 75% of all cement shipments are sent to ready mixed concrete operators.

The rest are shipped to

A World-Class Organization Built for Success

Approximately 70% to 75% of all cement shipments are sent to ready mixed concrete operators.

The rest are shipped to manufacturers of concrete-related products, contractors, materials dealers and oil well/mining/drilling companies, as well as government entities.

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manufacturers of concrete-related products, contractors, materials dealers and oil well/mining/drilling companies, as well as government entities.

Energy accounted for approximately 23% of the cement production cost profile in 2021.

Therefore, profitability of cement is affected by changes in energy prices and the available supply of these products.

The Company currently has fixed-price supply contracts for coal but also consumes natural gas, alternative fuel and petroleum coke.

Further, profitability of the cement operations is also subject to kiln maintenance, which typically requires a plant to be shut down for a period of time.

The limestone reserves used as a raw material for cement are located on Company-owned property, adjacent to each of the two cement plants.

The Company currently has fixed-price supply contracts for coal and natural gas, but also consumes alternative fuel and petroleum coke.

Further, profitability of the cement operations is also impacted by kiln maintenance, which typically requires a plant to be shut down for a period of time.

The limestone reserves used as a raw material for cement are located on Company-owned property, adjacent to each of the cement plants.

Management believes that its reserves of limestone are sufficient to permit production at the current operational levels for the foreseeable future.

The cement operations generally deliver its products upon receipt of customer orders or requests.

The 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 aggregates used for ready mixed concrete is a washed material with limited amounts of fines (such as dirt and clay).

The Company operates 150 ready mix plants in Texas, Colorado, California, Arizona and Wyoming.

The California ready mixed concrete operations are classified as assets held for sale as of December 31, 2021.

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.

The Company operates 35 asphalt plants in Arizona, California, Colorado and Minnesota.

The Company also provides paving services in Colorado and California.

Market dynamics for these downstream product lines include a highly competitive environment and lower barriers to entry compared with aggregates and cement.

The cement and downstream operations results are affected by volatile factors, including energy-related costs, operating efficiencies and weather, to a greater extent than the Company’s aggregates operations.

Liquid asphalt and cement serve as key raw materials in the production of hot mix asphalt and ready mixed concrete, respectively.

Therefore, fluctuations in prices for these raw materials directly affect the Company’s operating results.

Magnesia Specialties Business

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Dolomitic lime products sold to external customers are used primarily by the steel industry.

Products used in the steel industry, either directly as dolomitic lime or indirectly as a component of other industrial products, accounted for 34% of the Magnesia Specialties’ total revenues in 2020, attributable primarily to the sale of dolomitic lime products.

In 2021, 34% of the Magnesia Specialties’ total revenues were attributable to products used in the steel industry, primarily dolomitic lime.

Accordingly, a portion of the revenues and profitability of the Magnesia Specialties business is affected by production and inventory trends in the steel industry.

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The dolomitic lime business runs most profitably at 70% or greater steel capacity utilization.

domestic capacity utilization was negatively impacted by COVID-19 and averaged 65% in 2020, according to the Federal Reserve.

Steel production in 2020 decreased 18% versus 2019.

According to the Federal Reserve, domestic capacity utilization averaged 81% in 2021 versus 65% in 2020, which was negatively impacted by COVID-19.

In the Magnesia Specialties business, a significant portion of costs is of a fixed or semi-fixed nature.

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To help mitigate this risk, the Magnesia Specialties business has fixed-price agreements for approximately 64% of its 2022 coal, natural gas and petroleum coke needs.

For 2020, the Company’s average cost per MCF (thousand cubic feet) for natural gas decreased 9% versus 2019.

For 2021, the Company’s average cost per MCF (thousand cubic feet) of natural gas increased 21% versus 2020.

Given high fixed costs, low capacity utilization can negatively affect the segment’s results from operations.

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Accordingly, these products are not as dependent on the steel industry as the dolomitic lime product line.

However, demand for chemicals products in 2020 was negatively impacted by COVID-19.

Demand for chemicals products recovered in 2021 after being negatively impacted by COVID-19 in 2020.

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The principal raw materials used in the Magnesia Specialties business are dolomitic limestone and magnesium-rich brine.

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The segment can be affected by the specific transportation and other risks and uncertainties outlined under Item 1A, “Risk Factors,” of this Form 10-K.

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Patents and Trademarks

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An estimated 83% of U.S.

clinker capacity is owned by companies headquartered outside of the United States.

The Company’s cement operations also compete with imported cement because of the higher value of the product and the existence of major ports or terminals in Texas.

clinker capacity is owned by

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companies headquartered outside of the United States.

The Company’s cement operations also compete with imported cement because of the higher value of the product and the existence of major ports or terminals in Texas and California .

The Company’s ready mixed concrete and asphalt and paving operations are also in markets with numerous operators, large and small.

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While the revenues of the Magnesia Specialties business in 2021 were predominantly domestic, a portion was derived from customers located outside the United States.

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Environmental and Governmental Regulations

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The direct costs of ongoing environmental compliance were approximately $31.0 million in 2021 and $32.8 million in 2020 and are related to the Company’s environmental staff, ongoing monitoring costs for various matters (including those matters disclosed in this Form 10-K), and asset retirement costs.

Capitalized costs related to environmental control facilities were approximately $17 million in 2020 and are expected to be approximately $15 million and $18 million in 2021 and 2022, respectively.

Capitalized costs related to environmental control facilities were approximately $12.0 million in 2021 and are expected to be approximately $18.0 million in each of 2022 and 2023.

The Company’s capital expenditures for environmental matters were not material to its results of operations or financial condition in 2021 and 2020.

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Despite the Company’s compliance efforts, risk of environmental liability is inherent in the Company’s businesses, and environmental liabilities could have a material adverse effect on the Company in the future.

Complying with governmental and environmental regulations did not have and is not expected to have a material effect on the Company’s capital expenditures, earnings and competitive position, other than as discussed in this section.

Many of the applicable requirements of environmental laws are satisfied by procedures that the Company adopts as best business practices in the ordinary course of its operations.

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CKD is currently exempted from federal hazardous waste regulations under Subtitle C of the Resource Conservation and Recovery Act.

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The environmental accruals recorded by the Company are based on internal studies of the required remediation costs and estimates of potential costs that arise from time to time under federal, state and/or local environmental protection laws.

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See “Legal Proceedings” under Item 3 of this Form 10-K, “Note O:

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Commitments and Contingencies” of the “Notes to Financial Statements” of the Company’s consolidated financial statements included under Item 8, “Financial Statements and Supplemental Data,” of this Form 10-K, and the “Environmental Regulation and Litigation” section included under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-K.

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As the Company locates and acquires new production and distribution facilities, the Company works closely with local authorities during the zoning and permitting processes to design new quarries, mines, production and distribution facilities in such a way as to minimize disturbances.

The Company frequently acquires large tracts of land so that quarry, mine, production and distribution facilities can be situated with substantial distance from surrounding property owners.

The Company frequently acquires large tracts of land so that quarry, mine, production and distribution facilities can be situated at a substantial distance from surrounding property owners.

Also, in certain markets the Company’s ability to transport material by rail and water allows it to locate its facilities further away from residential areas.

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The Mine Safety and Health Administration (MSHA) and the Occupational Safety and Health Administration (OSHA) have established occupational thresholds for crystalline silica exposure as respirable dust.

The Company monitors occupational exposures at its facilities and implements dust control procedures and/or makes available appropriate respiratory protective equipment to maintain the occupational exposures at or below the appropriate levels.

The Company, through safety information sheets and other means, also communicates what it believes to be appropriate warnings and cautions its employees and customers about the risks associated with excessive, prolonged inhalation of mineral dust in general and crystalline silica in particular.

The Company, through safety information sheets and other means, also communicates appropriate warnings and cautions its employees and customers about the risks associated with excessive, prolonged inhalation of mineral dust in general and crystalline silica in particular.

The Company is generally required by state or local laws or pursuant to the terms of an applicable lease to reclaim quarry sites after use.

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For example, the perimeter and interior walls of an open pit quarry are sloped and benched as they are developed to prevent erosion and provide stabilization.

This sloping and benching meets dual objectives -- safety regulations required by MSHA for ongoing operations as well as final reclamation requirements.

This sloping and benching meets both safety regulations required by MSHA for ongoing operations as well as final reclamation requirements.

Therefore, these types of activities are included in normal operating costs and are not a part of the asset retirement obligation.

Historically, the Company has not incurred substantial reclamation costs in connection with the closing of quarries.

Reclaimed quarry sites owned by the Company are from time to time available for sale, typically for commercial development or use as reservoirs.

Historically, the

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Company has not incurred substantial reclamation costs in connection with the closing of quarries.

Reclaimed quarry sites owned by the Company are from time to time available for sale, typically for commercial development or use as reservoirs , or have been converted for recreational use by the local community.

Greenhouse Gases and Climate Change

Amid concerns that greenhouse gas (GHG) emissions are contributing to climate change, a number of governmental bodies, including the U.S.

We have identified certain risks and opportunities below with respect to the physical impacts of climate change and the transition to a low carbon economy.

Policy and Regulatory Matters A number of governmental bodies, including the U.S.

Congress and various U.S.

states, have proposed, enacted or are contemplating legislative and regulatory changes to mitigate or address the potential impacts of climate change, including provisions for emissions reporting or reductions, the use of alternative fuels, carbon credits (such as a "cap and trade" system) and a carbon tax.

states, have proposed, enacted or are contemplating legislative and regulatory changes to mitigate or address the potential impacts of climate change, including provisions for greenhouse gas (GHG) emissions reporting or reductions, the use of alternative fuels, carbon credits (such as a "cap and trade" system) and a carbon tax.

For example, in the United States, the United States Environmental Protection Agency (USEPA) promulgated a rule mandating that sources considered to be large emitters of GHGs report those emissions.

The manufacturing operations of the Company’s Magnesia Specialties business release carbon dioxide, methane and nitrous oxides during the production of lime, magnesium oxide and hydroxide products.

The Company’s two magnesia-based chemicals facilities, as well as its two cement plants in Texas, file annual reports of their GHG emissions in accordance with the USEPA reporting rule.

The primary operations of the Company, however, including its aggregates, ready mixed concrete and asphalt and paving product lines, are not major sources of GHG

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The Company’s two magnesia-based chemicals facilities, as well as its two cement plants in Texas and two newly-acquired cement plants in California, file annual reports of their GHG emissions in accordance with the USEPA reporting rule.

The primary operations of the Company, however, including its aggregates, ready mixed concrete and asphalt and paving product lines, are not so-called “major” sources of GHG emissions subject to the USEPA reporting rule.

In fact, most of the GHG emissions from aggregates plant operations are tailpipe emissions from mobile sources, such as heavy construction and earth-moving equipment.

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Supreme Court ruled in June 2014 that the USEPA exceeded its statutory authority in issuing the Tailoring Rule but upheld the Best Available Control Technology (BACT) requirements for GHGs emitted by sources already subject to PSD or Title V permitting requirements for other pollutants.

Both of the Company’s cement plants, as well as its Magnesia Specialties plants, hold Title V Permits, and each (other than the Manistee, Michigan facility) is also subject to PSD requirements.

The Company’s cement plants, as well as its Magnesia Specialties plants, hold Title V Permits, and each (other than the Redding, California cement plant and the Manistee, Michigan facility) is also subject to PSD requirements.

With the change of the U.S.

presidential administration, it is too early to determine whether the USEPA will proceed with revisions of the Tailoring Rule or proceed otherwise.

presidential administration in 2021, it is currently unclear whether the USEPA will proceed with revisions of the Tailoring Rule or proceed otherwise.

It is also unknown how the USEPA may revise BACT requirements.

In fact, although several large-scale projects for carbon capture are in the development phase, no technologies or methods of operation for reducing or capturing GHGs have been proven successful in large scale applications, other than improvements in fuel efficiency.

In fact, although several large-scale projects for carbon capture are in the development phase, no technologies or methods of operation for reducing or capturing GHGs have yet been proven successful in large scale applications, other than improvements in fuel efficiency.

Thus, if future modifications to our facilities require PSD review for other pollutants, GHG BACT requirements could be triggered and may require significant additional costs.

However, it is currently impossible to estimate the cost of any such future requirements.

President Biden has made climate change a central focus of his administration.

In addition to re-entering the Paris Agreement on January 27, 2021, President Biden issued a pair of executive orders and a presidential memorandum making the climate change central to U.S.

President Biden also has taken a number of steps to make climate change a central focus of his administration, including issuing a pair of executive orders and a presidential memorandum making climate change central to U.S.

policy and setting out several administrative priorities and undertakings.

Although it is still too early to determine the actions the federal governmental will take to implement the orders, or the full scope, timing or ramifications of such measures, it is clear that the administration intends to make a significant and sweeping push on the climate front and, like other signatories to the Paris Agreement, intends to pursue a goal of a Net Zero GHG by 2050.

The orders, combined with democratic control of both chambers of the 117 th U.S.

Congress, suggest that additional executive and/or legislative action is likely, although the timing and scope of such action is unclear.

It also seems probable that the USEPA and other agencies will likely use their rule-making authority and procurement decisions to further address climate change.

Various states where the Company has operations are considering climate change initiatives as well, and the Company may be subject to state regulations in addition to any federal laws and rules that are passed.

If and when the USEPA issues new regulations and/or Congress passes additional legislation on GHGs, the Woodville, Ohio and Manistee, Michigan Magnesia Specialties operations, as well as the Company’s two cement plants in Texas, which release CO 2 in certain of their processes and use carbon-based fuels for power equipment, kilns and the Company’s mobile fleet, will likely be subject to any new requirements.

The Company anticipates that any increased operating costs or taxes relating to GHG emission limitations at the Woodville or cement operations facilities would be passed on to customers.

President Biden reentered the Paris Agreement in January 2021 and later announced the United States’ reduction commitments under the Paris Agreement, including a 50% to 52% economy-wide reduction in net GHG emissions from 2005 levels by 2030.

More recently, President Biden set out a pact with 103 countries and jurisdictions, known as the Global Methane Pledge, to reduce global methane emissions by 30% from 2020 levels by the end of the decade.

In November 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (the “IIJ Act”), which provides billions of dollars in new funding for public transit and clean energy projects intended, in part, to address climate change, including road, bridge and other major infrastructure projects.

In addition, the currently-proposed Build Back Better bill (the “BBB bill”) calls for significant U.S.

government investments in the commercialization and scale-up of energy and climate technologies, as well as tax credits for businesses that invest in clean energy.

Although it is still too early to determine the actions the federal government will ultimately take to implement these orders, commitments and laws, or the full scope, timing or ramifications of such measures, it is clear that the current administration intends and has already begun to make a significant and sweeping push on the climate front and, like other signatories to the Paris Agreement, intends to pursue a goal of a Net Zero GHG by 2050.

These measures, combined with Democratic control of both chambers of the 117 th U.S.

Congress, also suggest that additional executive and/or legislative action is reasonably likely, although the timing and scope of such action is unclear.

It also seems probable that the USEPA and other agencies will use their rule-making authority and procurement decisions to further address climate change.

Various states where the Company has operations have enacted or are considering climate change initiatives as well, and the Company may be subject to state regulations in addition to any federal laws and rules that are passed.

The Company’s cement plants in California have not taken part in the auctions because the state previously allocated emission rights free of charge to the cement industry, which

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have been sufficient for operations to date.

The Company will continue to monitor the cap-and-trade program closely as part of its production planning to assess the impact of potentially stricter requirements in the future and/or the need to purchase rights to emit GHGs in California.

If and when the USEPA issues new regulations and/or Congress passes additional legislation restricting GHGs emissions, the Woodville, Ohio and Manistee, Michigan Magnesia Specialties operations, as well as the Company’s cement plants in Texas and California, which release CO 2 in certain of their processes and use carbon-based fuels for power equipment, kilns and the Company’s mobile fleet, will likely be subject to any new requirements.

The Company anticipates that any increased operating costs or taxes relating to GHG emission limitations at the Woodville or cement facilities would be passed on to customers.

The magnesium oxide products produced at the Manistee operation, however, compete against other products that, due to the form and/or structure of the source material, require less energy in the calcination process, resulting in the generation of fewer GHGs per ton of production.

Therefore, the Manistee facility may be required to absorb additional costs due to the regulation of GHG emissions in order to remain competitive in pricing in that market.

In addition, the cement produced by the Company’s two plants in Texas, like other U.S.

Due to GHG emissions requirements, the Manistee facility may be required to absorb additional costs, including for taxes or capital investments in order to maintain competitive pricing in that market.

In addition, the cement produced by the Company’s cement plants, like other U.S.

operators, is subject to strict limits set by the U.S.

Department of Transportation (DOT) 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 operations.

For example, various industry associations are engaged in an effort to ask the U.S.

DOT and other agencies to revise their standards allowing for greater rates of clinker substitution, similar to the rates currently permitted for European cement producers.

If higher rates of substitution and blending are, in fact, permitted in the future, the result is likely to be both reduced clinker and power consumption in cement production, which would, in turn, reduce GHGs emitted in connection with each ton of cement produced in 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.

For example, various industry associations are engaged in an effort to ask the USDOT and other agencies to revise their standards allowing for greater rates of clinker substitution, similar to the rates currently permitted for European cement producers.

In light of the various regulatory uncertainties, the Company at this time cannot reasonably predict what the costs of any future compliance requirements may be.

Nonetheless, the Company does not believe it will have a material adverse effect on the financial condition or results of the operations of either the Magnesia Specialties business or Building Materials business.

The Company continues to monitor GHG regulations and legislation and its potential impact on the Company’s cement business, financial condition and product demand.

In addition to impacts from increased regulation, climate change may result in physical and financial impacts that could have adverse effects on the Company’s operations or financial condition.

The Company’s four cement plants, like those of other cement operators, require combustion of significant amounts of fuel to generate high kiln temperatures and creates carbon dioxide as a product of the calcination process, which is an unavoidable step in making cement clinker.

Accordingly, the Company continues to closely monitor GHG regulations and legislation and its potential impact on the Company’s cement business, financial condition and product demand.

The Company does not currently expect the impact to the cement business to be material to the Company.

Physical Impacts In addition to impacts from increased regulation, climate change may result in physical and financial impacts that could have adverse effects on the Company’s operations or financial condition.

Physical impacts may include disruptions in production and/or regional supply or product distribution networks due to major storm events, shifts in regional rainfall and temperature patterns and intensities, as well as flooding from sea level changes.

In addition, production and shipment levels for the Building Materials Business correlate with general construction activity, which occurs outdoors and, as a result, is affected by erratic weather patterns, seasonal changes and other unusual or unexpected weather-related conditions, which

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can significantly affect that business.

In addition, production and shipment levels for the Building Materials business correlate with general construction activity, which occurs outdoors and, as a result, is affected by erratic weather patterns, seasonal changes and other unusual or unexpected weather-related conditions, which can significantly affect that business.

Excessive rainfall and other severe weather jeopardize production, shipments and profitability in all markets served by the Company.

In addition, climate and inclement weather can reduce the useful life of an asset.

In particular, the Company’s operations in the southeastern and Gulf Coast regions of the United States and T he Bahamas are at risk for hurricane activity, most notably in August, September and October.

In particular, the Company’s operations in the southeastern and Gulf Coast regions of the United States and The Bahamas are at risk for hurricane activity, most notably in August, September and October.

The last few years brought an unprecedented amount of precipitation to the United States and particularly to Texas and the southeastern United States, notably the Carolinas, Florida and Georgia, where it impacted the Company’s facilities.

The Company’s businesses also are dependent on reliable sources of electricity and fuels.

In California and Arizona, continuing drought has led to water use restrictions in numerous water districts, and insufficient supply of water for our operations in those areas could impact production.

Other Transition Risks and Opportunities The Company’s businesses also are dependent on reliable sources of electricity and fuels.

The Company could incur increased costs or disruptions in its operations if climate change regulation or severe weather impacts the price or availability of electricity or fuels or other materials used in its operations.

These and other climate-related risks also could impact the Company’s customers, such as a downturn in the construction sector, which could lead to reduced demand for the Company’s products.

These and other climate-related risks, such as a downturn in the construction sector due to harsh weather, high precipitation or other changes in weather, also could impact the Company’s customers, which could lead to reduced demand for the Company’s products.

The Company may not be able to pass on to its customers all the costs relating to these risks.

Notwithstanding the foregoing risks and uncertainties relating to climate change, there may also be opportunities for the Company to increase its business or revenues.

Notwithstanding the foregoing risks and uncertainties relating to climate change, there may also be opportunities for the Company to increase its business or revenues, both in terms of the physical impacts of climate change and market opportunities associated with the transition to a low carbon economy.

For example, warm and/or moderate temperatures in March and November allow the construction season to start earlier and end later, respectively, which could have meaningful positive impacts on the Company’s first- and fourth-quarter results, respectively.

From a regulatory standpoint, as noted

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above, the recently-passed IIJ Act provides billions of dollars in new funding for roads, bridge and other major infrastructure projects.

This may result in new public transit and clean energy projects that address climate change .

In addition, the Company’s magnesium hydroxide products are used to increase fuel efficiency in various industries, including both coal- and gas-fired electricity generation, which has a direct impact on reducing energy use and GHG emissions by more GHG-intense companies.

Finally, the desire for sustainable building solutions has led to greater recognition of the benefits of concrete construction in the effort to move to a circular economy thorough innovative products, longevity and recyclability, and increased demand for green construction projects would have a direct impact on the Company’s cement and concrete business.

Organization and Governance The Company’s Board of Directors plays an essential role in determining strategic priorities and considers sustainability issues an integral part of its business oversight.

The Company established an Ethics, Environment, Safety and Health (EESH) Committee in 1994, which today meets at least three times annually and receives reports directly from management relating to environmental, safety, ethics and other sustainability matters, including GHG and climate matters.

The EESH Committee reports to the full Board, and number of other Board committees have overlapping responsibility for sustainability matters.

Management receives at least quarterly updates from operating personnel directly responsible for compliance relating to EESH matters.

The Company’s sustainability function is led by a Head of Sustainability, who reports to the Executive Vice President and General Counsel on climate and other sustainability matters.

The Company believes the above approach has been effective in integrating sustainability as a core element of its corporate governance .

In an effort to mitigate the risks to the Company associated with GHG emissions while ensuring and improving financial sustainability, the Company has adopted a corporate-wide management strategy that has resulted in multiple operating initiatives to implement or evaluate GHG reduction processes and technologies that also improve operational efficiencies, including:

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adding rail capacity in lieu of truck movements;

and installing emissions monitoring equipment and real-time fleet management software.

For example, in 2015, the Company’s Midlothian cement plant was recognized by the USEPA as a high performing, energy efficient facility following investments in innovative air pollution control technologies and usage of alternative fuels.

and installing state-of-the-art emissions control equipment at one of the Company’s magnesia plants and tire processing systems for fuel, as well as a larger natural gas line, at one of the Company’s cement plants.

The Company’s Midlothian cement plant has been recognized by the USEPA as a high-performing, energy-efficient facility following investments in innovative air pollution control technologies and usage of alternative fuels.

Land Management

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As of January 31, 2022, the Company has approximately 10,000 employees, of which approximately 7,600 are hourly employees and approximately 2,400 are salaried employees.

Included among these employees are nearly 900 hourly employees represented by labor unions (10.3% of the Company’s employees).

Of such amount, 9.7 % of the Building Materials Business’ hourly employees are members of a labor union and 100 % of the Magnesia Specialties segment’s hourly employees are represented by labor unions.

Approximately 1,400 hourly employees (14% of the Company’s employees) are represented by labor unions, representing 19 % of the Building Materials business’ hourly employees and 100 % of the Magnesia Specialties segment’s hourly employees.

The Company’s principal union contracts for the Magnesia Specialties business cover employees at the Manistee, Michigan, magnesia-based chemicals plant and the Woodville, Ohio, lime plant.

The Woodville and Manistee collective bargaining agreements expire June 2022 and August 2027, respectively.

The Company believes it has good relations with its employees, including its unionized employees.

The Company believes it has good relations with its employees, including its unionized workforce.

While the Company’s management does not expect material difficulties in renewing these labor contracts, there can be no assurance that a successor agreement will be reached at any of these locations.

Management believes the Company’s success depends on its ability to attract, develop and retain key personnel.

None of Martin Marietta’s accomplishments, and nothing it has achieved, would be possible without its employees;

None of Martin Marietta’s accomplishments are possible without its employees;

the people who both drive the work and are most affected by it.

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The Company’s management oversees various employee initiatives to foster and improve its employees and the Management Development and Compensation Committee regularly reviews the compensation program to achieve those objectives.

A World-Class Organization Built for Success

In 2020, the Company also launched an Inclusion and Engagement Task Force, comprised of employees with diverse race, gender, background and experience, which is focused on hiring, developing, and retaining diverse employees to strengthen our talent pipeline and increase employee engagement and retention.

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2 unchanged sentences

It includes the concept that every employee acts as a wingman for other employees, to observe and act on any situation that potentially creates unsafe circumstances.

The companywide safety performance, inclusive of our more recently acquired operations, continues to deliver near or better than world-class safety levels.

In 2020, 90 % of the Company’s business units worked without a reportable incident and 99 % of its business units worked without a lost-time incident, achieving a world-class lost-time incident rate for the fourth consecutive year.

The companywide safety performance, inclusive of its more recently acquired operations, delivered better than world-class safety levels in 2021, the fifth consecutive year for the Company’s lost-time incident rate .

The COVID-19 pandemic has underscored the importance of keeping the Company’s employees safe and healthy.

In response to the pandemic, the Company has taken actions aligned with the Centers for Disease Control and Prevention to implement robust protocols to protect its workforce so that they can safely perform their jobs.

The Company established a new employer brand in 2019 — ONE — that reflects the thoughts, feelings and hearts of employees at every level of Martin Marietta.

In 2019, the Company established a new employer brand — ONE — that reflects the thoughts, feelings and hearts of employees at every level of Martin Marietta.

This included a standard approach to safety mentoring that ensures every employee has the knowledge and resources needed to complete their work safely and efficiently.

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The Company makes available free of charge through its internet website its Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, and amendments to those reports, if any, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act).

These reports and any amendments are accessed via the Company’s website through a link with the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system maintained by the Securities and Exchange Commission (the SEC) at www.sec.gov .

Accordingly, the Company’s referenced reports and any amendments are made available as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC, once EDGAR places such material in its database.

You can access the Company’s filings with the SEC through the SEC website at www.sec.gov or through our website, and the Company strongly encourages you to do so.

Martin Marietta routinely posts information that may be important to investors on our website at www.ir.martinmarietta.com , and we use this website address as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (Reg FD).

The contents of our website are not incorporated by reference in this Form 10-K and shall not be deemed “filed” under the Securities Exchange Act of 1934, as amended.

The Company undertakes no obligation to update any statements herein for revisions or changes after the filing date of this Form 10-K other than as required by law.

The Company has adopted a Code of Ethical Business Conduct that applies to all of its Board of Directors, officers and employees.

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The Company’s Chief Executive Officer is also required to certify to the New York Stock Exchange each year that he is not aware of any violation by the Company of the New York Stock Exchange corporate governance listing standards.

SOAR to a Sustainable Future

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Part I ♦ Item 1A – Risk Factors

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-K

Item 1. Business