Martin Marietta Materials Inc. reported record results for the first quarter ended March 31, 2016. Consolidated net sales totaled $734 million, up from $631.9 million in the first quarter of 2015.
The cement business benefitted from strong demand and better weather in Texas and, for the quarter, generated $69.9 million of net sales and $32.6 million of gross profit. Cement shipments increased 13.8 percent coupled with a 3.6 percent improvement in pricing (excluding the impact of the California cement operations sold in 2015). The cement business is benefitting from broad based strength in Texas markets, where demand exceeds local supply. The Portland Cement Association (PCA) forecasts continued supply/demand imbalance in Texas over the next several years. The business incurred $5.6 million in planned cement kiln maintenance costs, which are expected to be heaviest in the third quarter.
Ward Nye, chairman, president and CEO of Martin Marietta, stated: "We are especially pleased to report a record first quarter even as we are only in the early-stage of recovery in broadly-based construction activity. Our ability to perform so well without the benefit of consistent macroeconomic support reflects positively on Martin Marietta's disciplined execution against our strategic priorities. Our results also are indicative of our strict adherence to maintaining a relentless strategic and tactical focus on our leading operating positions in economically-diverse, high-growth geographies, and improving market conditions throughout the vast majority of our business. First-quarter results were supported by several years of slow, but steady job growth, and evident in the double-digit aggregates product line volume growth, strong price increases and improved profitability of both our aggregates-related downstream businesses and cement business. Our year-over-year comparisons further underscore the continued steady economic recovery in our business, much of which was masked in 2015 by historic levels of rainfall.
"In the first quarter of 2016, our aggregates product line volume grew over 13 percent and pricing increased over 8 percent," Nye said. "The Mid-America Group led with a 28 percent increase in aggregates product line shipments, resulting from the start of several large, principally state-funded highway projects across North Carolina and South Carolina, and increased residential and non-residential construction activity, across a broad spectrum of end-use demand. The West Group reported a 5 percent increase in volumes and an 11 percent increase in pricing. Of particular note, North Texas aggregates product line volumes and pricing increased 28 percent and 12 percent, respectively, for the quarter. The Dallas-Fort Worth Metroplex is the fastest growing area in Texas, and one of the top nationally for both job growth and residential construction. Further, the Texas Department of Transportation forecasts an $8 billion fiscal year infrastructure construction plan, which, together with the North Texas Tollway Authority and the Harris County Tollway Authority, should lead to further growth in customer backlogs. Our leading Texas market positions will allow us to capitalize on these opportunities for the balance of the year, and, indeed, for years to come."
Nye concluded, "On the strength of both the quarter and our customers' backlogs, we have also increased our aggregate product line volume growth to six percent to eight percent, as we expect continued positive employment growth in our key markets and normal weather patterns. We further anticipate an environment where our operations can safely run more efficiently and the benefits of strategic and operational excellence initiatives, including acquisition integration, all coalesce to deliver increasing shareholder value."