What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-03 compared with 2021-11-02 · 117 added, 396 removed, 271 unchanged (65% of the section changed)

2 unchanged sentences

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

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.

The Company also provides asphalt in Minnesota, subsequent to a business combination in the quarter ended June 30, 2021.

As of March 31, 2022, 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.

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.

In addition, the Company has two cement plants, cement distribution terminals and ready mixed concrete operations primarily in California that are classified as assets held for sale and reported as discontinued operations as of March 31, 2022.

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

4 unchanged sentences

BUILDING MATERIALS BUSINESS

(continuing operations only)

Reportable Segments

2 unchanged sentences

Kansas, Kentucky, Maryland,

Minnesota, Missouri, eastern Nebraska,

Minnesota, Missouri, Nebraska,

North Carolina, Ohio, Pennsylvania,

1 unchanged sentence

West Virginia, Nova Scotia and The Bahamas

Arkansas, Colorado, Louisiana, western

Nebraska, Oklahoma, Texas, Utah,

Arizona, Arkansas, California, Colorado, Louisiana, Oklahoma, Texas, Utah,

Washington and Wyoming

2 unchanged sentences

Aggregates, Cement, Ready

Mixed Concrete, Asphalt and

Mixed Concrete, Asphalt and Paving Services

Facility Types

Quarries, Mines, Plants and Distribution Facilities

Quarries, Mines, Plants and

Quarries, Mines, Asphalt Plants and

Distribution Facilities

Quarries, Mines, Cement Plants, Asphalt Plants, Ready Mixed Concrete Plants and

Distribution Facilities

Modes of Transportation

Truck, Railcar and Ship

Truck and Railcar

Truck, Railcar and Ship

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

9 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

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, 2021.

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

There were no changes to the Company’s critical accounting policies during the three months ended March 31, 2022.

RESULTS OF OPERATIONS

Earnings before interest;

Earnings from continuing operations before interest;

income taxes;

1 unchanged sentence

the earnings/loss from nonconsolidated equity affiliates;

acquisition-related expenses;

and the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting (Adjusted EBITDA) is an indicator used by the Company and investors to evaluate the Company’s operating performance from period to period.

and acquisition and integration expenses;

(Adjusted EBITDA) is an indicator used by the Company and investors to evaluate the Company’s operating performance from period to period.

Adjusted EBITDA is not defined by accounting principles generally accepted in the United States and, as such, should not be construed as an alternative to net earnings, earnings from operations or cash provided by operating activities.

1 unchanged sentence

Because Adjusted EBITDA excludes some, but not all, items that affect net earnings and may vary among companies, Adjusted EBITDA as presented by the Company may not be comparable with similarly titled measures of other companies.

A reconciliation of net earnings attributable to Martin Marietta to Adjusted EBITDA is as follows:

A reconciliation of net earnings from continuing operations attributable to Martin Marietta to Adjusted EBITDA is as follows:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in Millions)

Net Earnings Attributable to Martin Marietta

Net Earnings from continuing operations attributable to Martin Marietta

Interest expense, net of interest income

Income tax expense for controlling interests

Depreciation, depletion and amortization and

earnings/loss from nonconsolidated equity

Acquisition-related expenses

Impact of selling acquired inventory after markup

to fair value as a part of acquisition accounting

Depreciation, depletion and amortization and earnings/loss from

nonconsolidated equity affiliates

Acquisition and integration expenses

Adjusted EBITDA

2 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

East Group - Aggregates:

Reported average selling price

Adjustment for unfavorable impact of product,

geographic and other mix

Mix-adjusted ASP

Reported average selling price variance

Mix-adjusted ASP variance

West Group - Aggregates:

Reported average selling price

4 unchanged sentences

Mix-adjusted ASP variance

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

Building Materials business products and services revenues of $1.39 billion compared with $1.19 billion

Quarter Ended March 31, 2022

Financial highlights for the quarter ended March 31, 2022 (unless noted, all comparisons are versus the prior-year quarter and for continuing operations):

Consolidated total revenues of $1.23 billion compared with $982.4 million

Building Materials business products and services revenues of $1.08 billion compared with $856.6 million

Magnesia Specialties products revenues of $70.8 million compared with $65.3 million

1 unchanged sentence

Consolidated earnings from operations of $59.9 million compared with $99.3 million

Net earnings attributable to Martin Marietta of $254.6 million compared with $294.4 million ( 4 )

Net earnings from continuing operations attributable to Martin Marietta of $24.5 million compared with $65.3 million

Adjusted EBITDA of $197.2 million compared with $205.6 million

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

Earnings per diluted share from continuing operations of $0.39 compared with $1.04

Page 26 of 41

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

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 September 30, 2021 and 2020.

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 continuing operations for the three months ended March 31, 2022 and 2021.

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 September 30,

Three Months Ended March 31,

(Dollars in Millions)

15 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Three Months Ended September 30,

Three Months Ended March 31,

% of Revenues

3 unchanged sentences

Building Materials business:

Products and services

East Group Total

Ready mixed concrete

Asphalt and paving

West Group Total

Products and services

2 unchanged sentences

Total Magnesia Specialties

Aggregates Products Gross Profit Rollforward

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

Aggregates products gross profit, quarter ended September 30, 2020

Operational performance (1)

Change in aggregates products gross profit

Aggregates products gross profit, quarter ended September 30, 2021

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

Page 28 of 41

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Three Months Ended September 30,

Three Months Ended March 31,

(Dollars in Millions)

3 unchanged sentences

Magnesia Specialties

Three Months Ended March 31,

% of Revenues

(Dollars in Millions)

Earnings (Loss) from operations:

5 unchanged sentences

Three Months Ended

September 30, 2021

March 31, 2022

Volume/Pricing Variance (1)

4 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

1 unchanged sentence

Three Months Ended

September 30,

(Tons in Millions)

Total aggregates operations (2)

(1) Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.

( 1) Volume/pricing variances reflect the percentage increase from the comparable period in the prior year.

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

2 unchanged sentences

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)

Aggregates End-Use Markets

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 35% of third-quarter organic aggregates shipments.

Aggregates shipments to the residential market increased 8%.

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

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 30 of 41

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

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 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 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 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 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 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;

foreign currency transaction gains and losses;

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

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 $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 $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

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 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 nine months ended September 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.

Nine Months Ended September 30,

% of Revenues

(Dollars in Millions)

Total revenues:

Building Materials business:

Products and services

Interproduct revenues

East Group Total

Ready mixed concrete

Asphalt and paving

Interproduct revenues

West Group Total

Products and services

Total Building Materials business

Magnesia Specialties:

Total Magnesia Specialties

Page 39 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,

% of Revenues

(Dollars in Millions)

Gross profit (loss):

Building Materials business:

Products and services

East Group Total

Ready mixed concrete

Asphalt and paving

West Group Total

Products and services

Total Building Materials business

Magnesia Specialties:

Total Magnesia Specialties

Aggregates Products Gross Profit Rollforward

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

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

Operational performance (1)

Change in aggregates products gross profit

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

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

Page 40 of 54

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Nine Months Ended September 30,

% of Total Revenues

(Dollars in Millions)

Selling, general & administrative expenses:

Building Materials business:

Total Building Materials business

Magnesia Specialties

Earnings (Loss) from operations:

Building Materials business:

Total Building Materials business

Magnesia Specialties

Aggregates End-Use Markets

Organic aggregates shipments to the infrastructure market increased 6.2%, primarily driven by increased highway widening projects in North Carolina, Georgia and Indiana.

The infrastructure market accounted for 32% of first-quarter organic aggregates shipments.

Organic aggregates shipments to the nonresidential market were flat, with strong warehousing demand in Ohio, Indiana and Texas offset by a decrease in major projects in North and South Carolina.

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

Organic aggregates shipments to the residential market decreased 2% compared with a strong prior-year quarter, reflecting supply chain issues, increased costs and labor shortages.

The residential market accounted for 26% of first-quarter organic aggregates shipments.

The ChemRock/Rail market accounted for the remaining 6% of first-quarter organic aggregates shipments.

Volumes to this end use increased 20%, driven by increased aglime shipments in Iowa and increased ballast demand in Texas spurred by long-deferred railroad maintenance projects.

Building Materials Business

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

Nine Months Ended

September 30, 2021

Volume/Pricing variance (1)

Total aggregates operations (2)

Organic aggregates operations (3)

Page 41 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,

(Tons in Millions)

Total aggregates operations (2)

(1) Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.

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

(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):

Tons to external customers

Internal tons used in other product lines

Total aggregates tons

Cement (in millions):

Tons to external customers

Internal tons used in ready mixed concrete

Total cement tons

Ready Mixed Concrete (in millions of cubic yards)

Asphalt (in millions):

Tons to external customers

Internal tons used in paving business

Total asphalt tons

First-quarter organic aggregates shipments increased 2.5%, reflecting growing public and private product demand at the onset of construction season, while organic pricing increased 6.5%.

Inclusive of acquired operations, aggregates shipments grew 13.4% compared with prior-year quarter and pricing increased 5.6%.

Overall, East Group total shipments increased 1.1%, reflecting increased infrastructure construction activity in the Southeast and Midwest, while pricing increased 5.1%.

West Group total shipments increased 32.7%, driven by robust underlying demand in Texas and shipments from acquired operations that more than offset Colorado weather-related shipment shortfalls.

West Group pricing increased 9.0%, or 4.8% on a mix-adjusted basis, benefitting from improving long-haul shipments from higher-priced distribution yards and higher selling prices at acquired operations.

Aggregates product gross margin decreased 640 basis points to 14.9%, as year-over-year price increase impacts were more than offset by higher diesel fuel costs of approximately $12 million, increased supplies, repair costs, contract service cost of approximately $20 million, higher internal freight costs of $9 million and the impact of Tiller winter shut down, which did not impact prior year quarter as the operations were acquired April 30, 2021.

Texas cement shipments increased 10.0%, supported by robust product demand and tight supply throughout the Texas Triangle.

Cement pricing improved 11.8%, benefitting from the carryover of 2021 mid-year price increases and improving demand for higher-priced specialty oil-well cement products.

Product gross margin expanded 630 basis points to 20.3% compared with the prior-year quarter, which was negatively impacted by incremental costs and inefficiencies resulting from the Texas Deep Freeze.

Organic ready mixed concrete shipments declined slightly, driven by timing of project completions and weather-related Colorado shipment declines.

Organic pricing grew 8.2% in first quarter 2022 compared with first quarter 2021, following the implementation of annual price increases early in the year.

Inclusive of the acquired Arizona operations, ready mixed concrete shipments and pricing increased 14.8% and 7.7%, respectively.

Product gross margin declined 100 basis points to 7.3%, driven primarily by higher raw material and diesel costs which more than offset price increases.

Seasonal winter weather conditions in Colorado contributed to a 3.1 percent decrease in organic asphalt shipments.

Organic pricing increased 5.8 percent.

Including contributions from the acquired West Coast operations, total asphalt shipments and pricing increased 509.1 percent and 27.2 percent, respectively.

As anticipated, the Minnesota-based asphalt facilities, which were acquired on April 30, 2021, were closed during the first quarter given the construction season does not begin until late spring.

Consistent with the Company’s historical first-quarter trends, the asphalt and paving business posted an overall loss.

Page 31 of 41

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

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:

Nine Months Ended

September 30,

Aggregates (per ton)

Cement (per ton)

Ready Mixed Concrete (per cubic yard)

Asphalt (per ton)

Aggregates Product Line End-Use Markets

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 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 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 1.6% reflecting increased pricing from organic asphalt operations.

Magnesia Specialties Business

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

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

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

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

Magnesia Specialties first-quarter product revenues increased 8.5% to $70.8 million, driven by robust global demand for magnesia-based chemical products as well as improving domestic steel production in the latter half of the quarter.

Product gross profit was $26.8 million compared with $28.4 million.

Product gross margin decreased 570 basis points to 37.8% as higher costs for energy, supplies and raw materials more than offset revenue growth.

First-quarter earnings from operations were $21.5 million in 2022 compared with $23.5 million in 2021.

Consolidated Operating Results

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.

Consolidated SG&A for first quarter 2022 was 7.9% of total revenues compared with 8.1% in the prior-year quarter, an improvement of 20 basis points.

Earnings from operations for the quarter were $59.9 million in 2022 compared with $99.3 million in 2021, the decrease driven by higher costs for energy, supplies, freight and personnel, which more than offset year over year price increases.

Income Tax Expense

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.

For the three months ended March 31, 2022 and 2021, the effective income tax rates for continuing operations were 19.3% and 19.5%, respectively.

LIQUIDITY AND CAPITAL RESOURCES

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

Cash provided by operating activities for the three months ended March 31, 2022 and 2021 was $169.9 million and $191.9 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:

Nine Months Ended

September 30,

Three Months Ended

(Dollars in Millions)

1 unchanged sentence

Full-year 2021 net cash provided by operating activities was $1.14 billion.

During the three months ended March 31, 2022 and 2021, the Company paid $139.8 million and $110.3 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 repurchased 130,551 shares of common stock during the first three months of 2022 at an aggregate cost of $50.0 million.

At March 31, 2022, 13,390,401 shares of common stock can be purchased under the Company’s repurchase authorization.

Page 32 of 41

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

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 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.

The acquired operations complement the Company’s existing Central Division’s product offerings in the surrounding areas.

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 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).

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

The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility ) that matures on September 21, 2022.

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

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.

The Company has an $800 million five-year senior unsecured revolving facility (the Revolving Facility), which expires in December 2026.

The Revolving Facility requires the Company’s ratio of consolidated debt-to-consolidated EBITDA, as defined, for the trailing-twelve-month period (the Ratio) to not exceed 3.50x as of the end of any fiscal quarter, provided that the Company may exclude from the Ratio debt incurred in connection with certain acquisitions during the quarter or the three preceding quarters so long as the Ratio calculated without such exclusion does not exceed 4.00x.

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.

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.

Consolidated EBITDA is generally defined as earnings before interest expense, income tax expense, and depreciation and amortization expense.

Additionally, stock-based compensation expense is added back and interest income is deducted in the calculation of consolidated EBITDA.

During periods that include an acquisition, pre-acquisition adjusted EBITDA of the acquired company is added to consolidated EBITDA as if the acquisition occurred on the first day of the calculation period.

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

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)

Earnings from continuing operations attributable to Martin Marietta

Interest expense

Income tax expense

Depreciation, depletion and amortization expense

Stock-based compensation expense

Acquisition-related expenses

EBITDA related to acquired operations (Pre-acquisition

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

Interest income

Consolidated EBITDA, as defined by the Company’s Revolving Facility

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

is a co-borrower, at September 30, 2021

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

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

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

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 in an amount equal to the lesser of $500.0 million or the sum of the Company’s unrestricted cash and temporary investments, for purposes of the covenant calculation.

The Company was in compliance with the Ratio at March 31, 2022.

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

There were no amounts outstanding under the Trade Receivable Facility or the Revolving Facility as of March 31, 2022.

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 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.

At March 31, 2022, the Company had $1,197.4 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.

Further, as of March 31, 2022, 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.

Half of the deferred obligation was repaid in 2021 and the remaining half is due December 31, 2022.

There will be no interest assessed on amounts deferred.

Page 46 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

TRENDS AND RISKS

6 unchanged sentences

You may also write or call the Company’s Corporate Secretary, who will provide copies of such reports.

Page 33 of 41

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter March 31, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Investors are cautioned that all statements in this Form 10-Q that relate to the future involve risks and uncertainties, and are based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results.

1 unchanged sentence

You can identify these statements by the fact that they do not relate only to historical or current facts.

They may use words such as “anticipate,” “expect,” “should be,” “believe,” “will,” and other words of similar meaning in connection with future events or future operating or financial performance.

They may use words such as “ anticipate, ” “may,” “ expect, ” “ should, ” “ believe, ” “project,” “intend,” “will,” and other words of similar meaning in connection with future events or future operating or financial performance.

Any or all of management’s forward-looking statements here and in other publications may turn out to be wrong.

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the termination, capping and/or reduction or suspension of the federal and/or state gasoline tax(es) or other revenue related to public construction;

the level and timing of federal, state or local transportation or infrastructure or public projects funding, most particularly in Texas, Colorado, North Carolina, Georgia, Iowa, Florida, Minnesota and Maryland;

the level and timing of federal, state or local transportation or infrastructure or public projects funding, most particularly in Texas, Colorado, California, North Carolina, Georgia, Minnesota, Iowa, Florida, Indiana and Maryland;

the impact of governmental orders restricting activities imposed to prevent further outbreak of COVID-19 on travel, potentially reducing state fuel tax revenues used to fund highway projects;

1 unchanged sentence

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

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;

levels of construction spending in the markets the Company serves;

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

2 unchanged sentences

increasing residential mortgage interest rates and other factors that could result in a slowdown in residential construction;

unfavorable weather conditions, particularly Atlantic Ocean and Gulf of Mexico hurricane activity, the late start to spring or the early onset of winter and the impact of a drought or excessive rainfall in the markets served by the Company, any of which can significantly affect production schedules, volumes, product and/or geographic mix and profitability;

unfavorable weather conditions, particularly Atlantic Ocean and Gulf of Mexico hurricane activity, wildfires, the late start to spring or the early onset of winter and the impact of a drought or excessive rainfall in the markets served by the Company, any of which can significantly affect production schedules, volumes, product and/or geographic mix and profitability;

whether the Company’s operations will continue to be treated as “essential” operations under applicable government orders restricting business activities imposed to prevent further outbreak of COVID-19 or, even if so treated, whether site-specific health and safety concerns might otherwise require certain of the Company’s operations to be halted for some period of time;

the volatility of fuel costs, particularly diesel fuel, and the impact on the cost, or the availability generally, of other consumables, namely steel, explosives, tires and conveyor belts, and with respect to the Company’s Magnesia Specialties business, natural gas;

the volatility of fuel costs, particularly diesel fuel, notably related to the current conflict between Russia and Ukraine, and the impact on the cost, or the availability generally, of other consumables, namely steel, explosives,

Page 34 of 41

MARTIN MARIETTA MATERIALS, INC.

AND CONSOLIDATED SUBSIDIARIES

For the Quarter March 31, 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

tires and conveyor belts, and with respect to the Company’s Magnesia Specialties business, natural gas;

continued increases in the cost of other repair and supply parts;

8 unchanged sentences

weakening in the steel industry markets served by the Company’s dolomitic lime products;

changes in steel capacity utilization;

trade disputes with one or more nations impacting the U.S.

13 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-

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.

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

Page 35 of 41

1 unchanged sentence

AND CONSOLIDATED SUBSIDIARIES

For the Quarter September 30, 2021

For the Quarter March 31, 2022

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.

INVESTOR ACCESS TO COMPANY FILINGS

15 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

For the Quarter Ended September 30, 2021

For the Quarter Ended March 31, 2022

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